agMIS - Our mission

agMIS Our mission, policy, principles, practices

Our mission

To provide financial management tools for agriculture equal in quality, power and usefulness, to tools we and others have designed and built for other industries.

Policy

To make those tools available in a form or forms most useful to the greatest number of farm users.

Principles and practices

Compliance accounting. This area of traditional farm 'cash-basis' accounting has 2 parts. One is checkbook-level accounting for income and expenses, for tax purposes. The other is records to support a balance sheet (net worth statement), required by banks and lenders from time to time.

Built-in tools in agMIS system satisfy both these needs. In the first instance, it includes features powerful enough to account separately and in any user-defined combinations, of 10 banking accounts, 3 charts of accounts entities (IRS Schedules F, C and A, for example) among up to 10 sub-enterprises. A multi-family farm, for example, that tracks 2 family IRS Schedule A's plus 2 off-farm Schedule C businesses, can still track up to 6 individual Schedule F farm enterprises.

Accrual-basis accounting. Accounting for inventories, especially their true costs, is the core and centerpiece of this method of accounting which presumes 3 levels of inventories -- raw materials, work in process, and finished goods -- and requires all production costs to 'pass through' the 3 levels enroute to ultimately becoming salable finished products. It further requires inventory values to be expressed, at every level, at their true 'accrued' cost, and any gains or losses only to be reflected -- in records and reports -- from the time they're actually realized.

Accrual-basis accounting (continued). In general, farm producers comprehend that definition of accrual accounting because it expresses what they do as they transform raw materials into finished goods. The same producers, however, generally lack the expertise (and the time!) to express what they do, in accounting's unique language of debits and credits. But that's not a farmer-unique problem, by any means; it's one that MIS software systems have alleviated for non-accountant product managers and producers worldwide for decades. The agMIS system merely does the same for farm producers.

The agMIS system is able to track, at user-definable levels, all or any parts of the unit costs of anything and everything a farm produces, and report same at 3 levels (per acre, per bushel, and total field, for example), for up to 200 individual fields, pens, lots, large equipments, etc. In doing so, its reports reflect only those costs actually entered by users; at no time does it make accounting decisions or entries of its own. In other words, users get from their agMIS system, exactly what they enter into it.

Management accounting. From its name, it might be used to describe any financial records maintained to assist decision-making. We've seen it used, in fact, to describe complex and expensive 'cost accounting' programs, including those that claim abilities to 'create accounting entries' for users 'unable to create their own'. We advise against use of those programs by non-accountants, not because they might make incorrect decisions (they might), but because they in time will produce reports their owners can neither reconcile, prove, nor explain.

In agMIS, our definition of 'management accounting' includes all the capabilities defined here. And in our examples and illustrations, we explain how to use the information thus produced to update and maintain any standard accounting program using agMIS' accounting-approved and auditable information outputs.

Elsewhere in agriculture, the Farm Financial Standards Council lists 6 core concepts that drove the development of its management accounting guidelines*. Those 6 concepts, and more, are addressed in agMIS system designs as well.

*Management Accounting Guidelines for Agricultural Producers (Farm Financial Standards Council), February 2006, pages 3-5.