Beef Board Troubled by Issues Found in NCBA Compliance Review

July 27, 2010 04:19 PM

Beef Today Editors

“An independent accounting firm tested charges from NCBA to the beef checkoff in five areas and found many expenses that were either improperly charged to the checkoff or insufficiently documented," said Robert Fountain, Jr., producer and Cattlemen's Beef Board Secretary-Treasurer.

As an example he cited: international and domestic travel expenses for the spouses of staff and volunteer leadership, consulting fees for the purpose of investigating a certified beef program for the 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 were charged in full or in part to the checkoff. The exceptions noted by the CPA firm included all three periods tested, but were more prevalent in FY 2009 and the first five months of FY 2010.

“These findings are extremely troubling to the CBB Executive Committee," says Fountain."For this reason, CBB will begin a more comprehensive compliance review of NCBA for FY 2009 and FY 2010. CBB will also implement new monthly review procedures of NCBA’s checkoff expenditures and will issue more detailed guidelines to all contractors. The objectives of the additional testing will be to gain a better understanding of the CPA firm’s findings, to determine the pervasiveness of the reported issues, and to calculate the monetary impact of those issues on the amounts billed by NCBA to CBB and the Federation."

In an initial response, Steve Foglesong, NCBA President and producer from Illinois, said the organization received the independent accountaint's final report on Monday evening. "We are committed to achieving accuracy in this report. Responsible use of the producer dollars and ensuring the financial firewall are critical. Where mistakes were made, we will correct them. 

"A compliance review has been conducted every year of NCBA’s 14-year existence. There has been a transparent as well as full reconciliation of expenses when warranted. Every time there is a review, there are lessons, and we consider those an opportunity to fine-tune our processes going forward."

Click on these links for copies of the Executive Summary and the full Compliance Review.

Backgrounder from CBB:

All checkoff contractors and subcontractors are subject to compliance reviews and audits. It is the responsibility of checkoff contractors to assure that checkoff funds are being used appropriately, and it is CBB’s responsibility to monitor checkoff contractors. To this end, CBB has the legal responsibility to perform reviews of its contractors periodically, and to oversee and enforce the rules regarding checkoff expenditures.

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.

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.

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