Definition - Vouching, Auditing & Secretarial practice | Auditing and Secretarial Practice - B Com PDF Download

Vouching:- Vouching is the act of checking or examining the entries made in the books of account with the supporting the documentary evidences or vouchers.

In the words of .L.R DICKSEE ,”Vouching is an act of comparing entries in the books of account with the documentary evidence in support thereof”.

Objectives of vouching:-

1. The principal objective of vouching is to ensure that the transactions, as recorded in the books of accounts, are acceptable, genuine, properly authorised and correctly recorded.
2. Another objective of vouching is to ensure that all the entries made in the books are supported by necessary documentary evidence.
3. To see that all the transactions connected with the business have been recorded in the appropriate books of account.
4. To ensure that no transactions, which is not connected with the business, has been recorded in the books of accounts.
5. Detection of errors and frauds. 

Importance of vouching:- 

Vouching constitutes the foundation upon which the super structure of auditing is erected. It is the back born of auditing. In the words of F.R.M De Paula, vouching is the essence of audit.

Vouching can be regarded as the essence or back bone of auditing for the following reasons.

1. The success of an audit largely depends upon the care and attention with which vouching is accomplished.
2. Vouching is the most potent tool in the hands of an auditor to ascertain the accuracy of the transactions recorded in the books of account.
3. To see that all the transactions connected with the business have been recorded in the appropriate books of account.
4. To ensure that there are no transactions, which are not connected with the business, has been recorded in the books of accounts.
5. Detection of errors and frauds
6. Vouching ensures the arithmetical accuracy of the books of account.
7. If vouching is done with care and caution, the auditor can smoothly proceed further in his work.

Vouchers:-

A voucher is the documentary evidence in support of a transaction recorded in the books of account. It is a documentary evidence of an entry in a book of account. The following are the some of the examples of vouchers:

1. Receipt obtained from a payee.
2. Counter foil of a receipt.
3. Purchase invoice.
4. Sales invoice.
5. Cash memo.
6. Bank pay-in-slip.
7. A contract or an agreement.
8. A resolution passed at the meeting of the board of directors.
9. Minutes of a meeting.
10. Bought notes.
11. Sold notes.
12. Debt note.
13. Credit note.
14. Wages sheet.
15. Salary register
16. Goods inward book.
17. Goods outward book. 

Types of vouchers:- 

1. Primary vouchers:- a primary voucher is written evident in original. Purchase invoice, cash memos for goods purchased etc. are examples.
2. Collateral or secondary vouchers:- even evidences in original are not available, copies of the evidences are produced in support. Again, sometimes, subsidiary evidences are also provided for the purpose of audit. Such vouchers are usually known as collateral or secondary vouchers.

Essentials of vouchers or points to be noted by the auditor while vouching the vouchers:- 

1. Vouchers are consecutively numbered, arranged serially in the order of the entries and are properly filed.
2. Vouchers are in the name of the client.
3. See the teach voucher is genuine on its face.
4. Voucher is certified as correct by a responsible official.
5. The amount of each voucher is written in words and figures.
6. Every voucher, which is a receipt for cash payment over Rs 5000, bears a revenue stamp of Rs 1.
7. Alteration made in a voucher is properly signed by the maker and approved by a responsible official.
8. Any explanation is desired with to any voucher, the same should be noted in the audit note book.
9. Missing vouchers produced, the auditor should do,
   • Prepare a list of all such missing vouchers
   • Call for explanation from the concerned official from the loss of original vouchers 
10. If any voucher requires a special scrutiny, the auditor should proceed cautiously and use special ticks for checking.
11. As far as possible the auditor should complete the vouching work relating to a particular period in continuous sitting.
12. The auditor should not take the help of any staff while vouching the vouchers.
13. Test checking may be resorted only in exceptional circumstances.

Guidelines for Auditors in examination of vouchers

While vouching the transactions, the auditor should first of all examine the various vouchers keeping the following points in mind:

1. Made in the Name of the Employer: The auditor should see whether the voucher is made in the name of the employer of the concern.
2. Printed Form: He should see whether the voucher is on a printed form.
3. Serial Number: He should see whether all vouchers are consecutively numbered and filed in order of the entries in the various books.
4. Date, Name, Amount, etc.: The auditor should check date, name of the party to whom the voucher is issued, the name of the party issuing the voucher, and the amounts, etc.
5. Cancelled by Stamp: The vouchers, which are inspected by the auditor, should be cancelled by a stamp so that it cannot be produced again.
6. Related to the Firm: The auditor should also see that all the vouchers are related with the business or not and see whether the payments made by the concern relate to the business or not. The auditor should pay special attention to those vouchers, which are in the personal name of one of the partners, directors, manager or officers of the company.
7. Special Mark in case of Detailed Checking: In case of vouchers, which require detailed checking, the auditor should put special mark on them. He should check such vouchers carefully.
8. Passing of Vouchers: The auditor should see that a responsible senior officer of the concern passes every voucher correctly and the rubber stamps are affixed. He should also see whether the responsible official signs them.
9. Stamped: If the amount of voucher exceeds Rs.500 it must be stamped. The auditor should note whether the vouchers are stamped too.
10. Not to take the Help of the Employees: The auditor should not take the help of the employees of the concern while checking the vouchers.
11. Type of Account: The auditor should see whether the payment is made to a capital account or revenue account.
12. Related to the Year under Audit: The auditor should see that the vouchers are related to the year for which the auditing is going on.
13. Amount in Words and Figures: The auditor should also see that the figures and words of the amount in the vouchers are the same.
14. Points Regarding Further Verification: If any transaction requires further verification of any other evidence such as Memorandum of Association, Articles of Association, Prospectus, Partnership Deed, etc. they shall be noted.
15. Not to Accept Invoice as a Voucher: The invoice should not be accepted as voucher because there are a lot of chances of double payment i.e., once in the form of credit purchase and second time in the form of cash purchase.
16. Not to Accept the Mutilated Vouchers as such: In case if any voucher is mutilated or the amount therein is cut then the auditor should not accept such vouchers as such. They should be made signed by any senior responsible officer of the concern before they are accepted.
17. Pad Paper is not Voucher: Pad papers should not be accepted as vouchers because in such case chances of fraud are more.
18. Time of Payment: The vouchers for insurances, rates, and taxes, etc. should be checked by the auditor with reference to the period for which the payment has been made. In case of payments in advance, the auditor should see whether correct adjustments have been made.