Risky Business!

I have been reading some very interesting accounting forum articles lately, and I am shocked by some of the questions and even more so by . . . . 

I have been reading some very interesting accounting forum articles lately, and I am shocked by some of the questions and even more so by some of the answers posted on these forums.

It appears that many companies (even some governmental and non-profit agencies) are operating without written polices or procedures!  There seems to be no resource for a clerk to go to for answers on how to do his/her job; nothing on how things should be posted, how something or someone is to be paid, or how an employee’s benefit is to be applied.  Every decision is a throw of the dice!

When I first started in I.T. I was assigned the task of developing a financial system for my company (back when we wrote our own systems using clay tablets).  I was given the firm’s Polices and Procedures manual (P&P).  It covered everything from Accounts Payable to Payroll.  If you had a question, you went to the P&P manual.  There was rarely a question that it did not cover.  If the answer wasn’t in the manual a meeting of the Board was held, and a new entry was added.  We did not operate without written P&P’s! 

Today, companies have a risky, shoot-from-the-hip mentality with a “get’er done” attitude.  Maybe that’s why there are so many lawsuits filed by employees, so many recalls on products, and why so many businesses FAIL!  That first company I wrote the financial system for is still in business and has grown to be a leader in its field. 

I can’t impress upon you enough how important it is that you prepare a thorough and clear Policy & Procedures manual, which includes all accounting “rules” and how to apply them.  The very life of your company may depend on it!