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This Audit and Accounting Guide provides the latest information on accounting and auditing issues affecting the agricultural industry. Updated with conforming changes as of May 1, 2008, it includes guidance in planning and performing audits under the risk assessment standards (SAS Nos. 104-111). This edition of the guide has also been conformed to reflect the Defining Professional Requirements standards (SAS No. 102 and SSAE No. 13). Furthermore, it provides additional guidance on the auditor’s responsibilities as set forth in SAS Nos. 112-114, including identifying and reporting internal control deficiencies, understanding the link between the auditor’s consideration of fraud and the auditor’s assessment of risk, dating of the management representation letter, and the auditor’s communications with those charged with governance.
The guide summarizes applicable requirements and practices, and delivers "how-to" advice for handling audit and accounting issues common to the agricultural industry. It also includes accounting requirements and a discussion of the relevant financial statement considerations. Included in the appendices is the full text of Statement of Position 85-3, Accounting by Agricultural Producers and Agricultural Cooperatives. The guide covers the following new accounting and auditing pronouncements:
For a topical listing of subject matter by chapter, click on the Table of Contents tab.
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Chapter 1
Introduction
1.01 Agriculture ranks among the largest industries in the United States and, until recent times, was the country's principal occupation and employer. Although the number of people involved in agricultural production is still large, that number has been steadily shrinking as a result of increased farm productivity, a growth in the size of individual farms and ranches, and the population shift toward urban centers. Despite the trend toward larger business units, however, entities engaged in agriculture still range from small noncorporate family groups to publicly held multinational corporations.
1.02 For purposes of this guide, the term agricultural producers includes farmers and ranchers who grow or raise agricultural or horticultural products for sale or for use in the production of other agricultural or horticultural products. In their transactions with agricultural cooperatives, they may be referred to as members or patrons.
1.03 Audits of agricultural producers are designed and conducted in the same manner as audits of other enterprises, giving due consideration to the size and nature of the organization and internal control. The auditing procedures suggested herein are presented to provide guidance on matters that are unique or significant to the industry, but they may not apply to all situations and are not intended to replace or limit the use of judgment in determining the nature, timing, and extent of audit procedures to be applied in a particular audit.
1.04 Sample financial statements, whose form and content are currently acceptable, are illustrated in appendix A.
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