GLENCOE / McGraw-Hill
Internal
Control and
the Voucher
System
Internal Control
Section Objectives
1.
Explain the general principles of internal
control.
2.
Explain how the voucher system facilitates
internal control.
Purposes of Internal Control

To safeguard assets

To achieve efficient processing of transactions

To ensure the accuracy and reliability of
financial records
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950
Essential Internal Controls

Division of responsibilities

Effective training of employees

Capable personnel in key positions

Unannounced changes in assignments
 All
transactions supported by adequate
documentation
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950
Essential Internal Controls
 All
document numbers accounted for

Periodic review of control procedures by an
outside accounting firm

Strong audit trail

Electronic and mechanical control devices

Frequent evaluation of internal control system
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The Voucher System as a Tool
of Internal Control
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951
QUESTION:
What is the voucher system?
ANSWER:
The voucher system is a method of
controlling liabilities and cash
payments.
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Payment Voucher
Form used to authorize payments
Focal point in an effective internal control system
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Voucher System

Payments, except for small petty cash items,
are made by check.

Checks are issued based on properly
approved vouchers.

The voucher system is most appropriate for
medium- and large-sized companies.
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Controls Involved in a Voucher System

All liabilities are authorized.

All payments are made by check, except for petty
cash disbursements.

All checks are issued based on properly
approved vouchers.

Vouchers are used to set up and replenish cash
funds.

Vouchers are used to cover bills and invoices
received from outside parties.
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Controls Involved in a Voucher System

All bills and invoices are verified before they are
approved for payment.

Only experienced and responsible employees are
allowed to approve invoices for payment.

Invoices are attached to vouchers to provide
supporting documentation.

Different employees approve the vouchers, record
vouchers and payments, and sign and mail checks.

All vouchers are kept on file for a specified period
of time.
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952
R
E
V
I
E
W
Complete the following sentences:
control system is designed to
A(n) internal
____________________
safeguard the assets of a business.
voucher system is a method of
A(n) ______________
controlling liabilities and cash payments.
payment voucher is a form used to
A(n) _______________
authorize payments.
R
E
V
I
E
W
Complete the following sentences:
In a voucher system, checks
______ are issued
based on properly approved vouchers.
The voucher system is most appropriate
large- sized companies.
medium- and _____
for ________
Invoices are attached to vouchers to
documentation
provide supporting
_______________________.
Thank You
for using
College Accounting, Tenth Edition
Price • Haddock • Brock