Which of the following documents is not relevant for vouching cash sales? With regard to cash in hand especially the petty cash balances, a surprise physical verification can be arranged so that the auditor can ascertain whether such book balance of cash in hand physically exists. Vouching of expenses in hospitals is almost the same as in other organizations; however, the following points need to be considered by an Auditor are given below − An Auditor should adopt the usual way to vouch purchases and other expenses of the hospitals. Make a surprise count of petty cash to verify that the amount of the petty cash fund is intact. Ranajit Kumar Pramanik 2. Arens/Elder/Beasley 12. 2) Cash sales:-The vouching procedure in regard to cash sales should be on the following lines: He should examine the system of internal check in operation in regard to cash sales. B.A.F. The main objective of vouching purchase book is to ensure that all the goods purchased during the year are being received and the client makes payment only for the goods being delivered by the supplier. Verify entry in Debtors or Customers Account with regard to date and amount of sale. APPROACH IN AUDITING CASH BALANCES •Determined by assessed level of control risk in bank and cash handling procedures. Vouching Learning Objectives After studying this chapter, you will be able to – Gain knowledge on vouching of cash and trade transactions Understand types of accounts and various procedures of vouch of each account specifically. Vouching of Credit Sales. Different types vouchers relevant to the business transactions should be carefully field and preserved to enable the auditor to carry out vouching. Let's assume that a company offers a cash discount and it is printed on its sales invoices as 1/10, net 30. Vouching and Routine Checking. Vouching Sales Ledger or Debtors Ledger – Procedure, Guidelines to Auditor. Opening Balance 2. Dividends from Investments 6. Examine […] Cash Sales 3. Daily cash sales summary B. Salesmen’s summary C. Monthly statements sent to customers D. Bank statement. On the other hand, … Vouching starts with a number on the financial statement and then you find the original document that supports that number. 11. Petty Cash Book 2. And two of the procedures that are performed are Tracing and Vouching. Vouching Audit 1. Vouching of cash transaction is the most important job of an auditor. 4. For Vouching of Tour Bills the company should maintain their tour policy, ask the management for tour policy. Reporting The purpose of vouching is to form an opinion for the purpose of reporting. Verify whether bills are as per the limits set for the designation in policy. Vouching the Receipt side of Cash book 1. In the company’s cash book, the auditor identifies entries of cash sales, receipts from creditors, interest income, dividend income, mortgage payments, fixed asset sales and accounts receivable.By using this technique, the auditor reviews all the entries and seeks for the relevant documentary evidence that supports and verifies each transaction. ... Vouching of Journal Book. 2. •Much of this information will come from evaluations and tests of controls in the sales and cash receipts, purchases and cash payments systems. Sale of Scraps 9. Vouching means " to vouch " i.e. For example, if client has unusual revenue during year-end, it may have risk of fake sales and reverse back in next year. Transactions relating to credit purchases are recorded in Purchase Book. vouching payments: OR Procedure in regards to vouching the credit side of the cash book: While vouching payments, the auditor has to satisfy himself that the payment: Principles and Practices of Auditing Unit 4 – Vouching 2. 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 . To know that all receipts are accounted for. Prepare the bank reconciliation statement. He can compare it with cashbook. Auditing Mcqs After ascertaining the efficiency of the internal check system as regards cash sales, auditor should vouch the cash sales … Sale of investments 5. loans OPENING BALANCE: the opening balance on the debit side of the cash book should be compared with the balance shown in the last audited Balance Sheet to ensure that actual balance has been brought down.