Write short note on Vouching of Cash Sales and Purchases of Land and Building.

Vouching of cash sales

Examine cash book:

The auditor should examine the cash book with reference to daily cash sales summary and copies of cash memos. If automatic cash recording machines are being used by the entity, the auditor should use locked in totals of cash received as shown by the machine for reference.

Examine cash memos:

The auditor should select a sample of cash memos and

  • Examine whether the prices charged, discounts allowed and rates of sales tax charged, as shown by cash memos are correct and properly authorized.
  • Trace them through the salesman’s summary to cashier’s cash sales summary and the gate -keeper’s goods delivered summary.
  • Examine whether the dates on cash memos and cash, sales summary are the same.

Examine the counterfoils of pay-in-slips:

The auditor should examine the counterfoils of pay-in-slips with reference to cash sales summary to ensure the deposit of entire sales proceeds into the bank on the same day.

Routine checking:

  • Checking the arithmetical accuracy of cash memos, cash sales summary and gatekeeper’s goods delivered summary.
  • Examining the classification of cash sales to ensure correct posting to accounting heads, in particular, amount collected as VAT to VAT account.

Purchase of Land and Building:

Examination of ownership Dead: In order to Search the ownership of land and building, the following voucher are needed:

If asset is purchased through auctioneer, the auctioneer’s account should be checked. Moreover,

  • If land and building purchased in freehold, the title deed should be examined thoroughly.
  • if land and building purchased is on lease, the lease deed should be examined to check the purchase’s right over the property.

If the property is purchased through a broker, the broker’s note should be examined. Purchase agreement shall be a proper evidence in support.

If the building is created under contract, the actual contract should be checked together with architect’s certificate on the basis of which payments are made.

Other expenses incurred e.g. auctioneer’s commission brokerage, registration fee, architect’s fee etc. can be vouched with the help of receipts obtained from the concerned parti6. It should also be seen that they are properly capitalized.

If the purchaser is a company, the minutes of the Board’s meeting and the resolution passed therein, to authorize the purchase should also be examined.

Enable registration in settings - general
Compare items
  • Total (0)