In Debt Compliance’s  2012 survey, done in collaboration with the Association of Finance Professionals, showed that fully 50% of over 400 corporate respondents did not have a corporate policy on debt compliance. Lacking a policy can have these consequences:

• No debt compliance objectives, no assignment of responsibilities, and no documentation of compliance
• Low cooperation outside of treasury in ascertaining compliance
• No covenant checklist or a focus on only the 10‐15 financial ratios, permitted basket limits, and quarterly deliverables, ignoring the 60‐80 other covenants that can exist in BB and B‐rated agreement s
• No standard interpretation of the covenants, leading to wasted time each quarter re‐ interpreting them, which risks divergent and incomplete interpretations and unnecessary legal bills
• With the inevitable turnover, the learning curve for new staff is steep, risking inexperienced and superficial reviews.

The US based Debt Compliance Group have developed a standardised process for developing a comprehensive Corporate Debt Compliance Policy which covers:

• the policy objectives needed
• covenant compliance process including a covenant checklist, compliance determination, financial covenant ration analysis, permitted baskets report, the reports required
• the responsibilities of the CFO, corporate treasurer, etc.

Worth a read.