Vouching and Verification

Definition
• Vouching: Lawrence Dicksee had defined vouching as an act of
“comparing entries in the books of accounts with documentary
evidence in support thereof”.

• Vouching = income and exp

• Verification = Assets and liabilities

• Verification: It means confirmation or proving the truth about the

assets and liabilities appearing in the balance sheet.
Vouching
Substantive Audit
Procedure

Through which Name of the client

A voucher is examined Date of Transaction

Authorization of
as to
transaction

Arithmetical accuracy

Completeness

Authenticity and
Validity of transaction
To established
True and Fair Recording
in a Transaction
Examples of supporting Documents
1. Invoice
2. Copy of contract
3. Cash memo
4. Acknowledgment
5. Rent agreement
6. Etc……
Voucher and supporting documents
Classification of Voucher
Accounts voucher
voucher
Vouching Process at Glance

Process

Examination of
Examination of Examination of
books of
Voucher documents
Accounts
Audit of Cash Transaction
I. General Consideration are:
Review of internal control system
Correctness of book keeping records(posting, Casting and carry forward)
 Observation of Accounting Principles ( capital and revenue , legal entity, matching concept etc….)
Evidence of transaction ( Internal and External)
Validity of Transaction ( business purpose, authorization etc..)
Disclosure in Final accounts.

II. Casting

III. Bank Reconciliation statement

Internal control System
1. Complete accounting of Receipt and Payment
2. Proper authorization
3. Internal control System
4. Validation of transaction
Casting - Checking of Totaling
1. Overcasting of Payment Side
2. Under casting of Receipt Side
3. Fictious contra Entries in Cash book
4. Posting Cash Sales as Credit Sales
5. Wrong totaling
6. Wrong carry forwarding cash book
Cash transaction
• https://www.youtube.com/watch?v=Lm-nexZ6K5k&feature=youtu.be
Audit of Income / Expenditure
Audit of Income

Assertion of Internal Control

Verification Documentation
Evaluation Evaluation

Examination of
Occurrence
records

Analytical
Completeness review
procedures

Measurement

Presentation
and Disclosure
 Audit of Cash Receipt

Nature of Receipt

Recovery from Bad Interest / Dividend on

Cash Sales Receipt from Debtors Sale of Scrap Rental Receipt Sale of Investment
Debts Investment

Cash memo Dividend = Dividend

Notification of Bank Warrant Bills issued to tenant,
Carbon copies of cash Counterfoil of receipt Broker note,
Copy of delivery Challan Rent Register, Rent
memo issued to the customer Bankruptcy trustee Interest = TDS Investment Register
Transporters bill Agreement
Certificate
Vouching Point
Invoice Checking
Completeness
Casting /Totaling
Outside Confirmation
Compliance of Accounting Standards
Compliance of Schedule III of Companies Account
 Procedure for Audit of Receipt
1. Name of Client
2. Date of Vouchers
3. Serial Number of Vouchers
4. Amount in Words and Figures
5. Head of Account
6. Signature of Person Preparing Voucher
7. Signature of authorized by the proper officer
8. Signature of the Receiver
https://youtu.be/Lm-nexZ6K5k
Audit of Payment
Consideration
 Authorisation
Occurrences
Recording
Statutory Compliances ( tds )
Recording
Recording

Proper Amount Proper Manner Proper Disclosure

Basic of Calculation,
Ensure Compliance of Ensure Compliance of
Arithmetical Accuracy,
Accounting Standards Accounting Standards
Statutory Compliance
Audit of Purchase / Sales
• Vouching
Salaries and Wages
Advertisement Expenses
Cash Sales
 Rental Receipt
Income from Investment ( Dividend/ Interest on Investment)
Advertisement Expenditure
Salary
Rent Receipt
Income from Investment