SAMPLE FROM THE ACCOUNTING POLICIES AND PROCEDURES MANUAL INCLUDES

AN EXAMPLE PROCEDURE, A LIST OF TOPICS, FORMS AND JOB DESCRIPTIONS

Accounting Policies and Procedures Manual

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Introduction and Table of Contents

Guide to preparing a well written manual
A Sample Accounting Manual covering
common requirements and practices
39 Policies and 56 corresponding forms
Embezzlement Prevention Supplement
32 Job Descriptions covering every position
referenced in the Manual
Complete Index

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Sample Policy for Accounting Policies and Procedures Manual

Cash Section: Bank Account Reconciliations

Document ID
CSH
Revision
0.0
Effective Date
mm/dd/yyyy

Title
BANK ACCOUNT
RECONCILIATIONS
Prepared By
Preparers Name/Title
Reviewed By
Reviewers Name/Title
Approved By
Final Approvers Name/Title

Print Date
mm/dd/yyyy
Date Prepared
mm/dd/yyyy
Date Reviewed
mm/dd/yyyy
Date Approved
mm/dd/yyyy

Policy:

To ensure the accuracy of the companys bank account records by

proving the monthly balance shown in the banks Account Register.

Purpose:

To outline the practices for preparation of a Monthly Bank

Reconciliation

Scope:

This applies to all bank accounts maintained by the company.

Responsibilities:
CFO is responsible for review and approval of all reconciliations.
Controller is responsible for reconciling all checking accounts.
Background:
Errors or omissions can be made to the company's bank account
records due to the many cash transactions that occur. Therefore, it is
necessary to prove the monthly balance shown in the bank account
register. Cash on deposit with a bank is not available for count and is
therefore proved through the preparation of a reconciliation of the

SAMPLE FROM THE ACCOUNTING POLICIES AND PROCEDURES MANUAL INCLUDES

AN EXAMPLE PROCEDURE, A LIST OF TOPICS, FORMS AND JOB DESCRIPTIONS

company's record of cash in the bank and the bank's record of the
company's cash that is on deposit.
Definitions:Batch- All of the days credit card transactions are collected into a
batch of transactions. The batch is closed, usually at the end of the
day, and the result is submitted to the merchant processor as a single
batch.
Settlement- The processor clears the credit card transactions in the
batch and the result is settled to the designated bank account.
Settlement varies by Credit Card Company but usually occurs in 2-3
days after a batch is closed.
Processor- The processor is responsible for authorizing credit card
transactions and settling each batch. The processor is also the
company that one must interface with on all discrepancies or
chargebacks.
Chargebacks- A chargeback occurs when a customer (cardholder)
disputes a charge that appears on their monthly credit card statement.
If the dispute is unable to be resolved then the transaction is charged
back to the merchant. The processor charges the merchant and
returns the cardholders money.
Procedure:

1.0

BANK STATEMENT PREPARATION

1.1

After receipt of the monthly bank statement, including cleared checks,

deposit slips and any other transactions; the Controller should prepare the
monthly bank reconciliation and have it carefully reviewed by the CFO. The
CFO review is especially important if a bookkeeper is hired to perform other
cash drawer or cash posting transactions. To preserve proper segregation of
duties, no single employee, other than the owner, should perform both cash
transaction functions and bank account reconciliations.

1.2

Prior to preparing the bank reconciliation, the accountant should review the
bank statement for any interest credits, bank charges and other fees. These
should all be posted to the checking account before reconciling. Note: some
accounting systems allow for the entry of interest credits, bank charges and
other fees during the reconciliation process.

2.0
2.1

COMPUTERIZED FORMAT
In the computerized environment, the accounting system may provide
an automated bank reconciliation task. This task is generally selected
once a month in conjunction with receiving the month end bank
statement. Once selected, the screen shows a list of all items that
have been posted to the cash account and that have not been cleared
from the previous month's account reconciliation. The screen is
usually divided into two segments: one half is a list of all checks and
other charges reducing cash, and the other half is a list of all deposits
and other items increasing cash. This screen would also have a field

SAMPLE FROM THE ACCOUNTING POLICIES AND PROCEDURES MANUAL INCLUDES

AN EXAMPLE PROCEDURE, A LIST OF TOPICS, FORMS AND JOB DESCRIPTIONS

for entering the proper month end date and the balance at month end,
per the bank.
2.2

After the account-reconciling task is successfully completed, a report is

provided which shows the reconciliation process, including outstanding
checks and deposits in transit. The actual format will vary depending
on the accounting system, but in general, will contain the same
information as shown on the manually prepared report in CSH107 Ex1
SAMPLE BANK AND BOOK BALANCES RECONCILIATION TO CORRECTED
BALANCE.
Note: Print out the full (not a summary) report, staple it to the applicable
bank statement, and file the result as an important control feature. This will
document that the bank statement has been successfully reconciled.

3.0

MANUAL PREPARATION AND RECONCILING ITEMS

3.1

A monthly bank reconciliation starts with the ending bank statement balance.
List any deposits in transit that were made but were not yet recorded by the
bank and add to the bank balance. Then, list any checks that were written on
the account prior to month-end, but which have not yet cleared the bank and
deducted from the bank balance. The ending balance should agree with the
balance "per books", i.e.: the balance recorded in the checking account.

3.2

Now perform the same process with the monthly reconciliation of the ending
balance per the company's books.
Total deposits and total disbursements should be reconciled to the bank
statement, then adjustments such as any interest or any other bank credit
items should be listed and added to the balance. Then, any bank charges,
transfer fees, etc. should be listed and deducted from the balance.
From these steps, the "corrected" ending book balance is derived and
should equal the "corrected" bank balance from the previous step.

3.3

Any discrepancies between the derived balance and the checkbook

balance will require research to determine the cause, such as recording
errors, omissions, incorrect postings, etc. In some cases, the
discrepancy can be caused by not accurately entering all bank
generated credits and charges; such as fees, interest, etc. If the
balances still do not equal, the bank statement should be carefully
reviewed for possible errors; such as, checks or deposits clearing for
amounts that do not agree with those posted to the store's checking
account.

4.0

COMPUTERIZED PREPARATION AND RECONCILING ITEMS

4.1

The same procedures as the manual tasks described above are followed in a
computerized environment. The primary difference is in the ease of
preparation. All transactions, which were not already cleared in the prior
months reconciliation, are listed.

SAMPLE FROM THE ACCOUNTING POLICIES AND PROCEDURES MANUAL INCLUDES

AN EXAMPLE PROCEDURE, A LIST OF TOPICS, FORMS AND JOB DESCRIPTIONS

4.2

Start by checking or clicking off with the mouse or keyboard those

transactions, (mainly checks and other debit memos, and deposits and other
credit memos) that agree with the bank statement. Once all bank statement
items have been found and clicked off on the screen, the remaining "uncleared" entries on the screen are, in effect, the list of outstanding checks
and deposits in transit.
Furthermore, the screen typically provides a continually updating reconciled
cash amount that should agree to the ending bank balance amount once all
items are correctly accounted for and cleared. Usually the accounting system
does the math and the screen displays both the ending bank balance and the
reconciled cash amount with the remaining difference, if any.

4.3

Investigate all differences and enter any adjustments to the reconciliation or

post to the cash account in order to ensure an accurate bank balance.

5.0
5.1

ADJUSTMENTS AND OTHER TROUBLESHOOTING

In spite of the best of efforts, the reconciliation result may not agree
with the bank balance. The obvious first step is to make sure that all
checks and deposits on the bank statement agree with the entries in
the cash account. Discrepancies of this type are usually rare in
computerized environments but may be caused by improperly
recording manual checks or credit card deposits and fees.
Checks are generally posted and printed simultaneously so that what shows
up in the accounting system will always agree to what was processed through
the bank. Deposits are another matter. The bank might group deposited
checks differently than they were in the accounting system. As explained in
more detail in procedure CSH101 CASH DRAWERS AND CREDIT CARDS.
To simplify the month end reconciliation, receipts should be batched in a total
deposit amount that agrees to both the accounting system and the bank.
Make sure to print a totaled deposit report when daily receipts of checks and
cash are batched for deposit. After making the bank deposit, staple the
validated bank deposit slip to the deposit report. This will document the two
events: 1) what was deposited per the accounting system, and 2) what was
actually deposited in the bank. These two amounts must agree. This helps
eliminate deposit errors for check and cash receipts.

5.2A more difficult reconciling task is in obtaining agreement of all credit card
receipts. The difficulty results from three unique situations. First, there is a
time lag of several days between the time the credit card transaction
occurred in the store and the time it is settled or deposited to the store's
bank account. Second, depending on the type of credit card and/or the
merchant provider, the fee charged (typically 1% to 4%) on each transaction
may be automatically deducted from the deposit before it shows up on the
bank statement. And third, chargebacks are usually deducted immediately
by the processor and only reversed if the dispute is resolved in the
companys favor. This may even occur before the chargeback notice has
arrived in the mail.

SAMPLE FROM THE ACCOUNTING POLICIES AND PROCEDURES MANUAL INCLUDES

AN EXAMPLE PROCEDURE, A LIST OF TOPICS, FORMS AND JOB DESCRIPTIONS

Consequently, the deposit on the bank statement may not agree with
the daily credit card batch (receipts). In the face of these difficulties,
the CFO and Controller should thoroughly understand the particular
credit card daily closing procedures. An end of day report for each
credit card closing should be printed and saved as a reference for the
month end reconciliation process.
Alternatively, the credit card processor will provide a month-end
statement listing each credit card batch submitted each day. This
report can be used to reconcile the credit card batches to the
settlement deposits.
5.3After reconciling checks and deposits, the next area to reconcile are bank
generated Credit and Debit memos. These can result from various events
including, returned checks, returned check charges, monthly bank activity
charges, credit card merchant fees, charges from the use of debit cards,
interest income and other service charges. The CFO may not know many of
these until the bank statement is received. Each one of these entries must
be entered and distributed to the proper income or expense account.
Whatever the accounting system, its reconciling program usually provides a
routine for entering these end of month bank credits and charges.
5.4After agreeing all checks and deposits and entering all other bank credits and
charges, the balance per accounting system and reconciled bank balance
should agree. Any remaining difference must be investigated. If there is no
other explanation, an adjustment should be made. This would be entered as
a bank charge or credit and posted to a miscellaneous account.
5.5

Any outstanding checks or deposits in transit over six months old should be
reviewed for disposition including write-off by a journal entry.

Revision History:

Revisi
on

Date

mm/dd/y
y

Description of changes
Initial Release

Requested By

SAMPLE FROM THE ACCOUNTING POLICIES AND PROCEDURES MANUAL INCLUDES

AN EXAMPLE PROCEDURE, A LIST OF TOPICS, FORMS AND JOB DESCRIPTIONS

SAMPLE FROM THE ACCOUNTING POLICIES AND PROCEDURES MANUAL INCLUDES

AN EXAMPLE PROCEDURE, A LIST OF TOPICS, FORMS AND JOB DESCRIPTIONS

CSH107 Ex1 SAMPLE

BANK AND BOOK BALANCES
RECONCILIATION TO CORRECTED BALANCE

Account No.
For Month Ended XX/XX/XX

Reconciliation of Bank Balance

Ending balance per bank statement

$10,000.00

Additions:
Deposit in transit

2,500.00

Deductions:
Outstanding Checks
# 1003

150.00

# 1232

325.00

# 1235

1,275.00
1,750.00

Ending balance per checking account

$10,750.00

Reconciliation of Book Balance

Ending balance per books

$10,750.00

SAMPLE FROM THE ACCOUNTING POLICIES AND PROCEDURES MANUAL INCLUDES

AN EXAMPLE PROCEDURE, A LIST OF TOPICS, FORMS AND JOB DESCRIPTIONS

Additions:
Interest

100.00

Deductions:
Bank Charges

70.00

Wire transfer fees

30.00
100.00

Corrected Balance

$10,750.00

SAMPLE FROM THE ACCOUNTING POLICIES AND PROCEDURES MANUAL INCLUDES

AN EXAMPLE PROCEDURE, A LIST OF TOPICS, FORMS AND JOB DESCRIPTIONS

Accounting Policies and Procedures Manual:

39 Prewritten Policies and Procedures
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

General and Administrative

Chart Of Accounts
Files And Records Management
Travel And Entertainment
Management Reports
Period-End Review & Closing
Controlling Legal Costs
Taxes And Insurance
Property Tax Assessments
Confidential Information Release
Document Control

11.
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13.
14.
15.
16.
17.
18.

Cash
Cash Drawers And Credit Cards
Cash Receipts And Deposits
Problem Checks
Wire Transfers
Check Signing Authority
Check Requests
Bank Account Reconciliations
Petty Cash

19.
20.
21.
22.
23.

Inventory and Assets

Inventory Control
Inventory Counts
Fixed Asset Control
Customer Property
Fixed Asset Capitalization & Depreciation

24.
25.
26.
27.
28.
29.
30.
31.
32.
33.

Revenue
Sales Order Entry
Point-Of-Sale Orders
Customer Credit Approval And Terms
Sales Order Acceptance
Shipment Of Goods
Invoicing And Accounts Receivable
Sales Tax Collection
Progress Billing
Account Collections
Customer Returns

34.
35.
36.
37.
38.
39.

Purchasing
Vendor Selection
General Purchasing
Project Purchasing
Receiving And Inspection
Shipping And Freight Claims
Accounts Payable And Cash Disbursements

SAMPLE FROM THE ACCOUNTING POLICIES AND PROCEDURES MANUAL INCLUDES

AN EXAMPLE PROCEDURE, A LIST OF TOPICS, FORMS AND JOB DESCRIPTIONS

56 Corresponding Forms and Records

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12.
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16.

General and Administrative

Account Codes
Master File Guide Index
Records Retention Periods
Travel Arrangements Form
Travel And Miscellaneous Expense Report
Entertainment And Business Gift Expense Report
Department Reporting Summary
Daily Flash Report
Weekly Financial Report
Six Week Cash Flow Report
Budget vs. Actual Report
Financial Statements
Federal Tax Calendar
Non-Disclosure Agreement
Request For Document Change
Document Change Control

17.
18.
19.
20.
21.
22.
23.
24.
25.

Cash
Daily Cash Report
Deposit Log
Bad Check Notice
Bank Wire Instructions
Wire Transfer Form
Check Signing Authority Log
Check Request
Sample Bank And Book Balances Reconciliation
Petty Cash Journal

Inventory and Assets

26. Inventory Requisition
27. Inventory Count Sheet
28. Inventory Tag

29.
30.
31.
32.

Inventory and Assets (Cont)

Capital Asset Requisition
Asset Disposition Form
Bill Of Sale
Material Return Notice

33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.

Revenue
Sales Order
Order Form
Credit Application
Request For Credit Approval
Credit Inquiry
Phone Confirmation Checklist
Shipping Log
Commercial Invoice
Invoice
Accounts Receivable Write-Off Authorization
Account Collection Control Form
30 Day Satisfaction Guarantee
Returned Goods Authorization

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48.
49.
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51.
52.
53.
54.
55.
56.

Purchasing
New Vendor Notification
Vendor Survey Form
Purchase Requisition
Purchase Order
Purchase Order Log
Purchase Order Follow-Up
Daily Sundry Payable Log
Order And Arrival Log
Receiving Log
Receiving and Inspection Report
Inventory Inspection Levels

Job Descriptions:

A complete job description is included for each of the 32 positions referenced in the
Accounting Polices and Procedure Manual. Each position includes a summary description of the position,
essential duties and responsibilities, organizational relationships, a list of the procedures where the position is
referenced, specific qualifications, physical demands of the position, and work environment
Accounting Manager
Accounts Payable Clerk
Accounts Receivable Clerk
Administrative Services Manager
Cash Manager
Cashier
Chief Financial Officer
Construction Manager
Controller
Credit Manager
Customer Service Representative

Director of Quality
Engineering Manager
Financial Manger
Human Resources Manager
Inventory Control Manager
Legal Counsel
Manufacturing Manage
Marketing Manager
Office Manager
President
Production Manager

Project Manager
Purchasing Manager
Quality Control Manager
Quality Manager
Receiving Manager
Sales Manager
Sales Representative
Service Manager
Shipping Manager
Travel Coordinator