Accounting Manual

Introduction

An accounting manual is a handbook that ensures consistency and uniformity of accounting procedures. It should be in line with best accounting practices to ensure compliance with law. It is a great tool to enhance accounting staff competencies and share and transfer knowledge amongst employees.

Why

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This toolkit is useful for your organisation if the organisation:

• needs procedures and internal controls to foster a culture of accountability in the organisation.
• is increasing in complexity and size and needs to set-up standard accounting procedures.
• wants to define clear responsibilities and accountabilities within the organisation.

What you can expect

In six steps this toolkit guides you to design your own accounting manual. Here you’ll find a step-by-step guide, tools, examples and other resources for creating an accounting manual.

Step 1: Establish Need

• With the organisation's leader(s) and relevant staff, discuss the importance of having standard accounting practices in place to ensure a financially stable and healthy organisation.
• Agree that the current systems need to be reviewed, improved and documented.

This video from University of Ghana gives a basic introduction to accounting:

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Step 2: Understanding Current System

• Understand the current systems, their strengths and limitations, and identify the key people involved in financial management (if you don’t know already).
• Study all existing documents to understand and catalogue current financial practices.
• Interview the key people to collect all relevant information to understand how things are currently done.

Step 3: Assessment and Gap Analysis

• Assess the current system and procedures and identify gaps and risk areas.
• Make recommendations for improvements and discuss them with the leader of the organisation and other key people.
• Decide what improvements will be adopted and identify any necessary tools.

Step 4: Documentation

• After consultation with the leader(s), start documenting the whole system.
• Include existing practices and add new procedures where required. This should be a consultative process with the staff who will develop and implement the new financial system.
• Create a first final draft of the accounting manual and present it to management for a review.

Step 5: Approval

• Have the draft copy of the manual reviewed by relevant staff and approved by the leader(s).
• Present it to the board, once approved by the leaders (if necessary).

Step 6: Training and Follow-up

• Conduct a training to instruct all key staff members on the new procedures. Make sure that they fully understand reasons for changes and have the support required to implement them.
• Follow-up regularly to ensure a smooth implementation of the new procedures.

Key To Success

• It is important to first understand the existing systems and build new systems around the existing systems.
• Often the information on accounting practices is confidential to the organisation and it is necessary to be perceptive about this if you are acting as a consultant.
• Writing the handbook is only the first step, follow-up regularly with the responsible staff about the implementation of the documented procedures.

Challenges

• Staff may not be aware of the standard procedures for accountability.
• The current accounting system may be very basic.