Vouching in Auditing-Supporting evidence

Vouching is a fundamental auditing technique used to verify the accuracy, authenticity, and validity of transactions recorded in an organization's books of accounts. It involves examining the supporting documents and evidence for recorded transactions to ensure they are genuine and have been properly authorized and recorded.

1. UNIT-III
VOUCHING
BY
Dr.P.Manochithra
Department of BCom-CS
SRCAS.

2. Introduction
Routinecheckingisoneoftheprimaryfunctionofan
auditor.
Anotherimportantfunctionofanaudit isVouching.
Itis thebackboneofauditing.
Thetransactionsrecordedinthebooksofa/caretobe
comparedwiththesupportingevidencesandalsoto
checkproperlyauthenticatedandapproved.
Transactionswillbevouchbyitstypeeg.Cash,credit
purchase,creditsales.
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3. Cont.
Suchcredittransactionswillbevouchbytaking
the copies of invoices issued to the customers is
takenas asupportingdocuments.
Mere checkingandverificationisnotenough.
It isequallyimportantthatthecashmemosand
invoicesare properly authorized.
Hencetheresponsiblepersonshouldsignsuch
vouchers.
Thus, vouchingisvery important,becauseby
vouching the correctness and authenticity of
transactionsare established. 3

4. Definition
“Byvouchingismeanttheverificationoftheauthorityand
authenticityoftransactionsasrecordedinthebooksof
accounts.” -B.BBose
“Vouchingconsistsofcomparingentriesinthebooksofaccount
withdocumentaryevidencein support thereof.”
-Dicksee
“Vouchingisatechnicalterm,whichreferstotheinspectionof
substantiatingadocumentaryevidencesupportingand
transaction.” -RonaldA. Irish
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5. Meaning
Vouching is a process. While the documentary
evidence used for the purpose of vouching is a
‘Voucher’.Thus‘vouchersarethedocumentaryor
other evidences in support of transactions entered in
thebooksofaccounts.
The process of comparing or tallying the entries
papering in the books of accounts, with supporting
evidencelikecashmemos,receipts andother
documentsand correspondenceisknownas vouching.
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6. TypesofVoucher
1.Primaryvoucher
2.SecondaryorCollateralVoucher
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7. Characteristics
1.Examinationofentries
-bydocumentary
-by other evidence eg. Vouchers, receipts,
counterfoils of check book and pay-in-slips, minute
books,correspondence
2.Suchdocumentarysupportsandsubstantiatea
transaction.
3.Ensurescorrectnessand
4.ImportantaspectofAuditing
5.Preliminaryworkofauditing
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8. Objects
Toseethatalltransactionsarecorrectlyrecorded
Toseethatalltransactionsrecordedaresupportedbythe
documentaryevidence
Toascertainwiththehelpofevidencethatalltransactionsare
properlyauthenticated.
Toseethatnecessaryvouchersrelatingtoentriesrecordedin
booksarewiththeclient.
Thus,thepurposeofvouchingisnotmerelytoverifythat
thepaymentshavebeenmade,buttoverifyfurtherthatthe
paymentrelatestothepaymentshavebeenmade,buttoverify
thatthepaymentrelatestothebusinessandisapprovedby
properauthority. 8

9. Importance
1.ReliableExamination
2.ExaminationofOriginalEvidences
3.DetectionoferrorsatInitialStage
4.Keeps theAuditoralert
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10. Pointstobe included
1.SerialNo.
2.Date
3.Name
4.Address
5.Amount
6.Particulars
7.Approvalandsignature
8.Revenuestamp
9.Continuousvouching
10.Cancellingthevoucher
11.Period
12.Entry in thebooksofa/c
13.Listofmissingvouchers
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11. Vouching of Cash
transactions
Cashbookisthemostimportantofthebooksof
a/cforanybusiness.Thereceiptsandpaymentsare
recordedincashbook.Thecashbalanceonanyday
canbeknownfromcashbook.Theentriesforreceipts
andpaymentsofcasharecheckedwithreferenceto
varioussupportingdocumentaryevidences.
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12. Objects
Toascertainthatall theexpensesand receiptsare
shown underthecorrect book
Toascertainthat alltheexpensesand receipts
areshownunder thecorrect heads
Toensurethereisnounauthorizedorfraudulent
payments are made
Toverifythattheclosingcashbankbalanceare
correctlystruck.
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13. Vouchingthe Receipt
sideof Cashbook
1.OpeningBalance
2.CashSales
3.CashReceivedfrom debtors
4.ProceedsofBillsReceivable
5.IncomeforInterestandDividend
6.SaleofInvestments
7.CommissionReceived
8.Rentreceived
9.Proceeds fromsaleof scraped machinery
10.Proceeds fromsaleofFixedAssets
Vouchers
cash book of pre. yr
copiesofcashmemos
receipts, bank pass book
B/R book, pass book
receipts, Counterfoils
sale deed, receipt
agreement,salestatement
Rent agreement,receipt
plantregister
receipt,tender
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14. Cont.
11.Subscriptionreceived
12.InsuranceClaim
13.Recoveryofclaims
14.Receiptsfromsale hirepurchase
15.Royaltyreceived
16.Incomeofminimumrent
17.ITrefund
18.Dividendfrom Receiver
19.ShareCapital
20.Debenture
21.IssueofRightShares
registerofmembers
insurancepolicy
claimregister,cashbook
hire-purchaseagreement
contractoflease
leaseagreement
return of income, app.
receipt,passbook
sh.App.&allotment
book,board’sresoltution
cashbook,deb.App.,
board’s resolution
cash book,AoAletterof
offer
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15. Vouchingof thepayment
sideofCashBook
i.Paymentsrelatetothebusi.Only
ii.Thepaymentshouldrelatetotheyearforwhich thea/care
beingaudited
iii.Allpaymentsareproperlyapprovedandauthenticatedby
responsibleofficer
iv.Payments arecorrectlyaccountedforinthebooksofa/c
v.Nopaymentshouldbeleftunrecorded
vi.Amount paidshouldbecorrect
vii.Allpayments supportedbypropervoucher
viii.Paymentshouldbemadetoproperperson
ix.Particularsshouldbetallywiththebooks
x.Thelegalityofpaymentshouldbeverified
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16. Vouching of
SubsidiaryBooks
1.Purchasebook
2.Purchasereturnbook
3.Salesbook
4.Salesreturnbook
5.Billsreceivablebook
6.Billspayablebook
7.Journalproper
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17. Journalproper
The transactions which are not recorded in the other subsidiary
booksareenteredintheJournalproper.Theauditorshouldvouch
these transactions in the same manner as he does in case of cash
book transactions. He should see that each entry is supported by
supportingvoucher.
a)Openingentries
b)Closingentries
c)Rectifyingentries
d)Adjustingentries
e)Baddebts
f)Provisionfor baddebtsand doubtfuldebts
g)Depreciation
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18. Vouching ofLedgers
Ledgers
Personal
Ledgers
Purchase
/Creditors
Sales/
Debtors
Ledgers
Impersonal
Ledgers
Reala/c
Nominal
a/c18

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