devider::
of Biodiversity Conservation and the Need for Sustainable. Development Acharya, Crop and Livestock Services Division (now the Department of Agriculture
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Need for Accounting Standards for Agriculture and Livestock
According to the NAFSCOB (National Federation of State Co-operative Banks Ltd) report there are 30 SCBs (State Co-operative Banks), 962 branches, 370 DCCBs (Districts Central Co-operative Banks and 1,06,384 primary societies in India by 31/3/2006. The Government of India established NABARD to finance the agricultural sector through state and District Co-operative Banks. All the DCCBs and PACS (Primary Agricultural Credit Societies) are lending loans and advances for the development of agricultural sector and uplifting of weaker section.
The DCCBs and PACBs in India provide loans and advances for different agricultural schemes. These schemes are formulated and approved under the supervision and control of NABARD. The high yielding cultivable crops are identified for different regions and financial assistances are offered under Short Term and Medium Term (ST & MT), Schematic lending, ST & MT Agricultural loans and SAOs (Seasonal and Agricultural Operations) Financial assistance is provided for marketing, storage, purchase of seeds, fertilizers and pesticides and for all the agricultural activities. The commercial crops are also identified and loans and advances are provided for production, marketing and for other related needs under separate schemes and plans. In the books of accounts of any DCCB or PACS we can find plenty of loans and advances provided for cattle purchase, poultry, goat farm etc. In the accounting parlance these are brought under the category of Livestock . As per schedule VI of the Companies Act the livestock is included in fixed assets. Normally fixed assets are brought under the purview of depreciation as per the generally acceptable accounting principles and standard practices. It is obligatory as per legal provisions of certain Acts. The stock of inventories is categorized as current asset and valued according to the standard practices followed by the respective organizations.
Promoting Sustainable Rural Development Through Agriculture - Policy::
Historically, agriculture responded only to the need for food. in both commercial and subsistence agriculture, including livestock and fishing.
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According to AS 9 - Revenue Recognition concept, the minimum amount of sale income earned from agriculture can be reliably measured even at the time of completion of production. This may be due to support price set by the Government or immediate marketability. The price is pre-determined before marketing it. In such case the revenue may be recognized as soon as the production or harvesting is completed at the pre-determined price and that will be the selling price. There are so many crops for which no adequate support price is being provided and immediate convertibility into cash is also not possible. We could find a dispute in existing support price or the price determined every year by the Govt.
The IAS-41 (International Accounting Standard) has been introduced for Agriculture. The General Clarification (GC) - 12/2002, issued by the Accounting Standard Board of the ICAI on applicability of accounting standards indicated that the Accounting standards would apply to all the activities of the co-operative societies including those which are not commercial, Industrial and or business in nature. The Auditors should examine the books of accounts of them in accordance with Accounting Standards and deviations must be disclosed. According to Accounting Standard 2 revised (AS-2 revised) the stock of inventories that is one of the current assets must be valued at Net Realizable Value . The AS-2 is not applicable to producer s inventories of livestock, agricultural and forest products, mineral oils, ores and gases. According to AS-2 and IAS-2 (International Accounting Standards) they are measured at net realizable value in accordance with well-established practices in those concerns. It is obligatory to follow similar accounting policies consistently in all accounting periods. Any change must be disclosed in the financial statement. AS-10 deals with Fixed Assets. All the depreciable assets must be depreciated as per the standard practices. The depreciation is calculated under SLM (Straight Line Method), WDV (Written down Value method), unit of production method or any other standard method permitted to follow. Now the questions raised on stock of agricultural produce and live stock are
Medium Term Plan 2006 - 2011::
biotechnology applications for livestock development (215A2 and 215A2) frameworks on organic agriculture, including standards (for organic production,
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1. What are the procedures for recording such items?
2. What are the methods of valuing such stock?
3. If the current practices followed are approved which are the Standard practices to be considered prudential?
When these questions are raised to a group of practicing Charted Accountants, they said it is an unimportant area and hence they accept the current method of valuation followed by their client for agricultural produces or livestock. Since it is neglected as an unimportant area, proper emphasis was not given so far. But, India is an agricultural based country and more than 90% of village population has livestock. Most of the farmers and villagers earn their livelihood from livestock and income from crops. They take crop loan and schematic loans from DCCBs and PACSs available in their respective jurisdiction.
Even the authorities concerned accept that they do not follow any standard practice for valuing the yield of livestock. The breeding animals loan and all kinds of loan granted for livestock are highly hypothetical. It seems that it is granted on trial and error basis. In practice the DCCB and PACS ask the party to produce a Veterinary Doctor Certificate about the health condition of the cattle or the livestock to approve the loan. Many of their methods are substandard and unrealistic. The agricultural loans and crops loans are provided based on the agricultural schemes and plans that are prepared on unrealistic assumptions on the value of yield and duration of the yield. So in order to develop standard practices, the Indian Accounting Standard Board must come forward to formulate an Accounting Standard in the form of guidelines or provisions. While formulating it, cautions must be taken to prevent contradictions with other Accounting Standards, Concepts and Conventions, especially with revenue recognition concept and matching concept. It is expected that this will give a convincing solution for the following questions.
1. What are the Principles to be followed in recording Agriculture produce and livestock in books of accounts?
2. What are the methods of valuing the yield before and after the harvest of commercial and non-commercial crops?
3. What are the situations in which livestock can be considered as fixed assets?
4. What are the situations in which the livestock can be considered as current Assets?
5. How to value the Livestock?
This would help to develop standard and productive practices in granting loan to develop rural population in the long run. The lending policies and collection of overdue would not thrust any burden or risk. The people will use the rural credit wisely only on productive schemes. The unscrupulous persons could be prevented from misusing such facilities available in co-operative banks. This would facilitate to reach the schemes and plans to the right people. The people will feel their moral responsibility of repaying the loan and the NPA (Non- Performing Assets) in the DCCBs and PACS in India could be brought under control.
 Nobody understands...any help please?
 50 points for someone willing to do this!!!!!!!!!!?
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Need for Accounting Standards for Agriculture and Livestock