The auditor should examine the following while auditing Collection from debtors. Receipts from debtors who have become insolvent should be vouched with the dividend warrants received from the official receiver or assignee. The vouching of receipts from bills discounted should be as follows: Definition: Vouching is a procedure followed in the process of the audit to authorise the credibility of the entries entered in the books of accounts. The cash balance on any day can be known from cash book. > To check the counterfoils. The manager, secretary, or any other responsible official must certify such a Schedule. Define the term internal control and describe the ... Write a note on the following terms 1. The auditor should ensure that the amount recovered is deposited in the bank. 4). 11. Receipts from debtors who become bank rupt should be vouched with the dividend warrants received from the official receiver, total debt, rate per rupee payable as dividend and correspondence exchanged between the debtor or the official receiver and the client should be … (iii) Vouching the cash payment of duty with the receipts issued by the customs department; and (iv) Verification of the accounts to which the customs duty paid has been debited (e.g., duty paid for import of raw materials should be debited to the raw materials account, etc. Vouching of Cash Receipts (Debit Side of Cash Book) We will discuss the cash receipt which are placed on the debit side of cash book for following items − Opening Balance of Cash Book Opening balance of cash book represents cash in hand at the start of the year and should verified from the balance sheet of last financial year. He … If the debtors have not sent their statement of accounts, the auditor can contact the customers directly and ask for their confirmation of balance. Receipt from Debtors: To check the received from debtors to whom goods had been sold on credit in the past. 3. Thus, the counterfoil is the only proper documentary evidence available for the purpose. Vouching of Receipts from Debtors. Counter foil or carbon copies to be compared with entries made in cash book. Return to Ask a Question About This Lesson!. Vouching Sales Ledger or Debtor’s Ledger | Guidelines to Auditors, Notes on Audit of Ledgers – Guidelines to Auditors, Vouching of Bought Ledger or Creditor’s Ledger | Guidelines to Auditor, Vouching of Consignment Sales, Hire Purchase Sales, Sales Returns, Audit Procedure | Audit of Shares Issued for Consideration Other than Cash. The points to be examined are: total debt, rate per rupee payable as dividend and correspondence exchanged between the debtor or the official receiver and the client. 1. Click here to read or post comments. Vouching of Bought Ledger or Creditors ledger Bought ledger should be vouched with the help of the previous year’s audited Balance Sheet and all supporting books such as Purchase Book, Goods Inward Book, Cash Book, Allowances Book, Discount Register, and Bank Pass Book. However, this is not a reliable voucher as frauds are usually committed in the following ways: 1. In simple and easier words, it is a precise investigation of the presented documents of the firm by an auditor to check the correctness and accuracy of such documents. 2. Cash transactions maybe cash receipts or cash payments. Thus, the counterfoil is the only proper documentary evidence available for the purpose. It also provides the ability to process zero valued receipts, which allow for the distribution of matching tax invoices and tax credits. 13. Vouching Learning Outcomes • Understand the meaning of vouching • Identify how to verify vouchers Voucher • Documentary evidence Role of Auditor in vouching collection from debtors 1. Vouching of Cash Receipts: The vouching procedure, for cash receipts maybe discussed below- The auditor should check the cash book: with the relevant documentary evidence. Statement of accounts received from debtors. Q: Leech owes Smith $50. Vouching of Cash transactions Cash book is the most important of the books of a/c for any business. 2. Vouching of Sales Ledger or Debtor’s Ledger The opening balance of Sales Ledger should be checked with balance given in the previous year’s Balance Sheet. ... it was held that the auditor was liable for accepting the schedule of debtors without verifying thereof. Cash Received from Debtors Consider the following points for verification of cash received from debtors −  The carbon copies or counterfoils of cash receipt book should be verified. There is a possibility of committing fraud by passing fictitious entries in respect of credit notes, cash discounts, allowances in the Sales Ledger. Vouching is a substantive audit procedure to obtain evidence as to completeness, accuracy & validity. Two types of frauds may be committed while making collection from debtors. Vouching is the essence of auditing and is also the most important duty of an auditor. Cash received should be entered on the same date when the cash is … Customer’s should be asked to make the payment by check. The castings of the accounts in the Sales Ledger should now be checked with the Balances as shown in the Schedule of debtors, which has been supplied to him by his client. Such adjustments can be made for a longer period if the internal control systems is ineffective. The auditor should verify whether all the receipts are deposited into the bank in the immediate following day. 1. 11. Receipt from debtors should be vouched with the help of_____ a) Counterfoil Receipts cash book b) Suppliers statement c) Sales Deeds d) General Ledger 38. Vouching c. Auditing d. Investigation 33. Amount collected from the customer: The amount collected from the customer may be misappropriated and the amount standing to the debit of the customer account is written off as bad debts. ). 1. Vouching of Receipt side or Debit side of Cash book The receipt side or the debit side of the cash book contains items such as opening balance, cash sales, receipts from debtors, receipts from bills discounted and bills matured, income from investments, sale of investments, sale of fixed assets, loan received, and miscellaneous receipts, etc. The auditor should be very careful while auditing the receipts from the customers to ensure that no fraud of the above nature is committed. If rents are collected through agents, their statements should also be verified and tallied with the cash book entries. The receipts and payments are recorded in cash book. Vouching of receipts & Payments a) Receipts Audit of receipts including cash sales, receipts from debtors, recovery of bad debts written off, rents, interest, dividend, royalties, insurance claim, sale of assets, miscellaneous receipts b) Payments Audit of payments including cash purchases, payment to creditors, salaries There should be an effective system of Internal Check. Documents to be Vouched: Receipts issued by creditors, Invoices, Statement of accounts of creditors, Bank statement. Bad Debts Dividend Receipts from debtors who become bankrupt should be vouched with the dividend warrants received from the Official Receiver or Assignee. 2. Auditor should vouch the transaction in the following manner: 1. After having checked the Bought Ledger, the auditor should proceed to check the Sales Ledger, which contains the accounts of the debtors. With the help of vouching auditor come to know the genuineness of the transactions. 4. Vouching of Bad Debts Recovered . Details of total debt and rate per rupee payable as dividend should be examined. If a customer becomes insolvent, the amount due from him can be claimed through his Official Receiver. Vouching of Collection from Debtors | Rent Receipts | Auditor Role, Role of Auditor in vouching collection from debtors, Types of frauds in collection from debtors, Role of auditor in vouching rent receipts, 6 Areas to be Enquired and Reported by Auditor in Company Audit | Role of Auditor, Verification of Creditors | Guidelines for Auditors, Audit of Sole Trading Concern | Guidelines | Advantages to Sole Trader, Operational audit | Steps Involved | Purpose of conducting, Notes on Audit of Ledgers – Guidelines to Auditors, Weaknesses of Trade Union Movement in India and Suggestion to Strengthen, Audit Planning & Developing an Active Audit Plan – Considerations, Advantages, Good and evil effects of Inflation on Economy, Vouching of Cash Receipts | General Guidelines to Auditors, Audit of Clubs, Hotels & Cinemas in India | Guidelines to Auditors, Depreciation – Meaning, Characteristics, Causes, Objectives, Factors Affecting Depreciation Calculation, Inequality of Income – Causes, Evils or Consequences, Accountlearning | Contents for Management Studies |. Vouching is used to find out the accuracy and efficiency of entries in the books of accouts.in other words vouching can be regarded as the backbone of auditing. He should ensure that the discounts given are at uniform rate to all debtors and that due authorization is obtained in case of higher discounts. Purpose: This document provides the facility for receiving money and cheques from debtors. Cross verifying the counterfoils and rent receipts with rent rolls. >Teeming and Lading Method of Fraud to detect- Checking partial payments, Checking amounts deposited in banks, Checking carbon copies of receipts, Checking statements of accounts. So the cash received from debtors can be vouched with reference to the counterfoils of the receipts issued to them. Prev Page; The main aim of vouching is to inspect all receipts & payments are properly accounted for & no fraudulent transactions are recorded. Steps in Vouching Receipts from Debtors • Receipts issued – Auditor can vouch the receipt issued to debtors for collection of money. Receipts from bills receivable:-Bills receivable include bills of exchange, promissory notes, and I.O.U’s received from debtors.  Cash received should be entered on the same date when the cash is actually received. 2. They are—. Cash Received from Debtors Consider the following points for verification of cash received from debtors − 3. Receipts from Debtors Before vouching the receipts from debtors, the auditor should examine, the efficiency and adequacy of the system of internal check and should see that: The person maintaining the debtors, ledger should may be allowed to collect money from debtors. As there is a possibility that the rent collected may be misappropriated and shown as ‘Rent Receivable’, the auditor should obtain a confirmation statement from the tenant to verify the above. VOUCHING OF CASH TRANSACTIONS Vouching of cash receipts Opening Balance of Cash Book Opening balance of cash book represents cash in hand at the start of the year and should verified from the balance sheet of last financial year. 1. Teeming and lading: Where the amount collected from one customer is misappropriated by the cashier and the customer account is adjusted with the amount collected from some other customer. In case if credit balance is due to the fact that an advance is made on account of an order placed, it must be shown under a separate head known as “Advance against Goods on Order” and should not be included amongst sundry creditors. An auditor has to verify the following documents while auditing rent receipts: Through the lease deeds and rent agreements, the auditor can gather details regarding the exact amount of rent, the amount to be collected towards amenities, the advance collected from the tenant, due date of payment of rent for every month etc. Important parts of such systems should be (a)Persons maintaining the debtor’s ledger should not be allowed to collect the money from the customers, and (b) The customers should be asked to remit cash/cheques through the post. Cash Received from Debtors. But this is not reliable voucher as frauds are usually committed. General Guidelines to Auditors in vouching of Cash Receipts - From article at https://accountlearning.com/vouching-of-cash-receipts-general-guidelines-to-auditors/ Receipts from debtors  The cash received from debtors can be vouched with reference to the counterfoils of the receipts issued to them. The receipts from bills receivable can be in two ways: 1). The auditor should call for a Schedule of Debtors’ Account and check it carefully. From the definition it is clear that, A voucher is a documentary evidence in support of a transaction in the books of accounts. D) Nominal Account. Auditor should take the following precautions while vouching cash receipts or cash payments. So if the b/f figure is £2,000,000 and sales in the period were £800,000 and debtor days are 77, I would use goal seek to set the debtor days cell to '77' by changing the receipts cell in the calculation.  The discount allowed to customers should be properly authorized by a responsible officer. Vouching of Sales Ledger or Debtor’s Ledger. • Receipt date – Auditor to make note of the date of receipt and compare with date in the cash book. The opening balance of Sales Ledger should be checked with balance given in the previous year’s Balance Sheet. Journal for Payment from Debtor with Discount Allowed. 4. The auditor should verify whether all the receipts are deposited into the bank in the immediate following day. f Receipts from debtors The cash received from debtors can be vouched with reference to the counterfoils of the receipts issued to them. Consider the following points for verification of cash received from debtors − The carbon copies or counterfoils of cash receipt book should be verified. So an auditor should pay special attention to the credit entries in the Sales Ledger and bad debts. I usualy use goal-seek in excel to predict the receipts figure based on set debtor days. … Books like Bills Receivable Book, Cash Book, Sales Returns Book or Goods Outward Book, Journal or other subsidiary books should be checked to vouch the accounts in the Sales Ledger. Vouching of Cash received from Debtors. If so, receipts from debtors are recorded the cash receipts journal (where you put all cash receipts). | How are they vouched? View Vouching.ppt from ACCOUNT 105 at Apeejay Stya University. He should ensure that the discounts given are at uniform rate to all debtors and that due authorization is obtained... 3.