Payment of wages at higher rate than allowed. 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. Vouching of cash payments: While vouching the payment side, the auditor must remain vigilant to the possibility of following errors and frauds. Advance Payments to Suppliers (Prepayments) 3 of 5 Procurement and Purchasing Services 02-2012 Deposits, Partial, Progress and Down Payments Suppliers to which a partial advanced payment is issued (i.e. An organization has to make deposits for the purpose of State and Central sales tax. Journal vouchers can be of many types. How to do bank vouching effectively can any one give sugessions and how to detect frauds in bank related transactions waithing for ur replys vinod - Audit Internal Audit. Journal voucher can be of income, expense, purchasing of assets, payment of liabilities, etc. The auditor can go backward also using the help of tracing. In this session, Prof. Eralee has explained vouching payment in detail. • In most domestic business transactions, a cash payment will typically be made in the currency of the country where the transaction takes place, either in paper currency, in coins or in an appropriate combination. If the tax demand is raised by the Income tax department, the auditor should examine the correspondence and documents relating thereto. Vouching is the essence of the Auditing. Importance of Vouching Evidence : One of the main benefits of the vouching is that all the documentary evidence which substantiate transactions are thoroughly examined, which helps in identifying the genuineness of the transaction. Errors and frauds arise mostly in connection with receipts and payments of … If the organization has opted for an appeal, the auditor has to check the revision order. While vouching cash payments, an auditor should pay attention to the following points. Vouching of Cash Transaction In a business concern, cash book is maintained to account for receipts and payments of cash. 2) He should insist that the vouchers are properly dated. Vouching is the process of reviewing documentary evidence and ensure that it properly supports entries made in the books of accounting. The amount of a cheque may be increased after it has been signed. 5. that the sales tax paid/payable for each accounting period is duly recorded in the books. Vouching is a Technical term, which refers to the inspection of documentary evidence supporting and substantiating a transaction, by an auditor. 1. The vouching of wages is one of the most important duties of the auditor. A voucher may be a sales bill, purchase bill, payment receipt, pay-in slip, etc. In case any penalty or interest is paid along with tax, the same is to be verified. The auditor should verify the statement of total income, the calculation of the self assessment, tax liability, date of payment of self assessment tax and the date of filing of returns of income. Dear Seniors, Kindly give me notes of the procedures of Vouching Cash Payments & Cash Receipts . Periodically, tax is to be paid and sales return is to be filed along with the tax payment challans. The auditor should evaluate the effectiveness of Internal check and control system for cash payments. 6. in case of concession in sales tax, that the customer has declared the same in the proper form. Payment of Wages. (v) The interest payable and paid for late payment of tax, if any. Vouching of payment of wages should be done in the following lines. As vouching examines the truth of the transactions entered in the company’s accounts, it is known as an acid test of the audit. Ltd. for internal control there should be daily cash movement sheet which contain the followings. Tweet Preliminary expenses relates to the creation and floating of a company. 8. In simple and easier words, it is a precise investigation of the presented documents of the firm by an auditor to check the correctness and accuracy of such documents. Transaction which do not falls in any other voucher comes in journal voucher. 5. The main aim of vouching is to inspect all receipts & payments are properly accounted for & no fraudulent transactions are recorded. Examine the supporting documents to ensure that the expenses relates to the client’s business. Vouching Payment of Sales Tax. For the business itself, iii.Have been sanctioned by a person holding some authority, iv.Have been properly recorded in the books of accounts. Periodically, tax is to be paid and sales return is to be filed along with the tax payment challans. 3. The auditor should ascertain that the system of petty cash is maintained on the imp rest system and note the amount of imp rest should be consistent and in line with the requirements of the company although it should not necessarily be rigid. I head Risk Assurance at ANB Consulting Co. Pvt. 9. Auditors Duty in Vouching Cash Payments The auditor should pay special attention to the following points while vouching cash payments. 1) All vouchers relating to cash payments should be serially numbered and properly arranged. Registers needed for verification 16th March 2010 From India , … About Press Copyright Contact us Creators Advertise Developers Terms Privacy Policy & Safety How YouTube works Test new features For all payments of tax, the assessors’ copy of the payment challan bearing the ‘Received’ stamp of the bank should be verified. This discussion thread is old and is closed for new comments. The auditor should verify whether it is advance tax, self assessment tax or final payment of tax. The object of vouching is to Gain assurance regarding the existence assertion. 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. (i) Inspection of receipted challans for payments, (ii) The accounting year and corresponding assessment year, (iii) The assessment order provisional and final, (iv) The order on appeals, and. He should first of all assess the operation of an efficient and effective system of internal check. The receipts and payments are recorded in cash book. 6. Vouching Audit. 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. The final payment of tax should be verified against the Assessment Order received from the I.T. Vouching Payment of Income Tax and Sales tax. Payment shown to ex-workers in the current month. If the system is good, possibilities of errors and frauds are minimized. Vouching of Cash transactions Cash book is the most important of the books of a/c for any business. He should also ensure that the advance tax is paid within the due date specified under the Income Tax Act. Journal vouching It is the vouching of journal vouchers. Vouching is a process of checking the vouchers related to the transactions recorded in the books of accounts. Vouching of cash payments or credit side of the cash book. An organization has to make deposits for the purpose of State and Central sales tax. That the contingent liability in respect of sales tax is disclosed as a footnote to the balance sheet. Tweet The following are the audit steps to audit/vouch/verify the client’s advertising expenses: Audit For Payment Of Advertisement Expenses Check that the advertisement expenses have been properly allocated whether to Capital, deferred revenue or revenue as the case may be. It is the essence of Auditing It is the practice followed in an audit, with the objective of establishing the authenticity of … 2. Vouching of wages. 4. What is the definition of vouching? The entries for receipts and payments of cash are checked with reference to various supporting documentary evidences. In vouching, payments shown on cash book, an auditor should see that payment has been made wholly and exclusively for the business of the client and that it is properly authorized by the person who is competent to do so. With the help of vouching auditor come to know the genuineness of the transactions. 1. It comprises stamp duties, registration fees, legal costs, consultants fees, expenses of printing of memorandum and articles etc. Vouching is a substantive audit procedure to obtain evidence as to completeness, accuracy & validity. Cheque may be made payable to a wrong payee. 7. that any additional tax payable as per the assessment order is paid within the time allowed. The auditor should examine the entries in the cashbook with relevant vouchers. Lower or non-deduction of advance or other deductions due. down payments, progress payments, I m looking for better control over Cashier ,who is handling cash relating issues. 3. that the sales tax is properly charged in the invoice, duly collected and deposited. 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. By the word correct, auditors will ensure that the transactions are recorded in accordance with all financial assertions. At the time of vouching of wages paid, the Auditor should verify the following points to avoid misappropriation of cash − Adequacy of Internal Control System. The cash balance on any day can be known from cash book. Vouching of Payment of Wages. A voucher is a document recording a liability or allowing for the payment of a liability, or debt, held by the person or company who will receive payment. It is usually kept on the imp rest system. In the case of advance tax, the auditor should verify the statement prepared to calculate the advance tax to be paid. Vouching includes. To the right persons, ii. 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. Definition: Vouching is a procedure followed in the process of the audit to authorise the credibility of the entries entered in the books of accounts. Dear Seniors, Kindly give me notes of the procedures of Vouching Cash Payments & Cash Receipts . 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