Find the Auditing in Action in the chapter that presents the cases of debt covenant waivers at MGM and Pilgrim's Pride.

a. State why debt covenant violations are important to auditors? If the violation is "cured" so that the company is no longer in violation at the financial statement date is there an audit issue?
b. What client or lender information will an auditor review to identify any debt covenant violations?
c. If a company has a debt covenant violation and a waiver is required, who initiates the process to obtain the waiver? What is the implication for the financial statement audit and audit report of a waiver obtained for period of less than one year from the balance sheet date?

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