Financial Policies and Procedures Manual for Control
The Finance Policy Procedure Manual includes answers to basic financial questions:
- How do define your financial objectives?
- What’s your plan for business valuation or raising capital?
- What should be your policy on Related Party Transactions?
- What is the proper method for financial reporting?
- How do you hold a Board of Directors or Stockholders Meeting?
- How do you define, assess, or manage risk?
- What is the procedure for internal or external auditing?
These procedures cover key accounting and financial topics like capital planning, capital structure, asset and inventory control, financial reporting, and financial analysis.
You will also get a free Small Business Management Guide that talks about planning, starting, managing and exiting a business.
You may be familiar with the COSO (Committee of Sponsoring Organizations of the Treadway Commission) framework for internal control. COSO has received significant attention when referenced by the Securities and Exchange Commission (SEC) and the Public Company Accounting Oversight Board (PCAOB) as an example of an “internal control” system as required by Sarbanes-Oxley Act (SOX) sections 302 and 404.
COSO based Financial Policies and Procedures
These COSO internal controls are then documented in your finance policies and procedures manual template.
SOX, in general, has generated a lot of discussion about internal controls even requiring financial policies and procedures.
Financial Controls Prevent Waste, Fraud and Abuse
Historically, for business finance and accounting processes, controls have typically referred to preventing fraud and abuse. Increasing regulatory requirements have caused compliance and public company financial reporting regulations to become part of control system goals.
In this view, a financial control system of policies and procedures identifies who approves expenditures, signs checks, and reviews ledgers to accounts, as well as listing the required records and who keeps them.
Is this really all an internal control system does?
The Purpose of an Internal Control System
Financial reporting and compliance are two areas which COSO explicitly claims to address with its integrated framework. However, COSO also lists a third area where internal controls play a vital business role – effectiveness (reaching objectives) and efficiency (required resources) of operations.
If you develop and implement an internal control system and your only financial objectives are to prevent fraud and comply with laws and regulations, then you are missing an important opportunity for improvement.
The same internal controls can also be used to systematically improve your business, particularly in regard to effectiveness and efficiency.
COSO Describes a Control System Framework
COSO lists five components that must be in place to some degree for an internal control system to be effective:
- Control Environment (The tone and culture of an organization)
- Risk Management (Event identification, risk assessment, risk response in recognizing threats)
- Control Activities (Policies and Procedures in place to direct key organizational activities)
- Information/Communication (Capturing and disseminating information throughout the organization)
- Monitoring (Evaluating operations through measurement, auditing, etc;)
Using a Control System to Drive Improvement
Let’s look at how effectiveness and efficiency of operations is played out using one example of the five components in the internal control framework – the Control Environment.
The Control Environment of an organization is described as the foundation for the other components of internal control. It is the tone and culture of the organization upon which all other activities are conducted, and in most organizations it flows from the top. More specifically, how involved is management in setting realistic goals and then ensuring the organization has the resources to carry them out?
We can look at two contrasting styles. In the first, organizational goals fall from the sky with no involvement from those tasked with carrying out activities to reach objectives. Then results are either ignored altogether, or they are ignored until the end of the period; upon which you receive a nod of the head or a wag of the finger – depending on performance.
On the other end of the spectrum, management sets goals and objectives using a corroborative process. Management regularly reviews progress and performance along with leading indicators to determine if objectives will be met, and if not, identify if any corrective action should be taken.
Sometimes there may be valid reasons for missing objectives: how well they are considered and absorbed into the organizational knowledge is also a function of the Control Environment. Participative management is one of the most important ways to set a proper environment or tone where using resources to reach objectives actually means something, not empty phrasing.
Control Systems for Process Improvement
There are many examples of how control systems improve performance in all components of a business. Through Control Activities, for example, policies and procedures can also incorporate the idea of setting process objectives along with regular measurement and review, as well as creating communication channels between key departments. In fact, all the procedures found in these policies and procedures manuals follow the Plan-Do-Check-Act philosophy of continually improving processes, including this Finance Policies and Procedures Manual.
Process Procedures Communication
Communication activities can be built into the processes and procedures, creating communication channels that seem to frequently be lacking in organizations. These communication channels help create and communicate strategic level goals and objectives, which inform departments and segment level goals and objectives (which are also created as part of the control system). This kind of strategic alignment of objectives creates synergistic power in an organization.
COSO certainly fits our philosophy of control systems – where control isn’t only about preventing fraud and complying with regulations. Control is about having the philosophy and tools in place to be effective and efficient: and that is about doing things a little better tomorrow, next week, next month, and next year.
Financial Policies and Procedures Templates in MS Word
Whether you are managing your financial processes, building financial internal controls or trying to improve your fiscal performance, these financial policies and procedures templates make the process much simpler and easier. Easily editable in Microsoft Word and instantly downloadable, these prewritten finance policies and procedures manual template help you quickly and effectively implement h4 financial internal controls.
Fast Financial Internal Controls that come with 36 prewritten procedures, 61 forms, 10 job descriptions, a sample CFO’s manual, and a free Small Business Management Guide.
In total, you’ll receive over 600 pages of content written by knowledgeable technical writers and reviewed by experienced CPA’s.
Financial Policies for Compliance and Control
Both the Securities and Exchange Commission (SEC) and the Public Company Accounting Oversight Board (PCAOB) clearly recognize policies and procedures as key elements of financial control. The Finance Policies and Procedures Manual is based on Generally Accepted Accounting Principles (GAAP) as well as standard best practices, and help you comply with regulatory requirements, standards, and guidelines for raising capital, treasury management (managing cash), financial statement reporting, financial auditing, and general financial administration.
Because of their in-depth nature, the prewritten templates can be implemented by organizations of any size or kind.
Financial Best Practices Manual at Your Fingertips
It is not easy to write financial procedures from scratch. You can spend countless hours on research, writing, editing and review and yet fall short on all the requisite elements. Our Financial Procedures templates are thoroughly researched and are based on commonly recognized best practices. Why start from scratch when skilled finance professionals have already done the work for you?
The Financial Policies and Procedures Manual Template is organized into five categories:
- Financial Administration
- Raising Capital
- Treasury Management
- Financial Statement Reporting
- Internal Controls
Every one of these procedures cover key accounting and financial topics like capital planning, capital structure, asset and inventory control, financial reporting, and financial analysis.
You will also get a free Small Business Management Guide that talks about planning, starting, managing and exiting a business when you purchase our Financial Policies and Procedures Manual.