One of the first items you should put in your accounting manual is the general policies you follow. These are the basic foundation of what you’re trying to accomplish with the procedures you implement, and the rest of the manual will detail how you achieve the underlying accounting policies.
Some examples of what to include are:
- Outside of generally accepted accounting principles, are there any additional policies or statues you need to comply with? For example, if you receive federal grants, you’re probably subject to 2 CFR 200. If you’re a non-profit organization, SFAS 117 dictates how you present your financial statements.
- Do you use the cash or accrual basis of accounting?
- What is your fiscal year?
- How do you recognize revenue? If you have multiple revenue streams, describe each of them, e.g. deliverable-based contracts, cost-reimbursement contracts, grants and donations, rent on property you own and lease out, investment returns.
- Do you segregate revenue and expenses by programs, grants/funders, departments, etc.? If an expense is allocable across multiple programs, etc., what allocation method do you use?
- If you’re a nonprofit organization, you’ll issue a statement of functional expenses, which splits expenses into 3 categories – program services, fundraising, and management and general. Give a quick description of these categories and how you allocate expenses between them.
- Do you have an annual audit or review?
- What accounting software do you use? Do you have controls within it, e.g. requiring a username and password to login, and limiting which parts of the software each staff member has access? For example, an accounts payable accountant may not have access to the revenue and receivables portion of the software, some people may not be able to view payroll data, or may have read-only access in certain areas.
- This is also a good place to include a list of staff in the accounting/finance department and their job responsibilities.
Check here for additional topics to cover in your accounting manual.