Audit: NCBA Misused Checkoff Funds

The Executive Summery of the compliance review can be found here. It sums up problems that many ag groups have expressed concerns about finding. It appears those concerns are not unfounded.

The report states that “the exceptions and undetermined items reported 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.”

According to…

A routine compliance review indicated that the National Cattlemen’s Beef Association has misused beef checkoff dollars, prompting further investigation, Cattlemen’s Beef Board Secretary-Treasurer Robert Fountain Jr. said today in a news release.

The review, conducted by CBB with the help of an independent accounting firm, included fiscal years 2008 and 2009 as well as the first five months of fiscal 2010, ended Feb. 28.  The review specifically tested overhead costs; employee time reporting as a basis for the allocation of salaries and benefits to the checkoff; travel expenses; costs of NCBA’s Federation of State Beef Councils division; and subcontractor selection procedures.

NCBA charges to the checkoff in these five areas, Fountain said, showed expenses improperly charged or insufficiently documented. Among them, he said, were travel expenses for the spouses of staff and volunteer leadership; consulting fees for investigating a certified beef program for the policy division; travel performed to initiate 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 alleged infractions occurred in all three periods tested, but they were more prevalent in fiscal 2009 and the first five months of fiscal 2010, Fountain said.

“These findings are extremely troubling to the CBB Executive Committee,” he said.

National Cattlemen’s Beef Association President Steve Foglesong said the organization will work to correct any mistakes made with regard to alleged misuse of beef checkoff dollars and supports the development of written guidelines to ensure compliance.

Foglesong said NCBA takes compliance seriously, which is why it keeps separate bank accounts. He contended the group’s accounting and time keeping procedures are on par with or exceed most industries’ standards. In that system are more than 8,000 coding options for assigning time and expenses to help ensure accuracy.”

The report has been sent to the USDA’s Agricultural Marketing Service, which oversees the beef checkoff, as well as Beef Board members and qualified state beef councils.

The revelations come on the heels of a recommendation from the Cattlemen’s Beef Board that NCBA and the Federation of State Beef Councils should separate to prevent checkoff funds from being used for policy purposes. NCBA has also rescinded a proposed governance change due to criticism that the new structure would allow for checkoff funds to be influenced by the policy arm of NCBA.  A number of ag organizations including AFBF had concerns about the proposed changes and sent a letter to USDA asking for a review of the proposed governance changes.


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