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					Accounting Policies and
    Procedures Manual
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Accounting Policies and
    Procedures Manual
                        Fifth Edition

 A Blueprint for Running an Effective
           and Effi cient Department

                    Steven M. Bragg
Copyright   C   2007 by John Wiley & Sons, Inc. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Wiley Bicentennial Logo: Richard J. Pacifico.

Published simultaneously in Canada.

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Note: The previous edition of this is titled Design and Maintenance of Accounting Manuals: A Blueprint for Running an
Effective and Efficient Department, Fourth Edition
Library of Congress Cataloging-in-Publication Data

Bragg, Steven M.
   Accounting policies and procedures manual : a blueprint for
running an effective and efficient department / Steven M. Bragg. – 5th ed.
        p. cm.
    Rev. ed. of: Design and maintenance of accounting manuals /
Steven M. Bragg, Harry L. Brown. 4th ed. c2003.
    Includes index.
    ISBN 978-0-470-14662-0 (cloth/website)
1. Accounting–Handbooks, manuals, etc. – Authorship. I.
Bragg. Steven M. Design and maintenance of accounting manuals.
II. Title.
    HF5636.B8315 2007
    808.066657–dc22
    2007025170

Printed in the United States of America
10 9 8 7 6 5 4 3 2 1
  In memory of Wheaton, who always wanted to
write an accounting book and sail around the world
          (not necessarily in that order).
                              Contents


Preface                                               xiii
Acknowledgments                                        xv
About the Author                                      xvii
About the Web Site                                    xix

Chapter    1 Accounting Manuals                         1
      1.1 Introduction                                  1

      1.2 General Accounting Manual                     2

      1.3 Corporate Policies Manual                     3

      1.4 Accounting Procedures                         4

      1.5 Purchasing Card Manual                        5
      1.6 Accounting Controls Manual                    5

      1.7 Year-End Manual                               5

      1.8 Budgeting Manual                              5

      1.9 Property Accounting Manual                    6

     1.10 Forms Manual                                  6

     1.11 Document Management Manual                    6

     1.12 User Manual                                   7
     1.13 Information Technology Manual                 7

     1.14 Human Resources Manual                        8

     1.15 ISO 9000 Quality Standards                    8

     1.16 In The Beginning                             10

     1.17 Procedures to Write and Change Procedures    13


Chapter    2 General Accounting Manual                 16
      2.1 Introduction                                 16



                                                             vii
viii                                                                        CONTENTS



            2.2 Charts of Accounts                                                17

            2.3 Accounting Term Definitions                                        23
            2.4 Job Descriptions                                                  31

            2.5 Activities Calendar                                               36
            2.6 Accounting Policies                                               36

            2.7 Process Cycle Descriptions                                        40

            2.8 Accounting Procedures                                             51


       Chapter   3 Procedure Statements                                          52
            3.1 Introduction                                                      52

            3.2 Writing Style                                                     52
            3.3 Writing Mechanics                                                 56

            3.4 Flowcharting for a Procedures Manual                              58
            3.5 Format of The Procedure                                           73

            3.6 Work Steps for Constructing a Procedures Manual                   77

            3.7 Suggested List of Procedures                                      81

            3.8 Other Uses for Procedures Manuals                                 86


       Chapter   4 Maintaining and Distributing Accounting Manuals               88
            4.1 Introduction                                                      88

            4.2 Maintaining Accounting Manuals                                    89
            4.3 Responsibility for Maintenance of Manuals                         93

            4.4 Physical Construction of The Manual’s Binder                      96

            4.5 Creation and Storage of The Master Manual Copy                    98

            4.6 Creation and Maintenance of The Distribution Mailing List        100

            4.7 Physical Distribution Process                                    100

            4.8 Issuances to New Employees                                       102
            4.9 Manual Retrieval                                                 102

           4.10 Benefits of Using Electronic Manuals                              103
           4.11 Disadvantages of Using Electronic Manuals                        105

           4.12 Basic Electronic Manual                                          106
CONTENTS                                                                     ix



    4.13 Accounting Manual on an Intranet, Extranet, or the Internet   107

    4.14 Electronic Manual with Embedded Hypertext                     107
    4.15 Electronic Manual with Advanced Indexing Features             110

    4.16 Electronic Manual with Built-in Help Information              111
    4.17 Electronic Manual with Built-in Tutorials                     114

    4.18 Writing Tips for Electronic Manuals                           114

    4.19 Example of Comprehensive Electronic Manual Features           116

    4.20 Using the PDF Format for Electronic Files                     116

    4.21 Maintaining an Electronic Manual                              118


Chapter    5 Corporate Policies Manual                                 120
     5.1 Introduction                                                  120


Chapter    6 Accounting Procedures                                     147
     6.1 Introduction                                                  147


Chapter    7 Purchasing Card Manual                                    307
     7.1 Introduction                                                  307


Chapter    8 Accounting Controls Manual                                324
     8.1 Introduction                                                  324

     8.2 Basic Order Entry Controls                                    325
     8.3 Computerized Order Entry Controls                             325

     8.4 Electronic Order Entry Controls                               326
     8.5 Basic Credit Granting Controls                                326

     8.6 Computerized Credit Granting Controls                         327

     8.7 Basic Purchasing Controls                                     328
     8.8 Basic Inventory Procurement Controls                          329

     8.9 Computerized Purchasing Controls                              330

    8.10 Procurement Card Controls                                     331

    8.11 Goods in Transit Controls                                     332

    8.12 Manual Receiving Controls                                     332

    8.13 Computerised Receiving System Controls                        333
x                                                             CONTENTS



    8.14 Receiving—Evaluated Receipts Controls                     333

    8.15 Manual Accounts Payable Controls                          334
    8.16 Computerized Accounts Payable Controls                    335

    8.17 Manual Cash Disbursement Controls                         336
    8.18 Computerized Cash Disbursement Controls                   337

    8.19 Electronic Payment Controls                               337

    8.20 Basic Inventory Storage/Movement Controls                 338

    8.21 Basic Perpetual Inventory Tracking Controls               339

    8.22 Computerized Perpetual Inventory Tracking Controls        339

    8.23 Inventory Bar Code Scanning Controls                      340

    8.24 Inventory Zone Putaway and Picking Controls               340
    8.25 Inventory Pick-to-Light Controls                          341

    8.26 Inventory Cross-Docking Controls                          341

    8.27 Inventory Valuation Controls                              341
    8.28 Obsolete Inventory Controls                               342

    8.29 Manufacturing Resources Planning Controls                 343

    8.30 Just-in-Time Manufacturing Controls                       344
    8.31 Basic Shipping Controls                                   344

    8.32 Drop Shipping Controls                                    345

    8.33 Shippings—Evaluated Receipts Controls                     345
    8.34 Basic Billing System Controls                             346

    8.35 Computerized Billing System Controls                      347

    8.36 Advanced Billing System Controls                          347

    8.37 Credit Memo Controls                                      348
    8.38 Basic Cash Receipt Controls                               349

    8.39 Basic Check Handling Controls                             350
    8.40 Computerized Check Handling Controls                      351
    8.41 Credit Card Receipt Controls                              351

    8.42 Lockbox Receipt Controls                                  351

    8.43 Petty Cash Controls                                       352
CONTENTS                                                      xi



    8.44 Investment Controls                            352

    8.45 Basic Payroll System Controls                  353
    8.46 Computerized Timekeeping Controls              355

    8.47 Computerized Payroll System Controls           356
    8.48 Payroll Self-Service Controls                  356

    8.49 Cash Payroll Payment Controls                  357

    8.50 Electronic Payroll Payment Controls            357

    8.51 Electronic Payroll Remittance Controls         358

    8.52 Outsourced Payroll Controls                    358

    8.53 Fixed Asset Controls                           358


Chapter    9 Period-End Manual                          361
     9.1 Introduction                                   361

     9.2 Period-End Manual                              361

     9.3 Closing Procedure by Position                  369

     9.4 Soft Close                                     370

     9.5 Year-End Close                                 376
     9.6 New Year Startup                               386


Chapter 10 Budget Manual                                389
    10.1 Introduction                                   389

    10.2 System of Interlocking Budgets                 389

    10.3 Sample Budget                                  397
    10.4 Flex Budget                                    413

    10.5 Budgeting Process                              414
    10.6 Budgetary Control Systems                      420


Chapter 11 Property Accounting Manual                   422
    11.1 Introduction                                   420

    11.2 Project Cost Report                            423

    11.3 Record Keeping for Land Projects               423
    11.4 Record Keeping for Land Improvement Projects   424
    xii                                                                      CONTENTS



                        11.5 Record Keeping for Building Projects                 424

                        11.6 Record Keeping for Factory Equipment Projects        425
                        11.7 Record Keeping for Office Equipment Projects          425

                        11.8 Record Keeping for Vehicles                          426
                        11.9 Record Keeping for Leasehold Improvements            426

                       11.10 Record Keeping for Leases                            427

                       11.11 Sample Property Accounting Manual                    427


                   Chapter 12 Forms Manual                                       463
                        12.1 Introduction                                         463

                        12.2 Identify Needed Forms                                463
                        12.3 Rules for Form Creation                              465

                        12.4 Creating the Forms Manual                            469
                        12.5 Electronic Forms                                     474


                   Chapter 13 Document Management Manual                         475
                        13.1 Introduction                                         475


                   Chapter 14 User Manual                                        493
                        14.1 Introduction                                         493

                        14.2 Starting the Manual                                  494

                        14.3 Outlining and Updating the User Manual               495
                        14.4 Sample User Manual                                   495


                   Index                                                         513




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