The Future of Work

The What, Why, and How of Standard Operating Procedures

About the Author: Katie Thomas, CPA, is a content creator, 2021 40 under 40 CPA Practice Advisor recipient, and the owner of Leaders Online, where they help accounting professionals increase their impact, influence, and income through thought leadership and digital marketing. Feel free to visit Leaders Online or connect with her on LinkedIn to get in touch with Katie. 

Have you ever played a game of telephone and by the time you get to the last person, the phrase you started with was completely different? This is similar to what happens when you don’t have standard operating procedures in place for your accounting department. Give 10 employees a task and they’ll likely complete it 10 different ways. There’s nothing wrong with finding creative solutions and thinking outside of the box, but if you don’t have standardized procedures, there’s a good chance that you’ll have different results every time. 

In the accounting world, your work must be consistent and reliable. Having a standardized process for completing tasks can help you achieve that goal. In this article, we’ll break down exactly what standard operating procedures are, why they are important, and how to create them. 

What are Standard Operating Procedures (SOPs)?

Standard operating procedures (SOPs) are written instructions on how to carry out a specific task, such as closing the books or bill pay. They outline step-by-step processes that must be followed to complete the task. They can be created for virtually any task, whether it’s implementing new technology or performing day-to-day activities. While this article focuses on SOPs for accountants, it’s important to note that SOPs are crucial for all departments across an organization.

Why SOPs Are Important for Accounting Departments 

Well-defined procedures serve as controls. They ensure that processes are carried out in a certain way to maintain compliance and standards. Implementing SOPs can benefit accounting departments in many ways. When clearly defined, SOPs can:

  • Ensure Consistency: The goal of SOPs is to ensure that tasks are always carried out the same way to improve efficiency and ensure consistency in work quality. If the same steps are followed to complete a task, you’ll get consistent results. When SOPs are clear and thorough, any employee can follow them to get the same outcome.
  • Remain Compliant: SOPs are also an effective way to ensure compliance with both industry regulations and company policies. As accountants, we know how important it is to ensure the business remains in compliance with laws and regulations. SOPs can help support our compliance efforts. 
  • Streamline Onboarding: Having a standardized process for onboarding new hires will make the process smoother and more streamlined. SOPs also make the delegation process much easier. When I started working in public accounting, my supervisor had to explain everything to me. There were no SOPs available. As soon as I recognized that I too would be tasked with training the people below me, I immediately started documenting my processes. This made training the next round of new hires so much easier than it was for my supervisor training me. 
  • Prepare Companies for Growth: When processes are clearly defined, they can be replicated and scaled not only with new employees but also at new locations. If the company opens a new location, its accounting department can use your SOPs to maintain the same level of consistency and quality.
  • Mitigate Tribal Knowledge: Tribal knowledge is, essentially, information that is unknown to other employees and members of the company. For example, maybe there’s only one employee at the company who knows how to do a particular thing. Their process and knowledge aren’t documented, so if they leave the company, who will take over that task? SOPs prevent this scenario by ensuring that processes are clear and well-documented so that other employees can step into their shoes. 

The key to maximizing these benefits is to create SOPs that work well for your team. So, let’s dive into how you can do that now. 

Creating SOPs That Make Sense for Your Team

Creating SOPs requires diligence and prep work. However, some extra work now will save accounting departments a lot of time in the future. The process of creating these procedures should be something like this:

Determine the Processes You Want to Document

What processes would you like to document? Add them to a list. The processes can include numerous tasks, such as:

  • Entering transactions
  • Paying bills
  • Closing the books each month
  • Etc.

Next, you can move on to format.

Decide the Right Format for Your SOPs

Once you have the list of processes that you want to standardize, it’s time to determine the format of the SOP. Will the SOP include:

  • Diagrams?
  • Checklists?
  • Flowcharts?
  • Videos?
  • Etc.

Additionally, you need to have a central location for all SOPs to be stored. It’s important that both current SOPs users and future SOP users can find them easily. 

Tips on Choosing the Right SOP Format

Here are a few tips for choosing the correct format for your procedures:

  • Checklists should be detailed. You can create multi-level checklists with in-depth instructions for each task item.
  • Flowcharts or diagrams may make the most sense when multiple variables determine how the process will reach completion.
  • Videos and screen recordings can help someone follow the SOP precisely and are something to consider for complex processes. One of my favorite screen recording tools is Loom

Review Processes

By this point, you know what processes you want to document and how you’ll document them. Now it’s time to begin reviewing the processes. Start by speaking with the person(s) that handle these processes to:

  • Gather first-hand input on how the process is completed
  • Uncover different techniques for completing tasks or opportunities for automation
  • Remove any redundant processes

Once you have the information from the individual(s) in charge of the task, you can then move on to the next step.

Break The Process Into Steps

Now comes the fun part. It’s time to break the processes into steps. Every step should have detailed information on how to complete it correctly. Your goal is to provide as much detail for the steps so that another team member can replicate the procedure without error.

The idea is to create SOPs that safeguard a business. For example, if a team member is out of the office for an extended period of time, the SOPs should allow someone else to fill in their role without any business interruptions. 

Additionally, when creating these steps, don’t be afraid to find new ways to optimize how tasks are currently completed.

Implementing the SOPs

SOPs can now be slowly integrated into the operations. Once a first draft is created, it’s time to test them out. All relevant internal stakeholders should receive the first draft and provide feedback using them. 

Working through the SOPs in a real-world environment will empower accountants to:

  • Fine-tune SOPs
  • Recommend changes
  • Test the SOP

Creating a feedback loop at this point, and updating SOPs over time as necessary, will be important. Any internal team members that use the procedures should have a way to provide feedback. Often, the procedures will change over time, and the SOPs will need to be updated.

Wrapping Up

In conclusion, having standard operating procedures in your accounting department is vital. Whether you’re looking to scale, ensure consistency, stay in compliance, or successfully navigate employee changes, your SOPs will be the backbone to making these efforts a success. Use the steps above to start creating and implementing them today.

Katie Thomas, CPA

Katie Thomas, CPA is a content creator, 2021 40 under 40 CPA Practice Advisor recipient, and the owner of Leaders Online, where they help accounting professionals increase their impact, influence, and income through thought leadership and digital marketing. To get in touch with Katie, feel free to visit Leaders Online or connect with her on LinkedIn.