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Auditing - Auditors Duty in Vouching Cash Payments | 11th Auditing : Chapter 6 and 7 : Vouching of Cash Transactions

Chapter: 11th Auditing : Chapter 6 and 7 : Vouching of Cash Transactions

Auditors Duty in Vouching Cash Payments

The auditor should pay special attention to the following points while vouching cash payments.

Auditors Duty in Vouching Cash Payments

 

The auditor should pay special attention to the following points while vouching cash payments.

1.  The auditor should evaluate the effectiveness of Internal check and control system for cash payments.

2.  He should ensure that all the vouchers are made in the name of the business concern and payments are made pertaining to business.

3.  He should ensure that vouchers have been correctly posted to the appropriate accounts and properly distinguished between capital and revenue expenditure.

4.  He should ensure that all cash payments are within the period under audit.

5.  When cash payments are made in excess of Rs.10,000 the auditor should enquire the circumstances for making such a payment.

6.  He should also compare the rough cash book with the cash book to identify the fictitious payments.

 

LEGAL CASE STUDIES

1. In a case between Irish Woollens Co. Ltd. Vs. Tyson and others, it was held that auditor was negligent for not verifying the liabilities. He was liable to pay damages for the loss suffered by the client.

2. In another case, Arthur E. Green & Co. Vs. General Advance and Discount Corporation, it was held that the auditor was liable for accepting the schedule of debtors without verifying thereof.

 

Documents to be Vouched: Receipts issued by creditors, Invoices, Statement of accounts of creditors, Bank statement.

 

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