Which Points should be Considered while Vouching of Cash Transactions?

Vouching of a cash transaction is the most important job of an auditor. It is the essence of the Auditing. The object of vouching is to Gain assurance regarding the existence assertion. Before setting the program of vouching, an auditor should inquire carefully into the whole system of internal control. Vouching of Cash transactions Cash book is the most important of the books of a/c for any business.

An auditor should examine and understand the system and should pay attention to the following points. While vouching, the auditor should verify and satisfy himself that vouchers in the form of receipts, bills, invoices, cash memos, etc., correspond with the entries in the cash book.

Points should be Considered while Vouching of Cash Transactions are briefly described below –

  • The responsible officer for cash received and authority to sign check should not be given to the cashier and a copy of counterfoil should be kept for record of the office. The receipts should be numbered serially.
  • All the receipt of cash should be recorded in the cash book. Before starting the vouching of cash book, the auditor should inquire about the internal check system in operation
  • Amount of cash received should be deposited into the bank daily. The auditor should examine the method adopted for depositing daily cash receipts in the bank.
  • The cashier should not have any control over ledgers. As far as possible, all-cash transactions are to be checked elaborately.
  • A drawer of check should present it to a responsible officer to sign. The auditor should verify the cash in hand by actually counting it and see whether it agrees with cash book balance.
  • All unused receipt books and checkbooks must be kept under lock. The transactions should be clearly classified into revenue or capital transactions and accordingly entered in the books of accounts.
  • System for recording cash sales and miscellaneous income should be different. The auditor should not accept the canceled vouchers. In these cases, there will be chances of double payments.
  • All the payments except petty cash expenses must be made by check. Cash received should be entered on the same date when the cash is actually received.
  • The auditor should ascertain that the cashier does not sanction any payments of special nature without proper approval from the directors.

Therefore, the auditor should ensure that all receipts have been recorded in cash book and no fictitious payments appear on the payment side of the cash book.

 

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