PORKSHOP.2005:  PREPARING FOR A RETURN TO "REALITY"

The past 12 months have been quite a ride for pork producers.  Record supplies, red-hot demand, attractive feed costs, the highest prices since the mid-90s and an opportunity to heal from the last two disastrous downdrafts.  So far, 2005 looks good, if not great, but if the hog cycle swings down again, 2006 could deliver a jolt of reality.

PORKSHOP.2005, co-sponsored by the CPA/consulting firm of Latta, Harris, Hanon & Penningroth L.L.P., will help you prepare for lean times by focusing on cost control, starting with the #1 cost—feed.  Dr. Steve Dritz from Kansas State University will present a session on feed cost control, followed by FBS/LHHP classes on feed budgeting, financial budgeting, managerial accounting and new data collection and analysis tools—all focusing on optimizing returns.  PORKSHOP.2005, scheduled for June 8^th in Des Moines, Iowa (one day prior to the World Pork Expo).  Mark your calendar now; then watch our website and your mail for more information.

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The FBS professional training team is ready to help you fine-tune the management information system that drives your operation.  Daryl Ellis, Doug Ball, Curt Christianson, John McNutt and Norm Brown are ready and willing to come on-site and deliver answers and solutions tailored to your needs.  While we can sometimes accommodate a last-minute request, the most effective use of our time and your money is to coordinate training for users within the same locale.  That requires some advanced notice and planning!

Contact us now at 800-437-7638 or sales@fbssystems.com.

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In January's issue, we describe how (and why) we have transformed the historical adjusted accrual financial statements of AFRA (Agricultural Financial Reporting and Analysis) into real-time, accrual statements within TransAction Plus and e.CLIPSE. The next phase is rewriting the budgeting function of AFRA so it achieves these goals:

1.	Seamlessly integrate existing planning features.  Every core FBS module—TransAction Plus, Crop Audit and Smart Feeder—contains elements of financial and/or production budgeting.  Redundant data entry must be eliminated and reports must permit users to "drill down" to assumptions from anywhere in the system as well as compare the budget to the actual production/financial performance
2.	Biological / production modeling.  With livestock, feed and animal flow must be based on sound and well-documented biological assumptions.  Crop budgeting is generally more straightforward, but the input requirements and projected yields must tie to farms, fields and ownership splits.
3.	Activity-based budgeting.  If production levels change, then indirect variable costs such as fuel and labor must be adjusted correspondingly.  Fixed costs (depreciation, repairs, etc.) will also be affected if production levels increase to the point that new assets are required.
4.	Real-time updates.  The budgeting system should be able to replace assumptions with actual data in the current period then project the effects of those changes into the future.
5.	Multiple reporting levels.  A common plan should be able to generate projected cash flows, accrual financial statements, inventories and internal reports such as field work orders.
6.	Multi-year projections.  Like AFRA, budgets should "roll ahead" into future years if required.
7.	Variance analysis.  When actual performance varies from the plan, the source of that variance (either from purchasing or volume) must be monitored and analyzed.
8.	Flexible format.  Financial reports should easily adapt to your specific chart of accounts and responsibility centers.
9.	Modular expandability.  Ideally, a new user will be able to begin with a basic financial reporting core, then add more sophisticated modeling and analysis modules as the needs arise.
10.	Open architecture.  Both the budget input and output should be accessible through industry-standard formats like Excel or Access and interface with third-party budgeting tools.

Although this is an ambitious project, we are well on the way with many of these components and will explore them in more depth in future articles.

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ONE PROGRAM, TWO AUDITS, NO PENALTIES

We do management accounting for our own edification, financial accounting to access capital and tax accounting because of we have to.  All need to be done correctly, but the penalties for sloppiness or subterfuge are most severe when the government is involved.  Here's a sober story with a happy ending:

I've used FBS products continuously now since 1985.  I had my first IRS audit in 1991 following an amended return which had a large impact on my original return.  The agent who did the audit at that time hadn't had any favorable experiences with "farm software" up to that point and was pretty skeptical of what I was going to be able to show him.  He pretty much told me to have paper back up of everything I was gong to present with Transaction Plus, which of course wasn't a problem.  To cut to the chase, after he'd been here for a little over an hour (and saying "amazing" more than a few times at the dexterity of the program), pretty much gave up looking for fraud, evasion, graft or greed. He "taxed" me on finding the limits of the reports function as he tried to find out just how much information could be generated.

I completed my second audit this week which was triggered by a feedlot client filing two 1099's on the same group of cattle.  It was precisely the same numbers on both forms, but the oversight computer tagged the return anyway.  The agent this time was familiar with FBS to a large part due to the fact that her supervisor is the same agent who conducted my 1991 audit.  She was thus already programmed to ask for the documentation reports that accompanied my Income Statement Report and went straight to work matching up info there with random check stubs and sales receipts.  "Sure makes my job a lot easier", was her satisfied comment.  I should note that I don't use the Tax Prep capability that you have in the software, for a variety of reasons, but it's nice to know that the IRS has enough faith in your products to make use of them for their audits.

Sincerely,
John Conway
Wellman, Iowa

John, you made our day!  Sorry you had to go through two audits in the process.  Glad we could be of assistance; however, you wouldn't have gotten through the audits unscathed if you weren't doing things correctly in the first place.  The opposite is also true: just because farmers use our software doesn't mean they'll maintain their accounting records properly or carefully.

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25 YEARS AGO…

We exhibited our very first program at our very first trade show—the National Pork Congress in St. Louis, Missouri.  Thefirst e.farmsmart reader to respond with the correct program name, computer/operating system it was designed for and the medium on which it was recorded will receive 25% off on any FBS module.  Send your answers to norm@fbssystems.com.  We'll announce the correct answer and winner and introduce a new 25-year-trivia question next month.

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SOFTWARE Q&A – WITH Q'S FROM YOU, OUR CLIENTS! Send us your questions/problems–be they short, long, simple or downright frustratin'!–about SeRVware and we'll handle them right "on the air" for the benefit of all. Q. Can FBS print checks on blank check stock? a. Yes!  This is a real time and money saver for those printing checks for multiple bank accounts.  No more switching check stock in the printer or using multiple printers to print checks or inventorying pre-printed check forms for each account!  Our Farm/Trust Manager system has offered this feature for years, but most of our TransAction Plus clients are unaware that this is an option with their program. Before you order blank check stock from FBS Forms, you'll need to check on these items:     1.    You must purchase MICR fonts for your computer (to print the routing codes in machine-readable formats).  Sources are available over the Internet.  (For example, some of our clients have worked with matchfonts.com for approximately $39.95).     2.    A laser printer is recommended.  You may need to purchase magnetic ink or toner; check with the bank that processes your checks for their technical requirements.  Ink-jet printers don't print dense enough and generally require magnetic ink.  Magnetic toner or ink is available from several websites or through office supply stores.     3.    The support staff at FBS will assist you in setting up a text file called TA-FORM.xxx using your Notepad program.  This file will print all of the text that is usually preprinted on the check.  You can even print your logo if the file is in bitmap (bmp) or jpeg (jpg) format. Call in your questions (800.437.7638) or e-mail them to support@fbssystems.com. Top of Page CLIENT'S CORNER •   In The News! Jeff Sollars, Washington Court House, Ohio, modified his Kinze planter to save seed and leave a path for his sprayer in March 2005 Corn and Soybean Digest cover story, "Skip Rows, Save Dough." Harlan Downing, Colby, Kansas, demonstrates another twist to field guidance (RTK Trimble AutoPilot) in the January, 2005, Farm Journal article, "Without a Mark." •   Congratulations! Iowa Pork Producers President Elect, Dr. Gene Ver Steeg joins President Steve Kerns. Scott Tapper serves on the IPPA Board of Directors. Top of Page