Know The Concept Of Vouching In An Audit
The term vouching refers to the method of evaluating the document with reference to a particular data entry as evidence to determine the arithmetic accuracy of the business accounts. This examination process is conducted by the auditor and is regarded as the acid test of the audit.
Benefits of vouching
- The Crypto Code review states that this test is essential to analyze the truth of the transactions being listed in the record book. Thus, it is a great means to establish the accuracy and authenticity of the transaction entries.
- It can render the satisfaction feel to the concerned auditor and hence ensures if everything record is properly maintained.
Definition of a voucher
Voucher includes all the documentary evidence backing the writings in the account records and does establish the mathematical accuracy of the entries in the account.
The examples of this include
- The receipt bills
- An invoice
- Good Accepted note
- Filings in salary and wages sheet
- Inward and outward movement of goods listed in the register
- Store stocks record
- Leaflet and other remnants of a chequebook
- Pay-in-slip forms
- The bank statement sheets and passbook updates
- Challans, agreements, memorandum
- Replica of the purchase order
- Prospectus and different type of deeds like the partnership, trust or so
Significance of Vouching
- This process confirms the authenticity of all transactions
- It assists in knowing the type of transaction held
- Moreover, it can detail the importance of a particular transaction
- This is really helpful in categorizing the capital and revenue source and even the proper allocation of the expenditure strategy
- Easily detects any frauds and errors occurring with the transaction recordings
- Decides the extent of the genuineness of all the business transactions
- Make sure of the accounting accuracy
- Further, vouching for checks if all the accounting activities go in compliance with law and management policies
- Finally, it makes sure the proper disclosure
Factors to be considered while conducting the course of vouching
- Note the date of the voucher and also the name or party entitled in the voucher scheme.
- Tick and stamping with the audit imprint should be done while evaluating the vouchers.
- The authorization of the vouchers done by the in charge official.
- Attaching the revenue stamp of Rs.1 if the amount crosses Rs.5000 or so.
- Examine if all the transactions are associated with the business only.
- Evaluate the income and capital by noting down in words and figures.
- Look out for the signature of the payee, payment nature and proper filling of the transactions.
- Check if any vouchers are missing and recognize it with the voucher control number.