Accounting Policies and Procedures Manual
Start with an overview of your accounting process and system. Remember not everyone has an accounting background, so a review of the concepts and an overview of your people and software is the place to begin your manual.
Overview
The organization employs a comprehensive and effective set of accounting practices, procedures and policies that are designed to:
Be effective in ensuring accuracy and efficiency.
To ensure appropriate internal controls are in place which are designed to protect key assets and prevent fraud and other such activities.
Maintain an updated and documented record of the closing procedures that the company employs to produce financial statements and other management reports.
To provide historical accounting records for comparative reporting, benchmarking and other management needs.
People
Responsibilities
President
The President of the organization is responsible for the following accounting related tasks:
Approving all Expenditures over $10,000
Reviewing and approving all checks that require signature of the president
Reviewing a weekly/biweekly payroll summary of hours worked and check amounts
Approval of all Budgets as authorized by the board
Approve the Monthly financial reports.
Annual Review of financial internal controls
VP / CFO
The Chief Financial Office or Vice President is responsible for:
Reviewing the daily AP invoices and files the copy of the AP invoice log by month then day
Reviewing and Approving the check runs prior to printing
Reviewing the check run summary report
Reviewing and Approving all invoices and checks that require CFO signature
Approve all employee reimbursements
Approve all inter - account and intra - account transfers
Authorize all inter fund transfers
Receive the monthly bank statements unopened bank statements
Review all bank reconciliations
Manage all asset accounts
Coordinate the budget process for submission to the president
Review and approve with the president the monthly and annual financial statements prior to publication
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Software
The Company uses accounting software provided by xxxxxxx to track its accounting information.
Accounting Process – Debits & Credits
An overview of the accounting system:
Accrual Basis of Accounting
Debits and Credits
Revenue
Expenses
Assets
Liabilities
Owners Equity (include a table)
Accounting Process – manual systems
Financial Statements (Income Statement and Balance Sheet)
List of Accounting Policies and Procedures
Accounting for Assets
Purpose
This policy establishes the fundamental guidelines and practices for properly accounting and reporting assets on the Company’s Balance Sheet. An asset is an element of the financial statements constituting economic resources as of a certain date, and expected to benefit future operations i.e. land, buildings, work-in-process, inventory, and receivables....
Responsibilities
The Controller or designee is designated as the Fixed Asset System Coordinator and is responsible for ensuring:
- Administration and maintenance of the asset and property accountability and control system
- The designation of custodial areas and Property Custodians for each asset group
Property Custodians are responsible for:
- Notifying the Controller whenever fixed assets are acquired lost, destroyed, stolen or disposed of
- Identifying and reporting to management any property which is usable but not needed, or which should be disposed of
Individual employees are responsible for:
The proper use, care and protection of company property
Ensuring that company property is used only for the conduct of official company business....
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Accounting for Liabilities
Policies for long term liabilities and presentation on the balance sheet. Provide guidelines to properly accounting for liabilities including categorization, valuation methods, and G/L account code tables.
Valuation
Book Value
Net Settlement Value
Present Value (include a table)
Accounting for Revenue
Helps with proper revenue classification and accounting for it. Define and classify revenue types with tables for General Ledger codes.
Operating Revenue
Non-operating Revenue
External Sources of Revenue (include a table)
General Ledger Accounts for Recording Revenue (include a table)
Restatements of Revenue
Accounting for Expenses
Policy
This policy discusses and offers guidelines on operating expenses and credits, and includes tables that list General Ledger account code ranges for recording expenses. This policy defines and classifies types of expenses and expense credits at the Company. Expenses are the costs used to produce revenue. They are outflows of cash or charges. For financial reporting purposes, expenses include all costs paid to external parties.
Division of Duties
All procedures and expenditures shall be conducted and approved in accordance with the company written Delegation of Authority, Accounts Payable and Purchasing Policies and Procedures.
Expense Analysis
Expenses are to be analyzed for reasonableness. Reasonableness is ...
Coding and Approval
(include the Expense Dictionary and GL codes)
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Purchasing
Purpose
The purpose of this document is to describe how you buy goods, services, and assets at our organization.
Overview
Purchasing means the act of buying or obtaining goods, services, or assets on behalf of the company for a price or its equivalent. All purchasing must comply with the following policies and procedures:
Purchasing is authorized by the Delegated Authority Policy.
Purchasing is implemented by the Accounts Payable Procedures, Disbursement Approval Procedure, P-Card Policies, Purchase Order Policy and Procedures, and the Procurement Policy and Procedures.
General Purchasing Policies
All purchases over $100 require the use of a purchase order.
Verbal Quotes and Awards must be documented.
Purchasing amounts between $1,000 and $5,000 require at least three price quotes.
Purchases between $5,001 and $24,999 require written quotes be submitted from 3 qualified vendors for approval by the purchaser’s supervisor.
Purchases of $25,000 or more must comply with the procurement procedures.
All real estate leases and transactions must comply with the procurement procedures regardless of amount and without exception.
The company uses p-cards to increase purchasing efficiency and reduce accounting costs. Company P-Card Employees are authorized to use their p-cards according to the p-card policies and procedures
Division of Duties
All inventory purchasing activities should be separate from the associated receiving activity.
P-Card purchasing and receiving activities should not be separated but should be independently verified by use of a log.
All purchasing activities must be separate from accounting activities.
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Accounts Payable Policy
Purpose and Scope
Discussion
Applicable Laws
Generally Accepted Accounting Principles (GAAP)
Moral and Ethical Standards
Kickbacks and Gratuities
Loyalty
Timeliness
Accounts Payable Procedures
Overview
Accounts Payable is the process of keeping track of Company financial obligations. It involves the issuance of purchase orders, acceptance of invoices from vendors, recording the invoices in the computer system, and payment to vendors. This section describes the procedures and forms used in accounts payable.
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Segregation of Duties
Approval Authority
Expense Types – Categories (include a table)
Interim – Manual/Hand Checks
New Vendors
Setting up and maintaining Vendors in the Computer
Receipt of Invoices
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Accounts Receivable Policy
The AR templates make a 29 page Accounts Receivable and Collections manual...
Accounts Receivable Credit Procedure
Accounts Receivable Collections Procedure
Overview
Discussion
Understand the Payment Process for your particular Industry
Red Flags
Making Collection Calls
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Administrative Procedures
General Organization
Etiquette (dress, attitude, food and lunch room, gossip, visitors,
introductions, personal habits)
Ethics
Communications (telephone, correspondence, faxing, mail)
Computers, E-mail, and the Internet
Forms
Records Keeping (Filing, Alphabetic Filing, Numeric or Sequential Filing,
Alpha-Numeric Filling, Subject Filing, Security of records)
Meeting Procedures
Security of Facility
Security of Equipment
Terminology
A/R Lost Payments Procedure
Purpose/Discussion
Detailed Steps for Resolution
Archive Policy
Purpose
Discussion
Archive Procedure
Cash
Management
Claim Outline
Purpose and Scope
Discussion
Introduction
Statement of Facts
Contract Analysis
Financial Analysis
Schedule Analysis
Legal Analysis
Conclusion
Exhibits
Code of Ethics Policy
Overview
The organization (we) are committed to being an ethical and responsible member of society. In order to ensure the highest standards of ethics, honesty, governance, and integrity are maintained, we have adopted this Code of Ethics Policy. We refer to the elements of this policy as our Code. Our Code provides the guidelines and standards for acceptable business conduct.
It is our policy that all employees and directors shall abide by and comply with the Organization’s Code.
An employee that believes they have discovered a matter that appears to be in violation of the Code has a duty to report the matter. This matter may be reported to the employee’s supervisor other management level employee.
We have also adopted a Whistleblower policy to ensure that employees reporting a genuine concern or complaint will not be discriminated or retaliated against and have the opportunity to make such reports anonymously...
Discussion
Applicable Laws
Generally Accepted Accounting Principles (GAAP)
Moral and Ethical Standards
Loyalty
Kickbacks and Gratuities
Conflicts of Interest
Improper Influence of Conduct of Audits
Employee Privacy
Insider Trading
Computing Resources
Email and the Internet
Political Activities
Safety and the Environment
Anti-Trust
Timeliness
Compliance Procedures
Document Control
Revision Information
Contract Changes and Claims
Purpose
Management Responsibilities
Educate field personnel about the contract requirements for changes
Types of Changes
Extras
Change Orders
Claims
Delays
Crisis Management
Purpose
Team Leader
Spokesperson
Safety Coordinator
Manager
Team Secretary
Financial Counsel
Legal Counsel
Governmental Liaison
Delegated Authority Policy
Overview
Discussion
Assignments
Bank Signatories
Bids
Capital Expenditures
Claims
Change Orders
Contracts
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Division of Duties
Overview (include a table)
Financial Analysis
Overview
Dollar and Percentage Changes
Component Percentages
Ratios
Benchmarking
Financial Ratio Analysis
Liquidity Ratios
Leverage Ratios
Activity Ratios
Direct Cost Ratios
Overhead Ratios
Profitability Ratios
Summary
Financial Reporting Policies and Procedures
With procedures and spreadsheet checklist for each month.
Fraud and Embezzlement Policy
A must have policy.
Internal Control Policy
Purpose
This 10 page policy statement sets up the internal control system:
Control Framework
Control Environment
Risk Assessment
Control Activities
Information and Communication
Monitoring
Detective Controls
Preventative Controls
Management Controls
Accounting Controls
Communication
Internal Control Checklists
Employee Rotation
Vacations
Financial Forecasting
External and Internal Auditing
Risk Assessment and Mitigation
Company Mail
Check Stock.....
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Control Modification
Quarterly Review
Annual Review
Internal Control – Cash
Policy with checklists
Internal Control Safety
Internal Controls – Safety
Internal Control Accounts Payable
Purpose/ Discussion
Purchasing
Receiving
Payments to Individuals
Accounts Payable
Accounts Receivable Internal Control Procedures
Discussion
Bad Debt write-off
Internal Control Job Costing
Overview
Checklist
Absorption Rates – Overhead and Burden
Internal Control Payroll and HR
Purpose
Payroll and Human Resource Internal Controls
Internal Control Policy
Purpose
This 10 page policy statement sets up the internal control system.
Internal Control – Project Management
Purpose/Discussion
Project Management Controls
Internal Control Purchasing
Overview
Checklist
Internal Control Receiving and Warehousing
Purpose
Checklist
Asset Protection and division of Duties
Receiving of Goods
Internal Control Sales and Estimating
Purpose
Summary Information
Detail information
Sales Analysis
Forecasting
Internal Controls Retail
Checklist
Inventory Management and Control
Overview
Discussion
Security
Division of Duties
Receiving
Valuation
Physical Inventory
Coding
Procedures (includes a table)
Journal Entry Procedure
Purpose/Discussion
Documentation Required
Approval Authority and Date
Mechanics Lien Procedure
Mechanics Liens are an important collection tool.
Determine if it’s Legal for you to file a Mechanics Lien
File a Notice of your intent to Lien
File the Mechanic’s Lien
Office Task List – Person(s) Responsible
Activity
Payroll and H/R
Accounts Payable
Accounts Receivable
Job Costing
General Ledger
Tax Reporting
Business Development
Operations
Inventory
Safety & Environment
Other
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Order and Contract Management
Overview
Discussion
Order/Contract Administrator
Receiving Orders
Deposits
Order Processing
Order Changes
Order Fulfillment
Shipping
Billing and Invoicing
Project Estimating and Budgeting
Overview
Discussion
Purchasing Material s and Renting Equipment
Equipment Rental Policy
Short Term Rentals
Long Term Rentals
Purchase Order Authority Policy
Purchases
Purchase Orders and Approval
Small Tools
Tools Rental
Purchasing Small Tools
Records Management Policy
Purpose
Discussion
Responsibilities
Creation
Maintenance
Disposition and Archive
Risk Management Policy
Overview
Discussion
Risk Identification
Risk Assessment
Risk Mitigation
Risk Analysis Procedure (a table and spreadsheet)
Strategic Planning
Purpose
Definitions and assumptions
Perform SWOT Analysis
Develop Specific and Measurable Objectives (table)
Strategic Management Process
Telephone Answering Procedures
Protocol
Normal Office Hours
When an employee is not available
When an employee is available – politely screen the call
If you need to transfer a call, follow these procedures
Phones
