What is Vouching?
Vouching means inspection by an auditor of documentary evidence supporting & substantiating transactions. Vouching is the process of checking documentary evidence that the transactions are properly recorded & accounted for.
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The main aim of vouching is to inspect all receipts & payments are properly accounted for & no fraudulent transactions are recorded. Vouching is a substantive audit procedure to obtain evidence as to completeness, accuracy & validity. With the help of vouching auditor come to know the genuineness of the transactions.
The duty of auditor is to see substantial accuracy of vouchers & then make a report thereon. Vouching is also the basis for assets & liabilities. The auditor should be careful while vouching the transactions & entries in the books of accounts. It is the backbone of the auditing process. Thus, vouching may be considered as the essence of auditing.
Importance of Vouching
The importance of vouching is to determine that:
- Classification: Transactions have been classified & disclose in accordance with accounting policies.
- Accurate amount: Accurate amount has been recorded.
- Pertains to entity: Transactions pertain to an entity that took place during the relevant period.
- Actual occurred: Transactions which have actually occurred have been recorded.
- Proper Accounts: Transactions is recorded in proper account to the proper period.
Objectives of Vouching
Following are the objectives of vouching-
- To see that transactions & entries are properly recorded in the books of accounts.
- To see that entries & transactions are properly authenticated by a reasonable person.
- To see that transactions have been properly classified & disclosed in accordance with the accounting policies.
- To see that no fraudulent transactions are recorded in books of accounts.
- To see that all entries & transactions are supported by proper evidence.
What is Voucher?
A voucher is documentary evidence in support of any transaction in books of accounts. Voucher can originate within the organization or outside the organization i.e. they can be internal or external.
Example: Internal voucher: invoices for purchase & sale, receipts, counterfoils, slip of bank, etc.
External voucher: consignment stock, mortgage deed, etc.
Types of Voucher
Two types of voucher are:
- Primary voucher: All written evidences in original are primary vouchers.
- Secondary voucher: Copies of original vouchers are called collateral vouchers.
Material Defects in Voucher
Following are the material defect that disqualify the vouchers-
- Voucher not addressed to the client.
- Voucher not duly authorized for payment.
- Voucher concerning purchases & expenses not related to business.
- Voucher not pertaining to period under audit.
- Payment not acknowledge against voucher.
- Voucher in respect of which goods or services have not been received.
- Date of voucher significantly different from the date on which entry was
- Amount of voucher not agreed with corresponding entry.
- Amount altered, erased in voucher without proper authorization.
Care to be taken while Vouching
- Voucher must be dated & serially numbered.
- Information on the voucher should fully explain the transactions.
- Date of voucher should match with corresponding entry.
- Auditor should satisfy that transactions are authentic i.e. genion
- Voucher should be passed by responsible officer.
- Distinction should be made between capital & revenue expenditure.
- Amount on voucher should be checked.
- The period for payment should be noted.
- Proper care should be taken to see that transaction is not recorded twice.
- Alteration in voucher must be authorized by proper person.
- Prepare a list of missing & incomplete vouchers should be prepared.
- Auditor should stamp the voucher seen.
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