Table of Contents-Accounting Procedures

Chapter 1 - Overview of Accounting Procedures...... 1 The Nature of a Procedure...... 1 The Need for Procedures...... 1 The Number of Procedures to Develop...... 3 Obtaining Buy-In...... 3 The Mechanics of Procedure Production...... 4 Procedure Design Tips...... 6 Dissemination of Procedures...... 8 Retrieval of Procedures...... 9 Procedural Updates...... 10 Enforcement of Procedures...... 10 Deviations from Procedures...... 11 The Procedure Writer...... 12 The Need for Policies...... 12

Chapter 2 - Order Entry Procedures...... 15 Forms: Sales Order Form...... 15 Forms: Return Merchandise Authorization...... 16 The Order Entry Procedure (Manual System)...... 17 The Order Entry Procedure (Integrated System)...... 20 The Granting of Return Merchandise Authorizations...... 22

Chapter 3 - Credit Procedures...... 26 Forms: Sales Order Form...... 26 Forms: Credit Application...... 27 The Credit Examination Procedure (Manual System)...... 28 The Credit Examination Procedure (Integrated System)...... 34

Chapter 4 - Shipping Procedures...... 40 Forms: Sales Order Form...... 40 Forms: Pick List...... 41 Forms: Packing Slip...... 42 The Shipping Procedure (Manual System)...... 43 The Shipping Procedure (Integrated System)...... 47 The Drop Shipping Procedure...... 50 Chapter 5 - Customer Billing Procedures...... 52 Forms: The Invoice...... 52 Forms: The Credit Memo...... 54 Forms: The Statement of Account...... 58 The Billing Procedure...... 59 Additional Manual Billing Steps...... 64 Variations on the Billing Procedure...... 66 The Credit Memo Procedure...... 69 The Statement of Account Procedure...... 71 Cash Sales...... 73

Chapter 6 - Collection Procedures...... 77 Forms: The Credit Memo Approval Form...... 77 The Collection Procedure...... 78 The Credit Memo Request Procedure...... 83 The Allowance for Doubtful Accounts Calculation Procedure...... 83

Chapter 7 - Cash Receipts Procedures...... 87 Forms: Sales Receipt...... 87 Forms: Mailroom Check Receipts List...... 88 The Cash Receipts Processing Procedure...... 89 The Check Receipts Processing Procedure...... 91 The Process Credit Card Receipts Procedure...... 95 The Process Lockbox Receipts Procedure...... 99 The Remote Deposit Capture Procedure...... 99

Chapter 8 - Purchasing Procedures...... 104 Forms: Purchase Requisition...... 104 Forms: Purchase Order...... 106 Forms: Blanket Purchase Order Release...... 107 The Purchase Requisition Procedure...... 107 The Purchasing Procedure...... 109 Variations on the Purchasing Procedure...... 113 The Bidding Procedure...... 114

Chapter 9 - Procurement Card Procedures...... 118 Forms: Reconciliation Checklist...... 118 Forms: Missing Receipts Form...... 119 Forms: Disputed Expenditure Form...... 120 Forms: Lost Card Notification Form...... 121 The Card Reconciliation Procedure...... 122 The Lost Card Procedure...... 125

Chapter 10 - Expense Report Procedures...... 130 Forms: Expense Report Form...... 130 The Expense Report Submission Procedure (Manual System)...... 131 The On-Line Expense Report Submission Procedure...... 136 The Expense Report Review Procedure...... 137

Chapter 11 - Petty Cash Procedures...... 142 Forms: Petty Cash Transfer Form...... 142 Forms: Petty Cash Voucher...... 143 Forms: Petty Cash Book...... 144 Forms: Petty Cash Reconciliation...... 145 The Petty Cash Funding Procedure...... 146 The Petty Cash Disbursement Procedure...... 148 The Petty Cash Review Procedure...... 150

Chapter 12 - Receiving Procedures...... 154 Forms: Receiving Report...... 154 Forms: Return Merchandise Authorization...... 155 Forms: RMA Receipt Notification...... 156 The Receiving Procedure (Manual System)...... 157 The Receiving Procedure (Computerized System)...... 160 The Receiving Returned Goods Procedure...... 164

Chapter 13 - Accounts Payable Procedures...... 168 Forms: Check Request Form...... 168 Forms: Adjustment Letter...... 169 The Supplier Invoice Processing Procedure (Manual System)...... 170 The Supplier Invoice Processing Procedure (Integrated System)...... 174 Accounts Payable Credits Processing Procedure...... 175 The Evaluated Receipts Processing Procedure...... 177 The Check Payment Issuance Procedure...... 179 Payment Alternatives...... 183 The Void Checks Procedure...... 183 Chapter 14 - Inventory Procedures...... 187 Forms: Inventory Count Tag...... 187 The Physical Inventory Count Procedure...... 188 The Cycle Counting Procedure...... 192 The Obsolete Inventory Investigation Procedure...... 194 The Inventory Valuation Procedure...... 197

Chapter 15 - Payroll Procedures...... 203 Forms: For the New Hire...... 203 Forms: The Timecard...... 205 Forms: The Paycheck and Remittance Advice...... 208 The Adding an Employee Procedure...... 209 The Timecard Data Collection Procedure...... 211 The Commission Calculation Procedure...... 215 The Payroll Processing Procedure...... 217 The Employee Payment Procedure...... 222

Chapter 16 - Fixed Asset Procedures...... 227 Forms: Capital Request Form...... 227 Forms: Asset Disposal Form...... 228 The Capital Request Form Completion Procedure...... 229 The Capital Request Form Analysis Procedure...... 232 The Post Installation Review Procedure...... 236 The Asset Recognition Procedure...... 238 The Interest Capitalization Procedure...... 240 The Fixed Asset Record Creation Procedure...... 242 The Asset Revaluation Procedure...... 245 The Asset Exchange Procedure...... 248 The Depreciation Procedure...... 250 The Impairment Analysis Procedure...... 252 The Asset Retirement Obligation Procedure...... 254 The Intangible Asset Analysis Procedure...... 257 The Asset Tracking Procedure...... 260 The Asset Disposal Procedure...... 264

Chapter 17 - Treasury Procedures...... 269 Forms: Cash Forecast...... 269 Forms: Investment Quote Sheet...... 270 Forms: Drawdown/Repayment Form...... 271 The Cash Forecasting Procedure...... 272 The Funds Investment Procedure...... 275 The Cash Concentration Procedure...... 278 The Line of Credit Borrowing Procedure...... 281 The Foreign Exchange Hedging Procedure...... 283

Chapter 18 – Closing the Books Procedures...... 289 Closing the Books – Private Company...... 289 Closing the Books – Public Company...... 296

Answers to Chapter Questions...... 301

Glossary...... 319

Index...... 325

Exam Score Sheet…………………………………………………………………………………………….…….329

CPE Exam…………………………………………………………………………………………………………..330