Page 173 - DCOM204_AUDITING_THEORY

Unit 9: Vouching

Discuss substantial procedures involved in vouching; Notes
State procedure for vouching of cash transactions;
Discuss procedure for vouching of trading transactions.

Introduction

Vouching means to test the truth of items appearing in the books of original entry. It is an
important part of an auditor’s duty to certify as correct the transactions recorded in the looks of
accounts. The Accountant of a business is responsible for passing entries in the books of prime
entry. The question arises how and on what basis such entries have been passed. The auditor’s
primary duty is to check these entries and only then certify the accounts as correct and free from
any error or fraud.

9.1 Vouching

Some of the important definitions by well known authors are giving below:
According to Lawrence Dicksee had defined “vouching as an act of comparing entries in the books of
accounts with documentary evidence in support thereof”.

According to Ronald A. Irish has defined “vouching as a technical term which refers to the inspection
by the auditor of documentary evidence supporting and substantiating a transaction”.
According to F R M De Paula, “Vouching does not mean merely the inspection of receipts with the cash
book, but includes the examination of the transactions of a business together with documentary and other
evidence of sufficient validity to satisfy an auditor that such transactions are in order, have been properly
authorized and are correctly recorded in the books”.
According to Arthur W Holmes, “Vouching is the examination of the underlying evidence which is in
support of the accuracy of the transaction. The process of vouching is intended to substantiate an entry by
providing authority, ownership, existence and accuracy”.
From the above definitions we can conclude that vouching is a method of examination to not
only substantiates an entry in the books of account with documentary evidences, but also to see
that these evidences are adequate, reliable and really connected with the business. For this, the
auditor should go beyond the books of account i.e. he should go to the very source of the
transaction to see that it is related to the business and is properly authorized.

Notes Vouching is a method of examination to not only substantiates an entry in the
books of account with documentary evidences, but also to see that these evidences are
adequate, reliable and really connected with the business.

9.1.1 Objectives of Vouching

The main objectives of vouching are:
1. To examine the accounting entries recorded in the books of accounts with reference to
documentary evidence known as vouchers.

2. To examine the authenticity of the transactions recorded in the books of account.
3. To examine the adequacy and reliability of documentary evidence.

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