USMEF Audit and Budget Committee

Compliance Report

Presented by Reginald Staples

May 16, 2012

Provided for the Members of the

Audit Budget Committee 2 May 16, 2012

Compliance OverviewCompliance Overview

1. Promotes a culture of ethical behavior and commitment to compliance

2. Enables compliance with funding organizations, governing laws and internal policies and procedures

3. Communicates organizational expectations and commitment

4. Provides mechanisms for reporting potential compliance issues

5. Prevents and detects non-compliance

6. Makes a positive impression on membership and gives assurances to funding organizations

Provided for the Members of the

Audit Budget Committee 3 May 16, 2012

Compliance GoalsCompliance Goals

Establishing, monitoring, and enforcing policies, procedures and expectations that support the Code of Ethics and our values

Promoting awareness of USMEF compliance standards and expectations through communication and periodic training

Evaluating and continuously improving the compliance function

Provided for the Members of the

Audit Budget Committee 4 May 16, 2012

2012 Compliance Highlights2012 Compliance Highlights

Continue to Monitor Compliance Risks and Risk Control Procedures

USMEF Issued Updated International Accounting Manual Code of Ethics and Conflict of Interest (COI)

USMEF staff full participation in our Code of Ethics and COI acknowledgement annual process

USMEF EC members 95% completion of the new COI acknowledgement

Training and Communication Presented compliance topics at the November International Accounting

Conference Civil Rights Training – Denver Employees Send Periodic messages on relevant compliance topics

Internal Compliance Activities Food & Agriculture Export Alliance – Accounting and Governance Review Denver Voucher Review Oversee the development and implementation of corporate policies/procedures Continuous monitoring of all USMEF Bank Reconciliations Review processes to comply with new MAP guidelines - PENDING Follow-up review procedures

Provided for the Members of the

Audit Budget Committee 5 May 16, 2012

External Compliance AuditsExternal Compliance Audits The major funding organizations often conduct routine audits of the USMEF accounting records

to validate compliance with the respective funding agreements. The following schedule provides a status for each audit.

NPB – National Pork Board completed annual their audit with minimal findings Final audit report pending

CBB – Cattlemen's Beef Board audits Audit of 2009-2011 near completion Audit of 2012 ongoing monthly review and year-end procedures

OIG – Office of Inspector General review of the Agriculture Marketing Service’s oversight of the various research and promotion boards that administer checkoff

funds.

NCBA – National Cattlemen’s Beef Association monthly review with minor findings

FAS – Foreign Agriculture Services prior year audit completed with minimal findings. Report pending. The fieldwork for the current year audit is scheduled for the week of June 4 – 8, 2012

Provided for the Members of the

Audit Budget Committee 6 May 16, 2012

ClassificationClassification of USMEF of USMEF Government InteractionsGovernment Interactions

MS

Checkoff DefinitionActivities to influence USG policy or action – Cannot use check-off funds for this purpose

LDA and 990 DefinitionContacts with “covered” USG officials for the purpose of influencing USG policy or action. Note: USMEF pays tax on the time and expenses in this category.

1. Check-off funds may not be used to influence U.S. government policy or action

2. Lobbying is defined (per the LDA) as contacts with a covered U.S. government official for the purpose of influencing U.S. government policy or action

3. USMEF is not prohibited from engaging in lobbying activities to influence government policy or actions

4. Registration required if “lobbying activities” (per the LDA definition) constitute 20% or more of a USMEF employee’s time during any three-month period

Provided for the Members of the

Audit Budget Committee 7 May 16, 2012

Comparative Six Month TrendComparative Six Month TrendGovernment Affairs and Market Access Government Affairs and Market Access

SupportSupport

0

50

100

150

200

250

300

350

2011 - GA 2012 - GA

Government Affairs (GA)

Total Hours Beef Lamb Pork All Red Meat

-

10

20

30

40

50

60

70

80

2011 - MS 2012 - MS

Market Access Support (MS)

Total Hours Beef Lamb Pork All Red Meat

Provided for the Members of the

Audit Budget Committee 8 May 16, 2012

Potential Compliance Dashboard Potential Compliance Dashboard MetricsMetrics

Improve transparency and oversight

Audit Schedule Status – Scheduled, In-Process and Completed

Completed Audit Statisticsi. Quantify audit sample and total population subject to audit ii. Results of Audits - Number of exceptions and dollar amountiii. Classify each audit finding - error, application/interpretation or documentationiv. Number of Days Recommendations/Audit Findings Outstanding

Contract Compliance Review Activity – Number of contracts reviewed and dollar amount

Provided for the Members of the

Audit Budget Committee 9 May 16, 2012

2012 Compliance Projects2012 Compliance Projects

IT Governance

Oversee and Coordinate - Funding Compliance Audits

Identify and Report on New Compliance Metrics for Dashboard

Update the USMEF 2009-2010 Risk Assessment

Review Monitoring Procedure for Vendor Payments

Benchmark Anti-Corruption Foreign Corrupt Practices Act Policies and Procedures with Best Practices

Revise Conflict of Interest Policy and Procedures