VALUATION&

VERIFICATION

VOUCHING

By: MOTI VERMA, PGDM (FINANCE)

Under: C.A. Ashok Khetan Delhi

Background

Every Chartered Accountant firm has to be registered by The Institute of Chartered Accountant of India.

The Institute of Chartered Accountants of India (ICAI) is a statutory body established under the Chartered Accountants Act, 1949

ICAI now is the second largest accounting body in the whole world.

Cont…..

Ashok Khetan & Co, Barahkhamba lane, Cannoght Place, Delhi

- Ritu Raj Agency, Daryaganj - V.K.Pollycoats Pvt. Ltd, Delhi &

Gurgaon

Introduction

The general definition of an audit is an evaluation of a person, organization, system, process,enterprise, project or product. The term most commonly refers to audits in accounting, but similar concepts also exist in project management, quality management, and for energy conservation.

Auditing and Assurance Standard (AAS) 1 by ICAI 

"Auditing is the independent examination of financial information of any entity, whether profit oriented or not, and irrespective of its size or legal form, when such an examination is conducted with a view to expressing an opinion thereon.

Vouching

Ronald A. Irish has defined vouching as a technical term which refers to the inspection by the auditor of documentary evidence supporting and substantiating a transaction.

Arthur W Holmes, Vouching is the examination of the underlying evidence which is in support of the accuracy of the transaction.  The process of vouching is intended to substantiate an entry by providing authority, ownership, existence and accuracy.

Objectives of Vouching

To examine the accounting entries recorded in the books of accounts with reference to documentary evidence known as vouchers.

To examine the authenticity of the transactions recorded in the books of account.

To examine the adequacy and reliability of documentary evidence.

Vouching Of Purchase Book Vouching Of Purchases Return

Book Vouching Of Sales Book Vouching Of Sales Return Book Vouching of the receipt side of

cash book Vouching of Wages and Salary

register

Valuation

Objectives of Valuation

To find the position of assets on the date the balance sheet is drawn.

To know the correct financial position of the business.

To know the difference in of the value of assets between the date on which the asset was acquired and the date on which the balance sheet was drawn. So, the reasons for this difference can be debated over.

To show how the capital stands invested. To show the goodwill of the business.

Valuation of Building, Plant and Machinery

a. At cost

b. Expenses on repairs

c. Increase in Properties

d. Depreciation

e. Over Valuation

Valuation of Investment

Objectives of Verification

To ascertain the arithmetical accuracy of assets. To find out frauds and irregularities. To ascertain the existence and ownership of

assets. To see that all assets of the concern have been

include in the balance sheet. To see that the assets free from other

encumbrances than mentioned in the balance sheet.

To see that the liabilities have been included in the balance sheet at accurate value.

Verification of Assets Verification of Liabilities

Comparison of Purchase Errors

Diff. Amt CST/ VAT Debit Note Bills Posted0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

Ritu RajVeekay pollycoats

Comparison of Sales Errors

Amount different Quantity different Sample Not signed0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

Ritu RajVeekay pollycoats

Comparison of Rule 18 & 19

41%

59%

Veekay Pollycoats

Rule 18Rule 19

Cash book Errors

Salary paid58%

Exp.> Rs,2000027%

Negative balance15%

Cash book

Focus on valuation

Date of purchase20%

Accessory10%

Repair & mainte-nance10%

Depreciation60%

Focus on Valuation

Focus on Verification

No of assets20%

New/ Old10%

Sold/ Written off70%

Focus on Verification

Objective of Study

To know the actual guidelines of the Company law and the Income tax act.

To know, how the company maintains its books of accounts.

To know that company shows “True and Fair view” or not.

To know, what are the main points which are necessary to check while auditing.

Sample size

Ritu Raj Agency – all the vouchers of Purchase and Sales, Reconciliation statement for bank.

Veekay Pollycoats –all vouchers of Purchase and Sales of Delhi & Haridwar branch, and for two branches first and last quarter only.

-Stock and bank on random basis

Research design

Exploratory Research technique - Secondary Data analysis

Conclusion

While making voucher entry the most of the accountant do their work very effectively but something they do wrong due to lack of knowledge.

Companies try to show less profit by showing sale with fewer amounts.

Companies’ main objective is reducing cost and more profit by not maintaining the books of accounts properly.

Veekay pollycoat use the wastage of one product as a raw material of another product by charging the excise duty on that.

Veekay pollycoat is manufacturing and exporting concern so the exchange price of dollar is fixed on the date of payment received in bank.

Limitations

Reasonable cost Reasonable length of time Alternative accounting Principles Accounting Estimates

Bibliography

Books: Principles and Practices of Auditing (Dinkar

Pagare & Naresh Gupta) Auditing (S.C. Aggarwal)

Internet Websites: WWW.ICAI.org WWW.Books.net