By Radhika

Visiting Faculty

J.H.Bhalodia College

Unit : 5 - Vouching

Introduction

Routine checking is one of the primary function of an

auditor.

Another important function of an audit is Vouching.

It is the backbone of auditing.

The transactions recorded in the books of a/c are to be

compared with the supporting evidences and also to

check properly authenticated and approved.

Transactions will be vouch by its type eg. Cash, credit

purchase, credit sales.

Cont.

Such credit transactions will be vouch by taking

the copies of invoices issued to the customers is

taken as a supporting documents.

Mere checking and verification is not enough.

It is equally important that the cash memos and

invoices are properly authorized.

Hence the responsible person should sign such

vouchers .

Thus, vouching is very important, because by

vouching the correctness and authenticity of

transactions are established.

Definition

“By vouching is meant the verification of the authority and

authenticity of transactions as recorded in the books of

accounts.” - B.B Bose

“Vouching consists of comparing entries in the books of account

with documentary evidence in support thereof.”

- Dicksee

“Vouching is a technical term, which refers to the inspection of

documentary evidence supporting and substantiating a

transaction.” -Ronald A. Irish

Meaning

Vouching is a process. While the documentary

evidence used for the purpose of vouching is a

‘Voucher’. Thus ‘vouchers are the documentary or

other evidences in support of transactions entered in

the books of accounts.

The process of comparing or tallying the entries

papering in the books of accounts, with supporting

evidence like cash memos, receipts and other

documents and correspondence is known as vouching.

Types of Voucher

1.Primary voucher

2.Secondary or Collateral Voucher

Characteristics

1. Examination of entries

- by documentary

- by other evidence eg. Vouchers, receipts, counterfoils of check book and pay-in-slips, minute books, correspondence

2. Such documentary supports and substantiate a transaction.

3. Ensures correctness and

4. Important aspect of Auditing

5. Preliminary work of auditing

Objects

To see that all transactions are correctly recorded

To see that all transactions recorded are supported by the

documentary evidence

To ascertain with the help of evidence that all transactions are

properly authenticated.

To see that necessary vouchers relating to entries recorded in

books are with the client.

Thus, the purpose of vouching is not merely to verify that

the payments have been made, but to verify further that the

payment relates to the payments have been made, but to verify

that the payment relates to the business and is approved by

proper authority.

Importance

1. Reliable Examination

2. Examination of Original Evidences

3. Detection of errors at Initial Stage

4. Keeps the Auditor alert

Points to be

included

1. Serial No.

2. Date

3. Name

4. Address

5. Amount

6. Particulars

7. Approval and signature

8. Revenue stamp

9. Continuous vouching

10. Cancelling the voucher

11. Period

12. Entry in the books of a/c

13. List of missing vouchers

Vouching of

Cash transactions

Cash book is the most important of the books of

a/c for any business. The receipts and payments are

recorded in cash book. The cash balance on any day

can be known from cash book. The entries for receipts

and payments of cash are checked with reference to

various supporting documentary evidences.

Objects

To ascertain that all the expenses and receipts are

shown under the correct book

To ascertain that all the expenses and receipts

are shown under the correct heads

To ensure there is no unauthorized or fraudulent

payments are made

To verify that the closing cash bank balance are

correctly struck.

Vouching the

Receipt side of

Cash book

Vouchers

1. Opening Balance cash book of pre. yr

2. Cash Sales copies of cash memos

3. Cash Received from debtors receipts, bank pass book

4. Proceeds of Bills Receivable B/R book, pass book

5. Income for Interest and Dividend receipts, Counterfoils

6. Sale of Investments sale deed, receipt

7. Commission Received agreement,sale statement

8. Rent received Rent agreement,receipt

9. Proceeds from sale of scraped machinery plant register

10. Proceeds from sale of Fixed Assets receipt, tender

Cont.

11. Subscription received register of members

12. Insurance Claim insurance policy

13. Recovery of claims claim register,cash book

14. Receipts from sale hire purchase hire-purchase agreement

15. Royalty received contract of lease

16. Income of minimum rent lease agreement

17. IT refund return of income, app.

18. Dividend from Receiver receipt, passbook

19. Share Capital sh. App. & allotment book, board’s resoltution

20. Debenture cash book, deb. App., board’s resolution

21. Issue of Right Shares cash book, AoA letter of offer

Vouching of

the payment side of

Cash Booki. Payments relate to the busi. Only

ii. The payment should relate to the year for which the a/c are

being audited

iii. All payments are properly approved and authenticated by

responsible officer

iv. Payments are correctly accounted for in the books of a/c

v. No payment should be left unrecorded

vi. Amount paid should be correct

vii. All payments supported by proper voucher

viii.Payment should be made to proper person

ix. Particulars should be tally with the books

x. The legality of payment should be verified

Vouching of

Subsidiary Books

1. Purchase book

2. Purchase return book

3. Sales book

4. Sales return book

5. Bills receivable book

6. Bills payable book

7. Journal proper

Journal proper

The transactions which are not recorded in the other subsidiary

books are entered in the Journal proper. The auditor should vouch

these transactions in the same manner as he does in case of cash

book transactions. He should see that each entry is supported by

supporting voucher.

a) Opening entries

b) Closing entries

c) Rectifying entries

d) Adjusting entries

e) Bad debts

f) Provision for bad debts and doubtful debts

g) Depreciation

Vouching

of Ledgers

Ledgers

Personal Ledgers

Purchase/Credito

rs Ledgers

Sales/ Debtors Ledgers

Impersonal Ledgers

Real a/cNominal

a/c