If you are a Corn Belt farmer, and have corn or soybeans covered by crop insurance, there is a strong possibility you may have a claim to file for either loss of production or revenue.
With an estimated $20-30 billion to be paid this year in crop insurance indemnity checks, both the USDA’s Risk Management Agency and the crop insurance companies have to ensure that all claims are valid, and have made it well known that anyone with a claim of more than $200,000 will be subject to an audit.
But how do you prepare for an audit? What records do you need? Here are answers to your questions.
The auditing process should not be considered as a witch hunt, and anyone audited should not consider themselves as being suspected of financial shenanigans. The audit is something required by law and is part of the crop insurance process as much as signing and dating your application for coverage.
Additionally, it might be said that anyone farming for multiple landowners, and under the scrutiny of a farm manager, may already have all of the required information at hand. For many farms with good record keeping systems, those documents and data will likely satisfy the audit process.
Different companies may handle the audit in different ways, but the following information comes from one of the largest crop insurance providers and will be close to what the others require as well.
The audit will come after your harvest, and possibly after you have either used or disposed of some or all of your grain. Subsequently, data will depend on where the grain remains or its means of disposal: farm stored, commercially stored, sold to another end user, or fed on the farm. Data will be needed from the 2012 crop, along with that of the prior two years.
Data needed for farm stored grain:
Measurement of grain in bins will help determine total production, and measurement can be done by FSA staff or a third party approved by your insurance company. Your insurance company may have a worksheet which will be handy in completing that process. The data will need a measurement of the structure, the insurance units involved, the FSA farm numbers that produced the grain, and a legal description of the field.
If the grain was weighed before it was stored on the farm, a certified scale must be used and the scale tickets will be handy. Such scales should be non-portable farm scales or commercial elevator scales.
A grain cart with a scale can be used, if the scale prints a ticket, and if the integrated display panel shows the weight, and if the grain cart is available for inspection to determine its capacity. Since the tickets fade over time, they should be photocopied to help with the permanency of the information.
Acceptable weight tickets from each load must be provided. Federal Crop Insurance Corporation requires:
- Insured’s Name
- Load Number or Ticket Number
- Gross Weight
- Tare Weight
- Date Weighed
- Net Weight of Production
- Field Identification from which the production was harvested for correlation with the unit number of the stored crop.
- Identification and/or location of farm-storage structure in which the load(s) are stored and/or satisfactory explanation of disposition of the production, if any or all of the production is no longer stored at the time of inspection.