What are Accounting Policies?

Accounting policies are the internal controls of a company which stipulate the methods by which the books will be kept. Accounting policies are the agreed-upon accounting methods, conventions, and practices of an accounting cycle.

A business must establish guidelines and training to ensure that accounts are kept in ways that satisfy their needs for documentation, security, liquidity, management, and the observation of applicable laws.

Failure to communicate these policies and to follow-up on their usage can result is terrible financial problems for a business, including legal action from business partners, clients, the Secretary of State, the IRS, and so on.