What it is
A farm audit is an inventory audit with weather. Growing crops, stored grain and livestock make up much of the balance sheet, and each is measured by estimate: yield, grade, weight and market price at year end. Commodity contracts and government programs add revenue questions.
The program covers crop and livestock counts and valuation, grain stored at third parties, commodity and hedge contracts, government and insurance payments, land and equipment, seasonal borrowing, cooperative equity and related party land rents. Steps carry an assertion, sample-size note, W/P reference and sign-off.
When to use it
- Planning the audit of a crop, livestock or mixed farming operation.
- When the farm stores grain at elevators, hedges with futures or receives program payments.
- To document the response to inventory valuation and cutoff risks.
What’s inside
- Crop and livestock inventories: count, quantity, grade and valuation
- Revenue, government programs, insurance recoveries and commodity contracts
- Debt, land and equipment, leases and related party arrangements
- Tie-outs and general procedures
Standard cited
This template follows AU-C 330 / AU-C 501 / ASC 905. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use. See AU-C 330 explained, AU-C 501 explained.
Questions
How do you observe grain in bins?
Attend the count, measure or review the measurement of each bin or pile, test moisture and grade adjustments, and agree quantities to the records. Partly filled bins and piles need measurement of the volume and consideration of settling.
How is grain stored at an elevator tested?
Confirm quantity, grade, ownership and storage charges with the elevator and examine warehouse receipts and scale tickets. Distinguish grain the farm owns from grain sold on a deferred price contract, where the sale may already be complete.
Can the financial statements be on a basis other than GAAP?
Many farm financial statements are prepared on the cash or income tax basis, which is a special purpose framework (AU-C 800). The auditor’s report and the disclosure of the basis differ from a GAAP audit.
Related templates
- Audit Program: Inventory
- Inventory Observation Memo and Test Count Sheet (AU-C 501)
- Audit Program: Debt and Equity
- Related Party Questionnaire for Management (AU-C 550 / ASC 850)
Last updated 11/05/2026. All free templates.