Vouching: Meaning, Objectives, Principles and Vouching of Key Transactions Questions

Question 1

Define vouching.

Accepted Answer

**Vouching** is checking entries in books with **supporting vouchers** to verify their authenticity and accuracy.

Question 2

What is a voucher?

Accepted Answer

A **voucher** is a document that supports and proves a transaction.

Question 3

State one objective of vouching.

Accepted Answer

One objective is to verify the **genuineness** of transactions.

Question 4

What is cut-off checking?

Accepted Answer

**Cut-off checking** ensures transactions are recorded in the **correct accounting period**.

Question 5

Which is more reliable: internal or external voucher?

Accepted Answer

Generally, an **external voucher** is more reliable.

Question 6

What does stamping 'audited' on voucher mean?

Accepted Answer

It indicates voucher has been checked and helps prevent **reuse/duplicate payments**.

Question 7

Explain objectives of vouching (any five).

Accepted Answer

Objectives of **vouching** (any five):
- verify **genuineness** of transactions.
- check proper **authorization** and approvals.
- verify **amount**, date and party details.
- ensure correct **classification** (capital/revenue).
- detect **errors and frauds** (suppression, fictitious entries).

Thus vouching strengthens audit evidence.

Question 8

Explain principles/essentials of vouching (any three).

Accepted Answer

Principles of **vouching** (any three):
- examine **original vouchers** and supporting documents.
- verify **authorization** and proper approval.
- check **arithmetical accuracy** and details (date, party).
- ensure correct **classification** and proper posting.

Auditor should also mark vouchers as audited to prevent reuse.

Question 9

Explain vouching of cash receipts (brief).

Accepted Answer

For **cash receipts**, auditor checks cash book entries with **receipt counterfoils**, verifies proper numbering and authorization, and matches deposits with **bank pay-in slips** and bank statement.

Important: look for missing receipt numbers and delayed deposits (possible **cash suppression**).

Thus vouching ensures completeness and genuineness of receipts.

Question 10

Explain vouching of cash payments (brief).

Accepted Answer

For **cash payments**, auditor examines payment vouchers, bills and invoices, checks approvals and supporting documents, and verifies cheque payments with bank statement.

Also check that payment is to correct party and properly recorded.

It helps detect **duplicate payments** and fictitious expenses.

Question 11

Explain vouching of purchases (brief).

Accepted Answer

For **purchases**, auditor matches **supplier invoice** with **purchase order (PO)** and **goods received note (GRN)**, checks quantity, rate, calculations and authorization, and performs **cut-off** checks near year end.

This helps detect fictitious purchases and wrong period entries.

Question 12

List any three frauds/errors detected by vouching.

Accepted Answer

Vouching can detect (any three):
- **suppression of cash receipts**
- **fictitious purchases/expenses**
- **duplicate payments**
- **alteration of vouchers**
- **wrong classification** (capital vs revenue)

Hence vouching is an important fraud detection tool.

Question 13

Define vouching and explain its objectives. Add a simple flowchart.

Accepted Answer

**Vouching** is the process of verifying entries in the books of accounts by examining **supporting vouchers** to ensure transactions are **genuine, authorized, accurate** and properly recorded.

### **Objectives of vouching**
- verify **genuineness** (transaction actually occurred)
- check **authorization** and approvals
- verify **amount**, **date**, and **party**
- ensure proper **classification** (capital vs revenue)
- detect/prevent **errors and frauds**

```text
Book entry → Voucher → Authorization → Accuracy → Classification → Conclusion
```

Thus vouching forms the base of audit evidence for transactions.

Question 14

Explain principles/essentials of vouching with a table.

Accepted Answer

### **Principles/essentials of vouching**
| Principle | What auditor checks |
|---|---|
| **Original voucher** | avoid photocopy/duplicate unless justified |
| **Authorization** | proper approval/signature |
| **Accuracy** | amount, calculations, GST/discounts |
| **Date & period** | **cut-off** (correct accounting period) |
| **Proper classification** | capital vs revenue, correct ledger |
| **Supporting documents** | PO, GRN, delivery challan, credit note |

**Practical point:** mark vouchers as **“audited”** to prevent reuse and double payments.

So, vouching must be systematic and skeptical.

Question 15

Explain vouching of purchases and sales with key documents and risks in a table.

Accepted Answer

### **Vouching of purchases and sales (key points)**

#### **Purchases**
- match **Purchase Invoice** with **Purchase Order (PO)** and **Goods Received Note (GRN)**
- verify quantity, rate, terms, calculations and authorization
- check **cut-off** near year end (goods received vs invoice date)

#### **Sales**
- match **Sales Invoice** with **Customer Order** and **Dispatch/Delivery Challan**
- check pricing/discount authorization
- verify **cut-off** (dispatch date vs invoice date)

| Area | Main documents | Common risk |
|---|---|---|
| Purchases | PO + GRN + invoice | fictitious purchases, wrong cut-off |
| Sales | order + challan + invoice | fictitious sales, sales suppression |

Thus vouching supports correctness of revenue and expense transactions.

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