If we are an auditor, then carry out an audit of the financial statements by December 31, 2022.

When we conducted the audit, we received information that the client in November 2022 apparently experienced a debt covenant violation because several ratios were violated, such as the current ratio which should have been 3:1 to 1:1, no dividend distribution was violated so there was no dividend distribution.

Because the company violated it, the company management then tried to have the articles arising from the violation of the debt covenant removed. In the end, the directive succeeded in requesting the bank and an agreement was made on February 28, 2023. As additional information, the date of the audit report was March 15, 2023.

Question:

1. What impact will the illustration of these conditions have on the Financial Report 31 December 2022?

2. Does doing a wave after the balance sheet date change the composition of long-term contractual loans to short-term? Or is there no effect?

Give reasons for each component of the question and relate it to PSAK 1 / IAS 1 and IFRS

Answer rating: 100% (QA)

Impact of Debt Covenant Violation on Financial Statements December 31 2022 1 Potential Impacts The debt covenant violation in November 2022 could have ... View the full answer