What is a Voucher System in Accounting?

A voucher system is a method for authorizing the disbursement of cash. A voucher is filled out that identifies what is to be paid for, the amount to be paid, and the account number to be charged. Once this voucher is approved, the disbursement system is authorized to issue payment. Thus, a voucher system is a control used to ensure that cash is only spent on authorized purchases.

Advantages of the Voucher System

There are multiple advantages associated with having a voucher system in accounting. They are as follows:

Enhanced control. Since an authorized person must sign off on every voucher, this reduces the risk of unauthorized or fraudulent payments.
Improved paper trail. The presence of vouchers in the accounting system means that there is a clear paper trail that shows who approved and processed a transaction.
Good audit trail. Auditors can verify the authorizations for transactions more easily by inspecting vouchers.
Improved budget adherence. Since someone must approve each voucher, it is less likely that unwarranted expenditures will take place. This makes it easier to adhere to the established budget.
Reduced fraud. Given the authorization requirement built into the voucher system, it is less likely that fraud can occur within an organization.