Internal Control Questionnaires and Verification Procedures

Other

1. Are periodic property inventory reports prepared by the lessee or trustee?

2. Do reports clearly indicate the condition and location of the leased property?

3. When inspection of the equipment leased is either infrequent or not feasible, has the bank taken measures to protect its equipment and prevent its misuse?

4. At lease termination, are outside appraisals made of property before bids are accepted?

5. Are review procedures in effect to maintain the necessary insurance coverage on all leased assets, regardless of whether the cost of such insurance is to be borne by the bank or the lessee?

6. Does the bank have insurance coverage against its potential public liability risk as owner/lessor of the property?

7. Are safeguards in effect to prevent the possibility of conflict of interest or self-dealing in selecting the seller, servicer, insurer, or purchaser for the equipment leased?

8. Are separate files maintained for each lease transaction?

9. Does each file supporting the acquisition and disposal of assets reflect the review and written approval of an officer other than the person who actually controlled the disbursement and receipt of funds?

10. Are all leases required to be supported by current credit information?

11. Do modifications of terms require the approval of the board or lease committee that initially approved the lease?

12. If commitments are issued contingent upon receipt of certain satisfactory information, has authority to reject or accept such information been vested in someone other than the account officer?

13. Is residual value substantiated by periodic appraisals?

14. Are reports listing leases past due and/or receiving special attention submitted to the board for review at their regular meetings?

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