OIG calls for stronger oversight of checkoff boards
By Sara Wyant
© Copyright Agri-Pulse Communications, Inc.
WASHINGTON, March 28 - USDA's Agricultural Marketing Service (AMS) needs to strengthen its governance over the 19 research and promotion boards that the agency oversees by developing standard operating procedures and stronger guidance to ensure consistency in staff oversight, according to a new USDA Office of Inspector General (OIG) report released this morning. The boards collected about $528 million in checkoff or assessment fees in 2009.
The OIG said it initiated the audit, at the request of AMS's former administrator, after questions were first raised regarding activities within the United Soybean Board (USB) and the United States Soybean Export Council (USSEC). The investigative report, issued in July 2010, stated that “there was insufficient evidence to support the allegations made by the complainant. However, agents working on the investigation were concerned that the allegations were in areas overseen directly by AMS, but had not been detected by agency officials.”
Prior to November 2010, AMS had not provided “sufficient clarity” about the various roles and responsibilities it had in overseeing checkoff funds, explained OIG in their audit. In addition, AMS did not always ensure that boards provided the critical information needed to accurately assess board activities. The revised guidelines released in November 2010, clarified the Agency's oversight role by reinforcing its management reviews of Boards and strengthening policies on various administrative functions, but OIG said more improvements are still needed.
“We concluded that AMS' oversight controls need to be improved to prevent or detect the misuse of board checkoff funds,” noted OIG in the report. “Specifically, AMS' oversight policies were unclear regarding the agency's roles and responsibilities and the specific oversight procedures AMS staff must perform. In addition, staff did not always enforce the agency's guidelines. As a result, AMS' staff misinterpreted and inconsistently applied those policies when overseeing the activities and operations of the various boards. This condition increases the risk that funds could be misused by boards.”
For example, the report notes that the “Soybean Export Council, used subcontracts as a mechanism for paying employees unauthorized bonuses totaling approximately $302,000. The Council's executives did not obtain authorization from the USB to pay the bonuses. The Council requested funds, but did not specify the purpose or use of the funds. The USB became aware of the bonuses when the Council made another request for funds at yearend, due to its poor financial situation. An independent review of checkoff funds at another board uncovered charges for unallowable travel expenses as well as unsupported charges. AMS officials stated these charges were misallocated and later refunded to the checkoff board. However, these incidents contributed to our concern that AMS' oversight controls were not adequate to prevent or detect the potential misuse of funds.”
The OIG report pointed out how AMS could further improve its oversight of research and promotion boards by providing standard operating procedures for staff to follow and better defining roles and responsibilities.
“Two of AMS' roles not adequately defined are its responsibilities to prevent checkoff funds from being used for lobbying activities and its responsibilities to monitor subcontracts awarded by the various boards,” the report noted.
The report noted that AMS did not previously recognize in the Guidelines that its oversight role extends to monitoring subcontracts. “Boards often enter into subcontract agreements in order to carry out their regular activities, therefore, the activities of subcontractors should be reviewed with equal scrutiny since they perform some board functions. Although AMS officials stated that they review some of these transactions when they conduct management reviews, the Guidelines did not formally state this responsibility. It is important for AMS to formally recognize this role to prevent problems involving subcontracts.”
AMS Acting Administrator David Shipman concurred with the recommendations. In a release issued today, the agency pointed to changes that have already taken place, including:
• Revising its guidelines in November 2010 by reinforcing its management reviews of boards and strengthened policies on various administrative functions;
• Finalizing the AMS Standard Operating Procedures to ensure consistency in staff responsibilities in January 2012; and
• Implementing periodic internal reviews of the agency's Research and Promotion programs in order to evaluate and ensure consistency in the application of its policies and responsibilities.
In addition to the specific recommendations offered in the OIG report, AMS is also announcing a new policy that will strongly encourage upfront referendums as the preferable process to establishing all future Research and Promotion programs. “This will allow more direct engagement from interested stakeholders and the public prior to the establishment of a potential program and conforms to the Department's overall mission to provide additional transparency to the Research and Promotion programs,” AMS explained.
To read the full audit report, go to: http://www.agri-pulse.com/uploaded/USDA-oversight-doc-03282012.pdf
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