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Accounting Best Practices, Fifth Edition by Steven M. Bragg Englewood, Colorado

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13–3. Create a Policies and Procedures Manual

As is noted several times in this chapter, an unorganized accounting department is inefficient, suffers from a high transaction error rate, and does not complete its work products on time. While other best practices noted in this chapter, such as general training, cross-training, and calendars of events, will contribute to a more structured environment, one of the very best ways to create a disciplined accounting group is to create and maintain a policies and procedures manual.

This manual should list the main policies under which the accounting department operates, such as those listed in Exhibit 13.2. These are the key issues that confront each functional area and are usually limited to just a few pages. Anything longer probably indicates an excessive degree of control or some confusion in the difference between a policy and a procedure.

Exhibit 13.2. Sample Policies Page
Accounts Payable:
  • Any supplier invoice within 5 percent of the price indicated on the buyer’s purchase order requires no additional authorization to pay.

Document Archival:
  • Use the following format to determine when to dispose of old records:

Type of RecordRetention
Accounts Payable Ledgers/Schedules7 Years
Advertisement for a Job Opening1 Year
Capital Stock RecordsPermanent
Checks (Canceled)7 Years
Deeds, Mortgages, Bills of SalePermanent
Earnings Per Week3 Years
Financial ...

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