From the Editor.

Accounting and auditing have been the business story of 2002, thanks to Enron and Arthur Andersen. But more broadly, accounting experts have been sniping at the long-established framework of accounting that fails to adequately value intangibles such as brands, customers, patents, etc. -- bulwarks of the New Economy. For our cover story, we asked top accounting professors Baruch Lev and Robert Howell to write about how they think accounting should be changed.

By the time you read this, Enron's headline machine may be running out of juice -- but then again, maybe not. The ramifications of its collapse are potentially enormous, as the buffeting of the overall financial markets in early February attests. Writer Paul Sweeney spoke to a number of accounting professors and others and drew them out about the reforms they think are needed.

The slowdown in global merger activity isn't likely to dissipate soon, says Steven Koch, a top-ranking M&A executive with Credit Suisse First Boston. Koch, who was interviewed by writer Ramona Dzinkowski, maintains that the current "slump" is really relatively normal activity, but appears especially weak after the boom of 1998-2000.

Changes are in the wind for European companies, who will be required to adopt international accounting standards by 2005. Jeannot Blanchet, a senior Arthur Andersen consultant in France, argues that listed companies should treat this conversion as an opportunity and not a compliance burden -- and that by doing it early, they can turn it into a competitive advantage.

Financial Executive offers few stories about economics; that may be a personal bias of mine after suffering through Economics 101 in college. But there are economists with provocative and iconoclastic views, like Paul Kasriel of Northern Trust Co., whose ideas are drawing attention. As writer Barclay Leib found, Kasriel isn't a big fan of Federal Reserve Chairman Alan Greenspan and his interest rate policies.

Valuation of private or lightly traded companies continues to be a vexing issue for anyone interested in doing a sensible deal. Author Frank Evans details critical areas that need to be examined, and offers three different approaches to valuing a company, based on the composition of its assets.

Our special section on Best Practices has terrific advice from a number of voices. Authors and consultants Jim Collins and Michael Hammer help define current thinking on what best practices are all about, and there's more practical advice in areas like compensation, digitizing the finance function and supply chain management.

I'm delighted to report that Financial Executive has won another award, this from the American Society of Association Executives. FE won a certificate in ASAE's Gold Circle Awards competition for our March/April 2001 article, "Are Mergers Paying Off?" This was the third award the magazine has won since last spring.

You may notice some modest changes in the look of the magazine. Art Director Laura Avello has implemented new body type styles and logo treatments in a number of sections, and we hope you agree that the result is an even cleaner, crisper presentation of the varied topics we're covering in each issue.

Jeffrey Marshall