What are policies and procedure (P&P) manuals and why should your company care about creating and maintaining them?
Policy and procedure manuals document various business processes through a universal form of communication. To illustrate their importance, think of the following examples. A key employee has just quit on short notice and you need to hire someone quickly. You’ve found a replacement but don’t know the intricacies of the predecessor’s job duties and don’t have much time to train the new hire. If you have well documented policies and procedures for the various job functions, the new hire will be set up for success and you will have saved time and cost related to training as well as reduced potential errors due to ignorance. This will also give you the freedom to terminate employees you would have been dependent upon without losing significant amounts of job specific knowledge.
P&P’s also give you a standardized way to communicate important information to a large number of people at a relatively low cost. If all of your employees need to be aware of the Safety & Disaster Plan or the Ethics & Compliance hotline, these are important policies that should be accessible to all and acknowledged. Not to mention, sometimes law requires certain policies to be formally documented in writing. Along the same lines, suppose you are going to be audited. One of the first requests will be to see the policy and procedure manual for the area under review. This documentation is what the auditors will use as their guidelines for testing. If you are not following the P&P, this could be an audit finding. Additionally, the P&P document will be audited itself to determine if it is complete and serves its intended purpose. Lastly, if there is no policy in place, the auditors will have to spend additional time and cost observing and researching the process on their own in order to create standards to audit against and ultimately provide a relevant opinion in the audit report.
As you can see, taking time to document your process can help you avoid painful and costly situations in the future. As a good measure, also make sure to keep your manuals current by reviewing and updating them as necessary. For further assistance in these areas, contact TGG Accounting.Written by: Andrea Murray TGG Accounting