Vouchers are also known as audit evidence. Business transactions are recorded in the books of accounts on the basis of written proof, and vouchers serve as that proof.
A voucher is a document that provides details relating to items recorded in accounting records. It may include a cash memo, bill, invoice, or similar supporting documents. These papers confirm that a transaction has actually taken place.
Other documents that act as vouchers include salary registers, wage sheets, credit notes, debit notes, insurance policies, credit and debit advice, passbooks, salesmen statements, agreements, dividend warrants, lease deeds, minute books, job cards, articles of association, opening journal entries, share certificates, and debenture certificates.
All such documents form the basis of entries in accounting books. The original documents are called primary vouchers, while duplicate or carbon copies are known as secondary vouchers.
What is a Voucher
W. Holmes defines a voucher as any documentary evidence in support of a transaction. Joseph Lancaster states that a voucher is any document by which the accuracy of book entries may be verified.
Similarly, Ronald A. Irish explains that a voucher may be a receipt, invoice, agreement, or any written document that confirms a transaction. In simple terms, a voucher is written proof that supports accounting entries.
Why Are Vouchers Important?
Vouchers are important because they provide documentary evidence that financial transactions have actually occurred and have been properly authorized. They support the accuracy of accounting records and enable auditors to verify the completeness and authenticity of financial information.
Properly maintained vouchers also strengthen internal controls, reduce the risk of fraud, facilitate financial reporting, and ensure compliance with accounting and legal requirements. Without adequate vouchers, auditors may be unable to obtain sufficient evidence to support their audit conclusions.
Example of a Voucher
A company purchases office furniture from a supplier. The supplier issues an invoice, and after the purchase is approved, the accounting department prepares a cash payment voucher containing the invoice number, payment amount, approval signatures, and payment details. During the audit, the auditor examines the voucher along with the invoice and payment records to verify that the transaction was properly authorized and accurately recorded.
Common Types of Vouchers
| Type of Voucher | Purpose |
|---|---|
| Cash Payment Voucher | Records cash payments |
| Cash Receipt Voucher | Records cash receipts |
| Journal Voucher | Records non-cash accounting adjustments |
| Purchase Voucher | Records purchases of goods or services |
| Sales Voucher | Records sales transactions |
| Contra Voucher | Records transfers between cash and bank accounts |
Characteristics of Vouchers
1. Voucher is Evidence
A voucher serves as evidence of a transaction. It provides proof that a business dealing has taken place and can be used for future reference.
2. Written Form
A voucher must always be in written form. Oral or verbal statements cannot be accepted as valid evidence in accounting records.
3. Entry in Books
Entries in the books of accounts are made based on vouchers. Without proper supporting documents, accounting entries cannot be considered reliable.
4. Shows Nature of Transaction
A voucher clearly indicates the nature of the transaction. It reflects whether the transaction relates to purchases, sales, payments, receipts, or expenses.
5. Business Name
Vouchers must be issued in the name of the business. Documents in the name of employees or managers are not considered valid for accounting purposes.
6. Date of Voucher
Every voucher carries a date, which shows when the transaction occurred. The date must relate to the relevant accounting period to ensure proper matching of income and expenses.
7. Revenue Stamps
In certain cases, vouchers must include revenue stamps as required under the Stamp Act. This makes the document legally valid.
8. Signature of Manager
A voucher usually contains the signature of the seller, and it is approved by the buyer or manager. This approval confirms the authenticity of the transaction.
9. Amount in Words and Figures
The voucher mentions the amount in both words and figures. This reduces the chances of error or manipulation.
10. Accounting Year
The voucher must relate to the appropriate accounting year. Transactions are recorded in the correct period to determine accurate financial results.
11. Genuine Voucher
A voucher must be genuine and related to actual business transactions. Only original and authentic documents are acceptable as valid evidence.
Different Types of Vouchers
1. Primary Vouchers
Primary vouchers are original documents that support a business transaction. Examples include cash memos, invoices, and bills. These are considered the most reliable form of evidence.
2. Secondary Vouchers
Secondary vouchers are duplicate copies used when original documents are not available. These may include carbon copies, duplicate bills, or copies of resolutions.
Examples of Vouchers
1. Cash Received
Examples include counterfoils, carbon copies of receipts issued, and related correspondence. These documents confirm receipt of cash.
2. Cash Paid
Invoices, bills, salary registers, wage books, agreements, and correspondence serve as vouchers for cash payments.
3. Purchases
Purchase transactions are supported by order copies, invoices, correspondence, and entries in the goods inward book.
4. Purchase Returns
Credit notes, goods outward books, and correspondence are used as evidence for purchase returns.
5. Sales
Sales transactions are supported by order letters, sales invoices, goods outward books, and related correspondence.
6. Sales Returns
Credit notes, goods inward books, and correspondence provide evidence for sales returns.
7. Bills of Exchange
Cash book entries and bills on hand serve as vouchers for bills of exchange.
8. Asset Purchases
Documents such as invoices, agreements, deeds, correspondence, cash memos, and affidavits support asset purchases.
9. Bank Charges
Debit advice, standing orders, and bank correspondence act as vouchers for bank-related charges.
10. Others
Other examples include share warrants, insurance policies, letters of credit, bills of entry, travel tickets, minute books, and articles of association.
Voucher vs Invoice vs Receipt
| Voucher | Invoice | Receipt |
|---|---|---|
| Internal document authorizing or supporting a transaction | Issued by the seller requesting payment | Issued after payment as proof of payment |
| Used for accounting and auditing | Used before payment | Used after payment |
| May include multiple supporting documents | Shows goods or services sold | Confirms money has been received |
| Supports accounting entries | Supports payment requests | Supports payment verification |
How Auditors Verify Vouchers
This section is highly recommended because it directly connects the topic to auditing.
Auditors verify vouchers by examining whether each voucher is properly authorized, supported by relevant documents, accurately recorded, and related to a genuine business transaction. They compare vouchers with invoices, receipts, contracts, purchase orders, and accounting entries to confirm the completeness and authenticity of financial records. Any missing or irregular vouchers may indicate accounting errors or potential fraud requiring further investigation.
Frequently Asked Questions (FAQs)
What is a voucher?
A voucher is a document that provides evidence and authorization for a financial transaction recorded in the accounting system.
Why are vouchers important in auditing?
They provide documentary evidence that enables auditors to verify the authenticity and accuracy of financial transactions.
What are the main types of vouchers?
Common types include cash payment vouchers, cash receipt vouchers, journal vouchers, purchase vouchers, sales vouchers, and contra vouchers.
What is the difference between a voucher and an invoice?
A voucher supports and authorizes the accounting entry, while an invoice is a document issued by a seller requesting payment.
Can vouchers be maintained electronically?
Yes. Modern accounting systems generate electronic vouchers with digital approvals and supporting documents that facilitate efficient auditing.
Conclusion
Vouchers are essential accounting documents that provide reliable evidence of financial transactions and support the accuracy of accounting records. They enable auditors to verify the authenticity, authorization, and completeness of transactions while strengthening internal controls and reducing the risk of fraud.
As organizations increasingly adopt digital accounting systems, electronic vouchers have become an important component of modern financial management and auditing. Proper preparation and maintenance of vouchers contribute to transparent financial reporting, efficient audits, and stronger stakeholder confidence.
See Also: Different Types Of Audit of Journals
