Page 10 - Account for Ag - 2019

1-2 Accounting for Agriculture CH 1]

accounting system to best fit the needs of the agricultural business. The accountant must be able to supervise the
recording of transactions by bookkeepers and then take the results of their work, check it for accuracy, and
prepare reports for lenders, investors, and the government. The accountant will also prepare the operating
reports for management, who will make decisions on what, when and where production is to be optimized.
Although the bookkeeper is primarily concerned with recording transactions, the accountant may seldom
record a transaction in a large, multifaceted business. In an agricultural firm, the owner/operator may perform
all these tasks. It thus may be difficult to demarcate the bookkeeper and the accountant. The bookkeeper who
records all the transactions of the business must be able to exercise judgment in the recording, and thus should
have an understanding of the accounting system they are working with. The bookkeeper should have some
ability in organizing and reporting the information contained in the records.

ACCOUNTING AS A PROFESSION
Accountants and accounting has attained the same stature as a profession as that of law or medicine. To
insure a high standard of professional service all states license certified public accountants or C.P.A.'s just as
they license doctors and lawyers. Only when an individual has passed a rigorous examination of accounting
and related matters, met additional apprenticing requirements, and received a license may designate
themselves as C.P.A.'s (certified public accountants).
The requirements for the C.P.A. license vary with each state. However, generally, an applicant must be a
citizen of unquestioned moral character; some states require that the applicant be a college graduate with a
major in accounting. The applicant must pass a three-day examination covering accounting theory, accounting
practice, auditing, and business law; and must have from one to five years of working experience in the office
of a certified public accountant. The examination is prepared and administered by the American Institute of
Certified Public Accountants. The American Institute of Certified Public Accountants is the accounting
profession's equivalent to the American Medical Association or the American Bar Association.
The accountant may be employed in public accounting, private accounting, or governmental accounting.

PUBLIC ACCOUNTING. A public accountant is one who offers professional services to the public for a fee.
The accounting for hire service is much the same as that of a lawyer, in that the client approaches the
accountant for advice pertaining to accountancy of the business.
Banks and other lending institutions often require an audit of the records of a business when applying for
a sizable loan, and usually the audit must be made by a certified public accountant. If the company is to go
public with a stock sale on the major stock exchanges, there must be an audit before the securities may be sold
and periodic audits must be made if their sale is to continue.
The purpose of an audit is to allow the accountant making the audit to express an independent opinion
regarding the financial position and risk bearing capability of the concern. When making an audit, a certified
public accountant will carefully examine the concerns financial and accounting records. It is from these
records that the certified public accountant makes certain checks and tests of the information provided as
deemed necessary to base and express a professional opinion. Lenders, investors, and others rely on
information in a company's financial reports in making loans, granting credit, and when buying or selling
securities. The same rely on the independent C.P.A.'s opinion that the reports accurately reflect the concerns
financial/managerial/risk bearing position.
Accountants often offer management advisory services to their clients. When performing an audit on a
concern, the accountant gains an intimate knowledge of the audited company's accounting procedures and its
financial position. The accountant is thus in an excellent position to offer constructive criticism and
suggestions for improving procedures, strengthening the financial position and minimize risk.
The accountant in providing an advisory service may suggest the design and installation of an improved
accounting system to control production costs. This may also include the application of a computerized
accounting system, advice in financial planning, budgeting, forecasting, and inventory control--obviously all
phases of the accounting and record keeping of any agricultural business.
In this current age of complex income reporting laws from which a business pays taxes there are few
important business decisions made without considering the tax effect. Through their training and experience a
certified public accountant is well qualified to render important service in this area. This service is not limited
to merely filing the tax returns, but also includes advice on how transactions may be completed to incur the
smallest tax liability.
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