Question

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

Does the company have a system for detecting unauthorized note issuances?
Is there a process for timely payment of interest on notes?
Is the company's policy for note issuance frequently revised to reflect market changes?
Are the notes signed only by high-ranking executives of the company?

Answer 1

An auditor would most likely include a question about the process for timely payment of interest on notes in an internal control questionnaire for notes payable.

Step-by-step explanation:

In an internal control questionnaire for notes payable, an auditor would most likely include the following question: Is there a process for timely payment of interest on notes? This question focuses on the company's ability to meet its financial obligations by ensuring that interest on notes is paid on time. It helps the auditor assess the effectiveness of the company's internal controls related to the timely payment of interest.

Although the other questions relate to notes payable, they may not directly address internal control procedures. The question about detecting unauthorized note issuances may fall under the internal control questionnaire for general cash disbursements. The question about the revision of note issuance policies may be relevant for assessing the company's risk management practices, but it may not specifically pertain to internal control over notes payable.