Establishing Clear Fiscal Policies and Procedures

In the world of accounting, having clear and defined fiscal policies and procedures is so important for preventing fraud and enhancing departmental operations. By documenting every detail of your accounting processes, you not only protect your organization against potential threats but you can also streamline tasks, making them more efficient and less prone to errors. Let’s guide you through the essentials of establishing and implementing these policies and procedures.

 

How Should Things Be Done Within Your Organization 

The first step in establishing clear fiscal policies and procedures is to define how you want tasks handled within your organization. This involves identifying potential vulnerabilities in your security systems and determining the exact processes for every accounting task. This specification is crucial not only for the smooth operation of your department but also for protecting against fraud.

 

1. Look For and Solve Potential Vulnerabilities:  Fraud prevention starts with identifying and addressing potential vulnerabilities in your systems. For instance, wire fraud is a common threat in many organizations. Implementing procedures that require written and verbal authorization for wire transfers can thwart fraud attempts, as illustrated by an incident where a fraud attempt was foiled due to such a procedure. 
2. Documenting Every Detail: Once you have a clear understanding of how tasks should be handled, it’s essential to document every detail. This documentation should be thorough, leaving no room for confusion. Detailed and crystal-clear procedures are vital for ensuring that everyone in the organization knows exactly what to do and when/how to do it.

 

Break Down Procedures into Manageable Pieces

 

Rather than creating one extensive procedure for complex tasks, break them down into smaller, more manageable pieces. For example, instead of a single, overwhelming procedure for reconciling accounts and troubleshooting reconciliations, create several specific ones: how to reconcile an account, troubleshoot the beginning balance, troubleshoot open items, and attach a statement to a reconciliation. This approach makes it easier for staff to find the information they need without wading through unnecessary details.

Label each procedure according to its type, such as GL for general ledger, AR for accounts receivable, AP for accounts payable, and PR for payroll. This categorization helps in organizing and locating procedures efficiently. However, the primary focus should be on creating bite-sized, digestible procedures that staff can easily follow.

 

Including Technology in Your Procedures

 

It’s important to specify which software applications should be used for which tasks within your documented procedures. Some processes may require multiple applications. For example, paying bills might involve verifying funds in QuickBooks Online (QBO) and then using Bill.com to schedule the payments. Clearly outlining these steps ensures that all processes are performed correctly and consistently.

Visual aids help staff follow steps more accurately, reducing the risk of errors, so include screenshots in your procedures for more clarity. 

 

Streamlined Checklists

 

Once your procedures are documented, the next step is to create streamlined checklists based on these procedures. Checklists serve as a practical tool for ensuring that all steps are followed correctly and consistently. A checklist should not merely state “Process payroll.” Instead, it should include every step involved, such as:

1. Logging in to the payroll app
2. Confirming mobile timesheets have been approved by managers
3. Checking for any holidays during the pay period
4. Processing payroll
5. Syncing to QBO

 

By including detailed steps, checklists ensure that no aspect of the process is overlooked.

 

Involving Your Staff

 

Involve the staff who perform these tasks in creating the checklists. Have them test the checklists to ensure they can be followed accurately by others in the department. This approach not only improves the checklists but also fosters a sense of ownership and accountability among staff.

Documented procedures and checklists offer numerous benefits. They ensure consistency, provide a reference for training new employees, and serve as a backup when regular staff are unavailable. They also facilitate smooth audits by providing clear process documentation.

 

Ensuring Compliance

 

Once procedures are documented, have them reviewed and approved by upper management. This step ensures that all policies are in line with the organization’s standards and expectations.

 

Training is crucial for the success of implementing your documented procedures and checklists. Ensure that all staff understand the importance of following these processes and are trained to spot and prevent fraud. This includes enforcing a social media policy to prevent the sharing of sensitive company information and ensuring that your company website does not reveal internal structures that could be exploited by fraud attempts.

 

Imagine the efficiency and security of having a team of trained, expert staff who know exactly what to do each day. Just as pilots use checklists before takeoff, your accounting team should use checklists to ensure every step is completed correctly.

 

Conclusion

 

Establishing clear fiscal policies and procedures is a critical step in optimizing the workflow of your accounting department and preventing fraud. While documenting processes may seem tedious, the benefits will far outweigh the effort. Start with one procedure, refine it, and gradually expand your documentation. With well-documented procedures and comprehensive checklists, your organization will operate more efficiently, securely, and consistently. Remember, preventing fraud and optimizing operations begins with clarity and precision in your accounting processes.