I don't know whether it's something in the air or the water here in RB Land, but after reading and enjoying Selena's snapshot of accounting in Monday's column, I was "Goin' to Accounting in my mind." I grant you, this is not nearly so melodious or mellifluous as, with James Taylor, goin' to Carolina in one's mind, but hey, I'm a Fool.

(Plus, I've already gone to Carolina, '88.)

So let's strum those chords on our guitars and hold nothing back (if you have audio, you can hit this Web link and sing along):

In my mind I'm goin' to Accounting
Can't you see the assets?
Can't you just feel the cash flo-o-o-w?
Maybe just like a bottom line,
It hit me from behind
Yes, I'm goin' to Accounting in my mind....
Don't expect any receivables, depreciation, or amortization in tonight's report. Many other Fools and I have written online and in books about financial statements, the ins and outs of how to read them, what we look for in them, and so forth. The links in Selena's column provide a fine guide for those who answered, to her exit poll question, that they'd like to learn more about accounting.

No, fresh back from two weeks at the Carolina coast, I'm here to provide you the Rule Breaker take on accounting. And I don't even have to work hard at it, because it mostly comes from the mind of Baruch Lev of New York University's Stern School of Business Management. Professor Lev's thoughts were written up in Fast Company magazine earlier this year, and upon conclusion of the article -- my head and neck tired of nodding affirmatively throughout -- I had it added to our "RB Must Reads" section listed permanently on the Rule Breaker homepage in the right column.

Because if you're a Rule Breaker investor or thinker, you must read it.

Accounting is broken, Lev says. The 500-year-old system developed by Pacioli Luca misses some of the most valuable and compelling aspects of a business today. Most prominent among these "intangible assets" is a company's brand, the third attribute of the Rule Breaker. Also prominently missing, and relevant to Rule Breakers, is what I call "business permission," roughly defined as attractive business expansion capabilities uniquely or specially open to a company. These too are nowhere represented on the financial statements.

Given that accounting partly exists in order that investors might get a sound numerical read about a company's existing business, accounting is failing investors when it can't account for large portions of a business' actual value.

In my silly lyrics above (and didn't you enjoy my bottom/behind play on words?) was an ironic phrase that speaks directly to the point: "Can't you see the assets?" Because the truth is, you increasingly cannot in our information-based economy.

This befuddles many, who point to something like Celera Genomics (NYSE: CRA) and call it overvalued because most of the business is intellectual and human capital. Incredibly valuable intellectual and human capital. And while for an investor like me it points to eventual profitable success, many focus more on near-term prospects and scratch their heads and, in some cases, make jokes about the valuation. Most of the companies you find in our Rule Breaker Portfolio are companies whose human and intellectual capital (alongside -- and built into -- brand) make up a huge part of their market cap, which will be increasingly true of American business as bits and bytes take on more substantial value than cranes and railroad tracks.

And so you must read Professor Lev to understand this. As Fast Company writes: "The disconnect, says Lev, affects more than just financial analysts and corporate financial officers: Employees don't know how to value their contributions accurately. Managers don't have good numbers to refer to when deciding whether to back a project, or when assessing a project's performance. Are knowledge-based companies overvalued on the stock market? Are companies paying too much to acquire knowledge-based assets? These questions, says Lev, and more, cannot be adequately answered with today's accounting and financial-reporting methods. Accounting, in other words, no longer delivers accountability."

Over the weekend, Reuters did a story featuring Celera's president, Craig Venter, discussing Celera's intention to lead the new science of proteomics (possibly -- and I would say, probably -- to become a drug developer one day). You'd have to read Celera's financial statements really carefully, read between the lines, to find this anywhere represented in the numbers.

Specifically, you'd also have to know that Celera's capital equipment includes extremely powerful genomic sequencers from parent PE Biosystems -- which just changed its name to Applied Biosystems (NYSE: PEB) -- that point to the computer capacity that Celera will bring to bear in the search for the most important proteins. Having the fastest DNA sequencers, a top-notch scientific team, and a billion-dollar database full of human genes, Celera remains poised to take advantage of these new opportunities. (Jeff Fischer wrote about Celera's new directions in Fool News yesterday.) Celera has "business permission," as I wrote above. Unique business permission.

By the way, if the word "proteomics" causes you to draw a blank, report directly to Soapbox.com and purchase Proteomics: The Coming Revolution?, because it's something every one of us, investor or otherwise, should become conversant with. Then, to continue learning about biotech from all angles, read Zeke Ashton's column, Biotech Crash Course.

Returning to Fast Company, the article asks Lev, "What is it about intangible assets that creates value -- value that is more significant than that of tangible assets?" Any investor should read the simple answer and understand why in this new economy, as James Taylor has put it, "Hey, babe, the sky's on fire."

The firmament is indeed ablaze with new possibilities, and (somewhat) with the burning remnants of the companies that didn't seize them. The ones that got their rules broken. Spend any additional time you would have spent reading my column tonight and expose yourself to Lev's thinking, and explanations of why valuations are as they are, and where things are heading.

Fool on!

Exit Poll: The RB Survey Continues
In the past, we've interviewed officers from DoubleTwist, Inc., Amazon.com, Excite@Home, and other companies. As an investor who uses a Rule Breaker strategy, would you be interested in company officer interviews in this column on a regular (such as weekly) basis? Please share your response in our Exit Poll.