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Finance Policies And Procedures Manual

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ALL THE PROCEDURES ARE IN MICROSOFT WORD AND YOU WILL RECEIVE INSTANT ACCESS THROUGH A DOWNLOAD LINK

FOR MORE INFORMATION VIEW THE TABS ABOVE

 

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.

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.

Management Objectives

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.

Delivery Options CD and Hard Cover Book, Download Only

36 PREWRITTEN POLICIES AND PROCEDURES

FINANCE ADMINISTRATION

Board of Directors Meetings Procedure

The Board of Directors Meetings Procedure describes how to properly plan, execute, and record Board of Director’s Meetings. The procedure applies to Top Management who oversees the meeting process and “The Board” who is responsible for attending such meetings and making decisions regarding the company’s operations as required.

(8 pages, 1654 words)

In order to prepare for the Board of Director’s meetings, you should know they will be scheduled and held in accordance with the company’s bylaws. The Board should meet at least once a year. Directors should receive notice at least ten days prior to these meetings. Such notice should include: the date, time, and place of the meeting; meeting agenda; and in the case of a special (i.e., unscheduled) meeting, who is calling the meeting and why.

Board of Directors Meetings Responsibilities:

Top Management is responsible for overseeing the Board of Directors Meeting process.

The Board of Directors is responsible for attending Board meetings and making decisions regarding the company’s operations, as required; also referred to in this document as “the Board”.

Board of Directors Meetings Definitions:

Board of Directors – Individuals elected by a corporation’s shareholders to oversee the management of the corporation.

Consent Agenda – A practice by which the mundane and non-controversial board action items are organized in a group and passed with one motion.

Board of Directors Meetings Procedure Activities

  • Preparing for the Board of Directors’ Meeting
  • Board of Directors’ Meeting Procedure
  • Board of Directors’ Meeting Process Review
  • Board of Directors’ Meeting Process Improvements

Board of Directors Meetings Procedure Forms

  • Minutes of Board of Directors Meeting Form

Financial Document Control Procedure

The Financial Document Control Procedure defines the methods and responsibilities for controlling documents used to provide work direction or set policy. It describes processes for document revision, approval and distribution. The procedure applies to all documents required by the Financial management system (FMS) including documents of internal and external origin.

(12 pages, 2235 words)

Financial Document Control Responsibilities:

Document Control is responsible for controlling all FMS procedures and instructions, as well as all internal and external documents required by the FMS. Document Control is also responsible for ensuring that documents conform to applicable standards.

Department Managers are responsible for ensuring that the latest versions of relevant documents are available at the point(s) of use, that these documents are legible, and that they are understood and followed. They are also responsible for reviewing and responding to document change requests in a timely manner.

Top Management is responsible for reviewing requests and giving final approval to FMS-related procedures.

Financial Document Control Definitions:

Controlled Document – Document that provides information or direction for performance of work within the scope of the FMS.  Characteristics of control include such things as revision number (letter), signatures indicating review and approval, and controlled distribution.

Document– Information and its supporting medium (paper, magnetic, electronic, optical, photograph, or a product sample.)

External Document – Document originating outside the Company (e.g., customer drawings, industry and/or international standards, suppliers’ equipment maintenance manuals, or references) that provides information or direction for performing activities within the scope of the FMS.

Finance Management System (FMS) – Ordered, well-documented system of policies, processes, and procedures, designed to assure compliance, conformity, and security; demonstrate a system of internal controls; and promote continual improvement of financial processes.

Form – Printed, typed, or electronic document with blank spaces for insertion of required or requested information (e.g., tax form, order form).

Financial Document Control Procedure Activities

  • Finance Procedure Format
  • Finance Work Instructions (WI)
  • Financial Forms
  • Financial Document Approval
  • Temporary Financial Document Changes
  • Financial Document Revisions
  • External Finance Documents
  • Finance Document Distribution

Financial Document Control Procedure References

  • Sarbanes-Oxley Act
  • Electronic Records; Electronic Signatures, Title 21, Code of Federal Regulations (21 CFR part 11)
  • Electronic Signatures in Global and National Commerce Act, Public Law #106-229
  • Electronic Signatures Regulations 2002, statutory Instrument 2002 No. 318 (UK)

Financial Document Control Procedure Forms

  • Finance Document Request Form
  • Finance Document Control Database Form

 


 

FINANCIAL STATEMENTS

Financial Information Release Procedure

The Financial Information Release Procedure establishes processes for the CFO to approve the release of financial information to third and outside parties for business operations as necessary. This allows the company to properly control the release of its financial data. It applies to the Finance and Accounting Departments.

(8 pages, 1175 words)

Financial Information Release Responsibilities:

The CFO (Chief Financial Officer) is responsible for reviewing and approving requests for financial statements and any other proprietary, confidential, and/or sensitive financial information.

Financial Information Release Definition:

Financial Statements – Statements, typically created quarterly, that give an overall picture of business operations and of the company’s financial condition.

Financial Information Release Procedure Activities

  • Financial Statement Release Plan
  • Financial Information Release
  • Financial Information Release Review

Financial Information Release Procedure Forms

  • Financial Information Request Form
  • Financial Information Release Log Form

Financial Reporting Procedure

The Financial Reporting Procedure ensures that financial reporting is completed in accordance with legal and ethical requirement and accepted accounting practices; completed within the required time frame(s) and forwarded to required agencies; reviewed and signed by company officers who attest to the reasonable accuracy of the information; and available for the company’s needs. The financial reporting procedure applies to the Finance and Accounting Departments.

(10 pages, 1750 words)

If certification is required, both the CEO and the CFO should review the financial controls used to produce the financial statements and the financial statements themselves to ensure that no untrue statements or omissions of a material fact as of the end of the period covered by the report exist.

Financial Reporting Responsibilities:

The CFO (Chief Financial Officer) is responsible for preparing and submitting all financial statements as required by law and by company policy.

The CFO and the CEO (Chief Executive Officer) are responsible for signing all reported financial statements.

Top Management and the Board of Directors are responsible for reviewing and approving all submitted financial reports.

The Controller is responsible for providing audited financial reports to the CFO annually, and unaudited financial reports quarterly.

Financial Reporting Definitions:

Financial Statements – Statements that give an overall picture of the company’s business operations and financial condition.

United States Securities and Exchange Commission (SEC)– Government commission, created by the Securities Exchange Act of 1934 to regulate securities markets (stocks, bonds, derivatives, etc.) and protect investors.

Form 10-Q – The form and instructions needed for submitting quarterly financial reports to the SEC.

Form 10-K – The form and instructions needed for submitting annual financial reports to the SEC.

Annual Stockholders Report (ASR) – Information about the financial status of the company, sent to stockholders prior to or with proxy statements and the notice of the scheduled annual stockholders’ meeting in accordance with reporting requirements.

Financial Reporting Procedure Forms

 

  • Annual Report to Stockholders
  • Financial Statements for Business Operations
  • Additional Financial Statement Reporting
  • Public Company Quarterly Reporting
  • Public Company Annual Reporting
  • Improving the Financial Statement Reporting Process

 

Financial Reporting Procedure References

  • Securities and Exchange Act of 1934(USA); SEC General Rules and Regulations
  • SEC Accounting Regulation S-X (17 CFR 210, USA)
  • SEC General Regulation S-K (17 CFR 229, USA)
  • SEC General Rules for Electronic Filing Regulation S-T (17 CFR 232, USA)
  • Sarbanes-Oxley Act of 2002(USA)
  • SEC Regulation 14A Solicitation of Proxies (14A CFR 240)

Financial Reporting Procedure Forms

  • Financial Report Checklist Form

 


INTERNAL CONTROLS

Financial Corrective Action Procedure

The Financial Corrective Action Procedure outlines the responsibilities and methods for identifying causes of nonconformities, initiating corrective actions, and performing follow ups. The Financial Corrective Action Procedure ensures that corrective actions have been effective in preventing the reasons for noncompliance. It applies to all causes of nonconformity relating to finance that are discovered during transaction processing or internal audits.

(12 pages, 1461 words)

The assigned individual, or investigator, should investigate the nonconformity to determine the underlying, or root, cause or causes. Depending on the situation, the investigator may enlist the aid of other employees, forming an investigative team. Following investigation of cause, the Department Manager (or an authorized delegate) should review the results and consult with the investigator and appropriate employees to determine what corrective action(s) may be taken to eliminate the cause of the problem.

Financial Corrective Action Responsibilities:

The Controller is responsible for reporting on corrective actions taken at Management Review meetings and ensuring that this procedure is accurate, understood, and implemented effectively.

All Employees are responsible for identifying nonconforming conditions and initiating a Corrective Action, investigating and recording the cause of nonconforming conditions when assigned, and implementing corrective actions.

Financial Corrective Action Definitions:

CAR – Corrective action request.

Control Failure – Identified problem within the internal controls system.

NCR – Nonconformity (or nonconformance) report.

Nonconformity – Object or condition found not conforming to a standard or specification (regulatory, industry, customer, or company); something that falls outside of identified critical limits. Also called “nonconformance.”

Root cause – Most fundamental reason for the failure or inefficiency (the effect) of a process; effects can have more than one root cause.

Financial Corrective Action Procedure Activities

  • Financial Nonconformance Reports
  • Initiating Corrective Action
  • Investigating root Causes
  • Taking Corrective Action
  • Preventing Recurrence of Financial Problems
  • Verification and Closure

Financial Corrective Action Procedure Forms

  • Nonconformance Report Template
  • Financial Corrective Action Request Form
  • Financial Corrective Action Log Template

Fixed Asset Capitalization Depreciation Procedure

The Fixed Asset Capitalization Depreciation Procedure describes how to delineate capitalization and depreciation methods for various asset groups.

This Fixed Asset Capitalization Depreciation Procedure applies to all acquisitions with more than a one-year useful life expectancy and a minimum threshold amount as specified by the controller. (4 pages, 1232 words)

Fixed Asset Capitalization Depreciation Definitions:

Capitalization – Capitalization is the method chosen to record the purchase of a fixed asset on the company’s accounting books. If an asset is capitalized then it is not expensed in the same year the asset is purchased. Instead the asset is generally recorded on the balance sheet and individually on an asset schedule. Examples of capital expenditures are purchases of land, buildings, machinery, office equipment, leasehold improvements, and vehicles. The asset is expensed each year as depreciation.

Depreciation – is an annual income tax deduction that allows the write-down or write-off of the cost of the asset over its estimated useful life to recover the cost or other basis of certain property over the time the property is used. It is an allowance expense for the wear and tear, age, deterioration, or obsolescence of the property.

As an asset ages and is used by the company, its’ value declines. It, in effect, becomes worth less and less over time. The declining value or usefulness of the asset over time is represented as a discount that is applied to the original purchase price. At the end of the asset’s depreciation period, (and/or useful life), its value on the balance sheet will be zero, or fully-depreciated. At the same time, the individual depreciation expenses will have all been recorded on the income statement.

Cost basis – The total amount paid for the asset, in cash or kind, is considered the “cost-basis.” This should include all charges relating to the purchase, such as the purchase price, freight charges, and installation, if applicable. The cost basis is not the market value or list price of the asset. It is the total amount invested in the purchase or the total amount paid.

Fixed Asset Capitalization Depreciation Procedure Activities

      • Assets Capitalization
      • Assets Depreciation

Fixed Asset Capitalization Depreciation Procedure References

      • IRS Publication 964 “How to Depreciate Property”

RAISING CAPITAL

Bank Loan Applications Procedure

The Bank Loan Applications Procedure provides guidelines for determining suitable lending requirements and format and preparation of loan proposals. This procedure applies to bank loan applications but can be used for alternate forms of financing. Proposals can be used for loan applications for one or more banks or lending institutions.

(8 pages, 1883 words)

Bank Loan Applications Responsibilities:

The CFO (Chief Financial Officer) is responsible for directing the Finance Department in developing borrowing and financial plans to meet the needs of the company’s operations.

The Board of Directors is responsible for authorizing the raising of capital through bank loans.

Bank Loan Applications Definitions:

Collateralization – Securing a debt in part or in full by a pledge of collateral (an asset pledged as security to ensure payment or performance of an obligation).

Covenant – Condition that a borrower must comply with according to the terms of the loan agreement; if the borrower does not act in accordance with a covenant, the loan can be considered in default, in which case the lender has the right to demand payment, usually in full.

Credit scoring – Measuring and evaluating creditworthiness of a loan applicant; profitability, solvency, management ability, liquidity, and other information may be factored into an applicant’s credit score.

Securitization – Pooling of non-traded assets for the purpose of issuing standardized securities backed by those assets, which can then be traded like any other security; bundling and resale of debt instruments to investors, permitted only for parties licensed and regulated by the SEC; process of selling non-conventional loan packages to investors (public or private) who represent an interest in the cash flow generated by asset-backed loans.

Takedown – Transfer of money from a lender to a borrower under a loan agreement, loan commitment, or line of credit.

Bank Loan Applications Procedure Activities

  • Assessing Capital Requirements
  • Preparing Bank Loan Applications
  • Applying for a Bank Loan
  • Closing the Bank Loan
  • Bank Loan Service and Reporting
  • Bank Loan Analysis

Bank Loan Applications Procedure Forms

  • Loan Application Checklist Form

Business Valuation Procedure

The Business Valuation Procedure describes how to regularly conduct business valuation assessments in order to monitor valuation and multipliers in relation to valuation and multiplier targets, provide general and industry specific economic information that affects the business; provide information for business strategic planning, and use worth in equity to raise capital. This procedure applies to Top Management and the Finance Department.

(14 pages, 1093 words)

Business Valuation Responsibilities:

Top Management is responsible for setting valuation schedules, setting valuation targets, for reviewing valuation results in relation to targets, and for monitoring and adjusting business plans and strategies in order to reach valuation targets.

The CFO (Chief Financial Officer) is responsible for executing the valuation process, recording valuation plans, results, improvement plans, and for providing all needed information for the valuation process.

Business Valuation Definitions:

Valuation – The process of assessing or estimating the value of a business. There are several valuation approaches, including income (based on expected future cash flow), market (based on value of similar businesses), and asset (based on the net equity of the value of the business assets). The most appropriate method depends on the context or reason for the valuation. Generally, the income method of valuation is most practical for solvent, ongoing businesses.

Multiplier – Generally, the profits/earnings ratio of a business that plays an important role in income method valuation.

Business Valuation Procedure Activities

  • Business Valuation Plan
  • Business Valuation Steps
  • Company Valuation Review
  • Reaching Valuation Targets

Business Valuation Procedure Forms

  • Business Valuation Plan Template
  • Company Valuation Improvement Plan Template
  • Valuation History Template

 


TREASURY MANAGEMENT

Foreign Exchange Management Procedure

The Foreign Exchange Management Procedure ensures thoughtful and intelligent decisions are made about foreign currency exchange. The procedure minimizes the associated risk of less than expected returns or higher than expected costs due to fluctuations in exchange rates. The Foreign Exchange Management Procedure applies to the Finance and Accounting departments.

(10 pages, 1252 words)

The CFO should analyze risk or exposure from accepting or disbursing foreign currency annually or as needed, due to conditions and opportunities. Converting or translating currency (to/from US dollars, euros, yen, etc.) can diminish sales income or lead to higher-than-expected costs because of rate fluctuation – this is referred to as currency risk or foreign exchange risk.

Foreign Exchange Management Responsibilities:

The CFO (Chief Financial Officer) is responsible for assessing risks and exposure due to business conducted in foreign currency. The CFO should prepare a report and recommendations for dealing with foreign currencies and should follow and execute the established foreign exchange management plan.

Top Management and the Board of Directors should review and access foreign exchange risks and policy options, and then set the company foreign exchange management policy.

Foreign Exchange Management Definitions:

Foreign exchange risk – Risk that currency movements alone may affect the value of an investment; also called “currency risk”.

FX – Common abbreviation for “foreign currency exchange”.

Hedge – Insure against lost revenue due to foreign currency fluctuations.

Translation – Actual act or method of converting one form of currency to another.

Foreign Exchange Management Procedure Activities

  • Foreign Exchange Management Plan
  • Foreign Exchange Management
  • Reviewing Foreign Exchange Management
  • Improving Foreign Exchange Management

Foreign Exchange Management Procedure Forms

  • Foreign Exchange Management Plan Example
  • Foreign Exchange Results Form

Letters of Credit Procedure

The Letters of Credit Procedure develops and builds best practices in processing a letter of credit quickly and efficiently. The procedure allows processing of foreign transactions where a known or unclear level of risk prohibits normal purchasing and sales processes. The procedure applies to Finance, Accounting, Purchasing, and Sales department, or other departments involved in using documentary credit to process transactions.

(8 pages, 2046 words)

Letters of Credit Responsibilities:

The h4CFO (Chief Financial Officer) is responsible for setting and overseeing the process of providing and/or receiving a Letter of Credit, and is responsible for all related bank communication and transactions.

Department Managers are responsible for following the proper procedure for issuing or receiving a Letter of Credit.

Letters of Credit Definitions:

Letter of Credit – Bank monitored/controlled exchange of funds for a product or service, typically used in international trade where performance is considered a risk.

Bill of Lading – Legal document prepared by a carrier, as a contract, accepting goods for transport from the shipping party. It details the type, quantity and destination of the good being carried and serves as a receipt of shipment when the good is delivered. It accompanies the shipped goods, no matter the form of transportation, and must be signed by an authorized representative from the carrier, the shipper and the receiver.

Warranty Title – Legal statement from the seller that the title being conveyed is good and the transfer is legal and rightful.

Issuing Bank – Bank selected and used by the buyer to reserve, and then issue funds, after evidence of successful performance by the seller (typically, delivery of required documents including a Bill of Lading from a contracted carrier).

Letters of Credit Procedure Activities

  • Letter of Credit Plan
  • Executing a Letter of Credit as a Buyer
  • Executing a Letter of Credit as a Seller
  • Reviewing the Letter of Credit Process
  • Improving the Letter of Credit Process

Letters of Credit Procedure Forms

  • Letter of Credit Checklist Form

36 PREWRITTEN POLICIES AND PROCEDURES

FINANCE ADMINISTRATION

Continuity Plan Worksheet Template

The CFO should define the finance continuity plan using the Continuity Plan Worksheet Template to describe the following:

  • Section I – Who is going to be involved with execution of the plan and testing (i.e., the financial continuity team leader, or crisis management command structure);
  • Section II – What financial continuity plan training each team member has received and how current that training is;
  • Section III – Periodic backing up of critical data;
  • Section IV – Inspection and testing of backup data, including testing of communication between the primary and secondary work sites, application software at the backup site, data replication methodology between primary and secondary sites, etc.; and
  • Section V – The steps, in order, that the financial continuity team leader must take to restore Finance to a normal state of operations; and
  • Section VI – A financial threat matrix (see previous section).

After completing the FA1020-1 CONTINUITY PLAN WORKSHEET, the CFO should present the financial continuity plan to the Board of Directors for discussion and approval. Upon approval of the financial continuity plan by the Board of Directors, the CFO should communicate the plan to the Finance department, assign responsibilities, and begin implementing the plan.

Continuity Plan Worksheet Template Details

Pages: 04 Words: 172 Format: Microsoft Word 2013 (.docx) Language: English Manual: Finance Category: Finance Administration Procedure: Financial Continuity Planning Procedure FA1020 Type: Worksheet

 

Financial Document Change Request Template

The Financial Document Change Request Template should be filled out in order to request a new/changed financial document, complete with an explanation and detailed layout for the new document. All Finance Management System (FMS) documents are subject to revision.

To submit a change, the requester should obtain a current copy of the financial document and “red-line” requested changes on the copy. All changes should be clearly identified, initialed, and dated. If changes are extensive or complex, the requester may type a new document and submit this with a copy of the original.

The requester should fill out an FA1030-1 FINANCIAL DOCUMENT CHANGE REQUEST, attach the new/changed document, and submit this to his/her Department Manager for review. After reviewing the request, the Department Manager should submit the FA1030-1 and any attachments to the Document Controller, who should review the request to ensure the document conforms to the FMS.

Upon receiving the necessary approvals, Document Control should update the document and generate a new Master document. Financial Document Control should circulate the new Master document among designated Management personnel to obtain approval/signatures.

Financial Document Change Request Template Details

Pages: 01 Words: 149 Format: Microsoft Word 2013 (.docx) Language: English Manual: Finance Category: Finance Administration Procedure: Financial Document Control Procedure FA1030 Type: Form

Related Documents

  • FA1030-2 FINANCIAL DOCUMENT CONTROL DATABASE

 


 

FINANCIAL STATEMENTS

Financial Forecasting Checklist Template

The Financial Forecasting Checklist Template should list all of the required items and information needed to complete the financial forecast process, and note the date and other relative information when these items are received. As forecast items are completed, the CFO should note information on each document, forecast, and forecasted statement listed on FS1000-1 FINANCIAL FORECAST CHECKLIST, including:

  • The date on which the item was completed;
  • The required submission date for that item;
  • The organization/person/agency requiring (requesting) the item;
  • The actual submission date; and
  • Any relevant notes regarding the item.

The CFO should complete and release the final versions of the forecasted financial statements listed on the Financial Forecast Checklist. After receiving requested revisions/updates, the CFO should revise pro forma statements and related forecast documents listed on FS1000-1 FINANCIAL FORECAST CHECKLIST. The checklist should be reviewed near the end of each fiscal year, verifying that all required forecast documents are listed and that all listed documents are created and submitted, as required.

Financial Forecasting Checklist Template Details

Pages: 01 Words: 46 Format: Microsoft Word 2013 (.docx) Language: English Manual: Finance Category: Financial Statements Procedure: Financial Forecasting Procedure FS1000 Type: Checklist

 

Financial Information Request Template

Upon receiving a phone or in-person request for financial information, the Accounting or Finance Department manager/employee should complete a Financial Information Request Template, and forward the request to the CFO. FS1050-1 FINANCIAL INFORMATION REQUEST includes company/person making request, reason for requesting financial information, contact information, and more.

All requests for financial information shaould be forwarded to the CFO. The CFO should have sole authority to decide what information may be released according to the context and situation of the request, and should direct the release of financial information or direct a denial response. Those who request financial information should typically receive a reply as soon as possible, and always within thirty days.

Financial Information Request Template Details

Pages: 01 Words: 58 Format: Microsoft Word 2013 (.docx) Language: English Manual: Finance Category: Financial Statements Procedure: Financial Information Release Procedure FS1050 Type: Form

Related Documents

  • FS1050-2 FINANCIAL INFORMATION RELEASE LOG

INTERNAL CONTROLS

Asset Disposition Report Template

Financial Corrective Action Procedure

The Financial Corrective Action Procedure outlines the responsibilities and methods for identifying causes of nonconformities, initiating corrective actions, and performing follow ups. The Financial Corrective Action Procedure ensures that corrective actions have been effective in preventing the reasons for noncompliance. It applies to all causes of nonconformity relating to finance that are discovered during transaction processing or internal audits.

(12 pages, 1461 words)

The assigned individual, or investigator, should investigate the nonconformity to determine the underlying, or root, cause or causes. Depending on the situation, the investigator may enlist the aid of other employees, forming an investigative team. Following investigation of cause, the Department Manager (or an authorized delegate) should review the results and consult with the investigator and appropriate employees to determine what corrective action(s) may be taken to eliminate the cause of the problem.

Financial Corrective Action Responsibilities:

The Controller is responsible for reporting on corrective actions taken at Management Review meetings and ensuring that this procedure is accurate, understood, and implemented effectively.

All Employees are responsible for identifying nonconforming conditions and initiating a Corrective Action, investigating and recording the cause of nonconforming conditions when assigned, and implementing corrective actions.

Financial Corrective Action Definitions:

CAR – Corrective action request.

Control Failure – Identified problem within the internal controls system.

NCR – Nonconformity (or nonconformance) report.

Nonconformity – Object or condition found not conforming to a standard or specification (regulatory, industry, customer, or company); something that falls outside of identified critical limits. Also called “nonconformance.”

Root cause – Most fundamental reason for the failure or inefficiency (the effect) of a process; effects can have more than one root cause.

Financial Corrective Action Procedure Activities

  • Financial Nonconformance Reports
  • Initiating Corrective Action
  • Investigating root Causes
  • Taking Corrective Action
  • Preventing Recurrence of Financial Problems
  • Verification and Closure

Financial Corrective Action Procedure Forms

  • Nonconformance Report Template
  • Financial Corrective Action Request Form
  • Financial Corrective Action Log Template

 

Risk Assessment Procedure

The Risk Assessment Procedure prioritizes risks in order to manage them effectively and efficiently. The procedure substantially decreases the opportunity for material weaknesses to go undetected. It pertains to the identification and assessment of risk.

(18 pages, 3860 words)

Risk Assessment Responsibilities:

The Risk Manager is responsible for identifying and assessing risk, directing the risk assessment, and reporting the results of the assessment to the Board of Directors.

The Board of Directors is responsible for reviewing and approving the risk assessment prior to development of a Risk Management Plan (see AC1030 RISK MANAGEMENT).

Risk Assessment Definitions:

Hazard – Source of danger; specific situation that may influence the probability and/or extent of loss.

Material – Relatively significant or important in the context of the organization.

Risk – (n.) 1. A function of the likelihood of an event and its consequences (impact); 2. Possibility of loss or injury.  (v.) Expose to hazard or danger; incur danger of.

Risk exposure – Numeric value assigned to a risk, allowing comparison of different risks.

Risk matrix – Tool used to illustrate and prioritize risks.

Risk Assessment Procedure Activities

  • Form a Risk Management Committee
  • Identify Hazards/ Threats
  • Identify Threat Impact and Likelihood
  • Determine Risk Levels
  • Rank Threats
  • Risk Assessment Review

Risk Assessment Procedure References

  • 17 CFR 210, “Form and Content of and Requirements for Financial Statements, Securities Act of 1993, Securities Exchange Act of 1934, Public Utility Holding Company Act of 1935, Investment Company Act of 1940, Investment Advisers Act of 1940, and Energy Policy and Conservation Act of 1975″
  • 17 CFR 240, “General Rules and Regulations, Securities Exchange Act of 1934″.
  • 17 CFR 241, “Interpretative Release Relating to the Securities Exchange Act of 1934 and General Rules and Regulations Thereunder” (USA),
  • 1996 Amendment to the Capital Accord to Incorporate Market Rises

Risk Assessment Procedure Forms

  • Risk Assessment/Management Worksheet Form
  • Sample Chart of Accounts Form
  • Internal Control Checklist Form

RAISING CAPITAL

Bank Loan Applications Procedure

The Bank Loan Applications Procedure provides guidelines for determining suitable lending requirements and format and preparation of loan proposals. This procedure applies to bank loan applications but can be used for alternate forms of financing. Proposals can be used for loan applications for one or more banks or lending institutions.

(8 pages, 1883 words)

Bank Loan Applications Responsibilities:

The CFO (Chief Financial Officer) is responsible for directing the Finance Department in developing borrowing and financial plans to meet the needs of the company’s operations.

The Board of Directors is responsible for authorizing the raising of capital through bank loans.

Bank Loan Applications Definitions:

Collateralization – Securing a debt in part or in full by a pledge of collateral (an asset pledged as security to ensure payment or performance of an obligation).

Covenant – Condition that a borrower must comply with according to the terms of the loan agreement; if the borrower does not act in accordance with a covenant, the loan can be considered in default, in which case the lender has the right to demand payment, usually in full.

Credit scoring – Measuring and evaluating creditworthiness of a loan applicant; profitability, solvency, management ability, liquidity, and other information may be factored into an applicant’s credit score.

Securitization – Pooling of non-traded assets for the purpose of issuing standardized securities backed by those assets, which can then be traded like any other security; bundling and resale of debt instruments to investors, permitted only for parties licensed and regulated by the SEC; process of selling non-conventional loan packages to investors (public or private) who represent an interest in the cash flow generated by asset-backed loans.

Takedown – Transfer of money from a lender to a borrower under a loan agreement, loan commitment, or line of credit.

Bank Loan Applications Procedure Activities

  • Assessing Capital Requirements
  • Preparing Bank Loan Applications
  • Applying for a Bank Loan
  • Closing the Bank Loan
  • Bank Loan Service and Reporting
  • Bank Loan Analysis

Bank Loan Applications Procedure Forms

  • Loan Application Checklist Form

Business Valuation Procedure

The Business Valuation Procedure describes how to regularly conduct business valuation assessments in order to monitor valuation and multipliers in relation to valuation and multiplier targets, provide general and industry specific economic information that affects the business; provide information for business strategic planning, and use worth in equity to raise capital. This procedure applies to Top Management and the Finance Department.

(14 pages, 1093 words)

Business Valuation Responsibilities:

Top Management is responsible for setting valuation schedules, setting valuation targets, for reviewing valuation results in relation to targets, and for monitoring and adjusting business plans and strategies in order to reach valuation targets.

The CFO (Chief Financial Officer) is responsible for executing the valuation process, recording valuation plans, results, improvement plans, and for providing all needed information for the valuation process.

Business Valuation Definitions:

Valuation – The process of assessing or estimating the value of a business. There are several valuation approaches, including income (based on expected future cash flow), market (based on value of similar businesses), and asset (based on the net equity of the value of the business assets). The most appropriate method depends on the context or reason for the valuation. Generally, the income method of valuation is most practical for solvent, ongoing businesses.

Multiplier – Generally, the profits/earnings ratio of a business that plays an important role in income method valuation.

Business Valuation Procedure Activities

  • Business Valuation Plan
  • Business Valuation Steps
  • Company Valuation Review
  • Reaching Valuation Targets

Business Valuation Procedure Forms

  • Business Valuation Plan Template
  • Company Valuation Improvement Plan Template
  • Valuation History Template

TREASURY MANAGEMENT

Foreign Exchange Management Procedure

The Foreign Exchange Management Procedure ensures thoughtful and intelligent decisions are made about foreign currency exchange. The procedure minimizes the associated risk of less than expected returns or higher than expected costs due to fluctuations in exchange rates. The Foreign Exchange Management Procedure applies to the Finance and Accounting departments.

(10 pages, 1252 words)

The CFO should analyze risk or exposure from accepting or disbursing foreign currency annually or as needed, due to conditions and opportunities. Converting or translating currency (to/from US dollars, euros, yen, etc.) can diminish sales income or lead to higher-than-expected costs because of rate fluctuation – this is referred to as currency risk or foreign exchange risk.

Foreign Exchange Management Responsibilities:

The CFO(Chief Financial Officer) is responsible for assessing risks and exposure due to business conducted in foreign currency. The CFO should prepare a report and recommendations for dealing with foreign currencies and should follow and execute the established foreign exchange management plan.

Top Management and the Board of Directors should review and access foreign exchange risks and policy options, and then set the company foreign exchange management policy.

Foreign Exchange Management Definitions:

Foreign exchange risk – Risk that currency movements alone may affect the value of an investment; also called “currency risk”.

FX – Common abbreviation for “foreign currency exchange”.

Hedge – Insure against lost revenue due to foreign currency fluctuations.

Translation – Actual act or method of converting one form of currency to another.

Foreign Exchange Management Procedure Activities

  • Foreign Exchange Management Plan
  • Foreign Exchange Management
  • Reviewing Foreign Exchange Management
  • Improving Foreign Exchange Management

Foreign Exchange Management Procedure Forms

  • Foreign Exchange Management Plan Example
  • Foreign Exchange Results Form

 

Letters of Credit Procedure

The Letters of Credit Procedure develops and builds best practices in processing a letter of credit quickly and efficiently. The procedure allows processing of foreign transactions where a known or unclear level of risk prohibits normal purchasing and sales processes. The procedure applies to Finance, Accounting, Purchasing, and Sales department, or other departments involved in using documentary credit to process transactions.

(8 pages, 2046 words)

Letters of Credit Responsibilities:

The CFO (Chief Financial Officer) is responsible for setting and overseeing the process of providing and/or receiving a Letter of Credit, and is responsible for all related bank communication and transactions.

Department Managers are responsible for following the proper procedure for issuing or receiving a Letter of Credit.

Letters of Credit Definitions:

Letter of Credit – Bank monitored/controlled exchange of funds for a product or service, typically used in international trade where performance is considered a risk.

Bill of Lading – Legal document prepared by a carrier, as a contract, accepting goods for transport from the shipping party. It details the type, quantity and destination of the good being carried and serves as a receipt of shipment when the good is delivered. It accompanies the shipped goods, no matter the form of transportation, and must be signed by an authorized representative from the carrier, the shipper and the receiver.

Warranty Title – Legal statement from the seller that the title being conveyed is good and the transfer is legal and rightful.

Letter of Indemnity – Letter typically issued by the issuing bank protecting the buyer in the case the seller fails to deliver the goods/services as promised (fails to perform).

Issuing Bank – Bank selected and used by the buyer to reserve, and then issue funds, after evidence of successful performance by the seller (typically, delivery of required documents including a Bill of Lading from a contracted carrier).

Letters of Credit Procedure Activities

  • Letter of Credit Plan
  • Executing a Letter of Credit as a Buyer
  • Executing a Letter of Credit as a Seller
  • Reviewing the Letter of Credit Process
  • Improving the Letter of Credit Process

Letters of Credit Procedure Forms

  • Letter of Credit Checklist Form

Financial Policies and Procedures Manual for Control

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 to tax & 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 – Control Environment.

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.

Management Objectives

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

We could find examples of how control systems improve performance in all components. 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 our policies and procedures manuals follow the Plan-Do-Check-Act philosophy of continually improving processes, including our 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.

 

CONTROLLER SUMMARY OF FUNCTIONS

Directs the accounting and control functions, reporting the results of operations, and provides chronological systems.

CONTROLLER ESSENTIAL DUTIES AND RESPONSIBILITIES

  • Develops and implements accounting policies, coordination of systems and procedures, and the preparation of operating data and special reports as required, including interim and year-end financial statements. Maintains company’s system of accounts; keeps books and records on all company transactions and assets.
  • Establishes, coordinate, and administers as an integral part of management, an adequate plan for the control of operations including, profit planning, programs for capital investing and financing, sales forecasts, expense budgets, and cost standards, together with necessary controls and procedures to effectuate the plan.
  • In conjunction with the President and Vice President of Finance, coordinates, reviews, and endorses budget proposals and discusses proposed changes and significant changes.
  • Compares performance with operating plans and standards, and reports and interprets the results of operations to all levels of management.
  • Provides for the control and editing of all company orders, to insure conformity to established policies and procedures, and to facilitate data control and retrieval of records generated by these orders.
  • Establishes and administers tax policies and procedures.
  • Supervises or coordinates the preparation of reports to government agencies.
  • Coordinates all matters of business between the company and its stock transfer agents and registrars.
  • Provides other managers and departments with information required by them to carry out their assigned responsibilities.
  • Assures protection for the assets of the business through internal control, internal auditing, and assuring proper insurance coverage.
  • Assists Marketing in establishing and maintaining product pricing policies.
  • Liaison between the company and legal counsel. Recommends appointment of independent auditors, overseeing their audit work.
  • Provides advice on all matters to the Vice President of Finance and the President.

ORGANIZATIONAL RELATIONSHIPS

Reports to the Vice President of Finance. Supervises accounting staff and the Purchasing (Procurement) Manager.

PROCEDURES

The Controller Job Description is mentioned in the following procedures:

Procedure ID and Name

Policies & Procedures Manual

AC1000 Sarbanes-Oxley Compliance Finance
AC1060 Corrective Action Finance
ADM101 Personnel Records Human Resources
ADM103 Document Control Human Resources
ADM106 Property & Access Control Human Resources
ADM107 Separation Human  Resources
ADM109 Human Resources Reports Human Resources
CMP105 Health Insurance Portability Accountability Human Resources
CMP108 Equal Employment Opportunity Human  Resources
COM101 Payroll Human Resources
COM102 Paid & Unpaid Leave Human Resources
COM103 Insurance Benefits Human Resources
COM105 Employee Retirement Income Security Human Resources
COM106 Consolidated Budget Reconciliation Human Resources
CSH104 Wire Transfers Accounting
CSH106 Check Requests Accounting
CSH107 Bank Account Reconciliations Accounting
FS1010 Financial Reporting Finance
FS1020 Financial Statement Analysis Finance
FS1040 Financial Restatements Finance
G&A101 Chart of Accounts Accounting
G&A102 Files and Records Management Accounting
G&A106 Controlling Legal Costs Accounting
G&A107 Taxes And Insurance Accounting
G&A109 Release of Confidential Information Accounting
G&A110 Document Control Accounting
HRG101 Employee Hiring Human Resources
INV101 Inventory Control Accounting
INV102 Inventory Counts Accounting

CONTROLLER QUALIFICATIONS

A college degree is required with a major in accounting and a CPA designation preferred. Good communication skills and the ability to work well with people is essential. Good leadership skills are beneficial. Familiarity with common accounting and spreadsheet software applications is required.

CONTROLLER PHYSICAL DEMANDS

Occasional travel by airplane and automobile in conducting business is necessary. Ability to communicate orally with board of directors, management, and other co-workers, both individually and in front of a group is crucial. Regular use of the telephone and e-mail for communication is essential.

Sitting for extended periods is common. Hearing and vision within normal ranges is essential for normal conversations, to receive ordinary information and to prepare or inspect documents.

No heavy lifting is expected; exertion of up to 10 lbs. of force occasionally required. Good manual dexterity required for the use of common office equipment, such as computers, calculators, copiers, scanners, and fax machines.

Good reasoning ability is required to solve a wide range of business problems. Able to apply statistical calculations, analysis of variance, correlation techniques, and sampling theory as well as algebra, linear equations, and other analytics as required. Able to understand and utilize financial reports and legal documents to conduct business.

WORK ENVIRONMENT

The job is performed indoors in a traditional office setting. Activities include extended periods of sitting and extensive work at a computer monitor and/or calculator.

SKU: JD0210

How important are good financial strategies and processes for your business? Of course they are very important. The goal of the Finance Polices and Procedure Manual is to assist you with key aspects of financial operations that include regulatory compliance, improving performance (through well-defined processes) and implementing best practices into operational areas like Raising Capital and Treasury Management. The Finance field is broad, complex, and dynamic, so that no document can claim to be absolute in capturing every possible issue, policy, or procedure and remain current.  The concepts discussed in the manual cover the common, basic elements of a Finance Management System.This section provides an introduction and overview of the basic concepts of Finance, and more:

 

Finance Manual Introduction

  • The Balanced Scorecard

FINANCE AND REGULATORY BASICS

  • Securities Legislation of the 1930’s
  • The Sarbanes-Oxley Act

FINANCE AND INTERNAL CONTROL

  • COSO and Internal Control
  • Why Internal Control?
  • A Control System that Focuses on Improvement and Success
  • The Plan-Do-Check-Act Approach to Well-Defined Processes
  • An Internal Control System Can Drive Improvement
  • A Disciplined Approach

UNDERSTANDING KEY FINANCIAL PROCESSES

  • Capital Needs Analysis
  • Operating Cash Flow or EBITDA
  • Making Investment Decisions
  • Return on Invested Capital (ROIC)
  • Cost of Capital
  • Managing Working Capital
  • Accounts Payable
  • Accounts Receivable
  • Inventory Management

OTHER FINANCIAL PROCESSES

  • Financial Statements
  • Administration and Auditing

Financial

 Terms

Finance is a technical field.  A number of terms are used throughout the Financial Policies and Procedures Manual.  Those financial terms commonly used within a Finance Department are defined in this glossary.

ARTICLES OF INCORPORATION

A document (also called a charter) filed with a U.S. state by a corporation’s founders, describing the purpose, place of business, and other details of a corporation.

BALANCED SCORECARD

A management system organized around balancing four distinct business perspectives: financial, customer, internal, and innovation/learning; Balanced Scorecards seek to balance short and long term objectives, financial and non-financial measures, lagging and leading indicators, and internal and external perspectives.

BOARD OF DIRECTORS

Individuals elected by a corporation’s shareholders to oversee the management of the corporation.  The president reports to the Board of Directors.

BUSINESS PHASE

The period or phase of a business usually defined by its potential for growth and profitability.  For example, businesses are not typically profitable in their initial phase but have tremendous growth potential.  On the other hand, while mature businesses may no longer be capable of rapid growth rates, they are often more profitable than when they were new.

BYLAWS

The rules that govern the internal affairs or actions of a corporation. Bylaws generally include procedures for holding meetings and electing the board of directors and officers. The bylaws also set out the duties and powers of a corporation’s officers.

C CORPORATION

A business taxed as a separate entity: a business taxed under Subchapter C of the Internal Revenue Code and legally distinct from its owners.

CHIEF FINANCIAL OFFICER (CFO)

The senior manager of the Finance Department.  The CFO reports to the Company’s Chief Executive Officer (CEO).

CONSENT AGENDA

A practice by which the mundane and non-controversial board action items are organized in a group and passed with one motion.

CONTINUITY PLAN

Disaster Recovery Plan to ensure that the effects of an extended disruption (e.g., natural disaster) are minimized and the organization is able to maintain or quickly resume mission-critical functions.

CONTROLLED DOCUMENT

Document that provides information or direction for performance of work within the scope of the FMS.  Characteristics of control include such things as revision number (letter), signatures indicating review and approval, and controlled distribution.

DOCUMENT

Information and its supporting medium; the medium may be paper, magnetic, electronic, optical, photograph, or a sample of the Company’s product.

DOWNTIME (OR “DOWN TIME”)

Duration of an equipment or system stoppage, scheduled or unscheduled, measured from the moment of failure to the moment at which normal operations resume.

EXTERNAL DOCUMENT

Document originating outside the Company (e.g., customer drawings, industry and/or international standards, suppliers’ equipment maintenance manuals, or references) that provides information or direction for performing activities within the scope of the FMS.

FINANCE MANAGEMENT SYSTEM (FMS)

System of managing the Company’s financial resources, including accounting and financial reporting, internal controls, budgeting, collecting accounts receivable, risk management, and insurance. The FMS for a small business includes how you are financing the business and how you manage its money.  Ordered, well-documented system of policies, processes, and procedures, designed to assure compliance, conformity, and security; demonstrate a system of internal controls; and promote continual improvement of financial processes.

FINANCIAL OBJECTIVES

Clearly expressed and specific objectives (i.e. expressed in numbers, percentages, ratios) of the Company as they relate to its financial operations and financial structure.

FORM

Printed, typed, or electronic document with blank spaces for insertion of required or requested information (e.g., tax form, order form).  Document or web form with spaces in which to write; business document that typically contains some predefined data and designated, labeled areas for filling in data.

INTERNAL DOCUMENT

Document of internal origin (developed entirely by or completed by the Company) that provides information or direction for the performance of activities within the scope of the FMS.  Examples include, but are not limited to, FMS procedures.

LAGGING INDICATOR

Indicator of past performance, such as actual sales over a period.

LEADING INDICATOR

Indicator of future performance (e.g., an increase in interest rates is often a leading indicator of reduced consumer spending).

MANAGEMENT TEAM

Consists of the CEO, CFO, and Finance department managers, at a minimum.

PROCEDURE

Process or series of acts involved in a particular form of work; detailed elements of a process used to produce a specified result.  Procedures are different from work instructions. Procedures document a process.  Lower level detail of activities or tasks are documented within a work instruction.

QUORUM

The minimum number of people who must be present at a stockholders’ meeting, physically or by proxy, in order for a decision made at such a meeting to be binding.  The quorum requirements should be stated in the Company’s bylaws.

RECORD

Anything retained to provide and preserve permanent evidence of or information about an event (e.g., document, photograph, nonconforming product sample).

RESOLUTION

An official document representing an action or intent of action on the part of the Board of Directors of a corporation.

RETURN ON INVESTMENT (ROI)

Profit or loss resulting from an investment transaction, usually expressed as an annual percentage.  Return On Investment (ROI), calculated by dividing the expected results of committed resources by the resources committed to achieve the results.  (ROI = Results / Resources.)

SMART OBJECTIVES

An acronym that describes important attributes for objectives:

S

pecific,

M

easurable,

A

ttainable, Relevant, and

T

ime-Bound or SMART.

STOCKHOLDER (OR SHAREHOLDER)

One who owns shares of stock in a corporation (also called stockholder).  Ownership includes the right to declared dividends and to vote on certain company matters, including electing the Board of Directors.

TOP MANAGEMENT

Generally, a group of Company officers (e.g., chief executive officer (CEO), Chief Financial Officer (CFO)) with primary responsibility for decisions and activities affecting the Company in the long term (e.g., strategic planning); may also be referred to as “senior level management”.

UNCONTROLLED DOCUMENT

Document that is not a part of the controlled document system.  Uncontrolled documents may not be used to provide work direction or information necessary for the performance of work.

WORK INSTRUCTION

For a step in a process, the instruction(s) on how to perform that step, sufficiently detailed to allow an inexperienced person to perform the work. See Difference Between Process, Procedures and

Work Instructions

 

Manual Preparation

This section provides an introduction and guidance to help you develop and implement your company’s Policies and Procedures manual. For the company Policies and Procedures Manual to be effective, it should be easily understood by all employees. Therefore, it has to be written clearly and concisely. The objectives of this Manual are to enable and encourage continual improvement within the organization, improve communication within the company and with the company’s target market and channel partners, and increase customer satisfaction.

 

USAGE INSTRUCTIONS

  • Editing Files

THE POLICY MANUAL

  • Style and Format
  • Considerations In Writing Your Manual
  • Revisions
  • Sources of Additional Information

EFFECTIVE COMMUNICATION

  • Communication – Addressing Your Audience
  • Sexism in Writing
  • Number Usage
  • Organizing Your Thoughts
  • Outlining Technique
  • Defining the Format and Organization of Your Manual
  • Additional Sources

PROCEDURES

  • Format
  • Authorization
  • Production And Distribution
  • Revising and Updating Procedures
Sample Finance Policy Manual

Finance Policy Manual

The Finance Policy Manual covers the common finance requirements and best practices. It is intended only to provide an example of wording that might be used in a Manual of this type. This sample wording can be helpful in generating ideas for developing a manual for your own company.  However, finance policies should be drafted as appropriate and necessary to accurately reflect your company’s internal financial policies and standards.

(40 pages, 8217 words)

The purpose of the Finance Policy Manual is to document the principles and policies governing the company’s financial practices. The principles and policies provide:

  • A foundation for an effective system of internal controls;
  • Guidance in current financial activities;
  • Criteria for decisions on appropriate financial treatment; and
  • Financial management with direction and guidance with regard to policies, procedures, and reports that should be uniform throughout the company.

When consistently applied throughout the company, these principles and policies assure shareholders that financial statements issued by the company accurately reflect the status of the company’s operations. By developing and implementing this manual, the company is declaring its intent to comply with standards and regulations governing internal controls and risk management.  These issues have always been important, but they have recently received significant attention in the business environment, in the media, and in the courts.  The company’s systems of internal controls and risk management are based, in part, on the recommendations of the Committee of Sponsoring Organizations (COSO) contained in two documents, “Internal Control – an Integrated Framework” and “Enterprise Risk Management Framework.” Properly designed, implemented, and maintained internal controls are a system of checks and balances, intended to:

  • Ensure the effectiveness of the financial management system (FMS);
  • Ensure that financial objectives are met;
  • Identify irregularities;
  • Prevent or minimize waste, fraud, and abuse; and
  • Assist in resolving discrepancies that may be accidentally introduced into the operations of the business.

All additional departmental or functional policies and procedures written should conform to or parallel the policies in this manual.  All changes to policies and procedures must be reviewed to ensure that there are no conflicts with policies stated in the Finance Policy Manual. This policy manual covers:

PURPOSE

SCOPE

RESPONSIBILITY

EXCLUSIONS

  • Accounting
  • Payroll
  • Information Systems.
  • Security Planning
  • Disaster Recovery

 

MANAGEMENT RESPONSIBILITY

FINANCE ORGANIZATION

  • Finance Department Organization Chart
  • Chief Financial Officer Responsibilities
  • Treasury Responsibilities
  • Controller Responsibilities

 

MANAGEMENT COMMITMENT

FINANCE POLICY

PLANNING

  • Finance Objectives
  • Financial System Planning
  • Referenced Procedures

 

RESPONSIBILITY, AUTHORITY, AND COMMUNICATION

  • Responsibility and Authority
  • Management Representative
  • Internal communication
  • Referenced Procedures

 

MANAGEMENT REPORTING

  • General
  • Review input
  • Review output
  • Referenced Procedures

 

BUSINESS CONDUCT

  • Related Party Disclosure
  • Referenced Procedures

 

FINANCIAL MANAGEMENT SYSTEM

OBJECTIVES

REQUIREMENTS

  • Overview
  • Internal Controls
  • Audit Opinions
  • Referenced Procedures

 

TRANSACTIONS

  • Authorization
  • Timing
  • Amounts
  • Accuracy

 

DOCUMENTATION

  • Finance Policy Manual
  • Control of Documents
  • Control of Records
  • Referenced Procedures

 

SECURITY

  • Continuity
  • Physical Security
  • Disaster Recovery
  • Information Security
  • Referenced Procedures

 

PROCESSES AND CONTROL

ADMINISTRATIVE PROCEDURES

 

RAISING CAPITAL PROCEDURES

FINANCIAL STATEMENTS PROCEDURES

INTERNAL CONTROL PROCEDURES

RESOURCE MANAGEMENT

PROVISION OF RESOURCES

HUMAN RESOURCES

  • Finance Staff
  • Competence, Awareness, and Training
  • Separation and Supervision of Duties
  • References

 

INFRASTRUCTURE

WORK ENVIRONMENT