INTERNAL CONTROL QUESTIONNAIRE

GENERAL

Yes No Comments

Objectives: To insure the overall organizational structure and controls are conducive to accomplishing the objectives of the organization.

1. Does the organization have a statement of mission and objectives?

2. Is there a current organizational chart in use which reasonably fixes the responsibility of key personnel?

3. Is there a formalized policy and procedures manual?

4. Are there written job descriptions for each employee?

5. Is there a budgetary control system?

a. Is it being used properly?

6. Do reports:

a. Adequately focus on management information requirements?

b. Provide timely and complete information needed both internally and externally?
c. Highlight significant or unusual variations?

7. Do managers make periodic reviews of the reporting system to determine if it is meeting current needs?

8. Does a functional records management program exist?

9. Has an internal review function been established?

10. Are the internal review reports directed to an organization officer with sufficient responsibility to insure that adequate attention
is given to findings and recommendations?
 INTERNAL CONTROL QUESTIONNAIRE
MANAGEMENT REVIEW

Yes No Comments

Objectives: To determine existing or potential weaknesses in organizational and management controls and to determine the utilization of existing controls.

1. Are all major channels of communication utilized effectively?

2. Has fiscal authority been formally delegated to specific management personnel?

3. Has a system been established to insure that fiscal autonomy exists at all management levels?

4. Do policy and procedures manuals reference the following:

a. Applicable national and local regulations?

b. Bylaws and statutes of the governing board of the system?
c. Internal policies?

5. Do reports and summaries of operations provide essential and timely information necessary for managerial monitoring and
control?

6. Are employees periodically evaluated by managers?

7. Do managers and supervisors review the evaluations with their employees?

8. Are managers and supervisors required, as part of the evaluation process, to suggest measures to correct weaknesses or
inadequacies?

9. Are new management systems properly reviewed and approved by managers before implementation?

10. Are employee training programs adequate?

11. Do fiscal officers understand the importance of internal controls. Including division of responsibility?
 INTERNAL CONTROL QUESTIONNAIRE
CASH DISBURSEMENTS

Yes No Comments

Objectives: To ascertain that controls exist to insure that cash disbursements are properly authorized, supported by adequate documentation, and properly executed.

CASH DISBURSEMENTS

1. Is there adequate segregation of duties between the approval and payment functions as to:

a. Approval of documents for payment?

b. Check preparation?
c. Check signing?
d. Access to cash?
e. Access to accounting records?

2. Are all cash disbursements, except those from petty cash, made by check?

3. Are only printed pre-numbered checks used and properly controlled?

4. Are voided checks properly mutilated and held for inspection?

5. Are all checks protected against alteration?

6. Are all checks made payable to a specific payee?

7. Is the signing of checks in advance prohibited?

8. Are all disbursements properly authorized and supported by appropriate documentation?

9. Are all bank accounts and check signatures properly authorized?

10. Is there adequate review of supporting documentation before checks are signed?

11. Are there dollar limits on:

a. Single signature checks?

b. Signatures mechanically fixed?

12. Are the signers of checks bonded?

13. Do procedures provide for immediate bank notification when an authorized signer of checks changes duties or resigns?

14. Is the supply of blank checks adequately controlled?

15. If a mechanical check signer is used, are facsimile signature plates under proper control?

16. Is there a firm procedure establishing the conditions under which cash disbursements will be made?

17. Are all paid invoices or other authorized documents adequately cancelled so as to prevent their reuse?

18. Are vouchers prepared for all expenditures?

19. Is each bank account under separate ledger control?

20. Are bank accounts reconciled monthly by a person who is independent of the cash function?

21. Are bank statements delivered unopened directly to the reconciler?

22. Is the sequence of check numbers accounted for when reconciling the bank accounts?

23. Are endorsements on cancelled checks periodically examined, incidental to the reconciliation of the bank account?

24. Are paid checks scrutinized for suspicious and irregular features?

25. Do adequate procedures exist for the disposition of old outstanding checks?

PETTY CASH DISBURSEMENTS

1. Is the petty cash fund:

a. Properly authorized?
b. The responsibility of only one person?
c. Properly safeguarded?
d. Controlled by an imprest system?

2. Are petty cash vouchers:

a. Signed by the person receiving the cash?

b. Prepared in ink and required for each expenditure?
c. Supported by an invoice with the amounts spelled out?

3. Are the reimbursement vouchers approved by a responsible employee who has no direct access to cash?

4. Are the vouchers and attachments properly cancelled to preclude their reuse?

5. Is the fund verified by surprise counts?

6. Are IOU's unauthorized advances, and personal checks prohibited?

7. Are petty cash funds restricted to expenditures not exceeding a fixed amount?

8. Are reimbursements made payable to the fund custodian?

9. Is the custodian prohibited from handling more than one fund or other cash receipts?

10. Are petty cash fund balances adequate for the activity's needs?

TRAVEL DISBURSEMENTS

1. Is the authority for approval of travel requests established at all organizational levels?

2. Are all travelers familiar with the institution's travel regulations?

3. Does the fiscal officer or an appointed agent approve all travel vouchers?

4. Are travel vouchers independently reviewed for allowability and reasonableness?

5. Is the fiscal officer's travel voucher approved by his or her superior?

 INTERNAL CONTROL QUESTIONNAIRE
CASH RECEIPTS

Yes No Comments

Objectives: To ascertain that controls exist to insure that cash received is properly accounted for and deposited.

1. Are all cash receipts recorded through the use of pre-numbered receipts (or cash registers) by an individual designated to receive
cash?

2. Are cash register procedures in writing?

3. Do cash register procedures reflect proper daily check-out and documentation?

4. Does someone independent of cashiering and accounts receivable open mail?

5. Is there adequate separation of duties:

a. Between the cashiering function and the cash disbursements function?

b. Between the cashiering function and the accounts receivable function?

6. Is accountability and responsibility for checks and cash received through the mail established immediately on receipt and
maintained through deposit in the bank?

7. Are banks and institutional cashiers instructed not cash checks made payable to the company?

8. Are cashiers' daily cash reports subjected to supervisory review and approval?

9. Is a restrictive endorsement placed on incoming checks as soon as they are received?

10. Are instructions given to persons writing checks to make checks payable to the company?

11. Are receipts which are given to individuals who deposit cash with the cashier:

a. Prepared in multiple copies?

b. Identifiable to a specific cashier?
c. Dated?
d. Numerically controlled?

12. Are the duties of employees connected with the cash receipts function rotated periodically?

13. Is a record of cashiers overages and shortages:

a. Maintained?
b. Regularly reviewed?
c. Recorded on the books?

14. Are locked-in audit copies of receipts used where appropriate?

15. Is there daily posting of cash receipts to subsidiary accounts receivable records?

16. Are cashiers provided separate cash drawers to establish accountability and are these drawers locked during the cashier's
absence?

17. Do procedures prohibit the disbursement of cash from cash receipts prior to their deposit?

18. Are cash receipts deposited intact daily and without delay?

19. Are adequate physical facilities provided for safeguarding cash prior to deposit?

20. Are safe combinations and keys to cash boxes or files restricted to an essential number of employees?

21. Are safe combinations or locks to files changed periodically and at each personnel change?

22. Are bank deposits verified by means of a duplicate deposit slip or other means?

23. Are checks returned by the bank controlled and is follow-up maintained independently of the cash function?

24. Are the following cash register controls used:

a. Locked-in-totals?
b. Visible amount of sale?
c. Bell that signals sale and opening of cash drawer?
d. Receipt given to customer?
e. Over-or-under-ring vouchers signed by customer and supervisor?
f. Voided copies of receipts retained for audit purposes?

25. Are all persons who handle cash adequately bonded?

26. Are records of revenues such as rents, interest, dividend, etc., adequately controlled so that their non-receipt would be noted
and investigated?
 INTERNAL CONTROL QUESTIONNAIRE
PAYROLL

Objectives: To determine that the authorized records and procedures are so designed and operated as to provide adequate internal control.

Yes No Comments

1. Is there uniform application of payroll policies regarding the following items?

a. Time worked?
b. Time not worked (such as vacations, sick leave, and holidays)?
c. Job classifications and salary ranges?
d. Changes in rates of pay?
e. Application of employee benefits?

2. Is written approval required for the following areas:

a. Employees added to or deleted from the payroll?

b. Changes in rate of pay?
c. Payroll deductions?

3. Are files that support the above documentation in good order?

4. Is there adequate separation of duties in the preparation of payrolls?

5. Are payrolls approved by someone in authority?

6. Are the terms of union agreements as to wage rates, vacation pay, and similar items being complied with?

7. Are appropriate regulations being followed in regard to FICA, wages and hours, and national and local requirements concerning
employment?

8. Is there segregation of personnel and payroll functions?

9. Are complete personnel records maintained outside the payroll section?

10. Do procedures exist to insure that all employees are bona fide?

11. Are payroll subsidiary accounts reconciled with control accounts?

12. Do procedures exist to insure that employees do not receive more than the authorized salary payment?

13. Are the payroll checks distributed by someone other than the payroll department?

14. Are employees required to be identified or to produce some identification before receiving their paychecks?

15. Do procedures exist to properly control and dispose of old, outstanding payroll checks?

16. Are the duties of payroll office employees rotated, and are they required to take annual vacations?

17. Are vacation, sick leave and compensating time off properly documented and controlled?

18. Are payroll bank accounts maintained on an impress basis and reconciled by someone having no payroll duties?

19. Do reconciliation procedures include checking names on payroll checks against the payroll records and the examination of
endorsements on checks?

20. Are blank payroll checks adequately controlled?

21. Do procedures exist to prevent employees from receiving pay other than through properly approved and processed payroll
procedures for services performed (for example, consulting services)?
 INTERNAL CONTROL QUESTIONNAIRE
INVESTMENTS

Yes No Comments

Objectives: To determine that procedures are adequate to control and safeguard investments.

1. Is there a written investment policy?

2. Are changes in the type of investment in the investment portfolio approved in accordance with the investment policy?

3. Are investments purchased and sold only on proper authorization?

4. Are brokers' advices and other original papers evidencing purchase and sale of securities properly filed?

5. Is an independent safekeeping agent utilized?

6. Are all investment documents under the control of a responsible official as custodian?

7. Are all persons having access to investments adequately bonded?

8. Are investment documents registered in the name of the institution?

9. Are investment documents kept in a safe deposit box or vault?

10. Is a record maintained of all investments placed in or removed from the box or vault?

11. Are two or more signatures required for access to safety deposit boxes and are all signatures required to be reported? If so, is a
permanent log maintained reflecting each individual access?

12. Is more than one person required to be present during inspection of investments?

13. Is an accounting record maintained for each investment, including cost, description, and identifying number?

14. Are detailed records of investments maintained independently of the custodian(s)?

15. Are investments which have been approved for write-off properly authorized and recorded in a separate ledger and periodically
reviewed as to possibility of recoveries?

16. Is a record of investment income maintained?

17. Are accruals recorded as investment income is earned?

18. Is there proper segregation and accounting control of securities held for others as collateral, for safekeeping, or for other
purposes?

19. Are investments examined periodically by responsible officials and reconciled with the controlling accounts?

20. Do employees having no responsibility for custody of investments or record keeping:

a. Periodically inspect the investments?

b. Confirm those held by outsiders?
c. Reconcile documents to the records?
d. Verify recorded investment earnings to
determine the accuracy thereof?
e. Reconcile earnings with published financial records of payments?

21. Are purchased investments carried on the books at cost?

22. Are investments that are received as gifts recorded at fair market value (or appraised value) at date of gift?

23. If current market value (or fair value) is used to value investments, is this basis applied consistently for all investments in all
funds?
 INTERNAL CONTROL QUESTIONNAIRE
NOTES RECEIVABLE

Yes No Comments

Objectives: To ascertain that controls exist to insure that all secured amounts due the company are properly identified and recorded.

1. Is there a written policy governing notes receivable?

2. Are all notes, approved, prior to their acceptance, in accordance with written policy?

3. Are individual notes regularly reconciled with the control account balance(s)?

4. Are notes in the custody of persons having no access to accounting records?

5. Are partial payments adequately reflected in the subsidiary records?

6. Is there periodic confirmation of notes receivable balances?

7. Is a contingent liability record maintained for discounted notes receivable?

8. Are past-due notes promptly followed up?

9. Does the proper approval exist for the write-off of uncollectible notes in accordance with written policy?

10. Is proper control exercised subsequent to collection of notes charged off?

11. Is the custodian of the notes receivable denied access to:

a. Cash receipt and disbursement records?

b. Notes receivable records?
c. Initiation of write-offs?

12. Are notes receivable and related collateral kept under proper physical and accounting control?

13. Are renewals and modifications properly approved?

 INTERNAL CONTROL QUESTIONNAIRE
ACCOUNTS RECEIVABLE

Yes No Comments

Objectives: To ascertain that controls exist to insure that all unsecured amounts due the organization are properly identified and recorded.

1. Are credit and collection policies in writing and properly approved?

2. Are accounts receivable maintained independently of cash receipts and disbursement functions?

3. Are noncash credits, bad debt write-offs, credit memos and allowances:

a. Approved independently of processing, recording, and collecting the charge?

4. Is the total of the individual accounts independently reconciled at least monthly with the control account(s)?

5. Are accounts aged periodically?

a. Are aged accounts reviewed by a responsible official?

b. Are charge documents controlled and properly accounted for?

6. Are all valid receivables promptly recorded?

a. Examples are expenditures under cost reimbursement contract, freight damage, shortages, and returned merchandise.

7. Are all claims for such items as freight damage, shortages, and unsatisfactory merchandise:

a. Recorded on the books or otherwise controlled, as soon as the claims are prepared for filing?
b. Billed currently?

8. Do adequate procedures exist for follow-up and collection of delinquent accounts?

9. Are appropriate measures in force to insure prompt collection of employee and officers' accounts receivables?

10. Are there controls to insure that individuals with delinquent accounts are precluded from receiving additional credit?

11. Are accounts receivable balances independently confirmed on a periodic basis?

12. Are credit balances reviewed periodically?

13. Is there adequate control over the mailing of statements to prevent interception prior to mailing?

14. Are disputed liabilities handled by person(s) other than those receiving payment?
 INTERNAL CONTROL QUESTIONNAIRE
INVENTORIES

Yes No Comments

Objectives: To determine that adequate controls exist to insure that all inventories are properly reported, safeguarded, and accounted for.

1. Is there separation of duties between persons who handle the inventories and those handling:

a. Inventory records?
b. Sales billings?
c. Recording of purchases?

2. Are inventories under the physical control of designated individuals who are held responsible for quantities on hand?

3. Are receiving, issuing, accounting, and storing responsibilities properly separated?

4. Are materials released from the storeroom only on receipt of approved requisitions?

5. Is a central storeroom and receiving station maintained?

6. Are all incoming shipments, including returns by customers, handled by a central receiving department?

7. Are purchases made by requisition/purchase order only?

8. Are the storerooms or storage areas properly safeguarded or controlled to prevent access to materials by unauthorized persons?

9. Is a record kept on keys to storerooms, storage areas, etc.?

a. Is this record checked periodically?

10. Has adequate protection against spoilage and pilferage been provided for, with special care being given to sensitive items?

11. Are pre-numbered receiving reports used and copies thereof forwarded to the accounting department?

12. Are issuing and billing procedures designed and correlated so as to insure the billing of all items?

13. When inventories are to be taken, are adequate written procedures prepared?

14. Is there proper cutoff of inventory receipts and issues during inventory counts?

15. After the inventory is counted, are the count tags, sheets, etc., properly controlled?

16. Are inventory counts verified by persons independent of those in charge of the inventory records?

17. Are responsible officials advised of significant inventory discrepancies?

18. Are perpetual records adjusted for discrepancies?

19. Are obsolete, damaged, and slow-moving items reported to a responsible person?

20. Are scrap material inventories properly controlled?

21. Are goods that are consigned in and out accounted for properly?

22. Is there physical segregation and proper accounting control of merchandise on hand that is not the property of the institution?

23. Is adequate insurance coverage provided?

Apply Only to Perpetual Inventory Systems

24. Are surprise physical inventory counts made by persons not responsible for the inventory?

25. Are perpetual inventory records:

a. Maintained?
b. Verified by physical count at least once every twelve months?
c. Reconciled to control ledgers?

26. Are stock records updated daily?

27. Are the postings to the stock records made promptly from the following items:

a. Pre-numbered, signed receiving reports?

b. Issue requisitions?

28. Are additions to stock records referenced to insure easy verification of the records?

29. Are maximum and minimum quantities recorded on the stock records to insure against over or under stocking?

30. Are inventories taken without prior reference to quantities on perpetual records?

31. Are discrepancies between physical counts and perpetual records investigated and reconciled while counts are in progress?

32. Do adjustments of the perpetual inventory records require approval of responsible officials?

33. Are returnable containers:

a. Properly accounted for?

b. Properly safeguarded?
c. Properly inventoried?
d. Returned promptly to eliminate or reduce demurrage charges?
 INTERNAL CONTROL QUESTIONNAIRE
PURCHASES

Yes No Comments

Objectives: To ascertain that procedures exist to insure that acquisition of goods and services is properly controlled, accounted for, and in compliance with the company's purchasing
regulations.

1. Are all purchases, other than those from petty cash, made on properly approved orders?

a. Does the purchasing agent have sole authority to obligate funds for purchases?
b. If not, have delegations of authority been specifically approved by the appropriate governing board?
c. Are confirming (after the fact) purchase orders properly used and controlled?

2. Is there adequate separation of duties in connection with the following functions?

a. Controlling blank purchase orders?

b. Placing orders with vendors (including preparation of purchase order)?
c. Receiving?
d. Approving vouchers for payment?
e. Processing approved vouchers?
f. Disbursing?

3. Are purchasing policies defined by written procedures?

4. Are the purchasing policies in accordance with applicable statutes, contract specifications, and institutional policies?

5. Do policies provide for the assignment of responsibility for final purchasing decisions at the appropriate level?

6. Are all purchase orders:

a. Pre-numbered?
b. Accounted for?

7. In regard to leasing, do procedures insure compliance with the following categories:

a. Statutory purchasing regulations?

b. Institutional rules and regulations?

8. Is a system of competitive bidding used?

9. Is there a designated centralized receiving area for all incoming goods?

10. Are receiving reports:

a. Prepared on pre-numbered forms?

b. Compared in detail with purchase orders and vouchers (or invoices)?

11. Are there written procedures for appraisal of vendor performance?

12. Is there a policy statement with regard to conflicts of interest, including employee-vendor relationship?

13. Are blanket orders and long-term contracts under adequate control?
 INTERNAL CONTROL QUESTIONNAIRE
LAND, BUILDINGS, AND OTHER IMPROVEMENTS

Yes No Comments

Objectives: To determine that controls are in effect to insure that the ownership of land, buildings, and other improvements is in order and that the carrying value is appropriately
recorded in the records; that the method of acquisition complies with appropriate regulations of the institution and has the necessary approval of the proper governing body.

1. Are deeds and titles:

a. Properly prepared?
b. Legally recorded?
c. Properly safeguarded?

2. Are additions to fixed assets properly authorized and approved by the governing board?

3. Is title insurance:

a. Carried?
b. Policy value equal to the purchase price?

4. Are requests for purchase of fixed assets supported by requisition or other justification that shows:

a. Probable cost?
b. Description of addition?
c. Accounts to be charged?
d. Reason for the addition?

5. Does the governing board have control over capital budgets and changes therein?

6. Are actual expenditures later compared with the authorized estimates?

7. Are fixed assets carried in the accounting records at cost or, for assets acquired by gift, at fair market value at the date of gift? (If
not indicate basis of valuation.)

8. Are plant ledgers:

a. Maintained?
b. Reviewed periodically?
c. Balanced regularly to the control accounts?
d. Periodically checked by actual physical inventory?
e. Used to reflect pledges as collateral?

9. Is written approval required for all items removed from the plant ledger?

10. If detailed property records are not maintained, is it possible to determine by other means what property is in service?

11. Is a work order system used for major repair jobs?

12. Are regular employees used for construction of fixed assets for institutional use? If so, are the costs properly recorded and
controlled through:

a. Payroll records?
b. Disbursement records?

13. Are all costs of constructed fixed assets accumulated by work order or contract?

14. Are interim construction costs initially charged to construction in progress and distributed to permanent asset accounts on
project completion?

15. Are there formal recording procedures for gifts of fixed assets?

16. Does a policy exist for the normal inspection and maintenance of fixed assets?

17. Does a policy exist for the normal inspection and maintenance of fixed assets?

18. Is the property adequately covered by insurance?

19. Are idle plant facilities:

a. Properly identified?
b. Is depreciation fully funded?
c. Adequately secured?

20. Is there proper accounting treatment for recording of sales proceeds?

21. Is there a policy for differentiating between items to be capitalized and those to be expensed?
 INTERNAL CONTROL QUESTIONNAIRE
EQUIPMENT

Yes No Comments

Objectives: To determine that adequate controls exist for all phases of the equipment management function, particularly authorization, acquisition, record keeping, disposal, and
review.

1. Are capital expenditures authorized by appropriate officials?

2. Are equipment acquisitions originated by approved requisitions that show:

a. Item description?
b. Estimated cost?
c. Justification?
d. Accounts to be charged?

3. Does the sale, transfer, scrapping or dismantling of equipment require written approval?

4. Does the accounting department receive a copy of each authorization for equipment transactions?

5. Are all equipment additions controlled by a budget?

a. Do variations between budget and actual costs require approval of appropriate officials?

6. Is all equipment recorded at cost or fair market value at time of acquisition?

7. Is there a policy for differentiating between expenditures to be capitalized and those to be expensed?

8. Is identifying information:

a. Promptly placed on the equipment?

b. Difficult to remove?
c. Removed from equipment prior to disposal?

9. Are detailed subsidiary records of equipment maintained?

10. Are detailed records regularly reconciled to the general ledger by fund?

11. Are the detailed accounts for equipment promptly adjusted when equipment is disposed of or transferred?

12. Do written policies exist to enforce restrictions placed on property in the custody or under the control of, but now owned by
the company?

13. Are adequate records maintained of property under the control or custody of, but not owned by, the institution?

14. Are releases from accountability properly handled for transfers of equipment?

15. Are there adequate procedures for the receiving and recording of gifts of equipment?

16. Is a physical inventory taken periodically and at least annually?

17. Are small tools properly safeguarded and kept in specific locations?

18. Does a written policy exist for the normal inspection and maintenance of equipment?

19. Do written procedures exist for safeguarding equipment against improper or unauthorized use?

20. Is equipment periodically reviewed for the purpose of determining adequate insurance coverage?

21. Are inventories tested periodically by an official having no responsibility for the inventory?

22. Does a procedure exist for identifying and disposing of unused equipment?
 INTERNAL CONTROL QUESTIONNAIRE
NOTES PAYABLE : SHORT-TERM

Yes No Comments

Objectives: To ascertain that controls exist to insure that all indebtedness secured by notes or mortgages are valid claims and are properly identified and recorded.

1. Does the governing board authorize borrowing on notes?

2. Does the governing board authorize the mortgage of property?

3. Do the records of the board specify the types of institutions from which money may be borrowed?

4. Do the records of the board designate the officers authorized to sign notes?

5. Are note transactions controlled (that is, two signatures on notes) to prevent unauthorized borrowings?

6. Are notes payable recorded in a note register or other organized record which shows:

a. Amount of the note?

b. Maturity date?
c. Interest dates?
d. Interest payments?
e. Principal payments?

7. Is there separation of duties between persons maintaining the note register and those authorized to sign notes or checks?

8. Are proper records maintained for collateral pledged as loan security?

9. Are detailed note records regularly reconciled with the control account?

10. Are preprinted but unissued notes properly safeguarded?

11. Are paid notes properly cancelled and retained?

12. Are restrictions in the note agreements observed?

 INTERNAL CONTROL QUESTIONNAIRE
ACCOUNTS PAYABLE, ACCRUED LIABILITIES AND OTHER LIABILITIES

Yes No Comments

Objectives: To ascertain that controls exist to insure that all current unsecured liabilities are properly identified and recorded.

1. Are the liability control accounts reconciled at frequent intervals (at least monthly) with subsidiary records?

2. Are bid deposits and similar receipts properly recorded and recognized as liabilities when received?

3. Are accounts payable maintained independently of cash receipts and disbursement functions?

4. Is there a system for comparing the invoice, purchase order, and receiving report prior to entry of the account payable in the
accounting record?

5. Are accounts payable adjustments properly:

a. Reviewed?
b. Approved?

6. Are year-end cutoff procedures adequate to insure inclusion of all items purchased during the period?

7. Does a policy exist that requires payments to vendors be made within the discount period in order to take advantage of all
offered discounts?

8. Are lost discounts properly recognized in the accounting system?

9. Do procedures exist to prevent duplicate payments?

10. Are procedures adequate to avoid duplication of payments for transportation charges?

11. Are returned purchases controlled in a manner which assures proper credit?

12. Do procedures preclude payment for damaged or spoiled goods?

13. Are debit balances in accounts payable reviewed?

 INTERNAL CONTROL QUESTIONNAIRE
LONG-TERM LIABILITIES

Yes No Comments

Objectives: To ascertain that controls exist to insure that all bonded indebtedness is properly identified and recorded.

1. Are borrowing of funds and repurchases/returnables of long-term liabilities properly authorized?

2. Is there an independent transfer agent for registered bonds?

3. Is there an independent registrar for registered bonds?

4. If there is no independent transfer agent or registrar:

a. Are unsigned bonds properly controlled?

b. Are bonds and other obligations signed prior to issuance?
c. Are cancelled obligations properly mutilated or otherwise destroyed?

5. Are at least two signatures necessary to validate an instrument for long-term borrowing?

6. Is an interest-paying agent utilized?

7. If an independent interest-paying agent is not utilized, is the control over coupons or interest checks adequate?

8. Are unclaimed interest amounts adequately controlled and properly handled?

9. Are interest accruals made and verified?

10. Are there any special funding requirements or debt restrictions in effect?

a. If so, is a bond compliance checklist used?

b. Are the bond trustee's billings reviewed and monitored?

11. Is there board approval of the agreement with the trustee?

12. Was it determined by legal counsel that the debt issuance was in accordance with applicable laws and regulations?