Audit reports: WBC hosts conference call to discuss state, national industry auditsWritten by Emilee Gibb
The Wyoming Beef Council (WBC) held a conference call on Nov. 2 to discuss an array of audit reports including the WBC financial audit, the National Cattlemen’s Beef Association audit and the U.S. Meat Export Federation audit, as well as other topics including requests for proposal reviews.
Wayne Herr, a partner of McGee, Hearne and Paize, LLP in Cheyenne, discussed the most recent audit performed on WBC, noting that the audit “went pretty straight forward.”
Part of the audit that McGee, Hearne and Paize, LLP performed was a standard opinion, explained Herr.
“We look at the internal control environment, the risk of fraud affecting the organization, look at changes that have occurred due to changes of activity and how those should affect the financial statement numbers. Then we go through a planning process as a result that is required to formulate a detailed audit approach,” said Herr.
The audit for WBC is performed under a cash basis of auditing. Herr explained that cash basis auditing is different from full accrual auditing, which only accepts accounting principles.
The standard opinion was unmodified, indicating that it is the opinion of the company that the financial statements of WBC are fairly presented.
“Once we’re able to complete that without any significant exceptions, we give our opinion,” he continued.
Opinions given on an audit fall into four different categories, said Herr.
“We can give four different opinions when auditing. One is good, one is okay and two are bad. The WBC audit is the good opinion,” commented Herr.
Herr explained that 2015 was the first year that the WBC had a new standard addressing government multi-employer retirement plans.
“The bottom line is, the standard said we need to allocate essentially the accrued pension expense,” said Herr. “This is based on what the actuaries have determined, which is the accrual underfunding of the pension plan and then allocating that liability to all of the participants.”
As the WBC is not an accrual-based auditee, the language was simply included in the report for disclosure purposes.
“This liability is not a legal obligation of the WBC. It is a legal obligation of the state’s retirement plan,” stressed Herr.
The information primarily explains how much WBC’s portion would be if the retirement plan were terminated but they had to honor all commitments made to retired and current employees, said Herr.
“It would approximately be $93,000. That’s higher than it was last year because the state’s liability has gone up to $2.3 billion, which basically represents the underfunding of the retirement plan,” he continued.
Seventy to 73 percent of the funding for the plan is based on the actuarial determination, which was lower this year.
“That dropped this year because, for years now, the state retirement plan has not been able to achieve investment earnings in line with what was predicted two or three years ago,” said Herr. “Now there’s been a major adjustment because of that lack of earning ability of those investments.”
In addition to the standard audit requirements, the company also performed the audit to meet government auditing standards.
“We have additional audit requirements because we do this audit under government auditing standards, which are under the scheduled Government Accountability Office, and we put additional audit requirements on top of that,” said Herr.
The governmental requirements of the audit primarily evaluated legal compliance and financial reporting.
“We basically look at two areas – the internal control over financial reporting and compliance with laws, regulations, statutes and things that noncompliance would have a material effect on the financial statement,” explained Herr.
He noted that that the audit did not have anything to report under internal control over financial reporting or under compliance with other matters.
“It’s not really an opinion but more of a report. It just indicates that we did not find anything we need to bring to your attention,” said Herr.
“We’re also doing this audit under government auditing standards. There will be a separate report later for that, and it will indicate that we are doing this audit, particularly with concern for the Beef Promotion Research Act of 1985, as well as a certain section of the Beef Promotion and Research Order,” said Herr.
He noted that no violations were found. However, the report was changed to adopt changes made to the report by the National Beef Board.
“After we initially issued the report, the National Beef Board identified that they had changed this report and added another phrase, so we did reissue this opinion for them,” explained Herr.
The added language addressed that the audit did not identify a situation where the council failed to accurately allocate expenses that it shared with any other entity or funding source.
“The reason we didn’t have it in there to begin with is because we really didn’t think it applied. It probably doesn’t to WBC, but the National Beef Board preferred that the report follow the standard format they have in the manual, so we just added it,” continued Herr.
He stressed that the changes did not alter the results of the audit but simply brought the report into compliance with National Beef Board requests.