Module 2: Internal check

and
Vouching
Vouching
• Taylor and Perry
The examination of the evidences offered in the substantiation of the entries in the
books including in such examination the proof so far as possible that no entries
have been omitted from the books
• Meaning
It is an examination of the documentary evidence for vouchers to establish that the
transaction recorded in the books of account are valid genuine properly authorised
and accurate
Activities in vouching

• Checking of entries in the books of original entry with their

relevant documentary evidences or vouchers-to ensure that the
entries in the books of original entry are supported by evidences
• Going beyond books of account- tracing the source of the entries
in the books of account or source of the transaction-to ensure
that the transactions in the books of accounts are valid
• Routine checking for simple checking of arithmetical accuracy of
books of account in the books of original entry and in the ledger-
Objectives

• to ensure that the transaction recorded in the books of accounts are

acceptable and valid
• to ensure that all the entries made in the books are supported by
documentary evidence
• To ensure that all the transaction connected with business have been
recorded in appropriate books of account
• to ensure that no transaction which is not connected with a business
has been recorded in the books of account
• Detection of errors and frauds
Vouching of cash book or cash transactions

• the first is to ensure that all the receipts of the business from all
sources are accounted for and therefore every precaution should be
taken by means of internal check to make it as difficult as possible for
the receipt to be misappropriated
• The second is to ensure that it every payment has been properly
authorised and is a Bonafide business expense that the action is
properly recorded in the books of account and that the payee has
actually received the amount
Objectives
• To ensure that all the receipt of cash are duly accounted for
• To ensure that no improper payments are made
• To see that all the receipts and payment of cash are actually and
properly recorded
• To see that all the payments have been made to proper persons and
the payments made are true payments
• To see that cash and Bank balances shown by cash book are really
exist and correct
Vouching of receipts

• Vouching of cash sales

• Vouching Receipts from debtors aor book debts realised
• Receipts from bills receivable
Errors and frauds in regard to cash receipts

• The cash sales mein not be recorded in the books and cash maybe misappropriated
• Cash sales may be under recorded and the difference in amount may be misappropriated
• The cash sales may be recorded as credit sales and the cash received may be misappropriated
• Duplicate copy of sales invoice may be prepared for less than actual amount of credit sale and
difference of amount maybe made and amount involved may be misappropriated
• Unusual and non recurring cash receipts may not be recorded in the cash book
• Fictitious discount allowed may be recorded in the books of account
• Discount allowed may be overstated
• Receipts from customer may not be recorded in the books
• Good debts may be recorded in the books as bad debts
• Depositing of cash into Bank may be delayed to cover up misappropriation of cash
• Deposits into Bank may be overstated on the counter foils of the pay in slips and the amount maybe
misappropriated