Vouching of Trading Transactions

Vouching of Purchase Book

The main aim of vouching of purchases book is to see that all purchase invoices are entered in purchases book and the goods entered in the purchases book are entered are actually received by the business.

While vouching for credit purchases the auditor should examine and see the following points.

• There should be a proper record for all purchase orders. A duplicate copy of the order is kept in the office for record.
• A copy of the purchase order shall be sent to the Accounts Department.
• All goods received should be recorded on the goods received note; a copy of it should be sent to the Accounts Department.

1. The auditor should see that only credit purchases of the goods are recorded in the purchase book.

2. The purchases book can be verified from purchase invoices, copies of orders placed, goods received a note, goods inward book, copies of challans from suppliers.

3. The quantity mentioned in the invoice must be the same as is shown in the purchase order.

4. The price charged by the supplier must be as per the quotation/price list of the supplier.

5. The supplier bill must be in the name of the business and for the period under audit.

6. While vouching for the purchase vouchers, each voucher should be stamped or initiated after examination, so that it could not be produced again.

7. Any purchase, made not for the purpose of the business of the client, must not be debited to the purchase account.

8. Duplicate invoices must not be entered in the purchase book if original invoices have already been recorded.

9. The auditor should be more careful while vouching for the purchase made in the first and last month of the accounting period, because sometimes the purchase of last year may be included in the purchases of the first month of the current year or purchases of the last month of the current year may be recorded in the next.

Vouching of Purchase Return Book

While vouching for the purchase returns the following points should be taken into consideration by

the auditor.

1. He should see that a Debit Note has been sent to the supplier or a Credit note has been received from the supplier.

2. The quantity returned as per the return note must correspond with the storekeeper's record, return outward register and gatekeeper’s outward register.

3. The amount shown in the credit note should be verified.

4. He should be careful about the recordings of purchases return in the current year.

5. Sometimes the profits of the current year may be manipulated by recording the current year’s purchases return in the subsequent year.

6. The purchases return of the first month and last month of the Accounting year should be vouched carefully, to detect any manipulation of amounts.

Vouching of Sales Book

1. The sales register should be examined with copies of sales invoices. The sale of capital items should not be recorded in the sales book, otherwise, the profits will be inflated.

2. Test check should be applied to the calculations made in sale invoices.

3. The totalling and the castings of the sales book should be verified.

4. Sales Tax, duties collected through sales invoices must be recorded under separate accounts.

5. It should be verified that all sales invoices are prepared on the basis of challans and then sales invoices are entered in the sales book and from there, posted to their respected accounts.

6. Sales made in the current year must be recorded under that year and shall not be treated as sales of the subsequent year.

7. All cancelled sales invoices must be kept together for verification by the auditor, Who should see that cancelled invoices are properly treated in the books.

8. The statement of accounts should be verified by getting confirmations from the customers.

Vouching of sales return book

The Auditor should pay special attention to the following while vouching for the sales return

1. The date on which the goods are actually returned.
2. A credit note or Debit note of sales return.
3. Gatekeeper’s receipt book.
4. Return inward register.
5. Stores records.
6. Corresponding entry for the return of goods in customer’s account.
7. Goods returned should form the part of the closing stock at cost price or market price whichever is less.