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