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Auditing / Vouching of Cash Book Payment Side


Credit purchases entry must be checked in books of accounts (i.e. Journal, Ledger) Receipt received from creditors for payment received must be checked. Invoice bills must be examined (Requisition, purchase order, Quotations (Price List), Purchase invoice, Receiving Statement, Issuing Statement). If payment is made by cheques then counter folio and Bank statement should be checked. Sale repot should / can be examined (creditors statement).

Cash Purchases: Journal entry should be examined Purchases account xxx Cash account xxx

Cash book (payment side) must be checked. Invoice by the supplier must be checked. If invoice contains only the cost price than a separate document containing the details of purchases should also checked

When there are weaknesses in internal control system, whole process of purchases should be checked.

Requisition statement Purchase order Quotation Receiving statement Invoices Issuing Statement

Payment made to suppliers must be checked by the receipt given by them.


Gross wages and net wages must be checked. Total number of employees on payroll statement must be checked. Contracts between employer and employees must read out.


Basic wage Rate. Per hour wage rate. Overtime wage rate. Allowances (if any) Deductions (if any) Cheaques prepared and bank statement should be checked. Wages register must be examined (name, designation, employment nature, no of hours worked, overtime hours, rates, total amount, allowance, deductions, net amount paid, receiving signature, revenue stamps). If tax is deducted from wages then its entry must be checked. If casual labor are hired then their wages sheet must observed. If over time sheets are prepared separately then it can be checked Auditor should present at the time of payment of wages He can discuss with employees He can check procedure of payment. He can discuss with wages staff.

Note: According to ISA (International Standards of Accounting): Different staff should be appointed for preparation of wages, payment of wages. Salaries:

Auditor compares amount paid as salaries with the total net salaries payable. Auditor checks costs and cross costs of all columns of payroll register. When increments are given to employees the auditor examines whether it is approved or not. When some special payment is made to employees the auditor should check the approval.

The auditor should check whether all of person who prepared payroll have put their signature and the payroll is signed by the manager or director. Auditor also examines whether each payment in payroll register is acknowledged by the signature of the receiving party.

Directors Fee:

Auditors should check the articles of association to check the procedure of fixing of directors fee. The auditors should check the shareholders resolution for the fixation of directors fee. In some cases directors can fix their fees themselves in the case minutes of directors meeting will be study.

Commission of Salesman & Agent:

The amount of commission paid to the agents will be examined by the signature of the receiving party. Agreement between two parties must be checked which shows rate of commission and method of calculation. Where parts of commission are not paid the auditors takes a note of it so that appropriate year ending adjusting entry can be passed.

Travelling Allowance:

TA is not generally verified by vouchers of actual expenses but usually the allowance is paid as per rules of the organization. Rules and regulations of company will be studied to check. Allowance is paid according to rule. Travelling is made for the business purpose only. Bill for travelling allowance is properly signed by the person. The payment is dually authorized by a responsible officer. The acknowledge signature of receiving party must be checked.

Telephone Expenses:

All telephone bills will be checked which are paid on monthly basis. All telephone numbers can be checked and verified by the telephone dept.

The bill must rotate to current year. The call register will be checked and the amount collected from employees must be deposited with cashier.

Bank Charges:

The auditor can examine the debit note / advice issued by the bank. Entries must be verified from the bank statement.