When performing analytical procedures for notes payable, if actual interest expense is materially larger than the auditor's expectation, one possible cause would be interest payments on unrecorded notes payable.

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If interest expense is larger than expected, it could indicate the presence of unrecorded liabilities, such as interest payments on unrecorded notes payable. This is one of the possible explanations for the deviation between the auditor's expectation and the actual expense. However, there could be other reasons as well, such as errors in the calculation or recording of interest, changes in the interest rate, or other factors. It is the auditor's responsibility to investigate and determine the cause of the deviation to assess the impact on the financial statements and the audit opinion.

When Performing Analytical Procedures for Notes Payable, If Actual Interest