Accrued Liabilities Policy: Sample 2

Prepared By:

Approved By:

Revision Date:

Effective Date:

SCOPE

This policy applies to all units of Company X.

POLICY

• Accrued liabilities must be established on a consistent basis in each accounting period for the portion
of known or estimated future expenditures which are properly allocable to current period activities, but
which may not yet be formally payable.
• Amounts which are expected to be payable within one year should be recorded in the current
accounts. Amounts which are expected to be payable after one year should be set up as long-term
liabilities.
• In recording accrued liabilities, it is especially important that appropriate account titles be used, such
as Wages Payable, Estimated Property Taxes Payable and Interest Payable.
• Accrual balances and provisions should be evaluated monthly in relation to actual expenses incurred
and expenditures anticipated in order to avoid distorting adjustments at year end.
• Accruals should not be recorded for general contingencies for unknown future expenditures.

RESPONSIBILITY

The corporate controller is responsible for the establishment and interpretation of policies pertaining to the
recording and reporting of accrued liabilities. The chief operating officer of each unit and all managers
within Company X are responsible for the implementation and administration of this policy within their
respective organizations.

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