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  1. 1. Accounting &BookkeepingProcedures for InternalControlUS $595Includes six (6) modules:1. Introduction and Table ofContents2. Guide to preparing a wellwritten manual3. A Sample AccountingManual covering commonrequirements and practices4. 38 Policies & Proceduresand 54 corresponding forms5. Embezzlement PreventionSupplement6. Complete IndexChoose your delivery option: Hard Cover Book plusCD containing all documentsin editable Microsoft Wordformat and instant downloador Instant download only (noshipping)Have questions? Email:sales@bizmanualz.comHow to Order:Online: www.bizmanualz.comBy Phone: 314-863-5079800-466-9953By Fax: 314-863-6571Prewritten Accounting Procedures For Easy Internal ControlsThe Bizmanualz Accounting Policies and Procedures Manual can help you establisha strong internal control system and comply with Sarbanes-Oxley section 404. Withthese prewritten accounting procedure templates, you will learn how to improveaccounting department controls for Sarbanes-Oxley 404 compliance, how toimprove the performance of business finance and credit, how to manage shipping,purchasing and receiving, and how to manage cash operations.What’s Included? 38 Prewritten Policies and Procedures1. Chart Of Accounts2. Files And Records Management3. Travel And Entertainment4. Management Reports5. Period-End Review & Closing6. Controlling Legal Costs7. Taxes And Insurance8. Property Tax Assessments9. Confidential Information Release10. Document Control11. Cash Drawers And Credit Cards12. Cash Receipts And Deposits13. Problem Checks14. Wire Transfers15. Check Signing Authority16. Check Requests17. Bank Account Reconciliations18. Inventory Control19. Inventory Counts20. Fixed Asset Control21. Customer Property22. Fixed Asset Capitalization &Depreciation23. Sales Order Entry24. Point-Of-Sale Orders25. Customer Credit Approval And Terms26. Sales Order Acceptance27. Shipment Of Goods28. Invoicing And Accounts Receivable29. Sales Tax Collection30. Progress Billing31. Account Collections32. Customer Returns33. Vendor Selection34. General Purchasing35. Project Purchasing36. Receiving And Inspection37. Shipping And Freight Claims38. Accounts Payable And CashDisbursements54 Forms and Records1. Account Codes2. Master File Guide Index3. Records Retention Periods4. Travel Arrangements Form5. Travel And Miscellaneous ExpenseReport6. Entertainment And Business GiftExpense Report7. Department Reporting Summary8. Daily Flash Report9. Weekly Financial Report10. Six Week Cash Flow Report11. Budget vs. Actual Report12. Financial Statements13. Tax Calendar of Recurring MonthlyDates14. Non-Disclosure Agreement15. Request For Document Change16. Document Change Control17. Daily Cash Report18. Deposit Log19. Bad Check Notice20. Bank Wire Instructions21. Wire Transfer Form22. Check Signing Authority Log23. Check Request24. Sample Bank And Book BalancesReconciliation25. Inventory Requisition26. Inventory Count Sheet27. Inventory Tag28. Capital Asset Requisition29. Asset Disposition Form30. Bill Of Sale31. Material Return Notice32. Sales Order33. Order Form34. Phone Confirmation Checklist35. Credit Application36. Request For Credit Approval37. Credit Inquiry38. Shipping Log39. Commercial Invoice40. Invoice41. Accounts Receivable Write-OffAuthorization42. Account Collection Control Form43. Returned Goods Authorization44. New Vendor Notification45. Vendor Survey Form46. Purchase Requisition47. Purchase Order48. Purchase Order Log49. Purchase Order Follow-Up50. Daily Sundry Payable Log51. Order And Arrival Log52. Receiving Log53. Receiving and Inspection Report54. Inventory Inspection Levels
  2. 2. Accounting & Bookkeeping Procedures for Internal Control www.bizmanualz.comSample Procedure Page 2 of 8Document IDCSH107TitleBANK ACCOUNT RECONCILIATIONSPrint Datemm/dd/yyyyRevision0.0Prepared By(name, title)Date Preparedmm/dd/yyyyEffective Date:mm/dd/yyyyReviewed By(name, title)Date Reviewedmm/dd/yyyyApproved By(name, title)Date Approvedmm/dd/yyyyApplicable Standard: N/APolicy: To ensure the accuracy of the company’s bank account records by provingthe monthly balance shown in the bank’s Account Register.Purpose: To outline the practices for preparation of a Monthly Bank ReconciliationScope: This applies to all bank accounts maintained by the company.Responsibilities:CFO is responsible for review and approval of all reconciliations.Controller is responsible for reconciling all checking accounts.Background: Errors or omissions can be made to the companys bank account recordsdue to the many cash transactions that occur. Therefore, it is necessary toprove the monthly balance shown in the bank account register. Cash ondeposit with a bank is not available for count and is therefore provedthrough the preparation of a reconciliation of the companys record of cashin the bank and the banks record of the companys cash that is on deposit.Definitions: Batch. All of the day’s credit card transactions are collected into a “batch”of transactions. The batch is closed, usually at the end of the day, and theresult is submitted to the merchant processor as a single “batch”.Settlement. The processor clears the credit card transactions in the batchand the result is “settled” to the designated bank account. Settlementvaries by Credit Card Company but usually occurs in 2-3 days after a batchis closed.Processor. The processor is responsible for authorizing credit cardtransactions and settling each batch. The processor is also the companythat one must interface with on all discrepancies or “chargebacks”.Chargebacks. A chargeback occurs when a customer (cardholder) disputesa charge that appears on their monthly credit card statement. If the disputeis unable to be resolved then the transaction is charged back to themerchant. The processor charges the merchant and returns thecardholder’s money.
  3. 3. Accounting & Bookkeeping Procedures for Internal Control www.bizmanualz.comSample Procedure Page 3 of 8Procedure:1.0 BANK STATEMENT PREPARATION1.1 After receipt of the monthly bank statement, including cleared checks, deposit slipsand any other transactions; the Controller should prepare the monthly bankreconciliation and have it carefully reviewed by the CFO. The CFO review isespecially important if a bookkeeper is hired to perform other cash drawer or cashposting transactions. To preserve proper segregation of duties, no singleemployee, other than the owner, should perform both cash transaction functionsand bank account reconciliations.1.2 Prior to preparing the bank reconciliation, the accountant should review the bankstatement for any interest credits, bank charges and other fees. These should all beposted to the checking account before reconciling. Note: some accountingsystems allow for the entry of interest credits, bank charges and other fees duringthe reconciliation process.2.0 COMPUTERIZED FORMAT2.1 In the computerized environment, the accounting system may provide anautomated bank reconciliation task. This task is generally selected once a month inconjunction with receiving the month end bank statement. Once selected, thescreen shows a list of all items that have been posted to the cash account and thathave not been cleared from the previous months account reconciliation. Thescreen is usually divided into two segments: one half is a list of all checks andother charges reducing cash, and the other half is a list of all deposits and otheritems increasing cash. This screen would also have a field for entering the propermonth end date and the balance at month end, per the bank.2.2 After the account-reconciling task is successfully completed, a report is providedwhich shows the reconciliation process, including outstanding checks and depositsin transit. The actual format will vary depending on the accounting system, but ingeneral, will contain the same information as shown on the manually preparedreport in CSH107 Ex1 SAMPLE BANK AND BOOK BALANCESRECONCILIATION TO CORRECTED BALANCE.Note: Print out the full (not a summary) report, staple it to the applicable bankstatement, and file the result as an important control feature. This will documentthat the bank statement has been successfully reconciled.3.0 MANUAL PREPARATION AND RECONCILING ITEMS3.1 A monthly bank reconciliation starts with the ending bank statement balance. Listany deposits in transit that were made but were not yet recorded by the bank andadd to the bank balance. Then, list any checks that were written on the accountprior to month-end, but which have not yet cleared the bank and deducted fromthe bank balance. The ending balance should agree with the balance "per books",i.e.: the balance recorded in the checking account.
  4. 4. Accounting & Bookkeeping Procedures for Internal Control www.bizmanualz.comSample Procedure Page 4 of 83.2 Now perform the same process with the monthly reconciliation of the endingbalance per the companys books.Total deposits and total disbursements should be reconciled to the bank statement,then adjustments such as any interest or any other bank credit items should belisted and added to the balance. Then, any bank charges, transfer fees, etc. shouldbe listed and deducted from the balance.From these steps, the "corrected" ending “book” balance is derived and shouldequal the "corrected" bank balance from the previous step.3.3 Any discrepancies between the derived balance and the checkbook balance willrequire research to determine the cause, such as recording errors, omissions,incorrect postings, etc. In some cases, the discrepancy can be caused by notaccurately entering all bank generated credits and charges; such as fees, interest,etc. If the balances still do not equal, the bank statement should be carefullyreviewed for possible errors; such as, checks or deposits clearing for amounts thatdo not agree with those posted to the stores checking account.4.0 COMPUTERIZED PREPARATION AND RECONCILING ITEMS4.1 The same procedures as the manual tasks described above are followed in acomputerized environment. The primary difference is in the ease of preparation.All transactions, which were not already cleared in the prior month’sreconciliation, are listed.4.2 Start by checking or clicking off with the mouse or keyboard those transactions,(mainly checks and other debit memos, and deposits and other credit memos) thatagree with the bank statement. Once all bank statement items have been found andclicked off on the screen, the remaining "un-cleared" entries on the screen are, ineffect, the list of outstanding checks and deposits in transit.Furthermore, the screen typically provides a continually updating reconciled cashamount that should agree to the ending bank balance amount once all items arecorrectly accounted for and cleared. Usually the accounting system does the mathand the screen displays both the ending bank balance and the reconciled cashamount with the remaining difference, if any.4.3 Investigate all differences and enter any adjustments to the reconciliation or post tothe cash account in order to ensure an accurate bank balance.5.0 ADJUSTMENTS AND OTHER TROUBLESHOOTING5.1 In spite of the best of efforts, the reconciliation result may not agree with the bankbalance. The obvious first step is to make sure that all checks and deposits on thebank statement agree with the entries in the cash account. Discrepancies of thistype are usually rare in computerized environments but may be caused byimproperly recording manual checks or credit card deposits and fees.Checks are generally posted and printed simultaneously so that what shows up inthe accounting system will always agree to what was processed through the bank.
  5. 5. Accounting & Bookkeeping Procedures for Internal Control www.bizmanualz.comSample Procedure Page 5 of 8Deposits are another matter. The bank might group deposited checks differentlythan they were in the accounting system. As explained in more detail in procedureCSH101 CASH DRAWERS AND CREDIT CARDS.To simplify the month end reconciliation, receipts should be batched in a totaldeposit amount that agrees to both the accounting system and the bank. Make sureto print a totaled deposit report when daily receipts of checks and cash are batchedfor deposit. After making the bank deposit, staple the validated bank deposit slipto the deposit report. This will document the two events: 1) what was depositedper the accounting system, and 2) what was actually deposited in the bank. Thesetwo amounts must agree. This helps eliminate deposit errors for check and cashreceipts.5.2 A more difficult reconciling task is in obtaining agreement of all credit cardreceipts. The difficulty results from three unique situations. First, there is a timelag of several days between the time the credit card transaction occurred in thestore and the time it is settled or deposited to the stores bank account. Second,depending on the type of credit card and/or the merchant provider, the fee charged(typically 1% to 4%) on each transaction may be automatically deducted from thedeposit before it shows up on the bank statement. And third, “chargebacks” areusually deducted immediately by the processor and only reversed if the dispute isresolved in the company’s favor. This may even occur before the chargebacknotice has arrived in the mail.Consequently, the deposit on the bank statement may not agree with the dailycredit card batch (receipts). In the face of these difficulties, the CFO andController should thoroughly understand the particular credit card daily closingprocedures. An end of day report for each credit card closing should be printedand saved as a reference for the month end reconciliation process.Alternatively, the credit card processor will provide a month-end statement listingeach credit card “batch” submitted each day. This report can be used to reconcilethe credit card batches to the settlement deposits.5.3 After reconciling checks and deposits, the next area to reconcile are bankgenerated Credit and Debit memos. These can result from various eventsincluding, returned checks, returned check charges, monthly bank activity charges,credit card merchant fees, charges from the use of debit cards, interest income andother service charges. The CFO may not know many of these until the bankstatement is received. Each one of these entries must be entered and distributed tothe proper income or expense account. Whatever the accounting system, itsreconciling program usually provides a routine for entering these “end of month”bank credits and charges.5.4 After agreeing all checks and deposits and entering all other bank credits andcharges, the balance per accounting system and reconciled bank balance shouldagree. Any remaining difference must be investigated. If there is no otherexplanation, an adjustment should be made. This would be entered as a bankcharge or credit and posted to a miscellaneous account.
  6. 6. Accounting & Bookkeeping Procedures for Internal Control www.bizmanualz.comSample Procedure Page 6 of 85.5 Any outstanding checks or deposits in transit over six months old should bereviewed for disposition including write-off by a journal entry.Revision History:Revision Date Description of changes Requested By0 mm/dd/yy Initial Release
  7. 7. Accounting & Bookkeeping Procedures for Internal Control www.bizmanualz.comSample Procedure Page 7 of 8[This page intentionally left blank]
  8. 8. Accounting & Bookkeeping Procedures for Internal Control www.bizmanualz.comSample Procedure Page 8 of 8CSH107 Ex1 SAMPLEBANK AND BOOK BALANCESRECONCILIATION TO CORRECTED BALANCEAccount No.For Month Ended XX/XX/XXReconciliation of Bank BalanceEnding balance per bank statement $10,000.00Additions:Deposit in transit 2,500.00Deductions:Outstanding Checks# 1003 150.00# 1232 325.00# 1235 1,275.001,750.00Ending balance per checking account $10,750.00Reconciliation of Book BalanceEnding balance per books $10,750.00Additions:Interest 100.00Deductions:Bank Charges 70.00Wire transfer fees 30.00100.00Corrected Balance $10,750.00

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