[AMERICANDREAM]

Which of the following questions would an auditor most likely include on an internal control questionnaire for note payable?

Are direct borrowings on notes payable authorized by the board of directors

I got this correct thanks to the POE method, but I don’t understand why this needs to be included as a question from the auditor. Why is this question even important?

[MeanJoe]

I am not aware of the other possible answer choices but direct borrowings of notes payable are usually authorized by the board of directors so this is checking to see if the policy is being followed. If the internal controls in place are being followed as intended.

[I’mAGoingConcern]

Like said above, I'm not sure what the other answer choices were… but, IC questionnaires need a “Yes” or “No” answer. This is a simple one to answer with a Yes/No answer. Typically, if the answer choice said anything about ‘testing' that choice would be incorrect.

[MeanJoe]

This is most likely the question in full:

Which of the following questions would most likely be found on an auditor’s internal control questionnaire related to notes payable?
A) Are two or more signatures required on repayment of the notes?
B) Are the proceeds from borrowing used solely to acquire non-current assets?
C) Are the assets that serve as collateral on the debt reviewed monthly for possible impairment?
D) Are all note payable borrowings authorized by the board of directors?

[Author]

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