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Agricultural News

Compliance Review Results of NCBA's Handling of Beef Checkoff Funds Extremely Troubling to Beef Board Leadership

Mon, 26 Jul 2010 22:29:49 CDT

Compliance Review Results of NCBA's Handling of Beef Checkoff Funds Extremely Troubling to Beef Board Leadership The Cattlemen's Beef Board has just released a Compliance Review of their major contractor for beef checkoff programs- the National Cattlemen's Beef Association. The audit comes just ahead of the Summer Conference of the Cattle Industry that will be held in Denver this week- and the CPA firm that conducted the audit for CBB, Clifton Gunderson, appeared to detect a pattern of problems with adequate documentation to prove many expenses were properly allocated to the checkoff overhead that NCBA is allowed to claim as a contractor.

According to the conclusion found in the Executive Summary of the Compliance Review- there are significant problems that NCBA must address and there appears to be some rebuilding of the "firewall" that is talked about so often by checkoff groups. The conclusion says "It is evident from the report that the exceptions and undetermined items identified by CG occurred in all periods tested, but the prevalence was greater in fiscal years 2009 and 2010. In addition, the nature of several of the exceptions and undetermined items reported by CG clearly indicates that NCBA breached the financial firewall during the periods tested and that NCBA did not maintain sufficient documentation in many instances to adequately support the separation of expenditures between the policy side of NCBA and the checkoff side of NCBA. Although not reported as such by CG, CBB considers this lack of sufficient documentation to be noncompliance."

It's interesting to note that the major issues reported by the CPA firm do not have a lot to do with how the Federation of State Beef Councils handles money- it's more about someone at NCBA not stepping up and demanding more details on how work is done and who it is performed for- and having the paper trail to prove it.

There are some things that will likely be hard to explain and will be embarassing to the NCBA. Travel has been a difficult issue for the NCBA management in the last couple of years and the Compliance Report shows on Page 8 of the report that "A senior staff member expensed travel costs totalling $3,592 related to his spouse's travel to New Zealand for the Five Nations Beef Conference and his spuse and child's travel to San Antonio, Tx to the overhead cost pool." The report points out that these costs should have been paid by the staff member or allocated to the policy side of the NCBA. The report cites federal rules which come into play "Checkoff funds cannot be used for spouses travel per the Ag Marketing Service guidelines." In many other cases, thousands of dollars are questioned by the CPA firm as not having documentation backing up which pot of money should have paid for the expense.

According to CBB staff, the most recent Compliance Review of the NCBA was held in about 2005 and focused on the process of how money was allocated back to either the Beef Promotion Operating Committee, the Federation side of NCBA and the Policy- Dues Paying Side of the NCBA. In February 2010, the Cattlemen's Beef Board (CBB) began the process of conducting a routine compliance review of the National Cattlemen's Beef Association (NCBA) by engaging an independent CPA firm to perform agreed-upon procedures at NCBA. This firm reviewed NCBA compliance with its agreements to conduct checkoff-funded programs in the areas of beef promotion, research, consumer information and industry information. The compliance review also included compliance of checkoff expenditures of the Federation of State Beef Councils Division of NCBA (Federation). This compliance review included fiscal years 2008 and 2009 as well as the five months ended February 28, 2010. The agreed-upon procedures were performed to test: NCBA's allocation of overhead costs; employee time reporting as a basis for the allocation of salaries and benefits to the checkoff; travel expenses; Federation costs; and subcontractor selection procedures.

We have audio below from the Cattlemen's Beef Board's Robert Fountain, Jr., cow-calf producer from Adrian, Ga. and CBB Secretary-Treasurer who offered the statement that you can click on the Listen Bar below and hear.

Click here for the Executive Summary of the Compliance Report. The entire 18 page report is also available as released on Monday evening by the Cattlemen's Beef Board- click here for the entire Compliance Review for 2008-2009 and early 2010.

In addition to Beef Board members and qualified state beef councils, this independent report has been forwarded to USDA-Agricultural Marketing Service, the oversight agency for the beef checkoff, for review and input.


Robert Fountain, CBB Secretary-Treasurer, explains Beef Board Reaction to Compliance Review of the NCBA.
right-click to download mp3


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