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Vouching is concerned with the test of detail of transaction. Vouching means to verify
transactions recorded in the books of original entry by referring to original vouchers.
Definition of vouchers
B.N. Tandon.
"Vouching means testing the truth of items appearing in the books of original entry."
"Vouching refers to the inspection by the auditor of documentary evidence supporting and
sustaining a transaction."
Extent of Vouching
How many items the auditor should examine to reach at a the conclusion depends on reliability
of internal control system.
Objectives of vouching
For the purpose of verification the auditor May physically inspect the assets or maybe obtain
certificates from responsible officer as to the existence of the assets. The auditor also see
whether the assets are properly valued.
Definition of verification
Verification of assets implies an inquiry into the value, ownership and title existence and
possession and the presence of any charge on assets.
Joseph lancaster: verification of an assets is a process through which the auditor substantiate
accuracy of asset appearing in the balance sheet.
Verification
Verification is a comprehensive term. Verification basically relates to the process that the
auditor employee together and evaluate audit evidence in support of assertation made by the
management regarding a particular area of financial statement. Verification verify a
transaction but vouching is not employed in all the cases. During verification the auditor
employee substantive procedure to ascertain the following agitation (statement of
Management)
1. Existence
an asset or liability actually exist at the balance sheet date
2. Right and obligation
An asset is the right of an entity and liability is its obligation.
3. Occurrence
A transaction has actually occurred.
4. Completeness
There are no unrecorded transaction.
5. Measurement
Items have been measured properly.
6. Valuation
Items have been valued consistently using generally accepted accounting principles.
7. Disclosure and presentation
International accounting standards (ISA) and relevant legislation have given adequate
disclosure in financial statement are required.
The auditor for every item of financial statement will test not all the assertation the
auditor should always consider the relevance of testing a particular assertation with the
objectives he wishes to achieve.