My colleague Tracey Miller is right on top of things. She knows what is really news. Tracey is the editor-in-chief of The Electronic Accountant. Last week, she ran a news story about how Warren Buffett had blasted corporate America. It was the result of a scathing column that Buffet wrote in The New York Times where he argued that stock-option accounting and assumptions about pension fund returns are the most flagrant deceptions in corporate America, not to mention the outright crookedness by many chief executives.

Now, I tell you all this because when I read that piece by Buffett, entitled "Who Really Cooks the Books?" I had to offer a round of applause at the end. You see, without getting into a love fest, I am a big admirer of Buffett. I met him in a former lifetime when I was business editor at Barron's and found him a downright, simple, no-nonsense individual.

If you don't know him that well, consider this: He is the second wealthiest man in the world, behind his friend Bill Gates, and his company's net worth is somewhere around the $40 billion mark. He is also one of the few who has amassed astonishing riches through stock market investments.

But what makes Buffett so fascinating a person is that if you ask him a question, you get a direct answer, no hemming or hawing, and no fuzzy thinking. He is now 71 years old and still lives on Farnam Street in Omaha in the same gray stucco house he purchased 40 years ago for something like $31,000. And he loves fast food. His annual salary from his company? Said to be around $100,000.

But what he said in that op-ed piece for The Times reveals something else about him. He feels it is justified that there is a confidence problem about corporate earnings reports and the credibility of chief executives. "For many years," he writes, "I've had little confidence in the earnings numbers reported by most corporations. I’m not talking about Enron and WorldCom--examples of outright crookedness. Rather, I am referring to the legal, but improper, accounting methods used by chief executives to inflate reported earnings."

For one thing, Buffett cites the example of a company giving something of value to its employees in return for their services (such as stock options). "It is clearly a compensation expense. And if expenses don't belong in the earnings statement, where in the world do they belong?"

He doesn't think CEOs need independent directors, oversight committees or auditors absolutely free of conflicts of interest in order to clean up their acts. "They simply need to do what's right." As Alan Greenspan declared recently, the attitudes and actions of CEOs are what determine corporate conduct.

As to accountants, Buffett doesn’t believe in Congress setting accounting rules. He points out that the Senate opened the floodgates in 1994 to an anything-goes reporting system and feels it should be closed now. "Rather than holding hearings and fulminating, why doesn't the Senate just free the standards board by rescinding its 1994 action?"

Perhaps, Washington should take another look at what Buffett says. He is considered the world's savviest investor and even sat out the stampede over technology stocks, backing away from Microsoft and HP and sticking with Coke and Gillette. "I think it's much easier to predict the relative strength that Coke will have in the soft drink world than Microsoft will in the software world. That's not to knock Microsoft. If I had to bet on anyone, I'd bet on Microsoft. But I don't have to bet."

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