The knowledge that lives in one person
In most owner-managed businesses, how the finance function works is not written down anywhere. It exists in the practice of one or two people who have done it for years.
That works until it does not. The finance manager resigns. Somebody is on extended leave. The business acquires a second site and the process has to be replicated. An auditor asks how a control operates and gets three different answers.
A manual is not bureaucracy for its own sake. It is the difference between a finance function that survives a departure and one that stops. And in a business preparing for sale, its absence is a diligence finding: a buyer sees key person dependency where the seller sees an experienced team.
Who needs an accounting policies and procedures manual
Businesses that have grown past the point where one person can hold the process. Businesses with more than one location, where consistency matters. Groups wanting the same treatment applied across entities.
Businesses preparing for a sale or an investment. Businesses that have experienced a control failure and want the process fixed rather than the incident closed. And businesses where a key finance person is approaching retirement or departure.
How we build your accounting policies and procedures manual
The work breaks into stages, and each one has to close before the next starts:
- Document the process as it actually runs, not as anyone believes it should. These diverge, and the divergence is usually where the risk is.
- Map the approval authorities: who can commit spend, at what level, and who releases payment.
- Set the accounting policies: revenue recognition, capitalisation, provisions, depreciation, inventory valuation, foreign currency.
- Define the month-end close as a sequence with owners and timings rather than a habit.
- Document the controls that actually operate, and identify those that should but do not.
- Write the compliance calendar in, so filings sit inside the process rather than beside it.
- Keep it usable. A manual nobody reads has failed regardless of how complete it is.
- Set a review cycle, because an out-of-date manual is worse than none: it describes a process that no longer exists.
What belongs in it
Proportionate to the business. For an owner-managed company this is a working document rather than a corporate policy suite:
- Chart of accounts with guidance on what belongs where
- Accounting policies: the judgements, written down, so they are applied consistently and can be explained to an auditor
- Approval matrix: authority levels by transaction type and value
- Month-end close checklist with owners and deadlines
- Key controls: bank reconciliation, supplier setup, payment release, credit approval
- Compliance calendar integrated rather than separate
- Record retention, including the fifteen-year rule for real estate records
- Who to contact for what, which sounds trivial and is the most used page
The accounting policies section is the one that earns its keep at audit. A documented, consistently applied policy is defensible; the same treatment applied by habit and explained retrospectively is considerably weaker.
Why it now has a tax dimension
Since corporate tax, the accounting policies in a manual are no longer purely internal.
Taxable income starts from accounting income, so the policies on revenue recognition, provisions, capitalisation and depreciation feed directly into a filed computation. A business that applies a policy inconsistently across periods has a computation that moves for reasons it cannot explain.
The manual is where consistency comes from. It records what was decided, when, and on what basis, which is exactly what supports a position two years later when the person who made the decision has left and the FTA is asking.
That is a change in what a manual is for. It used to be an operational document. It is now also part of the evidence base behind your tax position.
What we see go wrong most often
Where businesses get caught:
- Documenting the process as it should be rather than as it runs.
- Writing it after the key person has already left, when the knowledge has gone with them.
- Producing a corporate policy suite for a business with four people in finance.
- No review cycle, so it describes a process that no longer exists.
- Leaving accounting policies out, which is the section that matters most at audit.
- Keeping the compliance calendar separate, so filings sit outside the process.
The timing
Before you need it. The specific triggers worth acting on: a second location, a finance hire or departure, preparation for sale or investment, a control failure, or a key person approaching retirement.
Review annually, and whenever the process materially changes. An out-of-date manual actively misleads.
What your accounting policies and procedures manual includes
- A written manual sized to the business
- Documented accounting policies supporting your tax position
- Approval matrix and authority levels
- Month-end close checklist with owners
- Key controls documented, with gaps identified
- Integrated compliance calendar
- A review cycle so it stays current
What to have ready
Nothing exotic, and most of it you already have:
- Access to the finance team to document what actually happens
- Current chart of accounts
- Existing policies or procedures, however informal
- Bank mandates and authorisation limits
- Details of systems in use
- Recent financial statements, to identify the policies actually applied
How we price the accounting policies and procedures manual
Fixed fee, scoped on the size of the finance function and the number of entities or locations. A single-entity business with three people in finance is a contained piece of work.
Where the exercise identifies controls that should exist and do not, remediation is separate, and worth doing, since a documented control that does not operate is weaker than an undocumented one that does.
Related
FAQs about accounting policies and procedures manual
What is an accounting policies and procedures manual?
A written record of how your finance function operates, approval authorities, transaction processing, controls, the month-end close, and the accounting policies applied. Sized to the business rather than to a corporate template.
Why do we need one?
Because the knowledge currently lives in one or two people. A manual is the difference between a finance function that survives a departure and one that stops, and its absence is a key person dependency finding in any diligence process.
Does it help with tax?
Yes, more than it used to. Taxable income starts from accounting income, so documented policies on revenue recognition, provisions and capitalisation are part of the evidence base behind a filed computation, particularly two years later when the person who decided has left.
How long should it be?
As short as it can be while still being used. A manual nobody reads has failed however complete it is, and a corporate policy suite for a four-person finance team is the commonest way to produce one.
Should it describe what we do or what we should do?
What you actually do, first. The gap between the two is usually where the risk sits, and documenting the aspiration hides it. Once the actual process is written down, the improvements become visible and can be made deliberately.
How often should it be reviewed?
Annually, and whenever the process materially changes. An out-of-date manual is worse than none because it describes a process that no longer exists, which misleads a new joiner and an auditor equally.
When is the best time to do it?
Before you need it. The triggers worth acting on are a second location, a finance hire or departure, preparation for sale, a control failure, or a key person approaching retirement.
If the honest answer is nobody, that is the business case. A manual is what turns one person’s practice into a process the business owns.
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Last reviewed 27 July 2026. Rates, thresholds and deadlines change, the e-invoicing provider deadline has already moved once. Confirm current requirements with the Federal Tax Authority before acting, or ask us to check your position.