| July 28, 2010 | |
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USCA: Beef Checkoff Audit Reveals Troubling Improprieties |
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U.S. Cattlemen’s will work to restore integrity to national program... Contact: Jess Peterson 202/870-3867 - usca@uscattlemen.org |
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| USCA (July 28, 2010) - The U.S. Cattlemen’s Association (USCA) said today that the recently released compliance audit of the National Cattlemen’s Beef Association (NCBA) as a beef checkoff contractor contains findings that are extremely troubling, and that the report demonstrates the need for immediate, definitive action to restore and protect the integrity of the national mandatory beef checkoff program. While it is the responsibility of checkoff contractors and subcontractors to assure that checkoff funds are used appropriately and within the parameters of the law, it is the legal responsibility of the Cattlemen’s Beef Board (CBB) to monitor and routinely audit checkoff contractors. In February 2010, the CBB began the process of conducting a routine compliance audit of the NCBA. The CBB engaged an independent CPA firm to perform a review testing 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. The audit period tested records for FY 2008 and 2009, as well as the five months ended February 28. 2010. Different facets of the checkoff are reviewed each year, so expenditures for multiple years were tested. In this year’s review the independent accounting firm randomly tested charges from NCBA to the beef checkoff in five areas and found expenses that were either improperly charged to the checkoff or charges that were insufficiently documented. These included international and domestic travel expenses for spouses of staff and volunteer leadership, consulting fees that benefited NCBA’s policy division, travel performed for the purpose of initiating an NCBA-member insurance program and time spent by employees in meetings related to non-checkoff revenue development that were charged in full or in part to the checkoff. In one instance, travel expenses for an NCBA senior staff member’s spouse to attend the Five Nations Beef Conference in New Zealand were improperly charged to the overhead cost pool allocated to the checkoff program. One expenditure, of which 50 percent was charged to the Federation, included travel expenses for an NCBA board member to attend a meeting of the Hawaii Cattlemen’s Association. Substantiating information provided by NCBA was insufficient to validate that the expenses should have been attributed to the checkoff. When reviewing NCBA’s process of selecting subcontractors for checkoff related activities, the CPA firm found that NCBA files did not contain evidence of a competitive bidding process for subcontractor selection as required. Further, these subcontractors were not listed on the approved list that exempts subcontractors from the competitive bidding process. The CBB has announced that it will commence a more comprehensive compliance review of NCBA for FY 2009 and 2010 and has announced that it will implement new monthly review procedures of NCBA’s checkoff expenditures as well as issue more detailed guidelines to all contractors. CBB officials say the additional review will result in a better understanding of the scope of the improprieties and to calculate the monetary impact of the amounts billed by NCBA to the CBB and the Federation. Chuck Kiker, USCA Vice-President, Beaumont, TX said, “The independent review clearly shows that financial fire walls have been breached at NCBA and this raises very serious issues that must be rectified quickly. The CBB responded to the report almost immediately with appropriate actions, including a more in-depth review of NCBA records and the initiation of monthly procedural reviews of NCBA’s checkoff expenditures.” Kiker said NCBA’s initial public response to the audit report is very disturbing. NCBA’s President Steve Fogelsong said in the response that the accountant’s inability to determine compliance on select items does not mean non-compliance; rather, it is an indication that written guidelines are needed to achieve compliance. “After 14 years of contracting for checkoff funded projects, NCBA is still having trouble documenting expenses and transactions so that auditors can make proper compliance determinations. NCBA would like producers to believe that there are no written guidelines on documenting expenses and transactions and that there is no training to explain to NCBA staff what they can charge to the checkoff and what expenses NCBA’s policy division is responsible for. Some of the questionable or inadequate documentation is being done by senior staff members,” noted Kiker. “As producers we should feel confident that these discrepancies were found through the robust system the CBB has in place to monitor checkoff contractor expenses,” continued Kiker. “The CBB is diligently working to ensure that producers’ checkoff funds are used appropriately and within the letter of the law. USCA has consistently argued that a distinct and clear separation between the Federation and NCBA is needed and that such a separation will restore the trust and faith in the checkoff program we need to allow it to flourish and carry out its mission to promote beef.” |
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