So Lehman Brothers are accused of managing by gimmicks, specifically – according to the BBC – an accounting “gimmick” known as Repo 105. “This is a legal accounting device that involves shifting around assets to reduce the size of a company’s balance sheet.”
Picture credit: Okinawa Soba
Apparently they got away with this gimmick for many years, until it blew up in their faces and the wallets of the world.
But deliberately hiding billions of dollars doesn’t sound like a gimmick, though; more like “smoke and mirrors” or maybe just plain old “cooking the books.”
How did this happen and why did it take so long to come to light?
Simple, there were obviously different sets of numbers in play: one set for public consumption, another for internal management. A risky strategy but far from unique.
Many organizations maintain “different versions of the truth,” either by design or accidentally.
By co-incidence, in the same week of the Lehman Brothers report, I wrote about the risks of management teams using different sets of numbers, please look for the topic titled Singing from the wrong spreadsheet at the Devil’s guide to iT.
