DENVER, CO — The National Cattlemen’s Beef Association is speaking out about an audit performed on how money was being spent for the Beef Checkoff Program.
The audit was performed by an independent firm brought in by the Cattlemen’s Beef Board. The CBB said it began the process of conducting a routine compliance review of the National Cattlemen’s Beef Association of the fiscal years 2008, 2009 and ended Feb. 28, 2010.
Politics. Members of the National Cattlemen’s Beef Association alluded to problems revolving around politics and issues between the Cattlemen’s Beef Board and the NCBA in a conference call about the audit findings.
One thing to note is that a confidentiality agreement was in place by the NCBA and yet the audit was released to the public. The NCBA performs audits every year.
The CBB did not speculate on how the report was released, but did state the report had been released to Beef Board members and qualified state beef councils and was forwarded to the USDA-Agricultural Marketing Service, which is the oversight agency for the beef checkoff program.
Key issues. The problems revolve around some key things found by the audit: How employees time is recorded, travel costs and other expenses charged to the program.
One example noted in the audit is the travel expenses charged for a trip to New Zealand and Texas.
• A senior staff member expensed travel costs totaling $3,592 related to his spouse’s travel to New Zealand for the Five Nations Beef Conference. It also noted his spouse and child’s travel to San Antonio, Texas to the overhead cost pool. According to the audit’s findings, since these expenses relate to the spouse and child, the expenses should be recorded to the Policy Division. Checkoff funds cannot be used for spouse’s travel per the Agriculture Marketing Service guidelines.
NCBA Response: Even though this employee’s employment agreement provides for spouse travel to two industry meetings per year, we will be revising the terms of employment so that the two spouse trips allowed for in the agreement will not be charged to the checkoff division.
Mistakes were made during processing of the child’s travel and will be corrected. We anticipate this will result in a credit to the checkoff division of approximately $2,500.
Another item noted in the audit was in regards to how employees record and charge time.
• Three employees attended the NCBA Charity Golf Tournament. One employee coded his/her time entirely to the Checkoff program, one coded time to the Federation, and one coded time to the overhead cost pool. (September 2008)
NCBA Response: This event raises money for charities that honor NCBA employees who have died of cancer and a charity that supports disabled farmers and ranchers. Key checkoff customers/vendors participate in the NCBA Charity Golf Tournament.
Staff participate to support the charities and develop relationships for checkoff work. There are no policies that prohibit an employee from accompanying these key customers/vendors during their participation in this event. We believe this time has been appropriately charged.
The Cattlemen’s Beef Board released a statement about the audit July 29.
“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,” Robert Fountain, Jr., cow-calf producer, of Adrian, Ga. and CBB secretary-treasurer said in a statement on the CBB website.
What’s next? The NCBA is going to work on moving forward with their mission and have identified a plan of action.
• The NCBA plans to work with the Agricultural Marketing Service and the CBB to understand the written guidelines that are currently being developed.
• Identify guidelines that apply specifically to the beef industry.
• Determine potential NCBA policies and procedures to apply these guidelines and improve the processes.
Meanwhile, the CBB is also moving forward with a plan of action.
CBB will begin a more comprehensive compliance review of NCBA for the fiscal year 2009 and fiscal year 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 findings and to calculate the monetary impact of those issues on the amounts billed by NCBA to CBB and the Federation.