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An analysis of the accounting principles applied by the European Farm Accountancy Data Network

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  • Eric J. Slof
  • Josep M. Argilés
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    Abstract

    In spite of its relative importance in the economy of many countries and its growing interrelationships with other sectors, agriculture has traditionally been excluded from accounting standards. Nevertheless, to support its Common Agricultural Policy, for years the European Commission has been making an effort to obtain standardized information on the financial performance and condition of farms. Through the Farm Accountancy Data Network (FADN), every year data are gathered from a rotating sample of 60.000 professional farms across all member states. FADN data collection is not structured as an accounting cycle but as an extensive questionnaire. This questionnaire refers to assets, liabilities, revenues and expenses, and seems to try to obtain a "true and fair view" of the financial performance and condition of the farms it surveys. However, the definitions used in the questionnaire and the way data is aggregated often appear flawed from an accounting perspective. The objective of this paper is to contrast the accounting principles implicit in the FADN questionnaire with generally accepted accounting principles, particularly those found in the IVth Directive of the European Union, on the one hand, and those recently proposed by the International Accounting Standards Committee�s Steering Committee on Agriculture in its Draft Statement of Principles, on the other hand. There are two reasons why this is useful. First, it allows to make suggestions how the information provided by FADN could be more in accordance with the accepted accounting framework, and become a more valuable tool for policy makers, farmers, and other stakeholders. Second, it helps assessing the suitability of FADN to become the starting point for a European accounting standard on agriculture.

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    File URL: http://www.econ.upf.edu/docs/papers/downloads/342.pdf
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    Bibliographic Info

    Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 342.

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    Date of creation: Feb 1998
    Date of revision: Oct 1998
    Handle: RePEc:upf:upfgen:342

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    Web page: http://www.econ.upf.edu/

    Related research

    Keywords: Accounting; agriculture; accounting standards; European Union; farm accountancy data network;

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    1. Laurence M. Crane & David J. Leatham, 1995. "External equity financing in agriculture via profit and loss sharing contracts: A proposed financial innovation," Agribusiness, John Wiley & Sons, Ltd., vol. 11(3), pages 223-233.
    2. Josep M. Argilés, 1998. "Accounting information and the prediction of farm viability," Economics Working Papers 277, Department of Economics and Business, Universitat Pompeu Fabra.
    3. J.-C. Kroll, 1987. "Le Nouveau Plan Comptable : les occasions perdues," Économie rurale, Programme National Persée, vol. 180(1), pages 20-25.
    4. John Flower, 1998. "The future shape of harmonization: a reply," European Accounting Review, Taylor & Francis Journals, Taylor & Francis Journals, vol. 7(2), pages 331-333.
    5. F. André, 1987. "Vers un renouveau de la formation économique des agriculteurs ?," Économie rurale, Programme National Persée, vol. 177(1), pages 53-56.
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