The following steps should be taken to vouch the sales return book.
1. Sales return book:
The auditor should vouch it with the credit notes issued to the debtors.
2. Credit notes:
While checking the credit notes issued particular attention should be given to the following points.
- Name of client.
- Debtors name agrees with the sales return book.
- Date falls within the financial period.
- Whether checked by staff member & it bears his initial in token of internal checking.
3. Allocation:
The debit to revenue account should be given in the books of client to that head of account which was previously credited.
4. Goods received:
The entries for the goods received should be checked with the goods inward book or with gate in passes.
5. Reason for returns:
The general reason for the debit note should be inquired in to correspondence on the subject should be carefully read, when the auditor feels doubtful about the accuracy of entries.
6. Casts and postings:
Casts cross casts and carry forwards of the sales return book should be checked. The pasting to the general ledger and some of the posting to the debtor’s ledger should also be checked.
7. Manipulation:
The entries in the sales return for the early part of the next period should be examined carefully. There is a possibility of manipulation account by including the fictitious sales during the year under audit and showing them as returned after the end of the accounting period.
8. Statement of account:
A test check of amount in respect of credit notes in to the statement of accounts (if received regularly) is also suggested.
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