Problem 3. Here are two unrelated stems and requirements. 1. Problem statement 3-1 The table below suggests that some organizations do not have the same diligence in developing a system of tracking how close they are to covenant thresholds compared to their diligence in control over financial reporting, as required by SOX. It isn't important for our purposes, but FCPA is the Foreign Corrupt Practices Act. Requirement: Speculate on why audit committees do not regularly ask about debt compliance. Feel free to speculate on any factor that you wish, including that whether an audit committee asks varies with how financially distressed the company is. Maybe the 28% who asked were financially distressed and had a reason to bring it up. Or, it might important that debt covenants are sometime built on variations from GAAP, like the non-GAAP figure, Earnings Before Interest, Taxes, and Depreciation and Amortization (EBITDA), and the audit committee is less concerned about non-GAAP measures. Does that relieve them of responsibility for what management states as the non-GAAP figure. 2. Problem statement 3-2 I saw that one company asked for a 'relief period' for a financial covenant. They stated this: The Credit Agreement Amendment amends the Credit Agreement to, among other things, extend the financial covenant relief period (the Financial Covenant Relief Period") through April 1, 2022. Requirement: a. Why would a borrower ask for a 'relief period?' b. Would a lender ask for something in exchange for a 'relief period?' If so, would they ask for the same concessions as though the covenant had been actually violated (or about to be violated)? Be certain to consider the situation where a borrower will be a routine customer of the lender. That is, the borrower has routinely borrowed and, presumably, repaid loans in the past and will probably continue to be a customer in the future