Vouching is the act of checking evidential documents to find out errors and frauds to know the authenticity, accuracy, and reliability of books of accounts. Vouching is only the way of detecting all sorts of errors and planned frauds. So, it is the backbone of auditing. Thus, it is important due to the following reasons:
(a) The backbone of auditing: Main aim of auditing is to detect errors and frauds for proving the truth 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.
(b) The essence of auditing: Auditing not only checks the accuracy of books of accounts but also checks whether the transaction are related to business or not. All transaction is performed after the prior approval of concerned authority or not.
(c) Evidential correctness: An auditor checks the books of accounts to detect errors and frauds. Frauds may be committed presenting duplicate vouchers. All the small and big amounts of frauds can be detected with the help of vouching.
(d) Finding unrecorded transactions: Each and every transaction is checked and ratified on the basis of support document.
(e) Authorization of transactions: If the transactions are made on the consent of concerned authority, such transactions are known as authorized transactions
(f) Truthiness of account: Vouching helps to find out the unrecorded or missing transactions. If any voucher is found unrecorded, auditors can suggest recording such transaction.
