Investors are skittish these days, very nervous about where to place their money, when to place their money, and to whom they should give their money.

And no wonder, as one national US financial columnist has suggested, within the investment bear market, there is a bear market in integrity.

He is not the only one lamenting the lack of credible investment data. The impact that a recent Time magazine has had with their focus issue devoted to the dearth of truth in investing, insurance, and finance in general, "You Are On Your Own, Baby", has only added fuel to the fire.

There is a public perception, cynical though it may be that public companies, at times, appear to be playing shell games with their accounting numbers. In reality, the truth may be somewhere in between, but for the average investor, the feeling is that the financial reporting is so complex and so obscure, no one can figure it out.

While many investors may have felt that they were being had during the last bull market, they did not quite want to believe it. Recent controversies over misleading investment advice from generally respected sources has generated attention and become a focus of blame.

Granted, there was hardly ever a complaint about discrepancies in investment marketing when everyone's portfolio was increasing in value! The burgeoning investigation at Merrill Lynch over the thousands of emails between stock research analysts privately sharing the 'real negative' results on public companies' financials, while publicly, on programmes such as CNBC and in research reports, these same analysts were issuing glowing statements on the same companies, has sparked public outrage.

It is now estimated that investigation into Merrill Lynch's misdeeds could cost the firm up to $2 billion. While Merrill Lynch has publicly stated they have committed no wrongdoing, ML share value has dropped more than 20 percent in recent weeks.

Any ML executive with stock options is probably hoping this will all just go away. Well, maybe not, this time. The determination of many a small investor - who bought stocks based upon Merrill Lynch analysts' advice - to seek recourse has become more focused. Research analysts aren't the only ones coming under the public's jaundiced eye.

The current credibility of financial advisors is almost as low as the proverbial used car salesman. Public companies (and their accounting processes), particularly since Enron, are being scrutinised as never before.

Accounting is not easy to understand.

Yes, cash is cash, and revenue minus expenses equal net earnings. However, large companies use accrual accounting, which endeavours to match revenue earned and expenses made to the fiscal year and period that they actually occurred.

Cash is still greatly involved but the focus is on net earnings. While accounting standards may be heavily regulated, a public company under pressure to show a good profit margin may be tempted to make a few accounting adjustments. And simplistically, it can happen something like this:

WICKED WIDGETS (WW) is a publicly traded company. Their balance sheet shows assets of $15 million, liabilities of $8 million, and Retained Earnings of $7 million. However, their income statement is terrible.

It has been a tough year, they have spent huge amounts trying to market a new product and it just didn't take off. For the fiscal year 2003, therefore, they are showing a loss of $10 million.

The Chief Executive Officer (CEO) is not happy, because he is well aware that when earnings are announced, WW stock value will take a nosedive. Plus, he won't get his annual incentive bonus, not to mention those stock options.

He has a little chat with the Chief Financial Officer and they decide that according to their interpretation of generally accepted accounting principles (GAAP), some of these marketing costs may not have really happened in fiscal year 2003, they really belong (deferred) in 2004 and 2005, so they make an adjustment to the income statement, and carry the deferred expenses to the balance sheet.

Presto, now the company shows a tidy respectable profit of $5 million, and their assets have increased. But is this deferred charge really an asset?

Wait a minute, you say, what about the auditors? Isn't their job to figure out these little games? Isn't this fraud? Regrettably and statistically, when upper management decides to foster a phoney scheme on the auditors and the public, it is almost impossible to detect.