How To Write Accounting Policy & Procedure

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Accounting policies and procedures are not one and the same thing, though workers in an office often confuse the two. Accounting policies represent the guidelines or rules that define what the accounting department expects in a given situation. By creating policies, the accounting department ensures that company rules and standards are maintained and adhered to in a consistent manner by all those affected. The procedure represents the how-side of the equation by defining the individual steps that ensure the company's accounting policies are maintained and internal controls are in place.

Define the Policy

When coming up with the accounting policy and procedure handbook used by accountants and others in the company, you must first define each rule or guideline as an individual policy that you want people to follow. Do not mix policies together, because it is too confusing. Accounting departments create cash-flow policies, travel reimbursement policies, petty cash policies, account payable policies or billing policies, just to name a few. The policy should define the rule -- known as the what -- and include who must adhere to it and why it must be adhered to. Policies and procedures are maintained as separate documents.

Write the Overview

Each policy must include an overview or summary of the guideline or rule. The overview comes first, with detailed information that includes the specifics. For instance, an accounting department might have a petty cash fund policy that details how much money will be made available for petty cash, the type of purchases it covers and the title of the person who is responsible for ensuring it is maintained properly. The policy doesn't list people's names, but rather the title or position in the company responsible for it.

Outline the Procedures

Procedures are the step-by-step process by which individuals adhere to the company policy. For instance, an accounting department may set a cash-flow policy that specifies how much operating cash should be available at all times and what must occur if it is not available. But to ensure the policy is maintained, someone in the accounting department must complete bank account reconciliations. The bank reconciliation process has detailed steps on how to do the bank reconciliation to ensure the cash-flow policy is adhered to. To write the procedure, outline each step that must take place, including the titles of people who complete each step and what happens in the subsequent steps.

Number the Steps

Write procedures in the order that the steps must occur. For example, using the bank reconciliation process, start with the first thing that needs to occur, such as: bank statements are to be given unopened to the accounting manager. Include the steps the accounting manager must perform before passing the actual reconciliation work to someone else in accounting. This could include such things as a quick review for check inconsistencies, payee names and more.

Policy and Procedure Manual

Include a list of the titles in the accounting department with brief descriptions of the duties performed by each position in the company at the front of the policy and procedure manual. This helps create internal controls while ensuring separation of duties. Write policies on individual pages, creating a new page or set of pages for each policy. Each policy receives its own heading and title in the table of contents to make it easy for people to look them up. After the policy, include all the procedures on their own pages as backup. The table of contents may include the "Cash Flow Policy," as a main title with subheadings and their own pages that include "Bank Reconciliations," "General Ledger Bank Account Reconciliations," or any other procedures that apply to that specific policy.

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About the Author

As a native Californian, artist, journalist and published author, Laurie Brenner began writing professionally in 1975. She has written for newspapers, magazines, online publications and sites. Brenner graduated from San Diego's Coleman College.

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