Page 187 - DCOM204_AUDITING_THEORY

Unit 9: Vouching

the authenticity of the transactions recorded in the books of account; to examine the Notes
adequacy and reliability of documentary evidence.
Principles of Vouching include: Arranged Voucher; Checking of Date; Checking of
Authority; in case of cutting or change there should be no changes in the vouchers. So,
these changes cannot be acceptable till the approval authority has made the signature;
Compare the Words and Figures; Transaction Must Relate to Business; the auditor should
not accept the voucher in personal name; Checking of Account; The stamps are required
according to the valuation of the amount or cash memo. There is no need of vouchers if
amount is less than twenty rupees; the auditor should not accept the cancelled vouchers;
for finding the correct decision, the auditor can also take help from the working papers of
the previous year; Minutes Book; By Laws; Agreements; Deed of Mortgage.

Before the auditor starts the vouching of the cash book, he should enquire about the
system of internal check in operation.
After satisfying himself that there is a good internal check system regarding the receipts
and payments of cash, the audit clerk should now proceed to vouch the debit side of the
cashbook

Under vouching for trading transaction one of the objects of auditing is to check and
prevent misappropriation of goods. The auditor should see that the client pays for only
those goods which have actually been ordered and received.

Whenever goods are required in a particular department, the head of such a department
should send the ‘Purchase Requisition’ which should show the quantity, quality, if possible
the price of the maximum price at which they may be purchased, the time by which the
goods must be supplied, etc., to the Purchase department which should invite tenders or
quotations from suppliers.

After having satisfied himself that there is a good internal check system regarding the
purchase, the auditor should now proceed to vouch the Purchase Book.

The auditor should not pass any entry in the journal until he is quite satisfied with regard
to its validity and correctness.

The auditors should apply a few test checks and if he finds that there is no mistake, he may
presume that everything is all right.

9.5 Keywords

Bought Ledger: Ledger which contains the creditor’s accounts.
Sales Ledger: the ledger which contains the accounts of the debtors.

Voucher is a piece of paper or a document that confirms the truth of a happening in the field of
accountancy; it confirms either the payment or receipt of money.
Vouching: The exercise of establishing and verifying the accuracy and authenticity of the
accounting entries passed in the book of account with reliable evidences are technically called
‘vouching’. It means vouching is the testing the truth of all the entries made in the book of
accounts.

9.6 Review Questions

1. Define vouching. Explain objectives and need of vouching in Audit.
2. What are the various principles of vouching?

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