Management has the responsibility to design, implement and communicate internal controls over the accounting and financial reporting of their organization. One method of doing so is the formal documentation of accounting policies and procedures. Not only will a set of formal policies and procedures help to ensure consistency and control over your organization’s accounting and financial reporting, but it will also serve as a tool to train staff members. The documentation of the accounting policies and procedures should also be made easily available to all staff affected by the policies and procedures.
The procedures should be documented clearly and as they are intended to be performed. It is also helpful to explain the design and purpose of the controls related to the procedures in order to increase the employees and understanding and support of the controls.
It is not sufficient to document your accounting policies and procedures once as changes in your organization or changes in accounting requirements may require changes in your policies and procedures. Those policies and procedures should be evaluated annually and updated periodically as needed. Changes in policies and procedures should be updated in the documentation promptly as they occur and communicated to your staff as they are made.
Jeffery W. Patterson, CPA