Source documents and the paper trail

An entry is a claim, a document is the proof

Anyone can write 'received R320' in a book. Accounting becomes worth trusting only when every written line can be traced back to evidence created at the moment the event happened. That evidence is called a source document, and it is where every entry in every book of a business begins.

A good source document answers five questions:

A document missing the last row is a weak document. It proves an amount but not that anyone with authority agreed to it.

The documents a small South African business actually uses

Receipt. Issued when the business receives money. The payer takes the original and the business keeps the duplicate.

Cash register roll or cash slip. The till's own running record of the day's cash sales.

Invoice. Issued when goods or services are sold on credit. It creates a debtor, a person who now owes the business.

Credit note. Issued when a credit customer returns goods or is given an allowance. It reduces what that customer owes.

Proof of payment and bank statement. Evidence that money actually moved through the bank account. The bank is an independent outsider, which is what makes its statement so useful.

Petty cash voucher. A signed slip supporting a small cash payment, with the till slip attached to it.

Cheque counterfoil. The stub kept when a cheque is written. Rare in new records, still common in older ones.

Original or duplicate

Keep the duplicate of a document your business issues, and the original of a document your business receives. The other party holds the matching half. Two independent people holding two halves of the same fact is exactly what makes a source document hard to fake.

Worked example. Lebo runs an auto spares shop in Bloemfontein. On 4 March a customer buys two wiper blades for R320 and pays cash. Lebo writes receipt 042 in a duplicate receipt book, hands the original to the customer, and keeps the carbon copy in the book.

The entry in Lebo's books says: bank up R320, income up R320, source document REC 042. In November, when the accountant asks what the R320 on 4 March was, nobody has to remember anything. The receipt book is opened at number 042 and the question is answered in ten seconds.

On the same day Lebo pays a supplier R1 150 for stock by EFT. The proof of payment carries reference EFT 8812, and the supplier's invoice is stapled to the printout. One event, two documents, and between them they prove the amount, the reason and the authorisation.

Core checkpoint: no document, no entry. And every document is filed so that it can be found twice over, by its number and by its date. If you can find a document only by remembering the customer's name, the filing has already failed.