This is the process by which the auditor examines vouchers to see:-o Whether these are for the business.
o Whether they have been authorized
o Whether they are for the current financial period.
o Whether they are properly recorded
This means that the auditor will try to substantiate the validity of information contained in vouchers representing the transactions.
Verification of assets and liabilities
This is done by scrutinizing the entries indicated in the balance sheet for:-
o Value of assets.
This method is used to gather evidence concerning the company‘s procedures, operations, use and handling of assets. This is used in situations such as:-
- Mail opening
- Wages payment
- Counting of cash especially petty cash and cash in hand
- Stock taking
- Enquiries and Third party confirmation
This is obtained either orally or in writing to parties who have had some dealings with the company to gather information about the accuracy of the company‘s own records e.g. from debtors, creditors, bankers and trustees e.t.c.
- Re-Checking and Re-Computation
The auditor will have to re-check and re-compute the arithmetic accuracy of transactions e.g. in the Trial Balance, depreciation, taxation, goodwill and reconciliations, all of which must be recomputed before they are passed.