What does AE mean in ACCOUNTING

Accounting policy refers to the specific procedures and rules that companies use when preparing and presenting their financial statements. It enables entities to align their financial record-keeping with legal, regulatory, taxation or other requirements.

Accounting policies help businesses ensure consistency and comparability in the accounting practices used by companies within any given industry. They also provide assurance that business decisions are made on a sound financial footing as well as helping to protect assets from fraud or misappropriation.

An effective accounting policy should include details on the measurement basis of the accounts (e.g., historical cost versus fair value), details on recognition criteria, disclosure processes, presentation format (e.g., dollar versus percentage) as well as compliance with applicable regulations or legislation.

Accounting policies should be reviewed at least annually or after a significant event such as an acquisition or sale of assets, a change in ownership structure or a move into new markets. Companies should also consider updating their policies after changes in tax laws or regulations impacting financial reporting standards are implemented.

The board of directors has ultimate responsibility for ensuring compliance with an entity's accounting policy but this may be delegated to senior management within the organization who will be responsible for setting out and enforcing rules around consistency of approach and accuracy of information provided for inclusion in required external reports such as annual accounts filed with relevant regulators.