Your Farm Financial Reporting Scorecard?
I will be speaking at the Ag Financial Boot Camp today in Bettendorf, Iowa and thought I would ask a few questions of our readers to see how they “score” on their financial reporting. Here are some of the questions:
- Are you using a computerized accounting system?
- Do you record your income and expenses on some type of accrual system?
- Do you print out your balance sheet, income statement and statement of cash flows on a monthly basis and use it in your farm operation?
- Do you know more about your farm finances than your banker does?
- Do you book crop inventories on your balance sheet?
- Do you calculate your deferred tax liability and know what that means?
- Do you calculate depreciation based on some type of economic depreciation or book depreciation?
- Do you prepare both historical and fair market value balance sheets?
If you do at least 6 out of 8, give yourself an A. If you do 4-5, give yourself a B-. Less than 4 is likely a failing grade on your farm financial reporting. For those farmers with a failing grade, I would suggest looking at the guidelines at the Farm Financial Standards Council website. They can help you get a passing grade.
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.
Great questions…..other potential questions
Do you have a monthly family living expense budget? Do you track actual family living expenses?
Do you have enterprise analysis capabilities?
Parcel fiscal analysis capabilities?