The focus of Accounting for Growth, whose success owed more to the scandal surrounding the author's dismissal from UBS Phillips & Drew after protests from some of the companies featured, was on "financial engineering" techniques associated with acquisitions. And the combination of the recession and the arrival of the Accounting Standards Board under its no-nonsense chairman David (now Sir David) Tweedie had changed the environment.
In the second edition of his book, to be published this week, Mr Smith acknowledges the progress made by Sir David and his colleagues. But he suggests that even the ASB, which has just issued proposals for dealing with goodwill and other intangible assets, does not believe its work will ever be complete: "Whatever rules you put in place, smart people will find a way to express a distorted or flattering picture of their performance."
And since British business is in the midst of a sustained takeover boom, it is arguable that the new version will be of greater relevance than the first. In a section labelled "It will all be different this time", he points to the activity in such sectors as financial services, pharmaceuticals and media as storing up possible problems for the future. "A soaring share price and M&A deals were the reward for any company which could claim the slightest association with the Internet," he writes, before pointing out that, for all the talk of the growing importance of multimedia, profits have been hard to come by.
The key factor behind Mr Smith's dispute with UBS was the "Blob Guide", as the Major Companies Accounting Health Check table became known. GrandMet tried to stop publication when it was upset by the claim that it had used nine of the 12 techniques highlighted in the book. In the new edition, Mr Smith says he later discovered he had left one out, and that the company was employing 10.
This time, the Blob Guide has been dropped on the grounds that "it always suffered from the shortcomings of an admittedly simplistic approach". Not that individual companies have been let off. The author takes great pride in pointing out what has happened since 1992 to the likes of British Aerospace, Queens Moat Houses, Trafalgar House and Lonrho as well as former foes GrandMet and Tiphook (now Central Transport Rental).
There is also more detail on survival techniques, including a taster for a system for predicting company failure - the subject of Mr Smith's next book, Corporate Pathology.
But the theme remains the same: even after six years of the ASB, the wise investor does not take company accounts at face value.Reuse content