Vouching of the cash book

An auditor should examine and understand the system and should pay attention to the following points. 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. Thus vouchers are the documentary or other evidences in support of transactions entered in the books of accounts. It is an important financial book for a business concern. Purchase vouching check cash memo issued by supplier. Purchase invoice must be a tax invoice otherwise buyer cant avail input tax credit of vat.

If cash register is used, auditor should check the total daily rolls with the entries in the. How would you vouch the receipts side of your clients cash book. Cash book is one of the most important books of accounts. A day book cumledger kept for making entry of the cash transactions as well as posting to the cash and bank accounts is called cash book. Which points should be considered while vouching of cash. Cash book, which is an important financial book for a business concern, is maintained to account for receipts and payments of cash. Reference should be made to the audit working papers to see if the closing balance of the cash shown in the balance sheet is the result of the many. Meaning and objectives of vouching accountingmanagement. Vouching principles of vouching, techniques of vouching. The entries for receipts and payments of cash are checked with reference to various supporting documentary evidences. Here, we will discuss some entries of the cash book. Vouching of cash transactions points to be considered. Recorded in debit side cash receipts opening balance. Hello this video is for vouching of cash book receipts side like this video and subscribe to this channel concept of vouching.

The vouching procedures used by auditors to check the overstatement of the account, which test the summary records to the detailed supporting documents, where as, tracing procedure checks the understatement where the direction of testing reciprocate from the former. In a business concern, cash book is maintained to account for receipts and payments of cash. The auditor has to guard against the omission of cash receipts and has to rely considerably on the system of internal check in force. Under this method when cash is received from a customer, say a the cashier makes no entry in the. In case of true and fair view there is good report. The vouching of a cash book is a very difficult process.

It should be checking with the balance shown in the audited balance sheet of the previous year. Payments to creditors payment for credit purchases cash memo acknowledge of cash received payments for goods purchased on credit vouching of purchase book payments to suppliers for services e. Vouching is different from simple routine checking as vouching is much more accurate than the latter. Topics covered under this chapter meaning definition importance of vouching routine checking and vouching types of vouchers vouching of receipts vouching of cash sales, receipts from debtors, bills receivable, proceeds from sale of investments and buildings vouching of payments. Vouching is the process of analysing vouchers of the business enterprise. Before starting the vouching of cash book, the auditor should enquire about the internal check system in. Points to be considered while vouching of cash transactions. We will further discuss the main duties of an auditor concerning. It involves misappropriation of cash received from customers.

When an accounting transaction is vouched, it is tested and verified by presenting relevant documentary evidence. Principles and practices of auditing unit 4 vouching 2. Tweet the following are the audit steps to auditvouchverify the receipts of cash proceeds. It is a unique book of account that combines journal and ledger. 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. Auditing vouching of cash transactions we will discuss the cash receipt which are placed on the debit side of cash book for following items. Vouching of receipt side or debit side of cash book. To ensure that all the receipts and payments have been properly recorded. We are on a mission of providing a free, worldclass education for.

Vouching does not mean merely the inspection of receipts with the cash book, but includes the examination of the transactions of a business together with documentary and other evidence of sufficient validity to satisfy an auditor that such transactions are in order, have been properly. Reporting the purpose of vouching is to form an opinion for the purpose of reporting. It is a step pursued in auditing, with an aim of checking the accuracy and reliability of the transactions entered in the companys books of accounts. What is the object of vouching the cash book or how the. Vouching of cash transaction is the most important job of an auditor. An auditor should examine and understand the system and should pay attention in the following points. How to do bank vouching effectively can any one give sugessions and how to detect frauds in bank related transactions waithing for ur replys vinod audit internal audit. Cash book is a very important financial book for a business concern. Auditor should also check the figures of the salesman and cashier summaries entry in the cash book. Impressed by turners ambition, anderson connects him with a lawyer and helps him land a union job with good wages and benefits by vouching for him to a union steward at a local hospital. Vouching of cash book in hindi points to be considered by auditor. Receipts of cash sales examining the system of internal checkscontrols pertaining to proceeds from cash sales to ensure no loop holes pertaining on omission of cash sales and prompt banking into the bank ascertain the practice followed in. By the word correct, auditors will ensure that the transactions are recorded in accordance with all financial assertions.

Auditing vouching of cash transactions tutorialspoint. All transactions whether it is cash receipts or payments should be accounted in the cash book. The required evidence for vouching the cash sales would depend upon the procedure for recording the cash sales in the book. Its a practice followed in auditing, with objective of establishing the authenticity of the transactions recorded in the primary books of accounts. Auditor should compare the cash book with the general ledger. The major purpose behind the vouching of purchase book is to confirm that every purchase bill is entered in purchase book and the invoices entered in purchase book are against the actually received goods and payment is made for those actual purchases. Vouching of debit side of cash book or cash receipts auditing. 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 technique of vouching in respect of the important items which usually appear on the debit side of the cash book is discussed here.

The auditor should ascertain that the system of petty cash is maintained on the imp rest system and note the amount of imp rest should be consistent and in line with the requirements of the company although it should not necessarily be rigid. What comes first, the invoice or the shipping document. Vouching of receipt side or debit side of cash book vouchers to. Errors and frauds arise mostly in connection with receipts and payments of cash by. The auditor vouches cash payments with an objective to ensure that all cash payments pertaining to business activities are genuine and. Auditing full notes bachelors of business administration. Following are the important objects of cash book vouching.

Before setting the program of vouching, an auditor should inquire carefully into whole system of internal control. Purchase invoices must be on the name of company with proper address. Vouching of the payment side of cashbook cheque payments. Vouching of credit side of cash book or cash payments auditing. How the auditors vouch the cash book including the receipt.

This document is highly rated by b com students and has been viewed 20251 times. With every purchase invoice a purchase order and goods receipt note should be enclosed. If we are tracing, were looking for completeness and thus, understatement. Where automatic tills are in use the entries in the cash book should be checked from the till. Reference should be made to the audit working papers to see if the closing balance of the cash shown in the balance sheet is the. Verification of cash in hand and at bank and petty cash vouching verification is a technical term, which refers to the inspection of documentary evidence supporting and substantiating a transaction, by an auditor. Usually carbon copies of the cash memos or cash sales invoices would support such entries which should be checked from the till records. In vouching, payments shown on cash book, an auditor should see that payment has been made wholly and exclusively for the business of the client and that it is properly authorized by the person who is competent to do so an auditor should keep in mind the following special points while vouching payments. Vouching is the act of inspecting supporting documents to ensure that the accounting record is correct. Cash transactions take place almost every day in business. Cash book is a journal for making primary entry of all cash transactions.

General points to be considered which vouching cash transactions are briefly explained. The techniques of vouching in respect of the important items which usually appear on thedebit side of the cash book. It should be checked with the balance shown in the audited balance sheet of the previous year. Audit procedures or how to auditvouch verify receipts of. Usually, cash receipts are entered first in the unpleasant cash book before they are entered in the cash book. Vouching is a technical term, which refers to the inspection of documentary evidence supporting and substantiating a transaction, by an auditor. Vouching audit objective important tracing accountinguide. Points to be considered for verification of cash received. Many cosigners think they are simply vouching for the borrowers integrity. The objects of vouching the payment side of the cash book are to ensure that the payments were properly authorized ascertain that they were entered under their appropriate head of account in the cash book see that payments relate to the business and are a proper business charge, determine that the payments stated to have been made are supported by the required documentary evidence and. The balance of a cash book is posted to the cash account in the ledger.

It is the essence of auditing 1 it is the practice followed in an audit, with the objective of establishing the authenticity of the transactions recorded in the primary books of account. Introduction a cash book important book of account in cash book receipts and payment recorded. Vouching of cash transactions cash book is the most important of the books of ac for any business. What is cash book definition, explanation and format. The closing balance for the last financial year will be the opening balance or cashinhand for the current financial year. Have been sanctioned by a person holding some authority, iv. How you will vouch the cash sales and cash purchases. Jan 10, 2009 how to do bank vouching effectively can any one give sugessions and how to detect frauds in bank related transactions waithing for ur replys vinod audit internal audit. The cash balance on any day can be known from cash book. If cash register is used, auditor should check the total daily rolls with the entries in the cash book. The entries related to cash book should be checked with various supporting evidence documents. All unused receipt books and cheque books should be kept under lock.

How the auditors vouch the cash book including the receipt side. 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. The receipts and payments are recorded in cash book. The vouching of the receipts side of the cash book is more difficult than the payment side, since only indirect evidence can, as a rule, be obtained. Transactions introduction a cash book important book of account in cash book receipts and payment recorded. The closing balance for the last financial year will be the opening balance or cash inhand for the current financial year. Cash balance the purpose of vouching is to check that cash in hand figures are facts. Usually carbon copies of the cash memos or cash sales invoice would support such entries which should be checked. The chances of misappropriation of cash are very high that is why auditor has to see that no receipt or payment of cash is unrecorded in cash book. Each and every cash entry has to be traced back to its origin and must be verified with the help of appropriate receipt or document. It is the essence of auditing 1 it is the practice followed in an audit, with the objective of establishing the authenticity of. Simply stated, vouching means a careful examination of all original evidence i.

Dec 09, 2017 vouching of cash transactions cash book is the most important of the books of ac for any business. A day bookcumledger kept for making entry of the cash transactions as well as posting to the cash and bank accounts is called cash book. Vouching of debit side of cash book or cash receipts. Vouching of receipt side or debit side of cash book youtube. After examining the adequacy or otherwise of the system of internal check, the following should be performed for vouching the petty cash book. All payments except petty cash expenses should be made by cheque. Have been properly recorded in the books of accounts. What is the object of vouching the cash book or how the cash. Im still not understanding this tracingvouching business. Cashbook cash payment transactions credit side or payment side of the cash book auditor should satisfy himself that the payment have been actually made. In vouching payments, the auditor does not merely seek.