A routine compliance review of the National Cattlemen's Beef Association has revealed some weaknesses in the way NCBA expenses are charged as beef checkoff activities. The audit, covering January 2008 through February 2010 indicates a pattern of insufficient documentation and noncompliance. The review covered the Beef Promotion Operating Committee in the areas of beef promotion, research, consumer information and industry information; and compliance of checkoff expenditures of the Federation of State Beef Councils Division of NCBA.
The report notes that maintaining complete and accurate documentation of expenses which supports the eligibility for checkoff reimbursement is the responsibility of NCBA and failure to do so is considered to be noncompliance. The report concludes that the nature of several of 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.
Late Tuesday afternoon the NCBA issued its response to the problems found during the audit. Steve Foglesong, NCBA President and a producer from Illinois, pledged that where mistakes were made, they will correct them. He says that NCBA understands the importance of compliance with the financial firewall and accepts this responsibility without question.
Compliance reviews are nothing new to the NCBA. A compliance review has been conducted every year of NCBA's 14-year existence. Foglesong says every time there is a review, there are lessons, and they consider those an opportunity to fine-tune processes going forward. The accountant's inability to determine compliance on select items does not mean non-compliance. Rather, Foglesong says it is an indication that written guidelines are needed to achieve compliance.
"Our commitment is to address the compliance review through a very factual and transparent process with our Federation partners, Cattlemen's Beef Board and the U.S. Department of Agriculture, which share accountability to producers who pay the checkoff," Foglesong said. "A complete response to the accountant's report will be addressed with CBB, participants from state beef councils and state cattlemen associations and NCBA directors at this week's Cattle Industry Summer Conference."