Internal Control Questionnaires and Verification Procedures

Collateral

1. Does the bank record, on a timely basis, a first lien on the assigned receivables for each borrower?

2. Do all loans granted on the security of the receivables also have an assignment of the inventory?

3. Does the bank verify the borrower’s accounts receivable or require independent verification on a periodic basis?

4. Does the bank require the borrower to provide aged accounts receivable schedules on a periodic basis?

5. If applicable, are cash receipts and invoices block proved in the mailroom and subsequently traced to posting on daily transaction records?

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