Companies create accounting policies and procedures to stress the importance of safeguarding financial assets. With so many hands overseeing accounts payable and receivable, it's easy for money to get sidetracked if employees do not have guidelines for handling even mundane tasks. Also, because penalties for failing to maintain careful financial records can be high, most corporations rely on forthright accounting procedures to ensure consistent compliance with reporting regulations.
- Skill level:
Write an introduction that states policy objectives. For example, "The Smith Equipment Company's purpose in writing this policy manual is to guarantee the protection of assets and compliance with standard accounting principles." Specify that all accounting staff must follow the policies.
Identify accounting department staff by title and name. List each employee's respective duties.
Establish procedures for cash receipts. Explain how to record incoming checks on a receipts log, what procedure to follow when money arrives by wire transfer and how to record funds from credit charges in a savings account.
Outline steps for cash disbursements. For example, which staff members log incoming funds and match invoices to purchases. State how many times per month cash disbursements are made, who prepares checklists for review by the supervisor, how signatories of checks confirm purchases, who checks for unpaid invoices and how often.
Describe reconciliations procedures, or what to do when balances fall shorter than the operating budget allows. For example, in order to determine reconciliations for bank accounts, staff must compare dates, amounts, returned and cancelled checks. Explain how to fix differences with other ledger amounts. For example, what is the required balance for petty cash and security deposit accounts?
Discuss elements of a petty cash fund, such as the maximum total amount, the maximum amount of individual disbursements and the fund's custodian. Establish procedures for replenishing the fund and recording disbursements. Discuss how often the fund should be reviewed. Explain how to handle discrepancies between receipts collected and the fund's current balance.
Establish procedures for making purchases. List steps for requesting checks to pay for goods or services that can't be invoiced (such as buying postage stamps). List authorised and unauthorised credit purchases. Explain how to submit expense reports.
Outline methods to manage fixed assets. Explain what information to include on property logs, when to conduct physical inventories and how to report changes in equipment and property.
Tell how to manage payroll. Identify who should maintain payroll files and where the files should be stored. List steps for preparing time sheets, processing employee work time and calculating payroll. Specify who reviews payroll summaries and distributes final checks.
Write policies for preparing monthly financial reports. Identify who prepares draft reports and who approves final versions. Give instructions for conducting year-end assessments.
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