(a) The following matters should be checked while vouching a sales invoice
- That the date of the invoice fall's within the accounting period.
- That the invoice is made out in the name of the client and that the debtor exists among the
list of debtors.
- That the Debtor's account had been debited with the full amount of the invoice.
- That the goods sold are those that are regularly dealt in by the concern(nature of
transaction)
- That the cost of sales has been credited to an appropriate nominal account or accounts.
- Ensure that the invoice numbers are sequential.
- Reconfirming that the totals were correctly computed.
- Authorisation of transaction
(b) Payment from petty cash should be, verified as follow;-
- Trace the amounts advanced to the petty cashier for meeting petty expenses from the cash
book into the petty cash hook.
- Vouch payments with support vouchers which must be supported, wherever possible by
external evidence.
- Check authorisation of reimbursements.
- Ensure where a columnar petty cash book is maintained that the extension have been
carried forward into appropriate amount columns.
- Check the column totals and cross totals and the dates_
- Verify the cash balance in hand.
- Trace posting of the various columns in which payments are classified to the respective
ledger accounts.
- Verify whether the amount of petty cash imprest is fixed. Whether the fixed amount is
reasonable considering the total amount of petty cash payments made during a month or
so.
(c) Inherent limitations in accounting and, internal control systems as per ISA 400: Risk
assessments and internal control are:
- Management's usual requirement that the cost of internal control does not exceed the
expected benefits to be derived.
- Most internal controls tend to be directed at routine transactions rather than non-routine
transactions.
- The potential for human error due carelessness, distraction, mistakes of judgement and
the misunderstanding of instructions.
- The possibility of circumvention of internal controls brought the collusion of a member
of management or an employee with parties outside or inside the entity.
- The possibility that procedures may become inadequate due to changes in conditions, and
compliance with procedures may deteriorate.
- Overriding of controls by the management.
Kavungya answered the question on May 14, 2019 at 12:55
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