Policies and Procedures: A Roadmap to Success

CPAs & Advisors

Bradley DeVries
Bradley DeVries CPA, CAE Managing Principal CPAs & Advisors

Print Friendly, PDF & Email

Regardless of the size of your nonprofit organization, well-documented policies and procedures are an essential component to your continued success. Most nonprofit organizations are designed to carry on their missions beyond the tenure of their current directors, employees and trustees. With that in mind, a well-documented Policies and Procedures manual should serve as a roadmap to operating at your organization’s peak potential. Additionally, get the most mileage from your efforts by using the policies and procedures as a tool to:

  • Train new employees, and fill in the gaps after an employee’s unexpected departure
  • Define roles and responsibilities regarding your organization’s internal controls
  • Hold employees accountable to roles and responsibilities, including frequency of performing certain duties
  • Reduce the risk of fraud by ensuring adequate segregation of duties and oversight
  • Comply with documentation requirements set by government grantors, in particular, awards subject to the Uniform Grant Guidance
  • Improve efficiency in the organization and streamline processes
  • Document cost allocation methodologies

With so many possible uses, it is imperative not only to establish a Policies and Procedures manual, but also keep it up to date. A good rule of thumb to ensure it is up-to-date is to review existing policies and procedures at least annually, or more frequently during periods of operational change or employee turnover. Using calendar reminders or recurring board agenda items are a great way to integrate this into the organization’s routine. During these reviews, pay particular attention to the following:

  • Unnecessary redundancies in controls
  • Controls that have been replaced by automated processes
  • Adequate documentation regarding intended flow of information and responsibilities for documenting approval and oversight
  • Appropriate dollar thresholds (including those used for capitalizing fixed assets, use of dual check signers, level of authorization needed for purchases, approval of journal entries, setting employee credit card or P-card limits, board approval of grant contracts, and determining de-minimus gift acceptance thresholds, among others)

The effectiveness of a Policies and Procedures manual requires not only diligence in keeping it up-to-date, but acceptance by those responsible for ensuring its success, including both management and boards. Therefore, management should play a key role in developing, operating and monitoring the established manual, while the board or its designee should review the effectiveness of the policies, procedures and related internal controls. While a template Policies and Procedures manual will rarely capture all the policies and procedures applicable and necessary for each organization, this Policies and Procedures to Document table can serve as a great starting point for developing or evaluating the current processes.

For more information and guidance, contact your Yeo & Yeo advisor.

Want To Learn More?

Connect with one of our professionals today.