Definition in the words of J.R.Batliboi,

“Vouching means testing the truth of items appearing in the books of

original entry”

Vouching

From the definition it is clear that, A voucher is a documentary evidence in support of a transaction in the books of accounts. Vouching is used to find out the accuracy and efficiency of entries in the books of accouts.in other words vouching can be regarded as the backbone of auditing.

Meaning

To ensure that transaction are acceptable (ie.valid)

To ensure that all the entries are made with evidence

To see that all the transactions are recorded and nothing is left out

Non business transaction are ignoredDetection of frauds and errors

Objects

It ensures accuracy of books of accountsIt helps the auditor to ensure transactions

recorded in the books are relating to business only

It helps the auditor to record all the transactions

It helps the auditor to go behind and beyond the books of accounts

It helps the auditor to proceed with his work smoothly

It ensures that transaction is valid or not

Benefits of vouching

Opening balanceCash salesReceipts from debtorsIncome from interest, dividends.Rent received Bills receivableCommission Sale of investments Bad debt dividends Sale of fixed assetsincome from hire purchase

The following important items appear on debit side of cash book

Cash may not be recorded in books and cash may be misappropriated

Discount allowed may be over stated Cash sales may be under-recordedCash sales may be recorded as credit sales to

fictitious debtorsFictitious entries for sales return may be made Receipts from customers may not be recorded Good debts may be recorded as bad debts Deposits into banks may be over stated Deposits of cash may be delayed

Errors and frauds in regards to cash receipts

Auditor has to carefully examine the system of internal check

Auditor can go into test checking He should compare rough cash book with original cash

bookHe should examine the methods of depositing daily

receiptsHe should check the bank pass book with the entries in

the cash book He should vouch cash receipts by reference to evidence He should note that all the receipts are in printed forms He should enquire the bad debts written off

Detections of frauds and errors while vouching cash transaction

The vouching procedure in regard to cash sales (i.e the vouching of cash sales by an auditor) should be on the following lines He should examine the system of internal check in operation in

regard to cash sales After ascertaining the efficiency of internal check he should

vouch the cash sales as follows1. Cash memos of each and every salesman should be checked at the

end of the day 2. He should compare the summary of daily sales of the salesman with

cash analysis of the receiving cashier.3. He should examine the rough cash book4. In case there is automatic cash register in use he should check daily

totals entered in cash book5. The summary of daily sales should be checked with the entries in

stock register6. He should verify the daily deposit of cash received into the bank

Vouching of cash sales