Does your accounting firm have a policies and procedures manual for your business or your clients? Or have you avoided creating a manual because it requires too much time and involves too many technical details?  

There are bookkeeping and accounting business owners who put off assembling a manual and wing it instead. However, not having a defined set of policies and procedures can cause significant problems for your clients and make your work more difficult, especially as your company grows or during client audits.

The good news is you don’t have to spend hours constructing a manual from scratch. You can use a simple template as a guide. 

This article will walk you through the essential elements of an accounting policy and procedure manual and provide a template to help you create one for your firm. 

Benefits of an Accounting Policies and Procedures Manual

A detailed accounting policy and procedure manual is necessary for all companies, from big corporations to small businesses. Relying on unwritten rules, where perhaps only one or two employees are aware of the policies and procedures, is often a recipe for disaster.

If one of those employees were to leave the firm, they would take all that policy knowledge with them. They might not pass that information along to the next employee, or details may be missed or forgotten if they do train their replacement. 

The lack of a reliable policy and procedures manual creates uncertainty and confusion within your team. Policies may be applied arbitrarily and favor one client over another or leave you vulnerable to fraud, accounting mistakes, and unreliable financial reports.

You want everyone in your firm to be in the know and on the same page regarding best practices for managing the business and working with clients. A comprehensive accounting policy and procedure manual accomplishes that and benefits your firm in other ways. 

• You’ll know the completion timelines of every accounting task, such as monthly reconciliations, yearly reports, and deadlines for end-of-month closing processes.

• You’ll have written documentation of internal control procedures, which are helpful for internal stakeholders and outside parties such as external auditors during the annual audit periods.

• You’ll have a clear understanding of every employee’s role and responsibilities. 

A Free Accounting Policies and Procedures Template

To help you get started on your manual, we’ve got a free accounting policies and procedures template to help outline and streamline your firm’s processes and those of your clients. 

Download our free manual template and customize it to meet your needs. After clicking the link, select “File” at the top left-hand corner of the page, select “Download,” and choose your preferred document format.

Accounting Policies and Procedures Template (Google Doc) 

Things to Include in Your Firm’s Policies and Procedures

There is no one-size-fits-all accounting policy and procedure manual. Each one varies depending on your firm as well as the industry, size, and general processes of your clients. 

However, there are standard items every accounting manual must have, which you can customize to suit your business (or that of your clients). 

1. Accounting Manual Components

Although various elements of an accounting procedures manual may differ between organizations, at their core, all will include the components listed here. 

Introduction

The introduction outlines the manual’s scope, purpose, and objectives.

Organization and Department Overview

In this section, write a brief description of the organization and list details such as industry, size, and management levels. Then, describe the department in question (e.g., accounting or finance), including its structure, management, and responsibilities. 

Accounting Policies 

There are two main topics to cover in this section. First, explain the core accounting processes of the organization as well as the interactions within its accounting sub-processes. Second, detail the required accounting resources, such as accounting software and the minimum number of employees in the department.

Chart of Accounts

In this section, you’ll list the company’s general ledger account names and numbers. This written record enables you to easily assign and maintain the company’s chart of accounts, which helps you eliminate duplicates while controlling a large volume of accounts. 

The chart of accounts also ensures consistency in your general ledger structure, cost collection, and financial reporting.

2. Accounting Procedures Components

In this section, you detail the core steps of the organization’s accounting cycle. Since the accounting department may contain several sub-departments, each division must document its processes and procedures for every sub-process in the accounting cycle. 

Fiscal Policy Statement

A fiscal policy statement outlines an organization’s financial practices and procedures. It generally includes information about budgeting, accounting, investments, cash management, borrowing, and reporting. The fiscal policy should be tailored to the organization’s specific needs and consider its operations and strategic objectives.

Financial Reporting

This section explains how the company expects its team to handle accounting transactions during the normal course of business. It provides a framework for tasks such as data entry into the accounting system, transaction processing, and steps taken to assure the accuracy and reliability of financial reporting.

Closing Periods

Every accounting cycle has accompanying closing processes, the primary ones being end-of-month and year-end closing processes. This section details when these periods end, the closing processes, deadlines for the closing periods, and required reports.

For instance, end-of-month closing is work performed at the end of a posting period. On the other hand, year-end closing includes an annual balance sheet, profit and loss, and cash flow statement, all generated in compliance with legal and reporting standard requirements.

Budgeting

Describe your budgeting processes, such as preparing the annual budget, the role of the budget committee, and the budget period length. 

Tax Filing

Detail the applicable tax regimes for the organization, the filing process, and the unit heads responsible for the filing process. This section also describes the components of the company’s income tax (e.g., what comprises its current taxes and deferred taxes).

Revenue

In this section, you’ll define the types of revenue sources for the organization, the recognition, and the measurement.

Cash

Explain the processing of cash receipts, banking of cash, cash disbursements, expense allocations, accounts transfers, and account reconciliations.

Assets

This section sets out procedures for handling assets, such as the acquisition, transfer, retirement, and disposal of assets like property, equipment, and bonds in the organization.

In addition, it specifies the duties of departmental or unit managers regarding fixed asset management, control, accounting, and record keeping. Plus, it provides criteria and guidelines for the initial recognition of fixed asset capitalization.

Payables

Detail payments made by the company to vendors, employees, statutory bodies, and all other external parties in this section. 

Credit Control

Document the processes and procedures to follow that ensure the collection of accounts receivable in a timely, fair, and cost-effective manner.

Inventory

In this section, you’ll define the type of inventory the organization carries. Examples include assets held for sale in the ordinary course of business, assets currently in production for such sales, or assets in the form of materials or supplies consumed in the production process or the rendering of services.

Payroll and Personnel Records

When completing this section, be sure to identify key tasks, including:

• Required personnel documents and proper storage.
• Correct payment of salaries for time or overtime worked.
• The proper statutory and other salary deductions.
• Accurate charges of labor costs to the appropriate cost center.
• Internal control over labor costs by division of duties and reconciliations.

General and Administrative 

General and administrative (G&A) procedures help ensure the efficient and effective management of the organization. These include budgeting, hiring, training, financial analysis, and strategic planning, in addition to others specific to your organization. 

Need Help Managing Your Firm’s Tasks and Projects for Clients?

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This free resource includes a ton of the most popular accounting templates including monthly bookkeeping, weekly accounting analysis, client onboarding procedures, and common tax return forms.

Gone are the days when being part of an accounting firm meant sitting together in an office and passing papers to your coworkers to review.

These days, your team may be spread throughout the country or even throughout the world. 

For more than a decade, virtual accounting firms have taken over a growing portion of the public accounting market. With the Pandemic, this trend has accelerated even faster.

Accounting professionals can start their own Internet-based financial business with very little overhead. In addition, you are no longer limited to a local talent pool.

Curious about how to get your own virtual firm started? Need advice about scaling your existing small business? Read on to see how experts with decades of experience are managing their virtual teams. 

These firm owners have joined Jetpack Workflow CEO, David Cristello, on the Growing Your Firm Podcast to share their insight into the field of virtual accounting firm management.

Ean Price Murphy

Ean Price Murphy is the manager of Moxie Bookkeeping and Profit First Professional. While her team size varies a bit, it generally hovers around 10 people spread throughout the country. 

Jamie Nau

Jamie Nau is the CFO and Director of Summit CPA Group. His company has over 35 professionals working on several teams to service clients in various industries. His team consists of bookkeepers, accountants, and CPAs and provides fractional CFO services for their clients.

David Worrell

David Worrell, Partner and CFO at Fuse Financial Partners, has created a virtual accounting firm based on the idea of having several teams that can function independently to service their clients.

Based on the interviews with the experts above, we have compiled a list of the best tips for you to run (or start) your own virtual accounting business.

Lesson #1: Create Goals for Your Teams (and Your Company) 

“We look a lot at gross profit and then we look at our client’s MPS score. How our clients are rating us on a 1-10 scale.” – Jamie Nau, CFO & Director of Summit CPA Group

While setting up your virtual accounting firm, you may have certain revenue or income goals. Those types of goals are useful because they are easily measurable and, as an accountant, you’re good at tracking finances. 

But your team and company goals need not be limited to finance-related goals. You should also consider monitoring other measurable key performance indicators such as employee satisfaction, client engagement, and project completion time. Anything that can be tracked and measured can be made into a goal. 

Lesson #2: Monitor Your Team’s Metrics

“I got directly into a meeting with all the accountants, the senior accountants, the ones that are putting the books together and answering questions on a day to day basis. That’s an hour-long meeting and the first thing we do is go over our goals.” – Jamie Nau, CFO & Director of Summit CPA Group

Once you’ve created your company’s goals for performance, you need to regularly monitor their performance on those metrics. The metrics that your company tracks might be long-term growth goals or project-related goals such as moving your clients into a new client management system such as Jetpack Workflow. 

Ensure you have your own financial reporting set up and functioning efficiently so you can track growth in your client base. This will also help you gauge your capacity to continue hiring more team members with additional expertise.

Having regular team manager meetings to discuss issues that each team is facing (whether internally with team dynamics or externally with client management) can allow managers to share their insights. If there is a drop in performance in one team, another team may have figured out a way to achieve better outcomes.

Lesson #3: Ask For Client Feedback

“I was able to play the underpromise overdeliver card and make the client feel good.” – Ean Price Murphy, Manager at Moxie Bookkeeping & Profit First Professional

Setting appropriate client expectations is key to the long-term success of your firm since referrals or reviews from your current clients can make your business grow faster. But other than a client remaining a client (which may just be a result of inertia), how do you know if your clients are satisfied? 

Regular check-ins with clients can yield some feedback. However, clients are often reluctant to personally share negative feedback. Providing clients with the opportunity to give anonymous feedback through surveys or virtual suggestion cards may give you a more robust, uncensored feedback mechanism on your operations and your team’s performance.

Lesson #4: Review Deadlines

“You want to walk through projected hours and responsibilities, who’s going to be on vacation, and who needs a little extra work to do.” – David Worrell, Partner & CFO at Fuse Financial Partners

When you’re offering virtual accounting services, your team is always (literally) out of the office, so it’s important to manage unexpected time off to ensure that you can still meet your deadlines. If your team is consistently not meeting their deadlines, it’s time to either reevaluate the way you are allocating resources or if you are being overly optimistic in projecting the time each project will take to complete. 

If the deadline is based on internal goals, you may want to adjust the deadline so you can review the upcoming workflow and availability of your resources. Leaving an outdated deadline on your task list does not help you determine when the task will actually be completed.

Lesson #5: Consider Splitting Your Team Into Pods

“The business and management textbooks will tell you – somewhere around 7-8 people you start to say ‘Wait, this is too much for me to handle.’” – David Worrell, Partner & CFO at Fuse Financial Partners

When your business is starting out with just a couple of employees, it’s easy to take on the management of those employees yourself. However when your business starts to expand, having a flat structure no longer makes sense. 

When you reach that point, you may want to consider having separate pods that can completely service a client’s needs. Do you offer virtual bookkeeping services, as well as tax preparation? It might be time to create a pod of experts for each discipline.

Worrell’s teams consist of bookkeepers, accountants, and client-facing leads that can complete a client engagement independently from his other teams. This gives the clients a set of professionals that they are used to, and it allows the team to monitor itself and ensure that their projects are being completed.

Lesson #6: Allocate Work Appropriately

“If they’re doing more than 10% admin work, that’s probably too much and we need to know why.” – Ean Price Murphy, Manager at Moxie Bookkeeping & Profit First Professional

Because your team is virtual, it may not always be easy to tell when someone is overloaded.  When accountants worked together with paper files in the same physical space, it was easy to tell whose desk was piled too high with paperwork. Now that most of the work exists digitally, it’s not as easy to figure out who may be overwhelmed.

As a manager, you need to review the hours being worked by each of your teams and team members.  

Lesson #7: Use a Weekly Mindset

“Even if it’s just 15 minutes, let’s look through this week and what’s due this week.” – Jamie Nau, CFO & Director of Summit CPA Group

One of the main appeals of working at a virtual firm is the flexibility to work when you want. While clients still need to be met with and team meetings will require everyone to attend at certain points, a lot of the work can be completed outside of standard business hours. If your team covers several different time zones, this is certain to happen.

By adopting a weekly mindset and setting goals for the week instead of each day, you can stop micromanaging your team. The team is allowed the freedom to complete tasks throughout the week when it is convenient for them. This will cut down on virtual meetings, increase your employee satisfaction, and lead to better employee retention.

Lesson #8: Understand Your Role in Client Engagements

“If we’re really worried about a client, then it’s my job to call that client.”  – Jamie Nau, CFO & Director of Summit CPA Group

Because clients no longer stop in to your office and you don’t hear phone calls made to your employees, you should have a clear idea of your role in the relationship with your clients. Do you want to regularly check in with the clients or do you want to let your teams work directly with them and only step in if there’s an issue? 

By going into each engagement with a vision of how the relationship will work, you can create a roadmap for your interactions and project how much of your time each new client will need.

Lesson #9: Don’t Be Scared to Pick Up the Phone (or Meet in Person)

“Sometimes I have to apologize to the customer and say ‘hey, you know what we’re accountants, we’re not great communicators.’” – David Worrell, Partner & CFO at Fuse Financial Partners

Just because you’re running a virtual CPA firm doesn’t mean that all of your client interactions need to be via video. While the recent expansion of video conference call options is helpful, it can still be just as useful to pick up a phone and call a client. You may even consider meeting with a client in person.  

Each of these real interactions allows you to connect with clients on a more personal level and quickly resolve issues that may require several back and forth emails.  

Lesson #10: Remember to Create a Sense of Belonging Among Your Employees

“Meetings are famously warm and fuzzy… there is a lot of this relationship building and trying to suss out what keeping you from doing your best work.” – David Worrell, Partner & CFO at Fuse Financial Partners

Most employees are thrilled by the opportunity and flexibility of remote work, but it takes extra effort to create a sense of belonging and loyalty to your firm. Though team outings may be out of the question due to location and other factors, you should consider scheduling time for employees to interact and talk about non-work topics.  

This might take the form of a weekly question, a fun quiz, or virtual competitions. Creating a sense of camaraderie will increase employee satisfaction and give team members an additional reason to pitch in and help their colleagues reach their goals.

Lesson #11: Make Sure Employees Aren’t Burning Out

“I try to call a team member personally and ask them, so what’s going on with this person or this account.” – David Worrell, Partner & CFO at Fuse Financial Partners

Virtual teams are great because team members have the tools available to work at any time. 

Virtual teams are hard because team members have the tools available to work at any time.

It’s your job as a team leader to monitor your team and make sure that your team is not burning themselves out because they are working all the time and their schedule is packed. 

By reviewing billable hours and team goals, you can get a sense of who on your team needs to slow down or take a break to maintain better work-life balance throughout your company.

While it’s important to make sure that you’re available to your clients, you should also review your policy about after-hours emails and vacation time.

Lesson #12: Review Your Virtual Tools

“When I started my business, there was no such thing as a virtual business manager.” – Ean Price Murphy, Manager at Moxie Bookkeeping & Profit First Professional

Though you may have started with one set of tools for creating a virtual team, you should monitor new technologies as they appear to see if there is an upgraded option that will serve you better. It’s easy to fall into habits and continue to use a program because it works without seeing if there is a new option that can streamline your operation and save you time.

For example, you may have started out tracking your own work on a paper task list and moved to a shared online task list as your team grew. You may want to consider upgrading to a workflow management system such as Jetpack Workflow that allows you to monitor project progress throughout your firm and the allocation of your resources in real-time in one central platform.