Agriculture Reference
In-Depth Information
bookkeeping. The person who is performing purchasing duties should not be keeping the
books or writing the checks.
Whenever and wherever possible, the responsibilities of records, reports, and controls
should rest with at least two people. Outside auditors are typically used to verify the accu-
racy and integrity of the organization's fi nancial records. All this is not to imply dishonesty
so much as to confi rm the credibility and integrity of all involved, and to verify that records
are being kept properly. When proper checks are built into an accounting system, there is
little reason to suspect impropriety.
Good fi nancial records should provide the basis for:
1.
Determining the success of the business in terms of profi tability during specifi c time
periods or cycles
2.
Determining the general fi nancial condition or health of the business at a given
moment
3.
Predicting the future ability of the business to meet the demands of creditors, of change,
and of expansion
4.
Analyzing the trends in performance as they relate to management's abilities and to
the success or failure of the past decisions and achievements
5.
Choosing among the various possible alternatives for future use of resources within
the fi rm
Working with accountants
Some agribusiness managers, such as Chuck Altman, the owner and president of a sizable
wholesale fertilizer company, confess to a fear of fi nancial management and accounting
simply because they are unfamiliar with the way the system works. Chuck's unfamiliarity
stems from the fact that his company started small, and his fi nancial knowledge and skills
have not grown with the company. Many other managers have come up through the ranks in
larger companies from the areas of sales, production, and operations. They also have not
been exposed to the fi nancial component of the business. It is not necessary for the manager
to know how to do the accounting personally or to maintain the records of an organization.
Instead, the agribusiness manager should concentrate on understanding how the system
works and what information the record-keeping process produces that can be useful for
decision-making and forecasting, and for fi nancial reporting.
The agribusiness manager who works with controllers, accountants, and bookkeepers is
likely to fi nd many that view the world about them in a conceptual and abstract manner.
The approach of such specialists can produce information, which, though accurate and inter-
esting, may not be understandable or meaningful to those controlling and managing
the organization. Determining what information is needed and what form it should take is the
responsibility of the manager.
Each manager reviews the information supplied by the records of the organization, and
determines if the information is to be used solely for managerial decision-making. If so, the
information should be tested against the previously provided criterion. He or she must
then ask such questions as: “Will this information or data allow management to make better
decisions?”, “Is the information prepared in such a way that managers can easily understand
and interpret it?”, and “Is it information that the particular agribusiness truly needs?”
Records that do not meet these tests should be altered or dropped. However, information that
will be used in fi nancial reporting to governmental units, lenders, and others generally is
