View Vouching.ppt from ACCOUNT 105 at Apeejay Stya University. Vouching Learning Outcomes • Understand the meaning of vouching • Identify how to verify vouchers Voucher • Documentary evidence 4. If so, receipts from debtors are recorded the cash receipts journal (where you put all cash receipts). The counterfoil is the only proper documentary evidence available for vouching. 1. The vouching of receipts from bills discounted should be as follows:  The discount allowed to customers should be properly authorized by a responsible officer. For example, carbon copies or counterfoils of cash receipts, […] The auditor should be very careful while auditing the receipts from the customers to ensure that no fraud of the above nature is committed. The manager, secretary, or any other responsible official must certify such a Schedule. Receipts from debtors who have become insolvent should be vouched with the dividend warrants received from the official receiver or assignee. Purpose: This document provides the facility for receiving money and cheques from debtors. Audit of Purchases – Vouching cash and credit purchases, Forward purchases, Purchase returns, Allowance received from suppliers. 4. Steps in Vouching Receipts from Debtors • Receipts issued – Auditor can vouch the receipt issued to debtors for collection of money. Consider the following points for verification of cash received from debtors − The carbon copies or counterfoils of cash receipt book should be verified. Bad Debts Dividend Receipts from debtors who become bankrupt should be vouched with the dividend warrants received from the Official Receiver or Assignee. However, this is not a reliable voucher as frauds are usually committed in the following ways: 1. The auditor should verify whether all the receipts are deposited into the bank in the immediate following day.  Cash received should be entered on the same date when the cash is actually received. The main aim of vouching is to inspect all receipts & payments are properly accounted for & no fraudulent transactions are recorded. Vouching of Bad Debts Recovered . In case if credit balance is due to the fact that an advance is made on account of an order placed, it must be shown under a separate head known as “Advance against Goods on Order” and should not be included amongst sundry creditors. Such adjustments can be made for a longer period if the internal control systems is ineffective. 13. The auditor should ensure that the amount recovered is deposited in the bank. Vouching is a substantive audit procedure to obtain evidence as to completeness, accuracy & validity. Important parts of such systems should be (a)Persons maintaining the debtor’s ledger should not be allowed to collect the money from the customers, and (b) The customers should be asked to remit cash/cheques through the post. Vouching of Sales Ledger or Debtor’s Ledger The opening balance of Sales Ledger should be checked with balance given in the previous year’s Balance Sheet. The auditor should call for a Schedule of Debtors’ Account and check it carefully. What is the Bill receivable account? If possible, a part of the total amount due can be recovered in installments (dividends). Receipts from debtors who become bank rupt should be vouched with the dividend warrants received from the official receiver, total debt, rate per rupee payable as dividend and correspondence exchanged between the debtor or the official receiver and the client should be … Audit of receipts – General considerations, Cash sales, Receipts from debtors, Other Receipts. Prev Page; As there is a possibility that the rent collected may be misappropriated and shown as ‘Rent Receivable’, the auditor should obtain a confirmation statement from the tenant to verify the above. Books like Bills Receivable Book, Cash Book, Sales Returns Book or Goods Outward Book, Journal or other subsidiary books should be checked to vouch the accounts in the Sales Ledger. The auditor should examine the following while auditing Collection from debtors. Define the term internal control and describe the ... Write a note on the following terms 1. … 3. Auditors Duty in Vouching Cash Payments . The auditor can verify the same by examining the correspondence with the official receiver and the statement received from him. ). 4). Q: Leech owes Smith $50. He should ensure that the discounts given are at uniform rate to all debtors and that due authorization is obtained... 3. Cash Received from Debtors. It also provides the ability to process zero valued receipts, which allow for the distribution of matching tax invoices and tax credits. Receipts from bills receivable:-Bills receivable include bills of exchange, promissory notes, and I.O.U’s received from debtors. Verify Cash receipt or memo with respect to date of receipt, amount and name of customer from whom … Vouching of Collection from debtors and Rent Receipts. It should be ensured that the debit or credit balances of the Sales Ledger should be shown on the proper side of the Balance Sheet. Vouching of Sales Ledger or Debtor’s Ledger. Cross verifying the counterfoils and rent receipts with rent rolls. Vouching of Cash Receipts (Debit Side of Cash Book) We will discuss the cash receipt which are placed on the debit side of cash book for following items − Opening Balance of Cash Book Opening balance of cash book represents cash in hand at the start of the year and should verified from the balance sheet of last financial year. Vouching of Receipts from Debtors. 12. (iii) Vouching the cash payment of duty with the receipts issued by the customs department; and (iv) Verification of the accounts to which the customs duty paid has been debited (e.g., duty paid for import of raw materials should be debited to the raw materials account, etc. If the books are maintained on the self balancing system, the total of the balance in the Schedule of debtors should tally with the total of the balance shown in the Debtors’ Ledger Adjustment Accounts. Click here to read or post comments. The receipts from bills receivable can be in two ways: 1). Vouching of Bought Ledger or Creditors ledger Bought ledger should be vouched with the help of the previous year’s audited Balance Sheet and all supporting books such as Purchase Book, Goods Inward Book, Cash Book, Allowances Book, Discount Register, and Bank Pass Book. Thus, the counterfoil is the only proper documentary evidence available for the purpose. Auditor should vouch the transaction in the following manner: 1. Cash transactions maybe cash receipts or cash payments. Statement of accounts received from debtors. f Receipts from debtors The cash received from debtors can be vouched with reference to the counterfoils of the receipts issued to them. With the help of vouching auditor come to know the genuineness of the transactions. General Guidelines to Auditors in vouching of Cash Receipts - From article at https://accountlearning.com/vouching-of-cash-receipts-general-guidelines-to-auditors/ The points to be examined are: total debt, rate per rupee payable as dividend and correspondence exchanged between the debtor or the official receiver and the client. D) Nominal Account. So an auditor should pay special attention to the credit entries in the Sales Ledger and bad debts. 1. Cash received should be entered on the same date when the cash is … Cash Received from Debtors Consider the following points for verification of cash received from debtors − Vouching is an important procedure for obtaining Audit Evidence. 2. Journal for Payment from Debtor with Discount Allowed. Details of total debt and rate per rupee payable as dividend should be examined. Customer’s should be asked to make the payment by check. 11. There should be an effective system of Internal Check. Vouching c. Auditing d. Investigation 33. Vouching of Cash transactions Cash book is the most important of the books of a/c for any business. There is a possibility of committing fraud by passing fictitious entries in respect of credit notes, cash discounts, allowances in the Sales Ledger. Verifying that entries are made in the cash book immediately and everyday collections are deposited into the bank the next day. Two types of frauds may be committed while making collection from debtors. Return to Ask a Question About This Lesson!. Receipts from bills discounted. The entries for receipts and payments of cash are checked with reference to various supporting documentary evidences. If the debtors have not sent their statement of accounts, the auditor can contact the customers directly and ask for their confirmation of balance. There may be some credit balances in the Sales Ledger, on account of the omission of the record of invoices in respect of goods supplied in which case, necessary adjustments should be made. Books like Bills Receivable Book, Cash Book, Sales Returns Book or Goods Outward Book, Journal or other subsidiary books should be checked to vouch the accounts in the Sales Ledger. Amount collected from the customer: The amount collected from the customer may be misappropriated and the amount standing to the debit of the customer account is written off as bad debts. Receipts from debtors  The cash received from debtors can be vouched with reference to the counterfoils of the receipts issued to them. Cash Sales copies of cash memos 3. Vouching is the essence of auditing and is also the most important duty of an auditor. ... it was held that the auditor was liable for accepting the schedule of debtors without verifying thereof. But this is not reliable voucher as frauds are usually committed. 1. • Receipt date – Auditor to make note of the date of receipt and compare with date in the cash book. VOUCHING OF CASH TRANSACTIONS Vouching of cash receipts Opening Balance of Cash Book Opening balance of cash book represents cash in hand at the start of the year and should verified from the balance sheet of last financial year. Thus, the counterfoil is the only proper documentary evidence available for the purpose. If rents are collected through agents, their statements should also be verified and tallied with the cash book entries. Counter foil or carbon copies to be compared with entries made in cash book. 3. The castings of the accounts in the Sales Ledger should now be checked with the Balances as shown in the Schedule of debtors, which has been supplied to him by his client. They are—. Vouching of Collection from Debtors | Rent Receipts | Auditor Role, Role of Auditor in vouching collection from debtors, Types of frauds in collection from debtors, Role of auditor in vouching rent receipts, 6 Areas to be Enquired and Reported by Auditor in Company Audit | Role of Auditor, Verification of Creditors | Guidelines for Auditors, Audit of Sole Trading Concern | Guidelines | Advantages to Sole Trader, Operational audit | Steps Involved | Purpose of conducting, Notes on Audit of Ledgers – Guidelines to Auditors, 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 |. Vouching of Receipt side or Debit side of Cash book The receipt side or the debit side of the cash book contains items such as opening balance, cash sales, receipts from debtors, receipts from bills discounted and bills matured, income from investments, sale of investments, sale of fixed assets, loan received, and miscellaneous receipts, etc. Receipts from Debtors Before vouching the receipts from debtors, the auditor should examine, the efficiency and adequacy of the system of internal check and should see that: The person maintaining the debtors, ledger should may be allowed to collect money from debtors. 3. 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. Vouching Sales Ledger or Debtor’s Ledger | Guidelines to Auditors, Notes on Audit of Ledgers – Guidelines to Auditors, Vouching of Bought Ledger or Creditor’s Ledger | Guidelines to Auditor, Vouching of Consignment Sales, Hire Purchase Sales, Sales Returns, Audit Procedure | Audit of Shares Issued for Consideration Other than Cash. The auditor should verify whether all the receipts are deposited into the bank in the immediate following day. Cash Received from Debtors Consider the following points for verification of cash received from debtors −  The carbon copies or counterfoils of cash receipt book should be verified. >Teeming and Lading Method of Fraud to detect- Checking partial payments, Checking amounts deposited in banks, Checking carbon copies of receipts, Checking statements of accounts. So the cash received from debtors can be vouched with reference to the counterfoils of the receipts issued to them. Vouching of Cash received from Debtors. 1. > To check the counterfoils. The opening balance of Sales Ledger should be checked with balance given in the previous year’s Balance Sheet. An auditor has to verify the following documents while auditing rent receipts: Through the lease deeds and rent agreements, the auditor can gather details regarding the exact amount of rent, the amount to be collected towards amenities, the advance collected from the tenant, due date of payment of rent for every month etc. 2. Teeming and lading: Where the amount collected from one customer is misappropriated by the cashier and the customer account is adjusted with the amount collected from some other customer. Cash receipt should be serially numbered. Prerequisites: A debtor must exist in the Lilac database, and that debtor must have been invoiced. What are Impersonal Ledgers? Vouching of receipts & Payments a) Receipts Audit of receipts including cash sales, receipts from debtors, recovery of bad debts written off, rents, interest, dividend, royalties, insurance claim, sale of assets, miscellaneous receipts b) Payments Audit of payments including cash purchases, payment to creditors, salaries 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 |. Further, such a credit balance must not be deducted from the amount of debtors but should be shown on the liabilities side of the Balance Sheet along with sundry creditors. The receipts and payments are recorded in cash book. Examination of the vouchers is called ‘vouching’. If a customer becomes insolvent, the amount due from him can be claimed through his Official Receiver. Receipt from debtors should be vouched with the help of_____ a) Counterfoil Receipts cash book b) Suppliers statement c) Sales Deeds d) General Ledger 38. 2. 11. VAT input is also our current Asset or Negative Current Liability because We paid this to our creditor or supplier (for paying govt.) The cash balance on any day can be known from cash book. Receipt from Debtors: To check the received from debtors to whom goods had been sold on credit in the past. After having checked the Bought Ledger, the auditor should proceed to check the Sales Ledger, which contains the accounts of the debtors. So if the b/f figure is £2,000,000 and sales in the period were £800,000 and debtor days are 77, I would use goal seek to set the debtor days cell to '77' by changing the receipts cell in the calculation. Role of Auditor in vouching collection from debtors 1. 2. Auditor should take the following precautions while vouching cash receipts or cash payments. 2. 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. Documents to be Vouched: Receipts issued by creditors, Invoices, Statement of accounts of creditors, Bank statement. From the definition it is clear that, A voucher is a documentary evidence in support of a transaction in the books of accounts.  Cash receipt should be serially numbered. He … He should ensure that the discounts given are at uniform rate to all debtors and that due authorization is obtained in case of higher discounts. I usualy use goal-seek in excel to predict the receipts figure based on set debtor days. Vouching is used to find out the accuracy and efficiency of entries in the books of accouts.in other words vouching can be regarded as the backbone of auditing. | How are they vouched? Vouching of Cash Receipts: The vouching procedure, for cash receipts maybe discussed below- The auditor should check the cash book: with the relevant documentary evidence.

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