Auditing and Assurance: Specialized Industries

Name: Tandayu, Constantino C. Date Submitted: December 14, 2022

ACC
CBAA Professor: Sir Amir T. Auditor, CPA Individual Activity
4128

Answer the following:

1. What do you think are the challenges of Agricultural Industry to Agricultural

Accounting? Explain and expound your answer.
2. What is the purposed solution to the above challenges?
3. In your own understanding, what should be the role of the government to
minimize the challenges encountered by the agricultural industry?

Answers;

1.
 Records and data- acquisition and storage
o Accurate accounting, the kind that facilitates smart strategic decisions,
requires data. With multiple profit centers and varying production cycles
and, potentially, multiple locations, the very process of gathering accurate
and timely data can be a struggle. When you factor in the number of
hands it takes to collect and properly allocate and enter that data, we’re
talking about a time-consuming process with the potential for significant
human error.
 Complicated taxes
o From payroll taxes and auto expenses to conservation and depreciation
deductions, there are a lot of tax laws farms and ranches need to pay
attention to and take advantage of. This is where having impeccable
records can prevent costly penalties and lost opportunities
 Forecasting
o The nature of farming, production cycles, markets, and even weather are
unpredictable. That makes future forecasting difficult. However, it’s
essential to understand, manage, and predict your cash flow. Knowing
 when to spend and when to invest is vital. Look at last year’s records and,
adjusting for changes in prices and volume, you can hopefully predict the
lean times and identify where cash flow gaps exist. Similarly, knowing
what’s making your profits can help you better prepare for the year to
come and strategize on how to optimize those profit centers.
 Understand family farming
o If you’re running a family farm, you know exactly what this means. That
means that everyone is pitching in when and where needed. From odd
jobs to urgent needs, it can mean long hours and, often, the family part
means there’s no compensation. How you work that out with your family is
one thing, but how your account for that in your farm business is another.
Labor is money and if you’re not properly recognizing its value, that can
mean relying more and more upon your family or yourself. If you’re not
paying your help, even if it’s you, there’s a need for better accounting.
 Death by a thousand spreadsheets
o Because “main street” accounting programs aren’t designed to handle the
details and nuance of farm management, most producers rely on an array
of home-built, stand-alone spreadsheets to track budgets, inventories,
allocations, and analysis. Each solves a short-term problem but often
creates long-term headaches for maintenance, especially as time rolls on
and business complexity evolves.
 Unreconciled financial statements
o One result of this fragmented approach to farm accounting is that yearend
financial statements are based on externally-prepared forms that are
disconnected from the general ledger. Inventory quantities and values are
often “plugged” into spreadsheets and work papers, and it’s up to the
lending institution to validate their accuracy.

2. They often say the first step to solving a problem is understanding you have one.
It’s difficult, sometimes, with the day-to-day operations to slow down and take a
look at something that doesn’t seem urgent, but the impact of ignoring or not
prioritizing your bookkeeping and accounting practices can be significant. With
existing challenges and no system in place, it’s pretty easy to see how something
that should be so fundamental to the health of your farm business can get
beyond your reach. That’s why the best tool within your reach is farm ERP
software which offers a broad ranging and inclusive management system for your
 farm and farm accounting. Farm ERP software can revolutionize how you view
your operations and understand how intricately they’re connected to your
finances and accounting. ERP software collects your operational data in one
spot, enabling you to get the reports you need, when you need them, and
strategize for operational success. It can also:
 Improve your resource management and utilization
- As noted above, forecasting is vital. Knowing where, how, and when
resources are in demand and what they cost is an essential part of doing
that successfully. ERP software allows you to collect that data directly
from those cost and profit centers and aggregate it in a centralized
location for analysis.
 Streamline your supply chain and vendor management
- With inventories all in one place and the ability to track, monitor trends,
and forecast future usage, you can improve not just the supply chain but
communication with important vendors
 Integrate your accounting and management records
- Accurate and precise record keeping is essential to your accounting and
bookkeeping as well as you’re forecasting. Having it all in one place
enhances timely, quality decisions. No more digging through files or
moving between multiple programs. Your data is verifiable, trackable, and
easily accessible.
 Connect payroll information to cost and profit centers
- Proper allocation of labor to cost and profit centers is key to
understanding your true value of farm activities contributing to your cost of
production for each product you grow.
ERP software is about more than accounting, it’s about using all the data you
have at your disposal to not only make the best business decisions you can but
to also ensure you’re streamlining and optimizing farm operations. It’s one
solution for your farm and one solution that addresses most of the common
challenges faced by agricultural accountants.
If you’re ready to take a look at farm ERP software designed by farmers for
farmers, get in touch with the FBS Systems team today. We can help bring the
barn and field into the back office and make the back office less complicated.
3. Government helps agricultural industries to minimize challenges faced by the
farmers, by implementing laws to lower the taxes and more. Also, government
helps by giving some free things that can help farmers to farm, they give also
incentives. And government offers many programs for farmers, like pautang,
 borrowing equipment from government and etc. Government helps as much as
they can, because they treasure farmer, they are the one of having big role and
reason to help the economic to grow and be develop.

References:

Agriculture, B. s. (2022, March 17). Thomson Cooper Accountants. Retrieved from

https://www.thomsoncooper.com/news-insights/post/the-typical-problems-of-farm-
accounting/

Elsen, S. (2019, 04 19). Red Wing Software. Retrieved from

https://www.redwingsoftware.com/home/articles/agriculture/farm-accounting-problems