The board and finance committee’s responsibility includes that financial policies and procedures exist and are followed by the organization. Management has usually delegated the responsibility to develop and maintain financial policies and procedures with little direction or guidance from the board and finance committee. The board and finance committee is usually consumed by other financial matters like budgets, audits, financial statements, and cash flow.
Financial Policies and procedures help sustain and strengthen your organization by providing the following to your organization:
• How the accounting function is performed including transaction processing like accounts payable, account receivable, payroll, journal entries, and grants and program management?
• What authorization and custody controls exist to reduce financial risks and protect the organization?
• What environment and culture exist for your organization, how is authority defined, and what external influences exist?
• How does your accounting system help you implement your financial policies and procedures?
• What segregation of duties and controls exists to detect or prevent accidental or intentional mistakes?
• What training do you provide to ensure competence and knowledge of accounting staff?
It is important for your major transaction processing like accounts payable, accounts receivable, payroll, and general ledger transactions that you evaluate best practices. This is important as you need to evaluate costs versus benefits received for each transaction process.
If it has been a while since you reviewed and improved your financial policies and procedures, we can help you develop and update your financial policies and procedures. An organization with good financial policies and procedures benefits from operating efficiencies, clear expectations, and financial accountability.