Vouchers and Payroll Accounting in the Public Sector

Every payment from public funds is supposed to leave a paper trail, and the paper is the voucher. A voucher shows what was paid, to whom, for what, under which head and sub-head, with whose authority and with what evidence. It is signed by several officers, entered in the vote book, stamped when paid and kept for audit.

If vouchers are properly prepared and checked, the controls described in the previous topic work; if they are loosely prepared, altered or duplicated, the money can leave without trace. Payroll is the largest repeated payment a ministry makes, so it has its own set of documents and a sequence of checks, from the personnel emolument record through the salaries section, internal audit and the cash office.

This topic covers the three classes of voucher:

• payment, receipt and adjustment
• the essential features of a valid payment voucher and the voucher certificate
• the rules for preparing and paying on vouchers
• what to do when a voucher is lost
• the documents for a contract payment
• the payroll procedure, with the records, the custody of personal emolument record cards, and the actions of the salaries section, the internal audit unit and the cash office

The next topic covers the cash office, the cash book and bank reconciliation.

The checking of vouchers appeared in November Diet, 2024, Question 4 (20 marks), where part (c) (4 marks) asked a Treasury accountant examining payment vouchers at a central pay office to create a checklist of major concerns. Read the control of government revenue and expenditure first.

What a voucher is and its classes

A voucher is a document that evidences a receipt or payment of money. The Financial Regulations require every payment to be made on the prescribed form. Vouchers are of three kinds: payment vouchers, receipt vouchers and adjustment vouchers.

Others used in government accounting include pension payment vouchers, pay-in vouchers, journal vouchers, remittance payment vouchers, transport and travelling allowance vouchers, capital expenditure payment vouchers, payroll summary vouchers (for non-pension employees, senior officers and junior officers), store issue and store receipt vouchers and other charges payment vouchers.

Payment vouchers

Any money paid by government must be supported by a payment voucher, which is the documentary evidence that payment was made for goods bought or services rendered. It is prepared at the point where payment is to be made.

It must contain the full particulars of the services rendered or goods bought, such as date, serial number, quantity and price, and it must be supported by relevant documents such as invoices, local purchase orders and letters of authority.

Essential features of a valid payment voucher

1. Date of the voucher, which shows its life span.
2. Classification code: the head and sub-head of expenditure.
3. Amount in words and figures.
4. Voucher number.
5. Description of the payment, with the name and address of the payee.
6. Supporting documents: local purchase orders, invoices, store receipt vouchers and contract agreements.
7. Authority: the signature of the officer controlling expenditure and the warrant that releases the money.
8. Signature of the cashier.
9. Signature of the payee.
10. Voucher certificate, in a box: prepared by; checked by; entered into the vote book by; passed by; paid by; authorised by.
11. Cheque number, where payment is by cheque.
12. The cashier’s stamp “PAID”, which prevents the voucher being presented for payment a second time.

The format has the classification code and station at the top, the voucher serial number and amount, the name and address of the beneficiary, columns for date, description, rate and amount payable, the authority (warrant and officer controlling expenditure), the amount in words, the signatures of the payee and the cashier, and a certificate by the officer authorising expenditure that the voucher has been entered in his vote book.

Rules for issuing and paying vouchers

A sub-accounting officer may not pay against a voucher unless:

• (a) it is certified for payment by an officer authorised to do so
• (b) it is stamped “checked and passed” for payment and signed by the checking officer, with the name of his station
• (c) it is stamped “entered in the vote book” and signed by the officer who keeps the vote book

For preparation:

• vouchers are made in ink, ballpoint or indelible pencil, or typewritten, and all copies must be legible;
• no erasure of any kind, and no correcting fluid;
• a single thick horizontal line before and after the naira figure; in words, no spaces left; and
• where a voucher is presented to the sub-treasury or cash office to obtain cash for payment elsewhere, as with salaries, a cheque or cash order form signed by the authorising officer, bearing the signature of the officer authorised to receive the cheque or cash, is needed: a separate form for each voucher.

Documents for a contract payment voucher

1. the minutes of the meeting of the tenders board that awarded the contract;
2. the certificate of completion issued by a competent site engineer or surveyor;
3. a copy of the contract agreement, to show that its terms were met;
4. the letter of award;
5. a delivery note or store receipt voucher where the contract is for supply of items; and
6. a waybill, an invoice or both from the contractor.

Example. A contract of ₦24m is 70% complete, certified at 24 × 70% = ₦16.8m. With retention of 5% (840,000), the voucher is for 16,800,000 − 840,000 = ₦15,960,000, and the supporting papers above show that each element is correct: the tenders board award, the 70% completion certificate and the agreement stating the retention.

Loss of a payment voucher

1. The accounting officer is told at once and a prompt investigation is carried out.
2. It is established whether payment has been made on the voucher.
3. If payment has been made, it is established whether the cash drawn is still in hand.
4. The accounting officer reports to the Accountant-General, stating the circumstances of the loss.

A checklist for examining payment vouchers

A Treasury officer who examines vouchers at a central pay office should look at:

• whether the voucher is on the prescribed form and has all the features above
• whether each signature is present and from an officer authorised to give it
• whether the head and sub-head are correct and the vote book entry made, with enough balance in the vote
• whether the warrant or authority exists
• whether the supporting documents are complete and agree in amount, quantity and name with the voucher
• whether the arithmetic and deductions (retention, tax) are right
• whether there are erasures, alterations or missing lines around the figures
• whether the voucher is stamped “PAID” once only and is not a duplicate
• whether the payee and the payee’s account agree with the contract
• whether the officers raising, checking and approving are different persons
• whether payments are split to avoid approval limits

Receipt vouchers

A receipt voucher is documentary evidence that the sum stated was received. Any receipt into the government purse must be supported by a Treasury Form 15 (pay-in form) with an attached Treasury Receipt Book 6 before it is regarded as an authentic receipt voucher.

The format shows the classification code, the receipt number, the service, the date, from whom received, the sum, what it was payment for, and the signatures of the cashier and the payee.

Adjustment vouchers

An adjustment voucher is documentary evidence of formal entries that move amounts from one account to another without any cash being received or paid. It is used:

• (a) to pay for services between ministries
• (b) to correct accounting errors caused by misclassification
• (c) to allocate unallocated stores finally
• (d) to make adjustments or transfers between accounts

The creditor department usually starts it and sends it to the debtor department for acceptance of the charge. It shows:

• the reason for the transfer, with full reference to the original debit or credit
• the voucher number
• the month of account
• particulars of any treasury or audit query that led to it

Payroll accounting

Approval by the Accountant-General

The Accountant-General approves the procedure and method that federal ministries, departments and units use to record and calculate personal emoluments. The standard payroll system must produce, in a single operation:

• (a) the personal emolument record
• (b) the payroll in duplicate with a bank pay-in advice slip
• (c) a pay statement for each officer, whether or not the system is computerised

The officer controlling expenditure ensures that the standard record shows:

• the standard rate of pay
• the incremental rate
• the standard allowance
• salary and other advances issued
• Pay As You Earn tax
• gross emoluments
• standard deductions
• net emoluments payable

Custody of the personal emolument record cards

In a manual system the head of finance and accounts keeps the cards under strict security: under lock and key in a fire-resistant cabinet, safe or strong room when not in use.

Every officer must complete the personal emolument record form each year, certified by the head of department or other designated officer. The completed form is the basis for opening the group registers, which must be audited before any officer is included in the payroll.

Action by the salaries section

1. Make the entries in the personal emolument record of each employee: basic salary for the month, deductions and net salary payable.
2. Add up the entries and raise Treasury Form 209 (advice of deduction from salary) for deductions and Treasury Form 1 (other charges payment vouchers) for payments on to the beneficiaries.
3. Classify these under the proper below-the-line code.
4. Raise a summary payment voucher for each pay point, showing total basic salaries and allowances (gross), total deductions and net pay.
5. Process the cash order form as the Financial Regulations provide.
6. Enter the personal emolument voucher, register and vote book.
7. Check the payroll entries and vouchers internally for accuracy, allowing for leave.
8. Compare and reconcile the figures with those on the variation sheet for the month.
9. The officer controlling expenditure, after agreeing the figures with the variation control sheet, signs all summary vouchers and Treasury Form 209.
10. Send the payrolls with the summary vouchers, Treasury Form 209 and on-payment vouchers to the internal audit unit.

Action by the internal audit unit

1. Check the accuracy of entries in the personal emolument records and payroll, examining them in detail so that variations in pay are correctly stated.
2. Examine all summary vouchers and supporting documents to ensure that the deductions and individual net salaries are right.
3. Ensure that the gross salaries in the summary vouchers agree with the variation control sheets.
4. Extract copies of the summary vouchers and supporting documents for record.

Action by the cash office

1. Check the payroll summary vouchers and supporting documents against the forwarding schedule from internal audit, to confirm that they are complete.
2. Sort and give treasury payment voucher numbers to summary vouchers, on-payment vouchers and the treasury receipt vouchers for Treasury Form 209.
3. Stamp all summary and on-payment vouchers “PAID” for the month of account.
4. Draw cheques for the net amount payable on the summary voucher in favour of the bank through which payment is made.
5. Draw cheques to the agencies shown in the on-payment vouchers.
6. Post all payment and treasury receipt vouchers separately in a salary cash book, balance it and reconcile it with the bank statement each month.

Worked payroll. A pay point has gross emoluments of ₦6,400,000. Deductions: Pay As You Earn tax ₦780,000; pension at 8% (6,400,000 × 8% = ₦512,000); health insurance ₦160,000. Net pay is 6,400,000 − 780,000 − 512,000 − 160,000 = ₦4,948,000. The variation sheet reconciles the gross to last month: last month’s gross ₦6,250,000 plus promotions ₦200,000 less a leaver ₦50,000 equals ₦6,400,000, which agrees. The internal audit unit would reject the payroll if the summary voucher showed a gross different from the variation sheet.

The ideas in more depth

Why the certificate has so many signatures

Each signature is a separate officer who takes responsibility for one step: preparing, checking, entering in the vote book, passing, paying and authorising. A fraud needs them all to agree. By spreading the work among different people, the voucher builds segregation of duties into the document itself.

Why no erasures and a line around the figures

A figure that has been rubbed out can be altered to a larger one, and a space before a figure in words can be filled. The thick line before and after the figure and the ban on correction fluid remove the opportunity: any change must be visible, initialled and explained. The PAID stamp likewise stops the same voucher from being paid twice.

Why payroll passes through three offices

The salaries section prepares the payroll, internal audit checks it and the cash office pays it. Because the officer who prepares it cannot pay it and the officer who pays it did not prepare it, a ghost worker needs help in three places. The variation sheet gives a trail back to the personnel records that opened the account.

Sources and references

• The Financial Regulations (2009 edition) on vouchers and personal emoluments, including regulations 1518, 1519 and 1525.

These points are stated as at 5 November 2026.

Worked examples

1. Calculate.
   6,400,000 − 1,452,000 = ₦4,948,000.

1. Retention.
   16.8 × 5% = ₦0.84m.
2. Payable.
   16.8 − 0.84 = ₦15.96m.

1. Calculate.
   6,250,000 + 200,000 − 50,000 = ₦6,400,000.

How to answer in the exam

• Define the voucher, then name the three classes.
• List the features of a payment voucher in the order of the form.
• For payroll, give the three offices in order and the document each checks.
• For a checklist, group the checks: form, authority, evidence, arithmetic and alteration.

Common mistakes in the exam

• Listing only payment vouchers when classes are asked for.
• Leaving out the PAID stamp or the vote book certificate.
• Allowing erasures to be corrected with fluid.
• Forgetting that a receipt voucher needs the pay-in form and the receipt book.
• Using an adjustment voucher for a cash payment.
• Mixing up the actions of the salaries section and the internal audit unit.

Quick revision

• Three classes: payment, receipt, adjustment (no cash moves).
• Valid payment voucher: twelve features, including supporting documents, certificate box and PAID stamp.
• Payroll: salaries section prepares, internal audit checks against the variation sheet, cash office pays and reconciles.

Practice questions

These are original questions written in the style of the Institute’s exams. Try each one before you open the answer. Section A is a recall check, because the paper itself is written.

Recall check: multiple choice

Section B style: written questions

A further written question

Model answers

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