Directors should be asking the following question: Is management's accounting for material or its innovative transactions in sync with the substance of these transactions? For example, if assets are to be shed from the balance sheet by selling them to a special purpose entity, are both the risks and the rewards being transferred to a third party?
If the answer is no, then a prudent director would require that the assets remain on the balance sheet (such as in the case of a "nonqualifying"(SPE), or that the accounting be supplemented with enough disclosure to inform investors of the ongoing risks these assets continue to present to the institution.