It means to test the truth of items appearing in the books of original entry. It is an important part of an auditor’s duty to certify as correct the transactions recorded in the Looks of accounts. The Accountant of a business is responsible for passing entries in the books of prime entry. The question arises how and on what basis such entries have been passed. The auditor’s primary duty is to check these entries and only then certify the accounts as correct and free from any error or fraud.
A careful examination of all original evidence such as invoice receipt of correspondence minutes, contracts etc.
Vouching is very useful in proving the accuracy of the entries in the books of accounts. It also indicates about that transaction, which is omitted from the books of account.
As quoted earlier vouchers are the documentary or other evidences in support of transactions entered in the hooks of accounts.
They may be of two types:
(1) PRIMARY — written evidence in original is said to be the primary voucher, e.g., invoice for a purchase
(2) COLLATERAL—when the original voucher is not available, copes thereof are produced in support or subsidiary evidence is made available so as to remove suspicions from the mind of auditor. Such a voucher is usually known as. a Collateral Voucher.
Vouching is called the essence of auditing. So audit is not possible without vouching. The object of vouching is to find out the accuracy of the entries appearing in the books of accounts and detect that no entry has been omitted from the books of account.
PRINCIPLES OR TECHNIQUES OF VOUCHING
At the time of vouching auditor should keep in view the following important principles in his mind.
1. ARRANGED VOUCHERS:
In the books of accounts the vouchers are based an entry. A voucher is helpful to support any transaction, which may be cash memo fill, voucher, ticket or others.
2. CHECKING OF DATE:
The voucher date can also be checked; it must be related to the current year. The date of the last or future year must not be adopted.
3. COMPARE THE WORDS AND FIGURES:
The auditor should satisfy himself amount written on the vouchers, its figures and words are same or not.
4. CHECKING OF AUTHORITY:
The vouchers are considers correct only when the proper authority signs on them. For the approval of the dealing the owner or the management must put the signatures for the approval of dealing if the vouchers are without the signatures of the proper authority. They are not considers the true.
5. CUTTING OR CHANGE:
There should be no changes in the vouchers. Any person for making the fraud can change the time, date amount, and name of concern. So, these changes cannot be acceptable till the approved authority has made the signature.
6. TRANSACTION MUST RELATE TO BUSINESS:
For the correctness of the vouchers it is necessary that it relate with the business Concern. The vouchers must be in the name of the business and also the manager. If it does not the vouchers are not acceptable and doubtful.
7. CASE OF PERSONAL VOUCHERS:
The auditor should not accept the voucher in personal name. There is a chance that an officer of the company has purchased any item in his personal capacity.
8. CHECKING OF ACCOUNT HEAD:
Auditor must be satisfied about the head of account in which cash is deposited and drawn. He should examine the documentary evidence in these regards.
9. REVENUE STAMPS:
For the stamps, the stamps act 1899 is applicable while fixing the revenue stamps. The stamps are required according to the valuation of the amount or cash memo. There is no need of vouchers if amount is less than twenty rupees.
10. CASE OF CANCELLED VOUCHER:
The auditor should not accept the cancelled vouchers, because it has already served the purpose of payment. There will be a danger of double payments, if it is accepted.
11. IMPORTANT NOTES:
For finding the correct decision, the auditor can also take help from the working papers of the previous year and others paper or note related to business and available with the management.
12. MINUTES BOOK:
When the meeting of shareholders is held, all the resolutions and decisions of the directors and shareholders are recorded in the minute’s book. This minute’s book must be examined by the auditor. He has to check that these decisions have been implemented in the books of accounts or not.
In case of company the article of association and memorandum are basically the rules & regulations. But on the other hand in the societies and clubs the bylaws are used to determine the powers of management. The auditor goes through these rules and regulation to find the true & fair view.
The auditor must examine all the related papers of the business such as the agreement, correspondence and others. The basic information can be received to the auditor by such papers.
15. DEED OF MORTGAGE:
Some times, you’re the sale or purchase of any assets, the management can enter into the agreement is prepare in this case. If the agreement is prepare in this case. If the agreement is made for a loan against the immovable property then the mortgage deed is signed. It is compulsory for the auditor to study the content of the deed.
Driving Lesson is of great importance for the removal of traffic violations and to teach people about the rules and regulations that they must follow while driving vehicles on the track. More >>
In the Advanced Rider online course by Lyons Legacy of Horsemanship, you learn what it takes to ride finished. The final of the four foundational lessons – Hips-In – is presented, followed by a review of all four foundational lessons. More >>
The escalating growth in population all around the globe has enhanced the requirement criteria of people. Increased medical requirements and facilities have also increased the rate of mortality. More >>
You can study why laws were made at a particular point in history and the issues that were deemed important enough for politicians to devote time to creating new frameworks for society. The whole principle of communicating a message to a group of people is not new. More >>
We have different ideas about exactly what numeracy skills you need to have. This makes sense – if you're going to be a teacher, you're probably going to need more maths in a day-to-day setting than if you're going to be a soldier. More >>
Barter System - Barter System is that system in which goods are exchanged for goods - Barter System More >>
Objectives of Business means the purpose for which the business is established. It is generally believed that the main objective of business is ta make profit and avoid loss. More >>
Functions of Money - Functions of Money as a Medium of Exchange, Measure of Value, Deferred Payment, Store of Value - Functions of Money More >>
The importance of business is that it provides products or services to customers. More >>
The partners of a firm are broadly divided into three main categories. General Partners, Special Partners and Other Partners. More >>