The balance of a cash book is posted to the cash account in the ledger. 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. In these cases, entries both for receipt and payment will appear in the cash book itself in appropriate columns. Have been sanctioned by a person holding some authority, iv. The three column cashbook is sometimes referred to as the triple cash book, treble cash book or the 3 column cash book. Its a practice followed in auditing, with objective of establishing the authenticity of the transactions recorded in the primary books of accounts. Sales vouching examine the internal control over receipts from sales. 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. Opening balance of the current year refers to the closing balance of last year. In the companys cash book, the auditor identifies entries of cash sales, receipts from creditors, interest income, dividend income, mortgage payments, fixed asset sales and accounts receivable. Vouchingmeaning, importance, vouching of cash and trading transactions.
The examiner ought to consider the accompanying general focuses while vouching the cash transactions. A voucher is a documentary evidence which is used to support a transaction in a books of account. When an accounting transaction is vouched, it is tested and verified by presenting relevant documentary evidence. At the time of vouching the bill receivable book, auditor should take the following steps.
A certificate to the effect that the payment has been made to the proper. An auditor should examine and understand the system and should pay attention to the following points. Sometimes, cash is deposited with the bank and sometimes, cash is withdrawn from the bank for use in office. The auditor should vouch the payment to creditors as follows. The receipt of payment and the date is recorded to show that the voucher has. Important points to be considered by auditors in vouching. Proper supporting should be attached with voucher like in case of payment of statutory dues proper challans and in case of party payments receipt should be attached. Wherever necessary, the supporting documents are to be attached with the vouchers, so that the transaction can be verified in depth. Vouching of receipt side or debit side of cash book vouchers to. If rent, rates and other taxes relating to the current year have not been paid by the time the books are closed, these must be i 1 ascertained and debited to the profit and loss account and shown as a liability iliihe 1 balance sheet.
Vouching, widely recognized as the backbone of auditing, is a component of an audit seeking to authenticate the transactions recorded in a firms book of accounts. Have been properly recorded in the books of accounts. In a single day, payment should not be exceeding rs. If the supporting evidences are not available, the auditors may ask for more information and explanation concerning such transactions 10. It is known as the evidence for the support of a transaction in the books of account. Credit side or payment side of the cash book if the purchase of freehold land or building is made, the. Recording transactions in the cash book accounting simpler. Vouching is the process of analysing vouchers of the business enterprise. For example, carbon copies or counterfoils of cash receipts. A cash book is a type of subsidiary book where cash or bank receipts and cash or bank payments made during a period are recorded in a chronological order. A receipts and payments account is a summary of actual cash receipts and payments.
The payment should relate to the year for which the ac are being audited iii. To make sure that all the transactions that have been occurred, are entered in the books. Auditor should take the following precautions while vouching cash receipts or cash payments. The technique of vouching in respect of the important items which usually appear on the debit side of cash book is discussed here. Definition of a voucher a voucher is an internal document used by a companys accounts payable department in order to collect and organize the necessary documentation and approvals. A voucher is often a prenumbered form used in the accounts payable department to standardize and enhance a companys internal control over payments to its vendors and service providers. He should examine the accounts of creditors with the help of invoices, return notes, good inwards book etc. Vouching helps to prove the truth and fairness of account by detecting errors and frauds. The cash book is recorded in chronological order, and the balance is updated and. The scrutiny of the entries in the cash book and the pass book revealed that.
Examine carbon copies of the cash receipt or cash sales invoices. Vouching of debit side of cash book or cash receipts. Vouching of receipt side or debit side of cash book. Vouching audit objective important tracing accountinguide. If the system is good, possibilities of errors and frauds are. It should be checking with the balance shown in the audited balance sheet of the previous year. Jan 28, 2020 vouching of cash payments credit side of cash book all the payment made to creditors, expenses incurred in cash and all other payments done appear on the credit side of cash book and the auditor is required to vouch cash payments because chances of cash misappropriation are very high. While vouching cash payment to creditors, the auditor should examine the system of internal control in existence. Hence the auditor should see whether all receipts have been recorded in cash book and no fictitious payment appears on the payment side of cash book.
Recording transactions in the cash book accounting. Vouching of cash payments credit side of cash book all the payment made to creditors, expenses incurred in cash and all other payments done appear on the credit side of cash book and the auditor is required to vouch cash payments because chances of cash misappropriation are very high. 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. 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 determine the closing cash and bank balances correctly. The auditor should examine the cash book with reference to daily cash sales summary and copies of cash memos. The vouching procedure, for cash receipts maybe discussed below the auditor should check the cash book. How the auditors vouch the cash book including the receipt side.
To check whether the transactions are duly authenticated by the person in charge. Examine authorization level for making cash sales and receiving amount therefrom. 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. Write short note on vouching of cash transactions and. Write short note on vouching of cash sales and purchases. Before setting the program of vouching, an auditor should inquire carefully into the whole system of internal control. Cashbook cash payment transactions credit side or payment side of the cash book auditor should satisfy himself that the payment have been actually made. Vouching of cash transactions points to be considered. 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. Cash paid to creditors vouching of cash transactions. A cash book is a financial journal that contains all cash receipts and. Mar 19, 20 ensure that no fraudulent payment have been made justify both cash book and bank statement ensure that all receipts and payments are properly recorded. Fraud can take place by accounting lesser amount than what is actually received. Errors and frauds arise mostly in connection with receipts and payments of cash by.
The vouching of a cash book is a very difficult process. Test check the few bills for ascertaining accuracy of rate, amount, discount and sales taxvat etc. The auditor vouches cash payments with an objective to ensure that all cash. The restaurant, for example, can debit the meat inventory account and credit the cash account to record the payment. The opening balance of sales ledger should be checked with balance given in the previous years balance sheet. Issue of right shares cash book, aoa letter of offer vouching of the payment side credit side of cash book i. The required evidence for vouching the cash sales would depend upon the procedure for recording cash sales in the book the following points are normally considered by. In case the verification of cash balance is not possible on the last. Bills payable vouching of cash transactions auditing. How can vouching the payment of wages and payment of.
The left hand side is known as the debit side and the right hand side is called the credit side. Now at first we have to know what is voucher and what is vouching. In vouching payments, the auditor does not merely seek. He should check the entries in the cash book with the receipts issued by creditors or counterfoils of cheque book and bank statement. Dec 17, 2019 the other side of the three column cash ledger book would be headed credit and show an identical format with the three columns representing the monetary amounts of the cash payment, bank payment, and discounts received. He may issue a forged receipt for the money received from the customer. Examine the method of depositing cash receipts daily. 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 difference between these two is that the 3column cash book contains an additional amount column on each side. By overcasting the payment side total of the cashbook. As explained in the introduction, there are 2 types of cash book. If automatic cash recording machines are being used by the entity, the auditor should use locked in totals of cash received as shown by the machine for reference. General points to be considered while vouching cash transactions. A cash book is a subsidiary of the general ledger in which all cash transactions during a period are 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. An auditor will examine the efficiency and reliability of internal check before beginning to vouch for cash payments. Vouching of cash payments credit side of cash book opening balance payment to creditors payment of salaries payment of wages purchase of plant and. Vouching of cash receipt transactions is more difficult than that of cash payment transactions, since there is greater chance of manipulation in regard to cash receipt. Auditing vouching of cash transactions tutorialspoint. Dec 09, 2017 vouching the receipt side of cash book 1.
By the word correct, auditors will ensure that the transactions are recorded in accordance with all financial assertions. Under this method when cash is received from a customer, say a the cashier makes no entry in the cash book, and he misappropriates this money. Hello this video is for vouching of cash book receipts side like this videoand subscribe to this channel concept of vouching. Vouching is the act of inspecting supporting documents to ensure that the accounting record is correct. A cashbook refers to an accounting book which records all the cash receipts and the cash disbursements. Examine the method adopted for depositing daily cash receipts in bank. To check whether proper documentary evidence is there in support of the entries made in the books of accounts. Before beginning the vouching of cash book, the inspector ought to enquire about the inward check framework in operation if there is no efficient interior check framework, there are part of odds of misappropriation of cash. An auditor should examine and understand the system and should pay.
In case large number of cash sales are affected, check cash sales summary book maintained by client. Auditor should trace the carryon or proceeds of matured and discounted bills which have been paid or discounted through cash book bank book. Verify the cash in hand by actually counting it and see whether it agrees with cash book balance. Proper bifurcation between revenue and capital expenditure. Vouching of receipt side or debit side of cashbook or cash receipt transactions. One copy of cash memo is returned to the internal duly stamped as cash paid 2 copies. Cashbook cash payment transactions credit side or payment side of the cash. He should compare the salary book and cheque drawn for a particular month. Which points should be considered while vouching of cash.
Cash transactions maybe cash receipts or cash payments. He should first of all assess the operation of an efficient and effective system of internal check. The auditor should vouch the entries in the bills payable book and the bank pass book if payment is made by bank. Procedure in regard to vouching the credit side of the cash book items vouching considerations 1. The auditor should verify that the prepaid and outstanding amounts are duly accounted for the period to which such. The technique of vouching in respect of the important items which usually appear on the debit side of the cash book is discussed here.
Vouching of debit side of cash book or cash receipts auditing. How the auditors vouch the cash book including the receipt. Examine the balance shown in the audited balance sheet of the previous year. Vouching of cash receipts general guidelines to auditors. Bank reconciliation statement adjustment of cash book. Sometimes the bank balances as per cash book and bank statement doesnt match. Cash book and bank book, accounting period, trial balance and its limitations. He should ensure that all cash payments are within the period under audit. Receipts are recorded on the debit the left hand side, and payments are recorded on the credit right hand side. Vouching of cash book in hindi points to be considered by auditor. Usually, cash receipts are entered first in the unpleasant cash book before they are entered in the cash book. How to vouch the bill received book and bill payable book.
Vouching of the payment side of cashbook cheque payments. What is the difference between an invoice and a voucher. A delinquent cashier, having control of all the financial books, may misappropriate cash by falsely crediting the customers account without corresponding entry in the cash book. He should ensure that bills when honoured on the date of maturity and returned by the payee after receiving the payment should be properly cancelled after payment.
He should also compare the rough cash book with the cash book to identify the fictitious payments. Central government account receipts and payments rules 1983. 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. Receipts and payments account definition, explanation, format. Vouching of credit side of cash book or cash payments. It is an important financial book for a business concern. In vouching payments, the auditor does not merely seek proof. The pay in slip should invariably be used for this purpose. 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.
In a business concern, cash book is maintained to account for receipts and payments of cash. The vouching of wages is one of the most important duties of the auditor. The auditor in vouching cash payments or credit side of cash book should ensure that payments are made for the purpose of business, payment relates to the period under audit, payment is properly sanctioned and recorded, payment has been made to the right person, and payment is properly supported by a voucher and same as entered in cash book. Vouching sales ledger or debtors ledger guidelines to. Vouching of credit side of cash book or cash payments auditing. After payment of cash, stamp should be affixed on cash voucher just like paid. Sometimes, fraud may occur when payment received from a. He should check the salaries actually paid during the year. Substantial procedures vouching of cash transaction. Mistakes can be detected easily through verification, and entries are kept uptodate. Cash payment voucher denotes payment of cash, bank payment voucher indicates payment by cheque or. Errors and frauds arise mostly in connection with receipts and payments of cash by making misappropriations wherever possible. Cash book definition, types accounting format of cash book.
1395 95 64 1045 264 292 631 184 560 1214 852 755 1563 1090 1330 1020 1148 460 389 1085 1315 1727 1594 952 936 211