Some liabilities and assets are purposely kept away by companies from appearing on the balance sheet, such liabilities are known as off-balance sheet items. The reason for this is that such companies want to lower their debt-to-equity and leverage ratios so as to enable them to borrow easily and prevent a breach of covenants. It is legal if the accounting laws are followed but becomes illegal if the purpose is to hide some assets or liabilities in order to deceive regulators and investors.