Video: Introduction to Compliance Reporting and Supplementary Information to Financial Statements

This lesson delves into the concept of compliance reporting, stressing the importance of ensuring that entities are in compliance with laws, regulations, and any governing restrictions. It highlights the various situations where compliance reporting is necessary, such as in loan agreements or bond indentures. The lesson also explains the various obligations that banks may impose on borrowers, including payment requirements, maintaining current ratios, and limiting dividend payments, to ensure that they can fulfill their debt obligations. Additionally, it discusses the potential need for a compliance audit or report, which may be requested by lenders or trustees, to confirm that borrowers have adhered to the accounting covenants in their agreements.