But this year's ritual has a twist. The chat may be a little more of an interrogation. And the parties will discuss not one corporation, but two: the company in whose boardroom they sit, and the company whose boardroom lapses helped create the biggest U.S. bankruptcy ever.

"It seems to me that, almost everywhere I go now, Enron is a very big discussion topic," said William Walker, chairman of the board of Beaverton-based Planar Systems. "Certainly in our last board meeting -- and, I expect, in all board meetings -- those issues were taken up as a board."

At heart, "those issues" are whether companies present a truthful picture of their business to employees and investors, and whether the people running companies fully know and fully tell what's going on there. The collapse of Houston-based Enron amid hidden transactions and claims of official ignorance made those questions urgent.

That stands officials at companies with a large Oregon presence on a line executives are straddling nationwide. They're closely investigating whether their businesses are representing themselves truthfully and openly, while at the same time reassuring everyone that there is no problem.

For example, Qwest Communications International, which provides Portland's phone service, and Kroger, which owns Fred Meyer stores, are taking pains to discuss and disclose off-the-books deals, while stressing that they are legal and appropriate.

The groups under the most pressure to make the right calls about such questions are a company's outside accountants and its directors -- in particular a little known subgroup of every public company's board of directors called the audit committee.

That committee, often made of just three people, bears the ultimate responsibility for making sure a company's books are right. In late 1999, the Securities and Exchange Commission reinforced that by requiring all boards to declare that "The outside auditor for the company is ultimately accountable to the board of directors and audit committee of the company," not to any corporate executive.

Audit committee members are getting a workout in the post-Enron business world. Several area officials said that, this year, directors are asking unusually pointed and probing questions about corporate finances when they meet with auditors.

Pat Anderson, chief financial officer of Portland's Columbia Sportswear Co., said he thought his company's directors held their auditors "a little more to the grill" this year.

Gerry Langeler, a Portland investor who serves on the audit committee of Minneapolis-based Vascular Solutions, said that "at every audit committee meeting since Enron became visible we have asked the auditors: 'Is there anything unusual? Anything we should know about?' "

Steven Rogel, Weyerhaeuser chairman, president and chief executive officer, said he thinks tough questioning is happening in boardrooms nationwide.

"Particularly the audit committees . . . are giving even greater scrutiny to the companies they review," said Rogel, who also serves as a director of Kroger and Union Pacific. "As they conduct these reviews, they're looking closely at the work of both the internal and external auditors to ensure they present a clear and accurate picture to the shareholders."

A difficult task Enron shows how hard it can be to ensure accurate audits. Its audit committee had six members, including a Stanford University accounting professor emeritus, a former bank president and a British accountant who once led England's Houses of Commons and Lords. They failed to head off the disaster.

"If management wants to defraud you, the board, they probably can. If the auditors are in on it, they definitely can," Langeler said.

Because of that, directors must be sure they can talk separately to executives and auditors, and make sure the stories match up, said Steve Wynne, a Portland lawyer and businessman who serves on the board of Planar and Portland's Flir Systems. As a rule, he said, audit committees meet quarterly with just outside auditors, and the committees also usually meet with a company's own financial officials without the CEO present.

Directors have other weapons in their arsenal, too. For one, the board itself hires and fires the accountants -- and negotiates their pay -- giving it significant influence over the auditors.

Langeler said the audit committee also can, and must, let the accountants and a company's executives know they will not stand for any monkey business. He said that is important because, even though many people think accounting rules are "black and white things," auditors often have to make "judgment calls" about how to account for things.

"The fundamental purpose of the board, and especially the audit committee, is to set the tone," he said. Directors should set a tone "that says, 'We're not going to push the limits here. When in doubt, leave it out, as opposed to put it in.' "

He offered an example from Mentor Graphics, a Wilsonville company he co-founded. Before he left the company, Langeler said, its operation in Holland was ready to ship some products out on the very last day of the quarter. As the night dragged on, workers loaded the products onto a truck for delivery. As soon as that truck left, the company could record the revenue from those products -- sales it needed to make its financial projections for the quarter and avoid disappointing investors.

"Midnight came and the tractor-trailer driver couldn't be found. He was out for a beer," Langeler said. "The difference between getting that revenue and not getting that revenue was not finding the driver. And we didn't count it . . . There are lots of fine lines that get drawn every day."

When to recognize sales is one of the trickiest areas for directors and auditors to deal with -- and one now under intense scrutiny.

Qwest ran into trouble in the past two years when it signed deals with two companies that agreed to sell it $750 million in equipment and then buy hundreds of millions of dollars in services from it in coming years.

Qwest booked the sales as revenue right away, causing some analysts to question whether the company was trying to make its revenues look artificially high.

The deals are legal, and Qwest executives point out that both have been disclosed. But attention to the deals has clearly affected the company. Its stock has dropped, partly because of the focus on Qwest's accounting, analysts say. And management recently started holding weekly phone calls to assure analysts and investors that the company is in fine shape.

"Qwest was fairly closed-mouthed until the latter part of 2001. Then they started disclosing more," said Dan McBride, an analyst with H&R Block Financial Advisors.

There are accounting gray areas besides booking revenue. Businesses can carry out a host of legal transactions that don't have to be fully reported in accounting documents. Enron, for instance, kept reams of debt off its public balance sheet through complicated deals with a series of foreign partnerships it established -- debt that killed the company when it was finally revealed.

The balance sheet is a crucial document for companies. It tells what companies own and owe, a key measure of financial health. Moving debt off the balance sheet is the equivalent of a dieter emptying his pockets before weighing.

Wynne said most companies "don't have a lot of off-balance-sheet transactions," unlike Enron. Still, there are plenty of companies who take advantage of such deals.

Fred Meyer was one. In 1997, the retailer got a $500 million "synthetic lease" -- a deal where a third party builds property for a company to use, which the company leases for several years, then makes a balloon payment to buy. Properly structured, the company can claim to own the property for tax purposes, getting deductions for it. But on financial statements, the company gets to count itself as leasing the property and doesn't have to add it to its assets and liabilities.

Synthetic leases are perfectly legal, though some people say they're misleading, and some financiers think accounting rules may soon change to forbid the practice.

Gary Rhodes, a spokesman for Kroger, defended the synthetic lease it bought with Fred Meyer as legitimate and "fully disclosed." He added that the amount of the lease is now less than $400 million and noted it expires in February 2003.

Still, he said, Kroger itself has historically avoided synthetic leases. "As a matter of policy, Kroger generally does not use off-balance-sheet financing," he said.

Langeler stressed that some practices that count one way on taxes and another on financial statements are perfectly fair -- such as writing-down asset values over different periods of time on taxes than on the books. But he starts to worry when a company uses "fairly sophisticated financial engineering that starts to mask" what's actually going on.

Now that audit committees and accountants are working to be more conservative, directors said, more companies may try to steer clear of such murky areas.

Finding directors If Enron's current influence is pushing directors to be more financially conservative, its long-term influence will probably be a change in the number and quality of people who agree to become directors.

Already, it can be hard to find high-quality directors, Wynne said, since doing a good job requires a significant time commitment and in-depth knowledge of business. That's especially true for audit committees. SEC rules say each audit committee member must be "financially literate," and at least one must have "accounting or related financial management expertise."

Wynne said he worries that the relatively small subset of people who meet those requirements might be discouraged by Enron's collapse. In particular, he fears they'll be scared by lawsuits seeking billions of dollars in damages filed by Enron shareholders.

Such suits were increasingly common, even before Enron collapsed, according to a study by London-based insurance broker Willis Group Holdings. From 1998 to 2000, shareholders filed from 200 to 240 federal class-action suits that alleged securities fraud, the study said.

That shot to a record 487 filings in 2001, partly because the stock market fell and the dot-com bubble burst. The amount of settlements per suit also rose, creating an explosion in liability costs -- $4.4 billion in 2000 alone, the study said.

Most companies offer insurance to help directors and officers cover their liability in such suits. But the policies are usually capped at $25 to $50 million, well below the amount of damages many suits seek, the Willis Group study said. And the study predicted that premiums on such policies will rise 50 percent this year.

"It's becoming increasingly difficult to attract good people, people you want, to serve on a board, because of directors' liability," Wynne said. "The reality of it is, putting together a good board is a tough assignment."

Walker, the Planar chairman, is worried enough about maintaining a strong board after Enron's collapse that he anticipates postponing his planned retirement from the board this fall. He wants to be around in case any new business rules or accounting guidelines are passed that affect the business or the board.

"There are some changes on the board that we will put on hold until we watch the fallout from Enron," he said, regarding his retirement. "It's not a very big thing. But it is an indication of corporate concern."

-- By Andy Dworkin