VOUCHING OF CASH

TRANSACTIONS

INTRODUCTION
A cash book important book of account
In cash book receipts and payment
recorded.
The entries related to cash book should be
checked with various supporting evidence
documents.
Objective of vouching cash book :
To find out that all expenses & receiptsrecorded
To find out that all expenses & receiptsshown under the correct head.

 To ensure that unauthorized & fraud

payment are not made.
To ensure that closing cash balance
is correctly recorded.

VOUCHING THE RECEIPTS SIDE OF CASH BOOK

OPENING BALANCE
Opening cash B/L- RECORDED on
receipt Side of cash book
The auditor CHECK last year
audited account and VERIFY that
last year closing B/L is correctly carry
forward to current year.
Vouchers: last year cash book
and audited balance sheet of last
year.

CASH SALES
Cash sales are recorded on receipt
side of cash book.
In businesses-large amt. of sales more
chances of fraud and misappropriation of
cash
How to prevent this ? Efficient Internal
check system
Cash sales made by at counter, post ,
travelling agent, mobile delivery van. Above all cases goods should be sold
with issue of cash memos.

 When sales are made on large scale,

system should be develop and 4 cash
memos generated.
At the end of day - salesman, cashier
& delivery clerk summary sheet will
be same .
Auditor test summary sheet.
VOUCHERS: Copies of cash memos,
Salesman summary
sheet,
Cash sales register,
Bank pass book.

CASH RECEIVED FROM DEBTORS

Cash received from debtors RECORDED
receipt side of cash book.
These entries should- VERIFY with receipts
issue to debtors and sign by authorized
person.
There are possibility of fraud by following
manner whiling receiving cash from debtors:
1. By showing less amt. in duplicate receipt
than actual cash receipt & difference is
misappropriation. How to prevent this?
Debtor- confirms balance at regular interval
time.

but
(2) Receipts may be issued to debtors
To Prevent such type
cash are not recorded in the books of accounts.
of Frauds
the same amount should be demandedDebtors
to the
againtype
To Prevent such
(3) Teaming & Lading
Process
The auditor
should carefully checkof Frauds
The date of cash received
The date of which cash is recorded in the books of
accounts
More than
actual discount
The date of which cash deposited
in bank
10
15
but allowed
actually dis.
(4) Discount allowed may recorded
% To Prevent
%
such type
e.g. In practice discount allowed
is allowed
of Frauds Bad
(5) Unauthorised writing off Bad Debts
Debts
only responsible
officer
should be allowed
to
Necessary
Vouchers
write off
Receipts, Cash Book, Pass Book, Correspondence

INCOME FOR INTEREST & DIVIDEND

- Int. rec. On bank deposits,
Int. on loan given,
Int. & dividend on shares, debentures and
other securities- RECORDED- on receipt side
of cash book
-While vouching of this income auditor
should
CHECK
the
bank pass
book,
counterfoils etc.
1.When int. rec. on bank deposits , auditor
should verify bank pass book OR bank
statement.
2.When int. rec. on loan given , auditor
should verify rate of int. and terms of
repayment of loan.

If int. OR dividend rec. through bank, auditor

should VERIFY the bank pass book also check that
WHETHER it is rec. for whole year or not and in
case if accounts are maintained ON MERCANTILE
BASIS, adjusting entry for income receivable is
passed.
NECESSARY VOUCHERS: receipts, counterfoils of
dividend warrant , bank pass book

SALE OF INVESTMENTS
- When the sale of investment RECORDED on receipt

side of cash book.

- Auditor should verify sales note of broker.
- Auditor also examine the authority schedule to
ascertain who is authorized to sell investment.
- Auditor should examine whether sale is made EXDIVIDEND OR CUM-DIVIDEND. If it is sold ex-dividend
then amt. of dividend should be credited to dividend A/c
.

 If seller ( client) is a DEALER in investment then

profit OR loss on sales of investment should be
treated as revenue profit OR loss
NECESSARY VOUCHERS: RECEIPT, SALE DEED
OR SOLD NOTE OF BROKER, BANK PASS BOOK.
- When the CLIENT
BUSINESSRECEIVED
IS COMMISSION
COMMISSION
AGENCY or CONSIGNMENT BUSINESS then
commission treated as income of business and
RECORDED on receipt side of cash book.
- Auditor should CHECK this commission income with
COMMISSION ACCOUNT and also verify THE COPIES
OF STATEMENT OF ACCOUNTS of parties on whose
behalf of business run.
- He should also verify the RATE OF COMMISSION
and find out the correctness of commission due and
received from various parties.
- NECESSARY VOUCHERS: RECEIPT, BANK PASS BOOK,

RENT RECEIVED
When property is given on LEASE OR HIRE, the rent rec.
RECORDED in receipt side of cash book.
While vouching of this transaction, auditor should VERIFY

RENT AGREEMENT, LEASE DEED, RENT REGISTERS

ETC.
Auditor should VERIFY receipt issued to tenants with the
entry in the cash book for rent.
When rent collected BY AGENT then copy of account of agent
should be verify.
If rent rec. in advance and outstanding -- ??????
If rent due. But not rec.
If some PROPERTY VACANT FOR SOME TIME, it should be
certified by responsible officer of business.
NECESSARY VOUCHERS: RECEIPT, BANK PASS BOOK,

RENT OR LEASE AGREEMENT, RENT REGISTER,

AGENTS ACCOUNT