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Infinance, the termdebt compliance describes variouslegal measures taken to ensure thatdebtors, whether individuals,businesses, orgovernments, honor theirdebts and make an honest effort to repay the money that they owe.[citation needed]
Generally regarded as a subdivision oftax law, debt compliance is most often enforced through a combination ofaudits and legal restrictions. For example, a provision of theFederal Debt Collection Procedures Act of 1990 states that a person or organization indebted to the United States, against whom a judgmentlien has been filed, is ineligible to receive a governmentgrant. Noncompliance, depending on severity and frequency, may be punished byfine or evenincarceration indebtor's prison.[citation needed]
Auditors may issue debt compliance letters stating that they have reviewed the financial covenants of a loan agreement as part of auditing a company's financial statements, and that they are not aware of any matters suggesting that the company is not in compliance with the specific terms of that agreement.[1]
