Vouching is an act of comparing entries in the books of accounts with documentary evidence in support thereof.

1. FACULTY OF MANAGEMENT SCIENCE
BACHELORS’ – PROGRAMME
Subject: Principles of Auditing
By: Buyera Saidi
E-mail: buyera.saidi@yahoo.com, Te.l+252634172883
Chapter 4 - vouching

2. VOUCHING
Vouching is the core function of auditing. The
auditor can examine the documents that
support and confirm a transaction. There is
need to test the truth of items recorded in the
books of accounts to prove an entry in the
accounting record with documentary evidence
as well as to see that transaction has been
properly authorized and recorded in the books
of original entry.

3. VOUCHING ………continuation
The auditor can make an opinion after
going through the relevant vouchers &
other records. There should be no
missing entry and there is no wrong
payment made to outside parties. The
goods and services purchased must relate
to the nature of the business. It tells that
transaction is valid, accurate, and
complete in all respects.

4. VOUCHING explained by accounting experts
1. L. R. Dicksee says that vouching is an act of
comparing entries in the books of accounts with
documentary evidence in support thereof.
2. Joseph Lancaster says that vouching is an
examination of the ledger entries as will satisfy the
auditor not only that the entry is supported by the
documentary evidence but it has been properly
made upon the books.
3. Ronald Irish says that vouching refers to the
inspection of documentary evidence supporting and
substantiating transaction.
4. R. K. Mautz says that the documentary evidence in
support of entries is often referred to as vouching.

5. OBJECTIVES OF VOUCHING
PROPER EVIDENCE: The purpose of vouching
is to note that proper evidence is available for
every entry. The signatures, initials and rubber
stamp are evidence that document has been
authorized and checked:
PROPER AUTHORITY: The purpose of
vouching is to note that there is proper authority
behind every transaction. The transactions are
not acceptable at all in the absence of signature
of the manager.

6. RIGHT PERIOD: The purpose of vouching
is to check that date of the vouchers
relates to the accounting period. The
adjustments in books are made on the
basis of current year record of the
transaction.
CORRECT AMOUNT: The purpose of
vouching is to check that correct amount
has been recorded in the entry.

7. CAPITAL AND REVENUE EXPENSES. The
purpose of vouching is to scrutinize the analysis
of transaction into capital or revenue. The
expense relating to one year is treated as
revenue otherwise it is called capital.
PURCHASE FOR BUSINESS: The purpose of
vouching is to confirm that purchases relate to
the nature of the business. Vouching helps to
confirm that private purchases are not recorded
as business purchases.

8. POSTINGS: The auditor can vouch
posting ledgers; He can see through
vouchers that postings are complete and
correct.
NO ERRORS: The purpose of vouching is
to check and confirm that there are no
errors in books of accounts. The errors are
the result of negligence or overwork. Audit
staff is not overloaded so that they can
find errors.

9. Ledger
Date Details F Cash Bank Date Details F Cash Bank
1/1/2 Bal. BF 2000 8000 1/1 Purchases 1000 3000
2/1 Sales 4000 7000 15 Wages 1000

10. NO FRAUDS: The purpose of
vouching is to examine that no
fraudulent payments are made.
The fraud can be committed due
to matching minds of employee
and customer. The auditor can
vouch for entries to disclose such
frauds.

11. CASTINGS: The purpose of vouching is to
check castings or totals. The auditor can
calculate all totals by himself. He can
evaluate the totals with books to sustain
accuracy.
CASH AT BANK: The purpose of vouching
is to determine true cash at the bank. He
can vouch all receipts and payments. The
result is that he can check whether cash
book is correct or not.

12. CASH BALANCE: The purpose of vouching is
to check that cash in hand is correct. He can
count cash and compare it with cash book. He
checks that cash book figure tally with cash in
hand.
REPORTING: The purpose of vouching is to
form an opinion for the purpose of reporting. In
case of true and fair view, there is a good
report. In absence of such results, there maybe
a qualified report.

13. TECHNIQUES OF VOUCHING
ARRANGED VOUCHERS. The vouchers are the basis
of entry in books accounts. The vouchers support all
transactions. It may be cash memo, bill, and
voucher, ticket or any other piece of paper showing
the dealing in terms of money.
RELATE TO BUSINESS: The vouchers must be in the
name of the business concern. The vouchers bring
name of managers or employees. Not acceptable.
The name of business must be mentioned on
vouchers otherwise transactions are doubtful.

14. CORRECT ACCOUNTS: The auditor checks
the accounts debited & those credited to
ensure correctness. The rules of debit and
credit can followed for dividing the
transaction into two accounts.
DATE OF VOUCHERS: The date of the
vouchers is checked. It should relate to
the year under audit. The date of last year
or next year must not accepted. In the
absence of date on voucher, it cannot be
acceptable

15. AMOUNT IN WORDS: The amount stated in the
voucher is recorded in the entry. The net amount
must be entered. The trade discount is not
included in the amount of the voucher. The
amount in words and figures must be the same.
CHANGES IN VOUCHERS: The changes in vouchers
should be discouraged. The date, amount, rate of
one unit and name of concern may be changed.
The changes should not be accepted unless
approved by the owner or manager.

16. REVENUE STAMPS: The stamps are used
according to the value of cash memos. The
Stamp Act 1899 is applicable for affixing
revenue stamps. A voucher of less than
twenty rupees does not require revenue
stamp.
AUTHORITY: The vouchers must be recorded
in the books of accounts after proper
authority. The owner or manager must put his
signature on every voucher for approval of
dealing. The voucher without signature of
management is not recorded.

17. AGREEMENTS: The auditor must examine the
agreements, correspondence and other papers
relating to business activities. Such agreements
provide basic information to the auditor. He can
vouch the transaction based on such agreements.
BY-LAWS: The memorandum and articles of
association are rules and regulations in case of
company. The by-laws of societies and clubs are
used to determine management power. The
auditor has the right to go through these rules and
regulations.

18. MORTGAGE DEEDS: The management may
enter into agreement with any party for
purchase and sale of assets. The deed or
agreement is prepared. In case of loan against
immovable property mortgage deed is signed.
The contents of deed must be studied.
NOTES AVAILABLE WITH MANAGEMENT: The
notes or other papers available with
management can be studied, The working
papers of Previous year can help the auditor
to note many points of evidence relating to
last year.

19. MINUTES BOOK: The auditor should
examine the minute book. The
resolutions and decisions of
directors and shareholders are
recorded there. He can see that
such decisions have been
implemented in the books of
accounts.

20. VOUCHING PROCEDURE
READING OUT: The vouching is a task of the
auditor. The junior auditor can read out the
contents of the voucher. He can inform the senior
auditor about the date, name of organization,
number of voucher and amounts of vouchers.
COMPARISON: He can senior tally auditor each
and can every hear the item contents stated in
called the voucher out by the junior auditor with
entries in the books of accounts. Thus comparison
is a part of vouching procedure.

21. TICKING: The senior auditor can use various
ticks or symbols to the items checked. The ticks
may be an abbreviation of words. Such ticks or
symbols may differ from auditor to auditor
because these are code words.
Signature: The senior auditor can vouch the
entries with the help of vouchers, The can put
his signature or initials on every voucher for
safety measures. The signed vouchers cannot
be presented again for another entry.

22. STAMPING: The senior auditor can use the
rubber stamp instead of signature or initials.
He can use stamps for checking vouchers.
The rubber stamp may have the wording
‘Checked and cancelled’ on it.
QUERY: The vouchers may be missing. The
entries may be doubtful due to over-writing
and erasing. The audit staff can write ‘Q’
against such entry. This entry is recorded in
working papers.

23. MANAGEMENT: The audit staff can give
some time to the management for clearing
the objections. The doubtful entries are
handed over in written form. The
management can examine the record in
detail.
REPLY: The management may respond
after one or two days about the doubtful
entries. The auditor can examine the
respond of managers. The auditor can judge
whether the respond is right or wrong.

24. CLEARANCE: The audit staff can
clear the question mark for which
proper answer is made available.
The auditor may not be satisfied
with the answers of objections. He
can inform the management about
this query.

25. NOT SATISFACTORY: The auditor may
disallow the unsatisfactory reply. He has skill,
training and experience. He can use all
available means to test the truth. He can note
down poor clarification in working papers.
OBJECTIONS: The objection stated in the
working papers can be discussed with the
management at the end of audit. He can form
an opinion on the basis of such objection. He
can submit his report either comprehensible or
qualified.

26. VOUCHING IS THE REASON FOR
AUDITING
ACCURACY OF BOOKS: Vouching is concerned
with checking entries in the books ‘of accounts with
the help of vouchers. The accuracy Of books of
accounts is maintained through vouching: The entry
is recorded and posted on the bass of vouchers only.
LOCATION OF ERRORS: Comparing of figures in
entries and vouchers can help the auditor to locate
errors. The location and correction of errors leads to
reliable data. The vouching is thus the backbone of
auditing for discovery of errors.

27. DETECTING FRAUDS: Vouching is an element of
auditing. The minor frauds are detected by it. The
management can fib( the responsibility of fraud.
Vouching is a tool in the hands of auditors for
ensuring that the books of accounts are accurate.
CORRECT TOTALS: Vouching is essential for
checking totals and subtotals. The totals of
voucher are tested. The deductions of discount
are checked. The addition of taxes or other
charges are noted. The net amount is recorded in
journals and ledgers. There is a need of correct
total for accuracy.

28. COMPLETE POSTING: Vouching is the essence of
auditing. There is a demand for accurate record of
audit. When posting is complete in all respect, it
means work of vouching is under process. The trial
balance is extracted from such record. It will
facilitate audit work.
THOROUGH CHECKING. Vouching is the essence
of auditing. All vouchers may be compared with all
entries in journal and posting into the ledgers. In
small companies or where internal, control system is
weak thorough checking is highly essential.
Vouching is the only way of thorough checking.

29. RELIABLE FINAL ACCOUNTS: Vouching is the
essence of auditing. There is a need of reliable final
accounts. It is only possible when accounting record
is correct. Thus vouching helps to produce true
journal and ledger books upon which we can draw
true final accounts.
ALTERATIONS ARE NOT POSSIBLE: Vouching is
the essence of auditing. The alteration in figures
after vouching is not possible at all. All entries are
ticked with the help of special symbols used for this
purpose. Thus vouching discourages the change in
figures for maintaining accuracy.

30. RELATED VOUCHER: Vouching is the essence of
auditing. The related vouchers are acceptable for
recording business transaction. The irrelevant or
doubtful voucher cannot be used for making the
business record. Vouching accepts only real and
genuine voucher relating to nature of work.
RELATE TO BUSINESS: Vouching is necessary
for auditing routine business activities. The
voucher must be relevant to routine
business transaction. The nature of business will
determine the relevance to business, The personal
activities of owners or manager do not relate to the
business.

31. CURRENT YEAR: The expense and income of assets
liabilities Of the current year must be recorded in the
current year. The adjustments outstanding. prepaid,
accrued and unearned incomes must be made The
matching revenues and expenses of current year are
needed.
NO- OMISSION: There must be any omission of any
business transaction. The omission of transaction
cannot show true and fair view of business affairs.
Vouching is useful tool in the hands of auditor. The
omission can be traced and corrections can be made
for true. business position.

32. ACTUAL TRANSACTION: There is a demand of audit
that actual transactions be recorded. The fictitious
transaction must be avoided. The auditor can use
vouching technique to track actual transactions.
The possibility of fictitious transactions is altogether
eliminated through vouching.
BUSINESS POLICIES FOLLOWED: Vouching is
helpful to find that business policies have been
followed. The policies are broad guidelines for doing
the business. The business objectives are achieved
only when policies are implemented. Vouching is used
to examine the policies adopted.

33. TRUE FINANCIAL STATEMENTS:
Vouching is essence of auditing. The
auditor can see whether there is link
between books of account and financial
statements. The truth in financial
statements depends upon truth in books.
Therefore vouching is a means of tracking
truth in financial statements of business
concern.

34. HELPS TO FORM OPINION: The auditor can
form an opinion on the books of accounts and
financial statements. His opinion is based on
accounting, principles followed and completion
of ledger formalities. Vouching tells us about
accounting principles and legal obligation. Thus
vouching is the essence of auditing.
PROPER AUTHORITY: Vouching is the
essence of auditing. Proper authority supports
every transaction. The signature of
management on every voucher shows proper
authority.