An unprecedented survey released last year showed the main technological advances in Brazilian agriculture. The study, carried out by Sebrae, in partnership with the Brazilian Agricultural Research Corporation (Embrapa) and the National Institute for Space Research (Inpe) with agricultural producers from all states of Brazil, companies and service providers, concluded that the majority analyzed positively, technological advances in rural activities; 67.1% of respondents believe in the growing need to use technologies in planning activities on the property and 59.7% want to apply the new tools to the management of rural property.
This perception of the need to increase control and management of activities is directly reflected in accountability to national authorities. The Brazilian government has increased the requirements in relation to information and detailing of the declaration of the Income Tax for Individuals (IRPF) and of the Rural Producer's Digital Cash Book (LCDPR).
"The Brazilian rural producer has benefits on the Income Tax and the calculation of profit has become more digital,” Marcelo Valentini, Audit partner and industry leader at Grant Thornton Brasil, assess. He notes that several information are already filled in by the system itself and that the Brazilian IRS crosses reference of the data from other tax returns, for example, from a dealership from whom the producer has purchased a pickup truck. “The level of demand is higher because the system facilitates inspection, requiring more in-depth control. Often, if the producer does not record the change, but the supplier or customer informs him, he is more vulnerable to inspection by the Brazilian IRS.”
The specialist explains that accurate accounting, in accordance with best practices and with attention to tax issues, serves as a basis for decision-making, facilitates the relationship with financial institutions and the market and ensures greater transparency within agricultural families or condominiums, in addition to enabling analyzes to reduce the tax burden.
“The company's own accounting manages to help reduce taxes, planning purchases and monitoring inputs and outputs in detail,” he says.
Another advantage of proper control of numbers, balances and the seal of an audit is to ensure easier access, less time consuming and less costly to ESG credits. “The market is very heated in the release of green credit.”
Valentini comments that many rural producers work only with cash flow, but when there is a more detailed management of the numbers, it is possible to have a broader view, which facilitates accountability for partners, large customers and suppliers. “Some ask for this information to prove whether the producer has the capacity to honor their sale or purchase. With this transparency and more reliable numbers, in addition to strengthening governance and the image with the market and suppliers, it will be easier to design a succession and raise funds, as it will have statements in accordance with Brazilian and international accounting practices,” Valentini evaluates.
It is important to emphasize that the accounting control must be done on a daily basis and not just for the Income Tax Return, because the more control and planning, the better the monitoring of the company's evolution will be. “This way, the producer can know where the money is going to, structure management based on results, design a succession closer to reality and even facilitate accountability between the partners,” he says, noting that well-structured management allows for analysis of numbers.
“If we find that the money is spent especially on a group of accounts, for example, or is concentrated more on one period than on others, we can assess what is there, whether all that expenditure is necessary and check alternatives. With cash flow alone, this monitoring is not possible. In the accounting issue, we understand whether the data is correct, whether the cost was necessary or was an unnecessary lapse, we monitor the evolution of the use of resources and check whether it is possible to cut expenses and increase profitability.”
With the large volume of resources involved, control with just a spreadsheet limits the options for analyzing and improving the application of values, reducing taxes and the search for options that guarantee other advantages to improve profit. “When the producer ceases to act as an individual and becomes a company, he starts to have tax exemptions and receive credits back, which helps to increase his profit. We showed him this in figures, but the company needs a higher level of governance and controls.”
We follow the step-by-step process for structuring numbers and information that lead to improved governance, we carry out an accounting and tax review, with an audit process that will promote a greater level of visibility for the company in the market.
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