Vouching of payment of wages is an important duty of an auditor as there are many chances of misappropriation of cash. The following are some of the duties of an auditor in vouching wage payments.
1. The auditor should verify the effectiveness of the system of Internal check in operation with regard to the preparation of wage sheet, maintenance of records and payment of wages.
2. He should verify the arithmetical accuracy in calculation of wages.
3. He should verify the attendance register of the employees and vouch it with the wage sheet to ensure that the wages has been correctly calculated only for the days worked by the employee.
4. Auditor should carefully scrutinize the wage sheet to identify that no dummy workers or ex-employees are included in the wage sheet.
5. Auditor should vouch the entries in the cash book with the wage sheet. He should also vouch the entries in the cash book with the bank statement to ensure that correct amount is withdrawn for payment of wages.
6. The auditor should compare the signature or thumb impression of the workers with previous months to check the genuineness of the person receiving the payment.
7. He should ensure that unclaimed or unpaid wages has been deposited in the bank. He should vouch the unpaid amount in the wage sheet with the entry in the bank statement. Payment for unpaid wages should be made only against authorization signed by a responsible official.
8. Auditor should verify that there is a proper system of wage payment to casual labourers.
Documents to be Vouched: Attendance register, Time or piece records, Leave register, Overtime register, Wage sheet, Bank statement, Register of casual labourers.
On 5/7/2016, Paid wages by cash for Rs. 8,000.
Auditor should vouch the transaction in the following manner:
1. Verify entry in Cash Book with respect to wages paid amount and date of payment.
2. Verify entry in Wages Account with regard to date and amount of payment.
3. Verify entries in Wage Sheet.
4. Verify entries in Pay Roll