High Plains’ average net operating assets at the end of 2008 and 2007 was $977.89 million and $642.83 million, respectively.
Which of the following is least likely to prevent earnings manipulation?
A . The independent audit.
B . SEC certification filed by High Plains’ CEO and CF
D . High Plains’ bond covenants.
Bond covenants can create an incentive to engage in earnings manipulation. If High Plains remains noncompliant, the bondholders can demand immediate repayment of the debt. (Study Session 7, LOS 25.c)