VOUCHING

VALUATION
&
VERIFICATION
Under: C.A. Ashok Khetan
Delhi
By: MOTI VERMA, PGDM
(FINANCE)
Background

 Every Chartered Accountant firm has to be

registered by The Institute of Chartered
Accountant of India.
 The Institute of Chartered Accountants of
India (ICAI) is a statutory body established
under the Chartered Accountants Act, 1949
 ICAI now is the second largest accounting
body in the whole world.
Cont…..

 Ashok Khetan & Co, Barahkhamba lane,

Cannoght Place, Delhi
- Ritu Raj Agency, Daryaganj
- V.K.Pollycoats Pvt. Ltd, Delhi & Gurgaon
Introduction

 The general definition of an audit is an

evaluation of a person, organization, system,
process,enterprise, project or product. The
term most commonly refers to audits in
accounting, but similar concepts also exist in
project management, quality management, and
for energy conservation.
Auditing and Assurance Standard (AAS) 1 by ICAI 

 "Auditing is the independent examination of

financial information of any entity, whether
profit oriented or not, and irrespective of its
size or legal form, when such an examination
is conducted with a view to expressing an
opinion thereon.
Vouching
 Ronald A. Irish has defined vouching as a technical
term which refers to the inspection by the auditor of
documentary evidence supporting and substantiating a
transaction.
 Arthur W Holmes, Vouching is the examination of the
underlying evidence which is in support of the
accuracy of the transaction.  The process of vouching
is intended to substantiate an entry by providing
authority, ownership, existence and accuracy.
Objectives of Vouching

 To examine the accounting entries recorded in

the books of accounts with reference to
documentary evidence known as vouchers.
 To examine the authenticity of the transactions
recorded in the books of account.
 To examine the adequacy and reliability of
documentary evidence.
 Vouching Of Purchase Book
 Vouching Of Purchases Return Book
 Vouching Of Sales Book
 Vouching Of Sales Return Book
 Vouching of the receipt side of cash book
 Vouching of Wages and Salary register
Valuation
Objectives of Valuation

 To find the position of assets on the date the balance

sheet is drawn.
 To know the correct financial position of the
business.
 To know the difference in of the value of assets
between the date on which the asset was acquired and
the date on which the balance sheet was drawn. So,
the reasons for this difference can be debated over.
 To show how the capital stands invested.
 To show the goodwill of the business.
 Valuation of Building, Plant and Machinery
a. At cost
b. Expenses on repairs
c. Increase in Properties
d. Depreciation
e. Over Valuation
 Valuation of Investment
Objectives of Verification

 To ascertain the arithmetical accuracy of assets.

 To find out frauds and irregularities.
 To ascertain the existence and ownership of assets.
 To see that all assets of the concern have been
include in the balance sheet.
 To see that the assets free from other
encumbrances than mentioned in the balance sheet.
 To see that the liabilities have been included in the
balance sheet at accurate value.
 Verification of Assets
 Verification of Liabilities
Comparison of Purchase Errors

6.00%

5.00%

4.00%

3.00% Ritu Raj

Veekay pollycoats

2.00%

1.00%

0.00%
Diff. Amt CST/ VAT Debit Note Bills Posted
Comparison of Sales Errors

35.00%

30.00%

25.00%

20.00%

Ritu Raj
Veekay pollycoats
15.00%

10.00%

5.00%

0.00%
Amount different Quantity different Sample Not signed
Comparison of Rule 18 & 19

Veekay Pollycoats

41%
Rule 18
Rule 19

59%
Cash book Errors

Cash book

Negative balance
15%

Exp.> Rs,20000 Salary paid

27% 58%
Focus on valuation

Focus on Valuation

Date of purchase
20%

Accessory
10%

Depreciation
60%
Repair & maintenance
10%
Focus on Verification

Focus on Verification
No of assets
20%

New/ Old
10%

Sold/ Written off

70%
Objective of Study

 To know the actual guidelines of the Company

law and the Income tax act.
 To know, how the company maintains its
books of accounts.
 To know that company shows “True and Fair
view” or not.
 To know, what are the main points which are
necessary to check while auditing.
Sample size

 Ritu Raj Agency – all the vouchers of

Purchase and Sales, Reconciliation statement
for bank.
 Veekay Pollycoats –all vouchers of Purchase
and Sales of Delhi & Haridwar branch, and for
two branches first and last quarter only.
-Stock and bank on random basis
Research design

 Exploratory Research technique

- Secondary Data analysis
Conclusion

 While making voucher entry the most of the accountant do

their work very effectively but something they do wrong due to
lack of knowledge.
 Companies try to show less profit by showing sale with fewer
amounts.
 Companies’ main objective is reducing cost and more profit by
not maintaining the books of accounts properly.
 Veekay pollycoat use the wastage of one product as a raw
material of another product by charging the excise duty on that.
 Veekay pollycoat is manufacturing and exporting concern so
the exchange price of dollar is fixed on the date of payment
received in bank.
Limitations

 Reasonable cost
 Reasonable length of time
 Alternative accounting Principles
 Accounting Estimates
Bibliography

Books:
 Principles and Practices of Auditing (Dinkar Pagare &
Naresh Gupta)
 Auditing (S.C. Aggarwal)
Internet Websites:
 WWW.ICAI.org
 WWW.Books.net