SYSTEM OF ACCOUNTS FOE FARMERS' COOPERATIVE ELEVATORS. 3 
either by measurement of the grain in the bins or by running it out 
of the bins and through a hopper or automatic scale, thus getting 
actual weights. The practice of taking estimated inventories by 
reference to the reports accumulated during the year's business is 
dangerous and, in most cases, absolutely inaccurate. The average 
platform scale has a weighing error of from 3 to 15 pounds per 60- 
bushel load. This weighing error accumulating during a whole year 
sometimes amounts to a shortage or "overage" of hundreds of 
bushels. By taking inventories from grain reports, the elevator may 
after five or six years, find itself with a book grain stock out of all 
proportion to the actual grain on hand at the time of inventory. 
By taking an actual inventory, the shrinkage or "overage" of each 
kind of grain is accounted for within the year to which it applies, 
and, if abnormal, can be checked up easily if an actual inventory has 
been taken the season before. 
AUDITING THE BOOKS. 
One of the features in elevator bookkeeping upon which great 
stress should be laid and to which an important position should be 
assigned is the auditing of the books as soon as the inventory has 
been taken. The custom prevailing among farmers' elevators of 
having internal audit committees furnished from the board of direc- 
tors or the stockholders is commendable only to the extent of its 
usefulness in keeping the directorate in close touch with the business 
of the elevator. The positive value of such an audit, in so far as it 
is able to detect errors of principle or even clerical errors, is neg- 
ligible, since, as a rule, the men making the audit are not especially 
trained for such work and use very little time to complete their re- 
ports. It should be apparent, then, that it is good business practice 
to secure the services of a certified public accountant who has had 
sufficient practice in elevator accounting to be able to give vital in- 
formation and advice to the manager and directors of the elevator. 
Internal audit committees may work in conjunction with such an 
auditor, thus shortening the period of his labors as well as benefiting 
themselves by contact with him. The item of cost in connection with 
the hiring of public accountants has been the deterrent factor which, 
to a great extent, has kept the farmers' elevators in the past from 
availing themselves of such services. By banding together, sev- 
eral cooperative elevator companies might give an accountant steady 
employment throughout the year and secure his services at a greatly 
reduced rate. 1 
i For further discussion of auditing, see U. S. Department of Agriculture Bulletin No. 178— Cooperative 
Organization Business Methods. 
