Vouching in Audit: Definition, Procedure, Importance, Checklist

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Audit procedures allow auditors to check various assertions. These assertions may relate to account balances or a class of transactions and events. Similarly, it entails collecting audit evidence that auditors can use to form a conclusion regarding the subject matter. One of the most common audit procedures auditors utilize within every engagement is vouching.

What is Vouching in Audit?

Vouching involves selecting a sample of items from a given population and reviewing the related supporting documents. This process helps auditors check for the occurrence of specific transactions or events. Similarly, it can help ensure the accuracy of the records. Vouching is one of the most common audit procedures, also known as the backbone of auditing.

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Vouching in an audit relies on the records provided by the client. Despite that, it can help ensure whether those records come with supporting evidence. However, auditors cannot check every item due to various constraints during audits. Therefore, they combine this procedure with audit sampling to select several transactions at once.

What is the importance of Vouching in Audit?

Vouching is a critical part of the auditing process. Primarily, auditors use this method as an audit procedure to ensure the accuracy and reliability of transactions and events. In part, it allows them to check how reliable the records and financial statements are. While vouching can often be tedious, it helps auditors to test various aspects of the subject matter and the client’s documentation process.

Vouching can help auditors ensure that the figures in the financial statements occurred during the period. It is the occurrence assertion in the auditing process. On top of that, it also checks the accuracy assertion by comparing reported figures with the supporting evidence. Overall, vouching contributes to objectives outlined in audit engagements by auditors.

What do auditors check during Vouching in Audit?

There are several aspects of financial statements and the related supporting evidence that auditors may check during vouching. Some of these include the following.

Personal expenses

One of the primary objectives of vouching is to ensure expenses incurred during a period are business-related. Auditors can use these audit procedures to identify any personal expenditures that directors or owners may have included in company records. Therefore, vouching can be crucial in checking the accuracy of expenses.

Proper classification

Auditors use vouching to ensure proper classification within headings in the financial statements. This case applies best to expenses where auditors must check if the management has classified items in the right categories.

Accuracy of figures

Auditors match the figures reported in the general ledgers with those in supporting documents when vouching. Consequently, they can ascertain the accuracy of the figures in the financial statements.

Internal controls

Auditors may also include internal control checks as a part of their vouching process. It entails checking for controls, such as authorization, verification, signatures, etc.

Period of transactions and events

Vouching can also be crucial in cut-off testing. It entails checking if items recorded in the general ledger relate to the reporting period. Therefore, auditors can also ensure that assertion during the vouching process.

Conclusion

Vouching is an audit procedure that involves checking general ledger transactions for supporting evidence. Auditors can test various assertions during the process, such as accuracy, occurrence, and even cut-off. Often known as the essence of auditing, vouching plays a crucial part in audits. During this process, auditors may check for various aspects of the financial records.

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