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Agricultural News

Beef Industry Groups Tell Federation of State Beef Councils- Recent Audit Results are Worrisome

Fri, 30 Jul 2010 5:01:17 CDT

Five of the industry groups that initially raised concerns about the relationship of a national checkoff entity within one group (Livestock Marketing Association, American Farm Bureau, National Farmers Union, National Livestock Producers Association and U.S. Cattlemen's Association) have responded to the Federation of State Beef Councils' Chairman Scott George regarding his July 21 email request for the groups' current position on the proposal to restructure the National Cattlemen's Beef Association (NCBA) and Federation of State Beef Councils governance.

"Each of our organizations has its own concerns about the proposed NCBA governance structure changes and has provided feedback and suggestions in several meetings with NCBA representatives," the groups wrote. "Although the time line for moving forward on these proposals has been recently delayed by NCBA, the groups' individual concerns and positions regarding the financial, operational and governance fire walls have been clearly communicated."

"Additionally, the third-party review released Monday by the Cattlemen's Beef Board (CBB) raises further questions and concerns that must be examined and addressed and will no doubt influence the larger discussion going forward," said the groups. Click here to read the full letter sent to Chairman Scott George

Earlier this week the results of a third-party NCBA checkoff compliance review were made public, heightening concerns that fire walls have been breached between the policy and checkoff divisions of NCBA.

Compliance reviews for beef checkoff contractors are routinely conducted and typically review a random sampling of transactions. For the period in review, a sampling of less than one percent of transaction records uncovered nearly $40,000 in violations including international travel expenses for an NCBA senior staff's spouse, which were allocated to the beef checkoff. It is highly unlikely that with errors of this magnitude found in one percent of the transactions that the other ninety-nine percent will be free from errors or exceptions.

The CBB has announced that it will conduct a more thorough review of FY 2008, 2009 and the five months ending February 28, 2010 in order to better understand the scope of the violations and the fiscal impact on the checkoff.

"Obviously, a more in-depth compliance review of NCBA is needed and we support the CBB's intent to do so," said Jon Wooster, USCA President. "It would also be very appropriate for the CBB to request from its auditing firm an extrapolation of errors found during the first NCBA compliance review, which will help us understand the potential scope of the problem."

"The Federation of State Beef Councils is not in a position to be making any demands of producer organizations, given the circumstances that have emerged this week regarding the compliance review," continued Wooster. "One would think the Federation's energy and resources should be spent on providing checkoff-paying producers with the serious response they deserve about these recent events rather than focusing on a governance restructure that further dilutes the Federation's control over the check-off dollars they are responsible for."

"Based on the amount of checkoff money involved in the violations found in the recently released routine compliance review of less than one percent of total transactions, it's imperative that further procedures be performed to determine how much checkoff money has been misused or misreported," continued Wooster. "Checkoff-paying producers deserve nothing less than absolute transparency in this process. After all, it's their money that's at stake."

"The CBB, which has oversight responsibility and jurisdiction over the Federation of State Beef Councils, is to be commended for its actions to preserve and enhance the integrity and credibility of the national beef checkoff program," commented Wooster. "Every cattle producer in the nation is watching what happens this week at the CBB and NCBA meetings in Denver. USCA members support the CBB's intent to conduct a further financial review as quickly as possible and to make the findings public. We urge the CBB to continue representing all producers."


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