Write short note on Vouching of Cash Transactions and Vouching of Cash Payments.

Cash transactions maybe cash receipts or cash payments. Auditor should take the following precautions while vouching cash receipts or cash payments.

Vouching of Cash Receipts:

The vouching procedure, for cash receipts maybe discussed below-

The auditor should check the cash book: with the relevant documentary evidence. For example, carbon copies or counterfoils of cash receipts, letter of confirmation of balances etc. These vouches should be examined in details.

Almost in all business house: Cash or cheques received in a day are deposited in the bank on the same day or the next day the audit should compare these deposited entries with the pay -in -slips in details.

The auditor should be careful in case the cheques received from customers are dishonored by the bank and the bill of exchange discounted but not yet settled. Such dishonored cheques with bank charges should be debited to debtors Accounts.

If bank balance in the pass book and that of cash book (bank column) disagree, the auditor should prepare the Bank l3econciliation Statement.

The carbon copies of receipts should be printed and consecutively numbered.

The auditor should ensure that all cash receipt’s have been entered in the cash book. If any receipt is lost or its duplicate copy has been issued, a responsible officer should authorize it.

Routine checking :The auditor should have routine checking of cash book, carbon copies of cash receipts and counterfoils of pay-in -slips etc. and posting of transactions from cash book to ledger accounts.

Vouching of Cash Payments:

The auditor must follow the procedure for cash payments. The auditor should examine the entries in the cashbook with relevant vouchers. He should also pay special attendance to details such as

• Date, amount, serial number, account head, validity and arithmetical accuracy of the voucher.
• Voucher should be supported by relevant documents. For example, voucher for payment of freight should be supported by freight bill issued by the transporter.
• Whether the cash memo/receipt is in the name of the client and transaction relates to client’s business.

The payment is properly authorized

• Where payment is made by cheque, the auditor must see that each entry  issued in the bank column in cash book corresponds with the entries made in the pass book.
• The auditor should perform routine checks to establish arithmetical accuracy of cash memos and cash book. He should also verify the posting from cash book to ledger accounts.