Vouching

Vouching is concerned with the test of detail of transaction. Vouching means to verify
transactions recorded in the books of original entry by referring to original vouchers.

Definition of vouchers

The term vouching is defined as follows:

B.N. Tandon.

"Vouching means testing the truth of items appearing in the books of original entry."

Sir Ronal Irish

"Vouching refers to the inspection by the auditor of documentary evidence supporting and
sustaining a transaction."

Extent of Vouching

How many items the auditor should examine to reach at a the conclusion depends on reliability
of internal control system.

Objectives of vouching

1. Availability of complete evidence

That all documentary evidence necessary to substantiate the transactions are available.
2. Transaction relate to business
that the transactions recorded in the book of original entry do in fact relate to the
business.
3. Transactions relate to period under audit.
The transactions recorded in the book of original entry are related to the period under
review.
4. Authorisation
that the transactions are executed only after they have been properly authorised.
5. Correct amount
that the amount involved in the transaction are correctly recorded in the books of
original entry.
6. Correct account
That the accounts credited and debited with respect to each transaction are correct.
7. Proper allocation
That the proper distinction between capital, revenue and deferred revenue items is
made while journalizing the transactions.
Verification
Vouching only prove that what asset and liability should exist. It is the verification that proves
whether they do really exist.

For the purpose of verification the auditor May physically inspect the assets or maybe obtain
certificates from responsible officer as to the existence of the assets. The auditor also see
whether the assets are properly valued.

Definition of verification

In the words of Spicer and pegler

Verification of assets implies an inquiry into the value, ownership and title existence and
possession and the presence of any charge on assets.

Joseph lancaster: verification of an assets is a process through which the auditor substantiate
accuracy of asset appearing in the balance sheet.

Verification

Verification is a comprehensive term. Verification basically relates to the process that the
auditor employee together and evaluate audit evidence in support of assertation made by the
management regarding a particular area of financial statement. Verification verify a
transaction but vouching is not employed in all the cases. During verification the auditor
employee substantive procedure to ascertain the following agitation (statement of
Management)

1. Existence
an asset or liability actually exist at the balance sheet date
2. Right and obligation
An asset is the right of an entity and liability is its obligation.
3. Occurrence
A transaction has actually occurred.
4. Completeness
There are no unrecorded transaction.
5. Measurement
Items have been measured properly.
6. Valuation
Items have been valued consistently using generally accepted accounting principles.
7. Disclosure and presentation
International accounting standards (ISA) and relevant legislation have given adequate
disclosure in financial statement are required.
The auditor for every item of financial statement will test not all the assertation the
auditor should always consider the relevance of testing a particular assertation with the
objectives he wishes to achieve.