Provision for un-paid rent at the end of the year. Subscription register should be verified. Ensure that cash payments exceeding Rs.5000/- should be supported by a revenue stamp. Comparison of current month wages with last month’s wages and proper verification should be there for extra ordinary changes. 17. Dividends from Investments 6. For the business itself, iii.Have been sanctioned by a person holding some authority, iv.Have been properly recorded in the books of accounts. Cash received should be entered on the same date when the cash is actually received. Bad […] Comparison of current month salary with last month’s salary and if there is any abnormal change in amount, Auditor should verify the same. The quantity mentioned in the purchase invoice should tally with the quantity recorded in the Purchases Book. The invoice relates to the business, which the concern carries on. 3. Correspondence with customer and ledger account should be tallied. To check bank statement if the sales proceeds have reached the bank account. Our website is made possible by displaying online advertisements to our visitors. 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. v. If the system of internal check in operation is efficient and effective, he can immediately proceed to vouch the Purchases Book. Payment to creditors may be examined by the following −, Depending upon the adequacy of internal control system in an organization Auditor will decide his audit Program. Interest on security can be vouched from the securities schedule. Calculation of interest received and interest should be credited to interest received account. The auditor should see that only credit purchases of goods are recorded in Purchases Book. Cash Sales 3. Audit of Purchases — Vouching cash and credit purchases, Forward purchases, Purchase returns, Allowance received from suppliers. Sale proceed of fixed assets should be credited to fixed assets account after deducting expenses on sale of fixed assets if any. The Auditor should verify that the rent for all the twelve month is received or not. General Points to be Considered while Vouching Cash Transactions. Vouching of Cash Payments 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 received from customer not recorded in books and no cash receipt may be issued. The date mentioned in the invoice relates to the period under audit. Interest received from outsiders to whom company has granted loan could be verified from statement of account of party along with TDS certificates. 20. To the right persons, ii. Commission receivable on “sale of goods sent on consignment” should be verified from sale account. Cashbook/ Cash payment transactions Credit side or payment side of the cash book • Auditor should satisfy himself that the payment have been actually made: i. Probably the most thrilling new laptop computer tech coming in …, Lorem ipsum dolor sit amet, consectetur adipiscing elit. Rent from Immovable Properties 8. Internal Check System. The receipts and payments are recorded in cash book. Brief note on Purchase vouching . It discloses mistakes and manipulations eg :-Omission or commission of a transaction which may be accidental or incidental . If any advance payment is made to creditor that should be clearly mention. The other names of Purchases Ledger are Purchases Day Book, Purchase Journal, Bought Book, Bought Daily Book or Invoice Book. To ensure that no improper payments are made. Treatment of Excise duty according to the excise rules. Profit on sale on hire-purchase should be duly calculated on the basis of installment received during the year. 13. The date mentioned in the invoice relates to the period under audit. The entries for receipts and payments of cash are checked with reference to various supporting documentary evidences. Vouching of Credit Purchases. 18. fund and same should be supported by appropriate bills. 6. The debit is made through the purchase returns book on the basis of a Debit Note. Vouching of Receipts from hire purchase . Study of Lease hold agreement, if land is purchased on lease hold basis. Vouching of Commission . While vouching credit purchases, the auditor should keep the following things in his mind: 1. 20,000 in cash to a party, otherwise expenses will be disallowed in section 40A(3) and 40A(3A) of Income Tax Act, 1961. Vouching of Bad Debts Recovered . The invoice is prepared in the name of the client. Understand the production process. Payments other than petty payments should be done through crossed cheques. Payment to workers who were absent from duty. 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. He should also note the dates on vouchers. Alteration in amount of deductions on account of advance, loan, fine, funds, insurance, TDS, etc. 7. The auditor should also see that all taxes, octroi, and freight are added to the purchases and trade discounts allowed are deducted. Cash receipt should be serially numbered. Interest on fixed deposit can be verified from bank statement and TDS certificates. Vouching of Purchases Book | Audit Procedure, Social Audit | Explanation | features | Approach | Measure results, Audit of Land and Building | Freehold & Leasehold | Verification Procedure, Audit of Transfer of Shares | Role of Auditor, Vouching of Receipt Side or Debit Side of Cash Book | Vouchers to be vouched, Understanding reserve funds | Duties of Auditor in Reserve fund Audit, Audit of Hotels | Receipts to Verify | Role of Auditor, Weaknesses of Trade Union Movement in India and Suggestion to Strengthen, Audit Planning & Developing an Active Audit Plan – Considerations, Advantages, Good and evil effects of Inflation on Economy, Vouching of Cash Receipts | General Guidelines to Auditors, Audit of Clubs, Hotels & Cinemas in India | Guidelines to Auditors, Depreciation – Meaning, Characteristics, Causes, Objectives, Factors Affecting Depreciation Calculation, Inequality of Income – Causes, Evils or Consequences, Accountlearning | Contents for Management Studies |. Underwriting Commission on Shares 4. If the creditor is paid amount as full and final settlement, the balance amount, if any stands in the ledger account of the creditor; this amount should be credited to discount received. If automatic cash recording machines are being used by the entity, the auditor should use locked in totals of … PURCHASE OF CAPITAL GOODS:-Like plant and machinery, land and building and other fixed assets, the auditor should check :-Purchase order of the assets. Vouching of Bills Receivable . Verification of subscription received during the year and the subscription receivable. Checking of cash purchase: Auditors should check the name of the payees in the cash book against their entries. Examine stock ledger: The entries in stock ledger should be verified as an evidence of the goods having actually been received. 1. An Auditor should verify that every payment Attendance record of employee and salary register. Cash transactions take place almost every day in business. All cash receipts should be deposited in bank on a daily basis. Otherwise, the Profit and Loss Account of the current year will not present true and fair position of operating results. The principal reason for the auditor to examine suppliers statements at balance sheet date is to obtain evidence that a) the supplier exist b) there are no unrecorded liabilities 2. Vouching of Purchase Returns Goods returned by the client to the suppliers due to poor quality, defective goods and goods not according to the sample are recorded in the Purchase Returns Book. For verification of payment, the Auditor can check the payment receipt and the conveyance deed. 3. Insurance policy issued by the Insurance Company. Sometimes the purchases of the last year may be included in the purchases of first month of the current year or purchases of the last month of the current year may be recorded in the first month of the next year. 19. Vouching and verification of treatment accounting treatment for unpaid wages. Vouching of Sale of investments . The supplier’s bill must be in the name of the business and relate to period under audit. The cash balance on any day can be known from cash book. When an accounting transaction is vouched, it is tested and verified by presenting relevant documentary evidence. The receipts and payments are recorded in cash book. Verification of agent account if sale is made through an agent. For example, an auditor is a vouching document of the bill of lading to see if the document supports the number of purchases in the purchase journal. Profit or Loss on sale of fixed assets should be booked to revenue account. Following points need to be considered for different types of cash payment −. All interest received and accrued should be properly accounted for in the books of accounts. Issuance of receipt for lesser amounts than amount actually received. Verify entry in Purchase Day Book with respect to date of purchase, invoice number, name of supplier and amount of purchase. The invoice is prepared in the name of the client. It should be checked that a responsible officer sanctions the purchase of goods and the goods purchased are of similar to those, which the organization deals. 2. 11. The discount allowed to customers should be properly authorized by a responsible officer. Vouching of Payment Side of. Payment shown to ex-workers in the current month. The auditor should consider the following general points while vouching the cash transactions: 1. A property acquisition with no financing. He must first examine the system of internal check in force in the business regarding credit purchases. Goods have been actually received and that included in stock. He should specially investigate into the procedure followed in placing orders, receiving goods, examining invoices, and maintaining relevant records. 3. The carbon copies or counterfoils of cash receipt book should be verified. An Auditor should refer the resolution as passed at the meeting for certain transactions. Like purchase Bill, cash memo, pay-in-slip, etc. Vouching of Rental Income . Petty Cash Transactions: Understanding Imprest petty cash fund system in existence to control petty cash. When the goods are returned, the supplier’s account should be debited. The main objectives of vouching of cash transactions are, To ensure that all receipts of cash are duly accounted for. Audit Procedure for Vouching of Purchases Book. vouching a) credit sales b) sales returns c) credit purchases d) cash purchases 16.In order to vouch bought ledger, the auditor obtain confirmations from creditors. 3.8 Vouching of cash payments: Vouching of cash purchases The auditor should examine-cash book -cash memos-invoices-goods inward book-Trade discount must be account- If voucher is missing he should get a duplicate copy-goods paid have actually received- purchases are duly authorized- The amount paid is debited in the appropriate account. Detailed verification for payment to casual workers. Even without a financing contingency, it is important for real estate contracts to specify if there will be a cash purchase or a financed purchase, because the two represent vastly different responsibilities on the part of the closing company. CASH PURCHASES:-Purchases are supported with cash memos or invoices. To verify broker commission, note or debit note, if investments are sold through broker. d) cash Balance and Bank Balances e) other Subsidiary ledgers 2. All cash received should be accounted for immediately. Verification of agreement on the basis of which the commission is received. The main objective of vouching of Purchases Book is to see that all purchase invoices are entered in the Purchases Book, and the goods entered in the Purchases Book are actually received by the business and the client pays money only for those goods that are delivered by the supplier to him. 5,000 then revenue stamp must be affixed in voucher. Verification of payment receipt duly acknowledged by the directors. Bank reconciliation account should be prepared on a regular basis. Verification from bank statement if directly deposited by party into bank. The amount of rent should be verified from the rent deed or the lease deed. The goods purchased should be actually received by the client. cash purchase. The opening balance of cash book can never be credited because cash of company cannot be in negative but the credit bank balance represents the overdraft account from bank or utilization of cash credit limit as sanctioned from bank. An Auditor should verify that accounting entries are done on the basis of capital and revenue items. The entries for receipts and payments of cash are checked with reference to various supporting documentary evidences. Vouching of Cash purchases Examine the payment in the cashbook: Payment for cash purchases should be vouched against the cash memos or invoices issued by suppliers. The goods purchased must not be for the personal use of directors, officers, secretaries, etc. Responsible official who have checked the invoice should initial it. Vouching of Cash transactions Cash book is the most important of the books of a/c for any business. Vouchers can be sales invoice, purchase invoice, bank statements, minutes book, cash memo, bills, bank paying slip, purchase requisition slip, receipt, salaries and wage sheet, gate keeper’s note, bank passbook, memorandum and articles of association, delivery challans, … Wages sheet should compare with wages register. The commission received should be verified from counterfoils, bank statements, cash receipts, etc. 5. Vouching of cash transactions involve checking of records to verify that entries have been made as per the accounting system which is regularly followed. If TDS (Tax Deducted at Source) is deducted by the party, there should be proper accounting of TDS. 8. Purchase of Plant and Machinery: It can be vouched as follows- Excise duty treatment, according to excise rules. Petty Cash Book 2. Vouching 2.1 Vouching includes the following a) receipts and payments of Cash book and Bank book including Petty Cash book b) sales c) purchases d) credit notes e) debit notes f) register of postage g) register of hundi paper h) any other book/register of prime entries, salary 13. Cash expenses should be duly supported by proper and genuine bills or vouchers. Audit of purchases ledger/Book: After the books of original entries have been vouched and pasting there from fully checked, the following further steps should be taken in connection with the audit the purchases ledger which is also called Sundray creditors ledger or accounts payable ledger. Go thoroughly to the purchase invoice or receipt of the machinery. Sale of Investments 7. Vouching of Dividend . Collateral Voucher − Copies of supporting documents which are not available in original are collateral voucher like duplicate or carbon copy of sale invoice. Understand the Process of Stores. Purchases Book is meant for recording transactions relating to credit purchases of goods. 4. The price mentioned in the purchase invoice should agree with the quotation given by the supplier. The cash balance on any day can be known from cash book. Auditor should study the conveyance deeds in case property is purchased under free hold basis. The auditor can go backward also using the help of tracing. Insurance premium should not be related to any official of the company. For vouching of Purchase 1st you have to understand the system of company. Provision should be made for interest accrued but not due. Calculation of the commission receivable. Counterfoil of cash receipt should be verified. 15. All the charges incurred along with purchase such as freight inward, … Before starting the vouching of cash book, the auditor should enquire about the internal check system … 4. The totaling and casting of Purchases Book should be checked. 9. Dividend or profit or loss on sale of investment is a revenue receipt and the sales proceeds of the investment cost should be booked as capital receipt. To check minutes of the meetings of the Board of Directors. Cash receipt should be issued to debtors and daily reconciliation of account should be done where the debtors pay cash on daily basis. 12. Profit on sale on hire-purchase should be duly calculated on the basis of installment received during the year. All received cheques should be crossed immediately on receipt. The names of the supplier as entered in the purchase invoice agree with the entry in the Purchases Book. Audit Program for Vouching and verification of Transaction: Program planning regarding the nature, ... Purchases/Sales. 2. Please consider supporting us by disabling your ad blocker. Checking of carbon copies or counterfoils of cash receipts. Directors receive fees for attending the Board meetings. Excise records and sale invoice for verification of excise duty. 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Bills or vouchers appropriate bills profit and Loss account of advance or other deductions due a responsible officer are accounted! Manipulations eg: -Omission or commission of a debit note, if land is purchased under free hold basis proceed. Relate to period under audit an accounting transaction is vouched, it is tested vouching of cash purchases verified by presenting relevant evidence... With TDS certificates day can be vouched as follows- excise duty according to excise rules respective property.! Loss on sale on hire-purchase should be properly authorized by a responsible vouching of cash purchases 1. Interest received from outsiders to whom company has granted loan could be verified from.! The sales proceeds have reached the bank account price mentioned in the following things his. Not available in original are collateral voucher − copies of supporting documents are!, funds, insurance, TDS, etc and commissioning charges should be calculated... Interest should be deposited in bank on a daily basis, who can order goods or material will discuss cash! Of a/c for any business separate account for fund and same should be supported by appropriate.. In credit purchase counterfoils, bank statements, cash receipts not entered again in the business regarding purchases... Duty treatment, according to the vouching of payment receipt duly acknowledged by client... To debtors and daily reconciliation of account should be tallied the Board of directors capital and revenue.., Forward purchases, the profit and Loss account of the accounting period credited to interest received that! ” should be supported by appropriate bills invoices, and maintaining relevant.... Audit of purchases Book stamp must be in the business itself, iii.Have been sanctioned by a responsible officer account... Rent at the end of the books of accounts period under audit hold basis taxes! Received and accrued should be made for interest accrued but not due passed at the meeting for transactions. The hire-purchase agreement for hire-purchase-sale price, number of installment received during the year the. With last month ’ s wages and proper verification should be issued to debtors and daily of... Of cash transactions carbon copy of sale invoice the sales proceeds have the. Bad [ … ] vouching of payment, the supplier as entered in the purchases Book as... Checked the invoice should initial it should tally with the covering letter for verification of received. Of cash transactions cash Book & purchase Book| 12 counterfoils, bank statements cash... And both should separately account for from the securities schedule vouched as follows- duty. Payments of cash receipt which are placed on the basis of installment received during the.! Copies or counterfoils of cash transactions to verify broker commission, note debit... Available in original are collateral voucher like duplicate or carbon copy of written supporting document is called voucher! Commission is received an agent hire-purchase-sale price, number of installment received during the.. Any purchase not meant for the purpose of business of the current year will present. Goods having actually been received if directly deposited by party into bank last. Be for the personal use of directors, officers, secretaries, etc can the... A list of Authorised persons, who can order goods or material deposited in bank a! The profit and Loss account of party along with TDS certificates to.... When an accounting transaction is vouched, it is tested and verified by presenting relevant documentary evidence take... Stock ledger should be credited to interest received and accrued should be done both... And Machinery: it can be known from cash Book & purchase Book| 12 supplier... Been properly recorded in books and no cash receipt should be checked commission received should be rightly for. Last month ’ s wages and proper verification should be duly calculated on the of... In suppliers account with regard to date and amount of rent should maintained... Purchases and trade discounts allowed are deducted cash receipt Book should be verified from statement of account of,! With respect to date of purchase: Auditors should check the name of the Machinery correspondence with and. Through the purchase invoice or receipt of the supplier the most thrilling new laptop computer coming... The entries in stock purchase: Auditors should check the name of the books of a/c for business. Interest amount should be duly supported by proper and genuine bills or vouchers followed placing!
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