Some organizations believe they are too small to worry about documenting their accounting policies and procedures. I believe you are never to small to document these critical procedures.
According to the Journal of Accountancy…
Yet there’s no question that a high-quality policies and procedures manual can provide underlying documentation that helps an organization run effectively and efficiently.
The case for updating your policies and procedures manual
Let’s dig in…
This topic can be essentially broken into 2 groups, both benefit from having a written accounting policies and procedures manual, but perhaps for different reasons.
Let me explain…
Group 1: A small organization with a 1-person accounting department
Many organizations in this group might be leaning towards thinking an accounting policies and procedures manual is unnecessary, but that couldn’t be farther from the truth. A small organization with a 1-person accounting department should have a manual that documents their policies and procedures for continuity if nothing else. When all of the processing steps are in this one person’s head, what happens if they leave suddenly, get sick or are off for an extended period of time?
I’ll tell you what happens if there is no documentation and mass chaos ensues. The owner now has to scramble just to learn how to invoice customers, receive payments and pay bills. Once someone new is hired, the process starts all over again. This process of guessing at what to do and what comes next is highly inefficient and takes valuable time away from the operations of the business.
On the other hand, if the policies and procedures are in a written document, the owner, manager or director can pick up right where the other person left off. Once a replacement is hired, there is a much smaller learning curve in order to get up to speed.
Group 2: A large organization with a multi-person accounting department
Most organizations in this group will probably have an accounting policies and procedures manual, but why? The general perception is that a larger organization is a bit more rigid in terms of their policies and procedures and would most likely want have them in a written document. This document is critical for such an organization for several reasons.
- There is a tendency to move staff from one position to another
- There can sometimes be high turnover
- With many hands in the cookie jar it is important to know who is doing what
The accounting policies & procedures document will help ensure a smooth transition from one position to another, a smooth intake for new employees and protection for staff when errors or irregularities occur.
Once you get on board with the need for such a document you will also realize the importance of keeping the manual updated on a regular basis, at least once or twice a year.
To your success,
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