Managerial Accounting Performance Standards
One of sessions after lunch dealt with managerial accounting for a large agricultural operation (almonds, cattle, potatoes, etc.). One item that was brought up is that any accounting system for any farming operation no matter the size should meet certain performance standards as follows:
- Timeliness – perfect financial information in an untimely manner does not have much value
- Accuracy – whether for tax purposes or managing your operation accuracy is very important
- Level of quality – tax information may need to be more precise than information used for management. Your system should provide both
- Cost-effectiveness – the law of diminishing returns also applies to financial reporting systems. Apply your low hanging fruit first
- Priority – when implementing a new system, determine your priorities
- Relevance – if your system provides information that is never used, get rid of it
- Reliability – if your information is not reliable, it is hard to manage
You should make sure to address each of these standards when implementing your financial and managerial accounting system.
Paul Neiffer, CPA
CliftonLarsonAllen LLP
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
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Managerial Accounting Performance Standards