Vouching Sales Ledger or Debtor’s Ledger | Guidelines to Auditors

Vouching Sales Ledger or Debtors Ledger – Procedure, Guidelines to Auditor

After having checked the Bought Ledger, the auditor should proceed to check the Sales Ledger, which contains the accounts of the debtors.

Vouching of Sales Ledger or Debtor's Ledger

Vouching of Sales Ledger or Debtor’s Ledger

The opening balance of Sales Ledger should be checked with balance given in the previous year’s Balance Sheet. Books like Bills Receivable Book, Cash Book, Sales Returns Book or Goods Outward Book, Journal or other subsidiary books should be checked to vouch the accounts in the Sales Ledger.

The auditor should call for a Schedule of Debtors’ Account and check it carefully. If the books are maintained on the self balancing system, the total of the balance in the Schedule of debtors should tally with the total of the balance shown in the Debtors’ Ledger Adjustment Accounts.

It should be ensured that the debit or credit balances of the Sales Ledger should be shown on the proper side of the Balance Sheet. The castings of the accounts in the Sales Ledger should now be checked with the Balances as shown in the Schedule of debtors, which has been supplied to him by his client. The manager, secretary, or any other responsible official must certify such a Schedule.

There is a possibility of committing fraud by passing fictitious entries in respect of credit notes, cash discounts, allowances in the Sales Ledger. So an auditor should pay special attention to the credit entries in the Sales Ledger and bad debts.

There may be some credit balances in the Sales Ledger, on account of the omission of the record of invoices in respect of goods supplied in which case, necessary adjustments should be made. Further, such a credit balance must not be deducted from the amount of debtors but should be shown on the liabilities side of the Balance Sheet along with sundry creditors.

In case if credit balance is due to the fact that an advance is made on account of an order placed, it must be shown under a separate head known as “Advance against Goods on Order” and should not be included amongst sundry creditors.

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