A copy of the queries should be handed over to the management to give them opportunity and time to get them cleared on the production of required documentary evidence, the queries would be cleared and consequently objections raised against them would be dropped. At the time if vouching auditor should keep in view the following important principles in his mind. d) Audit by independent auditor to improve internal affairs. All the expenses should be examined by the Auditor. Period of payment should be there on receipt. A voucher may be a sales bill, purchase bill, payment receipt, pay-in slip, etc. It is the responsibility of auditor. Intelligent and faithful vouching will establish reliability on financial statements, i.e., Profit and Loss account and Balance Sheet of any organization. Thus, auditing is incomplete without vouching. Tracing allures evidence for completeness. After the pasting in to general ledger has been checked, the following work should be done to audit the general ledger. Principles and Practices of Auditing Unit 4 – Vouching 2. 1. Following are the main objectives of vouching −. Planning 7. The auditor should not accept the voucher in personal name. AUDITING PRINCIPLES AND PRACTICE-17UCO514 K1 - LEVEL QUESTIONS UNIT I 1. (a) Audire (b) Adhere (c) Adihere (d) None of the above 2. Again, the direction is important to spot the difference between tracing and vouching. Auditing and Assurance Standards - Overview, Standard-setting process, Role of International Auditing and Assurance Standards Board and Auditing and Assurance Standards Board in India. Following points show the importance of vouching −. Cash purchase should not be recorded twice, once in cash purchase and second one in credit purchase. Both have therefore major difference in direction. Principles of Auditing FEATURES The book contains salient features governing audit of business concerns. Audit … its advantages and disadvantages ? Two persons do the job of vouching. Vouching can work in two directions. Unit 4 Vouching 1. Another important principle is independence. Cheques, counterfoils, bank statements, etc. Primary Voucher − Original copy of written supporting document is called primary voucher. The various types of vouchers to be presented / produced to the auditor for checking are cash receipt, cash paid, purchases, sales, purchases return, and sales return and journal entries. Define the vouching and principles of vouching? To plan work accordingly, an Auditor handles the following − 1. 2. Efficiency of vouching will decide the success of audit. The book is a first exposure to basic principles of audit and risk management. So audit is not possible without vouching. Any errors and frauds are easily detectable if vouching is conducting in searching and intelligent manner. What is audit program ? The auditor should take some notes about those items which need further evidence or explanation e.g. Any professional should be straightforward, honest and sincere in his approach. While vouching, an auditor should check whether the general principles of accounting have been followed or not and clear cut demarcation of capital and revenue is made or not. The auditor must also verify all the liabilities of the organization. Documentation 6. Sole trader will decide about the scope of audit and appointment of auditor. To verify that transactions are free from errors or frauds. To check the accuracy of accounting transactions. 5. So, he should show a high standard of integrity and maintain a separate account for the amount entrusted to him. What is audit program ? 1 VOUCHING AND VERIFICATION OF ASSETS & LIABILITIES VOUCHING According to R. B. Bose, "By vouching is meant the verification of the authority and authenticity of transactions as recorded in the books of account". Checking the classification of account must be done. Without the proof provided by vouching, the claims provided by the auditor are just that, only claims. Seeking to establish the accuracy of recorded transactions, vouching ensures that all the entries in the books of accounts come with the relevant evidence, including invoices, receipts, and others. evaluation of evidences − with relevance, adequacy and validity. : 2. Because it has already did the purpose of payment. People in the organization should not doubt his indepe… Vouching provides audit evidence in respect of following matters: Occurrence: Vouching helps the auditor to ascertain whether the transaction has actually occurred. In auditing process, based on evidence, there are two main functions. If, original entry is wrong, it will affect every process of accounting entry and its impact will be till the end result. Duplicate or carbon copy of cash receipt, contracts and correspondence with payee, etc. There will be a risk of double payment if it is accepted. The higher rank puts his initials on the voucher. Verification is a procedure of confirming existence, ownership, possession of assets and liabilities. Different types vouchers relevant to the business transactions should be carefully field and preserved to enable the auditor to carry out vouching. His opinions should be based on evidences rather than on personal intuitions. In this connection either of the following procedure is followed by identifying the act of vouching on the voucher. Vouching includes routine checking which is a mechanical checking, whereas vouching is made on the basis of documentary evidence. This revision of the standards has gone through an extensive deliberative process, including public comments and input from the Comptroller General’s Advisory Council on Government Auditing Standards (Advisory Council). Integrity, Objectivity and Independence 2. Sales order, sales invoice, goods outward register, cash receipt, bank pay-in-slip, etc. An Auditor should refer the resolution as passed at the meeting for certain transactions. Receipt should clearly mention “advance payment” if it is do. Determination of audit procedures and coordinating audit work. An Auditor should verify that accounting entries are done on the basis of capital and revenue items. Voucher should be properly numbered serially and arrangement of vouchers accordingly. Arranged Voucher. Vouching is called the essence of auditing. The term Audit originated from the Latin word. Collateral Voucher − Copies of supporting documents which are not available in original are collateral voucher like duplicate or carbon copy of sale invoice. A voucher is helpful to support any transaction, which may be cash memo fill, voucher, ticket or others. Define the vouching and principles of vouching? These are in same orders as the entries are made in the books. A junior member of the audit staff calls the particulars in respect of each of the entry appearing in the books and the senior member compares the details called out with the documentary evidence produced to him to satisfy himself as to the genuines of the transaction. In the books of accounts the vouchers are based an entry. The voucher date can also be checked; it must be related to the current year. An Auditor should verify that every payment voucher of above Rs. Auding Concepts - Nature and limitations of Auditing, Basic Principles governing an audit, Ethical principles and concept of Auditor’s Independence, Relationship of auditing with other disciplines. In case of negligence in vouching, the Auditor will be held responsible; he cannot escape from his duty, if he has done vouching carelessly. 3. Accounting system & Internal Control 9. Auditing Standards: Guidance for Understanding the New Peer Review Ratings (D06602, January 2014). Any errors and frauds are easily detectable if vouching is conducting in searching and intelligent manner. Like purchase Bill, cash memo, pay-in-slip, etc. a) Audit undertaken to ascertain truth and fairness of state of affairs. A junior member of the audit staff calls the particulars in respect of each of the entry appearing in the books and the senior member compares the details called out with the documentary evidence produced to him to satisfy himself as to the genuines of the transaction. Routine checking covers the checking of every carry forward, posting to ledger account and balancing of account. Audit of Proprietorship: In case of proprietary concerns, the owner himself takes the decision to get the accounts audited. (a) Auditing (b) Vouching (c) Verification (d) Checking. Internal audit is Vouching should be complete at once in one sitting for a particular period of time. Object: The object of vouching is to verify the authority, authenticity and genuineness of transactions recorded in the books of account. Audit Evidence 8. On the other hand, vouching provides evidence for occurrence. The auditor should fully confidence by inquiring about it. Whether the documents presented for testing are related to the current year or not. An Auditor should plan his work to complete his work efficiently and well within time. Confidentiality 3. While vouching, an auditor should check whether the general principles of accounting have been followed or not and clear cut demarcation of capital and revenue is made or not. Level of expertise: Vouching is done generally by junior level clerks having sufficient knowledge of the accounting principles. Accounting system and policies. Quotations, purchase orders, purchase bills, goods inward register, etc. To verify that proper certification of voucher should be there by any responsible officer of the company. A rubber stamp is put upon its supporting documents and upon the voucher. Accounting entries made in the books must be supported by documentary evidence and inspection of that evidence is called vouching. Two persons do the job of vouching. These quiz objective questions are helpful for competitive exams. To verify whether voucher is processed through all the stages of Internal Check system properly. b) Audit undertaken internally to evaluate management functions. _____ Principles of … He should analyze the documentary evidence in this regard. In the words of Ronald A. Irish, “Vouching is a technical term, which refers to the inspection of documentary evidence supporting and substantiating a transaction.” _____is a systematic examination of the books and records or a business. Vouching is equally important as passing of original entry in the books of accounts. Efficiency of vouching will decide the success of audit. Compare the date of the voucher with the date recorded in the same book. The object of vouching is to find out the accuracy of the entries appearing in the books of accounts and detect that no entry has been omitted from the books of account. The duty of auditor is not only to examine the arithmetic accuracy of the transactions by vouching but also to verify assets and liabilities appearing in the balance sheet. It is a documentary evidence which proves the accuracy or otherwise of a transaction appearing in the books of account. Verification The auditor should carefully analyze that the entries must pertain to the business. Demand note, cash receipt, cash memo, etc. Intelligent and faithful vouching will establish reliability on financial statements, i.e., Profit and Loss account and Balance Sheet of any organization. Similarly, vouching is base of all auditing process. 1. It goes through layers of audit trails. Gkseries provide you the detailed solutions on Auditing as per exam pattern, to help you in day to day learning. If a transaction is satisfactory considered to have been vouched, distinctive tick is placed on the amount appearing in the book of the original entry. INTOSAI – Auditing Standards (Chapter 1, paragraphs 1.0.3 and 1.0.4) states that “ “The basic principles for auditing standards are basic assumptions, consistent premises, logical principles and requirements which help in developing auditing standards and serve the Auditors in forming their opinions and reports, particularly Vouching is out of the financial statements. Every alteration in voucher must be authenticated by concerned officer. Vouching forms the base for auditing and has an important part of Auditor’s duty. Payment received through Banking Channels. If there is any cutting or change on the receipts and vouchers figures it should be signed by the authorized officer. collection of evidences − through observation, confirmation, inspection, inquiry. Responsibility of work performed by others 5. Verification of Liabilities. All such types of documentary evidence are known as vouchers. The auditor should examine that all the vouchers are passed by the authorized officers. Vouching does not take into account the non-business transactions, thus helping auditors to ensure that all transactions in a firm’s book of accounts are business-related. For example, an auditor is engaged in vouching when examining a shipping document to see if it supports the amount of a sale recorded in the sales journal. The auditor should not accept the cancelled voucher. 5,000/- should bear the revenue stamp. Casts: Casts and carry forwards of the accounts of the general ledger should be checked. Similarly, vouching is base of all auditing process. To verify that all the documentary evidence is authenticated and related to business transactions only. Following points need to be considered regarding vouching −. 1. To check whether all the business transactions are properly recorded in the books of accounts or not. The auditing work will depend upon the agreement of audit and … To verify and confirm that the entries are recorded according to the capital and the revenue nature or not. partnership deed, leases, articles of association, minute, books contracts etc. Vouching helps the auditors to ascertain whether the entries in the book are true and fair, this is the basic objective of auditing. Principles of Auditing Fundamental principles of Auditing 1. To see whether recorded transactions are duly supported by documentary evidence or not. If the voucher is passed by unauthorized person it will not be correct. He must remain objective throughout the whole process, his integrity must not allow any malpractice. The auditor has to be honest while auditing, he cannot be favoring the organization. In most cases, hard to detect frauds can only be … Without existence of adequate internal control system in organisation, an Auditor should not opt for test checking. Principles of Vouching. The Auditor judges the authenticity, of the accounting entries using the technique of vouching. 1. Vouching is a sort of preliminary work, which forms an important part of audit work. 14. 3. The auditor should fully confidence about the amount written on the vouchers, its figures and words are same or not. Vouching is the essence or backbone of auditing because when performing an audit, an auditor must have proof of all transactions. 2. An auditor is a professional who is given access to entire financial records of the organization he is auditing. c) Audit undertaken by employees of the organization to check financial irregularities. We provide all important questions and answers from chapter Auditing. So the auditor cannot have any interest in the organization he is auditing, which allows him to be independent and impartial at all times. He is also entrusted with funds of other persons for the purpose of audit. Checking of Date. If adequate internal control system exists, the Auditor may choose to do test checking instead of complete vouching. Every checked voucher should be tick marked with sign. In case of unavailability of proper supporting documents, the Auditor may have all reasons to doubt about errors or fraud or manipulation. Amount of receipt should be same in words and in figure. If an item is considered to be in sufficiently vouched for certain reasons, a symbol “Q” is put on the amount appearing in the book of original entry and the relevant particulars of the vouchers which are insufficiently vouched are noted on the query list. At the conclusion of the audit, a list of unclear queries will be prepared and reported to the management or to the shareholders. Process of Preparing Effective Business Messages, Basic Organizational Plans for Effective Business Message. UPDATE This book has been updated in the light ... Control, Vouching, Verification (General, … Page-2 Vouching is carried on to ensure that the transactions relating to a particular period have been recorded and there is no voucher left unrecorded in the financial books. Investigation about missing vouchers in file if any. First of all auditor should check all the vouchers provided by the client are properly arranged. There may be a chance that an officer of the company has bought any item in his personal capacity. Internal control system of organization. its advantages and disadvantages ? To check and investigate the books of accounts if they are in the name of Director, Manager, Partner or any other employee of the company. Auditor must be satisfied about the head of account in which cash is deposited and drawn. A careful examination of every business transaction with its supporting documentary evidence is called voucher. Again he … Vouching is the act of reviewing documentary evidence to see if it properly supports entries made in the accounting records. Skill & Competence 4. Whether the documents presented for testing are related to the current year or not.
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