Accounting Procedure

Prepared By: [YOUR NAME]

Title: [YOUR POSITION]

I. Introduction

• Purpose of the Document: This Accounting Policy and Procedure document outlines the guidelines and standards for maintaining accurate financial records, ensuring compliance with regulatory requirements, and promoting transparency and accountability in financial reporting within [Your Company Name].

• Scope of Application: This policy applies to all employees involved in financial transactions and reporting within the organization.

• Authority and Responsibility: The Chief Financial Officer (CFO) holds ultimate responsibility for overseeing adherence to this policy, while department heads are responsible for ensuring compliance within their respective areas.

II. Accounting Principles

• Generally Accepted Accounting Principles (GAAP): All financial transactions and reporting shall adhere to GAAP to ensure consistency and comparability.

• International Financial Reporting Standards (IFRS): Where applicable, IFRS shall be followed to align with global accounting standards.

• Company-Specific Accounting Policies: In addition to GAAP and IFRS, [Your Company Name] may establish specific accounting policies tailored to its operations and industry.

III. Financial Reporting

• Frequency of Reporting: Financial reports shall be generated on a monthly basis, with quarterly and annual reports for external stakeholders.

• Reporting Deadlines: Monthly financial reports are due within five business days following the end of the month.

• Required Financial Statements: Standard financial statements including the Balance Sheet, Income Statement, and Cash Flow Statement shall be prepared for each reporting period.

IV. Chart of Accounts

• Structure and Organization: The Chart of Accounts shall be organized in a hierarchical structure, categorizing accounts by type, function, and department.

• Approval Process for New Accounts: Requests for new accounts shall be submitted to the Finance Department for review and approval by the CFO or designated authority.

V. Recording Transactions

• Documentation Requirements: All financial transactions must be supported by appropriate documentation such as invoices, receipts, and purchase orders.

• Recording Methods: Transactions shall be recorded on an accrual basis to accurately reflect the financial position of the company.

• Segregation of Duties: The recording, authorization, and custody of assets shall be segregated to prevent fraud and error.

VI. Accounts Payable

• Invoice Processing: Invoices shall be reviewed, approved, and processed for payment in a timely manner to avoid late fees and maintain good vendor relationships.

• Approval Workflow: Purchase orders and invoices shall follow a predetermined approval workflow based on the amount and nature of the transaction.

• Payment Procedures: Payments shall be issued via electronic transfer or check, with proper documentation maintained for audit purposes.

VII. Accounts Receivable

• Invoicing Process: Invoices shall be issued promptly upon completion of goods or services rendered, with clear terms and payment instructions.

• Credit Policy: A credit policy shall be established to assess the creditworthiness of customers and mitigate the risk of bad debts.

• Collection Procedures: Delinquent accounts shall be followed up regularly through dunning letters, phone calls, and other collection efforts.

VIII. Petty Cash Management

• Petty Cash Custodian Appointment: A designated employee shall be appointed as the petty cash custodian responsible for managing and disbursing petty cash funds.

• Replenishment Process: Petty cash funds shall be replenished on a regular basis upon submission of receipts and reconciliation of expenditures.

IX. Bank Reconciliation

• Frequency of Reconciliation: Bank accounts shall be reconciled monthly to ensure accuracy and identify any discrepancies.

• Reconciliation Process: Bank statements shall be compared to the general ledger balances, with variances investigated and resolved promptly.

• Resolution of Discrepancies: Any discrepancies identified during the reconciliation process shall be investigated and corrected in a timely manner, with appropriate adjustments made to the accounting records.

X. Policy Review and Revision

• Frequency of Review: This policy shall be reviewed annually and revised as necessary to reflect changes in regulations, industry standards, and organizational needs.

• Process for Policy Amendments: Proposed amendments to this policy shall be submitted to the CFO for review and approval, with input from relevant stakeholders as needed.

• Approval of Policy Changes: Approved policy changes shall be communicated to all affected employees and documented for future reference.

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