How sequentially numbered vouchers help auditors?

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First of all let’s clear our confusions about the term Voucher itself.

Voucher is any document on which an information about the business activity is recorded and the same is approved/authenticated/authorized by the relevant person in the management. Thus voucher is any document that proves that a particular transaction did happened and the person responsible for such transactions knew about it.

So, vouchers are not limited just to record petty cash transactions or simply cash transactions. There are different types of vouchers for different transactions. But the term voucher is a general term. Therefore, we have specific names for different documents which are basically vouchers e.g. invoice, cash receipt, GRN etc. And as time has passed the term voucher became restricted only to mean documents that are used for internal communication and authorization which usually relates to making payments and / or receiving payments. But students should not restrict vouchers only to petty cash claim vouchers as sequential numbering is done for other source documents as well especially vendor’s invoices.

Let’s take an example of cashier who receives vouchers from different departments which bear different serial numbers. Thus it is not possible for him to arrange such documents in a series. This can pose serious problems if one of the vouchers get missing. In order to make sure that all the vouchers are present cashier will give his own numbering to each document he receives following a particular sequence. And later he will use his own numbering system to track different documents. Suppose the following scenario he faced:

Cashier received five vouchers from five different departments. The serial numbers on each document were as follows:

  1. EA – 8971
  2. 8007
  3. IIA6564
  4. HG – 8888
  5. L/K/M – 987

Now each bear not only different numbers but also different format of serial numbers. And later if he wants to find out a particular voucher out of hundreds of vouchers, he will have to check each and every voucher and also he cannot track the existence of each voucher. Why? Because they are not in sequence. So, cashier will give each document his own numberings which can be in any format. Suppose he numbered them as follows:

  1. EA – 8971 —> C – 0001
  2. 8007 ———> C – 0002
  3. IIA6564 ——> C – 0003
  4. HG – 8888 –> C – 0004
  5. L/K – 987 —> C – ooo5

The major benefit of doing this is that if after numbering one of the document is misplaced, then cashier will come to know about it immediately as sequence will break. Let’s say HG – 8888 is not in the stack. Now, as cashier knows that after C – 0003 there must be C – 0004 before C – 0005, he immediately found that one document is missing.

And now understand that if vouchers are not sequentially numbered then we might end up not recording them in financial records which in short mean incomplete financial statements or simply financial statements not giving true and fair view.

Being an auditor, we check whether vouchers are sequentially numbered or not by the management or concerned person as it ensures whether the steps have been taken to make sure financial statements are prepared accurately by recording all such transactions which should have been recorded.

Lastly, students should understand that it is the responsibility of management to sequentially number source documents and not of auditor. Auditors only check whether source documents are sequentially numbered or not as it shows the seriousness of management in preparing accurate financial statements which is one their prime responsibility as the attitude of management is vital in assessing inherent risks and control risks which ultimately affect audit risk.

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Teaching professional business subjects to the students of FIA, ACCA, CIMA, CA etc. He also found ACCA LIVE which is Pakistan's first portal to provide online classes and distance learning solutions to FIA/ACCA students. At PakAccountants.com he is busy making study material for different qualifications. Beside writing articles he answers questions asked using ASK TUTOR!

4 COMMENTS

  1. kindly help me draft a report to management on the risks of using manually generated orders as opposed to pre-printed orders. I have found the procurement department creating order numbers which are sometimes duplicated.
    Secondly, have found the department of Human Resource and Administration responsible for processing the payrolls with lots of anomalies on tax computations.
    please help

  2. Hi please can you send me a draft of how a typical profit and loss account will look like for a money exchange and transfer bureau, which is a limited liability company.

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