The accounting policy of a company is a set of accounting methods adopted by it – primary observation, cost measurement, current grouping and final generalization of the facts of economic activity.
Formation of accounting policy
The accounting policy of the organization is formed by the chief accountant or another person entrusted with the accounting of the organization, based on the Regulation «Accounting Policy of the Organization» (PBU 1/2008) and approved by the head of the organization.
At the same time, the following are approved:
- working chart of accounts of accounting, containing synthetic and analytical accounts necessary for accounting in accordance with the requirements of timeliness and completeness of accounting and reporting;
- forms of primary accounting documents, accounting registers, as well as documents for internal accounting reporting;
- the procedure for making an inventory of assets and liabilities of the organization;
- how assets and liabilities are valued;
- rules of workflow and technology for processing accounting information
- procedure for monitoring business operations;
- other solutions required for the organization of accounting.
The formation of the accounting policy is regulated by Federal Law № 402 «On Accounting» and the Regulation «Accounting Policy of the organization» (PBU 1/2008).
The accounting policy adopted by the organization is subject to registration of the relevant organizational and administrative documentation (orders, orders, standards, etc.) of the organization.
When forming the accounting policy, it is assumed that:
- the assets and liabilities of an organization exist separately from the assets and liabilities of the owners of this organization and the assets and liabilities of other organizations (the assumption of property isolation);
- the organization will continue to operate for the foreseeable future and it has no intention or need to liquidate or substantially reduce its operations and, therefore, the obligations will be settled in accordance with the established procedure (assumption of continuity of operations);
- the accounting policy adopted by the organization is applied sequentially from one reporting year to the next (assuming the consistency of the application of accounting policies);
- the facts of the organization’s business activities relate to the reporting period in which they occurred, regardless of the actual time of receipt or payment of funds related to these facts (assuming the temporary certainty of the facts of economic activity).
When interacting with government agencies, as well as in the framework of litigation, accounting policy can be used as an element of defending the interests of the company.
The importance of accounting
The formed accounting policy should ensure that:
- the completeness of the accounting record of all the facts of economic activity (the requirement of completeness);
- timely reflection of the facts of economic activity in accounting and financial statements (timeliness requirement);
- greater willingness to recognize expenses and liabilities in accounting than possible income and assets, avoiding the creation of hidden reserves (the requirement of prudence);
- accounting records reflect the facts of economic activity based not so much on their legal form as on their economic content and business conditions (the requirement of priority of content over form).);
- the identity of the analytical accounting data to the turnover and account balances of the synthetic accounting on the last calendar day of each month (consistency requirement);
- rational accounting, based on the conditions of management and the size of the organization, as well as on the ratio of the costs of generating information about a particular object of accounting and the usefulness (value) of this information (the requirement of rationality).
One of the main factors that affects the documents is the current legislation. Federal Law № 402-FZ «On Accounting» and Regulation «Accounting Policy of the Organization» (PBU 1/2008) regulate most of the features of working with accounts and transactions, but give enough freedom for an enterprise that carries out non-standard activities.
The company uses any convenient method of accounting, if it does not contradict the law. This is important when working with synthetic invoices in the context of individual product groups. The accounting policy should combine convenience for the company, the implementation of specific tasks and compliance with the requirements of the laws, including compliance with the recommendations for the preparation of tax reports.
The accounting methods chosen by the organization when forming the accounting policy are applied from the first of january of the year following the year of approval of the corresponding organizational and administrative document. At the same time, they are applied by all branches, representative offices and other divisions of the organization (including those allocated to a separate balance sheet), regardless of their location.
If the company operates according to the accepted local acts, the probability of an error or defect of a separate link is significantly reduced.
Features of the formation of the accounting policy of the organization with simplified accounting.
An organization that has the right to apply simplified accounting methods, including simplified accounting (financial) statements, in the absence of appropriate accounting methods in the federal accounting standards for a specific issue, has the right to form an accounting policy based solely on the requirement of rationality.
The accounting policy and its structure are not regulated by law. The formation of the accounting policy of the organization is assigned directly to the company. Management can independently decide what to use as a basis, and what to specify in regulatory documents.
Any accounting features must be specified in the internal documents. Including: the forms of standard documents, the procedure for electronic document management, the names of positions of responsible persons, the procedure for conducting control measures. The accounting policy is approved by the head of the organization.
The structure is determined based on the following tasks:
- Accounting for primary and secondary activities.
- Availability of key employee positions.
- Compliance with the firm’s scale and reporting.
The firm at it’s own choice selects how the accounting policy will be formed. Based on the requirements of investors and the method of raising capital, the internal document will be different for companies that are engaged in the same activity.
Features of the change
For accounting purposes, it may be necessary to change and create a new accounting policy. This is done in the following cases:
- When the current legislation changes.
- When choosing a new accounting method (switching from simplified to full accounting).
- Change of activity.
Changes in the accounting policy must be justified and executed in accordance with the procedure provided in the Regulation «Accounting Policy of the Organization» (PBU 1/2008).
Making changes to the standard template
Accounting policy is an internal document with minimal legal regulation. It is done in accordance with the laws and regulations, but gives enough freedom in the conduct of economic activities. At the minimum level, it is expressed in the presence of synthetic accounts that employees use for accounting.
At the maximum level, the organization can create internal documents for each operation, and fix them in the accounting policy. The way in which the company can exercise control over the activities of employees is specified in the regulatory framework.
The formation of the accounting policy is entrusted to the management of the enterprise. Senior management is more familiar with the tasks and goals, so they can adapt the internal document more accurately.
The application of the accounting policy starts from the beginning of the business activity of the organization. When performing any action specified in the internal regulations, the company must clearly follow the instructions and the method of conducting business accounting previously described inside.