Group Members

Amna Barkat Ali L1f18MCOM7047

Nida Younas L1f18MCOM7016
Fatima Shakeel L1f18MCOM7017

Presented to:
PROF: IMRAN SHEHZAD
Topic:
Vouching and Verification of
Salaries and Wages
Contents:
1. Vouching and verification
2. Salaries and wages
3. Difference between salaries and wages
4. Vouching procedure of salaries and wages
5. Vouching of Salaries
6. Vouching of wages
 Vouching And Verification
Vouching:
Vouching is a substantive auditing procedure designed to obtain
evidence as to the completeness , accuracy & validity of the data
produced by the accounting system.

Verification:
 Difference B/W Salaries and Wages

Salaries Wages
• Salary is the fixed amount of • Wage is the variable amount of
compensation which is paid for compensation which is paid on
the performance of an the basis of hours spent in
employee.  finishing a certain amount of
work.
• Salary is given to the skilled
persons who apply their • Whereas wages are paid to the
proficiencies in respective fields semi-skilled or unskilled worker
and generate the revenues for such as carpenter, welder,
the firm. electrician, etc. who work on
hourly basis.
• Salary is paid to employees who
possess the skills and • Whereas wages are paid to the
efficiencies in completing the labors, who are engaged in
office work.  manufacturing processes and
do the work on an hourly basis.
 Salaries and Wages

Definition of Wages:
Wages are usually associated with employee compensation that
is based on the number of hours worked multiplied by an hourly
rate of pay. Generally, the employees earning hourly wages will
be paid in the week that follows the hours worked.
Definition of Salary:
Salary is a fixed amount paid or transferred to the employees at
regular intervals for their performance and productivity, at the
end of the month. 
 Vouchingprocedureforsalariesandwages

Examining the internal control procedure Before

proceeding to verify payment made on account of
salaries and wages the auditor should examine the
internal control procedure as regard the following:
 Appointment, promotion and transfer of employees.
Records of attendance.
Arrangement for the preparation bill and there analysis.
Sanctioning and disbursement of wages and salaries.
Custody of the wages record
 VOUCHING OF SALARIES
While die salaries auditor should pay attention to the following points.
 The auditor should check the salary book.
He should check the salaries actually paid during the year.
 He should compare the salary book and cheque drawn for a particular
month.
 He should compare salary book with the cash book.
 Auditor should see that sign of each employee are available on the
book.
 Auditor should also examine, terms and conditions of the officers
employment.
 Revenue receipts should also be checked by the auditor.
 Auditor should also verify that all the deductions like income tax, and
other funds have been credited in the irrespective accounts.
  He should also check that unpaid salaries are taken into account for
that period.
 Auditor should also check that increment given to the employee was
due or not.
 VOUCHING OF WAGES
To vouch the wages following points must be considered :
1. Checking Of Internal System:
Auditor should satisfy himself testing the system of internal
check that internal control system is sufficient to provide a
reasonable protection against errors.
2. Checking Of Calculations:
Auditor should apply the test check to see that all the
calculations are correct.
3. Checking Of Wages Sheet:
Auditor should examine the time work wages and piece work
wages thoroughly.
4. Computing System:
Auditor should check that wages computing paying system is
sound or not.
 VOUCHING OF WAGES
1. Checking Of Names:
Auditor should check that payment has been made to those,
employees whose names are given. He should check that there
should be no dummy worker in them.
2. Signature Verification:
Auditor should verify, signature and thumb impressions of workers
by using the test check. He can compare with previous month.
3. Unpaid Wages:
He should check that all unpaid wages are taken into account or
not.
4.  Deductions:
Auditor should also check that deductions like income tax are
properly made in their relative heads.