Question

2) Discuss the three key controls over notes payable (state the related assertions).

Answer 1

The key controls over notes payable are as follows -

1) Proper authorization for the issue of new notes (High-level management, and two signatures on loan agreements)
2) Adequate controls over the repayment of principal and interest(accounting department should be responsible for timely mangement of payables)
3) Proper documents and records (relevant documentation should be there)
4) Periodic independent verification from auditors(may be internal or external)