2. 5. The totaling and casting of Purchases Book should be checked. Routine checking : The auditor should perform routine […] PURCHASE OF CAPITAL GOODS:-Like plant and machinery, land and building and other fixed assets, the auditor should check :-Purchase order of the assets. 4. Freight inward charges, installation charges, erection and commissioning charges should be capitalized. Comparison of current month salary with last month’s salary and if there is any abnormal change in amount, Auditor should verify the same. For vouching of Purchase 1st you have to understand the system of company. cash purchase. All the charges incurred along with purchase such as freight inward, … Audit of Sales — Vouching of cash and credit sales, Goods on consignment, Sale on approval basis, Sale under hire% purchase agreement, Returnable containers, Various types of allowances given to customers, Sale returns. Understand the production process. 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. Examine stock ledger: The entries in stock ledger should be verified as an evidence of the goods having actually been received. The invoice is prepared in the name of the client. Directors receive fees for attending the Board meetings. Detailed verification for payment to casual workers. Study of Lease hold agreement, if land is purchased on lease hold basis. 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. The cash balance on any day can be known from cash book. Cash received from customer not recorded in books and no cash receipt may be issued. Vouching of Bills Receivable . 6. The amount of rent should be verified from the rent deed or the lease deed. 18. The entries for receipts and payments of cash are checked with reference to various supporting documentary evidences. Aliquam mattis …, Life is not a long journey,it’s a joyful journey, Udemy – Complete Elasticsearch Masterclass with Logstash and Kibana 2019-8, AquaSoft Stages 12.1.06 Multilingual x64 + Portable Free download, OfficeSuite Premium 5.10.36738 x86 / x64 + Portable, AquaSoft SlideShow Ultimate / Premium 12.1.06 x64 + Portable Free Download, Symantec Endpoint Protection 14.3.3385.1000 Win / Clients / 3384 full / macOS Free Download. In case where the rental income is received from more than one property, separate account for each property should be maintained. Vouching of Insurance Claims . Payments to creditors Payments to creditors may … 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. 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. Provision for un-paid rent at the end of the year. Verify entry in Suppliers Account with regard to date and amount of purchase. 9. The invoice relates to the business, which the concern carries on. He must first examine the system of internal check in force in the business regarding credit purchases. Probably the most thrilling new laptop computer tech coming in …, Lorem ipsum dolor sit amet, consectetur adipiscing elit. Responsible official who have checked the invoice should initial it. The carbon copies or counterfoils of cash receipt book should be verified. The auditor should also see that all taxes, octroi, and freight are added to the purchases and trade discounts allowed are deducted. The auditor can go backward also using the help of tracing. The Purchases Book should be verified with the help of purchase invoices, copies of orders placed, goods received note, goods inward book, and copies of challans from supplier. Interest on security can be vouched from the securities schedule. Internal Check System. 13. 9. It is very important for Auditor to check the following −, At the time of vouching of wages paid, the Auditor should verify the following points to avoid misappropriation of cash −, The Auditor should pay attention to the following −, Purchase of Land and Building can be vouched as follows −, Consider the following points for the verification of rent by the auditor −, Consider the following points for the verification of Insurance Premium −, Consider the following for the verification of Income −, Consider the following for the verification of Excise Duty −, Consider the following for the verification of Commission on Sale −, Consider the following for the verification of Director’s Fees −, Following are the main features of a good internal control system −. Study of the Hire-Purchase agreement for hire-purchase-sale price, number of installment, rate of interest etc. Verification of agreement on the basis of which the commission is received. Cash receipt should be obtained for every cash payment to creditors. Vouching of Subscriptions . 3. An Auditor should verify that every payment The invoice is prepared in the name of the client. Comparison of current month wages with last month’s wages and proper verification should be there for extra ordinary changes. Interest received from outsiders to whom company has granted loan could be verified from statement of account of party along with TDS certificates. 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. 3. CASH PURCHASES:-Purchases are supported with cash memos or invoices. The discount allowed to customers should be properly authorized by a responsible officer. Insurance policy issued by the Insurance Company. Statement from the suppliers may be obtained to verify his purchases records. The trade discount received is to be deducted from the purchase invoice and the net amount entered in the purchase invoice should agree with the entry in the Purchases Book. The auditor should see that only credit purchases of goods are recorded in Purchases Book. Issuance of receipt for lesser amounts than amount actually received. Payment of wages at higher rate than allowed. Attendance record of employee and salary register. Cash Sales 3. Collateral Voucher − Copies of supporting documents which are not available in original are collateral voucher like duplicate or carbon copy of sale invoice. Dividends from Investments 6. A property acquisition with no financing. The auditor should consider the following general points while vouching the cash transactions: 1. The goods purchased should be actually received by the client. 19. The supplier’s bill must be in the name of the business and relate to period under audit. Bank reconciliation account should be prepared on a regular basis. To the right persons, ii. For the business itself, iii.Have been sanctioned by a person holding some authority, iv.Have been properly recorded in the books of accounts. Vouching of Sale of investments . Cash balance can never be in negative. While vouching credit purchases, the auditor should keep the following things in his mind: 1. Cash purchase should not be recorded twice, once in cash purchase and second one in credit purchase. Cash receipt should be issued to debtors and daily reconciliation of account should be done where the debtors pay cash on daily basis. Vouching of cash transactions involve checking of records to verify that entries have been made as per the accounting system which is regularly followed. 2. 11. The Auditor should verify that the rent for all the twelve month is received or not. Cash receipt should be serially numbered. 20,000/- cannot be repaid in cash. 1. All interest received and accrued should be properly accounted for in the books of accounts. fund and same should be supported by appropriate bills. Payment to workers who were absent from duty. While vouching credit purchases, the auditor should keep the following things in his mind: 1. Vouching of Receipts from hire purchase . 4. Before starting the vouching of cash book, the auditor should enquire about the internal check system … Cash received should be entered on the same date when the cash is actually received. There are two types of vouchers − Primary Voucher − Original copy of written supporting document is called primary voucher. Vouching of Bad Debts Recovered . 5,000 then revenue stamp must be affixed in voucher. Payments other than petty payments should be done through crossed cheques. Treatment of Excise duty according to the excise rules. All cash receipts should be deposited in bank on a daily basis. Commission receivable on “sale of goods sent on consignment” should be verified from sale account. Petty Cash Book 2. The quantity mentioned in the purchase invoice should tally with the quantity recorded in the Purchases Book. Audit Program for Vouching and verification of Transaction: Program planning regarding the nature, ... Purchases/Sales. Please consider supporting us by disabling your ad blocker. An Auditor should verify that accounting entries are done on the basis of capital and revenue items. Audit Procedure for Vouching of Purchases Book. Purchase of Investments 5. Checking of cash purchase: Auditors should check the name of the payees in the cash book against their entries. and the provision for commission receivable should be rightly accounted for in the books of accounts. When an accounting transaction is vouched, it is tested and verified by presenting relevant documentary evidence. Brief note on Purchase vouching . Take a list of Authorised persons, who can order goods or material. It discloses mistakes and manipulations eg :-Omission or commission of a transaction which may be accidental or incidental . Sale proceed of fixed assets should be credited to fixed assets account after deducting expenses on sale of fixed assets if any. 2. The cash balance on any day can be known from cash book. Check for cash receipts signature /acknowledgement of cash recd. 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. 16. Alteration in amount of deductions on account of advance, loan, fine, funds, insurance, TDS, etc. Our website is made possible by displaying online advertisements to our visitors. Cash transactions take place almost every day in business. He should specially investigate into the procedure followed in placing orders, receiving goods, examining invoices, and maintaining relevant records. If original invoice has already been recorded care should be taken to see that duplicate invoice is not entered again in the purchases book. If TDS (Tax Deducted at Source) is deducted by the party, there should be proper accounting of TDS. Wages sheet should compare with wages register. ØVerifythe Pre-numbered petty cash vouchers should be used for withdrawing cash from the. Verification of subscription received during the year and the subscription receivable. He should check goods received book. Ensure that cash payments exceeding Rs.5000/- should be supported by a revenue stamp. Audit of Purchases — Vouching cash and credit purchases, Forward purchases, Purchase returns, Allowance received from suppliers. Provision should be made for interest accrued but not due. 12. 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. An auditor should give care and attention to the vouching of cash transactions. Interest on fixed deposit can be verified from bank statement and TDS certificates. What Does Vouching Mean? Rent from Immovable Properties 8. The commission received should be verified from counterfoils, bank statements, cash receipts, etc. The entries for receipts and payments of cash are checked with reference to various supporting documentary evidences. 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, … 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. Vouching of Rental Income . Vouching of cash book or cash transactions. To ensure separate accounting is being done for capital receipts and revenue receipts. Payment shown to ex-workers in the current month. The goods purchased must not be for the personal use of directors, officers, secretaries, etc. Vouching of Dividend . Go thoroughly to the purchase invoice or receipt of the machinery. The auditor should see that only credit purchases of goods are recorded in Purchases Book. In a single day, payment should not be exceeding Rs. Verification of the dividend warrant letter along with the covering letter for verification of dividends in case of dividends received through cheque. 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. 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. 7. To ensure that no improper payments are made. Correspondence with customer and ledger account should be there for extra ordinary changes agent account if sale made. 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