By Diana Miller
Updated 7/30/2019. Written documentation of your organization’s policies and procedures regarding accounting practices always makes sense, regardless of your line of business. But it’s particularly critical when yours is a not-for-profit organization.
While the production of such a document can be highly detailed and time-consuming, it’s worth it. And it’s a job you’ll likely only do once — or perhaps just tweak periodically as laws or conditions change.
Let’s take a brief look at why such a manual is important, then we’ll outline best practices for writing an effective document for your organization.
Accounting Policies and Procedures Manual
Written documentation helps etch the institutional memory of the policies and procedures your organization must follow to stay in the good graces of taxing and regulatory agencies, donors and public opinion. After all, accounting staffers come and go. Without a physical manual, a departing employee might absently or inadvertently take all knowledge of unwritten best practices with him/her.
A well-written manual can be an important training tool for new employees and be used to clarify roles and responsibilities, and ensure that accurate financial data is used for decision-making purposes.
And finally, you should care because the IRS cares. As you file your Form 990, the government wants assurance that you have policies in place regarding such issues as whistleblower response, conflicts of interest, gift acceptance and document retention, among others.
In short, a good policies and procedures manual will make your accounting department’s job easier and your organization more responsive to concerns and better able to avoid scrutiny and controversy.
Contents of Manual
Once convinced that you need such a document, your next question might be what it should contain. It should be comprehensive and address all issues your accounting department might face.
Here’s an outline of the contents of a typical document of its kind.
- An introduction
- Overview of the organization
- Objective of the manual
- Organizational chart
- General policies
- Internal controls
- Accounting procedures for all components of the financial statements
- Financial statement close process-monthly and annual
- Accounting policies embedded within each section such as: signatories for bank accounts, investment restrictions, allowance and write-off of accounts receivable, depreciation years and methodology for fixed assets, record retention of documents
- Tax filings
- Budget process
- Job descriptions
- Exhibits of key forms
These are the basic elements of a manual, but yours might be otherwise structured or contain additional or different elements, depending on unique needs and circumstances.
Please feel free to call me if you have questions or would like additional guidance in the creation of this critical document.
Diana Miller, CPA at Wiss & Company LLP has extensive experience in public accounting for not – for -profit, higher education, government and commercial clients. You can reach her at (973) 994-9400 or email@example.com.