Fair value accounting in the agricultural sector: some implications for international accounting harmonization

In a recent issue of this journal, Argiles and Slof (2001) analysed the main features of the European Farm Accountancy Database Network (FADN) against the backdrop of IAS 41, the new international accounting standard on agriculture, and arrived at the conclusion that FADN offers an excellent tool for operationalizing IAS 41 in European farms. The present study revisits some of the key issues in Argiles and Slof's paper in a wider international context and highlights their implications for the harmonization of farm accounting practices around the world. In particular, this paper contends that there are some key provisions of IAS 41 that are incompatible with the European Union Fourth Directive which Argiles and Slof (2001, p. 364) apparently overlooked by focusing only on aspects of the directive that sanction current value measurement and ignoring those that relate to the treatment of associated holding gains or losses. Furthermore, this paper also demonstrates that Argiles and Slof's argument that simplicity is another improvement of IAS 41 vis-a-vis the French Plan Comptable General Agricole is flawed. Indeed, it is shown here that it would be virtually impossible to implement IAS 41 in Francophone countries in the absence of a fundamental revision, if not complete abandonment, of the plan comptable, at least in view of major conceptual differences between the notions of income, production and value added espoused by national statisticians and those enshrined in IAS 41.