Vouching of Credit Purchases
Transactions relating to credit purchases are recorded in Purchase Book. The main objective of vouching purchase book is to ensure that all the goods purchased during the year are being received and the client makes payment only for the goods being delivered by the supplier. The auditor before vouching the purchase book should satisfy himself about the effectiveness of the Internal check and control system relating to purchases.
While vouching purchase book the auditor should consider the following points:
1. The auditor should carefully check the entries in the Purchase Book with the purchase invoices. While examining the purchase invoice the auditor should pay attention to the following points:-
a. Invoices are in the name of the client.
b. The date of the invoice should relate to the period under audit.
c. The name of the creditor in the invoice agrees with the name entered in the purchases book.
d. Orders should be placed by a responsible officer and there should be another responsible officer to pass the invoice for payment.
e. Invoice should be initialed by the Invoice clerk as being checked.
2. The auditor should vouch the entries in the Purchase Book with the invoices, copies of orders placed, Goods Inward Book and delivery notes.
3. He should ensure that only credit purchases are recorded in the Purchases Book.
4. He should also ensure that purchase of capital goods, i.e., purchase of plant and machinery or any capital asset are not entered in Purchase Book. But instead they should be accounted in fixed assets account.
5. Auditor should check the totalling and casting of the purchases book and ensure that all taxes, octroi and freight are added to the purchases and trade discount allowed are deducted.
6. When directors or partners purchase goods for personal use, auditor should ensure that such purchases are charged to their personal accounts.
7. Auditor should compare the Gatekeepers Goods Inward Book and the stock sheets with the purchases book to ensure that all goods taken into stock have been entered in the purchases book.
(1) Purchase Invoice, (2) Purchase Book, (3) Suppliers ledger account, (4) Gatekeepers Goods Inward Book.
On 5.1.2017, X Ltd. purchased 30 cotton shirts @ Rs.150 each worth Rs.4,500 from Goyal Mills, Ahmedabad on credit.
Auditor should vouch the transaction in the following manner:
1. Verify entry in Purchase Day Book with respect to date of purchase, invoice number, name of supplier and amount of purchase.
2. Verify entry in Suppliers Account with regard to date and amount of purchase.