Accounting procedures are key policies that corporate leadership establishes to run operating activities effectively. According to Duke University’s General Accounting Procedures handbook, the policies help ensure that personnel possess the financial acumen necessary to perform tasks satisfactorily. The most important accounting operating procedures concern bookkeeping, payroll, tax reporting, fixed-asset management and financial reporting.
A corporate accounting policy handbook sheds light on the various steps, controls and methodologies that department heads use to run their businesses. A control is a set of directives that a segment chief puts into place to rein in waste and fraud in operating activities. The instructions also help avert technological malfunctions and inaccuracies in financial reports.
Corporate accounting personnel rely on top management’s guidance to complete duties adeptly. Without adequate policies in transaction recording and reporting processes, a firm may incur losses resulting from theft or operating errors. For example, an unsupervised junior bookkeeper may rely on a company’s accounting policies to debit and credit the right accounts.
Account and Cash Handling
Account and cash-handling policies concern bookkeeping activities and the steps that an organization takes to avert cash theft. These policies ensure that bookkeepers debit and credit the correct financial accounts when recording transactions. Financial accounts include assets, liabilities, equity items, revenues and expenses. Cash-handling procedures concern how accounting personnel manage cash receipts (from customers) and disbursements (to vendors).
Companies establish payroll policies to pay their workforce effectively and on time. The policies not only help a business pay workers in accordance with labor agreements, they also enable the firm to conform to laws and regulations. Equally important, payroll procedures allow companies to meet their fiscal mandates with respect to payroll tax reporting.
Property, Plant and Equipment Monitoring
“Property, plant and equipment,” or PPE, is a balance sheet account group that represents a company’s long-term assets, also known as tangible or fixed resources. Monitoring PPE is an important exercise, as fixed assets generally represent large portions of corporate balance sheets. PPE procedures typically concern the physical integrity of tangible assets and depreciation reporting. Depreciation is a mechanism that enables a company to recover the cost of a tangible asset over several years.
Tax-reporting policies help businesses adhere to Internal Revenue Service guidelines. The policies not only relate to conformity to IRS regulations but also concern fiscal reporting at the state level.
Corporate financial accounting and reporting policies provide the conceptual foundation on which personnel prepare financial statements. In fact, the policies provide the guidance that is necessary to report accurate operating data to management, investors and the public. A full set of accounting statements includes a statement of financial position, a statement of profit and loss, a statement of cash flows and a statement of retained earnings.