HHH Corp. is subject to a debt covenant that requires HHH to maintain a current ratio of at least 3.00. Violation of this covenant would force HHH into bankruptcy. HHH’s FY2013 financial statements show that the current ratio is 3.01.
Which the fraud schemes might HHH have used to fraudulently increase the current ratio?
If you were HHH’s auditor, describe one thing you would do to satisfy yourself that the reported current ratio is legitimate?