Accounting Policies Maturity Framework

Assess whether your accounting policies — revenue recognition, capitalisation, provisions, foreign currency and leases — are investor-grade and audit-ready, with specific gaps flagged for remediation.

How to Use This Framework

Weak accounting policies are one of the most common causes of audit adjustments, investor friction, and regulatory scrutiny for growth-stage companies. This framework assesses the maturity of your policy framework across five areas: revenue recognition, expense treatment, balance sheet and asset policies, consolidation, and financial reporting controls.

For each question, select the response that most accurately reflects your current state: 2 = Fully in place, 1 = Partially in place, 0 = Not in place. The interactive scorer below updates in real time. Total maximum is 40 points.

Be honest, not aspirational. A policy that exists as a draft document nobody follows scores 0 or 1. A policy that was written three years ago and has not been updated for new accounting standards scores 1. The value of this framework comes from scoring reality, not intent.

Assessment Areas

Area 1: Revenue Recognition

Q1. Does your revenue recognition policy address multi-element arrangements — contracts that bundle software, implementation, support, or professional services?

2 — Fully in place: written policy covering allocation of transaction price across performance obligations, reviewed by auditors 1 — Partially in place: informal approach exists but not formally documented or consistently applied 0 — Not in place: no specific policy; revenue is recognised on invoicing or cash receipt without structured analysis

Q2. Is your revenue recognition policy compliant with IFRS 15 or ASC 606, with the five-step model applied to your contract types?

2 — Fully in place: policy document explicitly references IFRS 15/ASC 606, covers all material contract types, updated within last 18 months 1 — Partially in place: aware of the standard and applying principles informally, but policy is not formally written or fully mapped to contract types 0 — Not in place: no formal policy; team has limited familiarity with IFRS 15/ASC 606 requirements

Q3. Is deferred revenue handled correctly — recognised only when performance obligations are satisfied, with the balance reconciled monthly?

2 — Fully in place: deferred revenue balance is reconciled monthly, aged, and reviewed; recognised revenue ties to delivery milestones 1 — Partially in place: deferred revenue balance exists in the system but reconciliation is quarterly or inconsistent 0 — Not in place: deferred revenue is not tracked separately or is recognised on invoicing regardless of delivery status

Q4. Is milestone-based and variable revenue (earn-outs, usage fees, performance bonuses) recognised using a documented, consistent approach?

2 — Fully in place: documented approach to variable consideration and milestone revenue; constrained to the extent it is highly probable not to reverse 1 — Partially in place: approached on a contract-by-contract basis with no formal policy; judgements made but not documented 0 — Not in place: variable revenue recognised in full when invoiced or received, without accounting for uncertainty

Area 2: Expense & Cost Treatment

Q5. Is there a documented capex vs opex policy that determines which expenditures are capitalised and which are expensed?

2 — Fully in place: written policy with capitalisation thresholds, categories, and approval requirements; consistently applied and reviewed by auditors 1 — Partially in place: informal rules applied but no written policy; decisions made case by case 0 — Not in place: no policy; expenditure capitalisation decisions are arbitrary or inconsistent

Q6. Are staff costs allocated correctly between cost of revenue, R&D, sales and marketing, and G&A — with the basis of allocation documented?

2 — Fully in place: headcount mapped to functions with a documented allocation policy; reviewed at least annually for accuracy 1 — Partially in place: most staff allocated to appropriate lines but allocation basis is not documented and some coding is inconsistent 0 — Not in place: all staff costs hit a single cost line; no functional allocation in place

Q7. Is the treatment of R&D expenditure documented — covering what qualifies for capitalisation under IAS 38 or SSAP 13, and what is expensed immediately?

2 — Fully in place: written R&D policy distinguishing research phase (expensed) from development phase (capitalised when criteria met); R&D tax credit tracking aligned 1 — Partially in place: aware of the distinction but policy is not written; some inconsistency in treatment 0 — Not in place: all R&D costs expensed regardless of development stage, or capitalisation approach applied without documented criteria

Q8. Is there a documented foreign exchange (FX) policy covering functional currency determination, transaction currency translation, and unrealised gain/loss treatment?

2 — Fully in place: functional currency set for each entity, FX policy documented covering spot rates vs average rates, unrealised gains/losses correctly recognised 1 — Partially in place: FX transactions processed but no formal policy; inconsistent rate application or FX gains/losses not always identified 0 — Not in place: FX is not tracked as a distinct item; no policy on functional currency or translation methodology

Area 3: Balance Sheet & Asset Policies

Q9. Is there a documented fixed asset depreciation policy with useful lives defined by asset class and reviewed periodically?

2 — Fully in place: fixed asset register maintained, depreciation rates documented by class, useful lives reviewed annually, consistent with accounting standards 1 — Partially in place: depreciation applied but rates not formally documented or reviewed; asset register may be incomplete 0 — Not in place: no formal fixed asset register or depreciation policy; assets expensed inconsistently

Q10. Is there a documented impairment testing policy for goodwill, intangibles, and long-lived assets, with indicators of impairment reviewed at least annually?

2 — Fully in place: formal impairment review process documented with CGU definitions, recoverable amount methodology, and board sign-off 1 — Partially in place: impairment considered at year-end but process is informal; no documented methodology or CGU definitions 0 — Not in place: impairment testing not performed; goodwill or intangibles carried at historical cost without review

Q11. If your company holds crypto or digital assets, is there a documented accounting policy covering measurement basis, impairment approach, and disclosure requirements?

2 — Fully in place: written policy covering classification (intangible asset or inventory as appropriate), measurement at cost or fair value, impairment triggers, and note disclosure 1 — Partially in place: digital assets held but accounting approach is ad hoc or based on legacy guidance; not formally documented 0 — Not applicable or not in place: either no digital assets held, or they are held with no accounting policy whatsoever

Q12. Are intercompany balances reconciled monthly, with a documented policy on intercompany pricing and elimination on consolidation?

2 — Fully in place: intercompany balances reconciled monthly between entities, transfer pricing policy documented and in line with arm's-length requirements, elimination confirmed at consolidation 1 — Partially in place: intercompany balances tracked but reconciled quarterly or less; no formal transfer pricing documentation 0 — Not in place: intercompany balances unreconciled or not tracked; elimination entries not made on consolidation

Area 4: Consolidation & Group Structure

Q13. Is the group consolidation currency documented, with a clear policy on translating subsidiary results into the presentation currency?

2 — Fully in place: presentation currency defined, translation methodology documented (closing rate for BS, average rate for P&L), translation reserve correctly applied 1 — Partially in place: consolidation performed but translation methodology is informal or inconsistently applied 0 — Not in place: no group consolidation or currency policy; subsidiary results added without translation adjustments

Q14. Are SPVs, holding companies, and special-purpose entities assessed for consolidation and included where control exists under IFRS 10 or equivalent?

2 — Fully in place: all entities in the group assessed for consolidation; control assessment documented; SPVs included or excluded with rationale 1 — Partially in place: main subsidiaries consolidated but SPV treatment is informal or not reviewed recently 0 — Not in place: no formal assessment of which entities to consolidate; structure is accounted for on historical practice

Q15. Are minority interests (non-controlling interests) accounted for correctly in the consolidated accounts, with the NCI balance reconciled?

2 — Fully in place: NCI correctly presented on the balance sheet, profit attributable to NCI separately disclosed, NCI balance reconciled at each period end 1 — Partially in place: NCI recognised but attribution of profit/loss and NCI balance reconciliation is not consistently done 0 — Not in place: NCI not identified or accounted for in consolidated accounts

Q16. Are related-party transactions identified, documented, and disclosed in accordance with IAS 24 or equivalent, including director loans and key management compensation?

2 — Fully in place: related parties identified annually, transactions documented at arm's-length, disclosures included in statutory accounts and management accounts where material 1 — Partially in place: related-party transactions identified at year-end for statutory accounts but not tracked during the year 0 — Not in place: related-party transactions not formally identified or disclosed; no process for capture during the year

Area 5: Financial Reporting Controls

Q17. Are management accounts produced within 10 working days of month-end with a consistent close timetable followed by the finance team?

2 — Fully in place: close timetable documented, accounts consistently produced within 10 working days, close calendar shared with the business 1 — Partially in place: accounts produced but timing is variable; no formal timetable or regular slippage beyond 10 days 0 — Not in place: no consistent close process; management accounts produced sporadically or more than 15 working days after month-end

Q18. Is there a clear audit trail for all accounting entries — including journal entries with preparer, approver, date, and rationale recorded in the system?

2 — Fully in place: accounting system captures preparer and approver for all journals; non-routine journals require documented rationale; audit trail reviewed as part of close 1 — Partially in place: system records who posted entries but rationale is not consistently documented; approvals are informal 0 — Not in place: no structured audit trail; journals posted without approval and rationale not captured

Q19. Is there a documented process for handling prior-period errors — including materiality assessment, restatement decisions, and communication to auditors and the board?

2 — Fully in place: error correction policy exists referencing IAS 8/ASC 250; errors assessed for materiality, corrections disclosed appropriately, auditors informed 1 — Partially in place: errors corrected when found but without a formal materiality assessment or consistent disclosure approach 0 — Not in place: no process for identifying or correcting prior-period errors; corrections posted without materiality assessment or disclosure

Q20. Does an accounting policies manual exist — covering all material accounting policies, updated for new standards, and accessible to the finance team?

2 — Fully in place: written accounting manual covering all material policies, updated within 12 months, version-controlled, signed off by CFO or auditors 1 — Partially in place: some policies documented (e.g., in the notes to statutory accounts) but not compiled into a working manual for the team 0 — Not in place: no accounting policies manual; policies exist only in the heads of senior finance staff

Your Score

0 / 40

Answer questions above to see your result

Next step: Identify the area where your score is lowest. The questions that scored 0 are your highest-priority actions. Accounting policy gaps tend to compound: a weak revenue recognition policy leads to audit adjustments, investor friction during due diligence, and restatement risk. A CFO-led policy review can typically close most gaps within a 60-day engagement.

Accounting Policies Maturity Framework

How to Use This Framework

Assessment Areas

Area 1: Revenue Recognition

Area 2: Expense & Cost Treatment

Area 3: Balance Sheet & Asset Policies

Area 4: Consolidation & Group Structure

Area 5: Financial Reporting Controls

Fix your accounting policies with afractional CFO.

Fix your accounting policies with a
fractional CFO.