In recent years, the internal control environment for governments has experienced an increased level of scrutiny. Formal documentation of accounting policies and procedures can help your organization create an internal control framework and ensure accountability and consistency in daily transactions and for financial reporting. What’s more, documented accounting policies and procedures can be used as a training tool for new staff and can play an important role in the event that key financial and administrative employees retire or otherwise depart from your government.
While a manual has been the traditional method of documenting a government’s accounting policies and procedures, technology may allow new and innovative ways of documenting policies and procedures. Regardless of the documentation method, management is responsible for developing appropriate accounting policies and procedures and ensuring proper documentation of the government’s policies, procedures, and controls. This documentation should be readily available for all staff to utilize. Key areas of the documentation should include:
- Delineation of authority
- Responsibility of all employees, especially the authority to authorize transactions and the responsibility for the safekeeping of assets and records
- Indication of which employees are to perform which procedures
- Documentation of design, purpose, and physical support for related control procedures
As a best practice, the Government Finance Officers Association recommends that the documentation of accounting policies and procedures be evaluated annually and updated periodically. Documentation should be updated immediately for any changes in policies and procedures that occur between these annual evaluations.
While the initial development of an accounting policies and procedures manual can be time consuming, it will benefit the government greatly in the future.
For more information on this topic, or to learn how Baker Tilly state and local government specialists can help, contact our team.