AccountingBest Practices
Fifth Edition
Steven M. Bragg
John Wiley & Sons, Inc.
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AccountingBest Practices
Fifth Edition
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AccountingBest Practices
Fifth Edition
Steven M. Bragg
John Wiley & Sons, Inc.
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This book is printed on acid-free paper.
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www.wiley.com
To John DeRemigis, who convinced me that this was a good idea
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About the Author
Steven Bragg, CPA, CMA, CIA, CPM, CPIM, has been the chief financial offi-cer or controller of four companies, as well as a consulting manager at Ernst &Young and auditor at Deloitte & Touche. He received a masters degree in financefrom Bentley College, an MBA from Babson College, and a bachelors degree ineconomics from the University of Maine. He has been the two-time president ofthe Colorado Mountain Club, and is an avid alpine skier, mountain biker, and cer-tified master diver. Mr. Bragg resides in Centennial, Colorado. He has written thefollowing books published by John Wiley & Sons:
Accounting and Finance for Your Small Business
Accounting Best Practices
Accounting Control Best Practices
Accounting Reference Desktop
Billing and Collections Best Practices
Business Ratios and Formulas
Controllers Guide to Costing
Controllers Guide to Planning and Controlling Operations
Controllers Guide: Roles and Responsibilities for the New Controller
Controllership
Cost Accounting
Design and Maintenance of Accounting Manuals
Essentials of Payroll
Fast Close
Financial Analysis
GAAP Guide
GAAP Implementation Guide
Inventory Accounting
Inventory Best Practices
Just-in-Time Accounting
Managing Explosive Corporate Growth
Outsourcing
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Payroll Accounting
Payroll Best Practices
Revenue Recognition
Sales and Operations for Your Small Business
The Controllers Function
The New CFO Financial Leadership Manual
The Ultimate Accountants Reference
Also:Advanced Accounting Systems (Institute of Internal Auditors)
Run the Rockies (CMC Press)
viii About the Author
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Free On-Line Resources by Steve Bragg
Steve issues a free accounting best practices newsletter as well as frequent addi-tional blog postings, and an accounting best practices podcast. You can sign up forfree delivery of both at www.stevebragg.com.
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Contents
Preface xiii
Chapter 1 Introduction 1
Chapter 2 How to Use Best Practices 4
Chapter 3 Accounts Payable Best Practices 18
Chapter 4 Billing Best Practices 81
Chapter 5 Budgeting Best Practices 103
Chapter 6 Cash Management Best Practices 129
Chapter 7 Credit and Collections Best Practices 145
Chapter 8 Commissions Best Practices 187
Chapter 9 Costing Best Practices 200
Chapter 10 Filing Best Practices 221
Chapter 11 Finance Best Practices 244
Chapter 12 Financial Statements Best Practices 266
Chapter 13 General Best Practices 295
Chapter 14 General Ledger Best Practices 333
Chapter 15 Internal Auditing Best Practices 352
Chapter 16 Inventory Best Practices 370
Chapter 17 Payroll Best Practices 414
Chapter 18 Policies in Support of Best Practices 445
Appendix A Summary of Best Practices 454
Appendix B Supplier Contact Information 471
Index 483
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xii Contents
IMPORTANT NOTE:Because of the rapidly changing nature of information in this field, this prod-uct may be updated with annual supplements or with future editions. Pleasecall 1-877-762-2974 or e-mail us at [email protected] to receiveany current update at no additional charge. We will send on approval anyfuture supplements or new editions when they become available. If you pur-chased this product directly from John Wiley & Sons, Inc., we have alreadyrecorded your subscription for this update service.
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Preface
The accounting department is a cost center. It does not directly generate revenues,but rather provides a fixed set of services to the rest of the company, and is askedto do so at the lowest possible cost. Consequently, the accounting staff is calledupon to process transactions, write reports, create new processes or investigateold oneswhile doing so as an ever-shrinking proportion of total corporateexpenses.
This cost-based environment is a very difficult one for most accountants, fortheir training is primarily in accounting rules and regulations, rather than in howto run a very specialized department in a cost-effective manner. They find a fewideas for improvements from attending seminars or perusing accounting or man-agement magazines, but there is no centralized source of information for them toconsult that itemizes a wide array of possible improvements. Hence the need f
