There are many good reasons to assemble a document outlining your business or organization’s accounting processes

When was the last time you stepped back and thought about your business or organization’s accounting processes? As you were brainstorming through processes within each transaction cycle did you find yourself with more questions than answers? What if this information was all in one place – like an accounting process manual or similar document? There are many good reasons to assemble a document outlining your business or organization’s accounting processes, for instance:

  • Allows your business or organization to commit to a plan and put your plan in writing.
  • The exercise of putting these processes in writing could be eye-opening – you may be alerted to cracks that exist in your internal controls and have the opportunity to fix them.
  • Provides improved alignment of employee job descriptions to the actual roles, duties, responsibilities the staff fulfill on a daily basis.
  • Creates a roadmap for someone to fill in temporarily for a role (due to sickness, vacation, etc.), or to get a new-hire up to speed.
  • Lends itself to outside review. Have a trusted third party like your CPA give this document a fresh set of eyes and voice their recommendations.

As you weigh moving forward with implementing some form of accounting process documentation, we have some considerations to be mindful of.

What are my areas where documentation is necessary?

These are generally going to be your business or organization’s main “transaction cycles” – areas where there is a significant amount of accounting processing on a regular basis that is crucial to the continuing operations of the business. Some examples:

  • Revenue, receivables, receipts
  • Purchases, payables, disbursements
  • Payroll, HR
  • Recording general journal entries
  • Month-end close
  • Financial reporting

Be specific with your documentation

Try to think through these cycles asking the Who, What, When, Where, Why, How questions. Try to think linearly. For instance – where and with whom does the process for making a large vendor purchase begin? Start there and move step-by-step through the cycle.

Make it easy to follow

While a narrative form will be necessary, feel free to incorporate some visual aids (flowcharts, screenshots of the accounting system, etc.) to drive the point home.

Maintain, update, and distribute

This should be a living, breathing document. As your business or organization uncovers areas to improve controls or efficiency, incorporate those into your process documentation. Give your staff the opportunity to provide input on an ongoing basis and then incorporate and rollout updates as necessary.

Contact Us with Your Questions

If you have questions or need help with documenting your accounting processes, contact our professionals at The Innovative CPA Group at 203-489-0612.  Or contact us online.