The innocuous payment voucher
Payment voucher appears in various forms in many businesses, most in standard pre-print forms available from stationery shops, some in customised company layout while others in electronic form as part of payment or procurement ERP systems. Despite the varied layout of the payment voucher, it is the information (or the lack of it) it captures that determine its usefulness and the effectiveness of the embedded controls. For SME that does not has an established procurement process, it is even more important that payment voucher is used to mitigate the procurement risk.
Some SME does not use payment vouchers, while others uses it with such minimal information stated on it that it is just a plain cover with authorised signature. A payment voucher serves two purposes, one for the capture of important information eg nature of the transaction and second the control function for proper payment authorisation.
A payment voucher should contain information that is not available from its attached supplier’s invoice. This information should include why this expense was incurred and for what purpose. It is not clear what is purchased by just looking at some supplier’s invoices. In addition, the business intent of why this is bought cannot be easily ascertained. An invoice for washing machine by a construction company can be incurred as part of a fit-out of showroom for a construction project, for its workers’ dormitory or for the private use of its directors. The treatment of this item in accounting will follow accordingly to the relevant expense line, beside impacting the profit or loss statement, there are also tax and GST implications. For corporate income tax expense deductibility, you would need to ensure certain details are available. For entertainment expense tax deductibility, you would need to ensure at least the names of the person entertaining and being entertained as well as the business purpose is stated on the payment voucher. For GST registered SME, it needs to be further stated clearly whether it is for business purpose to avoid the deeming of GST output tax on non-business transaction. The business intent of the transaction determines the expense/or even contra income line that it will be reflected on and the relevancy of its financial statement thereafter.
Secondly, a payment voucher serves as a payment authorisation to ensure the approval of proper authorised signatory based on payment limits and/or nature are performed before payment are disbursed to the payee. A pre-print serially numbering helps to further ensure completeness of every single piece of payment vouchers are accounted for. This control is effective only if the authorised signatories have the information in the first place upon which to base his approval for genuine and relevant business spent.
A payment voucher as innocuous as it appears to be, serves an important purpose and helps to reduce an SME operation risk arising from duplicated and non-genuine business payment.