Question

Q.4. Prepare a Cash Purchase Voucher for the things that you have purchased for
your own or family. Also, explain it in detail by keeping in mind the points
to be considered in vouching.

Answer 1

Answer:

Accounting entries made in the books must be supported by documentary evidence and inspection of that evidence is called vouching. The Auditor judges the authenticity, of the accounting entries using the technique of vouching. In case of unavailability of proper supporting documents, the Auditor may have all reasons to doubt about errors or fraud or manipulation.

Thus, auditing is incomplete without vouching.

In auditing process, based on evidence, there are two main functions

collection of evidences − through observation, confirmation, inspection, inquiry.

evaluation of evidences − with relevance, adequacy and validity.

Objective of Vouching

Following are the main objectives of vouching −

To check whether all the business transactions are properly recorded in the books of accounts or not.

To see whether recorded transactions are duly supported by documentary evidence or not.

To verify that all the documentary evidence is authenticated and related to business transactions only.

To verify that transactions are free from errors or frauds.

To verify whether voucher is processed through all the stages of Internal Check system properly.

To verify and confirm that the entries are recorded according to the capital and the revenue nature or not.

To check the accuracy of accounting transactions.

Importance of Vouching

Vouching forms the base for auditing and has an important part of Auditor’s duty. In case of negligence in vouching, the Auditor will be held responsible; he cannot escape from his duty, if he has done vouching carelessly. Following points show the importance of vouching −

Vouching is equally important as passing of original entry in the books of accounts. If, original entry is wrong, it will affect every process of accounting entry and its impact will be till the end result. Similarly, vouching is base of all auditing process.

Efficiency of vouching will decide the success of audit.

Any errors and frauds are easily detectable if vouching is conducting in searching and intelligent manner.

Intelligent and faithful vouching will establish reliability on financial statements, i.e., Profit and Loss account and Balance Sheet of any organization.

If adequate internal control system exists, the Auditor may choose to do test checking instead of complete vouching.

Vouching and Routine Checking

Routine checking covers the checking of every carry forward, posting to ledger account and balancing of account. Vouching includes routine checking which is a mechanical checking, whereas vouching is made on the basis of documentary evidence.

A voucher may be a sales bill, purchase bill, payment receipt, pay-in slip, etc. All such types of documentary evidence are known as vouchers.

Types of Voucher

There are two types of vouchers −

Primary Voucher − Original copy of written supporting document is called primary voucher. Like purchase Bill, cash memo, pay-in-slip, etc.

Collateral Voucher − Copies of supporting documents which are not available in original are collateral voucher like duplicate or carbon copy of sale invoice.

Explanation: