Vouching: Meaning, Definition, Importance, Objective, Characteristics and Source

25/07/2020 2 By indiafreenotes

Vouching, widely recognized as “the backbone of auditing,” is a component of an audit seeking to authenticate the transactions recorded in a firm’s book of accounts. When an accounting transaction is vouched, it is tested and verified by presenting relevant documentary evidence.

Vouching is a Technical term, which refers to the inspection of documentary evidence supporting and substantiating a transaction, by an auditor. It is the essence of Auditing.

It is the practice followed in an audit, with the objective of establishing the authenticity of the transactions recorded in the primary books of account. It essentially consists of verifying a transaction recorded in the books of account with the relevant documentary evidence and the authority on the basis of which the entry has been made; also confirming that the amount mentioned in the voucher has been posted to an appropriate account which would disclose the nature of the transaction on its inclusion in the final statements of account. Vouching does not include valuation.

Vouching can be described as the essence or backbone of auditing. The success of an audit depends on the thoroughness with which vouching is done. After entering in all vouchers, only then can auditing start. Vouching is defined as the “verification of entries in the books of account by examination of documentary evidence or vouchers, such as invoices, debit and credit notes, statements, receipts, etc. The object of vouching is to establish that the transactions recorded in the books of accounts are:

(1) in order and have been properly authorized.

(2) are correctly recorded.

“Simple routine checking cannot establish the same accuracy that vouching can. In routine checking, entries recorded in the books only show what information the bookkeeper chooses to disclose; however, these entries can be fictitious without any vouching or vouchers. By using a vouching or a voucher system a company will have concrete and solid documentation and evidence of expenses, capital, and written proof in audits.

Vouching is the essence or backbone of auditing because when performing an audit, an auditor must have proof of all transactions. Without the proof provided by vouching, the claims provided by the auditor are just that, only claims. In most cases, hard to detect frauds can only be discovered through the use of vouching. This means that the auditor must conduct vouching with great importance, if not, he can be charged with negligence. The importance of vouching was realized. In this case, the auditors were found to be guilty on negligence, because the auditors did not display enough reasonable care and skill in vouching the wage sheets and ended up failing to detect fraud in manipulation of these wage records and cash vouchers. When delivering the decision, the Judge stated that “It was clear that a good many documents were suspicious on either face and called for Inquiry”. It was declared that it was essential that due care and attention are to be given to vouching in auditing.


Essence of Auditing:

Auditing not only checks the accuracy of books of accounts but also checks whether the transactions are related to business or not. All the transactions are performed after the prior approval of concerned authority or not, transactions are real or not because an accountant may include fictitious transactions to commit frauds. All these facts can be found with the help of vouching. So, vouching is essential for auditing.


Once vouching of the transactions recorded is over, verification of assets and liabilities is done. Therefore, vouching acts as a basis for verifying the assets and liabilities.

Backbone of Auditing:

Main aim of auditing is to detect errors and frauds for proving the true and fairness of results presented by income statement and balance sheet. Vouching is only the way of detecting all sorts of errors and planned frauds. So, it is the backbone of auditing.


  • To check whether proper documentary evidence is there in support of the entries made in the books of accounts.
  • All transactions are to be supported by evidence. Each document should be proved by authorized authority. With the help of vouching we can detect errors and frauds by verifying each transaction. Planned fraud can be detected through vouching.
  • To make sure that all the transactions that have been occurred, are entered in the books of accounts.
  • To Find the Unrecorded Transactions: Each and every transaction is checked and ratified on the basis of document. Vouching helps to find out the unrecorded or missing transactions. If any voucher is found unrecorded, auditor can suggest to record such transactions.
  • To examine the transaction for which money paid or received relates to the business.
  • To check whether the transaction belongs to the entity.
  • To Know That Only the Business Transactions Are Recorded: Sometimes, transactions are performed for individual purpose but payment is made out of business. Such transactions should not be recorded in account of business. If such transactions are recorded, we can find it with the help of vouching. To know the real profit or loss of business, such transactions are to be separated.


  • Imperative Aspect of Auditing
  • Basis of Auditing
  • Drafted Evidence
  • Disclosure of Extortion
  • Report on Business Activities Only
  • No Secret Transactions
  • Course of Voucher


Internal Voucher: The Voucher prepared by company and its entities (Different Branches), also called micro environment of Business use for own purpose. Eg. Sale Invoice, Transfer of goods invoice etc..

External Voucher: The Voucher prepared by macro environment of the Business Organization (Outsider) of the Business, received from outside Party. Eg. Electricity Bill, Rent Paid, Bank Statement etc..