Vouching and voucherMEANING OF VOUCHING

The act of establishing the accuracy and authenticity of

entries in the account books is called vouching. Testing the

truth of items appearing in the books of original entry is

vouching. According to Ronald A. Irish of Australia defines

: vouching is technical term which refers to the

examination by the auditor of documentary evidence

supporting and substantiating a transaction. It is consider

to be the essence of auditing and therefore the auditor

should be careful while vouching. Finally, vouching means

not only the documentary evidence but also to see that the

transaction has been properly authorized, recorded and

entered in the books of account

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Voucher

• A voucher is a documentary evidence in support of

the transaction in the books of account. It may be

receipt , counterfoils of a receipt book , an

agreement , resolution passed by the board of

director or shareholder and as record in the

minute books , an invoice bank paying –in slip,

bought note , sold note , correspondence, gate

keeper, wages book, order book etc.

Following point must be borne in mind while examining voucher

• 1 : All the voucher are consecutively numbered and filed in order of the entries in the accounts. If the client has not done ,so the auditor has a right to ask him to do so.

• 2 : He should pay attention to the dates , which must corresponded with the cash book, name of the party to whom the voucher is issued with amount.

• 3 : The voucher inspected should be cancelled by a stamp if it is produced again.

• 4 : He should see that every voucher is passed as in order by a responsible officer . The signature of the officer should be noted .

• 5:He should also note , whether the voucher is stamped , if the amount of the voucher is above maximum limit.

Continue• 6 : He should also find out the nature of payment as to

whether it is relate to the business.

• 7Special attention should be given to those voucher which are in the personal name of one of the partners, directors, manager or secretary.

• 8 : He should see as to which account the payment is posted-revenue or capital.

• 9 : Attention should be paid to the amount both in words and figures .If they differ,the matter should be investigated

• 10: Note should be made of any item which requires further elucidation or information which is available from partnership deed.

• 11:Receipted invoice should not be accepted as a voucher, it is danger for twice.

• 12. If duplicate voucher for a missing one is produced, it should be properly scrutinized. Q-no 14

INTERNAL CHECK AS REGARD CASH• Before the auditor starts the vouching of the cash book,

he should enquire about the system of internal check in

operation. There are lot chances of misappropriation of

cash if there is no well organized system of inter check.

The following system of internal check as regard receipt

and payment of cash is suggested:

• When cash is received, it should be acknowledged by a printed receipt which should have a counterfoil or a carbon receipt. Cashier should not sign receipts and counterfoils. The receipts should be consecutively numbered. The unused receipt book should be kept under lock and key. Spoiled receipts should be cancelled and must not be detached from the counterfoils. No blank counterfoils should be accepted

continue Remittances should be opened by the cashier in the

presence of a responsible officer who should not be connected with the cashier’s office. cheques received should be crossed, Not negotiable-A/C payee only.

As soon as cash is received, it should be entered in a

rough cash book or diary.

ash registers are very useful for checking receipts.

All the receipts of the day should be deposited in the bank at the end of the day or the next day.

Bank reconciliation statement should be prepared frequently by the cashier and also by someone else.

The cashier should not have any control over the lenders.

Petty cash should be organized under the impress system.

Objectives of cash book audit

The main objects of the audit of the cash book may be summarized thus:

1. To ensure that all receipts are accounted for;

2. To ensure that no fraudulent payments have been made;

3. To know that all receipts and payments have been properly recorded; and

4. To verify the cash in hand and at bank

Continue…

Castings of cash book should be independently checked.

Internal control over the preparation of wages sheets to prevent fraud and manipulation should be exercised.

All payment as far as possible, except for petty cash, should be made by cheques.

The method of recording the cash sales has been dealt with below in detail. This is should be so organized that chances of misappropriation are reduced to a minimum.

Cashier should not sanction the payments of special nature. Directors should do so. Question -15

Internal check as regard credit purchases:

The system of internal check will depend upon the size of

the business and the staff available. Whenever goods are

required in a particular department, its head should send to

the purchasing department the “Purchase Requisition”

which should show the quality, quantity, if possible the

price or the maximum price at which they may be

purchased, the time by which the goods must be supplied.

1. All the orders sent out should be recorded in the purchase

order book which should have carbon copies-one to be

sent to the supplier and the other to be retained for

reference purposes.

Another point:

2. when the goods are received, the gate-keeper or the store-keeper should make an entry in the goods inward book.

3. the invoice should be checked with the goods inward book maintained by the store-keeper to see that the goods are correctly recorded in the store-register according to the invoice.

4. A clerk should check the invoice regarding calculations.

5.Invoice should be sent to the head of the dept. who placed the order for goods to see whether the prices and qualities are correctly recorded in the invoice.

Continuing…

6. The departmental head will now pass on the invoice to the clerk who will record the same in the purchases book.

7.Every person who has to deal with the invoice and the goods should initial the invoice.

8. Goods inward book should be compared with the purchases book.

9. He should see that the name of the creditor is the same as has been entered in the “Particulars” column of the purchases book. Question 24, 27**

Internal check regarding credit sales

sales are two types cash sales credit sales.whenever an order is received , it should be recorded

in the order received book and such things should be written , the date of order , the name of customer ,the name of goods and the date of delivery , mode of transport etc.A copy of it is sent to despatch department.When the despatch department has packed the goods,

another clerk should compare goods with ordering goods which is sent to counting house .A responsible official mark at this stage at which rate

the goods are to be charged

Continue The invoice will be made in duplicate or triplicate by

means of carbon papers.

One copy of invoice will be sent to invoice clerk to keep sales book and later it is sent to customer , another copy will be sent to gatekeeper to record goods outward book and 3rd copy will be retained for further reference.

If orders are received through travelers , they should be given order books with triplicate copies, one copy has to be handed over to customer, 2nd copy has to be sent head office and 3rd copy is to be retained by traveler for his record. Question 25

Loophole to make fraud regarding wage

The chances of fraud or errors are:

a) The inclusion of fictitious name of dummy workers in the wage book;

b) Errors or fraud in time and piece-work records;

c) Possibility of clerical errors;

d) The name of the employees who have resigned or dispensed, may have been included in wages sheets;

e) Over stating of wage rate; Understatement of deduction

f) Conversion of unpaid wages;

g) Over footing of pay roll sheets; page -85

Auditor’s duty as regard wages

• He should see whether the internal check system is satisfactory and there is no loophole for any fraud.

• He should check the casts of the wages sheets.

• He should check the calculation here and there.

• He should check the amount with cheque drawn.

• To identify the dummy worker he should check the job card, foreman and gate-keeper’s register.

• He may pay a surprise visit on the day of payment of wages and check the identity card.

• Wages sheet should compare with previous sheet.

• Number of worker should compare with Insu card&PF

• Test check the signatures and thumb with previous m.