Benefits of a Good Accounting
By Lawrence Gebhard, CPA
The importance of a good accounting policies and procedures manual cannot be overstated. This is especially true when it comes to nonprofit organizations, where often times their accounting department only consists of one or two people. Another reason why having a good policies and procedures manual is important for
nonprofit organizations, is to ensure compliance with any governmental or grant reporting requirements.
The purpose of the manual is to serve as a basic framework that will help the accounting staff understand how the accounting system works and how to process and record financial transactions. This includes establishing effective internal controls over accounting and financial reporting which will help to ensure the accuracy of financial reporting and also safeguard the organization's financial assets and prevent fraud.
The manual should be written in such a way that is easy for the staff to understand. Consider using flowcharts to document the workflow or include sample transactions with screen shots and copies of documents to assist the staff in their understanding.
The following is a list of some of the most common components of an accounting policies and procedures manual:
* Chart of Accounts
* Organizational Chart of Accounting Personnel and Responsibilities (in small organizations this may include the Executive Director or Board Treasurer if they assist in any accounting duties)
* Cash management
* Cash receipts/accounts receivable
* Cash disbursement/accounts payable
* Fixed assets
* Net assets
* Month-end close
* Financial reporting - interim and year-end financial statements
While you are creating your accounting policies and procedures manual, it is a good time to make an assessment of your current policies and procedures, and determine if there are ways to improve upon what you are doing. It is also a good practice to review and update the manual periodically. A good accounting policies and procedures manual can be an effective tool for your organization, but only if it is followed.