Internal Control Questionnaires and Verification Procedures

Disbursements

1. Are disbursements:

   1. Advanced on a prearranged disbursement plan?

   2. Made only after reviewing written inspection reports?

   3. Subject to advance, written authorization by the:

      • Contractor?

      • Borrower?

      • Inspector?

      • Lending officer?

   4. Reviewed by a bank employee who had no part in granting the loan?

   5. Compared to original cost estimates?

   6. Checked against previous disbursements?

   7. Made directly to subcontractors?

   8. Supported by receipted bills describing the work performed and the materials furnished?

2. Does the bank obtain waivers of subcontractors’ and materialmen’s liens as work is completed and disbursements made?

3. Are periodic reviews made of undisbursed loan proceeds to determine their adequacy to complete the projects?

4. Does the bank confirm that a certificate of occupancy has been obtained before final disbursement?

5. Does the bank obtain sworn and notarized releases of mechanics’ liens at the time construction is completed and before final disbursement?

6. Are independent proofs made at least monthly of undisbursed loan proceeds and contingency or escrow accounts? Are statements on such accounts regularly mailed to customers?

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