Marketing's new role in financial reporting. (Marketing Solutions).

The current era will probably go down as "post-Enron," but Enron is just the latest I example of financial reporting abuse.

What is ratcheting up investor anxiety and skepticism is not so much fear of rampant Enrons or egregious frauds or even the parade of earnings restatements. The real worry is financial reporting that obscures as much as it illuminates. The symptom is Enron and its ilk. The root cause is the pressure to create value. Evidence of this pressure can be found in financials that fog--rather than illuminate--value (and associated risk).

Sam Eddins, managing director at CSFB HOLT, says, "Because the accounting is not a very good reflection of the economic activity it's meant to report, I think it allows the boundaries to be loosened."

The fundamental question from anxious investors, emboldened analysts and alarmed regulators is: Where is the evidence of the value your company is creating?

For a period, companies and investors tacitly indulged in mutual obfuscation. Investors blithely bet on "business models" they rarely claimed to understand. And many companies got a "pass" on clarity.

Conglomerates by definition have a tough task using financials to explain the performance of myriad businesses. The GEs of the world are under fire not for misleading but for not leading.

Other companies have been getting a "merger-related pass" on their financials. For years after a merger or acquisition, the impact of the deal obscured the view of what was making money and what was not. Now, reports Business Week, "the 20 companies with the greatest merger and acquisition activity over the past four years are being punished by Wall Street"--down 15 percent compared to 5 percent for the S&P 500.

The dot-corns devised their own brand of opacity for a good reason. They didn't have earnings. A lot of the time they didn't have products or customers. They had to invent new financials.

So, nothing nefarious, but each time these companies rolled out vague or imprecise metrics, the mentality of "beats me, but I'm buying" was reinforced and rewarded. Enron and an avalanche of ineptitude and wrongdoing precipitated the inevitable day of reckoning.

Out of that crisis, we see an emerging affirmation of three principles of value creation:

* For most companies, the source of value--revenue, cash flow and profits--is customers (or groups of customers). How customers think, feel and act about a company is the ultimate determinant of the company's value.

* Companies whose financial metrics obscure the true value of their customers have a bigger problem than "credibility on Wall Street." How can they make good decisions about where to allocate corporate resources if they cannot see how today's decisions affect tomorrow's value?

* Financial reporting has to provide insight into value creation; otherwise, increasingly, it will be rejected as inadequate. "Honest-but-bad" beats "dishonest" in the ethics category, but neither scores in the "useful" category. A problem that has not been identified cannot be fixed. As punishing as it is to disclose problems, doing so at least allows to you do something about it.

As companies seek to deliver on these qualities, they must also deliver better leading indicators--not just reporting history, but helping investors anticipate the value of customers. That means those who are responsible for segmenting customers, managing their channels, and understanding, measuring and enhancing customer value must become a part of the new solution.

Marketing plays a key role in impacting the current and future value of the customer-income streams. Today, along with that responsibility goes the special and urgent role of helping make value transparent for all stakeholders.

Robert Hall is president of EnAct, a business of the Correker Corp., which is based in Dallas, with offices in Atlanta, London. Sydney and Toronto. He can be reached at [phone], [e-mail].