Items 1 through 6 are questions typically found in a standard internal control questionnaire used by auditors to obtain an understanding of internal control structure for notes payable. In using the questionnaire for a particular client, a "yes" response indicates a possible internal control, whereas a "no" indicates a potential weakness.

1. Are liabilities for notes payable incurred only after written authorization by a proper company official?

2. Is a notes payable master file maintained?

3. Is the individual who maintains the notes payable master file someone other than the person who approves the issue of new notes or handles cash?

4. Are paid notes cancelled and retained in the company files?

5. Is a periodic reconciliation made of the notes payable master file with the actual notes outstanding by an individual who does not maintain the master file?

6. Are interest expense and accrued interest recomputed periodically by an individual who does not record interest transactions?