Business Valuation Procedure | RC1020

Business Valuation Procedure

The Business Valuation Procedure describes how to regularly conduct business valuation assessments in order to monitor valuation and multipliers in relation to valuation and multiplier targets, provide general and industry specific economic information that affects the business; provide information for business strategic planning, and use worth in equity to raise capital. This procedure applies to Top Management and the Finance Department. (14 pages, 1093 words)

Business Valuation Responsibilities:

Top Management is responsible for setting valuation schedules, setting valuation targets, for reviewing valuation results in relation to targets, and for monitoring and adjusting business plans and strategies in order to reach valuation targets.

The CFO (Chief Financial Officer) is responsible for executing the valuation process, recording valuation plans, results, improvement plans, and for providing all needed information for the valuation process.

Business Valuation Definitions:

Valuation – The process of assessing or estimating the value of a business. There are several valuation approaches, including income (based on expected future cash flow), market (based on value of similar businesses), and asset (based on the net equity of the value of the business assets). The most appropriate method depends on the context or reason for the valuation. Generally, the income method of valuation is most practical for solvent, ongoing businesses.

Multiplier – Generally, the profits/earnings ratio of a business that plays an important role in income method valuation.

Business Valuation Procedure Activities

  • Business Valuation Plan
  • Business Valuation Steps
  • Company Valuation Review
  • Reaching Valuation Targets

Business Valuation Procedure Forms


Financial Continuity Planning Procedure | FA1020

Financial Continuity Planning Procedure

In the event of Financial operations disruption, the Financial Continuity Planning Procedure ensures the Finance department’s ability to return to normal functional capability with minimal downtime and minimal adverse effects. This procedure applies to the company’s Financial Management System (FMS). It includes the forming of a continuity team and plan to quickly resume mission-critical functions. (10 pages, 1939 words)

Members of the continuity team should be trained in their specific duties early in the original continuity plan implementation. As other personnel are moved into the continuity team, they should receive specialized training immediately. The continuity team leader should also receive periodic refresher training.

Financial Continuity Planning Responsibilities:

The CFO (Chief Financial Officer) is responsible for ensuring development and implementation of a financial continuity plan for Finance and for ensuring that the continuity plan is in force; this includes ensuring that the plan is tested and verified periodically.

The CFO is also responsible for reporting to the CEO and the Board of Directors (or Advisory Board) on continuity plan test results and recommending improvements to the plan. (If the company is large enough, the CFO may assign responsibilities to a continuity manager.)

The Board of Directors is responsible for reviewing and approving the Finance department’s continuity plan.

The Continuity Team Leader is responsible for implementing the plan and participating in plan testing.

Financial Continuity Planning Definitions:

Continuity plan – Plan to ensure that the effects of an extended disruption (e.g., natural disaster) are minimized and the organization is able to maintain or quickly resume mission-critical functions.

Downtime (or “down time”) – Duration of an equipment or system stoppage – scheduled or unscheduled – measured from the moment of failure to the moment at which normal operations resume.

Financial Continuity Planning Procedure Activities

  • Financial Continuity Planning
  • Implementing the Financial Continuity Plan
  • Testing the Financial Continuity Plan
  • Maintaining and Updating the Financial Continuity Plan

Financial Continuity Planning Procedure Forms


Financial Document Control Procedure | FA1030

Financial Document Control Procedure

The Financial Document Control Procedure defines the methods and responsibilities for controlling documents used to provide work direction or set policy. It describes processes for document revision, approval and distribution. The procedure applies to all documents required by the Financial management system (FMS) including documents of internal and external origin. (12 pages, 2235 words)

Financial Document Control Responsibilities:

Document Control is responsible for controlling all FMS procedures and instructions, as well as all internal and external documents required by the FMS. Document Control is also responsible for ensuring that documents conform to applicable standards.

Department Managers are responsible for ensuring that the latest versions of relevant documents are available at the point(s) of use, that these documents are legible, and that they are understood and followed. They are also responsible for reviewing and responding to document change requests in a timely manner.

Top Management is responsible for reviewing requests and giving final approval to FMS-related procedures.

Financial Document Control Definitions:

Controlled Document – Document that provides information or direction for performance of work within the scope of the FMS.  Characteristics of control include such things as revision number (letter), signatures indicating review and approval, and controlled distribution.

Document – Information and its supporting medium (paper, magnetic, electronic, optical, photograph, or a product sample.)

External Document – Document originating outside the Company (e.g., customer drawings, industry and/or international standards, suppliers’ equipment maintenance manuals, or references) that provides information or direction for performing activities within the scope of the FMS.

Finance Management System (FMS) – Ordered, well-documented system of policies, processes, and procedures, designed to assure compliance, conformity, and security; demonstrate a system of internal controls; and promote continual improvement of financial processes.

Form – Printed, typed, or electronic document with blank spaces for insertion of required or requested information (e.g., tax form, order form).

Financial Document Control Procedure Activities

  • Finance Procedure Format
  • Finance Work Instructions (WI)
  • Financial Forms
  • Financial Document Approval
  • Temporary Financial Document Changes
  • Financial Document Revisions
  • External Finance Documents
  • Finance Document Distribution

Financial Document Control Procedure References

  • Sarbanes-Oxley Act
  • Electronic Records; Electronic Signatures, Title 21, Code of Federal Regulations (21 CFR part 11)
  • Electronic Signatures in Global and National Commerce Act, Public Law #106-229
  • Electronic Signatures Regulations 2002, statutory Instrument 2002 No. 318 (UK)

Financial Document Control Procedure Forms


Financial Record Control Procedure | FA1040

Financial Record Control Procedure

The Financial Record Control Procedure both demonstrates conformance to specified customer, regulatory, and other requirements and explains how records are maintained.

This procedure applies to all records- regardless of form- that pertain to the company’s finance-related activities and are required to demonstrate implementation of and conformance to the company’s Financial Management System (FMS). (16 pages, 3597 words)

Financial Record Control Responsibilities:

Financial Management is responsible for maintaining a list of Finance records and for controlling record distribution.

All Finance personnel are responsible for ensuring that the financial records they generate are legible, accurate, and timely.

Financial Record Control Definitions:

Controlled document – Document that provides information or direction for performance of work and is part of a controlled document system.  Characteristics of control include such things as revision number (or letter), signatures indicating review and approval, and controlled distribution.

Document – Information and its supporting medium; the medium may be paper, magnetic, electronic, optical, photograph, or a sample of the Company’s product.

Form – Document or web form with spaces in which to write; business document that typically contains some predefined data and designated, labeled areas for filling in data.

Record – Anything retained to provide and preserve permanent evidence of or information about an event (e.g., document, photograph, nonconforming product sample).

Financial Record Control Procedure Activities

  • Identification of Financial Records
  • Financial Record Generation
  • Financial Recordkeeping and Traceability
  • Financial Record Retention and Long-Term Storage
  • Financial Record Maintenance

Financial Record Control Procedure References

  • Public Company Accounting Reform and Investor Protection Act of 2002
  • Right to Financial Privacy Act
  • Small Business Paperwork Relief Act
  • Guide to Retention Requirements
  • IRS Revenue Procedure 98-25- Records Retention

Financial Record Control Procedure Forms


Leasing Procedure | RC1070

Leasing Procedure

The Leasing Procedure ensures leasing and buying decisions are made after considering and comparing options of ownership, especially in calculating total equipment costs, tax benefits, and economic life. The procedure involves making lease options based on the overall good of the company, and in alignment with the overall financial strategies and objectives. The procedure applies to the Finance Department and any department requesting capital equipment. (8 pages, 1402 words)

The general guide for making lease/buy decisions should be the total cost and return on investment over the life of the equipment. Occasionally, however, situational factors and concerns may override the total cost result. In these cases, the overriding factors should be clearly documented and explained. Particular factors of the lease agreement determine if the lease is considered an “operating lease” and a monthly expense or a “capital lease” and treated as a purchase (i.e., the cost is amortized over an appropriate period).

Leasing Responsibilities:

The CFO (Chief Financial Officer) is responsible for reviewing lease/buy considerations for capital equipment.

Department Managers are responsible evaluating lease/buy decisions that affect their department.

Leasing Definitions:

Present Value Interest Factor (PVIF) – Serves to discount future values to account for the opportunity cost of time.

Operating Lease – Lease that, for operational purposes, is treated as a monthly expense.

Capital Lease – A lease that for operational purposes is treated like an asset purchase.

Lease-Buy Evaluation – Considering all factors in comparing the total cost of leasing and the total cost of ownership in order to make a lease or buy decision.

Total Cost – The cost of leasing or buying equipment, including monthly payments, interest/fees, taxes, operations/ maintenance, royalties, down payments, etc.

Leasing Procedure Activities

  • Leasing Plan
  • Leasing Evaluations
  • Reviewing Lease Evaluations
  • Improving the Lease Evaluation Process

Leasing Procedure Forms


Merchant Accounts Procedure | TM1060

Merchant Accounts Procedure

The Merchant Accounts Procedure ensures the selection of a merchant account that meets the company’s need to balance best service and lowest cost. This is accomplished through planning, monitoring, and reviewing merchant accounts to guarantee the greatest value for service. This procedure applies to the Finance Department. (6 pages, 923 words)

Merchant Accounts Responsibilities:

The CFO (Chief Financial Officer) is responsible for overseeing the selection of merchant accounts and for conducting periodic reviews of merchant accounts.

Merchant Accounts Definitions:

Merchant Account – Service provider that processes credit card payments for a merchant (business), such as our Company.

Chargeback – Reversal of a credit card transaction; can be accompanied by penalties and fees to the merchant.

Discount Rate – Fee paid by the merchant as a percentage of the transaction amount (e.g., 3%).

Fixed Transaction Fee – Flat fee paid by a merchant on every transaction.

Holdback – Percentage of transactions paid by the merchant and held by the merchant account provider to cover any transaction related dispute. Funds in the “holdback account” are released to the merchant at a predetermined time (e.g., after six (6) months).

Merchant Accounts Procedure Activities

  • Merchant Account Plan
  • Merchant Account Comparisons
  • Merchant Account Comparison Review
  • Merchant Account Improvements

Merchant Accounts Procedure Forms


Stock Offerings Procedure | RC1040

Stock Offerings Procedure

The Stock Offerings Procedure helps generate the desired funds through offering company stock publicly. The procedure employs best practices in conducting stock offerings effectively and efficiently. It applies to Top Management, Finance, and Accounting Departments. (12 pages, 1693 words)

Stock Offerings Responsibilities:

Top Management is responsible for creating the stock offering plan, and overseeing/reviewing the stock offering process.

The CFO (Chief Financial Officer) is responsible for advising Top Management in the stock offering process, and for executing the stock offering process.

Department Managers should assist in the stock offering process as necessary.

The Board of Directors approves all stock offerings.

Stock Offerings Definitions:

Due Diligence – Investigation into the company by the SEC Regulators and potential investors to ensure the representations made in the company’s prospectus about its financial condition, operations, and other facets of the company are correct and verifiable.

Investment/Underwriting Bank – A bank selected by the company to advise and assist in executing an initial or secondary public offering.

Prospectus – A formal legal document providing details about a corporation; generally used during a stock offering.

SEC General Rules and Regulations of the Securities Act of 1933 (17 CFR 230, USA) – Securities law containing rules for public stock offerings.

United States Securities and Exchange Commission (SEC) – Government commission created by the Securities Exchange Act of 1934 to regulate securities markets and protect investors.

Stock Offerings Procedure Activities

  • Stock Offering Plan
  • Executing the Stock Offering
  • Reviewing the Stock Offering Process
  • Improving the Stock Offering Process

Stock Offerings Procedure References

  • Securities and Exchange Act of 1934
  • Securities Act of 1933
  • Sarbanes-Oxley Act of 2002

Stock Offerings Procedure Forms