Difference between Vouching and Routine Checking
Vouching and routine checking is not the same thing. While routine checking checks the arithmetical accuracy of transactions, vouching is concerned with the checking of records with the help of supporting documents. These supporting documents or vouchers constitute bills, invoices, purchase or sale receipts, goods inward/outward register, minute book, and similar evidence that form the foundation of recording transactions in a business.
In the paragraphs below, we have outlined the scope of vouching and routine checking along with the differences between the two.
Overview of vouching
To do vouching, a transaction is selected from an account and then the auditor goes backward through the accounting processing system to find out the source which supports that transaction. For instance, to vouch for sales, the auditor would see whether entries made in the sales book can be traced back to copies of sales invoices and whether sales invoices are arithmetically correct. Further, he would check whether the transaction has actually occurred in the period under audit and whether it is duly authorized.
The objective of vouching is to ensure the genuineness of the transactions to make sure that no fake transactions are recorded in the books of accounts.
It is popularly known as the acid test of an audit because it tests the truth of a transaction recorded in the client’s books. When entries exactly match with their supporting vouchers, it ensures that the entries are correctly recorded in the books and do not represent any false figures.
The following are the primary functions of vouching:
- To examine the accounting transactions recorded in the books of accounts by using documentary proof known as vouchers
- To assess the sufficiency and dependability of such documentary evidence
- To investigate the truthfulness of the transactions reported in the books of account
- To ensure that all transactions are correctly documented in the books of accounts
- To verify that all of the transactions & entries are supported by valid evidence
- To ensure that no fraudulent transactions are documented in the books of accounts
- To check that all transactions relating to the business are recorded in the books
- To confirm that all transactions are properly authenticated by a responsible individual
Overview of routine checking
Routine checking is a form of audit examination in which certain books and records that are common to all types of businesses are checked. These include books of original entry (Journal), ledgers, and trial balances. The main objective of routine checking is to ensure arithmetical accuracy of entries made in Journal as well as Ledger. It also ensures that correct posting is done from Journal to the concerned ledger accounts. Thus, with the help of routine checking, fraud and errors of simple nature can be detected early.
Routine checking normally involves the following:
- Checking calculations in the books of original entry with respect to castings, sub-castings, carry forwards, and similar calculations.
- Checking the posting of entries from Journal to Ledger
- Checking the totalling and balancing of all accounts in the ledger
- Checking posting of balances from Ledger to trial balance
How does vouching differ from routine checking?
The following points of differences can be drawn between vouching and routine checking:
- Through routine checking, the auditor verifies the arithmetical accuracy of the entries made in the books. Whereas in vouching, the accounting entries are checked with the help of supporting documents.
- The objective of vouching is to examine the accounting transactions recorded in the books of accounts by using documentary proof known as vouchers. It helps to ensure that no fraudulent transactions are documented in the books of accounts. On the other hand, the main objective of routine checking is to ensure arithmetical accuracy of entries made in the books of original entry as well as Ledger.
- Vouching has a wider scope. It includes the examination of documentary evidence in support of the transactions recorded besides routine checking. Routine checking forms a part of the vouching process.
- Since routine checking is a simple job, it can be done by any person having ordinary knowledge of accounts. It is usually performed by junior staff in an organization. Vouching, on the other hand, is performed by the auditor and his staff.
- Further, because of its mechanical nature, routine checking can cause monotony in the staff performing it. Whereas vouching is a thorough process to investigate the truthfulness of the transactions reported in the books of account.
- Routine checking is not capable of revealing compensating errors and errors of principle. Only clerical errors can be detected through it. However, vouching can reveal well-planned frauds and errors of principle.
- By vouching, the auditor can be satisfied as to the accuracy, authenticity, and completeness of transactions recorded in the books. Whereas routine checking is merely concerned with castings, posting, and balancing.
|Objective||Ensure arithmetical accuracy of entries made in the books of original entry as well as Ledger||Examine the accounting transactions recorded in the books of accounts by using documentary proof|
|Concerned with||Concerned with castings, posting, and balancing||Accuracy, authenticity, and completeness of transactions|
|Frauds and errors||Routine checking can help to detect only minor cases of fraud.||Vouching can detect well-planned frauds and errors|
|Scope||Narrow scope||A wider scope; includes routine checking|
|Performed by||Junior staff in an organization||Performed by the auditor and his staff|
|Compensating errors and errors of principle||Does not reveal||Reveals|
|Depth||Mechanical in nature and monotonous||A thorough and detailed process|
The extent of errors detected in vouching and routine checking
It should be noted that no amount of routine checking can uncover severe frauds, errors of principle, or well-planned scams. Only clerical and small errors can be detected by this type of examination. There’s no denying that severe discrepancies, errors of principle, or well-planned scams can only be uncovered through proper vouching. That is why it is extremely critical that an auditor must carefully vouch for each item appearing in the books of accounts. Only by vouching can the auditor be satisfied as to the accuracy, authenticity, and completeness of transactions recorded in the books, and only then can he certify that the financial statements reflect a fair picture of the business’s operating results & its state of affairs.
Even though when compared to vouching, there are some disadvantages associated with routine checking, its utility and importance should not be overlooked. Routine checking forms the very basis for making further detailed checking. Hence, it should be done carefully.
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