Accounting procedure

Long-term activity of a legal entity always requires order in document flow, as it involves the work of a wide range of employees and the division of labor. One of the company’s bodies that conducts full-scale data recording is the accounting department which performs the following task:

• formation of documented systematized information about objects required by law,
• in accordance with the requirements established by law,
• preparation of accounting (financial) statements based on it.

The correct accounting largely determines the well-being of an economic entity. The rules of its conduct in Russia have a lot in common with other countries. Russian Federation is a party to the agreement on the International financial reporting system. In addition, Russian Federation has a standard of Accounting Regulations (PBU). The basis of the national legislation is the Federal Law” About accounting” No. 402-FZ, which is uniform for the whole country. This document prescribes the basic rules of accounting and defines all the stages of this process.

Accounting procedures are established taking into account principles such as continuity and consistency of income and expenses, as well as the interests of the state tax authorities.

Accounting procedures and functions

Transactions related to property and finance must be documented. The law requires mandatory documentation procedures not only from commercial firms, but also from individual entrepreneurs.

Accounting begins from the moment of creation (immediately after registration) and until the very last moment – the time of exclusion from the state register.

General directors of legal entities are responsible for maintaining financial records. Accounting can be represented by a single person or body or by an outsourcing structure under a contract for the provision of relevant services.

Under accounting, it is mandatory to ensure that:

1. Sufficient completeness of the recorded indicators (information).
2. Unambiguity of indicators.
3. Rationality and efficiency.

The accounting department is responsible for documenting all business transactions. The primary document includes current information about the fact of the transaction, operations, as well as other significant circumstances associated with the economic situation of the business entity.

Working documentation

The time of primary accounting is the time of the transaction or the period immediately following it, in case if the procedure could not be recorded in a timely manner.

The information that is the primary accounting data is contained in the documents:

• Acts officially certifying the facts of the provision and receipt of services by the parties in the framework of transactions.
• Consignment notes, which include a list of goods that are transferred between the parties.
• Payroll statements and documents confirming labor and social benefits.
• Cash documents: receipts, orders, orders, advance reports.

The information obtained from these documents should be reflected in the registers intended for this purpose, grouped by accounts and time.

Financial statements are a set of documented information about the material and technical base, the balance sheet, as well as all reports on cash flows (incoming and outgoing flows, as well as the movement of assets within the enterprise). In its entirety, it includes authentic information based on the information obtained from the registers.

Inventory management

One of the areas of accounting is the implementation of an inventory of the material assets and liabilities of an economic entity on the balance sheet.

When establishing the fact of non-compliance of the actual circumstances with the data of the register, the authorized representatives of the organization are required to enter information about this non-compliance in the official accounting documents. That is, violations must be recorded in accordance with the established procedure.

The requirements for the mandatory inventory procedure are provided for the following cases:

• leasing of property to other organizations, entrepreneurs or individuals;
• transfer of material liability to other persons;
• the facts of misappropriation of property or theft of it in another way, as well as damage to property or its improper sale, have been revealed;
• preparation of planned financial statements by the accounting department for the next reporting year;
• reorganization of a legal entity or termination of its functioning in the form prescribed by the procedure.

Inventory can be carried out with the involvement of specialists from other departments.

Chief Accountant as a second person

The Chief accountant is directly responsible for the performance of the function of the body. The basis for appointing him to the position and removing him from it are the decisions of the general director of the organization, and these may be individual decisions.

The Chief Accountant has the following responsibilities and functions:

• organization of the accounting policies carried out by him and other accountants;
• execution of accounting procedures, reflection of transactions in documents;
• organization of control over the regulated movement of property and assets of a legal entity;
• reporting to management and ensuring that regulatory authorities and auditors have access to materials on demand;
• sole signing of documents related to monetary settlement, which is the only basis for recognizing the validity of these documents.

Stages of working with documentation

Stages of accounting:

1. Processing of existing transactions and deals.
2. Preparation of internal documentation or acceptance of documents from the external (primary documentation) with further registration.
3. Grouping of data in accordance with the system of accounting accounts, the definition of accounting transactions, using the double entry method according to the selected accounting form. The information is entered in registers.
4. Summary of all indicators with the preparation of financial statements in strictly defined forms. This reporting includes all the main indicators of economic activity and property status.

These stages are common to any organization. Each of them can be divided into several steps, depending on the type of a particular enterprise and its functional features.

Reporting and government

The rules of accounting can be established by both the state and the company itself.

Accounting for data and their generalized presentation allows you to:

• facilitate the process of determining the tax base;
• monitor compliance with legislation.

For the business entity itself, the order of relations, including the management of cash flows – is the key to confidence in the future. Improving the internal order of accounting in the enterprise is quite an expected step for any developing company. The correctness of the documentation of financial and economic turnover depends on the time of inspections and the functioning of the enterprise.