How can vouching the Payment of Wages and Payment of Creditors?

Vouching of Payment of Wages.

The vouching of wages is one of the most important duties of the auditor. He should first of all assess the operation of an efficient and effective system of internal check. If the system is good, possibilities of errors and frauds are minimized. He should note the following points: The system of internal check has to be thoroughly investigated.

The totals and calculations involved in wage sheet should be checked. It should be seen that the amount of the cheques drawn for payment of wages tallies with the net amount as shown in the wage sheet. The name of the workers given in the wage sheet should be well compared with those given in the wage records.

E.g. Job card. Foreman’s register etc to ensure that no dummy names have been included in the wage sheets. The auditor should see that the wage sheet have been properly initialed by those responsible for their preparation. He should carefully check the payments made to the casual labor. Thus, regards wages, the auditor has to see that the wages as recorded in cash book have actually been paid such an amount of wages was actually due to be paid by the business and such payment was duly authorized.

Vouching of Payment to Creditors.

The auditor should vouch the payment to creditors as follows: He should examine the accounts of creditors with the help of invoices, return notes, good inwards book etc. and ensure that the payment have been approved by a responsible person.

The agreement relating to purchases and relevant minutes should be consulted. It should be seen, whether trade discount, if applicable, has been allowed by each supplier in purchases. The creditors account should be checked with the statement of accounts received from them.

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