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Policies And Procedures Template 2
Approved by the Board of Directors, DATE
© 2012 CompassPoint Nonprofit Services Fiscal Policies & Procedures
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The accrual method allows for
recording revenue and expenses when
incurred. It eliminates the budget distortion
of large advance payments, such as annual
insurance premiums, etc. This method gives
a more accurate picture when actual
expenses are compared with budgeted
amounts. It also eliminates the possibility of
overlooking incurred but unpaid expenses
when making budget projections.
Accounting Procedures
This section covers basic accounting procedures for the organization. The accounting procedures
used by the organization shall conform to Generally Accepted Accounting Principles (GAAP) to
ensure accuracy of information and compliance with external standards.
Basis of Accounting
SAMPLE Policy: The organization uses the
accrual basis of accounting. The accrual basis is
the method of accounting whereby revenue
and expenses are identified with specific
periods of time, such as a month or year, and
are recorded as incurred. This method of
recording revenue and expenses is without
regard to date of receipt or payment of cash.
SAMPLE Procedures:
Throughout the fiscal year, expenses are
accrued into the month in which they are
incurred. The books are closed no later than the [DAY/WEEK] after the close of the month.
Invoices received after closing the books will be counted as a current-month expense.
At the close of the fiscal year, this rule is not enforced. All expenses that should be accrued
into the prior fiscal year, are so accrued, in order to ensure that year-end financial
statements reflect all expenses incurred during the fiscal year. Year-end books are closed no
later than 90 days after the end of the fiscal year.
Revenue is always recorded in the month in which it was earned or pledged.
Journal Entries
Questions to consider in developing Policy:
For what type of transactions are Journal
Entries posted
How often are they posted
Questions to consider in developing Procedues:
Who is responsible for writing and posting Journal Entries
Who reviews them and when
How is approval documented
Journal entries are double entries
the accounting system (debit & credit) recording
the business transactions
of the organization
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