Most business organizations have an accounting manual that outlines all accounting policies and procedures, guidelines, and requirements for a business's accounts. What Is an Accounting Manual? The guide to accounting is the categorization of accounts, a list of accounting guidelines to follow, and the rules applicable to the particular organization. Accordance with the kind of business accounting manuals can differ from one company to the next. However, they all have the same function in every business, despite having the same guidelines. This ensures the accuracy and uniformity of accounting procedures used by each individual in the company responsible for accounting processes and tasks. The manual typically contains many different sections to cover the various aspects of the accounting process.
Understanding Accounting Manual
A manual for accounting outlines the relevant accounting rules, procedures, and guidelines for an organization. It is created within the company and is used as a reference tool to cross-train associates or to teach new employees. Accounting manuals vary in size as well as content, from one company to the next, based on the nature and the scale of the company.
The accounting manual for an organization may include roles or departments within the company and the list of accounts, and special instructions for keeping the ledger or keeping records about transactions or any other rules that must be adhered to by the accounting personnel.
It could include information on budgets or a sample of forms that must be filled out and maintained on-site to record purposes or for reporting purposes. The essence of the accounting manual is an outline of all essential accounting procedures and information for businesses.
The Components of An Accounting Manual
The accounting manual typically begins by introducing what the manual's purpose is and the benefits that those who read it will gain from it, and the management's responsibility concerning the company's financials. The following section typically addresses the various departments within the company and explains how they are incorporated into accounting. This section explains the company's structure and the roles of each division.
Following that, accounting procedures and guidelines are described as well as how reports should be carried out. In the next section, the accounting manual outlines the procedure for planning and reporting requirements, as well as the individuals who are authorized to oversee the accounting duties. Following this, the process could be focused on various accounting aspects, including internal audits as well as costs accounting, accounting for inventory as well as cash management. The accounting manual typically ends with various resources that can assist with the entire process.
Example of an Accounting Manual
XYZ corporation produces and sells widgets. XYZ company has an accounting department that is in charge of all the information and figures associated with the management of a manufacturing facility in addition to warehousing inventory, as well as managing distribution and selling operations.
The appropriate corporate accounts needed for these areas of business, along with guidelines for managing them as well as the forms that must be filled out, are contained in the XYZ accounting manual. This accounting guide was created internally by XYZ corporate accounting department and serves as a reference for existing employees as well as an educational tool for new employees.
Accounting Manual Benefits
The benefits of the Accounting Manual include:
- Assuring compliance through the constant application of procedures and policies. It is the Accounting Manual helps as a guide for your employees and your leadership team while promoting the requirements and the best practices.
- The reduction of the chance of fraud. Controls and procedures laid out in the Accounting Manual have been designed to reduce the risk of financial fraud and also the potential for accountability for the CEO as well as members of the Board.
- Meeting the requirements of audit and regulatory agencies. Auditors and IRS Form 990 demand you to possess an Accounting Manual in place.
- Effectiveness in training for employees. Accounting manuals are an essential tool for training new employees and defining the company's various tasks and roles. Being familiar with them can assist new employees and be a great way to clarify any doubts.
- Allowing your employees and Board to perform their duties more efficiently. With a complete Accounting Manual, the answers to numerous accounting and financial issues are right there so that you don't spend precious time reinventing the wheel every time an issue comes up.
Conclusion
A book that outlines the accounting practices employed by a business. Since accountants are given some flexibility in how they treat certain (though it is not always the case with all) costs and revenues, companies can adopt a common accounting procedure and make them available in an internal guideline.
