Yes it's derived from Welsh but in Welsh it's "Fychan".
The surname is a mutated form of Welsh fychan, which means "younger". It was a descriptive name to distinguish father from son. In English, the word fychan became vychan.
Welsh, Scottish, or Scots-Irish
Silvia Vaughan's birth name is Sylvia Vaughan.
Arky Vaughan's birth name is Joseph Floyd Vaughan.
Beryl Vaughan's birth name is Beryl Irene Vaughan.
Billy Vaughan's birth name is Billy Scott Vaughan.
Dai Vaughan's birth name is David Vaughan Jones.
Denis Vaughan's birth name is Denis Edward Vaughan.
Vaughan Wilson's birth name is Samuel Vaughan Wilson.
Vaughan Wilkins's birth name is William Vaughan Wilkins.
Vaughan Johnson's birth name is Vaughan Monroe Johnson.
Denny Vaughan's birth name is Charles Stewart Dennis Vaughan.