To our earlier discussions in this blog of the various items on a balance sheet we must add this: many important liabilities and assets – important, that is, for the future of the company – never get on the balance sheet at all. The rules governing what may be kept “off book” generated a good deal of controversy associated with the demise of Enron at the turn of the millennium. Enron, you may remember, created special purpose entities (SPEs) and supplied these off-book entities with Enron stock. Then it dealt with those entities in ways that spruced up its own books. The SPEs could be kept off book, under then extant rules, so long as 3 percent of their equity belonged to someone who was neither Enron nor an Enron “related entity.” The 3 percent figure may seem modest under the circumstances. But the point of it was that someone else had to be willing to put their own investment at risk. Indeed, as a matter of corporate law throughout the English speaking world, a ...