What is voucher and vouching in audit, describe routine checking and its objects
Voucher
‘Voucher’ is the original documentary evidence in support of any payment or receipt of money by the business. It would be with the help of the voucher that the accuracy of entry can be checked. Voucher alone can tell us about the nature and sources of the transaction, its value and authority. It substantiates the book entries and confirms their reality. Such evidence may be primary and collateral. Certain Vouchers provide primary evidence while others constitute collateral evidence.
The following may be a few of the examples of vouchers for certain transactions:
1) Cash Received – Counterfoils of Receipts issued, Contracts, Minutes, Correspondence, Confirmation of balances by Debtors etc,
2) Cash Paid – Original receipts from Payees, Invoice Bills, Demand Notes, Wages Books, Salaries Books, Contracts, Correspondence, Confirmation by Creditors etc,
3) Purchases – Invoices, Books, Copies of Orders, Correspondence etc.
4) Sales – Copies of Invoices, Orders Record, Goods Outward Book, Correspondence etc.
similarly, evidence can be had with regard to transactions like Purchases and Sales Returns, Bills Receivable and Payable and Journal Entries.
All vouchers relating to business transactions should be carefully preserved and properly filed.
Vouching
Vouching is the
essence of auditing and is also the most important duty of an auditor.
Examination of the vouchers is called ‘vouching’. The term vouching means a
careful examination of the original documentary evidence, such as invoices,
receipts, statements, correspondence, minutes, contracts, etc, with a view to
prove the accuracy of the entries in the books of account and to ascertain as
far as possible that no transactions have been omitted from books. ‘Vouching’
implies the substantiation of the entries in the books by reference to any
documentary or other evidence of an authoritative nature offered in support of
the transactions. It is a method of verifying the accuracy and the authenticity
of the entries recorded in the books. To vouch a statement is to confirm it by
evidence. Vouching helps an auditor in establishing the truth of entries in the
books of account and completeness of the record.
Vouching is the
very essence of the auditing, the whole success of an audit will depend upon
intelligent and thorough vouching of the documentary evidence. No amount of
internal check can reveal serious discrepancies, errors of principles or
carefully planned frauds. Vouching is indispensable in order to ascertain
genuineness of the entries though their sources as to whether (a) they are in
conformity with the general nature of the business, (b) they have been duly
authorised, (c) they have been correctly recorded in the books.
The mere
checking of the arithmetical accuracy of the postings and the totals is no
proof that the books contain true entries in respect of all transactions. The
book-keeper, for example, may pass an entry through the books in respect of a
purchase from A, but this entry alone does not prove that the goods were, in
fact, actually received; the purchase may be entirely fictitious, it being
arranged, in collusion with other members of the staff, to misappropriate the
amount of the cheque drawn in payment thereof. Again goods may be sold to B,
but no record thereof made in the books, cheque later received from B, being
misappropriated. In either case the books are arithmetically correct, but are
certainly not actually correct. Apparent accuracy of the books may not be able
to ensure their real accuracy, while vouching an auditor will also see that no
entries have been omitted from the of account.
The duty of the
auditor is to ascertain that the books are actually correct in accordance with
the best of his information and he obtains this information from the documents
from which the books have been written up, and any other evidence or
explanations he can obtain. His examination of the evidence, as such, is termed
‘vouching’. It will not only be confined to the receipts and payments of cash
alone but will also extend to the purchase and sale of goods and all other
transactions of the business which involve, or should involve entries in the
books. He is not only to ascertain that every transaction recorded in the books
is supported by a voucher, but is also to see that every transaction which
should have been properly recorded in the books of account, have in fact been
properly recorded in the books.
Vouching is very
much different from routine checking. It is much wider in its scope than
routine checking. In fact, routine checking is included in vouching. Vouching
differs from routine checking both in its meaning and objects.
Routine Checking
The term
‘routine checking’ means
(a) The checking
of casts, sub-casts, carry forwards, extensions and other calculations in the
books of original entry;
(b) The checking
of postings into ledgers, and
(c) The checking
of ledger accounts, as regards their casts, balancing the carrying forward of
balances and the transfer of balances and the transfer of balances to the Trial
Balance.
For this
purpose, Auditors usually employ ticks of different kinds. Very often coloured
pencils are used to distinguish one type of ticks from other.
The objects of
routine checking are:
1) Verification
of the arithmetical accuracy of the original books;
2) Ascertainment
of postings from books of original entry to the correct accounts in the
ledgers;
3) Ensuring, by
special ticks, that no figures are altered after they have been checked.
Contrary to this
the objects of vouching are much wider in their scope. In addition to the
objects of routine checking discussed above, auditor undertakes the work of
vouching with the object of going behind the books and to completely satisfy
himself that the transactions recorded in the books are (i) properly authorised
and (ii) correctly entered into. His attempt would be in the direction of
finding out facts behind the figures. Careful and intelligent vouching would
help an auditor to a very great extent in detecting frauds. The extent of
vouching to be performed by an auditor would depend upon the systems of
book-keeping and internal check in operation in the business.
Comments
Post a Comment