Vouching and

Investigation
 Meaning :
u c h i n
Vo vouching is defined as verification of
entries in the books of account by
g examination of documentary
evidence or vouchers such as
invoices, debit and credit notes,
statements, receipts etc.
Definition
- F R M De Paula:
Vouching is a method of
examination to not only
substantiate an entry in the books of
accounts with documentary
evidence, but also to see that these
evidence are adequate, reliable and
really connected with the business.
* To check whether evidences are correct or not :-
Frauds may be committed presenting duplicate
vouchers. Evidential documents or records are to be
checked carefully which is the scope of vouching.

*Proper evidence :- it acts as evidence for the entries

recorded in the books of accounts. It is the work of
vouching to ensure that proper evidence is available
for every entry.
 Importance of vouching

* Backbone of auditing :- Vouching is the only way of

detecting all sorts of errors and planned frauds. Hence it is the
backbone of auditing.

* Essence of auditing :- Auditing checks if transactions are

related to business or not.it checks for fictitious transactions
created for committing frauds. All these facts can be found with
the help of vouching.so, vouching is essential for auditing.
* Proper authority :- To verify proper authority
behind every transaction. Transaction is not
accepted without signature of concerned
manager.

*Cash balance :- It is conducted to check if the

cash in hand is correct. To count cash and
compare it with cash book.
 c t i v e s • Each and every transaction is
O b j e verified and ratified on the basis of
documentary evidences.
• Vouching is done to find out the
errors and frauds committed in the
books of accounts.
• to have accuracy in presenting the
financial reports as true and fair.
• To find out accuracy of entries
appearing in books of accounts.
PROS OF VOUCHING CONS OF
• Provides a high level of VOUCHING
• time consuming
assurance
• Limited space
• Helps to detect errors
and fraud
• May not detect all
• Compiles with legal and errors and frauds
regulatory requirements • Relies on
• enhances credibility documentaries.
 IINVESTI G AT I O N DEFINITION OF
MEANING INVESTIGATION.

Investigation AUDITING According to Spicer

involves an enquiry INVESTIGATION and pegler,
into facts behind the An auditing " The term
books if accounts Investigation refers to a Investigation implies
into the technical, detailed verification and an examination of the
financial and clarification of any doubts accounts of a
economic position of that may have occurred business for some
the company. regarding any form of
transaction. special purpose ".
Characteristics of investigation
Investigation varies from business
1 to business.
Investigation involves critical examination
.
and verification of specific
2 records.
3 Investigation is conducted with certain
specific objectives. is not a regular
process.
4 Investigation may be taking on even by a
non- chartered accountant.
The investigator reports to the person or
5 who is responsible for his appointment.
In the report, the factual information has to
be given in analytical as well as descriptive
manner.
Contents of Investigation
report.
1. The purpose and scope of investigation.
2. The period covered by the investigation.
3. The terms of investigation with reference to the
written Instructions of the client.
4. The various limitations faced by the investigator that
may materially affect the conclusion drawn
5. The assumption forms of the basis of investigation.
6. The investigation report should contain headings,
subheadings, charts and graphs etc
7. Conclusion of the investigator should be stated is
clear and certain terms.
 PRINCIPLES OF
INVESTIGATION

Investigation Determinatio
Report nf nature and
scope.

Formulation of
Conduct of investigation
Investigation. programme.
 Y P E S O F • STAGES OF
T N I N
T I G A T I O INVESTIGATIONS.
IN V E S
D I T I N G . 1. Understand the business.
AU 2. professional courtesies.
1. An investigation into the affairs of the
3. Organization of the investigations.
companies [ section 235 and 237]
4 Obtaining the background
2. An investigation into the affairs of the information.
related companies [ section 239]. 5. Gathering preliminary information

3. An investigation into the ownership of the

.
companies[ section 247]
Technique 1. The business and it's history.
s ofInves 2. Management and the staff.
ti gation 3. Sales and marketing.
4. Purchasers and suppliers.
A drafted outline report of 5 Future prospects and trends.
investigation. on
behalf of a prospective purchaser, the
headings are.
 INVESTIGATION

An investigation audit is a process of seeking,

discovering and gathering facts in a systematic and
measurable manner with the aim of disclosing the
benefits.
 AUDITING VS INVESTIGATION
• Auditing is the systematic examination of
books and record of a business in order to
ascertain or verify and to report upon the
facts regarding financial operations .
• Auditing is conducted on behalf of the
shareholders or proprietors.
• Audited accounts are not audited again .
• The audit of account is usually for a year or
six months.
• Audit is a kind of test checking.
• An auditor gives report to the owners of the
business.
• An auditor cannot approach the work with a
mind
• The report of the auditor is stereo typed.
• In case of auditor, he has to state that fact
whether the valuation of stock is being
consistently followed or not.
• It involves an enquiry into facts behind the
books of accounts into the technical and the
economic position.
• It is usually carried out on the behalf of out
siders who intend to purchase the business or
want to know the earning capacity of the
concern.
• Investigation may be conducted through the
accounts have been audited
• Investigation may cover a period extending
over 3 or 7 years
• Investigation is through examination the
books of accounts for a particular year.
• An investigator gives the report to the person
whose behalf he has undertaken into
investigation.
• An investigator approaches the work with
mind .
• The report of investigator is in detail
• The investigator is not concerned whether the
THAN
K