Distinguish Between Vouching and Verification

Auditing and Assurance Revision Questions and Answers

Vouching and a substantive audit procedure, which broadly deals with examination of profit and loss account transactions while ‘verification’ is also a substantive audit procedure, which deals with balance sheet items. Vouching involves examination of relevant documentary evidence and authorization

therefore is support of transactions or events occurring and affecting a particular period of an entity recorded essentially in primary books of account. It also consists of examining the process whether the amount mentioned in the voucher has been posted to an appropriate account, which would disclose the nature of the transaction on its ultimate inclusion in the final statements of account viz. Profit and Loss Account and Balance Sheet respectively. On these considerations, the essential points to be borne in mind while examining the voucher are:

 that the date of the voucher falls within the accounting period.
 that the voucher is made out the client’s name;
 that the voucher is duly authorized;
 that the voucher comprises all the relevant documents, which would be expected have been received or brought into existence on the transactions having been entered into i.e. the voucher is complete in all respects; and
 that the account in which the amount of the voucher is adjusted is the one that would clearly disclose the character of the receipt or payment posted thereto on its inclusion in the final accounts.

On the other hand, the term ‘verification’ usually applies to the process of auditing that examines and reviews appropriate manner, whether assets and liabilities are properly stated in the balance sheet essentially. The term may also apply and extend to the components or items of profit and loss account for checking the account balances and their presentation (i.e. revenue). It involves an enquiry into ownership, valuation, existence and presentation (including charge, if any) of assets and liabilities in the context of Balance Sheet items as on a particular date. In case of assets, these are the rights of the enterprise while liabilities shown in the balance sheet are owned the entity.

Thus, vouching deals with the examination of transactions at their points of origin whereas verification usually deals with the final balances contained in the final accounts i.e. Profit and Loss Account and Balance Sheet.

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