Accounting policies are important to any business to maintain consistency and to set up a standard for decision-making. For example, the importance of such a policy is due to the fact that in larger companies, accountants may determine different accounting treatments for the same transaction. To avoid such problems, accounting policy acts as a roadmap for the application of generally accepted accounting principles and removes variance in employee judgment.
Accounting policies are usually approved by top management and do not change much throughout the years. They are developed for long-term use, reflecting the values and ethics of the company.
Accounting policies can be about any financial matter, such as consolidation of accounts, depreciation methods, goodwill, inventory pricing and research and development costs, etc. Policies may vary with individual industries and sectors.
Accounting policies are not the same as accounting principles and standards. Accounting standard is describe as a principle that governs current accounting practice and that is used as a reference to determine the appropriate treatment of complex transactions. Accounting standard is universal for all individual industries and reflects a more general approach to accounting, which in many cases it does not take into account the specifics of the company․
Meanwhile, accounting policies are generally created for a specific company by their own management, mainly including procedures and accounting standards related to the activities of the company, as well as a number of other procedures related to the specifics of the company.
Despite all this, many policies are not optional, but mandatory, especially if you are dealing with a public firm.
Thus it is clear that today it is necessary to rethink the role of accounting policies in enterprise management. Just management orientation of accounting policies is basic, because it can fully affect management processes
The relevant specialists of our company are ready to assist our partners in developing common accounting principles and policies, which will further increase the efficiency of management.
Ofelya Baghdasaryan, financial analyst in Prima Finance LLC