In: Accounting
This is a question for someone with Auditing experience:
Ch3 Q 4
What is meant by (a) vouching, (b) tracing, and (c) scanning? What is the difference between vouching and tracing?
Answer
A.Vouching-
financial item followed back to origin (source doc). Provides
evidence for existence and occurrence, NOT for completeness,
sometimes helps with valuation and allocation
B.Tracing-
financial item followed forward from source doc to
journal/ledger entry. Provides evidence for completeness, sometimes
for valuation and allocation
C.Scanning-
"eyes-open" approach of looking for anything unusual
The difference between vouching and tracing:
Tracing
Tracing refers to first selecting an accounting transaction (a
source document) and then following it into the journal or ledger.
The direction of testing in this case is from the source documents
to the journals or ledgers and tests whether transactions that
occurred are recorded (completeness) in the accounting
records.
Tracing bermaksud menjejaki ke depan dari dokumen sokongan hingga
ke jurnal, lejer dan akhirnya Penyata Kewangan. Pada asasnya anda
perlu meneliti semua item dalam dokumen sokongan telah direkod
dalam Penyata Kewangan. Ianya dalah penting untuk menyokong
penegasan/perakuan (assertion) pengurusan bagi KESEMPURNAAN
(COMPLETENESS).
Vouching
Vouching refers to first selecting an item for testing from the
accounting journals or ledgers and then examining the underlying
source document. Thus, the direction of testing is from the
journals or ledgers back to the source documents. Vouching provides
evidence that items included in the accounting journals or ledgers
have occurred (are valid).