Voucher
‘Voucher’ is the original documentary evidence in support of any payment or receipt of money by the business. It would be with the help of the voucher that the accuracy of entry can be checked. Voucher alone can tell us about the nature and sources of the transaction, its value and authority. It substantiates the book entries and confirms their reality. Such evidence may be primary and collateral. Certain Vouchers provide primary evidence while others constitute collateral evidence.
The following may be a few of the examples of vouchers for certain transactions:
1) Cash Received – Counterfoils of Receipts issued, Contracts, Minutes, Correspondence, Confirmation of balances by Debtors etc,
2) Cash Paid – Original receipts from Payees, Invoice Bills, Demand Notes, Wages Books, Salaries Books, Contracts, Correspondence, Confirmation by Creditors etc,
3) Purchases – Invoices, Books, Copies of Orders, Correspondence etc.
4) Sales – Copies of Invoices, Orders Record, Goods Outward Book, Correspondence etc.
similarly, evidence can be had with regard to transactions like Purchases and Sales Returns, Bills Receivable and Payable and Journal Entries.
All vouchers relating to business transactions should be carefully preserved and properly filed.
Vouching
Vouching is the essence of auditing and is also the most important duty of an auditor. Examination of the vouchers is called ‘vouching’. The term vouching means a careful examination of the original documentary evidence, such as invoices, receipts, statements, correspondence, minutes, contracts, etc, with a view to prove the accuracy of the entries in the books of account and to ascertain as far as possible that no transactions have been omitted from books. ‘Vouching’ implies the substantiation of the entries in the books by reference to any documentary or other evidence of an authoritative nature offered in support of the transactions. It is a method of verifying the accuracy and the authenticity of the entries recorded in the books. To vouch a statement is to confirm it by evidence. Vouching helps an auditor in establishing the truth of entries in the books of account and completeness of the record.
Vouching is the very essence of the auditing, the whole success of an audit will depend upon intelligent and thorough vouching of the documentary evidence. No amount of internal check can reveal serious discrepancies, errors of principles or carefully planned frauds. Vouching is indispensable in order to ascertain genuineness of the entries though their sources as to whether (a) they are in conformity with the general nature of the business, (b) they have been duly authorised, (c) they have been correctly recorded in the books.
The mere checking of the arithmetical accuracy of the postings and the totals is no proof that the books contain true entries in respect of all transactions. The book-keeper, for example, may pass an entry through the books in respect of a purchase from A, but this entry alone does not prove that the goods were, in fact, actually received; the purchase may be entirely fictitious, it being arranged, in collusion with other members of the staff, to misappropriate the amount of the cheque drawn in payment thereof. Again goods may be sold to B, but no record thereof made in the books, cheque later received from B, being misappropriated. In either case the books are arithmetically correct, but are certainly not actually correct. Apparent accuracy of the books may not be able to ensure their real accuracy, while vouching an auditor will also see that no entries have been omitted from the of account.
The duty of the auditor is to ascertain that the books are actually correct in accordance with the best of his information and he obtains this information from the documents from which the books have been written up, and any other evidence or explanations he can obtain. His examination of the evidence, as such, is termed ‘vouching’. It will not only be confined to the receipts and payments of cash alone but will also extend to the purchase and sale of goods and all other transactions of the business which involve, or should involve entries in the books. He is not only to ascertain that every transaction recorded in the books is supported by a voucher, but is also to see that every transaction which should have been properly recorded in the books of account, have in fact been properly recorded in the books.
Vouching is very much different from routine checking. It is much wider in its scope than routine checking. In fact, routine checking is included in vouching. Vouching differs from routine checking both in its meaning and objects.
Routine Checking
The term ‘routine checking’ means
(a) The checking of casts, sub-casts, carry forwards, extensions and other calculations in the books of original entry;
(b) The checking of postings into ledgers, and
(c) The checking of ledger accounts, as regards their casts, balancing the carrying forward of balances and the transfer of balances and the transfer of balances to the Trial Balance.
For this purpose, Auditors usually employ ticks of different kinds. Very often coloured pencils are used to distinguish one type of ticks from other.
The objects of routine checking are:
1) Verification of the arithmetical accuracy of the original books;
2) Ascertainment of postings from books of original entry to the correct accounts in the ledgers;
3) Ensuring, by special ticks, that no figures are altered after they have been checked.
Contrary to this the objects of vouching are much wider in their scope. In addition to the objects of routine checking discussed above, auditor undertakes the work of vouching with the object of going behind the books and to completely satisfy himself that the transactions recorded in the books are (i) properly authorised and (ii) correctly entered into. His attempt would be in the direction of finding out facts behind the figures. Careful and intelligent vouching would help an auditor to a very great extent in detecting frauds. The extent of vouching to be performed by an auditor would depend upon the systems of book-keeping and internal check in operation in the business.
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