Vouching is a process where an auditor validates transactions or events by examining supporting documents. When it comes to vouching payments, the auditor investigates payments made by the company to ascertain their accuracy and legitimacy.


Vouching payments may involve checking bank statements, cancelled checks, and receipts to ensure that payment has been made. However, the auditor's job does not end there.


The auditor goes beyond checking for proof of payment to examine the underlying transactions. This helps to verify that the payment was made for a legitimate business purpose and that it was authorized by the appropriate personnel.


The auditor also reviews the company's internal controls to ensure that there are adequate procedures in place to prevent fraudulent payments or unauthorized expenditures. This includes verifying that there is segregation of duties, proper approval processes, and appropriate documentation for all transactions.


Through vouching payments, the auditor may also identify errors such as double payments, overpayments, or incorrect account postings. This helps the company to correct these errors and prevent them from occurring in the future.


In summary, vouching payments is not just about checking for proof of payment. It involves examining the underlying transactions, reviewing internal controls, identifying errors, and ensuring that payments were made for legitimate business purposes.