Your organization’s accounting practices and procedures dictate how financial information is recorded, reported, and protected. While accounting principles lay out the basic concepts that underlie the practice of accounting, policies and procedures are specific to your business. Your accounting policies should be documented and follow the appropriate guidelines. This ebook explains the relationship between accounting practices and procedures and how they affect your business. It is important to have these policies and procedures in place before you begin to implement them.
Generally accepted accounting principles and procedures are a logical approach to addressing specific behaviors in an organization. These practices and procedures are now widely recognizable among business clients, clinicians, and academic innovators. They are endorsed by credible individuals and produce specific results. This article will briefly outline some of the most common practices and procedures used by accounting professionals. For those who are unfamiliar, this is an overview of the most common practices in the United Kingdom.
Accountants serve as technical resources for other employees. They respond to questions about assigned accounting functions and provide technical information related to accounts, transactions, budgets, and issues. Accountants prepare, process, and duplicate various types of fiscal documents. Accountants also communicate with other departments and organizations to request information or perform tasks. The accounting profession is constantly evolving and this requires ongoing education and training. The benefits of using a CPA are enormous. But it isn’t just about the perks.
Accounting policies and procedures help employees evaluate and interpret accounting transactions. In larger companies, there may be multiple accountants reviewing financial activity. Therefore, different accountants may have different opinions on the appropriate accounting treatment for the same transaction. In larger companies, accounting policies and procedures act as a guide to applying the GAAP principles and removing differences in employee judgment. These policies are a vital component of any CPA firm’s accounting system. This guideline can be found in the NAIC’s Accounting Practices and Procedures Manual.
Generally accepted accounting principles (GAAP) were developed in response to the 1929 stock market crash. The crash was partially attributed to less-than-honest financial reporting practices. In the wake of this crash, the federal government and professional accounting organizations worked together to develop accounting principles and standards. These standards and guidelines were later enacted in the Securities Exchange Act of 1933 and Securities Act of 1934. Throughout the years, these guidelines have become more complex based on emerging concepts, standards, and best practices.
Historically, the lack of international consensus about financial reporting has made it difficult to promote the convergence of accounting standards. Today, however, there is a growing consensus that high-quality financial reporting should be transparent, comparable, and serve the needs of investors. The convergence of accounting practices has grown significantly over the past few years as large multinational corporations apply standards from their home countries. In addition to adopting international standards, large multinational corporations have begun applying their home country standards in accordance with international best practices.