The Value of Written Procedures


The process of preparing written procedures can identify weaknesses in internal controls. It can also help you identify redundancies in internal control or processes.

Scenario: You perform the accounts payable (AP) function in a small school district. You started two months ago, and your predecessor explained everything very well related to AP processing and you were able to work alongside them for two weeks before they left. Smooth sailing…until the payroll clerk is out with a family emergency for three weeks and payroll processing falls to you, the AP clerk. There was no training for that (there was a plan to work with the payroll clerk and cover this) and now, it’s time for payroll. There are no written procedures, the payroll clerk has been with the school district for 15 years and knows the process.

To anyone looking from the outside looking in, it’s obvious that written procedures should have been prepared long ago. Too often the reality is that what is being done works, or there were written procedures from several years before that are no longer current due to system changes. The value of having a process manual doesn’t end with being helpful in keeping the day-to-day operations continuing in the face of an emergency.

The process of preparing written procedures can identify weaknesses in internal controls. It can also help you identify redundancies in internal control or processes. In either case, it could help you improve your internal controls by strengthening them or creating efficiencies. As a school district in Texas, you receive federal funds through the Texas Education Agency (TEA) and are required not only to have a financial statement audit, but a compliance audit over your federal funds as well. This type of audit requires the auditors to gain an understanding of internal controls over financial reporting and compliance with the requirements applicable to the major programs identified in the single audit. . During the process, it’s not that unusual to hear “that’s not written, but it’s understood that’s what is expected”. In these situations, this approach may have worked well for years, until, as in the scenarios mentioned above, the information is not able to be passed on when needed. Although as auditors, we do hear that less often than before, there are still school districts out there that do not have written procedures, have outdated procedures, or incomplete procedures.

Written procedures are required to comply with the requirements of 2 CFR 200. However, this may not have carried over to other financial operations. It can be a daunting task to prepare a written manual or update old manuals. Approaching it from a general overview, then proceeding to each area can help you start the process. Start with the big 4 areas: Human Resources, Payroll, Accounts Payable and Purchasing. Move on to cash receipting and the monthly close process. Incorporate a calendar with due dates for payroll cycles, AP processing, weekly, monthly and annual tasks. By having these documented, you can ensure that deadlines are not missed, that taxes are paid timely, that contracts are reviewed and renewed prior to lapsing, even if the individual with the primary responsibility is unable to complete the duties.

Part of the process should also include setting a time frame to review periodically the procedures manual. A school district that is growing and changing at a fast pace should review as the number of employees involved in the various processes increases. A smaller school district that may not have had segregation of duties in key areas, may be able to implement changes with the addition of staff. A change in software systems would require that you take another look at the procedures to ensure they are still applicable. The last year, with COVID-19, changes may have been needed with employees working remotely.

Reach out to your auditors, attorneys or peer groups and utilize resources that are available, rather than starting from scratch. Many school districts have best practices or templates that can be used to help you start the process or update as your school district changes. It can be a time-consuming process initially, but the value a policy and procedure manual provides will reach far beyond ensuring day to day processes can be completed without an interruption in service in the event of an emergency.

The Texas Association of School Business Officials (TASBO) offers excellent workshops for both Developing A Fiscal Manual and a State and Federal Grants Manual. I encourage you to utilize TASBO as one of your resources. There are four offerings in May 2021, and one is scheduled during their Summer Conference in June 2021. TASBO’s State and Federal Grants (EDGAR) Manual is a comprehensive manual (approximately 90 pages) that specifically focuses on state and federal grant management that includes EDGAR topics such as: Pre and Post-award requirements such as Property Standards, Procurement Standards, and Financial Management. TASBO’s Fiscal Manual includes general operating procedures that set the foundation for fiscal management. The Fiscal Manual template is a concise (approximately 30 pages) document that is designed to address general fiscal guidelines using an A-Z list of fiscal topics.

May 7, 2021 – State and Federal Grants Manual Workshop - Kilgore (In-Person or Remote)

May 11, 2021 – Developing a Fiscal Manual Workshop (Online)

May 12, 2021 – State and Federal Grants Manual Workshop - (Online)

May 21, 2021 – State and Federal Grants Manual Workshop – Fort Worth (In-Person or Remote)

June 14-16, 2021 - Summer Solutions Conference: Fiscal/State & Federal Grants (EDGAR) Manual (In-Person)

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