What are vouching and tracing in audit?
Vouching and tracing are two directions of audit testing. Vouching starts from an entry in the accounting records and checks it back to supporting documents, such as invoices or contracts, to confirm it really happened. Tracing starts from source documents and follows them forward into the records to confirm they were recorded. Vouching tests existence; tracing tests completeness.
Also calledvouchingtracingdocument matching
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- Vouching
- Records to documents (existence)
- Tracing
- Documents to records (completeness)
- Work involved
- Matching fields across documents
How vouching and tracing work
To test that recorded sales are real, the auditor selects sales entries from the ledger and vouches them to invoices, orders, delivery notes and cash received. To test that all sales were recorded, the auditor selects shipping documents and traces them to invoices and ledger entries. The same logic applies to purchases, payroll and fixed assets. The choice of direction depends on the assertion at risk: overstatement risk calls for vouching, understatement risk for tracing. Much of the work is matching fields across documents and spreadsheets, such as amounts, dates, names and references, which is slow and error-prone by hand. Document extraction and matching tools now read the documents and tick off matches automatically, leaving auditors to review differences. DataSnipper performs document matching and cross-referencing inside Excel for audit and finance teams.
Common questions
What is the difference between vouching and tracing?+
Vouching works backwards from the records to the documents and tests whether recorded items exist. Tracing works forwards from documents to the records and tests whether everything was recorded.
When should an auditor use vouching?+
When the main risk is overstatement, for example of revenue or assets, because vouching checks that recorded amounts are supported by real transactions.
Can vouching and tracing be automated?+
Largely. Software can extract data from invoices and other documents and match it to ledger entries, leaving the auditor to review mismatches and document conclusions.
Audit software for document matching
Part of Accountio’s accounting technology coverage · Glossary
