Business, Legal & Accounting Glossary
A substantive test in an audit to check that the underlying records correctly show the nature of transactions entering into by the business being audited.
Vouching is a substantive test in an audit used to check that the underlying records correctly show the nature of transactions entered into by the business being audited.
Vouching is the process of reviewing documentary evidence to determine whether or not it properly supports entries made in accounting records. When an auditor examines a shipping document to see if it supports the amount of a sale recorded in the sales journal, for example, he or she is vouching. Vouching can be used in two ways. An auditor, for example, can trace actual inventory items back to accounting records to determine if they are properly documented, or start with inventory records and trace back to warehouse shelves to determine if the inventory exists.
When vouching, an auditor looks for errors in the amounts recorded in the accounting records as well as ensuring that the transactions are recorded in the correct accounts. The auditor also ensures that transactions are properly authorised.
When vouching reveals an error, the auditor may need to increase the sample size being audited to gain assurance that a system is functioning properly. Another option is to conduct various auditing procedures.
Many ventures may encounter vouching problems in financing, while credit- vouching operation is an effective approach to solve it.
guaranteeing, ensuring, certifying, securing, testifying
Vouching, widely recognized as “the backbone of auditing,” is a component of an audit seeking to authenticate the transactions recorded in a firm’s book of accounts. When an accounting transaction is vouched, it is tested and verified by presenting relevant documentary evidence.
Seeking to establish the accuracy of recorded transactions, vouching ensures that all the entries in the books of accounts come with the relevant evidence, including invoices, receipts, and others. Vouching does not take into account the non-business transactions, thus helping auditors to ensure that all transactions in a firm’s book of accounts are business-related. Auditors confirm that the amounts mentioned in each transaction are truthful, disclosing the nature of a transaction, and its authorization.
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This glossary post was last updated: 13th April, 2022 | 0 Views.