By DOUG SCHMITZ
Iowa Correspondent

ADRIAN, Ga. — An independent accounting audit of the National Cattlemen’s Beef Assoc. (NCBA) – the Cattlemen’s Beef Board’s (CBB) main contractor of beef checkoff programs – last month revealed specific financial discrepancies in the group’s documentation of money allocated among some of its staff members.

In the CBB’s compliance review of the NCBA, released on July 27, the accounting firm Clifton Gunderson tested charges from the NCBA to the beef checkoff in five areas, finding many expenses that were either improperly charged to the checkoff or insufficiently documented, according to Robert Fountain Jr., CBB secretary-treasurer and Adrian, Ga., cattle producer.

“For example, international and domestic travel expenses for the spouses of staff and volunteer leadership,” he said, “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.”

In February, the CBB conducted a routine compliance review of the NCBA through Clifton Gunderson to perform agreed-upon procedures at the NCBA. The compliance review included checkoff expenditures of the Federation of State Beef Councils Division of the NCBA, which covered fiscal years 2008, 2009 and part of 2010, through Feb. 28.

In late June, the CBB Executive Committee recommended separating the Federation of State Beef Councils from the NCBA to avoid any appearance of impropriety involving allocating funds toward the organization’s regulatory and fundraising efforts.

The Federation of State Beef Councils passed a resolution on July 31 during the Cattle Industry Summer Conference in Denver, Colo. to maintain its partnership with the NCBA, said Federation Division Chair Scott George. He added it was clear that greater independence is needed but not separation.

“We asked our Federation people where they want to be housed. The issue was whether or not the Federation should be separated from NCBA or stay with the national organization,” said George, who is also a Wyoming dairy and beef producer. “They decided to stay under the NCBA umbrella but act in a more independent manner. As we move forward, we will be working to develop a structure that ensures greater independence, while still maintaining our 14-year successful working relationship with NCBA.”

On May 25, NCBA representatives met with USDA officials in Washington to address what was called “grave concerns” raised to USDA Secretary Tom Vilsack by six other major farm groups regarding the NCBA’s policy and lobbying activities within the U.S. cattle industry, which Clifton Gunderson didn’t specifically address in its audit.

On July 27, Steve Foglesong, NCBA president and an Astoria, Ill., cattle producer, said the NCBA is committed to achieving accuracy in the report.

“Responsible use of the producer dollars and ensuring the financial firewall are critical,” he said. “Where mistakes were made, we will correct them. A compliance review has been conducted every year of the 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.”

According to the CBB, all checkoff contractors and subcontractors are subject to compliance reviews and audits to assure funds are being used appropriately. Foglesong said the NCBA agreed with the CBB that written and specific guidelines are needed for all checkoff contractors.

“The accountant’s inability to determine compliance on select items does not mean noncompliance,” he said. “Rather, it is an indication that written guidelines are needed to achieve compliance.”

Foglesong said the NCBA keeps separate bank accounts, and its accounting and timekeeping procedures include more than 8,000 different coding options for accurately assigning time and expenses.

“We strive for accuracy and will continue to seek clarity on guidelines to ensure compliance,” he said. “When the NCBA merged with the National Livestock and Meat Board, the NCBA became more than a policy organization.

“The NCBA became the home for the Federation of State Beef Councils, and as such, the number-one champion for the beef checkoff. Our employees log more than 200,000 hours annually, building and protecting beef demand. Every hour is focused on delivering results that matter, with a strong focus on being accountable to producers.”

Foglesong said a complete response to Clifton Gunderson’s report was addressed with the CBB, participants from state beef councils and state cattlemen associations and NCBA directors at the Cattle Industry Summer Conference, July 28-Aug. 1.

Foglesong added a more comprehensive compliance review of the NCBA for FY 2009 and 2010 is planned, as well as implementing new monthly review procedures of NCBA’s checkoff expenditures to determine the pervasiveness of the issues, and calculate their monetary impact.