Vouching of Credit Sales
In Sales Book, only credit sales of goods are recorded. Auditor before vouching the sales book should check the effectiveness of the system of internal check and control in operation.
The auditor should carry out vouching of credit sales in the following manner:
1. The auditor should verify the efficiency of the system of Internal check in operation by test checking the transactions.
2. Auditor should vouch Sales Book with the copy of the invoices, Orders Received Book and Goods Outward Book and ensure that all sales made are accounted.
3. He should check the casts, postings and carry forwards of the Sales Book.
4. He should see whether there is any omission or inflation of sales.
5. Auditor should ensure that sale of capital assets are not considered as ordinary sales and accounted in Sales Book.
6. Trade discounts allowed to customers should be checked and differences if any observed should be enquired.
7. Auditor should check that cancelled invoices are properly cancelled and kept separately.
8. To detect fraud, the auditor should prepare a statement of accounts of the customers and send it to the customers to confirm the accuracy of the balance.
9. Auditor should carefully vouch the entries made in the sales book of the last few weeks to ensure sales belonging to the next financial period are not treated as current year’s sales or fictitious sales not being recorded in the books which will inflate the profit.
Books and Documents to be Vouched: (1) Sales Invoice, (2) Sales Book, (3) Customers ledger account, (4) Goods Outward Book.
On 5.2.2017, X Ltd. sold 20 shirts for Rs.200 each to Ram & Co., Bangalore on credit.
Auditor should vouch the transaction in the following manner:
1. Verify entry in Sales Day Book with respect to date of sale, invoice number, name of customer and sale amount.
2. Verify entry in Debtors or Customers Account with regard to date and amount of sale.