Objectives of the Cash Books Vouching:
1) To
verify that all the receipts and payments have been properly recorded.
2) To
verify about the cash at the bank and in hand.
3) To
know or understand that all receipts are accounted for.
4) To
prove that no fraudulent have been made.
Vouching the receipts side:
1. Examination of internal system:
In case of receipts side the auditors has to depend upon the internal checks and external documentary evidence. He should examine the weak points of the internal check system and pay the special attention on the weak point.
2. Compare counterfoil with cashbook:
The auditor should checks the received cash with the counterfoil. He should also verify that unused receipt books are kept under lock and key or not.
3. Sale of assets:
The auditor should check the money received from the sale of assets and vouch it with reference to the correspondent of contract and other available evidence.
4. Terms of discount:
Auditor should verify that the terms and conditions on which discounts are given to the debtors. He should also examine a few items, on their base.
5. Receipts of rent:
When the Rent received it should be vouched with the rent agreement and counterfoil receipts.
6. Cash sale:
In this regard or consider auditor should compare the daily sale, statement of cashier and salesman with the bank statement.
7. Verify commission:
Auditor should check the account of commission with the accounts of the parties from whom commission has been received. The rate of agreement and commission must be checked verified.
8. Profit from investment:
Auditor should touch the profit from the investment with the counterfoil of dividend warrants and financial journals.
9. Bills receivable:
The amount received against the bill receivable should be vouched with reference to the bills receivable books. Inquires must be made against those bills, which are for the receipts of money, but against which the amount has not been received.
10. Bad debits dividend:
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 examined.
11. Insurance claim money received:
Amount received in represent of a claim from an insurance company should be vouched with correspondence exchange with the insurance company, the amount rendered by the company, the original claim actually lodged.
12. Sale of securities:
Broker sold note should be vouched. The fact that sale is “ex-dividend” or “cum-dividend should carefully be examined. Minutes of the boards of directors if any should also be examined.
13. Miscellaneous receipt:
For vouching miscellaneous receipt resort be made to correspondence, contracts, or any other document which will be produced for proving the support of transaction involved in respect of the miscellaneous receipts.
14. Opening balance:
It should be verified with the balance shown in the auditor’s balance sheet of the previous years.
Payment side:
1. Checking of internal system:
With reference to cash payments, auditor should analyze the internal check system and keep in view the weak points while auditing.
2. Inspection of wages and salaries:
The auditor should inspect the certified wages sheet and also test a few items for his satisfaction. He should also compare the contract and the appointment orders with the salaries.
3. Petty cash checking:
Auditor should examine the petty cash in hand and verify the balance of petty cash with cashbook.
4. Checking of payable bills:
The auditor should examine these bills with the returned bill. If these are paid through bank then passbook should be checked.
5. Checking of revenue and expenditure:
The auditor should prove that proper allocation has been made between capital, revenue and expenditure.
6. Creditors payments:
Auditor should also verify or examine the record and documentary evidence about the payments made to the creditors.
7. Detection of any missing entry:
Auditor should be very careful is examining the various payments. He should find out the missing or irregular entry by proper checking of vouchers.
8. Checking of cash purchase:
Auditors should check the name of the payees in the cash book against their entries. He should also note the dates on vouchers.
9. Checking of cash purchase:
These should be vouched with cash memos of the suppliers. For acquiring satisfaction that good have actually been received. The good received notes (GRN) good inward book etc should be examined. Allocation to the head of account debited should be verified.
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