2019

AGENCY FINANCIAL REPORT 

United States Department of Agriculture
SECTION I | MANAGEMENT’S DISCUSSION AND ANALYSIS i

USDA’s Non-Discrimination Statement

In accordance with Federal civil rights law and U.S. Department of Agriculture (USDA) civil rights 

regulations and policies, USDA, its Mission Areas, agencies, staff offices, employees, and institutions 

participating in or administering USDA programs are prohibited from discriminating based on race, 

color, national origin, religion, sex, gender identity (including gender expression), sexual orientation, 

disability, age, marital status, family/parental status, income derived from a public assistance program,

political beliefs, or reprisal or retaliation for prior civil rights activity, in any program or activity 

conducted or funded by USDA (not all bases apply to all programs). Remedies and complaint filing 

deadlines vary by program or incident. 

Program information may be made available in languages other than English. Persons with disabilities 

who require alternative means of communication to obtain program information (e.g., Braille, large 

print, audiotape, or American Sign Language) should contact the responsible Mission Area, agency, or 

staff office; the USDA TARGET Center at (202) 720-2600 (voice and TTY); or the Federal Relay 

Service at (800) 877-8339. 

To file a program discrimination complaint, a complainant should complete a Form AD 3027, USDA 

Program Discrimination Complaint Form, which can be obtained online, from any USDA office, by 

calling (866) 632-9992, or by writing a letter addressed to USDA. The letter must contain the 

complainant’s name, address, telephone number, and a written description of the alleged discriminatory 

action in sufficient detail to inform the Assistant Secretary for Civil Rights (ASCR) about the nature and 

date of an alleged civil rights violation. The completed AD-3027 form or letter must be submitted to 

USDA by: 

(1) Mail: U.S. Department of Agriculture 

Office of the Assistant Secretary for Civil Rights 

1400 Independence Avenue, SW 

Washington, D.C. 20250-9410; 

(2) Fax: (833) 256-1665 or (202) 690-7442; or 

(3) Email: program.intake@usda.gov 

USDA is an equal opportunity provider, employer, and lender. 
ii USDA AGENCY FINANCIAL REPORT | 2019

About the Report 

The purpose of the U.S. Department of Agriculture (USDA) fiscal year (FY) 2019 Agency Financial 

Report (AFR) is to inform Congress, the President, and the American people how USDA has used Federal 

resources entrusted to the Department in FY 2019. USDA strives to provide leadership on food, 

agriculture, natural resources, rural development, nutrition, and related issues based on public policy, the 

best available science, and effective management. USDA provides economic opportunity through 

innovation designed to ensure rural America thrives; promotes agriculture production to better nourish 

Americans while also helping to feed others throughout the world; and preserves our Nation’s natural 

resources through conservation, restored forests, improved watersheds, and healthy private working lands. 

USDA has demonstrated good stewardship of taxpayer resources by putting in place well-controlled and 

well-managed business lines and financial management systems and processes. USDA has chosen to 

produce both an AFR and an Annual Performance Report (APR) for FY 2019. USDA will include its 

FY 2019 APR with its Congressional Budget Justification and will post this AFR online at www.usda.gov. 

This AFR provides high-level financial and highlighted performance results with assessments of 

controls, a summary of challenges, and USDA stewardship information. The AFR enables the President, 

Congress, and the public to assess USDA accomplishments and understand its financial position. 

USDA’s end-of-fiscal-year financial position includes, but is not limited to, financial statements, notes 

to the financial statements, and a report of the independent auditors. The report satisfies the reporting 

requirements contained in the following laws and regulations: 

▪ Chief Financial Officers Act of 1990; 

▪ Federal Managers’ Financial Integrity Act of 1982; 

▪ Federal Financial Management Improvement Act of 1996;

▪ Government Performance and Results Act (GPRA) of 1993; 

▪ GPRA Modernization Act of 2010; 

▪ Government Management Reform Act of 1994; 

▪ Improper Payments Information Act of 2002; 

▪ Improper Payments Elimination and Recovery Act of 2010; 

▪ Improper Payments Elimination and Recovery Improvement Act of 2012 (IPERIA); 

▪ Office of Management and Budget Circular A-123, Management’s Responsibility for Enterprise 

Risk Management and Internal Controls; 

▪ Office of Management and Budget Circular A-136, Financial Reporting Requirements; and 

▪ Reports Consolidation Act of 2000. 
SECTION I | MANAGEMENT’S DISCUSSION AND ANALYSIS iii

The AFR is a detailed report on USDA’s progress toward achieving the goals and objectives described 

in the Agency’s Strategic Plan and Annual Performance Plan, including progress on the strategic 

objectives, performance goals, and Agency Priority Goals. The report will be delivered to Congress with 

the annual budget submission. 

This report is to be posted on these Web sites: Performance.gov and www.usda.gov. 
iv USDA AGENCY FINANCIAL REPORT | 2019

Table of Contents 

MESSAGE FROM SECRETARY PERDUE ................................................................................................... v 

SECTION I: MANAGEMENT’S DISCUSSION AND ANALYSIS ...................................................................... 1 

About USDA........................................................................................................................................................... 1 

USDA Organization Chart....................................................................................................................................... 3 

USDA Mission Areas............................................................................................................................................... 4 

USDA Program Performance ................................................................................................................................. 7 

Future Demands, Risks, Uncertainties, Events, Conditions, and Trends............................................................. 15

Financial Statement Highlights............................................................................................................................ 16

Statement of Assurance ...................................................................................................................................... 26

Federal Managers’ Financial Integrity Act Report on Management Control ...................................................... 27

Compliance with Laws and Regulations............................................................................................................... 34

Improper Payments Elimination and Recovery Act of 2010 as Amended........................................................... 39

Federal Financial Management Improvement Act Report on Financial Management Systems Background ...... 40

Financial Management Systems Strategy ............................................................................................................ 42

Other Management Information, Initiatives, and Issues..................................................................................... 47

SECTION II: FINANCIAL INFORMATION ................................................................................................. 50 

Message from the Office of the Chief Financial Officer....................................................................................... 50

Independent Auditors Report.............................................................................................................................. 52

Agency Response to Auditors Report.................................................................................................................. 61

Financial Statements ........................................................................................................................................... 62

Notes to the Financial Statements....................................................................................................................... 67

Required Supplementary Stewardship Information .......................................................................................... 148

Required Supplementary Information............................................................................................................... 159

SECTION III: OTHER INFORMATION .................................................................................................... 164 

Response to Management Challenges .............................................................................................................. 164

Summary of Financial Statement Audit and Management Assurances............................................................ 174

Payment Integrity .............................................................................................................................................. 176

Fraud Reduction Report .................................................................................................................................... 230

Inspector General Act Amendments of 1988: Management’s Report on Audit Follow Up .............................. 234

Reduce the Footprint......................................................................................................................................... 247

Civil Monetary Penalties.................................................................................................................................... 248

ABBREVIATIONS—ACRONYMS ........................................................................................................... 262 
SECTION I | MANAGEMENT’S DISCUSSION AND ANALYSIS v

Message from 

Secretary Perdue

The United States Department of Agriculture (USDA) is home to 

the most professional and dedicated public servants in the entire 

Federal government that honorably serve the people of American 

agriculture on a daily basis. As Secretary, I’m proud to serve 

alongside these individuals. My goal is for USDA to be the most 

efficient, most effective, and most customer-focused agency in 

the Federal government. 

USDA touches the lives of every American, and almost every 

human being on the globe. We have a lot to be proud of from the 

work this agency does every day, with employees in all 50 states and around the world. 

We have accomplished a lot in 2019 and as a USDA family have all worked to fulfill our 

vision to “do right and feed everyone.” 

In 2019, I was proud to visit my 50th state as Secretary of Agriculture. My favorite part of 

the job is getting out of Washington and into the field to meet with the farmers, ranchers, 

producers, and foresters who make American agriculture what it is. From all my travels—

North, South, East and West—the commodities and landscapes may be different, but the 

passion, attitude, and spirit of American agriculturalists is much the same. 

This year, USDA started the process of implementing the 2018 Farm Bill. For those who 

have been through a Farm Bill process before, implementing this large piece of 

legislation is no easy task. Our mission areas have all held several public listening 

sessions, both formally and informally, to receive stakeholder input. Our goal is to have 

programs that function best for the people that we serve. We have made progress in new 

Farm Bill provisions, and look to implement programs that are focused on customer 

service and are economically efficient. We still have a lot of work ahead of us, but we are 

diligently making progress on behalf of all of USDA’s customers.

Also, this year, USDA rolled out a second round of trade assistance to provide support to 

our farmers that have been impacted by unjustified retaliatory tariffs from our trading 

partners around the world. President Trump has a great affinity for American farmers, 

and he tasked me with making sure our farmers and producers do not bear the brunt of 

any trade issues we may be experiencing with other nations. Like in 2018, our farmer 

support program was three pronged: we would deliver direct payments to producers 

based on their yields, we would work to expand new markets around the world to sell the 

bounty of the American harvest, and we would purchase and distribute excess 

commodities to food banks across the country to feed those in need. President Trump and 

I continue to work to ensure our farmers are supported. 
vi USDA AGENCY FINANCIAL REPORT | 2019

As we look forward to 2020, USDA will continue to be facts-based and data-focused as 

we work every day to best serve our customers, both producers and consumers. Making 

sure Americans who earn their livelihood in the agriculture industry are thriving is near 

and dear to my heart. USDA will continue to be unapologetic advocates for American 

agriculture and work tirelessly to solve the issues facing farm families. The farmers, 

ranchers, producers, and foresters are the heart of this country and they deserve the best 

we have to offer. I know that is what they receive from our USDA family. 

Sincerely, 

Sonny Perdue 

U.S. Secretary of Agriculture 

November 19, 2019 
SECTION I | MANAGEMENT’S DISCUSSION AND ANALYSIS 1

Section I

Management’s Discussion 

and Analysis

About USDA

On May 15, 1862, President Abraham Lincoln signed legislation to establish the United States 

Department of Agriculture (USDA), and, two and a half years later in his final message to Congress, 

Lincoln called USDA “The People’s Department.” Through our work on food, agriculture, economic 

development, science, natural resource conservation, and other issues, USDA has impacted the lives of 

generations of Americans.

We would like you to learn more about USDA and the Agencies and Offices that touch every American 

every day. Information about the Department, our history, and our leaders can be found at 

www.usda.gov. 

MISSION STATEMENT

Provide leadership on agriculture, food, natural resources, rural infrastructure, nutrition, and related 

issues through fact-based, data-driven, and customer-focused decisions. 

VISION STATEMENT

“Do right and feed everyone.” 

CORE VALUES

We expect and require complete honesty and integrity in all we do. 

We make commitments with care and live up to them.

We own up to problems and are always responsive. 

We provide service to our customers on time, every time. 

We guard, conserve, and preserve USDA resources the taxpayers have entrusted to us. 
2 USDA AGENCY FINANCIAL REPORT | 2019

STAKEHOLDER ENGAGEMENT

USDA regularly consults with external stakeholders, including State and local officials and Members of 

Congress, as well as USDA’s customers, partners, landowners, policy experts, and industry and 

consumer groups regarding our programs’ effectiveness. Recent examples include the Interagency Task 

Force on Agriculture and Rural Prosperity Roundtables and the Back to Our Roots Listening Tour. 

These consultations have been used to validate the strategic goals, objectives, and performance measures 

outlined in the USDA Strategic Plan.
SECTION I | MANAGEMENT’S DISCUSSION AND ANALYSIS 3

-

USDA Organization Chart

Secretary

Deputy Secretary

Assistant 

Secretary for 

Civil Rights

Assistant 

Secretary for 

Congressional 

Relations

Assistant 

Secretary for 

Administration

Inspector 

General

General 

Counsel

Office of the 

Chief Financial 

Officer

Chief 

Economist

Office of 

Budget and 

Program 

Analysis

Director of 

Communica

tions

Office of Tribal 

Relations 

Office of 

Partnership 

and Public 

Engagement 

Office of 

Hearings and 

Appeals

Chief 

Information 

Officer

Under Secretary 

for Food Safety

• Food Safety 

and Inspection 

Service

Under Secretary 

for Marketing and 

Regulatory 

Programs

• Agricultural 

Marketing 

Service

• Animal and 

Plant Health 

Inspection 

Service

Under Secretary 

for Natural 

Resources and 

Environment

• Forest Service

Under Secretary 

for Food, Nutrition, 

and Consumer 

Services

• Food and 

Nutrition 

Service

Under Secretary 

for Rural 

Development

• Rural Housing 

Service

• Rural Utilities 

Service

• Rural Business 

– Coop Service

Under Secretary 

for Farm 

Production and 

Conservation

• Farm Service 

Agency

• Risk 

Management 

Agency

• Natural 

Resources 

Conservation 

Service

Under Secretary 

for Trade and 

Foreign 

Agricultural Affairs

• Foreign 

Agricultural 

Service

• Codex 

Alimentarius 

Commission

Under Secretary 

for Research, 

Education, and 

Economics

• Agricultural 

Research Service

• National Institute 

of Food and 

Agriculture

• Economic 

Research Service

• National 

Agricultural 

Statistics Service

• Office of the 

Chief Scientist
4 USDA AGENCY FINANCIAL REPORT | 2019

USDA Mission Areas

FARM PRODUCTION AND CONSERVATION

Farm Production and Conservation (FPAC) is the Department’s focal point for the Nation’s farmers and 

ranchers and other stewards of private agricultural lands and non-industrial private forest lands. FPAC 

agencies implement programs designed to mitigate the significant risks of farming through crop 

insurance, conservation programs, farm safety net programs, lending, and disaster programs. 

▪ Farm Service Agency (FSA)

▪ Natural Resources Conservation Service (NRCS)

▪ Risk Management Agency (RMA)

FOOD, NUTRITION, AND CONSUMER SERVICES

Food, Nutrition, and Consumer Services works to harness the Nation’s agricultural abundance to end 

hunger and improve health in the United States. Its operating agency, the Food and Nutrition Service, 

administers federal domestic nutrition assistance programs and includes the Center for Nutrition Policy 

and Promotion, which links scientific research to the nutrition needs of consumers through sciencebased dietary guidance, nutrition policy coordination, and nutrition education. 

▪ Food and Nutrition Service (FNS)

FOOD SAFETY

Food Safety is the USDA public health agency responsible for protecting the public’s health by ensuring 

the safety of the Nation’s commercial supply of meat, poultry, and processed egg products. FSIS ensures 

food safety through the authorities of the Federal Meat Inspection Act (FMIA), the Poultry Products 

Inspection Act, and the Egg Products Inspection Act, as well as humane animal handling through the 

Humane Methods of Slaughter Act. 

▪ Food Safety and Inspection Service (FSIS)
SECTION I | MANAGEMENT’S DISCUSSION AND ANALYSIS 5

MARKETING AND REGULATORY PROGRAMS

Marketing and Regulatory Programs (MRP) facilitates domestic and international marketing of U.S. 

agricultural products, protects U.S. plant and animal health, regulates genetically engineered organisms, 

administers the Animal Welfare Act, and carries out wildlife damage management activities. MRP 

agencies are active participants in setting national and international standards.

▪ Agricultural Marketing Service (AMS)

▪ Animal and Plant Health Inspection Service (APHIS)

NATURAL RESOURCES AND ENVIRONMENT

The mission of the Natural Resources and Environment is to sustain the health, diversity, and 

productivity of the Nation’s forests and grasslands to meet the needs of present and future generations. 

▪ Forest Service (FS)

RESEARCH, EDUCATION, AND ECONOMICS

Research, Education, and Economics is dedicated to the creation of a safe, sustainable, competitive U.S. 

food, fuel, and fiber system, and to building strong communities, families, and youth through integrated 

research, analysis, and education.

▪ Agricultural Research Service (ARS)

▪ Economic Research Service (ERS)

▪ National Agricultural Statistics Service (NASS)

▪ National Institute of Food and Agriculture (NIFA)

RURAL DEVELOPMENT

Rural Development fosters opportunity and economic security in rural America by investing in 

infrastructure, opening doors to better jobs, access to innovation, technology, and the promise of rural 

prosperity. The mission area is a catalyst for rural prosperity by improving high-speed internet access; 

providing affordable rural housing; connecting rural skill sets to jobs of the future; modernizing roads, 

bridges, and water systems; and ensuring communities have access to health care. Through loans, grants, 

and partnerships with local leaders, Rural Development provides tools and resources that ensure rural 

families, businesses, and communities have the help they need to prosper today and in the future. 

▪ Rural Business Service 

▪ Rural Utilities Service

▪ Rural Housing Service
6 USDA AGENCY FINANCIAL REPORT | 2019

TRADE AND FOREIGN AGRICULTURAL AFFAIRS

Trade and Foreign Agricultural Affairs’ (TFAA) role is to provide our farmers and ranchers with 

opportunities to compete in the global marketplace. TFAA is the Department’s lead on trade policy with 

the primary responsibility of ensuring USDA speaks with a unified voice on international agricultural 

issues domestically and abroad. Within TFAA, the Foreign Agricultural Service is the lead U.S. agency 

tasked with promoting exports of U.S. agricultural products through market intelligence, trade policy, 

trade capacity building, and trade promotion programs. This work is carried out by staff in Washington, 

as well as a global network of 93 offices covering 171 countries. Also, within TFAA, the U.S. Codex 

Office coordinates U.S. participation in the Codex Alimentarius Commission, a United Nations body 

that sets international food standards while protecting consumer health and ensuring fair trade practices.

▪ Foreign Agricultural Service

▪ U.S. Codex Program
SECTION I | MANAGEMENT’S DISCUSSION AND ANALYSIS 7

USDA Program Performance

USDA PERFORMANCE AND RESULTS FOR FY 2019

The U.S. Department of Agriculture’s (USDA) mission is to provide leadership on food, agriculture, 

natural resources, rural development, nutrition, and related issues based on sound public policy, the best 

available science, and efficient management.

For purposes of the Agency Financial Report (AFR), a performance summary is provided using the 

Department’s key performance indicators as a mechanism to gauge progress in achieving its mission. 

In fiscal year (FY) 2019, USDA had 34 key performance measures. 

The following tables and discussion provide a high-level description of the Department’s key focus 

areas that are being tracked and managed through USDA’s performance management process. The 

tables provide historical results of key performance indicators and include FY 2019 preliminary results 

indicating anticipation in meeting/not meeting performance targets.

Final performance information and a detailed discussion of the Department’s FY 2019 performance 

results, assessment methodologies, metrics, external reviews, and documentation of performance data 

will be presented in the FY 2019 USDA Annual Performance Report. The report is planned to be 

released with the President’s 2021 budget in February and will be available on the USDA Performance 

Improvement and Accountability website. 

The data used by the Department to measure performance is collected using a standardized 

methodology. This methodology has been vetted by federally employed scientists and policymakers, 

and, ultimately, the leadership and Under Secretaries of each respective mission area. All attest to the 

completeness, reliability, and quality of the data.
8 USDA AGENCY FINANCIAL REPORT | 2019

STRATEGIC GOAL 1: Ensure USDA Programs are Delivered Efficiently, Effectively, with 

Integrity, and a Focus on Customer Service

The Department will modernize and consolidate information technology (IT) infrastructure and services, 

as well as strengthen management and oversight of procurement, property, and finances to ensure our 

resources are deployed as effectively and efficiently as possible. We will create a safe and modern space 

within which employees can work and feel empowered to find innovative solutions to serve our 

customers’ needs and will promote accountability and professional development. USDA will leverage 

the strength and talent of our employees and reduce regulatory and administrative burdens to allow 

agencies to focus on our customers. 

Improved customer service and employee engagement will create a more effective and accessible USDA 

for all our stakeholders. 

EXHIBIT 1: Strategic Goal 1 Performance Measures

Performance Measures

FY 2018

Baseline Data

FY 2019

Target

FY 2019 

Expected Results

Reduce the number of data centers across the 

Department 39 20 Meet

Maintain ranking of the Top 10 Best Places to 

Work in the Federal Government for large 

agencies by the Partnership for Public Service

7 Top 10 Not Meet

Reduce the Department’s overall real 

property footprint through effective disposal 

and consolidation efforts (Million Square Feet)

31.9 31.6 Meet

Reduce the Department’s total number of 

light-duty fleet vehicles (Thousand) 29.4 28.8 Meet

Note: At time of publication, results were available through the third quarter of Fiscal Year (FY) 2019. The USDA 

Annual Performance Plan and Report, to be published in February 2020, will show final FY 2019 results. 
SECTION I | MANAGEMENT’S DISCUSSION AND ANALYSIS 9

STRATEGIC GOAL 2: Maximize the Ability of American Agricultural Producers to 

Prosper by Feeding and Clothing the World

A strong and prosperous agricultural sector is essential to the well-being of the U.S. economy. 

America’s farmers and ranchers ensure a reliable food supply, support job growth, and promote 

economic development. To maintain a competitive agricultural sector, USDA will support farmers’ and 

ranchers’ ability to start and maintain profitable businesses, as well as offer financial support to 

producers affected by natural disasters. Furthermore, USDA’s research agencies will continue to 

introduce high-performance plants, animals, and integrated management options that increase the 

efficiency of farming practices. Lastly, USDA will also provide tools to producers so they are wellpositioned to secure a share of a growing market for agricultural products. 

EXHIBIT 2: Strategic Goal 2 Performance Measures

Performance Measures FY 2018 

Baseline Data

FY 2019 

Target

FY 2019 

Expected Result

The annual normalized value of risk protection 

provided to agricultural producers through 

the Federal Crop Insurance program ($ Billion)

$74.6 $77.3 Not Meet

Average number of days to process direct 

loans (Farm Service Agency) 31 33 Meet

Percentage of direct and guaranteed loan 

borrowers who are beginning farmers (New 

Measure-NM)

55 53 Meet

First-year delinquency rate on new direct 

loans 6.2 7 Meet

Percent of high-risk plant pests for which early 

detection surveys are conducted 96% 95% Meet

Number of hours it takes to mobilize 

resources once it is determined that a federal 

emergency response is needed to manage an 

agricultural outbreak

24 24 Meet

Note: At time of publication, results were available through the third quarter of Fiscal Year (FY) 2019. The USDA 

Annual Performance Plan and Report, to be published in February 2020, will show final FY 2019 results. 
10 USDA AGENCY FINANCIAL REPORT | 2019

STRATEGIC GOAL 3: Promote American Agricultural Products and Exports

Expanding international marketing opportunities for U.S. farmers and exporters is critical to business 

and income growth across rural America. It is essential for USDA to continue its efforts to promote 

American agricultural products and exports through promotional activities, development of international 

standards, removal of trade barriers by monitoring and enforcing existing trade agreements, and 

negotiation of new trade agreements that benefit the U.S. agricultural economy. USDA will also partner 

with developing countries to move them along the agricultural market continuum from developing 

economies to developed economies with promising demand potential. Ultimately, this work will build 

the foundations for future markets and create long-term international relationships that advance U.S. 

agriculture’s exports.

EXHIBIT 3: Strategic Goal 3 Performance Measures

Performance Measures FY 2018 

Baseline Data

FY 2019 

Target

FY 2019 

Expected Result

Value of agricultural exports resulting from 

participation in foreign food and agricultural 

trade shows ($ Billion)

$2.13 $1.75 Meet

Value of trade preserved through resolution of 

foreign market access issues such as U.S. 

export detainment, restrictive Secure Payment 

System (SPS) and Technical Barriers to Trade 

(TBT) issues, and trade regulations ($ Billion)

$12.8 $5.50 Not Meet1

Note: At time of publication, results were available through the third quarter of Fiscal Year (FY) 2019. The USDA 

Annual Performance Plan and Report, to be published in February 2020, will show final FY 2019 results. 

1 FAS will not meet its target of $5.5B for FY 2019. Recent adverse effects of other countries’ tariff and non-tariff 

barriers are a significant challenge.
SECTION I | MANAGEMENT’S DISCUSSION AND ANALYSIS 11

STRATEGIC GOAL 4: Facilitate Rural Prosperity and Economic Development

USDA promotes rural prosperity and economic development by financing investments in rural utilities, 

housing, and businesses. When rural Americans share the same level of infrastructure services as the 

country’s urban areas, rural communities can make even greater economic contributions with healthy 

businesses and families. Just as economic and social science research informs decision-makers regarding 

current trends in rural America and gaps in existing markets, USDA may then provide benefits to rural 

American businesses and citizens. USDA will leverage funds, stimulate private-public partnerships, and 

engage in collaboration to build rural infrastructure including the following: broadband, community 

facilities, safe and affordable housing, and health services and facilities. The Department will also 

provide capacity building to help underserved communities become thriving communities. 

EXHIBIT 4: Strategic Goal 4 Performance Measures

Performance Measures FY 2018

Baseline Data

FY 2019

Target

FY 2019 

Expected Result

Health Facilities: Percent of customers who 

are provided access to new and/or improved 

essential community facilities

5.0% 6.8% Not Meet

Number of borrowers’ subscribers receiving 

new and/or improved telecommunication 

services (Million, Noncumulative)

0.158 0.139 Meet

Percent of RD commercial/infrastructure 

investments that leverage non-federal 

funding (%)2

77% 78% Meet

Percent of RD assistance that went to 

distressed communities (%) 11% 12% Meet

Note: At time of publication, results were available through the third quarter of Fiscal Year (FY) 2019. The USDA 

Annual Performance Plan and Report, to be published in February 2020, will show final FY 2019 results. 

2

 New definition of Leverage for Rural Development: The total dollar amount of financial contributions from both 

the applicant and other non-federal sources contributed alongside an RD grant, loan, or guarantee during time of 

obligation. For guarantees, leverage includes the total dollar amount of the guaranteed loan. 
12 USDA AGENCY FINANCIAL REPORT | 2019

STRATEGIC GOAL 5: Strengthen the Stewardship of Private Lands Through Technology 

and Research

The world population is expected to reach 9.6 billion by 2050. Feeding this population will require 

adoption of new science and technologies and the implementation of science-based conservation plans 

to sustainably increase agricultural production. To ensure U.S. private working lands and public 

agricultural landscapes are conserved, the Department will provide technical and financial assistance 

using the latest technology and research available. New and improved practices result from fundamental 

and applied research to understand the complex interactions between human systems and the 

environment, and transferring the resulting knowledge into the hands of producers and land managers 

through information, tools, and decision support. 

EXHIBIT 5: Strategic Goal 5 Performance Measures

Performance Measures

FY 2018

Baseline Data

FY 2019

Target

FY 2019 

Expected Result

Cropland with conservation applied to improve 

soil quality (Million Acres)—Environmental Quality 

Incentive Program (EQIP)

3.0 3.1 Meet

Cropland with conservation applied to improve 

soil quality (Million Acres)—Conservation 

Technical Assistance (CTA)

5.9 5.9 Not Meet

Tons of sediment prevented from leaving 

cropland and entering water bodies (Million Tons) 4.6 5.7 Meet

Working land protected by conservation 

easements (Thousand Acres) 107 140 Meet

Acreage enrolled in Conservation Reserve 

Program (CRP) riparian and grass buffers 

(Cumulative, Million Acres)

1.6 1.43 Meet

Acreage enrolled in CRP grasslands (Million) .5 .97 Meet

Contract Implementation Ratio 87 87 TBD3

Annual practice implementation rate 51% 53% Meet

Note: At time of publication, results were available through the third quarter of Fiscal Year (FY) 2019. The USDA 

Annual Performance Plan and Report, to be published in February 2020, will show final FY 2019 results. 

3

 Results will not be available until the beginning of FY 2020. 
SECTION I | MANAGEMENT’S DISCUSSION AND ANALYSIS 13

STRATEGIC GOAL 6: Foster Productive and Sustainable Use of Our National Forest 

System Lands

The Nation’s forests and grasslands are a fundamental part of the American landscape and a legacy that 

the USDA Forest Service holds in trust for present and future generations. Forests provide clean air and 

water, forest and rangeland products, mineral and energy resources, jobs, quality habitat for fish and 

wildlife, recreational opportunities, and memorable experiences. The Forest Service plays a critical role 

in making America’s forests and grasslands resilient to threats and disturbances while mitigating 

wildfire risk. The Department also manages the National Forests and grasslands to ensure that they are 

healthy and sustainable—while also allowing rural communities to access and benefit from economic 

opportunities that our Nation’s forests offer. This work is complemented by USDA’s research in 

forestry, ecology, and economics to ensure that world-class science guides effective policies and 

management practices.

EXHIBIT 6: Strategic Goal 6 Performance Measures

Performance Measures

FY 2018 

Baseline Data

FY 2019 

Target

FY 2019 

Expected Result

Percent of customers satisfied with recreation 

facilities, services, and settings on National 

Forests

95% 95% Meet

Timber volume sold (Billion Board feet) 2.9 3.7 Not Meet

Annual acreage of National Forest System (NFS) 

lands where final treatment effectively mitigates 

wildfire risk (million acres, annually)

0.74 1.10 Meet

Annual acreage treated to reduce or maintain 

fuel conditions on NFS and non-federal lands

(Million acres, annually)

2.77 3.4 Not Meet

Note: At time of publication, results were available through the third quarter of Fiscal Year (FY) 2019. The USDA 

Annual Performance Plan and Report, to be published in February 2020, will show final FY 2019 results. 
14 USDA AGENCY FINANCIAL REPORT | 2019

STRATEGIC GOAL 7: Provide All Americans Access to a Safe, Nutritious, and Secure 

Food Supply

USDA has critical roles in preventing foodborne illness and protecting public health, while also ensuring 

Americans have access to food, a healthful diet, and nutrition education in a manner that supports 

American agriculture and inspires public confidence. The Department will take a number of actions to 

achieve this goal. First, to ensure the food supply is safe, the Department will continue to prevent 

contamination and limit foodborne illness by expanding its modernization of food inspection systems, 

and USDA’s research, education, and extension programs will continue to provide information, tools, and 

technologies about the causes of foodborne illness and its prevention. Second, USDA will continue to 

develop partnerships that support best practices in implementing effective programs to ensure that 

eligible populations have access to programs that support their food needs. This work includes research 

on the nutritional quality of Americans’ food and diets, as well as the discovery of the drivers of poor 

diets and nutritional choices. Lastly, USDA will collaborate with partners and stakeholders on strategies 

to reduce foodborne illness and childhood obesity and improve diets. USDA ensures agriculture 

production incorporates the best available science into its modernization efforts to produce food that is 

safer, more nutritious, and secure.

EXHIBIT 7: Strategic Goal 7 Performance Measures

Performance Measures FY 2018

Baseline Data

FY 2019

Target

FY 2019 

Expected Result

Percentage of establishments that meet pathogen 

reduction performance standards 71% 72% Meet

Percentage of establishments whose Public Health 

Regulation (PHR) non-compliance rate decreases below 

the early warning cut point 120 days after receiving an 

Early Warning Alert (EWA)

73% 73% Meet

Percentage of American households with consistent, 

dependable access to food 88.9% 87.9% Meet

Annual percentage of eligible children participating in 

the National School Lunch Program (NSLP) 58% 59% Meet

Annual percentage of eligible children participating in 

the School Breakfast Program (SBP) 30% 30% Meet

Percentage of Supplemental Nutrition Assistance 

Program (SNAP) Employment and Training participants 

engaged in education and skills-based training

25.5% 27.5% Meet

Note: At time of publication, results were available through the third quarter of Fiscal Year (FY) 2019. The USDA 

Annual Performance Plan and Report, to be published in February 2020, will show final FY 2019 results. 
SECTION I | MANAGEMENT’S DISCUSSION AND ANALYSIS 15

Future Demands, Risks, Uncertainties, Events, 

Conditions, and Trends

Farmers and ranchers operate in highly competitive markets, both domestically and internationally. 

Rapid shifts in consumer demands associated with quality, convenience, taste, and nutrition dictate that 

farming, ranching, and marketing infrastructures become more fluid and responsive. National security is 

a significant, ongoing priority for USDA. The Department’s science research, education, and extension 

services will continue to be the foundation for understanding developments and making advances in 

solving agricultural and societal challenges. USDA is working with the U.S. Department of Homeland 

Security to help protect agriculture from intentional and accidental acts that might impact America’s 

food supply or natural resources. 

EXTERNAL FACTORS THAT CHALLENGE USDA’S ABILITY TO 

ACHIEVE ITS GOALS INCLUDE THE FOLLOWING:

▪ Weather-related hardships, including disasters related to the increasing intensity and duration of 

extreme weather and climate change, both domestically and internationally; 

▪ The risk of catastrophic fire, depending on weather, drought conditions, and the expanding number 

of communities in the wildland-urban interface;

▪ Non-weather-related hardships and other uncontrollable events, both domestically and internationally;

▪ Domestic and international macroeconomic factors, including consumer purchasing power, the 

strength of the U.S. dollar, and political changes abroad that could impact domestic and global 

markets greatly at any time;

▪ Sharp fluctuations in farm prices, interest rates, and unemployment that could impact the ability of 

farmers, other rural residents, communities, and businesses to qualify for credit and manage debt; 

▪ The impact of future economic conditions and actions by a variety of Federal, State, and local 

Governments that could influence the sustainability of rural infrastructure;

▪ The increased movement of people and goods, which provides the opportunity for crop and animal 

pests and diseases to move quickly across domestic and international boundaries; 

▪ Potential exposure to hazardous substances, which may threaten human health as well as the 

environment; and 

▪ The ability of the public and private sectors to collaborate effectively on food safety, security, and 

related emergency preparedness efforts.
16 USDA AGENCY FINANCIAL REPORT | 2019

Financial Statement Highlights

CONSOLIDATED BALANCE SHEETS

Total Assets

Total assets for FY 2019 were $265,095 million, compared to $238,774 million for FY 2018, an increase 

of $26,321 million, or 11 percent. The following exhibit presents FY 2019 total assets. 

EXHIBIT 8: Total Assets ($ millions)

 

Direct Loan and Loan Guarantees, Net, is one of the largest assets on the USDA Balance Sheet. RD 

offers both direct and guaranteed loan products for rural housing and rural business infrastructure. 

These products represent 86 percent of the total Department loan programs. Loan programs administered 

by FSA represent 11 percent of the total. FSA supports farmers who are temporarily unable to obtain 

private, commercial credit. The remaining 2 percent represents commodity loans and credit programs 

administered by the CCC. These loans are used to improve economic stability and provide an adequate 

supply of agricultural commodities. CCC credit programs provide international food assistance, expand 

international markets, and provide domestic low cost financing to protect farm income and prices. 

The following exhibit presents significant changes in total assets. 
SECTION I | MANAGEMENT’S DISCUSSION AND ANALYSIS 17

The following exhibit presents significant changes in total assets. 

EXHIBIT 9: Significant Changes in Assets ($ millions)

 

Increase in Direct Loan and Loan Guarantees, Net mainly due to RD loans receivable outstanding, loans 

acquired and subsidy cost; and new loans issued by FSA. 

Increase in Accounts Receivable, Net mainly due to RMA deferring collection of any unpaid producer 

premium without interest by two months, as a result of the widespread severe flooding and excess 

moisture conditions in many parts of the nation, which caused catastrophic crop damage. 

Increase in Fund Balance with Treasury mainly due to AMS custom receipts received from the 

Department of Homeland Security, and unobligated balance brought forward for Section 32; RD repaid 

less debt for the Rural Electric and Telephone Financing Account, Rural Housing Insurance Fund, and 

Single Family Housing Liquidating programs resulting in higher cash balances; FSA received additional 

appropriations for the Wildfires and Hurricanes Indemnity, Emergency Conservation, and Emergency 

Forest Restoration programs due to natural disasters; NRCS carryover of funding for the Watershed and 

Flood Prevention Operations account to mitigate damage caused by hurricanes, wildfires, and other 

natural disasters; and additional supplemental appropriations received for the Disaster Relief Act and 

reduced fire-related activity at Forest Service. 
18 USDA AGENCY FINANCIAL REPORT | 2019

Total Liabilities

Total liabilities for FY 2019 were $178,981 million, compared to $161,116 million for FY 2018, an 

increase of $17,865 million, or 11 percent. The following exhibit presents FY 2019 total liabilities. 

EXHIBIT 10: Total Liabilities ($millions)

 

Debt is the single largest liability on USDA’s balance sheet. It represents amounts owed primarily to 

Treasury by CCC, FSA and RD. For CCC, the debt primarily represents financing for price support, 

export credit guarantees, disaster programs and loans related to farm storage facilities. For FSA, the debt 

primarily represents financing to support direct and guaranteed loan programs, with the majority 

supporting operating, ownership, and emergency loans. For RD, the debt primarily represents financing 

to support electric and housing loan programs. The following exhibit presents significant changes in 

total liabilities. 
SECTION I | MANAGEMENT’S DISCUSSION AND ANALYSIS 19

The following exhibit presents significant changes in total liabilities.

EXHIBIT 11: Significant Changes in Total Liabilities ($ millions)

 

Decrease in Other Liabilities mainly due to more claims processed by RMA prior to fiscal year end 

causing a lower liability for insurance losses reported as a result of widespread severe flooding and 

excess moisture conditions in many parts of the nation, causing catastrophic damages to crops; and less 

accruals for Wildland Fire Management and the Secure Rural Schools and Community SelfDetermination Act of 2000 at Forest Service. 

Increase in Debt mainly due to CCC Trade Mitigation programs to protect agricultural producers in 

response to trade damage from unjustified retaliation; and RD carrying larger debt balances for the Rural 

Electrification and Telecommunications Direct, Rural Insurance Housing Fund Guaranteed, Rural Water 

and Waste Disposal Direct, Rural Housing Insurance Fund Direct and Rural Community Facilities 

Direct programs. 
20 USDA AGENCY FINANCIAL REPORT | 2019

CONSOLIDATED STATEMENTS OF NET COST

Net Cost of Operations

Net cost of operations for FY 2019 was $144,647 million, compared to $134,461 million for FY 2018, 

an increase of $10,186 million, or 8 percent. The following exhibit presents FY 2019 net cost of 

operations by mission areas. 

EXHIBIT 12: Net Cost of Operations by Mission Areas ($millions)

 
SECTION I | MANAGEMENT’S DISCUSSION AND ANALYSIS 21

The following exhibit presents significant changes in net cost of operations. 

EXHIBIT 13: Significant Changes in Net Cost of Operations ($ millions)

 

Decrease in Food, Nutrition and Consumer Services mainly due to lower participation in the 

Supplemental Nutrition Assistance Program (SNAP). 

Decrease in Natural Resources and Environment mainly due to the Secure Rural Schools and 

Community Self-Determination Act of 2000 not being reauthorized in FY 2019. 

Increase in Farm Production and Conservation mainly due to Trade Mitigation programs which provide 

assistance for producers with commodities that have been significantly impacted by actions of foreign 

governments resulting in the loss of traditional exports; more indemnities caused by widespread 

flooding and excess moisture; and the 2017 Wildfires and Hurricanes Indemnity Program. 
22 USDA AGENCY FINANCIAL REPORT | 2019

COMBINED STATEMENTS OF BUDGETARY RESOURCES

Budgetary Resources

USDA receives most of its funding from appropriations authorized by Congress and administered by the 

U.S. Department of the Treasury. Total budgetary resources consist of the balance at the beginning of 

the year, appropriations received during the year, spending authority from offsetting collections, and 

other budgetary resources. 

Total budgetary resources were $271,914 million for FY 2019 compared to $250,340 million in 

FY 2018, an increase of $21,574 million, or 9 percent. The following exhibit presents FY 2019 total 

budgetary resources by mission area. 

EXHIBIT 14: Total Budgetary Resources by Mission Area ($ millions)

 
SECTION I | MANAGEMENT’S DISCUSSION AND ANALYSIS 23

The following exhibit presents significant changes in total budgetary resources by mission area. 

EXHIBIT 15: Significant Changes in Total Budgetary Resources by Mission Area ($ millions)

 

Decrease in Food Nutrition and Consumer Services mainly due to lower participation in SNAP. 

Increase in Marketing and Regulatory programs mainly due to unobligated balance brought forward for 

Section 32 and transfers from CCC to fund new sections of the Farm Bill.

Increase in Research, Education and Economics mainly due to additional funding received for salaries 

and expenses, and buildings and facilities. 

Increase in Departmental Management mainly due to funding for disaster assistance payments. 

Increase in Rural Development mainly due to prior year recoveries and spending authority for the Rural 

Electrifications and Telecommunications Direct program.

Increase in Farm Production and Conservation mainly due to funding for Trade Mitigation programs; 

losses on insurance claims; and disaster assistance payments. 
24 USDA AGENCY FINANCIAL REPORT | 2019

Net Outlays

Net Outlays were $151,882 million for FY 2019, compared to $140,418 million in FY 2018, an increase 

of $11,464 million or 8 percent. The following exhibit presents FY 2019 net outlays by mission area. 

EXHIBIT 16: Net Outlays by Mission Area ($ millions)

 
SECTION I | MANAGEMENT’S DISCUSSION AND ANALYSIS 25

The following exhibit presents significant changes in net outlays by mission area. 

EXHIBIT 17: Significant Changes in Net Outlays ($ millions)

 

Decrease in Food Nutrition and Consumer Services mainly due to lower participation in SNAP. 

Decrease in Natural Resources and Environment mainly due to significantly lower fire season. 

Increase in Farm Production and Conservation mainly due to Trade Mitigation programs; more losses 

caused by widespread flooding and excess moisture, and deferred collection of any unpaid producer 

premiums. 
26 USDA AGENCY FINANCIAL REPORT | 2019

Statement of Assurance

Annually, the U.S. Department of Agriculture (USDA) assesses its financial management systems and 

internal controls over the effectiveness of operations and reporting with applicable laws and regulations 

and financial reporting. The assessment included the safeguarding of assets and compliance with 

applicable laws and regulations in accordance with the requirements of the Office of Management and 

Budget (OMB) Circular No. A-123, Management’s Responsibility for Enterprise Risk Management and 

Internal Control. 

USDA is providing modified assurance that USDA’s systems of internal control comply with the 

Federal Managers’ Financial Integrity Act (FMFIA) objectives. As a result of the assessments 

conducted, USDA’s systems of internal control meet the objectives of the FMFIA and the Federal 

Financial Management Improvement Act (FFMIA), with the exception of two material weaknesses in 

internal control related to (1) information technology and (2) financial management. There was also one 

instance of financial system non-conformance which is also a noncompliance with FFMIA. In addition, 

USDA identified three instances of non-compliance with laws and regulations. Management is 

providing reasonable assurance that the internal controls over operations are effective. The details of the 

exceptions are provided in the FMFIA, FFMIA, and Summary of Financial Statement Audit and 

Management Assurances sections of this report. No other material weaknesses were found in the design 

of the internal control over (1) the effectiveness and efficiency of operations and compliance with 

applicable laws and regulations as of September 30, 2019 and (2) internal control over reporting as of 

June 30, 2019. 

Sonny Perdue 

Secretary of Agriculture

November 19, 2019 
SECTION I | MANAGEMENT’S DISCUSSION AND ANALYSIS 27

Federal Managers’ Financial Integrity Act 

Report on Management Control

BACKGROUND 

The Federal Managers’ Financial Integrity Act (FMFIA) requires ongoing evaluations of internal controls 

and financial management systems. These evaluations lead to an annual statement of assurance that: 

▪ Obligations and costs comply with applicable laws and regulations; 

▪ Federal assets are safeguarded against fraud, waste, abuse, and mismanagement;

▪ Transactions are accounted for and properly recorded; and 

▪ Financial management systems conform to standards, principles, and other requirements to ensure 

that federal managers have timely, relevant, and consistent financial information for decisionmaking purposes. 

The U.S. Department of Agriculture (USDA) evaluated its internal controls in accordance with Office of 

Management and Budget (OMB) Circular No. A-123, Management’s Responsibility for Enterprise Risk 

Management and Internal Control. 

The Department operates a comprehensive internal control program. This program ensures compliance 

with the requirements of FMFIA and other laws, and OMB Circular No. A-123, Appendices A through 

D. All USDA managers must ensure their programs operate efficiently and effectively, and comply with 

relevant laws. They must also ensure financial management systems conform to applicable laws, 

standards, principles, and related requirements. In conjunction with the Office of Inspector General (OIG) 

and the Government Accountability Office (GAO), USDA’s management works decisively to determine 

the root causes of its material weaknesses so that it can direct resources to focus on their remediation. 

USDA remains committed to reducing and eliminating the risks associated with its deficiencies. It also 

strives to efficiently and effectively operate its programs in compliance with FMFIA and other 

applicable laws and regulations. 
28 USDA AGENCY FINANCIAL REPORT | 2019

FISCAL YEAR (FY) 2019 RESULTS 

The Department has two existing material weaknesses in internal controls over financial reporting: 

Information Technology (IT) and financial management. The material weakness for financial 

management is due to improvements needed in accounting and internal controls related to the Natural 

Resources Conservation Service (NRCS) and Commodity Credit Corporation (CCC). The Risk 

Management Agency resolved the material weakness related to internal controls over estimating losses 

on insurance claims. USDA also has one existing system non-conformance related to Funds Control 

Management within the CCC, which will be resolved by the end of fiscal year (FY) 2021. 

The Food and Nutrition Service (FNS) and the Farm Service Agency (FSA) are non-compliant with laws 

and regulations related to the Improper Payments Elimination and Recovery Act of 2010, as amended. 

USDA has identified violations or potential violations with the Anti-deficiency Act (ADA). Five ADA 

violations were reported to the President and Congress during FY 2019 with an additional eight 

violations in the process of being reported. The Office of the General Counsel determined six potential 

instances were not ADA violations; and five more are pending results from research and investigation 

for a determination as to whether or not violations actually occurred. A detailed description and 

summary of the Department’s ADAs can be found in the Compliance with Laws and Regulations 

section of this report. 

The Secretary’s Statement of Assurance provides modified assurance that USDA’s system of internal 

control complies with FMFIA objectives. For additional details on the results reported in USDA’s 

Consolidated Financial Statements Audit Report, see the Summary of Financial Statement Audit and 

Management Assurances section of this report. 
SECTION I | MANAGEMENT’S DISCUSSION AND ANALYSIS 29

SUMMARY OF OUTSTANDING MATERIAL WEAKNESSES

The following exhibit provides FY 2019 accomplishments and FY 2020 planned actions toward 

resolving the outstanding material weaknesses. 

EXHIBIT 18: Summary of Outstanding Material Weaknesses

1. USDA Information Technology (IT)

Material Weaknesses 

Existing

The Department needs to continue its efforts to improve Information Technology (IT) 

security and its overall maturity to an effective level. Additionally, the Department

needs to continue remediation of its remaining outstanding audit recommendations. 

Overall Estimated 

Completion Date FY 2020

FY 2019 Accomplishments: FY 2020 Planned Actions:

During FY 2019 the Office of the Chief Information Officer (OCIO): 

• Performed security assessments on select agencies;

• Continued to perform penetration tests of all USDA 

agencies, including DHS’ Risk and Vulnerability Assessment 

(RVA) of select agencies with High Value Assets (HVAs);

• Transitioned the Continuous Diagnostics Mitigation (CDM) 

Phase 2 tools to from planning to the operational phase; 

• Closed all outstanding OIG Federal Information Security 

Management Act audit recommendations from FY 2009 

through FY 2017, including the twenty overdue 

recommendations. Implementing these recommendations 

closed eleven audits. In addition, implemented four 

recommendations from the FY 2018 OIG; 

• Planned and started implementing a consolidated 

Cybersecurity Operations organization to centralize cyber 

security functions, and capabilities across the enterprise; 

• Developed processes and procedures to track, monitor, 

and enforce security configuration baselines for USDA 

servers; 

• Published seven new cybersecurity Departmental 

directives (6 policies, 1 procedure);

• Developed and implemented several solutions to address 

recommendations from OIG Audit Reports; and

• Started planning for the CDM Phase 3 tools.

OCIO will: 

• Perform security assessments on select 

agencies;

• Continue to perform penetration tests of 

all USDA agencies, considering DHS’ Risk 

and Vulnerability Assessment (RVA) of 

select agencies with High Value Assets 

(HVAs); 

• Refine operational processes and fill gaps 

in CDM Phase 2 tools (Identity and 

Access Management);

• Continue implementing recommendations 

from FY 2018 and FY 2019; 

• Develop a risk management strategy that 

will align with USDA’s enterprise risk 

management governance; 

• Continue to track, monitor, and enforce 

security configuration baselines for USDA 

servers; and 

• Deploy CDM Phase 3 tools (Network 

Security Management).
30 USDA AGENCY FINANCIAL REPORT | 2019

2. Financial Management—Natural Resources Conservation Service (NRCS)

Material Weaknesses 

Existing

NRCS needs improved (1) controls over obligations and undelivered orders (UDO), 

(2) accounting and controls over expenses, and (3) entity level controls.

Overall Estimated 

Completion Date FY 2020

FY 2019 Accomplishments: FY 2020 Planned Actions:

During FY 2019, NRCS: 

• Continued to improve the transparency of 

recording and liquidating obligations by 

incorporating period of performance in obligation 

reports from feeder system data; 

• Added fiscal year of performance to ProTracts 

reports; and 

• Reviewed all direct entry grant and Integrated 

Acquisition System UDOS and validated period of 

performance and proposed adjustments to 

beginning and ending balances. 

NRCS will: 

• Enhance Financial Management Modernization 

Initiative (FMMI) and feeder system processes to 

produce aged Unliquidated Obligations (ULO) 

reports with period of performance data for 

obligations; 

• Establish an ongoing process to maintain, 

monitor, and certify ULOs by period of 

performance to ensure ULOs are timely being 

closed out to prevent a backlog of aged 

obligations from developing in the future; 

• Design, implement, and document policies and 

procedures that include documented internal 

controls which provide support that NRCS has 

reviewed the transactional data and assumptions 

used in its entity-wide expenses accrual process; 

• Provide additional guidance and/or training to 

employees over the recording of transactions 

with future economic benefits; 

• Evaluate the results of the FY 2019 financial audit 

and the lessons learned to ensure the proper 

controls are in place for those processes; and

• Improve communication and coordination.
SECTION I | MANAGEMENT’S DISCUSSION AND ANALYSIS 31

2. Financial Management—Commodity Credit Corporation (CCC)

Material Weaknesses 

Existing

CCC needs to address material weaknesses related to Accounting Estimates and 

Accounting for Budgetary Transactions. 

Overall Estimated 

Completion Date FY 2020

FY 2019 Accomplishments: FY 2020 Planned Actions:

During FY 2019 CCC: 

• Continued to implement effective manual, 

compensating UDO (Undelivered Orders)

monitoring controls at the program level. These 

controls assess the accuracy & validity of open 

obligations on a regular basis; 

• Provided necessary training to County field 

personnel on the requirements of OMB A-11 for 

recording obligations, and ensured program 

handbooks were updated regarding execution and 

related accounting;

• Began a process to implement effective automated 

and/or manual controls to evaluate the relationship 

between a Conservation Reserve Program (CRP) 

annual rental contracts and CRP cost share 

contracts; and developed and implemented data 

analytic routines and management review controls 

related to program UDO populations to identify 

and correct abnormalities in the data;

• Updated documentation and continued to 

strengthen management controls related to the 

annual Agriculture Risk Coverage and Price Loss 

Coverage (ARC/PLC) UDO calculation to ensure that 

it is performed at a level of precision to include 

relevant and accurate data elements, such as 

enrollments and crop prices that reflect the 

documentation submitted by the producer and 

approved by management;

• Implemented processes, procedures, and controls 

to ensure accurate recognition of adjustments to 

delivered orders are posted into the accounting 

systems and performed periodic reviews of the 

accounting events to validate the results of 

recorded transactions;

CCC will: 

• Continue to implement effective UDO 

monitoring controls at the program level 

throughout of the organization;

• Create a review and approval process for 

apportionments that include Budget, Financial 

Management, Economics and Policy Analysis, 

and Agency Program leadership to ensure 

estimates are fully vetted and amounts 

requested are sufficient;

• Implement continuous monitoring of the 

relationship between the CRP annual rental 

contracts and CRP cost share contracts, and the 

continuous monitoring of CRP cost share data;

• Update Standard Operating Procedure and 

checklist to include evaluation process for

USAID’s cash adjustment, validate controls are 

working effectively, and document the root 

cause of deficiency and implement

corresponding compensating controls; 

• Continue development of a reconciliation/

analysis process for beginning of year balance 

for borrowing authority carried forward;

• Continue to monitor process for items requiring 

resolution and validate balance changes;

• Periodically review and update accounting 

standards and validate that resulting changes 

have been tested and implemented; and

• Continue with the execution of the existing 

OMB A-123, Appendix A Corrective Action 

Plan over Accounting Estimates by further 

improving and enhancing the analysis, review, 

and recordation process.
32 USDA AGENCY FINANCIAL REPORT | 2019

2. Financial Management—Commodity Credit Corporation (CCC) Continued

FY 2019 Accomplishments: FY 2020 Planned Actions:

• Implemented effective internal controls to review 

and reconcile the general ledger account interrelationships between borrowing authority and 

other budgetary accounts;

• Recorded borrowing authority at the appropriate 

program level to prevent abnormal balances, 

which will assist in meaningful account review 

and reconciliation;

• Continued to evaluate all budgetary general and 

subsidiary ledgers to ensure they reflect the 

appropriate accounting and reporting guidance 

provided by OMB and the U.S. Department of the 

Treasury;

• Continued to ensure the month-end 

reconciliations for significant accounts are 

performed in a timely manner and reviewed at 

the appropriate precision levels through the 

implementation of dollar materiality thresholds 

that are monitored by management. Reconciled 

differences identified were corrected in a timely 

manner in the subsidiary or General Ledger (GL). 

Researched and identified unknown differences 

per Account Reconciliation and Analysis Policy; 

• Continued with the execution of the existing 

OMB A-123, Appendix A Corrective Action Plan 

over Accounting Estimates by further improving 

and enhancing the analysis, review, and 

recordation process; and

• Continued with the execution of the existing 

OMB A-123, Appendix A Corrective Action Plan 

Analysis Policy. 
SECTION I | MANAGEMENT’S DISCUSSION AND ANALYSIS 33

SUMMARY OF OUTSTANDING SYSTEM NON-CONFORMANCE 

Funds Control Management non-conformance is also reported as a system non-compliance and is 

included in the FFMIA Report on Financial Management Systems (Exhibit 19). The weakness involves 

component agency-specific deficiencies for CCC.

The following exhibit provides FY 2019 accomplishments and FY 2020 planned actions toward 

resolving the Department’s outstanding system non-conformance. 

EXHIBIT 19: Summary of Outstanding System Non-Conformance

1. Funds Control Management

System 

Non-conformance Existing

CCC system improvements needed in recording obligations at the transactional 

level. 

Overall Estimated 

Completion Date FY 2021 

FY 2019 Accomplishments: FY 2020 Planned Actions:

During FY 2019 CCC: 

• Continued to evaluate all budgetary general and 

subsidiary ledgers to ensure they reflect the 

appropriate accounting and reporting guidance 

provided by OMB and the U.S. Treasury;

• Continued with the execution of the existing 

OMB A-123, Appendix A Corrective Action Plan 

for Funds Control and Budgetary Accounting; 

• Continued to partner with Deputy Administrator, 

Farm Programs and Information Technology 

Services Division, toward completing software 

modifications to ensure all program applications 

were in full compliance with the Funds 

Control/Obligation Requirements (i.e., business 

events, establishments, liquidations, adjustments 

[downward and upward], etc.) related to 

obligations at the transaction level in order to 

prepare for Financial Management Modernization 

Initiative implementation (FMMI); and

• Implemented the FSA/CCC Financial Improvement 

Program multi-phased, multi-year project move of 

all financial management processes from FPAC 

and its affiliated agencies’ accounting and feeder 

systems to FMMI. FSA remediated its feeder 

systems to create auditable financial data to 

integrate with FMMI.

CCC will: 

• Continue to evaluate all budgetary general and 

subsidiary ledgers to ensure they reflect the 

appropriate accounting and reporting guidance 

provided by OMB and the U.S. Treasury;

• Continue with the execution of the existing OMB 

A-123, Appendix A Corrective Action Plan for 

Funds Control and Budgetary Accounting; 

• Continue to partner with Deputy Administrator 

Farm Programs and Information Technology 

Services Division toward completing software 

modifications to ensure all program applications 

were in full compliance with the Funds Control/

Obligation Requirements (i.e., business events, 

establishments, liquidations, adjustments 

[downward and upward], etc.) related to 

obligations at the transaction level in order to 

prepare for FMMI; and

• Continue to implement the FSA/CCC Financial 

Improvement Program multi-phased, multi-year 

project move of all financial management 

processes from FPAC and its affiliated agencies’ 

accounting and feeder systems to FMMI.
34 USDA AGENCY FINANCIAL REPORT | 2019

Compliance with Laws and Regulations

USDA remains noncompliant, or potentially noncompliant with the Anti-deficiency Act (ADA) 

identified in the following table, as well as in the Improper Payments Elimination and Recovery Act of 

2010 (IPERA) as Amended and Federal Financial Management Improvement Act sections of this report. 

The Department has developed strategies to reduce and/or mitigate these violations during FY 2020. 

The following tables provide further details of each violation. 

ANTI-DEFICIENCY ACT

EXHIBIT 20: Five ADA Violations were Reported to the President and Congress During 2019

Agency: Commodity Credit Corporation (CCC)

Violation: Expenditures for CCC interest to the U.S. Department of the Treasury 

(Treasury) exceeded amounts initially apportioned by the Office of 

Management and Budget (OMB). CCC expended approximately $46.1 million

in interest to Treasury, more than the apportioned amount of $29.9 million. 

The ADA violation totaled $16,205,195.04.

Year Identified

FY 2016

Agency: Office of the Chief Financial Officer/ National Finance Center (OCFO/NFC)

Violation: The NFC managed web pages for the New Orleans chapter of the Association 

of Government Accountants (AGA), which is a non-governmental 

organization, on the NFC Web site at no cost to AGA. An investigation into 

this situation determined in FY 2017 that NFC has been maintaining the AGA 

web pages since 1999. The ADA violation was less than $5. 

Year Identified

FY 2017 

Agency: Farm Service Agency

Violation: A violation of ADA, 31 U.S.C. 1342 occurred in FSA’s Salaries and Expenses 

account in the total amount of $149.79. The violation occurred between 

January 20, 2018, and January 23, 2018, during the government shutdown 

when 41 field office staff verified 120 deposits to properly record collections. 

Year Identified

FY 2018 

Agency: CCC

Violation: Noninsured Crop Disaster Assistance Program (NAP) Frost Freeze (FFN)— 

During the reclassification process in FY 2018, CCC discovered NAP payments 

exceeded apportionments by $888. 

Year Identified

FY 2018 

Agency: CCC

Violation: (NEW): Pima Agriculture Cotton Trust Fund — An Inter/Intra-Agency 

Agreement (IAA) for $124,500 administrative fees was initiated and funds 

were certified to start the IAA process. On April 17, 2019, $14,943,071.01 was 

disbursed for payments to manufacturers/producers leaving only $64,927.99 

left for FY 2019. When the IAA for the $124,500 administrative fee was 

approved on May 20, 2019, it now exceeded the funds available for FY 2019 

by $59,572.01. 

Year Identified

FY 2019 
SECTION I | MANAGEMENT’S DISCUSSION AND ANALYSIS 35

EXHIBIT 21: ADA Violations Continue Pending Submission to the President and Congress. 

The violations include five prior year and three newly identified violation for the current fiscal year.

Agency Description of Violation Status

Office of Advocacy 

and Outreach (OAO)

PRIOR YEAR: The OAO identified an ADA violation for FYs

2011 and 2012 under the Food, Conservation, and Energy 

Act of 2008, Public Law 110-234 (Farm Bill of 2008). 

OAO awarded more than $19 million for “Outreach and 

Assistance for Socially Disadvantaged and Veteran 

Farmers and Ranchers” (Section 2501) Grants in excess of 

amounts permitted by the Farm Bill of 2008.

After review by OGC, it was 

determined that a violation 

occurred. The ADA violation 

is in the process of being 

reported to Congress and 

the President.

CCC PRIOR YEAR: Agriculture Risk Coverage-County (ARC-CO): 

On November 10, 2016, the Office of Management and 

Budget (OMB) approved an ARC-CO apportionment 

providing a total of $850,924,690 for crop year 2017 ARC 

funding. This funding was divided between ARC-CO 

($775,924,690) and Agricultural Risk Coverage-Individual 

Option ($75,000,000). As part of fiscal year-end close for 

FY 2017, CCC recorded an obligation of $2,319,369,741.34 

for crop year 2017 ARC-CO. This exceeded the 

apportioned amount by $1,543,445,051.

After review by OGC, it was 

determined that a violation 

occurred. The ADA violation 

is in the process of being 

reported to Congress and 

the President.

Farm Service Agency 

(FSA)

PRIOR YEAR: FSA issued a contract for Information 

Technology investments including the CCC Budget 

Formulation (CCC BF) system. The CCC BF was not included 

in the approved Acquisition Approval Request (AAR). The 

AAR and the contract will be amended to include $300,000 

for CCC BF. The FY 2018 Consolidated Appropriation Act, 

Section 706, states “none of the funds available to the 

Department of Agriculture for information technology shall 

be obligated for projects, contracts, or other agreements 

over $25,000 prior to written approval by the Chief 

Information Officer.” 

After review by OGC, it was 

determined that a violation 

occurred. The ADA violation 

is in the process of being 

reported to Congress and 

the President.

FSA PRIOR YEAR: FSA identified an ADA violation with the U.S. 

Warehouse Act in the amount of $4,843,000. FSA business 

practices dating back to FY 2000 supported Warehouse 

User Activities with Administrative S&E funds for direct and 

indirect costs. The user fee collections were not adequate 

to fully fund the costs, and S&E funds were used and not 

reimbursed; therefore, improperly augmenting the User 

Fee program. When FSA adjusted its accounts to correct 

the error, the user fee account was deficient, resulting in an 

ADA violation.

After review by OGC, it was 

determined that a violation 

occurred. The ADA violation 

is in the process of being 

reported to Congress and 

the President.
36 USDA AGENCY FINANCIAL REPORT | 2019

Agency Description of Violation Status

CCC Prior Year: Agriculture Risk Coverage (ARC)—In FY 2018, 

CCC identified crop year 2017 enrollments for the ARC 

program that exceeded available funding. The ARC 

program does not check funds availability at the time of 

approval. It is checked at the time of payment. When the 

payment run occurred, the program area identified that 

there were not enough funds for all Crop Year 2017 

contracts approved in FY 2018. This resulted in a 

$1,797,297 funding deficit and ADA violation.

After review by OGC, it was 

determined that a violation 

occurred. The ADA violation 

is in the process of being 

reported to Congress and 

the President.

ERS FY 2019 (NEW): Employee training—During the 

Government Shutdown in January 2019, online training 

was taken by an employee in furlough status. The training 

was a benefit to ERS, and ERS accepted the voluntary 

services in violation of 31 USC 1342. The ADA violation 

was approximately $1,503.

After review by OGC, it was 

determined that a violation 

occurred. The ADA violation 

is in the process of being 

reported to Congress and 

the President.

ARS FY 2019 (NEW): Unauthorized work during the

shutdown—An employee entered documentation into a 

contract file during the government shutdown. This 

resulted in an ADA violation in the amount of $11.03.

After review by OGC, it was 

determined that a violation 

occurred. The ADA violation 

is in the process of being 

reported to Congress and 

the President.

NRCS FY 2019 (NEW): Computer equipment was purchased in 

the amount of $41,065 without getting the requisite 

information technology acquisition form signed and 

approved.

After review by OGC, it was 

determined that a violation 

occurred. The ADA violation 

is in the process of being 

reported to Congress and 

the President.
SECTION I | MANAGEMENT’S DISCUSSION AND ANALYSIS 37

EXHIBIT 22: Current/Prior Year - Six potential violations were determined not to be an ADA. 

Agency Description of Violation Status

CCC FY 2018: FAS/Food for Progress—The Foreign Agriculture Service paid 

Food for Progress freight invoices from administrative funds. There was a 

zero balance in the administrative funds for this agreement; however, 

there were funds available as a result of downward adjustments.

OGC determined 

no violation 

occurred.

CCC FY 2018: United States Agency for International Development (USAID) 

grants—Pursuant to the Grants Oversight and New Efficiency (GONE) Act, 

CCC is required to report quarterly, the number of federal grant and 

cooperative agreement awards and balances of USAID (CCC child agency) 

for which closeout has not yet occurred, but for which the period of 

performance has elapsed more than 2 years with zero and undisbursed 

balances. At the end of 3rd quarter FY 2018, USAID reported grants that 

had not been closed out in the greater than 5-years category. As part of 

the grant closeout in FY 2018, it was determined in some cases that 

additional funds were needed to fully execute agreements and perform 

the closeout. As a result, FY 2018 funds were used.

OGC determined 

no violation 

occurred.

CCC FY 2018: Biomass Crop Assistance Program (BCAP)—During the FY 2017 

Quarterly Unliquidated Obligations (ULO) Certification process, the 

program office identified 12 contracts as invalid and requiring 

deobligation that were in fact deobligated through a Data Change Request 

(DCR) in the electronic Funds Management System (eFMS). After further 

analysis in FY 2018, the program office determined that such contracts 

were still valid. However, there were no funds available in FY 2018 to reestablish the related obligations.

OGC determined 

no violation 

occurred.

Office of 

Partnerships 

and Public 

Engagement 

(OPPE)

FY 2018: A potential ADA related to cooperative agreements may exist. 

OPPE may have exceeded its authority by charging USDA agencies for 

cooperative agreements that the agencies lacked legislative authority to 

enter into.

OGC determined 

no violation 

occurred.

CCC FY 2018: Puerto Rico Tree Assistance Program (TAP)—Contracts 

approved from prior fiscal years. TAP contracts from FY 2014 through 

FY 2017 were approved but not recorded into the program application 

timely. An obligation is triggered when an application is approved via a 

producer’s and FSA representative’s signature. CCC received input 

from the Puerto Rico District Directors that indicates that there are 

1,973 unrecorded TAP contracts representing 2014, 2015 and 2017. 

Management determined that the maximum understatement in open 

obligations to be $8.9 million and $17.5 million as of October 1, 2017 

and September 30, 2018, respectively.

OGC determined 

no violation 

occurred. 

Food and 

Nutrition 

Service (FNS)

FY 2019: In 2019, the Government Accountability Office opined that a 

potential ADA violation may have occurred during the December 2018 

lapse in appropriations. FNS incurred obligations and made expenditures 

in excess of legally available amounts by providing early payment of 

February 2019 SNAP benefits.

OGC determined 

no violation 

occurred.
38 USDA AGENCY FINANCIAL REPORT | 2019

Potential ADA Violations—three prior year and two new potential violations were identified. These 

occurrences are pending results from research and investigation for a determination as to whether or not 

a violation actually occurred. This table provides a description and status. 

EXHIBIT 23: Potential ADA Violations Identified Since FY 2017

Agency Description of Violation Status

CCC FY 2017: The prior year accounting treatment for 

obligations related to the Conservation Reserve Program—

Annual Rental contracts was determined to be in error with 

an ADA amount total of $9,921,859,680. Only the annual 

portion of the contract values was recorded as an 

obligation. 

The Office of the General 

Counsel (OGC) determined that 

the error was not an ADA 

violation; however, the incident 

has been referred to GAO for 

additional investigation and 

determination.

CCC FY 2018: Emergency Forestry Conservation Reserve 

Program—CCC failed to record the obligation for the full 

value of the long-term contract when the contact was 

signed. The ADA violation amount was $2,200,000. 

The Office of the General 

Counsel (OGC) determined that 

the error was not an ADA 

violation; however, the incident 

has been referred to GAO for 

additional investigation and 

determination.

National 

Institute of 

Food and 

Agriculture 

(NIFA) 

FY 2018: USDA’s OIG office issued an audit in August 2019

on NIFA Formula Grant Program Controls Over Fund 

Allocations to States. A final disposition will be determined. 

An OIG report indicated that a potential reportable ADA 

violation may have occurred in the amount of $36 million. 

The Office of the General 

Counsel (OGC) determined that 

the error was not an ADA 

violation; however, the incident 

is under further investigation 

and determination by OIG. 

CCC FY 2019 (NEW): Pima Cotton 2—On May 1, 2019, funding 

in the amount of $123,655 was recorded for Pima Cotton 

Trust Fund FY 2018 Carryover without being apportioned. 

This apportionment only requested the new funding of 

$16,000,000 for FY 2019, it did not request carryover 

funding to make it available for obligation in FY 2019. 

Obligating funds that were carried over and not 

apportioned may have resulted in a potential ADA 

violation. 

Pending a Determination.

CCC FY 2019 (NEW): Agriculture Wool Apparel Manufacturers 

Trust Fund—On May 1, 2019, funding in the amount of 

$123,655 was recorded for Ag Wool Trust Fund FY 2018 

Carryover without being apportioned. This apportionment 

only requested the new funding of $30,000,000 for FY 

2019, it did not request carryover funding to make it 

available for obligation in FY 2019. Obligating funds that 

were carried over and not apportioned may have resulted 

in a potential ADA violation. 

Pending a Determination
SECTION I | MANAGEMENT’S DISCUSSION AND ANALYSIS 39

Improper Payments Elimination and 

Recovery Act of 2010 as Amended

The following exhibit provides a summary of agency programs that are not compliant with the Improper 

Payment Elimination and Recovery Act of 2010 (IPERA) as Amended by the Improper Payment 

Elimination and Recovery Improvement Act of 2012 (IPERIA). The Office of Inspector General’s 

FY 2018 Compliance with IPERA Requirements (Audit Report 50024-0014-11, dated May 2019) found 

that two USDA agencies were noncompliant. The following exhibit identifies the non-compliance 

related to IPERA and target dates by which the deficiencies will be mitigated. The summary of 

corrective actions can be found in the Payment Integrity Management Section III of this report.

EXHIBIT 24: Outstanding Initiative to Achieve Compliance

Initiative: Improper Payments Elimination and Recovery Act of 2010, as amended by the Improper 

Payments Elimination and Recovery Improvement Act of 2012

Section of Non-compliance Agency/Program Target Completion 

Date

Publish and meet annual reduction targets 

for each program assessed to be at risk and 

measured for improper payments

Food and Nutrition Service (FNS) 

Special Supplemental Nutrition 

Program for Women, Infants, and 

Children (WIC)

12/15/2019

Farm Service Agency (FSA) Livestock 

Forage Disaster Program (LFP) 06/15/2020

FSA Noninsured Crop Disaster 

Program (NAP) 06/15/2020

Report a gross improper payment rate of less 

than 10 percent for each program and 

activity for which an improper payment 

estimate was obtained and published in the 

Performance and Accountability Report 

(PAR) or Agency Financial Report (AFR)

FNS School Breakfast Program 06/15/2020

FSA LFP 06/15/2020

FSA NAP 06/15/2020
40 USDA AGENCY FINANCIAL REPORT | 2019

Federal Financial Management Improvement Act Report on 

Financial Management Systems Background

The Federal Financial Management Improvement Act (FFMIA) is designed to improve financial and 

program managers’ accountability, provide better information for decision making, and improve the 

efficiency and effectiveness of federal programs. FFMIA requires that financial management systems 

provide reliable, consistent disclosure of financial data in accordance with generally accepted accounting 

principles and standards. These systems must also comply with (1) Federal Financial Management System 

(FFMS) requirements; (2) applicable federal accounting standards; and (3) the U.S. Standard General 

Ledger (USSGL) at the transaction level. 

Additionally, the Federal Information Security Management Act (FISMA) requires that there be no 

significant weaknesses in information security policies, procedures, or practices to be substantially 

compliant with FFMIA. The information technology (IT) non-compliance is also reported as a 

material weakness and is included in the Federal Managers’ Financial Integrity Act 

Report on Management Control. Failure to resolve prior-year recommendations identified by USDA’s 

Office of Inspector General (OIG) has prevented the Department from mitigating repeated deficiencies 

and from receiving a quality rating on the five Cybersecurity Framework security functions. More 

detailed information on the status of corrective actions planned and to be completed to comply with 

FISMA is also provided in the Response to Management Challenges section of this report.

The following exhibit contains the outstanding initiatives to achieve compliance. 

EXHIBIT 25: Initiatives to be Completed

Outstanding Initiatives to Achieve FFMIA Compliance

Initiative Section of Non-compliance Agency Target 

Completion Date

Information Technology

FFMS requirements and information 

security policies, procedures, and/or 

practices. 

Multiple

12/31/2020

Financial Management

Federal accounting standards and 

USSGL at the transaction level.

Natural Resources 

Conservation Service

9/30/2020

Federal accounting standards and 

USSGL at the transaction level.

Commodity Credit 

Corporation

9/30/2021 
SECTION I | MANAGEMENT’S DISCUSSION AND ANALYSIS 41

FISCAL YEAR 2019 RESULTS

During fiscal year (FY) 2019, the U.S. Department of Agriculture (USDA) evaluated its financial 

management systems to assess compliance with FFMIA. In assessing FFMIA compliance, USDA 

considered auditors’ opinions on component agencies’ financial statements, and progress made in 

addressing the material weaknesses identified in the FY 2018 Agency Financial Report. USDA is not 

compliant with federal accounting standards and the USSGL at the transaction level due to deficiencies 

identified for the CCC and NRCS. Additionally, as reported in the FFMIA section of this report, USDA 

continues to have weaknesses in IT controls and FFMS requirements that result in non-compliance with 

the FISMA requirement. As part of its financial systems strategy, USDA agencies continue working to 

meet FFMIA and FISMA objectives. 

Commodity Credit Corporation (CCC)

Commodity Credit Corporation (CCC) Noncompliance with federal accounting standards and USSGL at 

the transaction level was noted for weaknesses in the accounting for budgetary transactions and 

accounting estimates. The financial management systems did not record certain accounting events at the 

transaction level in accordance with the USSGL. CCC continues to make significant progress in 

performing compensating controls over the accounting for obligation activity. CCC continues 

implementing their program obligation activity into FMMI in a phased approach. 

Natural Resources Conservation Service (NRCS)

Deficiencies in applicable federal accounting standards, including the USSGL at the transaction level, 

were noted for incorrect posting logic being used for recoveries of prior year unpaid obligations and the 

Financial Management Modernization Initiative does not allow for updates to the period of performance 

data related to these types of transactions. 

NRCS continues working to mitigate auditor-identified deficiencies and substantially comply with 

FFMIA. 
42 USDA AGENCY FINANCIAL REPORT | 2019

Financial Management Systems Strategy

The Financial Management Systems (FMS) component of the Office of the Chief Financial Officer 

(OCFO) is responsible for providing timely, accurate, and complete financial information to 

U.S. Department of Agriculture (USDA) agencies to enable them to execute the mission of USDA. 

Specifically, FMS provides cloud-based, Commercial Off-the-Shelf (COTS) Enterprise Resource 

Planning (ERP) software that provides USDA Agencies with the functionality they need to distribute, 

obligate, expend, and report on the funds entrusted to them by Congress. 

FMS operates as an internal Shared Services Provider to USDA agencies, pooling resources to offer 

cost-effective systems and support through the consolidation of functions, standard processing, and 

repeatable processes. 

FINANCIAL MANAGEMENT LINES OF BUSINESS

FMS’ mission as an Internal Shared Service Provider is to provide reliable, cost-effective, employeecentric systems and services to USDA organizations, thus enabling customers to focus on serving this 

great Nation through their mission delivery. FMS’ goal is to provide the necessary activities for 

executing the Financial Management Lines of Business vision. The three key components of this vision 

are communication, governance, and operations. By executing these components, USDA will deliver a 

successful, shared service offering. 

FMS’ activities are focused on financial management services. The list of financial management 

services includes:

▪ Budget execution; 

▪ General ledger accounting; 

▪ Financial reporting; 

▪ Audit support; 

▪ Payroll accounting; 

▪ Investment accounting; 

▪ Commercial vendor payments; 

▪ Temporary duty travel payments; 

▪ Permanent change of station employee relocation payments; 

▪ Grant payments; 

▪ Purchase card payments;

▪ Lease accounting; 

▪ Intragovernmental payments; 

▪ Intragovernmental collections; 
SECTION I | MANAGEMENT’S DISCUSSION AND ANALYSIS 43

▪ Receivable management; 

▪ Property accounting; and 

▪ Grants management.

By offering a solution that is proven and operating, and which meets all compliance requirements, a 

customer is jump-started when coming online with a state-of-the-art, fully configured ERP solution built 

for financials. FMS’ primary objectives for this shared services effort are to provide the following: 

▪ An enterprise financial management service that enables customers to reap the benefits of faster, 

less expensive, and less risky services as compared with starting with a new ERP or financial 

management implementation;

▪ Integration with the National Finance Center (NFC) payroll processing services; 

▪ Budget status forecasting; 

▪ An enterprise grants management service that enables customers to utilize a full life cycle 

management tool for grants administration that provides visibility to both the government and the 

grant recipient; 

▪ A complete audit-compliant financial solution with full documentation meeting financial 

requirements; 

▪ Continuous process, operational, and organizational improvements for those shared services 

retained in the future state portfolio; 

▪ More powerful and flexible financial management and reporting; 

▪ Administrative payments, collections, and certifications;

▪ Editing/auditing capabilities that are 100 percent computerized; and 

▪ The best possible customer-focused service and support. 

SUCCESSES DURING FISCAL YEAR (FY) 2019

Robotics Process Automation

The Robotics and Automation Services Management Office (SMO) provides enterprise-wide 

collaboration, supports automation for enterprise-wide processes, encourages process improvement/ 

efficiencies, and acts as a mechanism for USDA to realize the benefits of intelligent automation. 

Process automation through Robotics aligns to the Secretary’s top priority, which is to ensure USDA 

programs are delivered efficiently, effectively, with integrity, and with a focus on customer service. 

The Robotics and Automation SMO will help achieve the four goals, most notably to “Create a 

workforce for the 21st century that is highly-skilled, results-oriented, customer-focused, and nimble.” 
44 USDA AGENCY FINANCIAL REPORT | 2019

The project team will work with key stakeholders across OCFO and other partner organizations to 

promote the procedures required to facilitate key decision making and establish and maintain 

organizational control. To achieve this objective, the team will create multiple deliverables required for 

the SMO to operate efficiently and effectively both now and in the future. In FY 2019, the following 

was accomplished: 

▪ Developed and deployed three Robotics financial automations into production; 

o The automation of the funds distribution process reallocates 2 to 3 hours of manual work per 

day, automating more than 2,000 documents posted in the Financial Management 

Modernization Initiative (FMMI); 

▪ Supported the President’s Management Agenda (PMA) mandate to reduce the “burden through 

tools like integrated IT [information technology] and automation software” by implementing 

Robotic Process Automation (RPA); 

▪ Improved the accuracy of budget data entry, reducing keystroke errors; 

▪ Produced initial savings of $75,000 in the first year, and will save $2.2 million after Enterprise 

Expansion; 

▪ Operationalized the USDA/RPA SMO governing body for RPA. As the governing body, the SMO 

owns and is responsible to grow and centralize the RPA program across all business areas of USDA. 

The SMO is also responsible to review, evaluate, (intake) and develop unique processes from groups 

inside and outside of OCFO and the Office of the Chief Information Officer (OCIO); and

▪ Established a Robotics reskilling program for RPA Developers and Analysts. 

FSA/CCC Financial Improvement Program (FFIP) 

The Farm Service Agency’s (FSA) financial accounting, including Commodity Credit Corporation’s 

(CCC) (which is operated by the FSA), is not integrated with the rest of USDA in the FMMI system, 

creating reconciliation and other issues, which include additional costs to maintain a separate set of 

systems. Subsequently, the Office of the Secretary directed OCFO to develop a plan to migrate FSA’s 

accounting into the standard FMMI system. 

This project will be a multi-phased, multi-year project that will ultimately move all financial 

management processes from FSA accounting and feeder systems to FMMI. Simultaneously, FSA will 

need to fix their feeder systems to create auditable financial data to integrate with FMMI. In FY 2019, 

the FFIP project:

▪ Successfully established end-to-end outbound connectivity between FMMI and Web-Based Supply 

Chain Management (WBSCM) for Budget Allotment; 

▪ Successfully established end-to-end outbound connectivity between FMMI and WBSCM for 

Funds Commitment;
SECTION I | MANAGEMENT’S DISCUSSION AND ANALYSIS 45

▪ Initiated Phase 2 of the Farm Production and Conservation (FPAC) Financial Improvement 

Program (FFIP) for the Unified Export Strategy (UES)/ezFedGrants (eFG) project. The UES 

system and eFG will interface via web service to transfer claims data and make payments via the 

FMMI accounting system; 

▪ Converted 78 unique programs consisting of 86 open contracts totaling approximately $78 million

into FMMI; and 

▪ Streamlined the FSA business process by eliminating the need for manual, paper-based payment 

processing and solved a long outstanding issue related to temporary sequestrations by working 

with the Office of Management and Budget (OMB). This process also resolved a longstanding 

issue for the FSA to close many lingering account balances and move to FMMI with clean 

accounts thereby eliminating a $6 billion abnormal balance condition. 

Grants Management 

Beginning in 2013, the USDA OCFO expanded FMMI to include the eFG grants management solution. 

The eFG System is an online system used for managing the grant’s entire lifecycle. Members of grantseeking organizations use the eFG External Portal to view and apply for grant award opportunities, view 

grant award package documents, and submit claims and reports among other actions. The eFG program is 

designed for servicing grants to organizations such as educational institutions and research organizations. 

On behalf of the OCFO’s FMS, Grant Management Service (GMS) acts as the eFG system owner. The 

mission of GMS is to provide guidance and leadership in the areas of program management, governance, 

grants and agreements policy, and IT related to the eFG community. The enterprise grants and agreements 

management solution encompasses seven USDA agencies and includes more than 50 Financial Assistance 

Listings, while transforming USDA’s grants and agreements capabilities. GMS supports myriad federal 

initiatives, such as school lunch programs, home ownership opportunities to low- and moderate-income 

rural Americans, organic agriculture, and numerous other grant and agreement related programs to better 

serve the American public. In FY 2019, GMS’ ongoing initiatives include:

▪ Continued the support of implemented formula grants and other functionality for the FFIP Release 

2.0 (R2) Foreign Agriculture Service (FAS) UES grants project; 

▪ Continued the support of implemented formula grants and other functionality for the National 

Institute of Food and Agriculture (NIFA); 

▪ Deployed 3,350 new FY 2019 agreements and 6,913 (to date) active and draft agreements using 

eFG, the Department’s grants management solution; 

▪ Trained over 1,500 internal and external users on eFG and resolved 2,275 Tier 0-1 tickets;

▪ Implemented a robust user education site, WikiGrants, as an internal repository of eFG related 

materials, such as user guides, training modules, and frequently asked questions (FAQs) that 

received 641 unique visitors in FY 2019; 

▪ Designed and developed the internal Interagency Agreement (INTR);
46 USDA AGENCY FINANCIAL REPORT | 2019

▪ Continued to support the Pega project, which includes upgrade and enhancements, user experience 

(UX) and user interface (UI) improvements, and system architecture;

▪ Continued the support of eFG enhancements for the Animal and Plant Health Inspection Service 

(APHIS);

▪ Engaged Customers through: 

o National Extension and Research Administrative Officers Conference (NERAOC),

o USDA’s Financial Management Training (FMT),

o Agricultural Management Services Specialty Crops Program Conference,

o Federal Demonstration Partnership Quarterly Conferences, and

o PegaWorld (eFG external portal).

Other Initiatives

OCFO is also working to implement USDA Agencies into Treasury’s G-Invoicing initiative by June 30, 

2021. This system will address current Buy/Sell activity by implementing a federal intra-governmental 

transaction (IGT) Buy/Sell Data Standard and provide transparent access to a common data repository for 

brokered transactions in accordance with 31 U.S.C. 3512(b) and 3515.
SECTION I | MANAGEMENT’S DISCUSSION AND ANALYSIS 47

Other Management Information, Initiatives, and Issues

DIGITAL ACCOUNTABILITY AND TRANSPARENCY ACT 

(DATA ACT)

In May 2014, the Digital Accountability and Transparency Act (DATA Act) was enacted. This Act 

extends the Federal Funding Accountability and Transparency Act (FFATA) by adding additional data 

elements to the previous FFATA reporting on financial assistance and procurements. The U.S. 

Department of Treasury (Treasury) and the Office of Management and Budget (OMB) are responsible 

for implementing the Act. Federal agencies are required to produce seven files as listed below and report 

them to the Treasury Broker (Broker) quarterly: 

Exhibit 26: Government-Wide Requirements

File Description Submission Frequency

File A—Appropriations 

Account data Summary financial data Agency submits to Data Broker Quarterly

File B—Object Class/Program 

Activity data Summary financial data Agency submits to Data Broker Quarterly

File C—Award Financial data Detailed financial/ 

award data Agency submits to Data Broker Quarterly

File D1—Procurement data Detailed procurement 

award data 

External— 

(FPDS-NG to Data Broker) 

Daily/Pulled 

Quarterly4

File D2—Financial Assistance 

data 

Detailed assistance 

award data 

External— 

(FABS5 to Data Broker) 

Semi-Monthly/ 

Pulled Quarterly6

File E—Additional Awardee 

Attributes Awardee/recipient data External— (SAM.gov to Data Broker) Quarterly

File F—Sub-award Attributes Sub-award data External— 

(FSRS7 to Data Broker) Quarterly

4 USDA’s file D1 data are reported daily to the Federal Procurement Data System—Next Generation (FPDS-NG). 

It is pulled into the Treasury Broker quarterly as part of USDA’s quarterly DATA Act submission. 

5 Financial Assistance Broker Submission system. 

6 USDA’s file D2 data are reported semi-monthly to USAspending.gov. It is pulled into the Treasury Broker 

quarterly as part of USDA’s quarterly DATA Act submission. 

7 FFATA Sub-award Reporting System 
48 USDA AGENCY FINANCIAL REPORT | 2019

Government-Wide Implementation 

OMB and Treasury issue guidance for implementation of the DATA Act. The latest OMB guidance is 

OMB Memorandum 18-16. This guidance instructs Federal Agencies to develop a DATA Act Data 

Quality Plan for implementation in fiscal year (FY) 2019. USDA published its DATA Act Data Quality 

Plan in September 2019. 

Treasury maintains data elements and guidelines for reporting in the DATA Act Information Model 

Schema (DAIMS). DAIMS 1.3.1 was implemented in FY 2019. USDA became compliant with the latest 

version when it was released in February 2019. 

USDA Implementation 

The Office of the Chief Financial Officer (OCFO) oversees the DATA Act implementation for USDA. 

OCFO’s Financial Management Services (FMS) manages a data repository for the Department to collect and 

report all DATA Act elements to the Treasury Broker for publication on the USAspending.gov website. 

This data repository contains the data necessary to create Files A-C.

USDA reports the following information in compliance with the DATA Act:

▪ Files A-C: The data for Files A-C come from three sources:

o Data are pulled from the Financial Management Modernization Initiative (FMMI) General 

Ledger (GL).

o The Rural Development (RD) and Farm Service Agencies (FSA) use separate GLs (RD and 

FSA also have FMMI activity) and submit file A-C data to the repository. 

o USDA is also a Financial Shared Service Provider, servicing 23 small government agency 

clients. All USDA and customer data are held in the FMMI repository. 

USDA submitted third-quarter 2019 data to the USAspending.gov website in August 2019. USDA 

reported all Treasury symbols in File A as being error-free. 99.8 percent of reporting on Budget 

Object Classification Codes and Program Activity codes in File B passed validation checks. 

92.5 percent of the awards financial attributes in File C passed validation checks, a significant 

improvement over the prior quarters. 

▪ File D1: Data are submitted as frequently as daily to the Federal Procurement Data System—

Next Generation (FPDS-NG). The Treasury Broker pulls in all data submitted to FPDS-NG at 

quarter-end for comparison purposes. 

o As of June 30, 2019, USDA reported 39,700 procurement award transactions with a value of 

$3.8 billion. 
SECTION I | MANAGEMENT’S DISCUSSION AND ANALYSIS 49

▪ File D2: Data are submitted from USDA Agencies and staff offices to USAspending.gov for 

posting. Error records are sent back to the Agencies for correction and resubmission. 

o As of June 30, 2019, USDA reported 3,783,164 federal financial assistance award 

transactions with a value of $86.9 billion. The increase in financial assistance awards 

reported is due, in large part, to the FSA reporting direct payments to farmer and producers 

for the first time in FY 2019. 

▪ Files E and F: Data are pulled by the Treasury broker quarterly; this data are not maintained in 

Agency systems. 

Fourth-quarter data will be reported in November 2019. USDA is focused on improving data quality. 

USDA began quarterly analysis of transactions that might have been mislabeled and gone unreported. In 

the third quarter of FY 2019, USDA implemented Parent/Child reporting. This implementation allows 

USDA to correctly report parent/child relationships with the Departments of Transportation, Labor, 

Interior, the U.S. Agency for International Development, and the Army Corps of Engineers. 

Seven USDA agencies are using the Department’s grants system, which will improve reporting 

capabilities and will provide standardization for many grants programs. More agencies are exploring 

migration to the Department’s grants solution, which may potentially yield even more efficiencies 

and standardization. 

OCFO also works with the Office of Contracting and Procurement (OCP) and the Office of Property and 

Fleet Management (OPFM) to ensure that procurement reporting will adhere to DATA Act requirements. 

Together, OCFO, OCP, and OPFM are reviewing procurement reporting policies and procedures to ensure 

that data are reported and certified by the agencies to be both timely and accurate in the Department’s 

Integrated Acquisition System (IAS), as well as other procurement systems used by USDA. In FY 2019, 

USDA is also addressing the reporting of SMARTPAY purchases and fleet card transactions. OCFO, 

OCP, and OPFM issued joint guidance to ensure that SMARTPAY purchases and fleet card transactions 

are recorded correctly with a Procurement Instrument Identifier in the C and D1 files.

LIMITATIONS OF FINANCIAL STATEMENT

The principal financial statements are prepared to report the financial position and results of operations 

of the reporting entity, pursuant to the requirements of 31 United States Code (U.S.C.) 3515(b). The 

statements are prepared from the books and records of the entity in accordance with Federal Generally 

Accepted Accounting Principles (GAAP) and the formats prescribed by the Office of Management and 

Budget (OMB). Reports used to monitor and control budgetary resources are prepared from the same 

books and records. The financial statements should be read with the realization that they are for a 

component of the U.S. Government. 
50 USDA AGENCY FINANCIAL REPORT | 2019

Section II

Financial Information

Message from the Office of the Chief Financial Officer

We are pleased to present the fiscal year 2019 United States 

Department of Agriculture (USDA) Agency Financial 

Report. With the support of many people throughout USDA, 

we made significant strides to deliver our services more 

effectively and efficiently. A growing core focus of the 

Office of the Chief Financial Officer (OCFO) is to provide 

world class financial management policy, systems, and 

services in support of broader missions at the agency. 

In August 2019, Scott Soles joined us in the role of Principal Deputy Chief Financial Officer. 

Scott graduated with a degree in Accounting from Southwest Texas State University in 1986. He is a 

Certified Public Accountant and holds a Certification in Financial Forensics. He has worked extensively 

with very large organizations around the world on a variety of business initiatives. We look forward to 

working with Scott. 

The following highlights selected accomplishments during the period: 

▪ For the second year in a row, the Commodity Credit Corporation received an unmodified opinion. 

In addition, the Natural Resources and Conservation Service moved from Balance Sheet only to a 

full scope audit opinion. We are glad to report that the Department as a whole sustained an 

unmodified opinion on all principal statements. 

▪ During the longest shutdown in government history, OCFO continued to deliver high-quality 

service. For those government agencies with appropriations, the Financial Management Services 

division processed over 45,000 payments totaling over $510 million for 2,000 travel 

reimbursements and 22,000 eligible invoices. Once the shutdown ended, the National Finance 

Center processed over 1.3 million bi-weekly time and attendance cards for employees affected by 

the shutdown. Over 600,000 federal employees received net pay of over $5 billion in their checking

accounts within one week of the shutdown termination, without significant incident.

▪ Under the broader umbrella of leveraging Information Technology, USDA continued implementing 

Robotics Process Automation (RPA). As part of this program, and in support of personnel 
SECTION II | FINANCIAL INFORMATION 51

development programs, we are re-skilling 27 OCFO staff to be RPA Analysts and Developers. 

OCFO has seven RPA processes in production and over 25 more in development. We designed both 

a centralized and federated model to provide flexibility to USDA agencies while still ensuring 

compliance with OCFO and Office of Chief Information Officer documentation and approval 

standards. In addition, OCFO is partnering with mission areas on RPA initiatives. We are working 

with the Forest Service to develop processes to improve logistics and tactical procurement 

efficiency during fire season, and with the Farm Production and Conservation to automate position 

builds which will enable them to hire staff faster at the county offices to assist farmers and ranchers.

▪ USDA made significant improvements in audit closures during FY 2019. 

o The Department’s inventory of open audits decreased from 100 in FY 2018 to 75 in 

FY 2019, which constitutes a 25 percent decrease in our beginning inventory. 

o Component agencies and staff offices closed 50 audits, including 230 recommendations. These 

audit closures represent a 14 percent increase over the 44 audits closed during FY 2018. Of the 

50 audits closed, 47 were more than one year past the management decision date. There was an 

overall increase of 44 percent in closures of late audits over the FY 2018 level.

o USDA implemented all overdue (FY 2009–FY 2017) information technology security 

recommendations, which included 18 overdue recommendations. Implementing these 

recommendations alone closed 11 audits. 

o Additionally, many of the oldest audits relate to the disposition of disallowed costs and/or 

implementation of funds to be put to better use. Increased focus on these types of audits 

also contributed to the higher closure rate of older audits and significantly improved 

controls over cybersecurity.

o The number of audits open one or more years without final action at the end of FY 2019 

was 53. This number represents an 18 percent decrease from the previous year. 

We are proud of our hard-working employees’ accomplishments at USDA. We remain steadfast and 

committed to making greater financial management improvements. At every level, we are committed to 

be a proactive, cost-effective organization that is transparent and accountable for the programs we 

deliver. Ultimately, our efforts will result in setting the highest achievable standard of excellence in 

managing taxpayers’ dollars. 

Lynn M. Moaney 

Deputy Chief Financial Officer 

November 19, 2019 

Scott Soles

Principal Deputy Chief Financial Officer

November 19, 2019 
52 USDA AGENCY FINANCIAL REPORT | 2019

AUDIT REPORT 50401-0018-11 1

Independent Auditor’s Report 

Independent Auditors Report

G. Scott Soles

Principal Deputy Chief Financial Officer

Office of the Chief Financial Officer

The Department of Agriculture’s Office of Inspector General audited the consolidated financial 

statements of the Department for fiscal years 2019 and 2018. We also considered USDA’s

internal control over financial reporting and tested USDA’s compliance with certain provisions 

of applicable laws, regulations, contracts, and grant agreements that could have a direct effect on 

the determination of material financial statement amounts and disclosures on these consolidated 

financial statements.

The “Findings” section presents the material weaknesses and significant deficiencies in internal 

control and instances of noncompliance with laws and regulations, as of and for the year ended

September 30, 2019. USDA’s response is presented in its entirety in Exhibit A.

Report on the Financial Statements

We have audited the accompanying consolidated financial statements of USDA, which comprise 

the consolidated balance sheets as of September 30, 2019 and 2018, and the related consolidated 

statements of net cost, and changes in net position; and the combined statements of budgetary 

resources for the fiscal years then ended and the related notes to the consolidated financial 

statements (hereinafter referred to as the “consolidated financial statements”). The objective of 

our audits was to express an opinion on the fair presentation of these consolidated financial

statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated 

financial statements in accordance with accounting principles generally accepted in the United 

States of America (U.S.); and the design, implementation, and maintenance of internal control

relevant to the preparation and fair presentation of financial statements that are free from 

material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on 

our audits. We conducted our audits in accordance with auditing standards generally accepted in 

the U.S.; the standards applicable to financial audits contained in government auditing standards,

issued by the Comptroller General of the U.S.; and the Office of Management and Budget 

(OMB) Bulletin 19-03, Audit Requirements for Federal Financial Statements. Those standards 

and OMB Bulletin 19-03 require that we plan and perform audits to obtain reasonable assurance 

about whether the consolidated financial statements are free from material misstatement.
SECTION II | FINANCIAL INFORMATION 53

2 AUDIT REPORT 50401-0018-11

An audit involves performing procedures to obtain audit evidence about the amounts and 

disclosures in the consolidated financial statements. The procedures selected depend on the 

auditor’s judgment, including the assessment of the risks of material misstatement of the 

consolidated financial statements, whether due to fraud or error. In making those risk 

assessments, the auditor considers internal control relevant to the entity’s preparation and fair 

presentation of the consolidated financial statements in order to design audit procedures that are 

appropriate in the circumstances, but not for the purpose of expressing an opinion on the 

effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit 

also includes evaluating the appropriateness of accounting policies used and the reasonableness 

of significant accounting estimates made by management, as well as evaluating the overall 

presentation of the consolidated financial statements. Our audits also included performing such 

other procedures as we considered necessary in the circumstances.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a 

basis for our audit opinion.

Opinion on the Consolidated Financial Statements

In our opinion, the consolidated financial statements referred to above present fairly, in all 

material respects, the financial position of USDA, as of September 30, 2019 and 2018, and its net 

costs, changes in net position, and budgetary resources for the years then ended, in accordance

with accounting principles generally accepted in the U.S.

Other Matters

Interactive Data 

Management has elected to reference information on websites or other forms of interactive data 

outside the financial statements to provide additional information for the users of its financial 

statements. Such information is not a required part of the basic financial statements or 

supplementary information required by the Federal Accounting Standards Advisory Board 

(FASAB). The information on these websites has not been subjected to any of our auditing 

procedures and, accordingly, we do not express an opinion or provide any assurance on it.

Required Supplementary Information

Accounting principles generally accepted in the U.S. issued by the FASAB require that the 

Management’s Discussion and Analysis (MD&A), Required Supplementary Information (RSI)1

,

and Required Supplementary Stewardship Information (RSSI) be presented to supplement the 

consolidated financial statements. Although not a part of the consolidated financial statements, 

FASAB considers this information to be an essential part of financial reporting for placing the 

consolidated financial statements in appropriate operational, economic, or historical context. We 

have applied certain limited procedures to the MD&A, RSI, and RSSI in accordance with 

auditing standards generally accepted in the U.S., which consisted of inquiries of management

1 The RSI consists of the Deferred Maintenance and Repairs and the Combined Statements of Budgetary Resources 

(by component), which are included with the financial statements.
54 USDA AGENCY FINANCIAL REPORT | 2019

AUDIT REPORT 50401-0018-11 3

about the methods of preparing and comparing the information for consistency with 

management’s responses to our inquiries, the consolidated financial statements, and other 

knowledge we obtained during our audits of the consolidated financial statements. We do not 

express an opinion or provide any assurance on the information because the limited procedures 

do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information

Our audits were conducted for the purpose of forming an opinion on the consolidated financial 

statements as a whole. The “Message from the Secretary” and “Other Information” sections are 

presented for purposes of additional analysis, and are not a required part of the consolidated 

financial statements or the required supplementary information. This information has not been 

subjected to the auditing procedures applied in our audits of the consolidated financial statements 

and, accordingly, we express no opinion and provide no assurance on it.

Other Reporting Required by Government Auditing Standards

Report on Internal Control Over Financial Reporting

In planning and performing our audit of the consolidated financial statements, we considered

UDSA’s internal control over financial reporting to determine the audit procedures that are 

appropriate in the circumstances for the purpose of expressing our opinion on the consolidated 

financial statements, but not for the purpose of expressing an opinion on the effectiveness of

USDA’s internal control. Accordingly, we do not express an opinion on the effectiveness of 

USDA’s internal control. We did not test all internal controls relevant to operating objectives as 

broadly defined by the Federal Managers’ Financial Integrity Act of 1982 (FMFIA).

Our consideration of internal control was for the limited purpose described in the preceding 

paragraph and was not designed to identify all deficiencies in internal control over financial 

reporting that might be significant deficiencies or material weaknesses, and, therefore, material 

weaknesses or significant deficiencies may exist that were not identified. 

A deficiency in internal control exists when the design or operation of a control does not allow 

management or employees, in the normal course of performing their assigned functions, to 

prevent, or detect and correct, misstatements on a timely basis. A material weakness is a 

deficiency or a combination of deficiencies, in internal control, such that there is a reasonable 

possibility that a material misstatement of USDA’s consolidated financial statements will not be 

prevented, or detected and corrected on a timely basis. We consider the deficiencies in overall 

financial management and information technology (IT) security program, described in 

“Findings,” Section 1, to be material weaknesses. 

A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is 

less severe than a material weakness, yet important enough to merit attention by those charged 

with governance. We consider the deficiency in internal control over unliquidated obligations 

(ULO), described in “Findings,” Section 2, to be a significant deficiency. 
SECTION II | FINANCIAL INFORMATION 55

4 AUDIT REPORT 50401-0018-11

Report on Compliance with Laws, Regulations, Contracts, and Grant Agreements

As part of obtaining reasonable assurance about whether USDA’s consolidated financial

statements are free of material misstatement, we performed tests of its compliance with certain 

provisions of laws, regulations, contracts, grant agreements, and Governmentwide policy 

requirements, noncompliance with which could have a direct effect on the determination of 

material financial statement amounts and disclosure in the consolidated financial statements. 

However, providing an opinion on compliance with those provisions was not an objective of our 

audit and, accordingly, we do not express such an opinion. 

Federal Financial Management Improvement Act of 1996 (FFMIA)

We also performed tests of USDA’s compliance with certain provisions referred to in Section 

803(a) of FFMIA. Providing an opinion on compliance with FFMIA was not an objective of our 

engagement and, accordingly, we do not express such an opinion. The results of our tests of 

FFMIA disclosed instances, described in more detail in Finding 4 in the “Findings,” Section 3, of 

this report, where USDA was not substantially compliant with Federal Financial Management 

System Requirements (FFMSR), applicable Federal Accounting Standards, and the U.S. 

Standard General Ledger (USSGL) at the transaction level. 

Antideficiency Act (ADA)

Title 31 U.S. Code (U.S.C.) Section 1517 states that an officer or an employee of the United 

States Government may not make or authorize an expenditure or obligation exceeding an 

apportionment or an amount permitted by regulations as prescribed by Title 31 U.S.C. Section 

1514. In fiscal year 2019, the Department reported 12 confirmed and 4 potential ADA violations 

in its agency financial report. Additionally, a potential ADA was reported in the Food and 

Nutrition Service’s Financial Statements for fiscal years 2019 and 2018 audit report for 

providing early payment of February 2019 benefits for its Supplemental Nutrition Assistance 

Program during the lapse in appropriations.

Improper Payments Elimination and Recovery Act of 2010 (IPERA)

During fiscal year 2019, we identified instances of noncompliance with the requirements of 

IPERA, regarding the design of program internal controls related to reporting improper 

payments. A separate report will be issued with further details on the Department’s compliance 

with improper payment requirements.2

Management’s Responsibility for Internal Control and Compliance

USDA’s management is responsible for (1) evaluating the effectiveness of internal control over 

financial reporting based on criteria established under FMFIA, (2) providing a statement of 

assurance on the overall effectiveness of internal control over financial reporting, (3) ensuring 

USDA’s financial management systems are in substantial compliance with FFMIA requirements, 

and (4) ensuring compliance with other applicable laws, regulations, contracts, and grant 

agreements.

2 IPERA amended the Improper Payments Information Act of 2002, Public Law 107-300. These two laws address 

improper payment requirements.
56 USDA AGENCY FINANCIAL REPORT | 2019

AUDIT REPORT 50401-0018-11 5

Auditor’s Responsibilities

We are responsible for (1) obtaining a sufficient understanding of internal control over financial 

reporting and compliance to plan the audit, (2) testing whether USDA’s financial management 

systems substantially comply with FFMIA requirements referred to above, and (3) testing 

compliance with certain provisions of laws, regulations, contracts, and grant agreements that 

have a direct effect on the determination of material amounts and disclosure in the consolidated 

financial statements.

We did not evaluate all internal controls relevant to operating objectives as broadly established 

by FMFIA, such as those controls relevant to preparing statistical reports and ensuring efficient 

operations. We limited our internal control testing to controls over financial reporting and 

compliance. Because of inherent limitations, internal control over financial reporting may not 

prevent, or detect and correct, misstatements due to fraud or error.

We did not test compliance with all laws, regulations, contracts, and grant agreements applicable 

to USDA. We limited our tests of compliance to certain provisions of laws, regulations, 

contracts, and grant agreements that have a direct effect on the determination of material 

amounts and disclosure in the consolidated financial statements that we deemed applicable to

USDA’s consolidated financial statements for the fiscal year ended September 30, 2019. We 

caution that noncompliance may occur and not be detected by these tests.

Management’s Response 

Management’s response to the report is presented in Exhibit A. We did not audit USDA’s 

response and, accordingly, we express no opinion on it. 

Purpose of the Report on Internal Control Over Financial Reporting and the Report on 

Compliance with Laws, Regulations, Contracts, and Grant Agreements

The purpose of the “Report on Internal Control Over Financial Reporting” and the “Report on 

Compliance with Laws, Regulations, Contracts, and Grant Agreements” sections of this report is 

solely to describe the scope of our testing of internal control and compliance and the results of 

that testing, and not to provide an opinion on the effectiveness of USDA’s internal control or on 

compliance. 

These reports are an integral part of an audit performed in accordance with government auditing 

standards in considering USDA’s internal control and compliance. Accordingly, these reports 

are not suitable for any other purpose. 

Gil H. Harden

Assistant Inspector General for Audit

Washington, D.C.

November 22, 2019
SECTION II | FINANCIAL INFORMATION 57

6 AUDIT REPORT 50401-0018-11

Findings 

Section 1: Material Weaknesses in Internal Control Over Financial 

Reporting

Finding 1: Improvements are Needed in Overall Financial Management

The material weakness for financial management is due to improvements needed in accounting 

and internal controls related to the Commodity Credit Corporation (CCC) and Natural Resources 

Conservation Service (NRCS). In conducting our review, we noted the following areas where 

improvements are needed in overall financial management. Specifically:

• CCC disclosed material weaknesses related to accounting for budgetary transactions and 

accounting estimates. 

• NRCS disclosed material weaknesses related to controls over obligations and undelivered 

orders; accounting and controls over expenses; and entity level controls. 

In its FMFIA Report on Management Control for fiscal year 2019, the Department reported the

following corrective action plans to address the outstanding weaknesses from fiscal year 2018

that remain material weaknesses for fiscal year 2019:

• CCC, in fiscal year 2020, plans to continue to implement effective undelivered orders 

monitoring controls at the program level at all levels of the organization. In addition, 

CCC plans to create a review and approval process for apportionments that include 

Budget, Financial Management, Economics and Policy Analysis, and Agency Program 

leadership to ensure estimates are fully vetted and amounts requested are sufficient. 

• NRCS, in fiscal year 2020, plans to enhance Financial Management Modernization 

Initiative and feeder systems processes to produce aged ULO reports with period of 

performance data for obligations. In addition, NRCS plans to design, implement and 

document policies and procedures that include documented internal controls which 

provide support that NRCS has reviewed the transactional data and assumptions used in 

its entity-wide expenses accrual process. 

Since USDA has actions planned and in progress, we are making no further recommendations 

herein. 
58 USDA AGENCY FINANCIAL REPORT | 2019

AUDIT REPORT 50401-0018-11 7

Finding 2: Improvements are Needed in Overall Information Technology 

Security Program 

As required by the Federal Information Security Modernization Act of 2014 (FISMA), the Office 

of Inspector General (OIG) reviewed USDA’s ongoing efforts to improve its IT security program 

and practices during fiscal year 2019.3

USDA continues to take positive steps to improve its IT security posture, but many longstanding 

weaknesses remain. In fiscal years 2009-2018, OIG made 75 recommendations for improving 

the overall security of USDA’s systems—71 recommendations are completed and 4 

recommendations are scheduled for closure after the date of our report. OIG also issued three

new recommendations based on security weaknesses identified in fiscal year 2019. One 

recommendation reopens a previously closed recommendation because the implemented 

remediation was ineffective. 

OMB establishes standards for an effective level of security and considers “Managed and 

Measurable” as a sufficient level. However, OIG found the Department’s maturity level to be at 

the “Defined” level. Based on OMB’s criteria, the Department’s overall score indicates an 

ineffective level. In detailed testing of the 67 FISMA Reporting Metrics, OIG found the 

Department increased its maturity level for 22 metrics. One metric’s maturity level was 

downgraded because of a new requirement related to supply chain risk management, and the 

maturity level did not change for 44 metrics. The Department and its agencies must also develop 

and implement an effective plan to mitigate security weaknesses identified in the prior fiscal year

audit.

In the report, OIG recommended that the Department review and identify the full population and 

last review date of all IT policies and procedures, revise them as needed, and disseminate them to 

employees; create a monitoring plan to ensure that all policies and procedures are reviewed and 

updated; and remove unauthorized software from USDA systems. The Office of the Chief 

Information Officer generally agreed with the findings and recommendations in the report.

3 Audit Report 50503-0002-12, U.S. Department of Agriculture, Office of the Chief Information Officer, Fiscal Year

2019 Federal Information Security Modernization Act, issued October 2019.
SECTION II | FINANCIAL INFORMATION 59

8 AUDIT REPORT 50401-0018-11

Section 2: Significant Deficiency in Internal Control Over Financial 

Reporting

Finding 3: Controls Over Unliquidated Obligations Can Be Strengthened

For several years, our report identified deficiencies with controls over inactive ULO.4 This year, 

our review disclosed that improvements are still needed.

We reviewed the completeness of 10 obligation certifications submitted to the Department for 

the third quarter of fiscal year 2019; and for those agencies, further reviewed a nonstatistical 

selection of 143 obligation balances for validity. We found that 28 ULOs were invalid and 

should have been deobligated prior to the sample date because no future expenditures were 

expected. In addition, we found that eight intra-departmental ULOs were valid but should have 

been liquidated in a prior fiscal year. These ULOs inappropriately remained open in part 

because USDA agencies failed to bill, or submit final payments, to other USDA agencies.

We also found that the ULO certification cutoff dates, cutoff amounts, and transaction types 

were inconsistent among the agencies tested because each agency developed its own criteria 

query to obtain the certification population. In addition, not all agencies were using the new

reporting tool for the third quarter ULO certifications, at the time of our inactive obligations

testing. The Financial Management Modernization Initiative ULO Aging Report reconciles to 

the general ledger and was developed in response to our fiscal year 2018 recommendation. This 

report was initially scheduled for use beginning in the second quarter of fiscal year 2019 but was 

delayed due to implementation problems.

The U.S. Department of the Treasury’s annual closing guidance (Treasury Bulletin 2019-15,

Yearend Closing, dated August 23, 2019), requires an annual review of ULOs. Departmental 

Regulation 2230-1, Reviews of Unliquidated Obligations, dated October 15, 2014, further 

requires quarterly reviews and certification as to the validity of inactive ULO balances from 

agency Chief Financial Officers. 

Ineffective monitoring and reviewing, as well as inappropriate certifying to the validity of 

obligation balances, resulted in invalid obligations remaining open. Invalid obligations 

improperly restrict the availability of funding authority. This increases the risk of misstating 

obligations as of yearend.

Management generally agreed with our findings and will continue to implement controls over 

ULOs. In fiscal year 2017, we recommended the Department revise Departmental Regulation 

2230, Reviews of Unliquidated Obligations, to assist agencies and staff offices in properly 

identifying and categorizing the current status of ULOs. The Department is currently in the 

process of revising the Departmental Regulation; therefore, we are making no further 

recommendations.

4 An obligation is a binding agreement that will result in outlays, immediately or in the future. Budgetary resources

must be available before obligations can be incurred legally.
60 USDA AGENCY FINANCIAL REPORT | 2019

AUDIT REPORT 50401-0018-11 9

Section 3: Noncompliance with Laws and Regulations

Finding 4: Lack of Substantial Compliance with FFMIA Requirements

FFMIA requires agencies to annually assess whether their financial management systems comply 

substantially with (1) FFMSR, (2) applicable Federal accounting standards, and (3) the USSGL 

at the transaction level. FFMIA also requires auditors to report in their CFO Act financial 

statement audit reports whether financial management systems substantially comply with 

FFMIA’s system requirements. In addition, FISMA requires each agency to report significant 

information security deficiencies, relating to financial management systems, as a lack of 

substantial compliance under FFMIA. 

During fiscal year 2019, USDA evaluated its financial management systems to assess 

compliance with FFMIA. The Department reported that it was not compliant with FFMSR, 

applicable accounting standards, USSGL at the transaction level, and FISMA requirements. As 

noted in its MD&A, USDA continues its work to meet FFMIA and FISMA objectives.

Specifically, in its FFMIA and FMFIA reports, the Department reported an ineffective 

information security program due to many longstanding weaknesses with outstanding 

recommendations. See Finding 2 of this report for more details. 

Additionally, in its FFMIA report, the Department noted noncompliance by two of its component 

agencies relating to financial management, described below.

1. CCC noncompliance with Federal accounting standards and USSGL at the transaction 

level was noted for weaknesses in budgetary transactions and accounting estimates. The 

financial management systems did not record certain accounting events at the transaction

level in accordance with USSGL. CCC continues to make significant progress in 

performing compensating controls over the accounting for obligation activity. CCC

continues implementing its program obligation activity into FMMI in a phased approach. 

2. NRCS’ deficiencies in applicable Federal accounting standards, including the USSGL at 

the transaction level, were noted for obligations incurred, including accrued expenses and 

undelivered orders; recoveries of unpaid obligations; and unexpended appropriations as it 

relates to accrued expenses. NRCS continues working to mitigate auditor-identified 

deficiencies and substantially comply with FFMIA.

See Finding 1 of this report for more details on NRCS and CCC issues. 

Due to planned actions, we are making no further recommendations in this report.
SECTION II | FINANCIAL INFORMATION 61

Agency Response to Auditors Report

United States

Department of

Agriculture

Office of the Chief

Financial Officer

1400 Independence

Avenue, SW

Washington, DC

20250

November 22, 2019

TO: Phyllis K. Fong 

Inspector General

Office of Inspector General

FROM: G. Scott Soles /S/

Principal Deputy Chief Financial Officer

Lynn Moaney /S/

Deputy Chief Financial Officer 

SUBJECT: U.S. Department of Agriculture’s Financial Statements for Fiscal Years

2019 and 2018

The Department is pleased to respond to your audit report on the financial statements 

for fiscal years 2019 and 2018.

We concur with the findings in the report. We will continue with actions planned and in 

progress to address the findings.

I would like to express my appreciation for the cooperation and professionalism 

displayed by your staff and your contract auditors during the audit.

AN EQUAL OPPORTUNITY EMPLOYER
62 USDA AGENCY FINANCIAL REPORT | 2019

Financial Statements

CONSOLIDATED BALANCE SHEETS 

As of September 30, 2019, and 2018 ($ in millions)

Item 2019 2018 

Assets (Note 2): 

Intragovernmental: 

Fund Balance with Treasury (Note 3) $ 153,468 $ 132,350 

Investments (Note 5) 233 228 

Accounts Receivable (Note 6) 79 78 

Other (Note 11) 12 9 

Total Intragovernmental 153,792 132,665 

Cash and Other Monetary Assets (Note 4) 550 236 

Investments (Note 5) 3 3 

Accounts Receivable, Net (Note 6) 3,835 1,114 

Direct Loan and Loan Guarantees, Net (Note 7) 104,255 101,947 

Inventory and Related Property, Net (Note 8) 23 46 

General Property, Plant, and Equipment, Net (Note 9) 2,249 2,224 

Other (Note 11) 388 539 

Total Assets 265,095 238,774 

Stewardship PP&E (Note 10) 

Liabilities (Note 12): 

Intragovernmental

Accounts Payable 1 3 

Debt (Note 13) 139,678 119,423 

Other (Note 15) 9,901 9,910 

Total Intragovernmental 149,580 129,336 

Accounts Payable 2,234 1,854 

Loan Guarantee Liability (Note 7) 434 502 

Actuarial Federal Employees’ Compensation Act (FECA) Liability 782 892 

Environmental and Disposal Liabilities (Note 14) 218 200 

Benefits Due and Payable 5,147 5,074 

Other (Notes 15 & 16) 20,586 23,258 

Total Liabilities 178,981 161,116 

Commitments and Contingencies (Note 17) 

Net Position: 

Unexpended Appropriations - Funds From Dedicated Collections (Combined) (Note 18) 180 168 

Unexpended Appropriations - All Other Funds (Combined) 71,271 65,238 

Cumulative Results of Operations - Funds From Dedicated Collections (Combined) (Note 18) 3,331 2,243 

Cumulative Results of Operations - All Other Funds (Combined) 11,332 10,009 

Total Net Position - Funds From Dedicated Collections (Combined Totals) (Note 18) 3,511 2,411 

Total Net Position - All Other Funds (Combined Totals) 82,603 75,247 

Total Net Position 86,114 77,658 

Total Liabilities and Net Position $ 265,095 $ 238,774 

The accompanying notes are an integral part of these statements.
SECTION II | FINANCIAL INFORMATION 63

CONSOLIDATED STATEMENTS OF NET COST

For the Years Ended September 30, 2019, and 2018 ($ in millions)

Item 2019 2018 

Rural Development:

Gross Costs $ 6,538 $ 6,987

Less: Earned Revenue 3,672 3,831 

Net Costs 2,866 3,156 

Food Safety:

Gross Costs 1,313 1,342 

Less: Earned Revenue 248 242 

Net Costs 1,065 1,100 

Marketing and Regulatory Programs:

Gross Costs 3,052 2,660 

Less: Earned Revenue 1,294 1,204 

Net Costs 1,758 1,456 

Natural Resources and Environment:

Gross Costs 6,180 7,871 

Less: Earned Revenue 842 852 

Net Costs 5,338 7,019 

Food, Nutrition, and Consumer Services:

Gross Costs 92,657 98,033 

Less: Earned Revenue 47 57 

Net Costs 92,610 97,976 

Farm Production and Conservation:

Gross Costs 39,653 20,512 

Less: Earned Revenue 3,034 1,080 

Net Costs 36,619 19,432 

Trade and Foreign Agricultural Affairs:

Gross Costs 416 470 

Less: Earned Revenue 58 59 

Net Costs 358 411 

Research, Education, and Economics:

Gross Costs 3,069 3,000 

Less: Earned Revenue 138 146 

Net Costs 2,931 2,854 

Departmental Management:

Gross Costs 1,343 1,333 

Less: Earned Revenue 241 276 

Net Costs 1,102 1,057 

Total Gross Costs 154,221 142,208 

Less: Total Earned Revenue 9,574 7,747 

Net Cost of Operations (Note 19) $ 144,647 $ 134,461 

The accompanying notes are an integral part of these statements.
64 USDA AGENCY FINANCIAL REPORT | 2019

CONSOLIDATED STATEMENT OF CHANGES IN NET POSITION

For the Year Ended September 30, 2019 ($ in millions)

Item 

Funds From 

Dedicated Collections 

(Combined Totals) 

(Note 18)

All Other Funds 

(Combined 

Totals) Eliminations

Consolidated 

Total 

Unexpended Appropriations: 

Beginning Balances $ 168 $ 65,238 $ - $ 65,406 

Budgetary Financing Sources: 

Appropriations Received 12 150,903 - 150,915 

Appropriations Transferred In (Out) - (51) - (51) 

Other Adjustments - (17,061) - (17,061) 

Appropriations Used - (127,758) - (127,758) 

Total Budgetary Financing Sources 12 6,033 - 6,045 

Total Unexpended Appropriations 180 71,271 - 71,451 

Cumulative Results of Operations: 

Beginning Balances $ 2,243 $ 10,009 $ - $ 12,252 

Budgetary Financing Sources: 

Other Adjustments - (280) - (280) 

Appropriations Used - 127,758 - 127,758 

Non-Exchange Revenue 208 21,514 - 21,722 

Donations and Forfeitures of Cash and Cash Equivalents 1 1 - 2 

Transfers In (Out) Without Reimbursement 1,375 (3,086) 1,164 (547) 

Other Financing Sources (Non-Exchange): 

Transfers In (Out) Without Reimbursement - 1,164 (1,164) - 

Imputed Financing 29 3,081 (2,090) 1,020 

Other (167) (2,450) - (2,617) 

Total Financing Sources 1,446 147,702 (2,090) 147,058 

Net Cost of Operations (358) (146,379) 2,090 (144,647) 

Net Change 1,088 1,323 - 2,411 

Cumulative Results of Operations 3,331 11,332 - 14,663 

Net Position $ 3,511 $ 82,603 $ - $ 86,114 

The accompanying notes are an integral part of these statements. 
SECTION II | FINANCIAL INFORMATION 65

CONSOLIDATED STATEMENT OF CHANGES IN NET POSITION

For the Year Ended September 30, 2018 ($ in millions)

Item Funds From 

Dedicated Collections 

(Combined Totals) 

(Note 18)

All Other Funds 

(Combined 

Totals) Eliminations

Consolidated 

Total 

Unexpended Appropriations: 

Beginning Balances $ 156 $ 55,947 $ - $ 56,103

Budgetary Financing Sources: 

Appropriations Received 12 148,936 - 148,948 

Appropriations Transferred In (Out) - 1 - 1 

Other Adjustments - (8,764) - (8,764) 

Appropriations Used - (130,882) - (130,882) 

Total Budgetary Financing Sources 12 9,291 - 9,303 

Total Unexpended Appropriations 168 65,238 - 65,406 

Cumulative Results of Operations: 

Beginning Balances 2,270 2,989 - 5,259 

Budgetary Financing Sources: 

Other Adjustments - (285) - (285) 

Appropriations Used - 130,882 - 130,882 

Non-Exchange Revenue - 8 - 8 

Donations and Forfeitures of Cash and Cash Equivalents 1 1 - 2 

Transfers In (Out) Without Reimbursement 513 10,345 1,220 12,078 

Other Financing Sources (Non-Exchange): 

Transfers In (Out) without Reimbursement - 1,219 (1,220) (1) 

Imputed Financing 54 3,288 (2,355) 987 

Other 33 (2,250) - (2,217) 

Total Financing Sources 601 143,208 (2,355) 141,454 

Net Cost of Operations (628) (136,188) 2,355 (134,461) 

Net Change (27) 7,020 - 6,993 

Cumulative Results of Operations 2,243 10,009 - 12,252 

Net Position $ 2,411 $ 75,247 $ - $ 77,658

The accompanying notes are an integral part of these statements. 
66 USDA AGENCY FINANCIAL REPORT | 2019

COMBINED STATEMENTS OF BUDGETARY RESOURCES

For the Years Ended September 30, 2019, and 2018 ($ in millions)

2019 2018 

Item

Budgetary 

Non-Budgetary 

Credit Reform 

Financing 

Accounts Budgetary 

Non-Budgetary 

Credit Reform 

Financing 

Accounts

Budgetary Resources:

Unobligated Balance From Prior Year Budget Authority, Net 58,810 4,703 60,455 3,470 

Appropriations (Discretionary and Mandatory) 150,957 84 143,914 - 

Borrowing Authority (Discretionary and Mandatory) 27,127 14,039 9,888 17,208 

Spending Authority From Offsetting Collections (Discretionary 

and Mandatory)

 5,582 10,612 9,838 5,567 

Total Budgetary Resources 242,476 29,438 224,095 26,245 

Status of Budgetary Resources:

New Obligations and Upward Adjustments (Total) 170,897 18,548 157,385 18,759 

Unobligated Balance, End of Year:

Apportioned, Unexpired Accounts 35,683 10,088 20,869 6,547 

Exempt From Apportionment, Unexpired Accounts 1 - 1 - 

Unapportioned, Unexpired Accounts 9,042 802 12,845 939 

Unexpired Unobligated Balance, End of Year 44,726 10,890 33,715 7,486 

Expired Unobligated Balance, End of Year 26,853 - 32,995 - 

Unobligated Balance, End of Year (Total) 71,579 10,890 66,710 7,486 

Total Budgetary Resources 242,476 29,438 224,095 26,245 

Outlays, Net:

Outlays, Net (Discretionary and Mandatory) 153,234 1,730 139,567 3,705 

Distributed Offsetting Receipts (-) (1,251) (1,831) (962) (1,892) 

Agency Outlays, Net (Discretionary and Mandatory) $ 151,983 $ (101) $ 138,605 $ 1,813
SECTION II | FINANCIAL INFORMATION 67

Notes to the Financial Statements

As of September 30, 2019, and 2018 ($ in millions)

NOTE 1: Significant Accounting Policies

Organization

USDA provides a wide variety of services in the United States and around the world. USDA is 

organized into eight distinct mission areas and their agencies that execute these missions. See MD&A 

for listing of the missions and the agencies within each mission. 

Consolidation

The financial statements consolidate all of the agencies’ results. The effects of intradepartmental activity 

and balances are eliminated, except for the Statement of Budgetary Resources (SBR) which is presented 

on a combined basis. The financial statements are prepared in accordance with generally accepted 

accounting principles for the Federal Government. 

Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions that 

affect the amounts reported in the financial statements and accompanying notes. Actual results could 

differ from those estimates.

Revenue and Other Financing Sources

Revenue from exchange transactions is recognized when persuasive evidence of an arrangement exists, 

delivery has occurred or services have been rendered, sales price is fixed or determinable, and collection 

is reasonably assured. In certain cases, the prices charged by the Department are set by law or 

regulation, which for program and other reasons may not represent full cost. Prices set for products and 

services offered through the Department’s working capital funds are intended to recover the full costs 

incurred by these activities. Revenue from non-exchange transactions is recognized when a specifically 

identifiable, legally enforceable claim to resources arises, to the extent that collection is probable and the 

amount is reasonably estimable. Appropriations are recognized as a financing source when used. An 

imputed financing source is recognized for costs subsidized by other Government entities. 

Investments

The Department is authorized to invest certain funds in excess of its immediate needs in Treasury 

securities. Investments in non-marketable par value Treasury securities are classified as held to maturity 

and are carried at cost. Investments in market-based Treasury securities are classified as held to maturity 
68 USDA AGENCY FINANCIAL REPORT | 2019

and are carried at amortized cost. The amortized cost of securities is based on the purchase price 

adjusted for amortization of premiums and accretion of discounts using the straight-line method over the 

term of the securities.

Accounts Receivable

Accounts receivable are reduced to net realizable value by an allowance for uncollectible accounts. 

The adequacy of the allowance is determined based on past experience and age of outstanding balances. 

Direct Loans and Loan Guarantees

Direct loans obligated and loan guarantees committed after FY 1991 are reported based on the present 

value of the net cash-flows estimated over the life of the loan or guarantee. The difference between the 

outstanding principal of the loans and the present value of their net cash inflows is recognized as a 

subsidy cost allowance; the present value of estimated net cash outflows of the loan guarantees is 

recognized as a liability for loan guarantees. The subsidy expense for direct or guaranteed loans 

disbursed during the year is the present value of estimated net cash outflows for those loans or 

guarantees. A subsidy expense also is recognized for modifications made during the year to loans and 

guarantees outstanding and for reestimates made as of the end of the year to the subsidy allowances or 

loan guarantee liability for loans and guarantees outstanding. 

Direct loans obligated and loan guarantees committed before FY 1992 are valued using either the 

present-value or net realizable methods. Under the present-value method, the outstanding principal of 

direct loans is reduced by an allowance equal to the difference between the outstanding principal and the 

present value of the expected net cash flows. The liability for loan guarantees is the present value of 

expected net cash outflows due to the loan guarantees. Under the net realizable value method, the 

average rate of the last five years of write-offs is used. 

Inventories and Related Property

Inventories to be consumed in the production of goods for sale or in the provision of services for a fee 

are valued on the basis of historical cost using a first-in, first-out method. Commodities are valued at the 

lower of cost or net realizable value using a weighted average method. 

Property, Plant and Equipment

Property, Plant and Equipment (PP&E) are stated at cost less accumulated depreciation. Depreciation 

is determined using the straight-line method over the estimated useful lives of the assets. Useful lives 

for PP&E are disclosed in Note 9. Capitalization thresholds for personal property and real property are 

$25,000; and $100,000 for internal use software. There are no restrictions on the use or convertibility 

of PP&E. 
SECTION II | FINANCIAL INFORMATION 69

Pension and Other Retirement Benefits

Pension and other retirement benefits (primarily retirement health care benefits) expense is recognized 

at the time the employees’ services are rendered. The expense is equal to the actuarial present value of 

benefits attributed by the pension plan’s benefit formula, less the amount contributed by the 

employees. An imputed cost is recognized for the difference between the expense and contributions 

made by and for employees.

Other Post-Employment Benefits

Other post-employment benefits expense for former or inactive (but not retired) employees is recognized 

when a future outflow or other sacrifice of resources is probable and measurable on the basis of events 

occurring on or before the reporting date. The liability for long-term other post-employment benefits is 

the present value of future payments. 

Workers’ Compensation Benefits

The Federal Employees’ Compensation Act (FECA) provides wage replacement and medical cost 

protection to covered Federal civilian employees injured on the job, employees who have incurred a 

work-related occupational disease, and beneficiaries of employees whose death is attributable to a jobrelated injury or occupational disease. The FECA program is administered by the U.S. Department of 

Labor (DOL), which initially pays valid claims and subsequently seeks reimbursement from the Federal 

agencies employing the claimants. DOL provides the actuarial liability for claims outstanding at the end 

of each fiscal year. This liability includes the estimated future costs of death benefits, workers’ wage 

replacement, medical, and miscellaneous costs for approved compensation cases.

Funds from Dedicated Collections

In accordance with Statement of Federal Financial Accounting Standards (SFFAS) 43, Funds from 

Dedicated Collections, USDA has reported the funds from dedicated collections for which it has 

program management responsibility when the following three criteria are met: 1) a statute committing 

the Federal Government to use specifically identified revenues and/or other financing sources that are 

originally provided to the Federal Government by a non-Federal source only for designated activities, 

benefits or purposes; 2) explicit authority for the fund to retain revenues and/or other financing sources 

not used in the current period for future use to finance the designated activities, benefits, or purposes; 

and 3) a requirement to account for and report on the receipt, use, and retention of the revenues and/or 

other financing sources that distinguishes the fund from the Federal Government’s general revenues. 

Contingencies

Contingent liabilities are recognized when a past event or exchange transaction has occurred, a future 

outflow or other sacrifice of resources is probable, and the future outflow or sacrifice of resources is 

measurable.
70 USDA AGENCY FINANCIAL REPORT | 2019

Allocation Transfers

USDA is a party to allocation transfers with other Federal agencies as both a transferring (parent) entity 

and/or a receiving (child) entity. Allocation transfers are legal delegations by one department of its 

authority to obligate budget authority and outlay funds to another department. A separate fund account 

(allocation account) is created in the U.S. Treasury as a subset of the parent fund account for tracking 

and reporting purposes. All allocation transfers of balances are credited to this account, and subsequent 

obligations and outlays incurred by the child entity are charged to this allocation account as they execute 

the delegated activity on behalf of the parent entity. 

USDA allocates funds, as the parent, to a number of U.S. Government agencies, including: Department 

of the Interior, Department of Defense, Department of Housing and Urban Development, Agency for 

International Development and the Small Business Administration. USDA receives allocation transfers, 

as the child, from the Department of Labor, Department of Transportation, Department of the Interior, 

Agency for International Development, Economic Development Administration, Appalachian Regional 

Commission and the Delta Regional Authority. 

Inter-Entity Costs 

Goods and services are received from other federal entities at no cost or at a cost less than the full cost to 

the providing federal entity. Consistent with accounting standards, certain costs of the providing entity 

that are not fully reimbursed by the Department are recognized as imputed cost [in the Statement of Net 

Cost] and are offset by imputed revenue [in the Statement of Changes in Net Position]. Such imputed 

costs and revenues relate to business-type activities (if applicable), employee benefits, and claims to be 

settled by the Treasury Judgment Fund. However, unreimbursed costs of goods and services other than 

those identified above are not included in our financial statements. 

Fiduciary Activities

Fiduciary activities are the collection or receipt, and the management, protection, accounting, 

investment, and disposition by the Federal Government of cash or other assets in which non Federal 

individuals or entities have an ownership interest that the Federal Government must uphold. Fiduciary 

assets are not assets of the Federal Government and are not recognized on the balance sheet.

Asbestos-Related Cleanup Costs

Effective October 1, 2012, Technical Bulletin (TB) 2006-1, Recognition and Measurement of AsbestosRelated Cleanup Costs, as amended, requires an estimate of both friable and non friable asbestos-related 

cleanup costs; recognition of a liability and related expense for those costs that are both probable and 

reasonably estimable; and disclosure of information related to friable and non-friable asbestos-related 

cleanup costs that are probable but not reasonably estimable in a note to the financial statements. 
SECTION II | FINANCIAL INFORMATION 71

Deferred Maintenance and Repairs

Deferred maintenance and repairs are such that were not performed when they should have been or were 

scheduled to be and which are put off or delayed for a future period. Maintenance and repairs are 

activities directed toward keeping fixed assets in an acceptable condition. Activities include preventive 

maintenance; replacement of parts, systems, or components; and other activities needed to preserve or 

maintain the asset. Maintenance and repairs, as distinguished from capital improvements, exclude 

activities directed towards expanding the capacity of an asset or otherwise upgrading it to serve needs 

different from, or significantly greater than, its current use. SFFAS 42, Deferred Maintenance and 

Repairs: Amending Statements of Federal Financial Accounting Standards 6, 14, 29 and 32, became 

effective October 1, 2014. Estimates for deferred maintenance and repairs are disclosed in required 

supplementary information. 

Reconciliation of Net Cost to Net Outlays

SFFAS 53, Budget and Accrual Reconciliation (BAR) amends requirements for a reconciliation between 

budgetary and financial accounting information established by SFFAS 7, Accounting for Revenue and 

Other Financing Sources and Concepts for Reconciling Budgetary and Financial Accounting. The BAR 

explains the relationship between the entity’s net outlays on a budgetary basis and the net cost of 

operations during the reporting period. 

Insurance Programs

SFFAS 51, Insurance Programs, effective for the period beginning after September 30, 2018, establishes 

accounting and financial reporting standards for insurance programs. It provides standards to ensure that 

insurance programs are adequately defined and report consistent information about the liabilities for 

losses incurred and claimed as well as expected losses during remaining coverage. These standards 

replace the insurance and guarantee program standards provided in paragraphs 97-121 of SFFAS 5, 

Accounting for Liabilities of the Federal Government. 

Classified Activities

Accounting standards require all reporting entities to disclose that accounting standards allow certain 

presentations and disclosures to be modified, if needed, to prevent the disclosure of classified information.

Reclassifications

Note 29, Reconciliation of Net Cost to Net Outlays was reclassified to conform to the current year 

presentation for loans receivable, other liabilities, and other components of the budget outlays that are 

not part of net operating cost. 
72 USDA AGENCY FINANCIAL REPORT | 2019

NOTE 2: Non-Entity Assets

Non-entity assets include proceeds from the sale of timber payable to the U.S. Treasury, timber contract 

performance bonds, employer contributions and payroll taxes withheld for agencies serviced by the 

National Finance Center, rural housing escrow, interest, fines, and penalties. 

Item FY 2019 FY 2018

Intragovernmental: 

Fund balance With Treasury $ 365 $ 277

Accounts Receivable 246 186 

Total Intragovernmental 611 463 

Cash and Other Monetary Assets 46 46 

Accounts Receivable 196 149 

Total Non-Entity Assets 853 658 

Total Entity Assets 264,242 238,116 

Total Assets $ 265,095 $ 238,774

NOTE 3: Fund Balance with Treasury

Borrowing Authority not yet Converted to Fund Balance represents unobligated and obligated amounts 

recorded at year-end that will be funded by future borrowings. Non-Budgetary Fund Balance with 

Treasury includes special fund receipt accounts, and clearing and suspense account balances awaiting 

disposition or reclassification. 

Item FY 2019 FY 2018

Status of Fund Balance with Treasury:

Unobligated Balance: 

Available $ 45,772 $ 27,417 

Unavailable 36,802 46,823 

Obligated Balance Not Yet Disbursed 77,888 78,722 

Borrowing Authority Not Yet Converted to Fund Balance (41,658) (44,123) 

Authority Granted Prior to Credit Reform for Rental Assistance Grants (27) (33) 

Non-Budgetary Fund Balance with Treasury 34,691 23,544 

Total $ 153,468 $ 132,350 
SECTION II | FINANCIAL INFORMATION 73

NOTE 4: Cash and Other Monetary Assets

For FY 2019 and FY 2018, cash and other monetary assets consists of Federal crop insurance escrow of 

$390 million and $119 million, deposits in transit of $114 million and $71 million, and single-family 

housing escrow of $46 million and $46 million, respectively. 

Item FY 2019 FY 2018

Cash $ 550 $ 236

NOTE 5: Investments 

FY 2019 

Amortization 

Method Cost

Amortized 

(Premium) 

Discount

Interest 

Receivable

Investments, 

Net

Market 

Value 

Disclosure

Intragovernmental: 

Non-Marketable 

Par Value $ - $ - $ - $ - $ - 

Market-Based Straight Line 232 - 1 233 233 

Total $ 232 $ - $ 1 $ 233 $ 233 

With the Public: 

Alternative Agricultural Research and 

Commercialization Corporation $ 3 $ - $ - $ 3 $ 3 

Total $ 3 $ - $ - $ 3 $ 3 

FY 2018 

Amortization 

Method Cost

Amortized 

(Premium) 

Discount

Interest 

Receivable

Investments, 

Net

Market 

Value 

Disclosure

Intragovernmental: 

Non-Marketable 

Par Value $ - $ - $ - $ - $ - 

Market-Based Straight Line 227 - 1 228 228 

Total $ 227 $ - $ 1 $ 228 $ 228 

With the Public: 

Alternative Agricultural Research and 

Commercialization Corporation $ 3 $ - $ - $ 3 $ 3 

Total $ 3 $ - $ - $ 3 $ 3 
74 USDA AGENCY FINANCIAL REPORT | 2019

NOTE 6: Accounts Receivable, Net

FY 2019 Accounts Receivable, 

Gross

Allowance for 

Uncollectible Accounts

Accounts Receivable, 

Net

Intragovernmental $ 79 $ - $ 79 

With the Public 3,898 (63) 3,835 

Total $ 3,977 $ (63) $ 3,914 

Criminal Restitution $ 8 $ (8) $ - 

FY 2018 Accounts Receivable, 

Gross

Allowance for 

Uncollectible Accounts

Accounts Receivable, 

Net

Intragovernmental $ 78 $ - $ 78 

With the Public 1,170 (56) 1,114 

Total $ 1,248 $ (56) $ 1,192 

Criminal Restitution $ 4 $ (4) $ - 
SECTION II | FINANCIAL INFORMATION 75

NOTE 7: Direct Loans and Loan Guarantees, Net 

Direct Loans

Direct loan obligations or loan guarantee commitments made pre-1992 and the resulting direct loans or 

loan guarantees are reported at either net present-value or net realizable value. 

Direct loan obligations or loan guarantee commitments made post-1991 and the Federal Credit Reform 

Act of 1990 as amended, govern the resulting direct loan or loan guarantees. The Act requires agencies 

to estimate the cost of direct loans and loan guarantees at present value for the budget. Additionally, the 

present value of the subsidy costs (i.e., interest rate differentials, interest subsidies, delinquencies and 

defaults, fee offsets, and other cash flows) associated with direct loans and loan guarantees are 

recognized as a cost in the year the loan or loan guarantee is disbursed. The net present value of loans or 

defaulted guaranteed loans receivable at any point in time is the amount of the gross loan or defaulted 

guaranteed loans receivable less the present value of the subsidy at that time. 

The net present value of Direct Loan and Loan Guarantees, Net is not necessarily representative of the 

proceeds that might be expected if these loans were sold on the open market. 

Direct Loan and Loan Guarantees, Net at the end of FY 2019 was $104,255 million compared to 

$101,947 million at the end of FY 2018. Loans exempt from the Federal Credit Reform Act of 1990 

represent $569 million of the total compared to $475 million in FY 2018. Table 1 illustrates the overall 

composition of the Department’s credit program balance sheet portfolio by mission area and credit 

program for FY 2019 and FY 2018. 

Beginning in FY 2012, advance payments surpassed the loans receivable balance in the Rural Utilities 

Liquidating Fund. This was due to an increased volume in advance payments and a normal reduction to 

the Liquidating Portfolio. The Omnibus Budget Act of 1987, section 313, authorized the accumulation 

of Cushion of Credit (CoC) in the Revolving Fund. Borrowers may make advance payments up to their 

liquidating and financing total Rural Utilities Service debt. To accurately represent the value of Electric 

and Telecommunication assets, RD reports the CoC amounts as a separate line item in Table 1. 

During the fiscal year, the gross outstanding balance of the direct loans obligated post-1991 is adjusted 

by the value of the subsidy cost allowance held against those loans. Current year subsidy expense, 

modifications and reestimates all contribute to the change of the subsidy cost allowance throughout the 

year. The subsidy cost allowance moved from $4,102 million to $4,611 million during FY 2019, an 

increase of $509 million. Table 2 shows the subsidy cost allowance balances for FY 2019. 

Total direct loan subsidy expense is a combination of subsidy expense for new direct loans disbursed in 

the current year, modifications to existing loans, and interest rate and technical reestimates to existing 

loans. Total direct loan subsidy expense in FY 2019 was $341 million compared to $112 million in 

FY 2018. Table 3 illustrates the breakdown of total subsidy expense for FY 2019 and FY 2018 by 

program. 
76 USDA AGENCY FINANCIAL REPORT | 2019

Direct loan volume increased from $9,221 million in FY 2018 to $10,453 million in FY 2019. Volume 

distribution between mission area and program is shown in Table 4. 

Guaranteed Loans 

Guaranteed loans are administered in coordination with conventional agricultural lenders for up to 

95 percent of the principal loan amount. Under the guaranteed loan programs, the lender is responsible 

for servicing the borrower’s account for the life of the loan. The Department, however, is responsible for 

ensuring borrowers meet certain qualifying criteria to be eligible and monitoring the lender’s servicing 

activities. Borrowers interested in guaranteed loans must apply to a conventional lender, which then 

arranges for the guarantee with a Department agency. Estimated losses on loan and foreign credit 

guarantees are reported at net present value as Loan Guarantee Liability. Defaulted guaranteed loans are 

reported at net present value as Loans Receivable and Related Foreclosed Property, Net.

Guaranteed loans outstanding at the end of FY 2019 were $153,076 million in outstanding principal and 

$136,647 million in outstanding principal guaranteed, compared to $150,891 million and $134,691 million, 

respectively, at the end of FY 2018. Table 5 shows the outstanding balances by credit program. 

During the fiscal year, the value of the guaranteed loans is adjusted by the value of the loan guarantee 

liability held against those loans. Current year subsidy expense, modification, and reestimates all 

contribute to the change of the loan guarantee liability through the year. The loan guarantee liability is a 

combination of the liability for losses on pre-1992 guarantees and post 1991 guarantees. Table 6 shows 

that total liability moved from $502 million to $434 million during FY 2019, a decrease of $68 million. 

Table 7 shows the total loan guarantee liability. 

Total guaranteed loan subsidy expense is a combination of subsidy expense for new guaranteed loans 

disbursed in the current year, modifications to existing loans, and interest rate and technical reestimates 

to existing loans. Total guaranteed loan subsidy expense in FY 2019 was negative $76 million compared 

to negative $160 million in FY 2018. Table 8 illustrates the breakdown of total subsidy expense for 

FY 2019 and FY 2018 by program. 

Guaranteed loan volume decreased from $24,758 million in FY 2018 to $21,036 million in FY 2019. 

Volume distribution between mission area and program is shown in Table 9. 
SECTION II | FINANCIAL INFORMATION 77

Administrative Expenses

Consistent with the Federal Credit Reform Act of 1990, as amended, subsidy cash flows exclude direct 

Federal administrative expenses. Administrative expenses for FY 2019 and FY 2018 are shown in 

Table 10. 

Subsidy Rates

Subsidy rates are used to compute each year’s subsidy expenses. The subsidy rates disclosed in Table 11

and Table 12 pertain only to the FY 2019 cohorts. These rates cannot be applied to the direct and 

guaranteed loans disbursed during the current reporting year to yield the subsidy expense. The subsidy 

expense for new loans reported in the current year could result from disbursements of loans from both 

current year cohorts and prior-year cohorts. The subsidy expense reported in the current year also 

includes reestimates.

Credit Program Discussion and Descriptions

The Department offers direct and guaranteed loans through credit programs in the FPAC mission area 

through the FSA and the CCC, and in the RD mission area. 

Farm Production and Conservation (FPAC) Mission Area

The FPAC mission area helps keep America’s farmers and ranchers in business as they face the 

uncertainties of weather and markets. FPAC delivers commodity, credit, conservation, disaster, and 

emergency assistance programs that help strengthen and stabilize the agricultural economy. FPAC 

contributes to the vitality of the farm sector with programs that encourage the expansion of export 

markets for U.S. agriculture. 

FSA offers direct and guaranteed loans to farmers who are temporarily unable to obtain private, 

commercial credit, and nonprofit entities that are engaged in the improvement of the nation’s agricultural 

community. Often, FSA borrowers are beginning farmers who cannot qualify for conventional loans due 

to insufficient financial resources. Additionally, the agency helps established farmers who have suffered 

financial setbacks from natural disasters or have limited resources to maintain profitable farming 

operations. FSA officials also provide borrowers with supervision and credit counseling.

FSA’s mission is to provide supervised credit. FSA works with each borrower to identify specific 

strengths and weaknesses in farm production and management, and provides alternatives to address 

weaknesses. FSA is able to provide certain loan servicing options to assist borrowers whose accounts are 

distressed or delinquent. These options include reamortization, restructuring, loan deferral, lowering 

interest rates, acceptance of easements, and debt write-downs. The eventual goal of FSA’s farm credit 

programs is to graduate its borrowers to commercial credit.

CCC’s foreign programs provide economic stimulus to both the U.S. and foreign markets, while giving 

humanitarian assistance to the most disadvantaged people throughout the world. CCC offers both credit 
78 USDA AGENCY FINANCIAL REPORT | 2019

guarantee and direct credit programs for buyers of U.S. exports, suppliers, and sovereign countries in 

need of food assistance. 

CCC permits debtor nations to reschedule debt under the aegis of the Paris Club. The Paris Club is an 

informal group of official creditors whose role is to facilitate debt treatments based on an internationally 

recognized set of rules and principles, facilitated by the senior officials of the French Treasury. Its sole 

purpose is to assess, on a case-by-case basis, liquidity problems faced by economically disadvantaged 

countries. The general premise of Paris Club is to provide disadvantaged nations short-term liquidity 

relief to enable them to reestablish their credit worthiness. The U.S. Departments of State and Treasury 

lead the U.S. Delegation and negotiations for all U.S. Agencies. 

CCC also provides loans for Farm and Sugar Storage Facilities (FSFL). FSFL provides low interest 

financing for producers to build or upgrade farm storage and handling facilities. FSFL program 

regulations were amended during FY 2017 to add eligibility for portable storage structures, portable 

equipment, and storage and handling trucks, and to reduce the down payment and documentation 

requirements for a new “microloan” category of FSFLs up to $50,000. 

Exhibit 27: Farm Production and Conservation List of Programs

Farm Service Agency Commodity Credit Corporation

Direct Farm Ownership

Direct Farm Operating

Direct Emergency Loans

Direct Indian Land Acquisition

Direct Boll Weevil Eradication

Direct Seed Loans to Producers

Direct Conservation

Guaranteed Farm Operating 

Subsidized/Unsubsidized

Guaranteed Farm Ownership Unsubsidized

Guaranteed Conservation

American Recovery and Reinvestment Fund 

General Sales Manager Export Credit Guarantee 

Program

Facility Program Guarantee

P.L. 480 Title 1 Program

Direct Farm Storage Facility

Direct Sugar Storage Facilities

Rural Development (RD) Mission Area

RD offers both direct and guaranteed loans administered through three agencies with unique missions to 

bring prosperity and opportunity to rural areas. Each year, RD programs create or preserve tens of 

thousands of rural jobs and provide or improve the quality of rural housing, business, and utilities. To 

leverage the impact of its programs, RD is working with state, local, and Indian tribal governments, as 

well as private and nonprofit organizations and user-owned cooperatives. RD is able to provide certain 
SECTION II | FINANCIAL INFORMATION 79

loan servicing options to borrowers whose accounts are distressed or delinquent. These options include 

reamortization, restructuring, loan deferral, lowering interest rate, acceptance of easements, and debt 

write-downs. The choice of servicing options depends on the loan program and the individual borrower. 

Rural Housing programs provide affordable, safe, and sanitary housing and essential community 

facilities to rural communities. They also help finance new or improved housing for moderate, low, and 

very low-income families each year. Other programs help rural communities to finance, construct, 

enlarge or improve fire stations, libraries, hospitals and medical clinics, industrial parks, and other 

community facilities. 

Rural Business programs promote a dynamic business environment in rural America. These programs 

work in partnership with the private sector and community-based organizations to provide financial 

assistance and business planning. They also provide technical assistance to rural businesses and 

cooperatives, conduct research into rural economic issues, and provide cooperative educational materials 

to the public. 

Rural Utilities programs help to improve the quality of life in rural America through a variety of loan 

programs for electric energy, telecommunications, and water and environmental projects. These 

programs leverage scarce Federal funds with private capital for investing in rural infrastructure, 

technology, and development of water resources. 

Exhibit 28: Rural Development List of Programs

Rural Housing Program Rural Business Program Rural Utilities Program

Single Family Housing Direct 

Loans (including Self-Help Loans)

Single Family Housing Loan 

Guarantees

Single Family Housing Repair 

Loans

Rural Rental Housing Direct Loan

Rural Rental Housing Loan 

Guarantees

Farm Labor Housing Loans

Community Facilities Direct 

Loans and Loan Guarantees

Business and Industry Loan 

Guarantees

Intermediary Relending Program 

Loans

Rural Microentrepreneur 

Assistance Program 

Rural Economic Development 

Loans

Rural Energy for America 

Program Loan Guarantees

Biorefinery Renewable 

Chemical, and Bio-based 

Product Manufacturing 

Assistance Program Loan 

Guarantees 

Water and Environmental Direct 

Loans, Loan Guarantees

Rural Broadband Direct Loans 

Electric and 

Telecommunications Direct 

Loans and Loan Guarantees
80 USDA AGENCY FINANCIAL REPORT | 2019

Events and Changes Having a Significant and Measurable Effect on Subsidy Rates, 

Subsidy Expense, and Subsidy Reestimates

The Federal Credit Reform Act of 1990, as amended, governs the proprietary and budgetary accounting 

treatment of direct and guaranteed loans. The long-term cost to the Government for direct loans or loan 

guarantees is referred to as “subsidy cost.” Under the Act, subsidy costs for loans obligated beginning in 

FY 1992 are recognized at the net present value of projected lifetime costs in the year the loan is 

disbursed. Subsidy costs are revalued annually. Components of subsidy include interest subsidies, 

defaults, fee offsets, and other cash flows. 

The annual reestimate process updates the budget assumptions with actual portfolio performance, 

interest rates, and updated estimates for future loan performance. The FY 2019 reestimate process 

resulted in a $440 million decrease in the post-1991 estimated cost of the direct loan portfolio and a 

$27 million decrease in the post-1991 estimated cost of the guaranteed loan portfolio, primarily 

comprised of the following programs. 

Direct Loans

The Direct Single-Family Housing program had an overall upward reestimate of $211 million. The 

majority of the upward reestimate is attributable to the Section 502 program cohorts 2000 through 2010 

which had an upward reestimate of $205 million. The upward reestimates reflect the impact of 

continuing elevated residual defaults of loans for properties acquired prior to the 2008 recession. 

Additionally, the agency is borrowing at a lower rate than it is lending and the decrease in projected 

interest income contributes to the upward impact to the reestimate. 

The Direct Community Facility program had an overall upward reestimate of $217 million. Cohorts 

2016 through 2018 had an upward reestimate of $124 million due primarily to borrowing rates from 

Treasury rising higher than initially budgeted. Treasury rates on older cohorts do not change as Treasury 

sets fixed borrowing rates on each cohort after 90% of the loans have been disbursed. Additionally, the 

increase in the principal write-off curve further increased the total reestimate due to the increase in 

projected write-offs.

The Electric program had an overall downward reestimates of ($972) million. The Direct Federal 

Financing Bank (FFB) Electric Program had an overall downward reestimate of ($899) million which is 

comprised primarily of a ($936) million downward reestimate in the FFB program and a $37 million

upward reestimate in the FFB Underwriter program. The main factor of the downward reestimate 

increase in the Direct FFB program was the modification realized in FY 2019 due to the implementation 

of the Agriculture Improvement Act of 2018. The language in the bill allowed the borrowers to prepay 

outstanding debt using Cushion of Credit balances. The positive modification cash flows increased cash 

balances resulting in a downward impact as the agency had to borrow less from Treasury to cover the 

cost of the subsidy. 
SECTION II | FINANCIAL INFORMATION 81

Guaranteed Loans 

The Guaranteed Single-Family Housing Program had an overall upward reestimate of $51 million. 

The most significant change was attributed to an upward reestimate of $68 million in the Section 502 

Direct Loan program, which assists low income applicants obtain decent, safe and sanitary housing in 

eligible rural areas. The Section 502 Direct Loan program increase in reestimates is the result of an 

upward reestimate of $198 million and a downward reestimate of ($130) million. The change in the 

upward reestimate for the 502 Section Direct Loan program is attributed to cohorts 2011 through 2018, 

along with an offsetting downward reestimate for cohort 2019. The increase in the upward reestimate for 

cohorts 2011 through 2018 is attributed to an increase in forecasted loss settlements, a decrease in 

forecasted recoveries, and a decrease in forecasted annual fee inflows. These changes in the loss 

settlements, recoveries, and annual fee cash flows are due to decreases in the forecasted 30-year 

mortgage rates and forecasted Housing Price index (HPI). The downward reestimate for the 2019 cohort 

is due to an increase in projected annual fees as compared to original subsidy estimate, resulting in 

higher future cash flows and the reduction of the subsidy cost. 

Loan Modifications 

A modification is any Government action different from the baseline assumptions that affect the subsidy 

cost, such as a change in the terms of the loan contract. The cost of a modification is the difference 

between the present value of the cash flows before and after the modification. 

Multi-Family Housing direct loan modifications related to the revitalization program, which began in 

FY 2006, continued through FY 2019. In this program, Rural Development provides restructured loans 

and grants to development owners to revitalize multi-family housing development projects in order to 

extend the affordable use without displacing tenants due to the increased rent.

During FY 2019, the Rural Utilities Program loans experienced a significant increase in loan 

modifications. The modifications amount for FY 2019 was $898 million while in FY 2018 there was

none. The Cushion of Credit (CoC) modifications were a direct result of the enactment of the FY 2018 

Agriculture Improvement Act. The language in the act provided the borrowers the opportunity to prepay 

outstanding loans, without a penalty, using the CoC balances. Additionally, the Federal Financing Bank 

Direct Electric Loan Program modifications continued with the refinancing options that were enacted in 

the FY 2018 Consolidated Appropriations Act as part of a two-year pilot program. 

The Debt Reduction Fund is used to account for CCC’s “modified debt.” Debt is considered to be 

modified if the original debt has been reduced or the interest rate of the agreement changed. In contrast, 

when debt is “rescheduled,” only the date of payment is changed. Rescheduled debt is carried in the 

original fund until paid. With one exception, all outstanding CCC modified debt is carried in the Debt 

Reduction Fund and is governed by the Federal Credit Reform Act of 1990, as amended. 
82 USDA AGENCY FINANCIAL REPORT | 2019

Foreclosed Property 

Property is acquired largely through foreclosure and voluntary conveyance. Acquired properties associated 

with loans are reported at their market value at the time of acquisition. The projected future cash flows 

associated with acquired properties are used in determining the related allowance (at present value).

As of September 30, 2019 and 2018, foreclosed property consisted of 2,398 and 1,238 rural single family 

housing dwellings, with an average holding period of 15 months and 16 months, respectively. As of 

September 30, 2019 and 2018, FSA-Farm Loan Program properties consist primarily of 110 and 107 

farms, respectively. The average holding period for these properties in inventory for FY 2019 and 

FY 2018 was 67 months. Certain properties can be leased to eligible individuals. 

Other Information

Non-performing loans are defined as receivables that are in arrears by 90 or more days or are on 

rescheduling agreements until such time two consecutive payments have been made following the 

rescheduling. When RD, FSA and CCC calculate loan interest income, however, the recognition of 

revenue is deferred. Late interest is accrued on arrears. 

Approximately $14,458 million and $14,954 million of Rural Housing Service unpaid loan principal as 

of September 30, 2019, and 2018 were receiving interest credit. If those loans receiving interest credit 

had accrued interest at the full-unreduced rate, interest income would have been approximately 

$682 million and $709 million higher for FY 2019 and FY 2018 respectively.

At the end of FY 2019 and FY 2018, the RD portfolio contained approximately 51,684 and 55,938 

restructured loans with an outstanding unpaid principal balance of $2,711 million and $2,869 million, 

respectively. At the end of FY 2019 and FY 2018, the farm loan portfolio contained approximately 

17,761 and 17,739 restructured loans with an outstanding unpaid principal balance of $1,343 million and 

$1,315 million, respectively. Direct credit and credit guarantee principal receivables in the food aid and 

export programs under rescheduling agreements as of September 30, 2019 and 2018, were $825 million

and $1,005 million, respectively.
SECTION II | FINANCIAL INFORMATION 83

TABLE 1: Direct Loan and Loan Guarantees, Net 2019 and 2018

FY 2019 Direct Loans Loans Receivable,

Gross

Interest 

Receivable

Foreclosed 

Property

Present Value 

Allowance

Value of Assets 

Related to Loans

Obligated Pre-1992

Farm $ 192 $ 103 $ 6 $ (102) $ 199 

Export - - - - - 

Food Aid 640 9 - (90) 559 

Housing 5,934 689 20 (610) 6,033 

Community Facility 10 - - - 10 

Electric 2,241 3 - (1,739) 505 

Telecommunications 63 - - - 63 

Water and Environmental 239 2 - - 241 

Intermediary Relending 4 - - - 4 

Business and Industry - - - - - 

Economic Development - - - - - 

Pre-1992 Total 9,323 806 26 (2,541) 7,614 

Obligated Post-1991

Farm 12,582 293 10 (462) 12,423 

Export - - - - - 

Food Aid 545 8 - (90) 463 

Housing 17,560 414 139 (2,158) 15,955 

Community Facility 9,755 76 - (321) 9,510 

Electric 47,033 73 - (577) 46,529 

Telecommunications 3,183 1 - (2) 3,182 

Water and Environmental 12,870 89 - (301) 12,658 

Intermediary Relending 355 2 - (76) 281 

Business and Industry 44 - - (5) 39 

Economic Development 200 - - (15) 185 

Post-1991 Total 104,127 956 149 (4,007) 101,225 

Cushion of Credit (5,556) - - - (5,556)

Total Direct Loan Program Receivables 107,894 1,762 175 (6,548) 103,283 

Defaulted Guarantee Loans

Pre-1992

Farm - - - - - 

Export - - - - - 

Food Aid - - - - - 

Community Facility - - - - - 

Electric - - - - - 

Telecommunications - - - - - 

Water and Environmental - - - - - 

Intermediary Relending - - - - - 

Business and Industry - - - - - 

Economic Development - - - - - 

Pre-1992 Total - - - - - 

Post-1991

Farm 207 68 - (256) 19 

Export 417 12 - (219) 210 

Food Aid - - - - - 

Housing 110 - - (81) 29 

Community Facility 6 - - - 6 

Electric - - - - - 

Telecommunications - - - - - 

Water and Environmental - - - - - 

Intermediary Relending - - - - - 

Business and Industry 187 - - (48) 139 

Economic Development - - - - - 

Post-1991 Total 927 80 - (604) 403 

Total Defaulted Guarantee Loans 927 80 - (604) 403 

Loans Exempt from Credit Reform Act:

Commodity Loans 565 8 - (4) 569 

Other Foreign Receivables - - - - - 

Total Loans Exempt 565 8 - (4) 569 

Total Direct Loan and Loan Guarantees, Net $ 104,255 
84 USDA AGENCY FINANCIAL REPORT | 2019

FY 2018 Direct Loans Loans Receivable, 

Gross

Interest 

Receivable

Foreclosed 

Property

Present Value 

Allowance

Value of Assets 

Related to Loans

Obligated Pre-1992

Farm $ 227 $ 13 $ 5 $ (14) $ 231 

Export - - - - - 

Food Aid 844 11 - (179) 676 

Housing 6,375 66 15 (25) 6,431 

Community Facility 13 - - - 13 

Electric 2,284 9 - (1,593) 700 

Telecommunications 82 - - - 82 

Water and Environmental 274 2 - - 276 

Intermediary Relending 6 - - - 6 

Business and Industry - - - - - 

Economic Development - - - - - 

Pre-1992 Total 10,105 101 20 (1,811) 8,415 

Obligated Post-1991

Farm 11,663 186 12 (420) 11,441 

Export - - - - - 

Food Aid 612 9 - (102) 519 

Housing 17,930 126 75 (2,085) 16,046 

Community Facility 8,562 65 - (168) 8,459 

Electric 47,037 296 - (560) 46,773 

Telecommunications 3,510 5 - 121 3,636 

Water and Environmental 12,506 95 - (265) 12,336 

Intermediary Relending 363 2 - (85) 280 

Business and Industry 43 - - (1) 42 

Economic Development 183 - - (13) 170 

Post-1991 Total 102,409 784 87 (3,578) 99,702 

Cushion of Credit (7,115) - - - (7,115)

Total Direct Loan Program Receivables 105,399 885 107 (5,389) 101,002 

Defaulted Guarantee Loans

Pre-1992

Farm - - - - - 

Export - - - - - 

Food Aid - - - - - 

Community Facility - - - - - 

Electric - - - - - 

Telecommunications - - - - - 

Water and Environmental - - - - - 

Intermediary Relending - - - - - 

Business and Industry - - - - - 

Economic Development - - - - - 

Pre-1992 Total - - - - - 

Post-1991

Farm 186 1 - (185) 2 

Export 439 10 - (220) 229 

Food Aid - - - - - 

Housing 89 1 - (57) 33 

Community Facility 5 - - - 5 

Electric - - - - - 

Telecommunications - - - - - 

Water and Environmental - - - - - 

Intermediary Relending - - - - - 

Business and Industry 260 3 - (62) 201 

Economic Development - - - - - 

Post-1991 Total 979 15 - (524) 470 

Total Defaulted Guarantee Loans 979 15 - (524) 470 

Loans Exempt from Credit Reform Act:

Commodity Loans 471 5 - (1) 475 

Other Foreign Receivables - - - - - 

Total Loans Exempt 471 5 - (1) 475 

Total Direct Loan and Loan Guarantees, Net $ 101,947 
SECTION II | FINANCIAL INFORMATION 85

TABLE 2: Schedule for Reconciling Subsidy Cost Allowance Balances (Post-1991) Direct Loans

Item FY 2019 FY 2018

Beginning Balance of the Subsidy Cost Allowance $ 4,102 $ 4,384 

Add: Subsidy Expense for Direct Loans Disbursed During the Year by Component 

Interest Rate Differential Costs (234) (240) 

Default Costs (Net of Recoveries) 178 176 

Fees and Other Collections (14) (11) 

Other Subsidy Costs (47) (40) 

Total Subsidy Expense Prior to Adjustments and Reestimates (117) (115) 

Adjustments

Loan Modifications 898 - 

Fees Received 88 75 

Loans Written Off (653) (412) 

Subsidy Allowance Amortization 649 (99) 

Other 84 42 

Total Subsidy Cost Allowance Before Reestimates 5,051 3,875 

Add or Subtract Subsidy Reestimates by Component 

Interest Rate Reestimate 41 499 

Technical/Default Reestimate (481) (272) 

Total Reestimates (440) 227 

Ending Balance of the Subsidy Cost Allowance $ 4,611 $ 4,102 
86 USDA AGENCY FINANCIAL REPORT | 2019

TABLE 3: Subsidy Expense for Direct Loans by Program and Component

FY 2019 Direct Loan Programs Interest 

Differential Defaults 

Fees and 

Other 

Collections Other

Subtotal 

Subsidy

Total 

Modifications

Interest 

Rates 

Reestimates 

Technical 

Reestimates 

Total 

Reestimates 

Total 

Subsidy 

Expense

Farm $ (39) $ 73 $ (1) $ 6 $ 39 $ - $ 97 $ (140) $ (43) $ (4)

Export - - - - - - - (12) (12) (12) 

Food Aid - - - - - - - 22 22 22 

Housing 36 46 - 3 85 8 25 186 211 304 

Community Facility (145) 52 - 5 (88) - - 217 217 129 

Electric (143) 5 (13) (32) (183) 863 (108) (864) (972) (292) 

Telecommunications - 1 - (2) (1) 27 20 69 89 115 

Water and Environmental 45 1 - (27) 19 - 9 41 50 69 

Intermediary Relending 5 - - - 5 - (1) (4) (5) - 

Business and Industry - - - - - - - 4 4 4 

Economic Development 7 - - - 7 - (1) - (1) 6 

Total Direct Loan Subsidy Expense $ (234) $ 178 $ (14) $ (47) $ (117) $ 898 $ 41 $ (481) $ (440) $ 341 

FY 2018 Direct Loan Programs Interest 

Differential Defaults 

Fees and 

Other 

Collections Other

Subtotal 

Subsidy

Total 

Modifications

Interest 

Rates 

Reestimates 

Technical 

Reestimates 

Total 

Reestimates 

Total 

Subsidy 

Expense

Farm $ (35) $ 74 $ (1) $ 3 $ 41 $ - $ (108) $ 116 $ 8 $ 49 

Export - - - - - - - (17) (17) (17) 

Food Aid - - - - - - - (2) (2) (2) 

Housing 22 50 - 9 81 - 16 30 46 127 

Community Facility (154) 43 - 5 (106) - 42 91 133 27 

Electric (126) 4 (10) (30) (162) - 538 (489) 49 (113) 

Telecommunications 1 4 - (4) 1 - (36) (25) (61) (60) 

Water and Environmental 43 1 - (23) 21 - 50 23 73 94 

Intermediary Relending 5 - - - 5 - (2) 1 (1) 4 

Business and Industry - - - - - - - - - - 

Economic Development 4 - - - 4 - (1) - (1) 3 

Total Direct Loan Subsidy Expense $ (240) $ 176 $ (11) $ (40) $ (115) $ - $ 499 $ (272) $ 227 $ 112 
SECTION II | FINANCIAL INFORMATION 87

TABLE 4: Total Amount of Direct Loans Disbursed (Post-1991)

Direct Loan Programs FY 2019 FY 2018

Farm $ 2,584 $ 2,390 

Export - - 

Food Aid - - 

Housing 1,151 1,185 

Community Facility 1,530 1,354 

Electric 4,218 3,236 

Telecommunications 114 232 

Water and Environmental 780 766 

Intermediary Relending 18 19 

Business and Industry 5 7 

Economic Development 53 32 

Total Direct Loans Disbursed $ 10,453 $ 9,221 
88 USDA AGENCY FINANCIAL REPORT | 2019

TABLE 5: Guaranteed Loans Outstanding 

FY 2019

Pre-1992 

Outstanding 

Principal, Face Value

Post-1991 

Outstanding 

Principal, Face Value

Total Outstanding 

Principal, Face Value

Pre-1992 

Outstanding 

Principal, Guaranteed

Post-1991 

Outstanding 

Principal, Guaranteed

Total Outstanding 

Principal, Guaranteed

Loan Guarantee Programs

Farm $ 1 $ 17,883 $ 17,884 $ 1 $ 16,130 $ 16,131 

Export - 1,901 1,901 - 1,863 1,863 

Food Aid - - - - - - 

Housing 1 124,066 124,067 1 111,622 111,623 

Community Facility - 1,168 1,168 - 1,040 1,040 

Electric - 154 154 - 154 154 

Telecommunications - - - - - - 

Water and Environmental - 77 77 - 68 68 

Intermediary Relending - - - - - - 

Business and Industry 6 7,819 7,825 5 5,763 5,768 

Economic Development - - - - - - 

Total Guarantees Outstanding $ 8 $ 153,068 $ 153,076 $ 7 $ 136,640 $ 136,647 

FY 2018 

Pre-1992 

Outstanding 

Principal, Face Value

Post-1991 

Outstanding 

Principal, Face Value

Total Outstanding 

Principal, Face Value

Pre-1992 

Outstanding 

Principal, Guaranteed

Post-1991 

Outstanding 

Principal, Guaranteed

Total Outstanding 

Principal, Guaranteed

Loan Guarantee Programs

Farm $ 1 $ 17,168 $ 17,169 $ 1 $ 15,473 $ 15,474 

Export - 1,877 1,877 - 1,840 1,840 

Food Aid - - - - - - 

Housing 1 122,965 122,966 1 110,632 110,633 

Community Facility - 1,142 1,142 - 1,017 1,017 

Electric - 161 161 - 161 161 

Telecommunications - - - - - - 

Water and Environmental - 91 91 - 80 80 

Intermediary Relending - - - - - - 

Business and Industry 3 7,482 7,485 3 5,483 5,486 

Economic Development - - - - - - 

Total Guarantees Outstanding $ 5 $ 150,886 $ 150,891 $ 5 $ 134,686 $ 134,691 
SECTION II | FINANCIAL INFORMATION 89

TABLE 6: Liability for Loan Guarantees (Present Value Method For Pre-1992 Guarantees)

FY 2019 

Liabilities for Losses on Pre- 1992 

Guarantees Present Value

Liabilities for Loan Guarantees on 

Post- 1991 Guarantees Present Value Total Liabilities for Loan Guarantees

Loan Guarantee Programs

Farm $ - $ 222 $ 222 

Export - 3 3 

Food Aid - - - 

Housing - (232) (232) 

Community Facility - 52 52 

Electric - - - 

Telecommunications - - - 

Water and Environmental - 1 1 

Intermediary Relending - - - 

Business and Industry - 388 388 

Economic Development - - - 

Total Liability for Loan Guarantees $ - $ 434 $ 434 

FY 2018 

Liabilities for Losses on Pre- 1992 

Guarantees Present Value

Liabilities for Loan Guarantees on 

Post- 1991 Guarantees Present Value Total Liabilities for Loan Guarantees

Loan Guarantee Programs

Farm $ - $ 215 $ 215 

Export - 4 4 

Food Aid - - - 

Housing - (212) (212) 

Community Facility - 52 52 

Electric - - - 

Telecommunications - - - 

Water and Environmental - 1 1 

Intermediary Relending - - - 

Business and Industry - 442 442 

Economic Development - - - 

Total Liability for Loan Guarantees $ - $ 502 $ 502 
90 USDA AGENCY FINANCIAL REPORT | 2019

TABLE 7: Schedule for Reconciling Loan Guarantee Liability

Item FY 2019 FY 2018

Beginning Balance of the Loan Guarantee Liability $ 502 $ 794 

Add: Subsidy Expense for Guaranteed Loans Disbursed During the Year by Component 

Interest Supplement Costs - - 

Default Costs (Net of Recoveries) 620 845 

Fees and Other Collections (664) (824) 

Other Subsidy Costs (5) (1) 

Total of the Above Subsidy Expense Components (49) 20 

Adjustments 

Loan Guarantee Modifications - - 

Fees Received 632 643 

Interest Supplements Paid (8) (8) 

Foreclosed Property and Loans Acquired 109 63 

Claim Payments to Lenders (541) (680) 

Interest Accumulation on the Liability Balance (8) 10 

Other (176) (160) 

Ending Balance of the Loan Guarantee Liability Before Reestimates 461 682 

Add or Subtract Subsidy Reestimates by Component: 

Interest Rate Reestimate (46) (82) 

Technical/Default Reestimate 19 (98) 

Total of the Above Reestimate Components (27) (180) 

Ending Balance of the Loan Guarantee Liability $ 434 $ 502 
SECTION II | FINANCIAL INFORMATION 91

TABLE 8: Subsidy Expense for Loan Guarantees by Program and Component

FY 2019 Loan Guarantee Programs Interest 

Supplement Defaults 

Fees and 

Other 

Collections Other Subtotal

Total 

Modifications

Interest 

Rates 

Reestimates 

Technical 

Reestimates 

Total 

Reestimates 

Total 

Subsidy 

Expense

Farm $ - $ 25 $ (13) $ - $ 12 $ - $ (6) $ (11) $ (17) $ (5)

Export - - 9 (5) 4 - - (6) (6) (2) 

Food Aid - - - - - - - - - - 

Housing - 502 (612) - (110) - (39) 90 51 (59) 

Community Facility - 6 (1) - 5 - - (5) (5) - 

Electric - - - - - - - - - - 

Telecommunications - - - - - - - - - - 

Water and Environmental - - - - - - - - - - 

Intermediary Relending - - - - - - - - - - 

Business and Industry - 87 (47) - 40 - (1) (49) (50) (10) 

Economic Development - - - - - - - - - - 

Total Loan Guarantee Subsidy Expense $ - $ 620 $ (664) $ (5) $ (49) $ - $ (46) $ 19 $ (27) $ (76)

FY 2018 Loan Guarantee Programs Interest 

Supplement Defaults 

Fees and 

Other 

Collections Other Subtotal

Total 

Modifications

Interest 

Rates 

Reestimates 

Technical 

Reestimates 

Total 

Reestimates 

Total 

Subsidy 

Expense

Farm $ - $ 25 $ (13) $ - $ 12 $ - $ 1 $ 3 $ 4 $ 16 

Export - - 10 (2) 8 - (1) (7) (8) - 

Food Aid - - - - - - - - - - 

Housing - 623 (753) - (130) - (88) (25) (113) (243) 

Community Facility - 5 (1) - 4 - - 5 5 9 

Electric - - - - - - - - - - 

Telecommunications - - - - - - - - - - 

Water and Environmental - - - - - - - - - - 

Intermediary Relending - - - - - - - - - - 

Business and Industry - 192 (67) 1 126 - 6 (74) (68) 58 

Economic Development - - - - - - - - - - 

Total Loan Guarantee Subsidy Expense $ - $ 845 $ (824) $ (1) $ 20 $ - $ (82) $ (98) $ (180) $ (160)
92 USDA AGENCY FINANCIAL REPORT | 2019

TABLE 9: Guaranteed Loans Disbursed

FY 2019 FY 2018

Principal, Face Value 

Disbursed

Principal, Guaranteed 

Disbursed

Principal, Face Value 

Disbursed

Principal, Guaranteed 

Disbursed

Loan Guarantee Programs

Farm $ 3,059 $ 2,758 $ 3,150 $ 2,839 

Export 1,992 1,951 1,961 1,918 

Food Aid - - - - 

Housing 14,528 13,075 17,526 15,773 

Community Facility 155 137 105 93 

Electric - - - - 

Telecommunications - - - - 

Water and Environmental 9 8 2 1 

Intermediary Relending - - - - 

Business and Industry 1,293 990 2,014 1,553 

Economic Development - - - - 

Total Guaranteed Loans Disbursed $ 21,036 $ 18,919 $ 24,758 $ 22,177 

TABLE 10: Administrative Expenses

Item FY 2019 FY 2018

Direct Loan Programs $ 498 $ 509 

Guaranteed Loan Programs 532 432 

Total Administrative Expenses $ 1,030 $ 941 
SECTION II | FINANCIAL INFORMATION 93

TABLE 11: Subsidy Rates for Direct Loans (percentage) 

FY 2019 Interest 

Differential Defaults 

Fees and 

Other 

Collections Other Total 

Direct Loan Programs

Farm Ownership (1.22) 0.17 - (0.26) (1.31) 

Farm Operating (3.59) 6.87 - 0.62 3.90 

Emergency Disaster (6.49) 9.65 - 1.01 4.17 

Indian Tribe Land Acquisition (29.87) - - - (29.87) 

Boll Weevil Eradication (0.16) - - (0.05) (0.21) 

Indian Highly Fractionated Land 22.67 0.05 - (1.38) 21.34 

Farm Storage Facility Loan (0.24) 0.02 (0.27) (0.02) (0.51) 

Sugar Storage Facility Loan Program (1.00) 0.03 - 0.02 (0.95) 

Multi-Family Housing Relending Demo 27.68 - - (0.01) 27.67 

Multi-Family Housing Revitalization Seconds 50.12 0.51 - (0.05) 50.58 

Multi-Family Housing Revitalization Zero - - - - - 

Community Facility Loans (14.65) 4.25 - 2.79 (7.61) 

Section 502 Single-Family Housing 2.11 4.60 - 0.06 6.77 

Section 515 Multi-Family Housing 24.13 0.75 - (1.17) 23.71 

Section 504 Housing Repair 15.27 (0.04) - (3.02) 12.21 

Section 514 Farm Labor Housing 25.16 0.23 - (0.47) 24.92 

Section 524 Site Development 2.84 - - 0.67 3.51 

Section 523 Self-Help Housing 3.87 4.67 - 0.06 8.60 

Single-Family Housing Credit Sales (7.63) 2.25 - 2.96 (2.42) 

Rural Microenterprise Direct Loans 6.85 2.67 - - 9.52 

Intermediary Relending Program 21.64 1.77 - (1.40) 22.01 

Rural Economic Development Loans 13.65 0.01 - (0.31) 13.35 

Water and Waste Disposal Loans 1.80 0.12 - (2.18) (0.26) 

FFB Electric Loans (4.00) 0.01 - (0.39) (4.38) 

Treasury Telecommunication Loans 0.14 0.36 - (0.02) 0.48 

FFB Telecommunications Loans (0.61) 0.19 - (2.29) (2.71) 

FFB Guaranteed Underwriting - 1.51 (1.90) - (0.39) 

Rural Energy Savings Program 12.95 1.48 - (0.40) 14.03 

Broadband Treasury Loans 0.13 19.27 - 0.12 19.52 

Reconnect Direct Loans 7.64 23.95 - (0.45) 31.14 

Reconnect Grant Assisted Loans - 23.95 - 0.10 24.05 

TABLE 12: Subsidy Rates for Loan Guarantees (percentage)

FY 2019 Interest 

Differential Defaults 

Fees and 

Other 

Collections Other Total 

Guaranteed Loan Programs

Farm Ownership—Unsubsidized - 0.93 (1.16) - (0.23) 

Farm Operating—Unsubsidized - 2.36 (1.24) - 1.12 

Conservation—Guaranteed - 0.73 (1.13) - (0.40) 

GSM 102 - 0.27 (0.49) - (0.22) 

Export Guarantee Program—Facilities - 1.09 (3.61) - (2.52) 

Community Facility Loan Guarantees - 3.77 (0.88) - 2.89 

Guaranteed 538 Multi-Family Housing - 3.51 (8.31) - (4.80) 

Guaranteed 502 Single-Family Housing - 3.44 (4.15) - (0.71) 

Business and Industry Loan Guarantees - 6.34 (4.02) - 2.32 

Renewable Energy Loan Guarantees - 5.93 (1.47) - 4.46 

Section 9003 Loan Guarantees - 27.74 (6.09) 0.11 21.76 

Water and Waste Disposal Loans - 1.25 (0.87) - 0.38 
94 USDA AGENCY FINANCIAL REPORT | 2019

NOTE 8: Inventory and Related Property, Net

Commodity inventory is restricted for the purpose of alleviating distress caused by natural disasters, providing emergency food assistance in 

developing countries, and providing price support and stabilization. 

Commodities: Unit of Measure

FY 2019 Beginning 

Inventory Acquisitions Collateral Acquired Donations Others FY 2019 Ending Inventory

Quantity Value Quantity Value Quantity Value Quantity Value Quantity Value Quantity Value

Corn Meal Pounds 1 $ 1 64 $ 13 - $ - (64) $ (14) - $ - 1 $ - 

Blended Foods Pounds 11 4 97 42 - - (94) (43) - 1 14 4 

Dry Edible Beans Cwt. - - - 36 - - - (35) - - - 1 

Dry Whole Peas Cwt. - 6 2 39 - - (2) (42) - (1) - 2 

Emergency Food Ration Bars Pounds - - - - - - - - - - - - 

Grain Sorghum Bushels - 3 10 50 - - (10) (52) - (1) - - 

Lentils Dry Cwt. - - - 9 - - - (9) - - - - 

Nonfat Dry Milk Pounds - - 3 55 - - (3) (55) - - - - 

Rice Products Cwt., Pounds - - 2 70 - - (2) (67) - - - 3 

Meat Pounds - - 39 324 - - (39) (324) - - - - 

Vegetable Oil Pounds 15 8 335 142 - - (346) (147) - (1) 4 2 

Wheat Products Bushels, Pounds - - 13 137 - - (13) (137) - - - - 

Peanuts Pounds 134 24 - - 194 35 (1) - (301) (54) 26 5 

Soybeans Bushels, Pounds - - 88 16 - - (88) (16) - - - - 

Fruit and Nut Products Pounds - - 10 286 - - (10) (286) - - - - 

Cotton Bales - - - - 42 122 - - (42) (117) - 5 

Other Various XXXX - XXXX 29 XXXX - XXXX (31) XXXX 3 XXXX 1 

Total Commodities N/A XXXX $ 46 XXXX $ 1,248 XXXX $ 157 XXXX $ (1,258) XXXX $ (170) XXXX $ 23 

Commodities: Unit of Measure

FY 2018 Beginning 

Inventory Acquisitions Collateral Acquired Donations Others FY 2018 Ending Inventory

Quantity Value Quantity Value Quantity Value Quantity Value Quantity Value Quantity Value

Corn Meal Pounds 2 $ 1 33 $ 7 - - (34) $ (7) - $ - 1 $ 1 

Blended Foods Pounds 4 2 114 39 - - (107) (37) - - 11 4 

Dry Edible Beans Cwt. - - - 1 - - - (1) - - - - 

Dry Whole Peas Cwt. - 6 3 64 - - (3) (64) - - - 6 

Emergency Food Ration Bars Pounds - - - - - - - - - - - - 

Grain Sorghum Bushels - 2 12 61 - - (12) (60) - - - 3 

Lentils Dry Cwt. - - - 10 - - - (10) - - - - 

Nonfat Dry Milk Pounds - - - - - - - - - - - - 

Rice Products Cwt., Pounds - 1 - 10 - - - (11) - - - - 

Meat Pounds - - - - - - - - - - - - 

Vegetable Oil Pounds 21 13 259 127 - - (265) (131) - (1) 15 8 

Wheat Products Bushels, Pounds - - 36 175 - - (36) (175) - - - - 

Peanuts Pounds 56 10 - - 156 28 (12) (13) (66) (1) 134 24 

Soybeans Bushels, Pounds - - 68 17 - - (68) (17) - - - - 

Fruit and Nut Products Pounds - - - - - - - - - - - - 

Cotton Bales 

Other Various XXXX - XXXX 4 XXXX - XXXX (4) XXXX - XXXX - 

Total Commodities N/A XXXX $ 35 XXXX $ 515 XXXX $ 28 XXXX $ (530) XXXX $ (2) XXXX $ 46 
SECTION II | FINANCIAL INFORMATION 95

NOTE 9: General Property, Plant, and Equipment (PP&E), Net

FY 2019 

Category Useful Life (Years) Cost

Accumulated 

Depreciation Net Book Value

Land and Land Rights $ 70 $ - $ 70 

Improvements to Land 10 – 50 758 (746) 12 

Construction-in-Progress 147 - 147 

Buildings, Improvements and Renovations 15 – 30 3,115 (2,067) 1,048 

Other Structures and Facilities 15 – 50 1,855 (1,653) 202 

Equipment 5 – 20 1,820 (1,309) 511 

Assets Under Capital Lease 3 – 20 26 (22) 4 

Leasehold Improvements 10 90 (80) 10 

Internal-Use Software 5 – 8 1,192 (1,044) 148 

Internal-Use Software in Development 97 - 97 

Total $ 9,170 $ (6,921) $ 2,249 

FY 2018 

Category Useful Life (Years) Cost

Accumulated 

Depreciation Net Book Value

Land and Land Rights $ 70 $ - $ 70 

Improvements to Land 10 – 50 757 (740) 17 

Construction-in-Progress 72 - 72 

Buildings, Improvements and Renovations 15 – 30 3,109 (1,986) 1,123 

Other Structures and Facilities 15 – 50 1,850 (1,634) 216 

Equipment 5 – 20 1,770 (1,275) 495 

Assets Under Capital Lease 3 – 20 34 (29) 5 

Leasehold Improvements 10 86 (78) 8 

Internal-Use Software 5 – 8 1,167 (991) 176 

Internal-Use Software in Development 42 - 42 

Total $ 8,957 $ (6,733) $ 2,224 
96 USDA AGENCY FINANCIAL REPORT | 2019

NOTE 10: Stewardship PP&E

Stewardship PP&E consist of assets whose physical properties resemble those of general PP&E that are 

traditionally capitalized in the financial statements. Due to the nature of these assets, valuation would be 

difficult and matching costs with specific periods would not be meaningful. Stewardship PP&E include 

heritage assets and stewardship land. 

Heritage Assets

Heritage assets are unique and are generally expected to be preserved indefinitely. Heritage assets may 

be unique because they have historical or natural significance, are of cultural, educational or artistic 

importance, or have significant architectural characteristics. The assets are reported in terms of physical 

units rather than cost, fair value, or other monetary values. No amounts are shown on the Balance Sheet 

for heritage assets, except for multi-use heritage assets in which the predominant use of the asset is in 

general government operations. The costs of acquisition, betterment, or reconstruction of multi-use 

heritage assets is capitalized as general PP&E and depreciated. The costs of acquiring, constructing, 

improving, reconstructing, or renovating heritage assets, other than multi-use, is considered an expense 

in the period incurred when determining the net cost of operations. Heritage assets consist of collection 

type, such as objects gathered and maintained for exhibition, such as library collections, and noncollection type, such as memorials, monuments and buildings. 

National Forests, National Grasslands and Other Sites 

FS manages its heritage assets by site. Sites include national forests, national grasslands, other FSmanaged sites, and non-FS-managed sites such as museums and university laboratories. The mission of 

the FS is to sustain the health, diversity, and productivity of the Nation’s forests and grasslands to meet 

the needs of present and future generations. The FS strives to achieve quality land management under 

the sustainable multiple-use management concept, to deliver the necessary products and services that are 

essential for enhancing natural resource stewardship, and to meet the diverse needs of people. 

Heritage Asset categories can include the following:

Priority Heritage Assets (PHA): Heritage assets of distinct public value that are, or should be, actively 

maintained, and meet one or more of the following criteria:

▪ The property is recognized through an official designation, such as a listing on the National 

Register of Historic Places, State register, etc.

▪ The property is recognized through prior investment in preservation, interpretation, and use. Any 

improvement to a PHA that meets real property designation criteria is considered real property. 

▪ The property is recognized in an Agency-approved management plan. 

▪ The property exhibits critical deferred maintenance needs, and those needs have been documented. 
SECTION II | FINANCIAL INFORMATION 97

Other Heritage Assets: Assets that may have potential important historical or cultural significance but 

lack formal listing and the demonstrated need for active maintenance.

Assemblage Assets: Any grouping of artifacts or archival materials aggregated through donation, agency 

events, site-specific or other field collection, other acquisition method, or combination therein. 

Research Centers

The Agricultural Research Service (ARS) was established on November 2, 1953. Congress first 

authorized federally supported agricultural research in the Organic Act of 1862. The statute directed the 

Commissioner of Agriculture “to acquire and preserve in his department all information he can obtain 

by means of books and correspondence, and by practical and scientific experiments.” The scope of 

USDA’s agricultural research has been expanded and extended more than 60 times since the Department 

was created.

NRCS owns one heritage asset, the Tucson Plant Materials Center (TPMC), which is included in general 

PP&E as a multi-use asset. It was listed in the National Register of Historic Places (NRHP) on July 2, 

1997. The TPMC develops and evaluates native plants and addresses an array of resource issues in the 

areas of rangeland, mined land, urban lands, cropland riparian areas, and desert lands. The TPMC 

provides technical assistance to NRCS field offices; Resource Conservation and Development (RC&D) 

groups; conservation districts; Federal, State, and Tribal agencies; and private landowners through the 

Southwest. Research centers are considered heritage assets because one or more buildings or structures 

at these centers is on (or eligible for inclusion on) the NRHP. 

Library Collections 

The National Agricultural Library (NAL) supports agricultural research through the acquisition, 

curation, and dissemination of information needed to solve today’s agricultural challenges. NAL’s 

content ranges from special collections materials dating from the early 16th century to near-real time 

observational research data. The Library holds more than 3.5 million items. NAL was created as the 

departmental library for USDA in 1862 and became a national library in 1990. One of five national 

libraries of the U.S., it is also a key member of the Agriculture Network Information Collaborative 

(AgNIC) partnership. In its international role, NAL participates, as appropriate, in international 

agricultural information initiatives. 

Acquisition and Withdrawal of Heritage Assets 

The FS generally does not construct heritage assets, although in some circumstances important sitestructural components may be rehabilitated or reconstructed into viable historic properties to provide 

forest visitors with use and interpretation. Heritage assets may be acquired through the procurement 

process, but this rarely occurs. Normally, heritage assets are part of the land acquisition and inventory 

process. Withdrawal occurs through land exchange or natural disasters. Most additions occur through 

inventory activities where previously undocumented sites are discovered and added to the total. 
98 USDA AGENCY FINANCIAL REPORT | 2019

Stewardship Land

Stewardship land is land and land rights not acquired for or in connection with items of general PP&E. 

Land is defined as the solid surface of the earth, excluding natural resources. Stewardship land is valued 

for its environmental resources, recreational and scenic value, cultural and paleontological resources, 

vast open spaces, and resource commodities and revenue provided to the Federal Government, States, 

and counties. These assets are reported in terms of physical units rather than cost, fair value, or other 

monetary values. No asset amount is shown on the balance sheet for stewardship land. The acquisition 

cost of stewardship land is considered an expense in the period acquired when determining the net cost 

of operations. Stewardship land consists primarily of the national forests and grasslands owned by the 

FS and conservation easements purchased by NRCS. 

National Forests

National forests are formally established and permanently set aside and reserved for national forest 

purposes, including National Wilderness, National Primitive, National Wild and Scenic River, National 

Recreation, National Scenic Research, National Game Refuges and Wildlife Preserve, and National 

Monument areas.

National Grasslands

National grasslands are designated by the Secretary of Agriculture and permanently held by the USDA 

under Title III of the Bankhead-Jones Farm Tenant Act.

Research and Experimental Areas

Research and experimental areas are reserved and dedicated by the Secretary of Agriculture for forest 

and range research experimentation. Areas reported are located outside the exterior boundaries of a 

national forest or national grassland. 

National Preserves and Other Areas

National preserves are established to protect and preserve scientific, scenic, geologic, watershed, fish, 

wildlife, historic, cultural and recreational values; and provide for multiple use and sustained yield of 

renewable resources. Other areas include areas administered by the FS that are not included in one of the 

above groups. 

Conservation Easements 

NRCS’ mission objectives in administering the conservation easement programs are to provide 

landowners with financial and technical assistance in return for maintaining and improving high quality 

productive soils, clean and abundant water, healthy plant and animal communities, clean air, an adequate 

energy supply, and working farm and ranch land. 
SECTION II | FINANCIAL INFORMATION 99

NRCS’ objectives in managing, monitoring and enforcing the terms and conditions of easement deeds 

are to ensure that: 1) taxpayer investments are properly used in accordance with the intent of the 

program; 2) the agency is a good steward of the land; and 3) the land is properly maintained. 

Stewardship resources involve substantial investment in order to gain long-term benefits for the 

American public and help the agency satisfy its mission. The purpose of purchasing easements is to 

restore or enhance wetlands, farmland, grasslands, forest ecosystems, and restore, protect, maintain, and 

enhance the functions of floodplains. 

NRCS, on behalf of USDA, administers and owns conservation easements on private lands through a 

variety of programs. The specific uses for the land are identified under each program. Landowners are 

not allowed to withdraw from the program. However, termination or expiration may occur. For the 

purpose of reporting, all easements where NRCS is listed as a grantee of the easement are included in 

the agency’s stewardship land count. Also included are easements that are administered by NRCS on 

behalf of other USDA agencies. 

Acquisition and Withdrawal of Stewardship Lands 

The Land and Water Conservation Fund (L&WCF) Land Acquisition Program acquires land for the FS 

National Forest System (NFS). The program coordinates with a variety of partners, including State, 

local, and Tribal governments, and private landowners through statewide planning for development of a 

land-adjustment strategy.

The Land Acquisition Program preserves, develops, and maintains access to NFS lands and waters for 

the public and provides permanent access to public lands for recreation, commodity production, resource 

management, public safety, and community economic viability. 

The L&WCF statutory authority specifically defines the purpose to also include protecting the quality of 

scientific, scenic, historical, ecological, environmental, air and atmospheric, water resource, 

archeological values, as well as food and habitat for fish and wildlife, and managing the public lands for 

minerals, food, timber, and fiber. 

From these several allowable uses of program funding, the program concentrates on protecting habitat 

for priority species identified in the national forest and grassland’s Land Management Plans and 

enhancing recreational opportunities for areas with high demand for recreation. The program focuses 

acquisitions on inholdings and areas adjacent to existing NFS lands. 
100 USDA AGENCY FINANCIAL REPORT | 2019

FY 2019 (In Units) Ending Balance Additions Withdrawals Beginning Balance

Heritage Assets 

National Forests 154 - - 154 

National Grasslands 20 - - 20 

Other Sites 170 1 (4) 173 

Research Centers 34 - - 34 

Library Collections 1 - - 1 

Total 379 1 (4) 382 

Stewardship Land 

National Forests 154 - - 154 

National Grasslands 20 - - 20 

Research and Experimental Areas 3 - - 3 

National Preserves and Other Areas 2 - - 2 

Conservation Easements 18,641 297 - 18,344 

Total 18,820 297 - 18,523 

FY 2018 (In Units) Ending Balance Additions Withdrawals Beginning Balance

Heritage Assets 

National Forests 154 - - 154 

National Grasslands 20 - - 20 

Other Sites 173 7 (9) 175 

Research Centers 34 - - 34 

Library Collections 1 - - 1 

Total 382 7 (9) 384 

Stewardship Land 

National Forests 154 - - 154 

National Grasslands 20 - - 20 

Research and Experimental Areas 3 - - 3 

National Preserves and Other Areas 2 - - 2 

Conservation Easements 18,344 390 - 17,954 

Total 18,523 390 - 18,133 

NOTE 11: Other Assets

In FY 2019 and FY 2018, other assets included investments in trust for loan asset sales of $35 million

and cost of loans sold of $2 million 

Item FY 2019 FY 2018

Intragovernmental

Advances to Others $ 12 $ 9 

Subtotal Intragovernmental 12 9 

With the Public

Advances to Others 351 502 

Other Assets 37 37 

Total Other Assets $ 400 $ 548 
SECTION II | FINANCIAL INFORMATION 101

NOTE 12: Liabilities Not Covered by Budgetary Resources

In FY 2019 and FY 2018, other intragovernmental liabilities not covered by budgetary resources 

included accruals for Federal Employee Compensation Act (FECA) of $137 million and $143 million, 

contract disputes claims payable to Treasury’s Judgment Fund of $26 million and $26 million, and 

unemployment compensation of $15 million and $15 million, respectively. In FY 2019, Technology 

Modernization Fund of $5 million. 

In FY 2019 and FY 2018, other liabilities with the public not covered by budgetary resources included 

estimated losses on insurance claims of $4,483 million and $5,972 million, underwriting gain of 

$1,143 million and $1,638 million, contingent liabilities of $621 million and $923 million, unfunded 

leave of $645 million and $602 million, Payments to States of $107 million and $272 million, single 

family housing escrow of $46 million and $46 million, loans paid in advance for multi family housing of 

$25 million and $24 million, and stewardship contracting product sales of $4 million and $21 million, 

respectively.

Item FY 2019 FY 2018

Intragovernmental

Other $ 183 $ 184 

Subtotal Intragovernmental 183 184 

With the Public

Actuarial Federal Employees’ Compensation Act (FECA) Liability 782 892 

Environmental and Disposal Liabilities 216 200 

Other 7,074 9,498 

Subtotal With the Public 8,072 10,590 

Total Liabilities Not Covered by Budgetary Resources 8,255 10,774 

Total Liabilities Covered by Budgetary Resources 169,152 149,101 

Total Liabilities Not Requiring Budgetary Resources 1,574 1,241 

Total Liabilities $ 178,981 $ 161,116 
102 USDA AGENCY FINANCIAL REPORT | 2019

NOTE 13: Debt 

FY 2019 Beginning Balance Net Borrowing Ending Balance

Other Debt

Debt to the Treasury $ 72,775 $ 20,588 $ 93,363 

Debt to the Federal Financing Bank 46,648 (333) 46,315 

Total Other Debt 119,423 20,255 139,678 

Total Debt $ 119,423 $ 20,255 $ 139,678 

Classification of Debt:

Intragovernmental Debt $ 139,678 

FY 2018 Beginning Balance Net Borrowing Ending Balance

Other Debt

Debt to the Treasury $ 72,598 $ 177 $ 72,775 

Debt to the Federal Financing Bank 45,433 1,215 46,648 

Total Other Debt 118,031 1,392 119,423 

Total Debt $ 118,031 $ 1,392 $ 119,423 

Classification of Debt:

Intragovernmental Debt $ 119,423 
SECTION II | FINANCIAL INFORMATION 103

NOTE 14: Environmental and Disposal Liabilities

USDA is subject to the Comprehensive Environmental Response, Compensation, and Liability Act, the 

Clean Water Act, and the Resource Conservation and Recovery Act for cleanup of hazardous waste. In 

FY 2019 and FY 2018, FS estimates the liability for total cleanup costs for sites known to contain 

hazardous waste to be $2 million and $2 million, respectively, based on actual cleanup costs at similar 

sites. In FY 2019 and FY 2018, CCC estimates the liability for total cleanup costs for sites known to 

contain hazardous waste to be $31 million and $21 million, respectively, based on actual cleanup costs 

at similar sites. CCC estimates the range of potential future losses due to remedial actions to be between 

$31 million and $272 million. These estimates will change as new sites are discovered, remedy 

standards change, and new technology is introduced. 

In FY 2019 and FY 2018, ARS estimated the liability for cleanup of the Beltsville Agricultural Research 

Center (BARC) to be $28 million and $21 million, respectively. ARS is evaluating and remediating 

areas of concern on BARC that are contaminated or threaten to contaminate ground and surface water 

with pesticides, solvents, metals, and other hazardous substances. 

USDA is also subject to Asbestos National Emissions Standards for Hazardous Air Pollutants. In 

FY 2019 and FY 2018, the Department estimated its liability for asbestos-related cleanup of real 

property to be $157 million and $156 million, respectively. The liability is calculated using total square 

footage of real property expected to contain asbestos times a cost factor based on historical actual 

cleanup costs, adjusted for inflation, including any other identifiable costs, e.g., survey cost. As 

additional information becomes available, key assumptions will be reevaluated, cost estimates will be 

revised, and necessary adjustments will be made to the liability recognition.
104 USDA AGENCY FINANCIAL REPORT | 2019

NOTE 15: Other Liabilities

In FY 2019, other liabilities with related budgetary obligations with the public included Agricultural 

Risk Coverage of $677 million; Price Loss Coverage of $1,868 million; Grants, Subsidies, and 

Contributions of $3,457 million; Conservation Reserve Program of $1,821 million; Insurance Claims 

and Indemnities of $501 million; Trade Mitigation Program of $257 million; and other accrued liabilities 

of $561 million. 

In FY 2019, other liabilities without related budgetary obligations with the public included Payments to 

States of $107 million, single family housing escrow of $46 million, loans paid in advance for multifamily housing of $25 million, and other accrued liabilities of $4 million. 

In FY 2018, other liabilities with related budgetary obligations with the public included Agricultural 

Risk Coverage of $1,063 million; Price Loss Coverage of $1,893 million; Grants, Subsidies, and 

Contributions of $3,770 million; Conservation Reserve Program of $1,845 million; and other accrued 

liabilities of $866 million. 

In FY 2018, other liabilities without related budgetary obligations with the public included Payments to 

States of $272 million, single family housing escrow of $46 million, loans paid in advance for multifamily housing of $24 million, and other accrued liabilities of $21 million. 
SECTION II | FINANCIAL INFORMATION 105

FY 2019 Non-Current Current Total 

Intragovernmental: 

Other Liabilities With Related Budgetary Obligations $ - $ 89 $ 89 

Employer Contributions and Payroll Taxes - 92 92 

Unfunded FECA Liability 75 62 137 

Other Unfunded Employment Related Liability - 15 15 

Liability for Advances and Prepayments - 4 4 

Liability for Clearing Accounts - 71 71 

Custodial Liability - 60 60 

Liability for Non-Entity Assets Not Reported on the Statement of Custodial Activities - 9,403 9,403 

Other Liabilities Without Related Budgetary Obligations 26 4 30 

Subtotal Intragovernmental 101 9,800 9,901 

With the Public: 

Other Liabilities With Related Budgetary Obligations - 9,142 9,142 

Liability for Unpaid Insurance Claims - 4,039 4,039 

Liability for Unearned Insurance Premiums - 674 674 

Accrued Funded Payroll and Leave - 362 362 

Unfunded Leave - 645 645 

Liability for Advances and Prepayments - 126 126 

Other Deferred Credits - 69 69 

Liability for Nonfiduciary Deposit Funds and Undeposited Collections - 586 586 

Liability for Clearing Accounts - (17) (17) 

Actuarial Liability for Federal Insurance and Guarantee Programs 1,143 3,010 4,153 

Contingent Liabilities - 621 621 

Capital Lease Liability 3 1 4 

Other Liabilities Without Related Budgetary Obligations 25 157 182 

Subtotal With the Public 1,171 19,415 20,586 

Total Other Liabilities $ 1,272 $ 29,215 $ 30,487 
106 USDA AGENCY FINANCIAL REPORT | 2019

FY 2018 Non-Current Current Total 

Intragovernmental: 

Other Liabilities With Related Budgetary Obligations $ - $ 72 $ 72 

Employer Contributions and Payroll Taxes - 84 84 

Unfunded FECA Liability 77 66 143 

Other Unfunded Employment Related Liability - 15 15 

Liability for Advances and Prepayments - 1 1 

Liability for Clearing Accounts - (73) (73) 

Custodial Liability - 60 60 

Liability for Non entity Assets Not Reported on the Statement of Custodial Activities - 9,582 9,582 

Other Liabilities Without Related Budgetary Obligations 26 - 26 

Subtotal Intragovernmental 103 9,807 9,910 

With the Public: 

Other Liabilities With Related Budgetary Obligations - 9,437 9,437 

Liability for Unpaid Insurance Claims

Liability for Unearned Insurance Premiums

Accrued Funded Payroll and Leave - 343 343 

Unfunded Leave - 601 601 

Liability for Advances and Prepayments - 155 155 

Other Deferred Credits - 690 690 

Liability for Nonfiduciary Deposit Funds and Undeposited Collections - 448 448 

Liability for Clearing Accounts - (41) (41) 

Actuarial Liability for Federal Insurance and Guarantee Programs 1,638 8,688 10,326 

Contingent Liabilities - 931 931 

Capital Lease Liability 3 2 5 

Other Liabilities Without Related Budgetary Obligations 24 339 363 

Subtotal With the Public 1,665 21,593 23,258 

Total Other Liabilities $ 1,768 $ 31,400 $ 33,168 
SECTION II | FINANCIAL INFORMATION 107

NOTE 16: Leases 

Capital Leases

USDA enters into leasing agreements through leasing authority delegated by the General Services 

Administration (GSA). USDA acquires use of various general facilities (buildings and plant material 

centers), equipment, and land with renewal options that range from 0 to 10 years and which are located 

mainly in urban areas. The portfolio includes leases with escalation clauses based on the Consumer Price 

Index (CPI), and amortization periods with a range of 8 to 25 years. 

Operating Leases

USDA enters into leasing agreements through leasing authority delegated by GSA. USDA leases various 

land, buildings and equipment. 

Major non-cancelable operating leases consists primarily of office space, most with renewal options that 

range from 1 to 25 years with escalation clauses based on the CPI, and lease periods with a range of 1 to 

30 years. 

The USDA Headquarters complex (Whitten Building and South Building) is a government owned 

facility, which is part of the GSA Federal Buildings Inventory. As the result of a 1998 agreement 

between GSA and USDA, a moratorium was placed on the rental billings for the Headquarters complex 

beginning in FY 1999. At current market rate, the estimated yearly rental payment for the above 

mentioned space would be $64 million. This agreement is still in effect and as a result, USDA activities 

located in the Headquarters complex are not billed for rental costs. 
108 USDA AGENCY FINANCIAL REPORT | 2019

FY 2019

Capital Leases

Summary of Assets Under Capital Leases Federal Non-Federal Total

Land and Building $ - $ 27 $ 27 

Machinery and Equipment - - - 

Accumulated Amortization - (23) (23)

Total - 4 4 

Future Payments Due

Land & Buildings Machinery & Equipment Totals

Federal Non-Federal Federal Non-Federal Federal Non-Federal

Fiscal Year 2020 - 3 - - - 3 

Fiscal Year 2021 - 3 - - - 3 

Fiscal Year 2022 - 2 - - - 2 

Fiscal Year 2023 - 2 - - - 2 

Fiscal Year 2024 - 1 - - - 1 

After 5 Years - 1 - - - 1 

Total Future Lease Payments - 12 - - - 12 

Less: Imputed Interest - 6 - - - 6 

Less: Executory Costs - 2 - - - 2 

Net Capital Lease Liability - 4 - - - 4 

Capital Lease Liabilities Covered by Budgetary Resources - 4 - - - 4 

Operating Leases 

Future Payments Due for Non-Cancellable Operating Leases

Land & Buildings Machinery & Equipment Totals

Federal Non-Federal Federal Non-Federal Federal Non-Federal

Fiscal Year 2020 30 77 - 1 30 78 

Fiscal Year 2021 25 67 - 1 25 68 

Fiscal Year 2022 23 52 - - 23 52 

Fiscal Year 2023 20 39 - - 20 39 

Fiscal Year 2024 14 31 - - 14 31 

After 5 Years 36 125 - - 36 125 

Total Future Lease Payments $ 148 $ 391 $ - $ 2 $ 148 $ 393 
SECTION II | FINANCIAL INFORMATION 109

FY 2018

Capital Leases

Summary of Assets Under Capital Leases Federal Non-Federal Total

Land and Building $ - $ 34 $ 34 

Machinery and Equipment - 

Accumulated Amortization - (29) (29)

Total - 5 5 

Future Payments Due

Land & Buildings Machinery & Equipment Totals

Federal Non-Federal Federal Non-Federal Federal Non-Federal

Fiscal Year 2019 - 4 - - - 4 

Fiscal Year 2020 - 3 - - - 3 

Fiscal Year 2021 - 3 - - - 3 

Fiscal Year 2022 - 2 - - - 2 

Fiscal Year 2023 - 2 - - - 2 

After 5 Years - 2 - - - 2 

Total Future Lease Payments - 16 - - - 16 

Less: Imputed Interest - 8 - - - 8 

Less: Executory Costs - 3 - - - 3 

Net Capital Lease Liability - 5 - - - 5 

Capital Lease Liabilities Covered by Budgetary Resources - 5 - - - 5 

Operating Leases 

Future Payments Due for Non-Cancellable Operating Leases

Land & Buildings Machinery & Equipment Totals

Federal Non-Federal Federal Non-Federal Federal Non-Federal

Fiscal Year 2019 29 86 - 1 29 87 

Fiscal Year 2020 22 70 - - 22 70 

Fiscal Year 2021 18 60 - - 18 60 

Fiscal Year 2022 15 48 - - 15 48 

Fiscal Year 2023 13 36 - - 13 36 

After 5 Years 49 106 - - 49 106 

Total Future Lease Payments $ 146 $ 406 $ - $ 1 $ 146 $ 407 
110 USDA AGENCY FINANCIAL REPORT | 2019

NOTE 17: Commitments and Contingencies

The Department is subject to various contingencies related to legal and environmental claims as well as 

commitments under contractual and other commercial obligations.

No amounts have been accrued in the financial statements for claims where the amount is uncertain or 

where the probability of judgment is remote. See Note 14 for discussion of environmental contingencies. 

Item Accrued Liabilities Estimated Range of Loss

Lower End Upper End

FY 2019

Legal Contingencies: 

Probable $ 621 $ 621 $ 638 

Reasonably Possible 20 30 

Environmental Contingencies

Probable 218 218 218 

Reasonably Possible 31 272 

item Accrued Liabilities Estimated Range of Loss

Lower End Upper End

FY 2018

Legal Contingencies:

Probable $ 931 $ 931 $ 969 

Reasonably Possible 18 82 

Environmental Contingencies

Probable 200 200 200 

Reasonably Possible 21 145 

Commitments to extend loan guarantees are estimated to be $4,312 million and $3,857 million in 

FY 2019 and FY 2018, respectively. 

CCC is committed and has incurred obligations and expenditures related to the first tranche of Market 

Facilitation Program (MFP) payments to eligible producers. The payment for the first tranche is 

comprised of either 50 percent of the producer’s calculated payment or $15 per acre whichever is higher. 

Subsequent to September 30, 2019, Secretary Perdue announced that market conditions dictate the 

execution of the second tranche of MFP payments to eligible producers. The obligations and 

expenditures for the second tranche will be up to 75 percent of the total calculated payment less the 

amount received in the first payment and will begin in FY 2020. At the Secretary’s discretion, CCC may 

be committed to make the third tranche of MFP payments to eligible producers. 
SECTION II | FINANCIAL INFORMATION 111

NOTE 18: Funds from Dedicated Collections

Funds from dedicated collections are financed by specifically identified revenues, often supplemented 

by other financing sources, which remain available over time. These specifically identified revenues and 

other financing sources are required by statute to be used for designated activities or purposes and must 

be accounted for separately from the Government’s general revenues. 

Financial information for all significant funds from dedicated collections follows the descriptions of 

each fund’s purpose shown below. 

Agricultural Marketing Service (AMS)

Funds for Strengthening Markets, Income, and Supply 

The funds for strengthening markets, income, and supply are used to purchase commodities for schools 

and elderly feeding programs, to provide goods and other necessities in emergencies and disasters, and 

to purchase agricultural commodities to stabilize markets. The fund is permanently financed by statutory 

transfer of an amount equal to 30 percent of customs receipts collected during each calendar year and is 

automatically appropriated for expanding outlets for perishable, non-price supported commodities. An 

amount equal to 30 percent of receipts collected on fishery products is transferred to the Food and 

Nutrition Service and is used to purchase commodities under section 6 of the National School Lunch Act 

and other authorities specified in the child nutrition appropriation. Funds are available under section 32 

of the Act of August 24, 1935, as amended (7 U.S.C. 612c). 

Expenses and Refunds, Inspection and Grading of Farm Products 

The commodity grading programs provide grading, examination, and certification services for a wide 

variety of fresh and processed food commodities using federally approved grade standards and purchase 

specifications. This fund is financed by the collection of fees charged to producers of various food 

commodities who request, on a voluntary basis, inspection and grading of agricultural food commodities. 

This program is authorized by the Agricultural Marketing Act of 1946 (7 U.S.C. 1621–1627).

Animal Plant Health Inspection Service (APHIS)

Agricultural Quarantine Inspection User Fee Account 

This fund is used to record and report expenditures and revenue associated with operating Agricultural 

Quarantine Inspection (AQI) activities at ports of entry. The Farm Bill of 1990, as amended by the 

Federal Agriculture Improvement and Reform Act of 1996, gave the Animal and Plant Health Inspection 

Service (APHIS) the authority to charge user fees for AQI services and to use the revenue to fund AQI 

activities. In March of 2003, a portion of the AQI program was transferred to the Department of 

Homeland Security (DHS); however, APHIS retained the authority to collect AQI revenue. APHIS 

transfers a portion of the revenue to DHS periodically throughout the year to fund its expenditures. 

The revenue in the fund is collected from airlines, air passengers, vessels, trucks, and railroad cars that 
112 USDA AGENCY FINANCIAL REPORT | 2019

are subject to AQI inspection at ports of entry. These user fees are an inflow of revenue from the public 

that is used to fund AQI inspections that are required by APHIS and DHS. The authority is codified in 

21 U.S.C. 136(a). 

Forest Service (FS)

Cooperative Work 

Cooperative contributions are deposited for disbursement in compliance with the terms and provisions 

of the agreement between the cooperator and the FS. Cooperators include timber purchasers, not-forprofit organizations, and local hunting and fishing clubs. The governing authorities are the Cooperative 

Funds Act of July 31, 1914 (16 U.S.C. 498) and the Knutson Vandenberg Act. 

Land Acquisition 

Funds are appropriated annually from Interior’s Land and Water Conservation Fund, but are no-year 

appropriations to the Forest Service for acquisition of land pursuant to the Land and Water Conservation 

Act, as amended and other land acquisition authorities of the Forest Service (section 40.12). 

Payments to States, National Forest Fund 

The Act of May 23, 1908, as amended (16 U.S.C. 500), commonly known as Payments to States, 

requires with a few exceptions, that 25 percent of all monies received from the national forests and 

deposited into the National Forest Fund during a fiscal year from timber, grazing, special-use permits, 

power and mineral leases, and admission and user fees be paid to the States in which the national forests 

are located, for public schools and public roads in the county or counties in which the national forests 

are situated. 

Timber Salvage Sales

The Salvage Sale Fund was established to facilitate the timely removal of timber damaged by fire, wind, 

insects, diseases, or other events. Amounts collected from the sale of salvaged timber are used on other 

qualifying salvage sales to cover the cost of preparing and administering the sales. The Timber Salvage 

Sales program is authorized by 16 USC 472(a). 

State and Private Forestry 

The FY 2004 Department of the Interior and Related Agencies Appropriation Act (Public Law 108-108) 

authorizes the Forest Service to receive a transfer of receipts from the Department of the Interior’s Land 

and Water Conservation Fund to finance the existing Forest Legacy Program. Treasury established a 

new special fund, “State and Private Forestry” to accommodate for this program, and the funding is 

available until expended. The program expenditures include grants and an occasional land purchase, but 

no real property will be procured or constructed. 
SECTION II | FINANCIAL INFORMATION 113

Recreation Fee Demonstration Program 

The Recreation Fee Demonstration Program fund receives deposits of recreation fees collected from 

projects that are part of the Recreation Fee Demonstration Program. These monies are retained and used 

for backlog repair and maintenance of recreation areas, sites or projects. These funds are also used for 

interpretation, signage, habitat or facility enhancement, resource preservation, annual operation, 

maintenance, and law enforcement related to public use of recreation areas and sites. The Recreation Fee 

Demonstration Program is authorized by 16 U.S.C. 4601-6(a).

National Forest Fund Receipts 

The Act of May 23, 1908, as amended (16 U.S.C. 500), requires (with a few exceptions) that all receipts 

from national forest activities be aggregated each fiscal year in order to calculate the portion which is 

paid to the States in which the national forests are located. The payments must be used for public 

schools and roads in the county or counties in which the national forests are situated. Originally, the 

States’ portion of receipts was 25 percent, but past statutory amendments have changed the calculation 

factors from time to time. Receipts include revenues from the sale of timber and other forest products; 

fees for grazing, special-use permits, power and mineral leases; and recreation user fees. 

Restoration of Forest Lands and Improvements 

The Restoration of Forest Lands and Improvements Acts (16 U.S.C. 579(c)) states any monies received 

by the United States with respect to lands under the administration of the Forest Service (a) as a result of 

the forfeiture of a bond or deposit by a permittee or timber purchaser for failure to complete 

performance of improvement, protection, or rehabilitation work required under the permit or timber sale 

contract or (b) as a result of a judgment, compromise, or settlement of any claim, involving present or 

potential damage to lands or improvements, shall be deposited into the Restoration of Forest Lands and 

Improvements Account. The monies are then made available until expended to cover the cost to the 

United States of any improvement, protection, or rehabilitation work on lands under the administration 

of the Forest Service rendered necessary by the action which led to the forfeiture, judgment, 

compromise, or settlement, provided that any portion of the monies received in excess of the amount 

expended in performing the work necessitated by the action which led to their receipt shall be 

transferred to miscellaneous receipts.

National Grasslands Receipts

Title III, Bankhead-Jones Farm Tenant Act (Act) of July 22, 1937, as amended (7 U.S.C. 1012) 

authorizes annual payments on a calendar year basis to counties, equal to 25 percent of revenues 

received during the year from sales activities and fees on lands designated as national grasslands or land 

utilization projects. Counties use these payments for public schools and roads. 

The administrative process of aggregating the receipts on a calendar year basis (involving two fiscal 

years) and disbursing the payments requires an unavailable receipt account (National Grasslands 

Receipts, Forest Service) and an available receipt account (Payments to Counties, National Grasslands, 

Forest Service). 
114 USDA AGENCY FINANCIAL REPORT | 2019

Acquisition of Lands to Complete Land Exchanges 

Land Exchange Acquisitions is authorized by the Act of December 4, 1967, as amended (16 U.S.C. 

484a), commonly known as The Sisk Act. All deposits received during the previous fiscal year are made 

available by the annual appropriation act. The authorizing legislation provides for cash deposits of a 

portion or all of the value of the selected lands in exchange cases with States, local governments, and 

public school districts or other public school authority, to be used to purchase similar lands, or in cases 

of special legislation, for authorized expenditures from funds deposited by non-federal parties. 

Stewardship Contracting Product Sales 

Stewardship End Result Contracting Projects (16 U.S.C. 6591c), amends the Healthy Forests 

Restoration Act of 2003, and states the Forest Service, via agreement or contract as appropriate, may 

enter into stewardship contracting projects with private persons or other public or private entities to 

perform services to achieve land management goals for the national forests and the public lands that 

meet local and rural community needs. The value of timber or other forest products removed may be 

applied as an offset against the cost of services received under the agreements or contracts. Monies 

earned from such agreements or contracts may be retained by the Forest Service and shall be available 

for expenditure without further appropriation at the project site from which the monies are collected or 

at another project site. In addition, if the offset value of the forest products exceeds the value of the 

resource improvement treatments, the Forest Service may collect any residual receipts under the Act of 

June 9, 1930 (commonly known as the Knutson-Vandenberg Act, 16 U.S.C. 576); and apply the excess 

to other authorized stewardship projects. Finally, the Forest Service is required to annually report to the 

Committee of Agriculture, Nutrition, and Forestry of the Senate and the Committee on Agriculture of 

the House of Representatives on the status and accomplishments of these agreements and contracts. 

National Institute of Food and Agriculture (NIFA)

Native American Institutions Endowment Fund 

The Native American Institutions Endowment Fund was authorized by Public Law 103-382 and 

provided an initial installment to establish an endowment to benefit the 1994 land-grant institutions. 

The public law states that “This program will enhance educational opportunities for Native Americans 

by building educational capacity at these institutions in the areas of student recruitment and retention, 

curricula development, faculty preparation, instruction delivery systems, and scientific instrumentation 

for teaching.” While the principal (corpus) of the fund cannot be used, the interest that is earned on the 

endowment fund investments in Treasury instruments can be used for the purposes described above. 

After the close of a fiscal year, the income is distributed after making adjustments for the cost of 

administering the fund. 
SECTION II | FINANCIAL INFORMATION 115

Other

Financial information is summarized for all other funds from dedicated collections with total assets less 

than $50 million listed below.

Agricultural Marketing Service

▪ Perishable Agricultural Commodities Act 

▪ Wool Research, Development and Promotion Trust Fund 

▪ Inspection and Weighing Services 

Animal Plant Health Inspection Service

▪ Miscellaneous Contributed Funds 

▪ Gifts and Bequests 

Forest Service

▪ Roads and Trails for States, National Forest Fund 

▪ Reforestation Trust Fund 

▪ Timber Sales Pipeline Restoration Fund 

▪ Operation and Maintenance of Forest Service Quarters

▪ Timber Roads, Purchaser Elections 

▪ Range Betterment Fund

▪ Acquisition of Lands for National Forests, Special Acts 

▪ Receipts for Construction of Administrative Improvements- Arizona and Taos, New Mexico Land

Conveyance 

▪ Payment to Minnesota (Cook, Lake and Saint Louis Counties) 

▪ Licensee Program

▪ Resource Management Timber Receipts

▪ Quinault Special Management Area

▪ MNP Rental Fee Account

▪ Land Between the Lakes Management Fund

▪ Administration of Rights-of-Way and Other Land Uses Fund 

▪ Hardwood Technology Transfer and Applied Research Fund 

▪ Gifts, Donations and Bequests for Forest and Rangeland Research 
116 USDA AGENCY FINANCIAL REPORT | 2019

▪ Land Between the Lakes Trust Fund

▪ Expenses, Brush Disposal 

▪ Midewin National Tallgrass Prairie Restoration Fund

▪ Gifts and Bequests 

Natural Resources Conservation Service 

▪ Damage Assessment and Restoration Revolving Fund 

▪ Miscellaneous Contributed Funds 

Agricultural Research Service

▪ Concessions Fees and Volunteer Services 

▪ Gifts and Bequests 

▪ Miscellaneous Contributed Funds 

Rural Development 

▪ Alternative Agricultural Research and Commercialization Revolving Fund 

Foreign Agricultural Service 

▪ Miscellaneous Contributed Funds 

▪ Gifts and Bequests 

▪ Foreign Service National Separation Liability Trust Fund 

Food Safety and Inspection Service 

▪ Expenses and Refunds, Inspection of Farm Products 

National Agricultural Statistics Service

▪ Miscellaneous Contributed Funds 

Economic Research Service

▪ Miscellaneous Contributed Funds 

Office of the Secretary

▪ Gifts and Bequests 
SECTION II | FINANCIAL INFORMATION 117

Office of Partnership and Public Engagement 

▪ Gifts and Bequests 

Office of Communications

▪ Gifts and Bequests 

Office of General Counsel

▪ Gifts and Bequests 

Office of the Inspector General

▪ Inspector General Assets Forfeiture, Department of Justice

▪ Inspector General Assets Forfeiture, Department of Treasury 
118 USDA AGENCY FINANCIAL REPORT | 2019

AMS AMS APHIS FS

Item 

Funds for 

Strengthening 

Markets, Income, 

and Supply

Expenses and 

Refunds, 

Inspection and 

Grading of Farm 

Products

Agricultural 

Quarantine 

Inspection User 

Fee Account

Cooperative 

Work

Land 

Acquisition

Payments to 

States, 

National 

Forests Fund

Timber Salvage 

Sales

State and 

Private 

Forestry

Recreation Fee 

Demonstration 

Program

Balance Sheet As of September 30, 2019

Fund Balance with Treasury $ 1,038 $ 80 $ 285 $ 375 $ 122 $ 72 $ 91 $ 211 $ 135 

Investments - - - - - - - - - 

Other Assets 1 23 164 10 41 2 1 - 4 

Total Assets 1,039 103 449 385 163 74 92 211 139 

Other Liabilities 155 66 60 66 - 67 2 - 3 

Total Liabilities 155 66 60 66 - 67 2 - 3 

Unexpended Appropriations - - - - - - - - - 

Cumulative Results of Operations 884 37 389 319 163 7 90 211 136 

Total Liabilities and Net Position 1,039 103 449 385 163 74 92 211 139 

Statement of Net Cost For the Period Ended 

September 30, 2019

Gross program costs 1,014 205 237 99 44 (46) 39 26 98 

Less Earned Revenue 7 180 822 119 - 150 46 - 97 

Net Cost of Operations 1,007 25 (585) (20) 44 (196) (7) 26 1 

Statement of Changes in Net Position For 

the period Ended September 30, 2019

Net Position Beginning of Period 768 31 343 64 94 (189) 42 155 114 

Non-Exchange Revenue - - - - - - - - - 

Other Financing Sources 1,123 31 (539) 235 113 - 41 82 23 

Net Cost of Operations (1,007) (25) 585 20 (44) 196 7 (26) (1)

Change in Net Position 116 6 46 255 69 196 48 56 22 

Net Position End of Period $ 884 $ 37 $ 389 $ 319 $ 163 $ 7 $ 90 $ 211 $ 136 
SECTION II | FINANCIAL INFORMATION 119

FS NIFA Other Total

Item 

National Forest 

Fund Receipts

Restoration of 

Forest Lands and 

Improvements

National Grasslands 

Receipts

Acquisition of 

Lands to Complete 

Land Exchanges

Stewardship 

Contracting 

Product Sales

Native American 

Institutions 

Endowment Fund

Balance Sheet As of September 30, 2019 

Fund Balance with Treasury $ 147 $ 307 $ 145 $ 36 $ 59 $ 15 $ 329 $ 3,447 

Investments - - - - - 227 8 235 

Other Assets 4 2 - 50 20 - 12 334 

Total Assets 151 309 145 86 79 242 349 4,016 

Other Liabilities - - 36 - 6 - 44 505 

Total Liabilities - - 36 - 6 - 44 505 

Unexpended Appropriations - - - - - 179 1 180 

Cumulative Results of Operations 151 309 109 86 73 63 304 3,331 

Total Liabilities and Net Position 151 309 145 86 79 242 349 4,016 

Statement of Net Cost For the Period Ended 

September 30, 2019

Gross program costs - 29 52 6 22 12 167 2,004 

Less Earned Revenue (26) 6 37 14 30 5 159 1,646 

Net Cost of Operations 26 23 15 (8) (8) 7 8 358 

Statement of Changes in Net Position For the 

period Ended September 30, 2019

Net Position Beginning of Period 181 128 110 78 55 237 200 2,411 

Non-Exchange Revenue - - - - - - - - 

Other Financing Sources (4) 204 14 - 10 12 113 1,458 

Net Cost of Operations (26) (23) (15) 8 8 (7) (8) (358)

Change in Net Position (30) 181 (1) 8 18 5 105 1,100 

Net Position End of Period $ 151 $ 309 $ 109 $ 86 $ 73 $ 242 $ 305 $ 3,511 
120 USDA AGENCY FINANCIAL REPORT | 2019

AMS AMS APHIS FS

Item Funds for 

Strengthening Markets, 

Income, and Supply

Expenses and Refunds, 

Inspection and Grading 

of Farm Products

Agricultural 

Quarantine Inspection 

User Fee Account

Cooperative 

Work

Land 

Acquisition

Payments to 

States, National 

Forests Fund

State and 

Private Forestry

Recreation Fee 

Demonstration 

Program

Balance Sheet As of September 30, 2018

Fund Balance with Treasury $ 804 $ 71 $ 257 $ 132 $ 53 $ 59 $ 144 $ 113 

Investments - - - - - - - - 

Other Assets 1 20 152 11 41 1 11 4 

Total Assets 805 91 409 143 94 60 155 117 

Other Liabilities 37 60 66 79 - 249 - 3 

Total Liabilities 37 60 66 79 - 249 - 3 

Unexpended Appropriations - - - - - - - - 

Cumulative Results of Operations 768 31 343 64 94 (189) 155 114 

Total Liabilities and Net Position 805 91 409 143 94 60 155 117 

Statement of Net Cost For the Period Ended 

September 30, 2018

Gross program costs 724 223 228 115 47 327 46 91 

Less Earned Revenue 5 169 717 105 - 82 - 100 

Net Cost of Operations 719 54 (489) 10 47 245 46 (9)

Statement of Changes in Net Position For 

the period Ended September 30, 2018

Net Position Beginning of Period 519 44 296 169 92 57 143 94 

Non-Exchange Revenue - - - - - - - - 

Other Financing Sources 968 41 (442) (95) 49 - 58 11 

Net Cost of Operations (719) (54) 489 (10) (47) (246) (46) 9 

Change in Net Position 249 (13) 47 (105) 2 (246) 12 20 

Net Position End of Period $ 768 $ 31 $ 343 $ 64 $ 94 $ (189) $ 155 $ 114 
SECTION II | FINANCIAL INFORMATION 121

FS NIFA Other Total

Item 

National Forest 

Fund Receipts

Restoration of 

Forest Lands and 

Improvements

National 

Grasslands 

Receipts

Acquisition of 

Lands to Complete 

Land Exchanges

Stewardship 

Contracting 

Product Sales

Native American 

Institutions 

Endowment Fund

Balance Sheet As of September 30, 2018 

Fund Balance with Treasury $ 176 $ 128 $ 128 $ 27 $ 41 $ 15 $ 286 $ 2,434 

Investments - - - - - 222 8 230 

Other Assets 5 2 - 51 36 - 13 348 

Total Assets 181 130 128 78 77 237 307 3,012 

Other Liabilities - 2 18 - 22 - 65 601 

Total Liabilities - 2 18 - 22 - 65 601 

Unexpended Appropriations - - - - - 167 1 168 

Cumulative Results of Operations 181 128 110 78 55 70 241 2,243 

Total Liabilities and Net Position 181 130 128 78 77 237 307 3,012 

Statement of Net Cost For the Period Ended 

September 30, 2018 

Gross program costs - 44 24 4 54 6 238 2,171 

Less Earned Revenue 67 2 25 - 68 5 198 1,543 

Net Cost of Operations (67) 42 (1) 4 (14) 1 40 628 

Statement of Changes in Net Position For the period Ended September 30, 

2018 

Net Position Beginning of Period 116 193 75 81 52 226 269 2,426 

Non-Exchange Revenue - - - - - - - - 

Other Financing Sources (2) (23) 34 - (11) 12 13 613 

Net Cost of Operations 67 (42) 1 (3) 14 (1) (40) (628)

Change in Net Position 65 (65) 35 (3) 3 11 (27) (15)

Net Position End of Period $ 181 $ 128 $ 110 $ 78 $ 55 $ 237 $ 242 $ 2,411 
122 USDA AGENCY FINANCIAL REPORT | 2019

NOTE 19: Sub-Organization Program Costs/Program Costs by Segment

FY 2019 FSA CCC NRCS RMA FPAC Business Center FNS FSIS

Rural Development: 

Gross Costs $ - $ - $ - $ - $ - $ - $ - 

Less: Earned Revenue - - - - - - - 

Net Costs - - - - - - - 

Food Safety: 

Gross Costs - - - - - - 1,355 

Less: Earned Revenue - - - - - - 249 

Net Costs - - - - - - 1,106 

Marketing and Regulatory Programs: 

Gross Costs - - - - - - - 

Less: Earned Revenue - - - - - - - 

Net Costs - - - - - - - 

Natural Resources and Environment:

Gross Costs - - - - - - - 

Less: Earned Revenue - - - - - - - 

Net Costs - - - - - - - 

Food, Nutrition, and Consumer Services: 

Gross Costs - - - - - 93,573 - 

Less: Earned Revenue - - - - - 48 - 

Net Costs - - - - - 93,525 - 

Farm Production and Conservation: 

Gross Costs 2,603 24,478 3,920 10,018 233 - - 

Less: Earned Revenue 417 431 31 2,185 17 - - 

Net Costs 2,186 24,047 3,889 7,833 216 - - 

Trade and Foreign Agricultural Affairs: 

Gross Costs - - - - - - - 

Less: Earned Revenue - - - - - - - 

Net Costs - - - - - - - 

Research, Education, and Economics: 

Gross Costs - - - - - - - 

Less: Earned Revenue - - - - - - - 

Net Costs - - - - - - - 

Departmental Management: 

Gross Costs - - - - - - - 

Earned Revenue - - - - - - - 

Net Costs - - - - - - - 

Total Gross Costs 2,603 24,478 3,920 10,018 233 93,573 1,355 

Less: Total Earned Revenue 417 431 31 2,185 17 48 249 

Net Cost of Operations $ 2,186 $ 24,047 $ 3,889 $ 7,833 $ 216 $ 93,525 $ 1,106 
SECTION II | FINANCIAL INFORMATION 123

FY 2019 AMS APHIS FS FAS ARS NIFA ERS

Rural Development: 

Gross Costs $ - $ - $ - $ - $ - $ - $ - 

Less: Earned Revenue - - - - - - - 

Net Costs - - - - - - - 

Food Safety: 

Gross Costs - - - - - - - 

Less: Earned Revenue - - - - - - - 

Net Costs - - - - - - - 

Marketing and Regulatory Programs: 

Gross Costs 1,563 1,605 - - - - - 

Less: Earned Revenue 306 1,048 - - - - - 

Net Costs 1,257 557 - - - - - 

Natural Resources and Environment:

Gross Costs - - 6,336 - - - - 

Less: Earned Revenue - - 858 - - - - 

Net Costs - - 5,478 - - - - 

Food, Nutrition, and Consumer Services: 

Gross Costs - - - - - - - 

Less: Earned Revenue - - - - - - - 

Net Costs - - - - - - - 

Farm Production and Conservation: 

Gross Costs - - - - - - - 

Less: Earned Revenue - - - - - - - 

Net Costs - - - - - - - 

Trade and Foreign Agricultural Affairs: 

Gross Costs - - - 434 - - - 

Less: Earned Revenue - - - 98 - - - 

Net Costs - - - 336 - - - 

Research, Education, and Economics: 

Gross Costs - - - - 1,444 1,444 88 

Less: Earned Revenue - - - - 181 35 3 

Net Costs - - - - 1,263 1,409 85 

Departmental Management: 

Gross Costs - - - - - - - 

Earned Revenue - - - - - - - 

Net Costs - - - - - - - 

Total Gross Costs 1,563 1,605 6,336 434 1,444 1,444 88 

Less: Total Earned Revenue 306 1,048 858 98 181 35 3 

Net Cost of Operations $ 1,257 $ 557 $ 5,478 $ 336 $ 1,263 $ 1,409 $ 85 
124 USDA AGENCY FINANCIAL REPORT | 2019

FY 2019 NASS RD DM Total

Intradepartmental 

Eliminations GRAND TOTAL

Rural Development: 

Gross Costs $ - $ 6,604 $ - $ 6,604 $ (66) $ 6,538 

Less: Earned Revenue - 3,690 - 3,690 (18) 3,672 

Net Costs - 2,914 - 2,914 (48) 2,866 

Food Safety: 

Gross Costs - - - 1,355 (42) 1,313 

Less: Earned Revenue - - - 249 (1) 248 

Net Costs - - - 1,106 (41) 1,065 

Marketing and Regulatory Programs: 

Gross Costs - - - 3,168 (116) 3,052 

Less: Earned Revenue - - - 1,354 (60) 1,294 

Net Costs - - - 1,814 (56) 1,758 

Natural Resources and Environment:

Gross Costs - - - 6,336 (156) 6,180 

Less: Earned Revenue - - - 858 (16) 842 

Net Costs - - - 5,478 (140) 5,338 

Food, Nutrition, and Consumer Services: 

Gross Costs - - - 93,573 (916) 92,657 

Less: Earned Revenue - - - 48 (1) 47 

Net Costs - - - 93,525 (915) 92,610 

Farm Production and Conservation: 

Gross Costs - - - 41,252 (1,599) 39,653 

Less: Earned Revenue - - - 3,081 (47) 3,034 

Net Costs - - - 38,171 (1,552) 36,619 

Trade and Foreign Agricultural Affairs: 

Gross Costs - - - 434 (18) 416 

Less: Earned Revenue - - - 98 (40) 58 

Net Costs - - - 336 22 358 

Research, Education, and Economics: 

Gross Costs 205 - - 3,181 (112) 3,069 

Less: Earned Revenue 21 - - 240 (102) 138 

Net Costs 184 - - 2,941 (10) 2,931 

Departmental Management: 

Gross Costs - - 1,422 1,422 (79) 1,343 

Earned Revenue - - 968 968 (727) 241 

Net Costs - - 454 454 648 1,102 

Total Gross Costs 205 6,604 1,422 157,325 (3,104) 154,221 

Less: Total Earned Revenue 21 3,690 968 10,586 (1,012) 9,574 

Net Cost of Operations $ 184 $ 2,914 $ 454 $ 146,739 $ (2,092) $ 144,647 
SECTION II | FINANCIAL INFORMATION 125

FY 2018 FSA CCC NRCS RMA

FPAC Business 

Center FNS FSIS

Rural Development: 

Gross Costs $ - $ - $ - $ - $ - $ - $ - 

Less: Earned Revenue - - - - - - - 

Net Costs - - - - - - - 

Food Safety: 

Gross Costs - - - - - - 1,413 

Less: Earned Revenue - - - - - - 244 

Net Costs - - - - - - 1,169 

Marketing and Regulatory Programs: 

Gross Costs - - - - - - - 

Less: Earned Revenue - - - - - - - 

Net Costs - - - - - - - 

Natural Resources and Environment:

Gross Costs - - - - - - - 

Less: Earned Revenue - - - - - - - 

Net Costs - - - - - - - 

Food, Nutrition, and Consumer Services: 

Gross Costs - - - - - 98,793 - 

Less: Earned Revenue - - - - - 57 - 

Net Costs - - - - - 98,736 - 

Farm Production and Conservation: 

Gross Costs 2,292 9,844 4,302 5,917 1 - - 

Less: Earned Revenue 414 235 40 453 - - - 

Net Costs 1,878 9,609 4,262 5,464 1 - - 

Trade and Foreign Agricultural Affairs: 

Gross Costs - - - - - - - 

Less: Earned Revenue - - - - - - - 

Net Costs - - - - - - - 

Research, Education, and Economics: 

Gross Costs - - - - - - - 

Less: Earned Revenue - - - - - - - 

Net Costs - - - - - - - 

Departmental Management: 

Gross Costs - - - - - - - 

Earned Revenue - - - - - - - 

Net Costs - - - - - - - 

Total Gross Costs 2,292 9,844 4,302 5,917 1 98,793 1,413 

Less: Total Earned Revenue 414 235 40 453 - 57 244 

Net Cost of Operations $ 1,878 $ 9,609 $ 4,262 $ 5,464 $ 1 $ 98,736 $ 1,169 
126 USDA AGENCY FINANCIAL REPORT | 2019

FY 2018 AMS APHIS FS FAS ARS NIFA ERS

Rural Development: 

Gross Costs $ - $ - $ - $ - $ - $ - $ - 

Less: Earned Revenue - - - - - - - 

Net Costs - - - - - - - 

Food Safety: 

Gross Costs - - - - - - - 

Less: Earned Revenue - - - - - - - 

Net Costs - - - - - - - 

Marketing and Regulatory Programs: 

Gross Costs 1,272 1,546 - - - - - 

Less: Earned Revenue 296 939 - - - - - 

Net Costs 976 607 - - - - - 

Natural Resources and Environment:

Gross Costs - - 8,105 - - - - 

Less: Earned Revenue - - 868 - - - - 

Net Costs - - 7,237 - - - - 

Food, Nutrition, and Consumer Services: 

Gross Costs - - - - - - - 

Less: Earned Revenue - - - - - - - 

Net Costs - - - - - - - 

Farm Production and Conservation: 

Gross Costs - - - - - - - 

Less: Earned Revenue - - - - - - - 

Net Costs - - - - - - - 

Trade and Foreign Agricultural Affairs: 

Gross Costs - - - 510 - - - 

Less: Earned Revenue - - - 118 - - - 

Net Costs - - - 392 - - - 

Research, Education, and Economics: 

Gross Costs - - - - 1,415 1,390 97 

Less: Earned Revenue - - - - 189 43 5 

Net Costs - - - - 1,226 1,347 92 

Departmental Management: 

Gross Costs - - - - - - - 

Earned Revenue - - - - - - - 

Net Costs - - - - - - - 

Total Gross Costs 1,272 1,546 8,105 510 1,415 1,390 97 

Less: Total Earned Revenue 296 939 868 118 189 43 5 

Net Cost of Operations $ 976 $ 607 $ 7,237 $ 392 $ 1,226 $ 1,347 $ 92 
SECTION II | FINANCIAL INFORMATION 127

FY 2018 NASS RD DM Total

Intradepartmental 

Eliminations GRAND TOTAL

Rural Development: 

Gross Costs $ - $ 7,106 $ - $ 7,106 $ (119) $ 6,987 

Less: Earned Revenue - 3,842 - 3,842 (11) 3,831 

Net Costs - 3,264 - 3,264 (108) 3,156 

Food Safety: 

Gross Costs - - - 1,413 (71) 1,342 

Less: Earned Revenue - - - 244 (2) 242 

Net Costs - - - 1,169 (69) 1,100 

Marketing and Regulatory Programs: 

Gross Costs - - - 2,818 (158) 2,660 

Less: Earned Revenue - - - 1,235 (31) 1,204 

Net Costs - - - 1,583 (127) 1,456 

Natural Resources and Environment:

Gross Costs - - - 8,105 (234) 7,871 

Less: Earned Revenue - - - 868 (16) 852 

Net Costs - - - 7,237 (218) 7,019 

Food, Nutrition, and Consumer Services: 

Gross Costs - - - 98,793 (760) 98,033 

Less: Earned Revenue - - - 57 - 57 

Net Costs - - - 98,736 (760) 97,976 

Farm Production and Conservation: 

Gross Costs - - - 22,356 (1,844) 20,512 

Less: Earned Revenue - - - 1,142 (62) 1,080 

Net Costs - - - 21,214 (1,782) 19,432 

Trade and Foreign Agricultural Affairs: 

Gross Costs - - - 510 (40) 470 

Less: Earned Revenue - - - 118 (59) 59 

Net Costs - - - 392 19 411 

Research, Education, and Economics: 

Gross Costs 223 - - 3,125 (125) 3,000 

Less: Earned Revenue 24 - - 261 (115) 146 

Net Costs 199 - - 2,864 (10) 2,854 

Departmental Management: 

Gross Costs - - 1,417 1,417 (84) 1,333 

Earned Revenue - - 1,060 1,060 (784) 276 

Net Costs - - 357 357 700 1,057 

Total Gross Costs 223 7,106 1,417 145,643 (3,435) 142,208 

Less: Total Earned Revenue 24 3,842 1,060 8,827 (1,080) 7,747 

Net Cost of Operations $ 199 $ 3,264 $ 357 $ 136,816 $ (2,355) $ 134,461 
128 USDA AGENCY FINANCIAL REPORT | 2019

NOTE 20: Cost of Stewardship PP&E 

The acquisition cost of stewardship land, including restoration in FY 2019 and FY 2018 was 

$220 million and $266 million, respectively. 

NOTE 21: Terms of Borrowing Authority Used

The Secretary of Agriculture has the authority to make and issue notes to the Secretary of the Treasury 

for the purpose of discharging obligations for RD’s insurance funds and CCC’s nonreimbursed realized 

losses and debt related to foreign assistance programs. The permanent indefinite borrowing authority 

includes both interest bearing and non-interest bearing notes. These notes are drawn upon daily when 

disbursements exceed deposits. Notes payable under the permanent indefinite borrowing authority have 

a term of one year. On January 1 of each year, USDA refinances its outstanding borrowings, including 

accrued interest, at the January borrowing rate.

In addition, USDA has permanent indefinite borrowing authority for the foreign assistance and export 

credit programs to finance disbursements on post-credit reform, direct credit obligations, and credit 

guarantees. In accordance with the Federal Credit Reform Act of 1990, as amended, USDA borrows 

from Treasury on October 1, for the entire fiscal year, based on annual estimates of the difference 

between the amount appropriated (subsidy) and the amount to be disbursed to the borrower. Repayment 

under this agreement may be, in whole or in part, prior to maturity by paying the principal amount of the 

borrowings plus accrued interest to the date of repayment. Interest is paid on these borrowings based on 

weighted average interest rates for the cohort, to which the borrowings are associated. Interest is earned 

on the daily balance of uninvested funds in the credit reform financing funds maintained at Treasury. 

The interest income is used to reduce interest expense on the underlying borrowings. 

USDA has authority to borrow from the Federal Financing Bank (FFB) in the form of Certificates of 

Beneficial Ownership (CBOs) or loans executed directly between the borrower and FFB with an 

unconditional USDA repayment guarantee. CBOs outstanding with FFB are generally secured by unpaid 

loan principal balances. CBOs outstanding are related to pre-credit reform loans and no longer used for 

program financing. 

FFB CBOs are repaid as they mature and are not related to any particular group of loans. Borrowings 

made to finance loans directly between the borrower and FFB mature and are repaid as the related group 

of loans become due. Interest rates on the related group of loans are equal to interest rates on FFB 

borrowings, except in those situations where an FFB funded loan is restructured and the terms of the 

loan are modified. Prepayments can be made on Treasury borrowings without a penalty; however, they 

cannot be made on FFB CBOs, without a penalty. 

Funds may also be borrowed from private lending agencies and others. USDA reserves a sufficient 

amount of its borrowing authority to purchase, at any time, all notes and other obligations evidencing 

loans made by agencies and others. All bonds, notes, debentures, and similar obligations issued by the 

Department are subject to approval by the Secretary of the Treasury. Reservation of borrowing authority 

for these purposes has not been required for many years. 
SECTION II | FINANCIAL INFORMATION 129

NOTE 22: Available Borrowing Authority, End of Period

Available borrowing authority at September 30, 2019 and 2018 was $41,658 million and 

$44,123 million, respectively. 

NOTE 23: Undelivered Orders at the End of the Period

FY 2019 Federal Non-Federal

Paid $ 13 $ 356 

Unpaid 2,772 58,083 

Total $ 2,785 $ 58,439 

FY 2018 Federal Non-Federal

Paid $2 $513 

Unpaid 2 ,722 58,258 

Total $2,724 $58,771 

NOTE 24: Permanent Indefinite Appropriations

USDA has permanent indefinite appropriations available to fund (1) subsidy costs incurred under credit 

reform programs, (2) certain costs of the crop insurance program, (3) certain commodity program costs, 

and (4) certain costs associated with FS programs.

The permanent indefinite appropriations for credit reform are mainly available to finance any 

disbursements incurred under the liquidating accounts. These appropriations become available pursuant 

to standing provisions of law without further action by Congress after transmittal of the budget for the 

year involved. They are treated as permanent the first year they become available, as well as in 

succeeding years. However, they are not stated as specific amounts but are determined by specified 

variable factors, such as cash needs for liquidating accounts, and information about the actual 

performance of a cohort or estimated changes in future cash flows of the cohort in the program accounts. 

The permanent indefinite appropriation for the crop insurance program is used to cover premium 

subsidy, delivery expenses, losses in excess of premiums, and research and delivery costs. 

The permanent indefinite appropriation for commodity program costs is used to encourage the exportation 

of agricultural commodities and products, to encourage domestic consumption of agricultural products by 

diverting them, and to reestablish farmers’ purchasing power by making payments in connection with the 

normal production of any agricultural commodity for domestic consumption.

The permanent indefinite appropriation for FS programs is used to fund Recreation Fee Collection 

Costs, Brush Disposal, License programs, Smokey Bear and Woodsy Owl, Restoration of Forest Lands 

and Improvements, Roads and Trails for States, National Forest Fund, Timber Roads, Purchaser 

Elections, Timber Salvage Sales and Operations, and Maintenance of Quarters. Each of these permanent 

indefinite appropriations is funded by receipts made available by law and is available until expended. 
130 USDA AGENCY FINANCIAL REPORT | 2019

NOTE 25: Legal Arrangements Affecting Use of Unobligated Balances

Unobligated budget authority is the difference between the obligated balance and the total unexpended 

balance. It represents that portion of the unexpended balance unencumbered by recorded obligations. 

Appropriations are provided on an annual, multi-year, and no-year basis. An appropriation expires on 

the last day of its period of availability and is no longer available for new obligations. Unobligated 

balances retain their fiscal-year identity in an expired account for an additional five fiscal years. 

The unobligated balance remains available to make legitimate obligation adjustments, i.e., to record 

previously unrecorded obligations and to make upward adjustments in previously underestimated 

obligations for five years. At the end of the fifth year, the authority is canceled. Thereafter, the authority 

is not available for any purpose. 

Any information about legal arrangements affecting the use of the unobligated balance of budget 

authority is specifically stated by program and fiscal year in the appropriation language or in the 

alternative provisions section at the end of the appropriations act. 

NOTE 26: Explanation of Differences Between the SBR and the Budget of 

the U.S. Government

The differences between the FY 2018 Statement of Budgetary Resources and the FY 2018 actual numbers 

presented in the FY 2020 Budget of the United States Government (Budget) are summarized below.

FY 2018

Item 

Budgetary 

Resources

Obligations 

Incurred

Distributed 

Offsetting 

Receipts Net Outlays

Combined Statement of Budgetary Resources $ 250,340 $ 176,144 $ (2,854) $143,272 

Reconciling Items:

Expired Accounts (33,147) (153) - - 

Commodity Credit Corporation (CCC), 

Beginning Balance Adjustment

 (51) (51) - - 

Milk Market Orders Fund 54 54 - - 

Rounding (4) 1 - 1 

Budget of the United States Government $ 217,192 $ 175,995 $ (2,854) $ 143,273 

A comparison between the FY 2019 SBR and the FY 2019 actual numbers presented in the FY 2021 

Budget cannot be performed as the FY 2021 Budget is not yet available. The FY 2021 Budget is expected 

to be published in February 2020 and will be available from the U.S. Government Publishing Office. 
SECTION II | FINANCIAL INFORMATION 131

NOTE 27: Incidental Custodial Collections

Custodial collections represent collections on land leases for resource extraction, National Forest Fund 

receipts from the sale of timber and other forest products, miscellaneous general fund receipts such as 

collections on accounts receivable related to canceled year appropriations, civil monetary penalties and 

interest, and commercial fines and penalties. Custodial collection activities are considered immaterial 

and incidental to the mission of the Department. 

Item FY 2019 FY 2018

Revenue Activity: 

Sources of Collections: 

Miscellaneous $ 193 $ 136 

Total Cash Collections 193 136 

Accrual Adjustments 8 (1) 

Total Custodial Revenue 201 135 

Disposition of Collections: 

Transferred to Others: 

Treasury (184) (119) 

(Increase )/Decrease in Amounts Yet to be Transferred (17) (16) 

Net Custodial Activity $ - $ - 
132 USDA AGENCY FINANCIAL REPORT | 2019

NOTE 28: Fiduciary Activities

Rural Housing Insurance Fund (RHIF) was established by Public Law 89-117 pursuant to section 517 of 

title V of the Housing Act of 1949, which authorized RD to collect escrow payments on behalf of new 

and existing Single Family Housing borrowers. Other fiduciary activities by RD include but are not 

limited to collections from borrowers, interest paid on escrow accounts, and payments to insurance 

agencies and taxing authorities. 

Schedule of Fiduciary Activity 

For the Period Ending September 30, 2019 and 2018

Item Rural Housing Insurance Fund 

FY 2019

Rural Housing Insurance Fund 

FY 2018

Fiduciary Net Assets, Beginning of Year $ 124 $ 116 

Fiduciary Revenues - - 

Contributions 439 445 

Investment Earnings - - 

Gain (Loss) on Disposition of Investments, Net - - 

Administrative and Other Expenses - - 

Disbursements To and On Behalf of Beneficiaries (440) (437) 

Increases/(Decrease) in Fiduciary Net Assets (1) 8 

Fiduciary Net Assets, End of Year $ 123 $ 124 

Fiduciary Net Assets 

As of September 30, 2019 and 2018

Item Rural Housing Insurance Fund 

FY 2019

Rural Housing Insurance Fund 

FY 2018

Fiduciary Assets: Cash and Cash Equivalents $ 123 $ 124 

Fiduciary Assets: Investments - - 

Fiduciary Assets: Other Assets - - 

Fiduciary Liabilities

Less: Liabilities - - 

Total Fiduciary Net Assets $ 123 $ 124 
SECTION II | FINANCIAL INFORMATION 133

NOTE 29: Reconciliation of Net Cost to Net Outlays 

Budgetary and financial accounting information differ. Budgetary accounting is used for planning and 

control purposes and relates to both the receipt and use of cash, as well as reporting the federal deficit. 

Financial accounting is intended to provide a picture of the government’s financial operations and 

financial position so it presents information on an accrual basis. The accrual basis includes information 

about costs arising from the consumption of assets and the incurrence of liabilities. The reconciliation of 

net outlays, presented on a budgetary basis, and the net cost, presented on an accrual basis, provides an 

explanation of the relationship between budgetary and financial accounting information. The 

reconciliation serves not only to identify costs paid for in the past and those that will be paid in the 

future, but also to assure integrity between budgetary and financial accounting. 

The reconciliation explains the relationship between the net cost of operations and net outlays by 

presenting (1) components of net cost that are not part of net outlays (e.g. depreciation and amortization 

expenses of assets previously capitalized, change in asset/liabilities); (2) components of net outlays that 

are not part of net cost (e.g. acquisition of capital assets); and (3) other temporary timing difference (e.g. 

prior period adjustments due to correction of errors). The analysis below illustrates this reconciliation by 

listing the key differences between net cost and net outlays. 

Other components of net operating cost not part of the budgetary outlays include primarily cost 

capitalization offset, cost of goods sold, advances and prepayments, other deferred revenue, liability for 

clearing accounts, actuarial FECA liability, contingent liabilities, other liabilities with/without related 

budgetary obligations, and subsidy payable to the financing account. 

Other components of the budget outlays that are not part of net operating cost includes primarily other 

revenue, collections for others, and financing sources transferred in from custodial statement collections. 
134 USDA AGENCY FINANCIAL REPORT | 2019

FY 2019 Intragovernmental With The Public Total

Net Cost of Operations $ 7,301 $ 137,346 $ 144,647 

Components of Net Operating Cost Not Part of the Budgetary Outlays: 

Property, Plant, and Equipment Depreciation - (277) (277)

Property, Plant, and Equipment Disposal & Reevaluation - 9 9 

Year-End Credit Reform Subsidy Reestimates (1,674) - (1,674)

Other 1 178 179 

Increase/(Decrease) in Assets: 

Accounts Receivable 664 3,389 4,053 

Loans Receivable - 2,308 2,308 

Other Assets 3 (108) (105)

(Increase)/Decrease in Liabilities not Affecting Budget Outlays: 

Accounts Payable 327 (424) (97)

Salaries and Benefits (8) (19) (27)

Insurance and Guarantee Program Liabilities - (2,833) (2,833)

Environmental and Disposal Liabilities - (17) (17)

Other Liabilities (Unfunded Leave, Unfunded Federal Employees Compensation Act 

(FECA), Actuarial FECA) 

 1,021 5,788 6,809 

Other Financing Sources: 

Imputed Financing (1,020) - (1,020)

Total Components of Net Operating Cost Not Part of the Budget Outlays (686) 7,994 7,308 

Components of the Budget Outlays That Are Not Part of Net Operating Cost 

Acquisition of Capital Assets - 116 116 

Acquisition of Inventory - (23) (23)

Transfers Out (In) Without Reimbursement (3) - (3)

Other (197) 34 (163)

Total Components of Budgetary Outlays That Are Not Part of Net Operating Cost (200) 127 (73)

Net Outlays 6,415 145,467 151,882 

Related Amounts on the Statement of Budgetary Resources 

Outlays, Net 154,964 

Distributed Offsetting Receipts (3,082)

Agency Outlays, Net $ 151,882 
SECTION II | FINANCIAL INFORMATION 135

FY 2018 Intragovernmental With The Public Total

Net Cost of Operations $ 7,497 $ 126,964 $ 134,461 

Components of Net Operating Cost Not Part of the Budgetary Outlays: 

Property, Plant, and Equipment Depreciation - (344) (344)

Property, Plant, and Equipment Disposal & Reevaluation - 15 15 

Year-End Credit Reform Subsidy Reestimates (1,307) - (1,307)

Other 1 95 96 

Increase/(Decrease) in Assets: 

Accounts Receivable 57 671 728 

Loans Receivable - 2,115 2,115 

Other Assets 6 360 366 

(Increase)/Decrease in Liabilities not Affecting Budget Outlays: 

Accounts Payable 29 (608) (579)

Salaries and Benefits (1) 5 4 

Insurance and Guarantee Program Liabilities - (2,285) (2,285)

Environmental and Disposal Liabilities - - - 

Other Liabilities (Unfunded Leave, Unfunded Federal Employees Compensation Act 

(FECA), Actuarial FECA) 

 (62) 6,823 6,761 

Other Financing Sources: 

Imputed Financing (987) - (987)

Total Components of Net Operating Cost Not Part of the Budget Outlays (2,263) 6,847 4,584 

Components of the Budget Outlays That Are Not Part of Net Operating Cost 

Acquisition of Capital Assets - 108 108 

Acquisition of Inventory - 29 29 

Transfers Out (In) Without Reimbursement 6 - 6 

Other (9) 1,239 1,230 

Total Components of Budgetary Outlays That Are Not Part of Net Operating Cost (3) 1,376 1,373 

Net Outlays 5,231 135,187 140,418 

Related Amounts on the Statement of Budgetary Resources 

Outlays, Net 143,272 

Distributed Offsetting Receipts (2,854)

Agency Outlays, Net $ 140,418 
136 USDA AGENCY FINANCIAL REPORT | 2019

NOTE 30: Disclosure Entities and Related Parties

The Department exercises significant influence over the policy decisions of the Milk Market Orders 

Assessment Fund, Research and Promotion Boards and the Foundation for Food and Agricultural 

Research.

Milk Market Orders Assessment Fund

The Secretary of Agriculture is authorized by the Agricultural Marketing Agreement Act of 1937, as 

amended under certain conditions to issue Federal milk marketing orders establishing minimum prices 

which handlers are required to pay for milk purchased from producers. There are currently 11 Federallysanctioned milk market orders in operation. Market administrators are appointed by the Secretary and 

are responsible for carrying out the terms of specific marketing orders. Their operating expenses are 

financed by assessments on regulated handlers and partly by deductions from producers, which are 

reported to the Agricultural Marketing Service (AMS). Most of these funds are collected and deposited 

in checking and savings accounts in local banks and disbursed directly for direct disbursement by the 

market administrator. A portion of the funds collected may be invested in securities such as certificates 

of deposit. Expenses of local offices are met from an administrative fund and a marketing service fund, 

which are prescribed in each order. The administrative fund is derived from prorated handler 

assessments. The marketing service fund of the individual order disseminates market information to 

producers who are not members of a qualified cooperative. It also provides for the verification of the 

weights, sampling, and testing of milk from these producers. The cost of these services is borne by such 

producers. The maximum rates for administrative assessment and for marketing services are set forth in 

each order and adjustments below these rates are made from time to time upon recommendations by the 

market administrator and upon approval of the AMS to provide reserves at about a six-month operating 

level. Upon termination of any order, the statute provides for distributing the proceeds from net assets 

pro rata to contributing handlers or producers. 

The AMS reports this account in the President’s Budget because milk marketing administration staff are 

excepted service. Salaries, health insurance, TSP contributions and all other federal benefits are paid by 

the marketing order funds and as a result there are no costs to the Federal government. As a result, 

corresponding dollars are reported for presentation purposes only. In FY 2019, the non-Federal costs of 

administrating Federal milk marketing orders, including salaries and expenses, travel, and rent for office 

space were estimated to be $74 million. The AMS Funds for Strengthening Markets, Income and Supply 

(Section 32) account is used to fund the Secretary’s oversight responsibilities of Marketing Orders. 

Research and Promotion Boards

Research and Promotion (“checkoff”) programs are authorized by the Commodity Promotion, Research, 

and Information Act of 1996 and various Acts for specific commodities. Research and Promotion Board 

members are appointed by the Secretary. AMS is responsible for administrative oversight of Research 

and Promotion Programs to ensure fiscal accountability and program integrity. 
SECTION II | FINANCIAL INFORMATION 137

AMS also conducts rulemaking and oversees the activities of Fruit, Vegetable, and Specialty Crop 

Marketing Order Commodity Boards, Councils, or Committees to ensure compliance with all legal and 

regulatory requirements. Marketing orders and agreements are authorized by the Agricultural Marketing 

Agreement Act of 1937. 

These programs are not Federally funded. In FY 2019, the non-Federal costs of oversight for the 

Research and Promotion activities, including salaries and expenses, travel, and rent for office space were 

estimated to be $5.7 million. Industry boards collect and manage assessments from industry members to 

conduct program activities. 

Foundation for Food and Agricultural Research (FFAR)

The Secretary of Agriculture (Secretary) was authorized by the Agricultural Act of 2014 (Act), to 

establish a nonprofit corporation known as the Foundation for Food and Agriculture Research. FFAR 

was established by the Secretary on July 23, 2014. On the date of the enactment of this Act, the 

Secretary transferred $200 million of the Commodity Credit Corporation funds, to the FFAR, to remain 

available until expended under the conditions stipulated. On the date on which the strategic plan was 

submitted, the Secretary transferred $185 million of the Commodity Credit Corporation Funds, to the 

FFAR, to remain available until expended. The FFAR may use the funds made available to carry out the 

purposes of the FFAR only to the extent that the FFAR secures an equal amount of non-federal 

matching funds for each expenditure. None of the funds made available may be used for construction. 

FFAR is governed by a Board of Directors (Board) which consists of appointed and ex-officio, 

nonvoting members. The ex-officio members of the Board consist of the following: 

(i) The Secretary 

(ii) The Under Secretary of Agriculture for Research, Education, and Economics 

(iii) The Administrator of the Agricultural Research Service 

(iv) The Director of the National Institute of Food and Agriculture 

(v) The Director of the National Science Foundation 

The ex-officio members by majority-vote appoint 15 individuals to the Board. The Board elects from 

among the members of the Board, an individual to serve as Chair of the Board. The Board hires an 

Executive Director who shall carry out such duties and responsibilities as the Board may prescribe. 

The Executive Director shall ensure that any funds received are held in separate accounts from funds 

received from nongovernmental entities. 

The purposes of FFAR shall be (1) to advance the research mission of the USDA by supporting 

agricultural research activities focused on addressing key problems of national and international 

significance; and (2) to foster collaboration with agricultural researchers from the Federal Government, 

State (as defined in section 1404 of the National Agricultural Research, Extension, and Teaching Policy 

Act of 1977 (7 U.S.C. 3103)) governments, institutions of higher education (as defined in section 101 of 
138 USDA AGENCY FINANCIAL REPORT | 2019

the Higher Education Act of 1965 (20 U.S.C. 1001)), industry, and nonprofit organizations. The 

activities of the FFAR shall be supplemental to any other activities at USDA and shall not preempt any 

authority or responsibility of USDA under another provision of law. 

To ensure integrity in the operations of the FFAR, the Board developed and enforced procedures relating 

to standards of conduct, financial disclosure statements, conflicts of interest (including recusal and 

waiver rules), audits, and any other matters determined appropriate by the Board. 

Any individual who is an officer, employee, or member of the Board is prohibited from any 

participation in deliberations by the FFAR of a matter that would directly or predictably affect any 

financial interest of— 

(i) the individual; 

(ii) a relative (as defined in section 109 of the Ethics in Government Act of 1978 (5 U.S.C. 

App.)) of that individual; or 

(iii) a business organization or other entity in which the individual has an interest, including an 

organization or other entity with which the individual is negotiating employment. 

Members of the Board may not receive compensation for service on the Board but may be reimbursed 

for travel, subsistence, and other necessary expenses incurred in carrying out the duties of the Board. 

The FFAR provides annual audits of its financial condition to the Secretary of Agriculture and the 

Comptroller General of the United States for examination or audit. 
SECTION II | FINANCIAL INFORMATION 139

NOTE 31: Insurance Programs

The Federal Crop Insurance Program is considered a short-duration exchange transaction insurance 

program. The crop insurance policies insure against unexpected declines in yield and/or price due to 

natural causes. In crop year 2019, there were approximately 1.1 million crop insurance policies totaling 

approximately $109 billion insurance protection in force. 

The insurance policies are structured as a contract between Approved Insurance Providers (AIP) and 

producers, with the FCIC providing reinsurance to AIPs. Crop insurance policies automatically renew 

each year, unless producers cancel them by a published annual deadline. 

Under the reinsurance agreements, AIPs agree to deliver insurance products to eligible entities under 

certain terms and conditions. The administrative and operating subsidy (A&O) compensates the AIPs for 

selling and servicing crop insurance policies, including the direct settling of claims. Producers pay a 

portion of premium and fees to participate in the insurance program benefit payments. 

FCIC and AIPs share in underwriting gains or losses. The underwriting risk for the crop insurance 

program is shared by FCIC and the AIPs. The AIPs generally retain approximately 80 to 85 percent of 

the premium, and the risk associated with the premium. FCIC provides AIPs stop-loss reinsurance for 

the risk associated with their retained premium.

The AIPs for Fiscal Year 2019 are as follows:

▪ Ace American Insurance Company

▪ American Agri-Business Insurance Company 

▪ American Agricultural Insurance Company

▪ CGB Insurance Company 

▪ Church Mutual Insurance Company 

▪ Country Mutual Insurance Company 

▪ Farmers Mutual Hail Insurance Company of Iowa 

▪ Great American Insurance Company

▪ Guide One Insurance Company 

▪ Hudson Insurance Company 

▪ NAU Country Insurance Company

▪ Producers Agriculture Insurance Company 

▪ Rural Community Insurance Company 

▪ Stratford Insurance Company 

▪ Technology Insurance Company 

▪ XL Reinsurance America Inc.
140 USDA AGENCY FINANCIAL REPORT | 2019

The funds within the Federal Crop Insurance Program can be used to pay any authorized expense of 

the program. The following table lists the type of funds received and the resources used of the 

program for 2019.

Federal Crop Insurance Program Resource and Resources Used

Resource

Fiscal Year 2019 

(millions) Uses

Fiscal Year 2019 

(millions)

Producer Premiums Collected $1,246 Obligations for Delivery Costs $1,567 

Producer Fees Collected $43 Obligations for Indemnities $9,315 

Underwriting Loss Collected from AIPs $2 Obligations for Underwriting Gain $2,143 

Appropriations $11,787 Obligations for Initiatives & Other Costs $34 

Appropriations Transfers ($13) 

Unobligated Balance Beginning of Year $578 Unobligated Balance End of Year $584 

Total $13,643 Total $13,643 

In addition to the mandatory FCIC fund, RMA received $67.2 million in S&E funds to administer the 

Federal Crop Insurance Program in 2019. The Federal Crop Insurance Act requires the total premium, 

including producer paid premium and premium subsidy, to be established to achieve an overall projected 

loss ratio of not greater than 1.0 over an extended period of time. The FCIC Act dictates the percentage 

of subsidized premium. The estimation of expected indemnities is generally based on the observed 

historical rate of loss often referred to as the ‘loss cost’ method. 

In Fiscal Year 2019 there were widespread severe flooding and excess moisture conditions in many 

parts of the nation, causing catastrophic damage to crops. In order to provide relief, RMA deferred 

collection of any unpaid producer premium without interest, by two months. The total amount of 

deferred collections was approximately $2.5 billion. 

FCIC collects administrative fees from producers in return for catastrophic risk protection coverage and 

additional levels coverage. The rates are set by statute. For reinsurance year 2019, the catastrophic risk 

protection fees were $300 per crop per county and $30 for additional levels coverage per crop per county.

FCIC may request the Secretary of Agriculture to provide borrowing authority funds of the Commodity 

Credit Corporation (CCC) if at any time the amounts in the insurance fund are insufficient to allow 

FCIC to carry out its duties. Even though the authority exists, FCIC did not request CCC funds in the 

reporting period. Instead, FCIC uses such sums as are necessary from the U.S. Treasury to cover 

program costs that are in excess of collections. 

FCIC does not have investments. 
SECTION II | FINANCIAL INFORMATION 141

Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions that 

affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the 

date of the financial statements and reported amount of revenues and expenses during the reporting 

period. Actual results could differ from those estimates. 

FCIC financial statements show estimates on the Balance Sheet and Statement of Net Cost on the 

following line items:

Balance Sheet 

▪ Liability for Unpaid Insurance Claims, 

▪ Liability for Losses on Remaining Coverage, 

▪ Contingencies, 

▪ Unearned Revenue, and 

▪ Underwriting Gain; 

Statement of Net Cost 

▪ Indemnities, 

▪ Program Delivery Costs, 

▪ Premium Revenue, 

▪ Net (Gain)/Loss on Business Ceded from AIPs, and 

▪ Other Revenue. 

Loss Recognition

The end of the government’s fiscal year, on September 30, occurs while many crops are still in the field 

and subject to ongoing natural risks. This misalignment between the government’s fiscal year and the 

inherent business cycle of the crop insurance program results in significant uncertainty for the end-offiscal-year estimates of claims. Estimates can often vary by 20% or more from final results. 

Estimates of claims are based on current crop conditions and historical trends for a given crop condition. 

Therefore, it is assumed the expected claims will be similar to levels observed historically.

The estimate model assumes that there is a relationship between crop yields, harvest prices, and the 

resulting loss ratios. The indemnity for an individual producer is based on the difference between the 

producer’s actual yield and his/her average yield. Similarly, for revenue plans, the indemnity is based on 

the difference between the actual harvest price and the “base” price which is the estimated harvest price 

at the time the crop is planted. 
142 USDA AGENCY FINANCIAL REPORT | 2019

Regression analyses are calculated based on the historic relationships between the crop yields and 

harvest prices (when necessary) for each crop in each state and the resulting loss ratios in each of those 

years. The resulting regression coefficients are used in conjunction with the most recent National 

Agricultural Statistics Service (NASS) forecasts and commodity futures prices to calculate a projected 

loss ratio for each crop/state combination. 

There are uncertainties associated with these assumptions including:

▪ Actual yields which may be different than those provided by the NASS estimates; 

▪ Changes in weather patterns close to harvesting dates, which could affect yields but not be 

reflected in the NASS estimates; 

▪ Commodity prices which may change from those in the market because of many factors (such as 

weather, yields, and economic conditions); and 

▪ Significant catastrophic weather events (i.e. hurricanes and freezes) occurring near the balance 

sheet date which could affect estimated crop yields and crop prices. 

There are uncertainties associated with assumptions used to estimate losses on insurance claims. As a 

result, the ultimate liability may differ significantly from the recorded estimate. Indemnity costs are paid 

from premium proceeds, including producer paid premium and premium subsidies. If indemnity costs 

exceed funds available, additional funds will be requested and apportioned to FCIC. 

Revenue and Liabilities Recorded

SFFAS 51 promulgates the recognition and measurement of: 

1. Revenue and Liability for Unearned Premiums; 

2. Liability for Unpaid Insurance Claims; and

3. Liability for Losses on Remaining Coverage 

Revenue and Liability for Unearned Premiums 

Premium revenue is comprised of producer paid premium. Producer paid premium is recognized as 

earned proportionately over each crop’s growing season. The portion of producer paid premium not 

recognized at the conclusion of the fiscal year is classified as Unearned Revenue in the balance sheet. 

Liability for Unpaid Insurance Claims 

Liability for Unpaid Insurance Claims are claims for adverse events that occurred before the end of 

the reporting period. Per SFFAS 51, for the claim to be considered incurred, a single event or a series 

of events must be completed by the end of the reporting period to be considered an adverse event of 

the period. 
SECTION II | FINANCIAL INFORMATION 143

The Liability for Unpaid Insurance Claims is comprised of the following: 

▪ Funds in the Escrow accounts to cover payments to producers who have not cashed their indemnity 

payments 

▪ Claims reported but not paid as of the end of the reporting period 

▪ Incurred but Not Reported (IBNR) is estimated claims from events that have occurred as of the end 

of the reporting period but have not yet been reported for settlement. 

FCIC uses a historical trend analysis based upon the data from the prior years to determine the value of 

claims incurred for the current reinsurance year as of the financial statement reporting date. 

Liability for Losses on Remaining Coverage

The liability for losses on remaining coverage as of the end of the reporting period represents the 

estimated amounts to be paid to settle claims for the remaining open arrangement period in excess of 

losses associated with the related unearned premiums as of the end of the reporting period. 

The liability for losses on remaining coverage is the total projected losses less actual losses reported, 

IBNR, and losses associated with unearned premium. 

Underwriting Gain/Loss

Underwriting gain/loss is the AIPs portion of earnings or losses on the insurance book of business due 

from or to FCIC. A periodic settlement, as stipulated in the SRA, is calculated where results of business 

written by AIPs are determined and an experience-rated gain or loss on business ceded from AIPs is 

computed. Payments due to AIPs for a net gain are paid in the second fiscal year following the 

reinsurance year. Underwriting losses are paid to FCIC periodically. 

Contingencies 

Various lawsuits, claims, and proceedings are pending against FCIC. In accordance with SFFAS No. 5, 

FCIC records accruals for such contingencies when it is probable that a liability will be incurred, and the 

amount of the loss can be reasonably estimated. 

If there is a reasonable possibility that a loss will occur, FCIC discloses the nature of the contingency 

and an estimate of the possible liability, an estimate of the range of the possible liability, or a statement 

that such an estimate cannot be made. 
144 USDA AGENCY FINANCIAL REPORT | 2019

NOTE 32: Reclassification of Balance Sheet, Statement of Net Cost, and 

Statement of Changes in Net Position For FR Compilation Process 

To prepare the Financial Report of the U.S. Government (FR), the Department of the Treasury requires 

agencies to submit an adjusted trial balance, which is a listing of amounts by U.S. Standard General 

Ledger account that appear in the financial statements. Treasury uses the trial balance information 

reported in the Governmentwide Treasury Account Symbol Adjusted Trial Balance System (GTAS) to 

develop a Reclassified Balance Sheet, Reclassified Statement of Net Cost, and a Reclassified Statement 

of Changes in Net Position for each agency, which are accessed using GTAS. 

Treasury eliminates all intragovernmental balances from the reclassified statements and aggregates lines 

with the same title to develop the FR statements. This note shows the USDA’s financial statements and 

the USDA’s reclassified statements prior to elimination of intragovernmental balances and prior to 

aggregation of repeated FR line items. 

A copy of the 2018 FR can be found here: https://www.fiscal.treasury.gov/reports-statements/ and a 

copy of the 2019 FR will be posted to this site as soon as it is released. 

The term “non-Federal” is used in this note to refer to Federal Government amounts that result from 

transactions with non-Federal entities. These include transactions with individuals, businesses, nonprofit entities, and State, local, and foreign governments. 
SECTION II | FINANCIAL INFORMATION 145

Reclassification of Balance Sheet to Line Items Used for the Government-wide 

Balance Sheet as of September 30, 2019 

FY 2019 USDA Balance Sheet Line Items Used to prepare FY 2019 Government-Wide Balance Sheet

Financial Statement Line Amount Reclassified Financial Statement Lines

Adjusted Balance 

(Calculated Amount) *

Assets (Note 2):

Intragovernmental:

Fund Balance with Treasury (Note 3 ) 153,468 Fund Balance With Treasury (RC 40)/1 153,468 

Federal Investments (RC 01)/1 232 

Investments (Note 5) 233 Interest Receivable - Investments (RC 02)/1 1 

Accounts Receivable, Net (Note 6 ) 79 Accounts Receivable (RC 22)/1 80 

Other (Note 11) 12 Advances to Others and Prepayments (RC 23)/1 12 

Total Intragovernmental 153,792 Total Federal Assets 153,793 

Cash and Other Monetary Assets (Note 4) 550 Cash and Other Monetary Assets 550 

Investments (Note 5) 3 Debt and Equity Securities 3 

Accounts Receivable, Net (Note 6) 3,835 Accounts and Taxes Receivable, Net 3,835 

Direct Loan and Loan Guarantees, Net (Note 7) 104,255 Loans Receivable, Net 104,255 

Inventory and Related Property, Net (Note 8) 23 Inventories and Related Property, Net 23 

General Property, Plant, and Equipment, Net (Note 9) 2,249 Property, Plant, and Equipment, Net 2,249 

Other (Note 11) 388 Other Assets 388 

Total Non-Federal Assets 111,303 Total Non-Federal Assets 111,303 

Total Assets 265,095 Total Assets 265,096 

Stewardship PP&E (Note 10)

Liabilities (Note 12):

Intragovernmental:

Accounts Payable 1 Accounts Payable (RC 22)/1 1 

Interest Payable - Loans and Not Otherwise Classified 

(RC 04)/1 26 

Loans Payable (RC 17)/1 137,042 

Debt (Note 13) 139,678 Other Liabilities (RC 30)/1 2,610 

Accounts Payable (RC 22)/1 120 

Benefit Program Contributions Payable (RC 21)/1 220 

Advances from Others and Deferred Credits (RC 23)/1 5 

Liability to the General Fund for Custodial and Other 

Non-Entity Assets (RC 46)/1 9,463 

Other (Note 15) 9,901 Other Liabilities (Without Reciprocals) (RC 29)/1 94 

Total Intragovernmental 149,580 Total Federal Liabilities 149,581 

Accounts Payable 2,234 Accounts Payable 2,234 

Loan Guarantee Liability (Note 7) 434 Loan Guarantee Liabilities 434 

Actuarial Federal Employees’ Compensation Act Liability 782 Federal Employee and Veteran Benefits Payable 783 

Environmental and Disposal Liabilities (Note 14) 218 Environmental and Disposal Liabilities 218 

Benefits Due and Payable 5,147 Benefits Due and Payable 5,147 

Insurance and Guarantee Program Liabilities 8,865 

Other (Note 15 & 16) 20,586 Other Liabilities 11,720 

Total Non-Federal Liabilities 29,401 Total Non-Federal Liabilities 29,401 

Total Liabilities 178,981 Total Liabilities 178,982 

Commitments and Contingencies (Note 17)

Net Position:

Unexpended Appropriations - Funds from Dedicated 

Collections (Combined Totals) (Note 18) 180 Net Position - Funds From Dedicated Collections 180 

Unexpended Appropriations - All Other Funds (Combined 

Totals) (Note) 71,271 

Net Position - Funds Other Than Those From Dedicated 

Collections 71,271 

Net Position - Funds From Dedicated Collections 1,492 

Cumulative Results of Operations - Funds from Dedicated 

Collections (Combined Totals) (Note 18) 3,331 

Reconciling Item - GTAS Presents This Line As A 

Consolidated Total 1,839 

Net Position - Funds Other Than Those From Dedicated 

Collections 13,171 

Cumulative Results of Operations - All Other Funds (Combined 

Totals) (Note ) 11,332 

Reconciling Item - GTAS Presents This Line As A 

Consolidated Total (1,839)

Total Net Position - Funds from Dedicated Collections 3,511 Total Net Position - Funds from Dedicated Collections 3,511 

Total Net Position - All Other Funds 82,603 Total Net Position - All Other Funds 82,603 

Total Net Position 86,114 Total Net Position 86,114 

Total Liabilities and Net Position 265,095 Total Liabilities and Net Position 265,096 
146 USDA AGENCY FINANCIAL REPORT | 2019

Reclassification of Statement of Net Cost to Line Items Used for the Government-wide 

Statement of Net Cost for the Year Ending September 30, 2019 

FY 2019 USDA SNC Line Items Used to prepare FY 2019 Government-Wide SNC

Financial Statement Line Amount Reclassified Financial Statement Lines

Adjusted Balance 

(Calculated Amount) *

Gross Cost

Non-Federal Gross Cost 145,672 

Federal Gross Cost

Benefit program costs (RC 26)/2 1,727 

Imputed Costs (RC25)/2 1,020 

Buy/Sell Cost (RC24)/2 1,201 

Borrowing and other interest expense (RC05)/2 4,118 

Other expenses (without reciprocals) (RC 29) 483 

Total Federal Gross Cost 8,549 

Total Gross Cost 154,221 Department Total Gross Cost 154,221 

Earned Revenue

Non-federal earned revenue 8,326 

Buy/Sell Revenue (exchange) (RC24)/2 575 

Federal securities interest revenue including associated gains 

and losses (exchange) (RC 03)/2 7 

Borrowing and other interest revenue (exchange) (RC 05)/2 583 

Accrual of Custodial Collections Yet to be Transferred to a TAS 

Other Than the General Fund of the U.S. Government - 

Exchange (RC 14) (20)

Collections Transferred in to a TAS Other Than the General Fund 

of the U.S. Government - Exchange (RC 13) 102 

Total Federal Earned Revenue 1,247 

Less: Total Earned Revenue 9,574 Department Total Earned Revenue 9,573 

Net Cost of Operations (Note 19) 144,647 Net Cost of Operations 144,648 
SECTION II | FINANCIAL INFORMATION 147

Reclassification of Statement of Changes in Net Position to Line Items Used for the Government-wide

Statement of Operations and Changes in Net Position for the Year Ending September 30, 2019 

FY 2019 USDA SCNP Line Items Used to prepare FY 2019 Government-Wide SCNP

Financial Statement Line Amount Reclassified Financial Statement Lines

Adjusted Balance

(Calculated Amount) *

Unexpended Appropriations:

Beginning Balances 65,406 Net position, beginning of period 65,406 

Budgetary Financing Sources:

Appropriations Received 150,915 Appropriations Received As Adjusted (Rescissions and Other 

Adjustments) (RC 41)/1 150,915 

Non-expenditure transfers-in of unexpended appropriations 

and financing sources (RC 08) /1 (3)

Appropriations Transferred In (Out) (51)

Non-expenditure transfers-out of unexpended appropriations 

and financing sources (RC 08) /1 (48)

Other Adjustments (17,061)

Appropriations Received As Adjusted (Rescissions and Other 

Adjustments) (RC 41)/1 (17,061)

Appropriations Used (127,758) Appropriations Used (RC 39) (127,758)

Total Budgetary Financing Sources 6,045 Total Budgetary Financing Sources 6,045 

Total Unexpended Appropriations 71,451 Total Unexpended Appropriations 71,451 

Cumulative Results of Operations:

Beginning Balances 12,252 Net position, beginning of period 12,252 

Budgetary Financing Sources:

Other Adjustments (280) Revenue and Other Financing Sources - Cancellations (RC 36) (280)

Appropriations Used 127,758 Appropriations expended (RC 38)/1 127,758 

Other Taxes and Receipts 11 

Non-exchange Revenue 21,722 

Collections transferred into a TAS Other Than the General 

Fund of the U.S. Government - Nonexchange (RC 15) 21,711 

Donations and Forfeitures of Cash and Equivalents 2 Other Taxes and Receipts 2 

Appropriation of unavailable special or trust fund receipts 

transfers-in (RC 07)/1 137 

Non-expenditure Transfers-In of Unexpended Appropriations 

and Financing Sources (RC 08)/1 14 

Non-expenditure Transfers-Out of Unexpended 

Appropriations and Financing Sources (RC 08)/1 (697)

Expenditure transfers-out of financing sources (RC 09)/1 (1)

Transfers In (Out) without Reimbursement (547)

Non-expenditure Transfers-Out of Financing Sources - Capital 

Transfers (RC 11) - 

Other Financing Sources (Non-Exchange):

Non-expenditure Transfer-In of Financing Sources - Capital 

Transfers (RC 11) - 

Transfers-In Without Reimbursement (RC 18)/1 - 

Transfers In (Out) without Reimbursement - Transfers-Out Without Reimbursement (RC 18)/1 - 

Imputed Financing 1,020 Imputed Financing Sources (RC 25)/1 1,020 

Other Taxes and Receipts (168)

Non-entity collections transferred to the General Fund of the 

U.S. Government (RC 44) (2,626)

Other (2,617)

Accrual for non-entity amounts to be collected and transferred 

to the General Fund of the U.S. Government (RC 48) 179 

Total Financing Sources 147,058 Total Financing Sources 147,060 

Net Cost of Operations (144,647) Net Cost of Operations (144,648)

Net Change 2,411 Net Change 2,412 

Cumulative Results of Operations 14,663 Cumulative Results of Operations 14,664 

Net Position 86,114 Net Position 86,115 
148 USDA AGENCY FINANCIAL REPORT | 2019

Required Supplementary Stewardship Information

STEWARDSHIP INVESTMENTS (UNAUDITED)

Item FY 2019 

Expense

FY 2018 

Expense

FY 2017 

Expense

FY 2016 

Expense

FY 2015 

Expense

Non-Federal Physical Property: 

Food and Nutrition Service

Supplemental Nutrition Assistance Program $ 51 $ 15 $ 21 $ 19 $ 25 

Special Supplemental Nutrition Program 7 6 6 6 10 

National Institute of Foods and Agriculture

Extension 1890 Facilities Program 20 20 20 20 20 

Total Non-Federal Property $ 78 $ 41 $ 47 $ 45 $ 55 

Human Capital: 

National Institute of Foods and Agriculture

Higher Education and Extension Programs $ 621 $ 572 $ 564 $ 558 $ 554 

Food and Nutrition Service

Supplemental Nutrition Assistance Program 103 85 83 104 90 

Agricultural Research Service

National Agricultural Library 26 26 25 23 23 

Risk Management Agency

Risk Management Education - 11 10 9 8 

Natural Resources Conservation Service

National Volunteer Program 8 8 - - - 

Total Human Capital $ 758 $ 702 $ 682 $ 694 $ 675 

Research and Development

Basic Research: 

Agricultural Research Service

Human Nutrition $ 51 $ 44 $ 43 $ 43 $ 43 

Product Quality/Value Added 52 51 51 51 51 

Livestock Production 129 47 44 43 43 

Crop Production 57 121 112 107 108 

Food Safety 51 56 56 56 56 

Livestock Protection 103 47 47 47 46 

Crop Protection 45 101 99 97 96 

Environmental Stewardship 112 110 108 101 101 

National Institute of Foods and Agriculture

Land-Grant University System 872 846 809 290 274 

Forest Service 48 59 62 64 92 

Total Basic Research $ 1,520 $ 1,482 $ 1,431 $ 899 $ 910 
SECTION II | FINANCIAL INFORMATION 149

Item FY 2019 

Expense

FY 2018 

Expense

FY 2017 

Expense

FY 2016 

Expense

FY 2015 

Expense

Applied Research: 

Agricultural Research Service 

Human Nutrition $ 40 $ 35 $ 35 $ 34 $ 34 

Product Quality/Value Added 41 41 40 40 40 

Livestock Production 103 38 36 35 35 

Crop Production 46 97 90 87 86 

Food Safety 41 45 45 45 45 

Livestock Protection 83 38 38 37 36 

Crop Protection 36 81 78 77 77 

Environmental Stewardship 90 87 86 81 81 

National Institute of Foods and Agriculture

Land-Grant University System 323 314 300 492 465 

Forest Service 249 244 244 224 238 

Economic Research Service 

Economic and Social Science 86 86 86 85 85 

National Agricultural Statistics Service 

Statistical 5 5 5 5 5 

Natural Resources Conservation Service 

Plant Materials Centers 12 12 - - - 

Soil Survey Research 1 1 - - - 

Total Applied Research $ 1,156 $ 1,124 $ 1,083 $ 1,242 $ 1,227 

Development: 

Agricultural Research Service 

Human Nutrition $ 10 $ 9 $ 9 $ 9 $ 9 

Product Quality/Value Added 10 10 10 10 10 

Livestock Production 26 9 9 9 9 

Crop Production 11 24 22 22 22 

Food Safety 10 11 11 11 11 

Livestock Protection 21 10 9 9 9 

Crop Protection 9 20 20 19 19 

Environmental Stewardship 23 22 22 20 20 

National Institute of Foods and Agriculture 

Land-Grant University System 549 532 510 - - 

Forest Service 3 6 3 3 10 

National Agricultural Statistics Service 

Statistical 4 4 4 4 4 

Total Development 676 $ 657 $ 629 $ 116 $ 123 

Total Research and Development $ 3,352 $ 3,263 $ 3,143 $ 2,257 $ 2,260 
150 USDA AGENCY FINANCIAL REPORT | 2019

NON-FEDERAL PHYSICAL PROPERTY

Food and Nutrition Service (FNS)

FNS’ non-Federal physical property consists of computer systems and other equipment obtained by 

State and local governments for the purpose of administering the SNAP. The total SNAP expense for 

ADP Equipment & Systems has been reported as of the third quarter of FNS’ financial statements. FNS’ 

non-Federal physical property also consists of computer systems and other equipment obtained by the 

State and local governments for the purpose of administering the Special Supplemental Nutrition 

Program for Women, Infants, and Children. 

National Institute of Food and Agriculture (NIFA)

The Extension 1890 facilities program supports the renovation of existing buildings and the construction 

of new facilities as well as computers and equipment purchases that permit faculty, students, and 

communities to benefit fully from the partnership between USDA and the 1890 Land-Grant Universities. 

HUMAN CAPITAL

National Institute of Food and Agriculture

The higher education programs include graduate fellowship grants, competitive challenge grants, 

secondary/2-year postsecondary grants, Hispanic serving institutions education grants, a multicultural 

scholars program, a Native American institutions program, a Native American institutions endowment 

fund, an Alaska Native serving and a Native Hawaiian serving institutions program, grants for insular 

areas, and a capacity building program at the 1890 institutions. These programs enable universities to 

broaden their curricula, increase faculty development and student research projects, and increase the 

number of new scholars recruited in the food and agriculture sciences. NIFA also supports extensionrelated work at 1862, 1994 and 1890 land-grant institutions throughout the country through formulabased or competitive programs. 

Food and Nutrition Service

FNS’ human capital consists of employment and training (E&T) for SNAP. The E&T program requires 

recipients of SNAP benefits to participate in an employment and training program as a condition to 

SNAP eligibility.

Outcome data for the E&T program is only available through the third quarter. As of this period, FNS’ 

E&T program has placed 130,714 work registrants subject to the 3 month SNAP participant limit and 

789,709 work registrants not subject to the limit in either job-search, job training, job-workfare, 

education, or work experience. 
SECTION II | FINANCIAL INFORMATION 151

Agricultural Research Service (ARS)

The National Agricultural Library (NAL) provides services directly to the staff of USDA and to the 

public, primarily via its Web site, https://www.nal.usda.gov. As the world’s leading agricultural library, 

NAL has expertise in information and knowledge management, and a wide variety of subject areas 

related to agriculture and food, including nutrition and food safety, animal welfare, natural resources, 

invasive species, lifecycle assessment, and long-term agroecosystem research.

Risk Management Agency (RMA)

Prior to fiscal year 2019, FCIC provided education and training on crop insurance programs and risk 

management strategies to agricultural producers and ranchers. Requests for Application (RFA) 

solicitations for partners were announced on Grants.gov. Effective with The Agriculture Improvement 

Act of 2018 (the 2018 Farm Bill), funds previously used for this program were transferred to the 

National Institute of Food and Agriculture (NIFA). 

In fiscal year 2018 and before, RFAs were announced for Crop Insurance in Targeted States Program 

and the Risk Management Education Partnership Program. Partnerships with qualified applicants 

provide education, outreach assistance and related tools and information on crop insurance programs and 

risk management strategies. Awards were given on a competitive basis and awarded for a one-year term. 

Awardees demonstrated non-financial benefits and agreed to substantial involvement by FCIC in the 

project. Funding was authorized in section 522 and 524 of the Act. 

Partnerships were established with the private industry and these organizations worked with Women, 

Hispanics, African Americans, Asian Americans, Native Americans, Immigrants, Military Veterans, 

Organic Crops, Beginning Producers, Specialty Crop Producers & Ranchers, New Markets, Livestock 

Farmers, Limited Resource, Retiring-Transitioning, Strikeforce, Socially Disadvantaged, Sustainable 

Producers, Traditional, Value-Added and Small Farms & Ranches. 

Education efforts were improved by expanding State and Regional education partnerships; encouraging 

the development of information and technology-based decision aids; facilitating local crop insurance 

education and risk management training workshops throughout the nation through cooperative agreements 

with educational institutions, community-based outreach organizations, and other qualified entities. 

Natural Resources Conservation Service (NRCS)

NRCS’s investment in human capital is primarily for education and training programs that are 

intended to increase or maintain national economic productive capacity. Human capital investment 

also seeks to produce outputs and outcomes that provide evidence of maintaining or increasing 

national productive capacity. 
152 USDA AGENCY FINANCIAL REPORT | 2019

RESEARCH AND DEVELOPMENT

Agricultural Research Service (ARS)

ARS’ mission is to conduct research to develop and transfer solutions to agricultural problems of high 

national priority and provide information access and dissemination to: ensure high quality, safe food, 

and other agricultural products; assess the nutritional needs of Americans; sustain a competitive 

agricultural economy; enhance the natural resource base and the environment; and provide economic 

opportunities for rural citizens, communities, and society as a whole. 

New Products/Product Quality/Value Added 

ARS has active research programs directed toward: improving the efficiency and reducing the cost for 

the conversion of agricultural products into biobased products and biofuels; developing new and 

improved products for domestic and foreign markets; and providing higher quality, healthy foods that 

satisfy consumer needs in the United States and abroad. 

Livestock Production 

ARS’ research program is directed toward fostering an abundant, safe, nutritionally wholesome, and 

competitively priced supply of animal products produced in a viable, competitive, and sustainable 

animal agriculture sector of the U.S. economy by: safeguarding and utilizing animal genetic resources, 

associated genetic and genomic databases, and bioinformatic tools; developing a basic understanding of 

food animal physiology to address priority issues related to animal production, animal well-being, and 

product quality and healthfulness; and developing information, best management practices, novel and 

innovative tools, and technologies that improve animal production systems, enhance human health, and 

ensure domestic food security. The research is heavily focused on the development and application of 

genomics technologies to increase the efficiency and product quality of beef, dairy, swine, poultry, 

aquaculture, and sheep systems. Areas of emphasis include increasing the efficiency of nutrient 

utilization, increasing animal well-being and reducing stress in production systems, increasing 

reproductive rates and breeding animal longevity, developing and evaluating non-traditional production 

systems (e.g., organic and natural), and evaluating and conserving animal genetic resources.

Crop Production 

ARS’ program focuses on developing and improving ways to reduce crop losses while protecting and 

ensuring a safe and affordable food supply. The program concentrates on production strategies that are 

environmentally friendly, safe to consumers, and compatible with sustainable and profitable crop 

production systems. Research activities are directed at safeguarding and utilizing plant genetic resources 

and their associated genetic, genomic, and bioinformatic databases that facilitate selection of varieties 

and/or germplasm with significantly improved traits. Research activities attempt to minimize the impacts 

of crop pests while maintaining healthy crops and safe commodities that can be sold in markets throughout 

the world. The agency is conducting research to discover and exploit naturally occurring and engineered 
SECTION II | FINANCIAL INFORMATION 153

genetic mechanisms for plant pest control, develop agronomic germplasm with durable defensive traits, 

and transfer genetic resources for commercial use. ARS is also providing taxonomic information on 

invasive species that strengthens prevention techniques, aids in detection/identification of invasive pests, 

and increases control through management tactics that restore habitats and biological diversity.

Food Safety 

ARS’ research program is designed to yield science-based knowledge on the safe production, storage, 

processing, and handling of plant and animal products, and on the detection and control of pathogenic 

bacteria and fungi, parasites, chemical contaminants, and plant toxins. All of ARS’ research activities 

involve a high degree of cooperation and collaboration with USDA’s Research, Education, and 

Economics agencies, as well as with the Food Safety and Inspection Service (FSIS), Animal and Plant 

Health Inspection Service (APHIS), the Food and Drug Administration (FDA), the Centers for Disease 

Control and Prevention (CDC), the Department of Homeland Security (DHS), and the Environmental 

Protection Agency (EPA). The agency also collaborates in international research programs to address 

and resolve global food safety issues. Specific research efforts are directed toward developing new 

technologies that assist ARS stakeholders and customers, including regulatory agencies, industry, and 

commodity and consumer organizations in detecting, identifying, and controlling foodborne diseases 

that affect human health.

Livestock Protection 

ARS’ program is directed at protecting and ensuring the safety of the Nation’s agriculture and food 

supply through improved disease detection, prevention, control, and treatment. Basic and applied 

research approaches are used to solve animal health problems of high national priority. Emphasis is 

given to methods and procedures to control animal diseases through the discovery and development of 

diagnostics, vaccines, biotherapeutics, animal genomics applications, disease management systems, 

animal disease models, and farm biosecurity measures. The research program has the following strategic 

objectives: establish ARS laboratories into a fluid, highly effective research network to maximize use of 

core competencies and resources; use specialized high containment facilities to study zoonotic and 

emerging diseases; develop an integrated animal and microbial genomics research program; establish 

core competencies in bovine, swine, ovine, and avian immunology; launch a biotherapeutic discovery 

program providing alternatives to animal drugs; build a technology driven vaccine and diagnostic 

discovery research program; develop core competencies in field epidemiology and predictive biology; 

establish a best-in-class training center for our Nation’s veterinarians and scientists; and develop a 

model technology transfer program to achieve the full impact of ARS research discoveries. The ARS 

animal research program includes the following core components: biodefense research, animal genomics 

and immunology, zoonotic diseases, respiratory diseases, reproductive and neonatal diseases, enteric 

diseases, parasitic diseases, and transmissible spongiform encephalopathies. 
154 USDA AGENCY FINANCIAL REPORT | 2019

Crop Protection 

ARS’ Crop Protection research program is directed to protect crops from insect and disease loss through 

research to understand pest and disease transmission mechanisms, and to identify and apply new 

technologies that increase our understanding of virulence factors and host defense mechanisms. The 

program’s research priorities include: identification of genes that convey virulence traits in pathogens 

and pests; factors that modulate infectivity, gene functions, and mechanisms; genetic profiles that 

provide specified levels of disease and insect resistance under field conditions; and mechanisms that 

reduce the spread of pests and infectious diseases. ARS is developing new knowledge and integrated 

pest management approaches to control pest and disease outbreaks as they occur. Its research will 

improve the knowledge and understanding of the ecology, physiology, epidemiology, and molecular 

biology of emerging diseases and pests. This knowledge will be incorporated into pest risk assessments 

and management strategies to minimize chemical inputs and increase production. Strategies and 

approaches will be available to producers to control emerging crop diseases and pest outbreaks and to 

address quarantine issues. 

Human Nutrition

Maintenance of health throughout the lifespan along with prevention of obesity and chronic diseases via 

food-based recommendations are the major emphases of ARS’ Human Nutrition Research Program. 

These health-related goals are based on the knowledge that deficiency diseases are no longer the primary 

public health concerns in the United States; excessive consumption has become the primary nutrition 

problem in the American population. This is reflected by increased emphasis on prevention of obesity, 

from basic science through intervention studies to assessments of large populations. The agency’s 

research program also studies essential nutrients and nonessential, health promoting components in 

foods. To better define the role of nutrition in pregnancy and growth of children, and for healthier aging, 

four specific areas of research are emphasized: nutrition monitoring; the scientific basis for dietary 

recommendations; prevention of obesity and related diseases; and life stage nutrition and metabolism. 

Environmental Stewardship 

ARS’ research program emphasis is in developing technologies and systems that support sustainable 

production and enhance the Nation’s vast renewable natural resource base. The agency is currently 

developing the scientific knowledge and technologies needed to meet the challenges and opportunities 

facing U.S. agriculture in managing water resource quality and quantity under different climatic 

regimes, production systems, and environmental conditions. 

ARS’ research also focuses on developing measurement, prediction, and control technologies for 

emissions of greenhouse gases, particulate matter, ammonia, hydrogen sulfide, and volatile organic 

compounds affecting air quality and land-surface climate interactions. The agency is a leader in 

developing measurement and modeling techniques for characterizing gaseous and particulate matter 

emissions from agriculture. In addition, ARS is evaluating strategies for enhancing the health and 

productivity of soils, including developing predictive tools to assess the sustainability of alternative land 
SECTION II | FINANCIAL INFORMATION 155

management practices. Finding mechanisms to aid agriculture in adapting to changes in atmospheric 

composition and climatic variations is also an important component of this program. 

ARS’ range and grazing land research objectives include the conservation and restoration of the 

Nation’s range land and pasture ecosystems and agroecosystems through improved management of 

fire, invasive weeds, grazing, global change, and other agents of ecological change. The agency is 

currently developing improved grass and forage legume germplasm for livestock, conservation, 

bioenergy, and bioproduct systems as well as grazing-based livestock systems that reduce risk and 

increase profitability. In addition, ARS is developing whole system management strategies to reduce 

production costs and risks. 

National Agricultural Library

The library provides services directly to the staff of USDA and to the public, primarily via the NAL 

Web site. NAL is the premier library for collecting, managing, and disseminating agriculture 

information. It delivered about 43.7 million page views to 6.9 million customers in FY 2019. 

Buildings and Facilities

As the principal intramural scientific research agency of the Department of Agriculture, ARS operates 

an extensive network of more than 100 federally owned research facilities. These facilities are 

strategically located throughout the U.S., reflective of the wide geographic diversity and site specificity 

of agricultural production; distinct climatic and agroecosystem zones; and the numerous research 

partners, cooperators, and customers/users with which ARS works. These specialized laboratories and 

facilities are essential for ARS’ scientists and support personnel to carry out the agency’s mission.

National Institute of Food and Agriculture (NIFA)

NIFA participates in a nationwide land-grant university system of agriculture related research and 

program planning and coordination between State institutions and USDA. It assists in maintaining 

cooperation among the State institutions, and between the State institutions and their Federal research 

partners. NIFA administers competitive grants and capacity/formula payments to State institutions to 

leverage State and local funding for agriculture research.

Forest Service (FS)

Forest Service Research & Development (R&D) has an integrated science portfolio that supports 

achievement of the agency’s strategic goals. The contributions of FS R&D enhance the rigor and impact 

of the work done throughout the agency. The FS R&D structure has two components: Priority Research 

Areas and Strategic Program Areas (SPAs). 

The Priority Research Areas address urgent needs in seven areas: Forest Disturbances, Forest Inventory 

and Analysis, Watershed Management and Restoration, Bioenergy and Biobased Products, Urban 

Natural Resources Stewardship, Nanotechnology, and Localized Needs Research. 
156 USDA AGENCY FINANCIAL REPORT | 2019

The SPAs are the long-term programs from which Priority Research Areas are funded. Each of the seven 

SPAs are described below.

Wildland Fire and Fuels

Wildland Fire and Fuels R&D provides managers with the knowledge and tools to reduce negative 

impacts and to enhance the beneficial effects of wildland fire, as a natural process. This knowledge and 

these tools are critical to understanding the human process of fire and fuels management on society and 

the environment. 

Research focuses on understanding and modeling fundamental fire processes; interactions of fire with 

ecosystems; and the environmental, social, and economic aspects of fire, as well as evaluating the 

integrated management strategies and disturbance interactions at multiple scales and the application of 

fire research to address management problems.

Invasive Species

Invasive Species R&D provides the scientific information, methods, and technology to reduce or 

eliminate the introduction, spread, and impact of invasive species and to restore or improve the 

functionality of ecosystems affected by invasive species. 

Research focuses on non-native plants, pathogens, animals, fish, insects, diseases, invertebrates, and 

other species whose introduction is likely to cause economic or environmental harm to an ecosystem. 

Water, Air, and Soil 

Water, Air, and Soil R&D enables the sustainable management of these essential resources by providing 

science to inform management efforts to provide clear air and safe drinking water, to protect lives and 

property from wildland fire and smoke, and to adapt to climate variability and change. 

The program addresses ecosystem services with a high level of integration between water, air, and soil 

research, such as the effects of climate variability and change on water budgets or carbon sequestration 

metrics from an ecosystem perspective.

Wildlife and Fish

Wildlife and Fish R&D relies upon interdisciplinary research to inform policy initiatives affecting wildlife 

and fish habitat on private and public lands, and the recovery of threatened or endangered species.

Scientists investigate the complex interactions among species, ecosystem dynamics and processes, land 

use and management, and any emerging broad scale threats to fish and wildlife viability, including 

global climate change, loss of open space, invasive species, and disease. 
SECTION II | FINANCIAL INFORMATION 157

Resource Management and Use

Resource Management and Use R&D provides the science and technology base to sustainably manage 

and use forest resources and forest fiber-based products. 

Research focuses on the plant sciences, soil sciences, social sciences, silviculture, productivity, forest 

and range ecology management, harvesting and operations, forest and biomass products and utilization, 

economics, urban forestry, and climate change. 

Outdoor Recreation 

Outdoor Recreation R&D promotes human and ecological sustainability by researching environmental 

management, activities, and experiences that connect people with the natural world. 

Research in outdoor recreation is interdisciplinary, focusing on nature-based recreation and the changing 

trends in American society; connections between recreation visitors, communities, and the environment; 

human benefits and consequences of recreation and nature contact; the effectiveness of recreation 

management and decision-making; and sustaining ecosystems affected by recreational use. 

Inventory and Monitoring 

Inventory and Monitoring R&D provides the resource data, analysis, and tools that monitor vulnerable 

forest ecosystems for rapid change resulting from threats, including fire, insects, disease, natural 

processes, or management actions. From their research, scientists determine the status and trend of the 

health of the Nation’s forests and grasslands, and the potential impact from ongoing and anticipated 

environmental stressors. 

Their research integrates the development and use of science, technology, and remotely sensed data to 

better understand the incidences of forest fragmentation over time from changes in land use or from 

insects, disease, fire, and extreme weather events.

A representative summary of FY 2019 accomplishments include the following: 

▪ 48 new interagency agreements and contracts

▪ 20 interagency agreements and contracts continued 

▪ 1,184 articles published in journals 

▪ 735 articles published in all other publications 

▪ 3 patents granted 

▪ 2 patent licenses executed 

Economic Research Service (ERS)

ERS provides economic and other social science research and analysis for public and private decisions 

on agriculture, food, natural resources, and rural America. Research results and economic indicators on 
158 USDA AGENCY FINANCIAL REPORT | 2019

these important issues are fully disseminated through published and electronic reports and articles, 

special staff analyses, briefings, presentations and papers, databases, and individual contacts. ERS’ 

objective information and analysis helps public and private decision makers attain the goals that promote 

agricultural competitiveness, food safety and security, a well-nourished population, environmental 

quality, and a sustainable rural economy. 

National Agricultural Statistics Service (NASS)

NASS conducts research to improve the statistical methods and related technologies used to produce 

U.S. agriculture statistics. The research agenda has two primary areas of emphasis: the National 

Agriculture Statistics Service estimation program and the Census of Agriculture program. For each, the 

goal is the development of improved estimates at lower cost, with reduced respondent burden, and with 

valid measures of uncertainty. All facets of the estimation process are considered, from increasing 

efficiencies in sampling and data collection to enhancing the statistical methodology used to analyze the 

data. Two high priority items within the research effort are exploring approaches to reducing respondent 

burden and model-based estimates. The use of previously reported, remotely sensed, and administrative 

data have the potential to substantially reduce respondent burden, but can also introduce bias. Assessing 

the best ways to use these data and continue to produce precise statistics is a major effort. Models are 

used to combine data from disparate sources, from sample surveys to remote sensing, resulting in 

improved estimates with valid measures of uncertainty. Going forward, users of NASS services and 

products will be increasingly dependent upon methodological and technological efficiencies. 

Natural Resources Conservation Service (NRCS)

NRCS Plant Materials Centers (PMC) are research farms engaging in applied research and development 

as defined in SFFAS No. 8. Overall efforts of PMCs include the selection of plants and the development 

of plant technology used by NRCS and conservation partners for the application of vegetation to solve 

natural resource issues on private and public lands. 

The NRCS Soil Science Division (SSD) conducts soil survey research and provides leadership for the 

National Cooperative Soil Survey (NCSS), which is responsible for the soils inventory of the United States 

and interpreting this information to “help people help the land” through natural resource conservation. 
SECTION II | FINANCIAL INFORMATION 159

Required Supplementary Information

DEFERRED MAINTENANCE AND REPAIRS (UNAUDITED)

The Forest Service is steward to nearly 193 million acres of national forests and grasslands within the 

NFS. On these NFS lands, the agency manages major assets that are categorized as general PP&E, 

including nearly 40,000 administrative, recreation, and research buildings and approximately 27,000 

recreational sites, such as campgrounds, picnic areas, trailheads, and interpretive sites. 

Across the NFS, the agency also manages over 370,000 miles of roads, of which 65,000 miles are for 

passenger vehicles; over 159,000 miles of trails for motorized and non-motorized use; nearly 13,400 

road and trail bridges; and over 1,700 Forest Service-owned and Special Use Permitted dam structures.

ARS owns/manages approximately 15 million gross square feet of facility space in 3,000 buildings on 

379,000 acres of land. APHIS operates approximately 28 facilities, which includes 378 buildings, in the 

United States and 14 facilities/buildings internationally. The NRCS portfolio of owned assets 

encompasses 29 sites, including 13 parcels of owned land, 224 buildings, and about 221 other structures. 

Deferred Maintenance & Repairs (DM&R) estimates include capitalized PP&E, non capitalized heritage 

assets, and non capitalized or fully depreciated PP&E. 

No DM&R is reported for stewardship land because land is considered to be in acceptable condition 

unless an environmental contamination or liability is identified and the land cannot be used for its 

intended purpose. Stewardship land easements are excluded from DM&R since ownership is retained by 

the landowner. 

Defining and Implementing Maintenance and Repairs Policies in Practice 

Policies for ranking and prioritizing DM&R activities for most assets, except bridges, are based on 

condition surveys performed on a 5-year revolving schedule. Bridge class assessments occur on a 2-year

revolving schedule. To-date, surveys of all administrative buildings, dams, bridges, roads open to 

passenger cars, and recreation sites have been accomplished. The agency’s DM&R for NFS passenger 

car roads is determined every other year from random sample surveys providing a moderate level of 

confidence in the accuracy of the data reported. DM&R is not reported for roads that are not part of the 

passenger-car system.

ARS, APHIS, and NRCS use similar condition surveys to estimate DM&R on all major classes of its 

PP&E and heritage assets.

Ranking and Prioritizing Maintenance and Repairs Activities

Maintenance and repair activities are prioritized based on condition surveys and ranked based on PP&E 

and heritage assets that pose serious threats to public health or safety, a natural resource, or the ability of 

the agency to implement its mission. 
160 USDA AGENCY FINANCIAL REPORT | 2019

Factors Considered in Setting Acceptable Condition

The standards for acceptable operating condition for various classes of PP&E and heritage assets are 

as follows:

Conditions of roads and bridges within the NFS road system are measured by various standards: 

▪ Federal Highway Administration regulations for the Federal Highway Safety Act. 

▪ Best management practices for the nonpoint source provisions of the Clean Water Act from 

U.S. Environmental Protection Agency and States. 

▪ Road management objectives developed through the National Forest Management Act forest 

planning process. 

▪ Forest Service directives—Forest Service Manual (FSM) 7730, Operation and Maintenance; Forest 

Service Handbook (FSH) 7709.56a, Road Preconstruction, and FSH 7709.56b, Transportation 

Structures Handbook. 

Dams in the NFS are managed according to FSM 7500, Water Storage and Transmission, and FSH 

7509.11, Dams Management Handbook. The condition of a dam is acceptable when the dam meets 

current design standards and does not have any deficiencies that threaten the safety of the structure or 

public. For dams to be rated in acceptable condition, the agency needs to restore the dams to the original 

functional purpose, correct unsightly conditions, or prevent more costly repairs. 

Buildings in the NFS shall comply with the International Family of Building and Related Codes, the 

National Fire Protection Association Life Safety Code, the Forest Service Health and Safety Handbook, 

and the Occupational Safety Health Administration as determined by condition surveys and safety 

inspections. These requirements are found in FSM 7310, Buildings and Related Facilities, revised 

November 19, 2004. 

Recreation facilities in the NFS are located within recreation sites that range from highly developed sites 

to general forest areas such as campgrounds, trailheads, trails, water and wastewater systems, 

interpretive facilities, and visitor centers. Recreation sites are managed in accordance with Federal laws 

and regulations (Code of Federal Regulations [CFR] 36). 

Detailed management guidelines are contained in FSM 2330, Publicly Managed Recreation 

Opportunities, and forest- and regional-level user guides. Quality standards for developed recreation 

sites in the NFS were established as Meaningful Measures for health and cleanliness, settings, safety and 

security, responsiveness, and the condition of the facility. 

Trails and trail bridges in the NFS are managed according to Federal law and regulations (CFR 36). 

More specific direction is contained in FSM 2350, Trail, River, and Similar Recreation Opportunities, 

and the FSH 2309.18, Trails Management Handbook. 

ARS, APHIS, and NRCS define acceptable condition in accordance with standards comparable to those 

used in private industry for buildings and other structures. 
SECTION II | FINANCIAL INFORMATION 161

Deferred Maintenance and Repair Costs

Asset Category FY 2019 Ending 

Balance 

FY 2019 Beginning 

Balance 

FY 2018 Ending 

Balance 

FY 2018 Beginning 

Balance 

General PP&E $ 5,663 $ 5,648 $ 5,648 $ 5,342 

Heritage Assets 210 180 180 149 

Total $ 5,873 $ 5,828 $ 5,828 $ 5,491 
162 USDA AGENCY FINANCIAL REPORT | 2019

COMBINING STATEMENTS OF BUDGETARY RESOURCES (UNAUDITED) 

FSA CCC NRCS RMA FPAC FNS FSIS AMS APHIS

FY 2019 

Budgetary

Non-Budgetary 

Financing 

Accounts Budgetary

Non-Budgetary 

Financing 

Accounts Budgetary Budgetary

Business 

Center 

Budgetary Budgetary Budgetary Budgetary Budgetary

Budgetary Resources:

Unobligated Balance From Prior Year Budget Authority, Net 2,807 209 1,035 82 5,606 582 - 34,903 77 518 768 

Appropriations (Discretionary and Mandatory) 4,348 - 1,777 - 5,434 12,381 263 103,536 1,064 1,607 1,526 

Borrowing Authority (Discretionary and Mandatory) - 2,792 27,127 334 - - - - - - - 

Spending Authority From Offsetting Collections (Discretionary and Mandatory) 347 1,847 30 86 39 1,292 20 49 241 181 222 

Total Budgetary Resources 7,502 4,848 29,969 502 11,079 14,255 283 138,488 1,382 2,306 2,516 

Status of Budgetary Resources: 

New Obligations and Upward Adjustments (Total) 2,382 3,107 29,392 351 5,155 13,627 278 94,763 1,295 1,563 1,669 

Unobligated Balance, End of Year: Apportioned, Unexpired Accounts 4,939 1,516 215 38 3,247 621 5 16,742 74 221 779 

Exempt From Apportionment, Unexpired Accounts - - - - - - - - - 1 - 

Unapportioned, Unexpired Accounts 115 225 361 113 (2) 3 - 3,268 - 500 4 

Unexpired Unobligated Balance, End of Year 5,054 1,741 576 151 3,245 624 5 20,010 74 722 783 

Expired Unobligated Balance, End of Year 66 - 1 - 2,679 4 - 23,715 13 21 64 

Unobligated Balance, End of Year (Total) 5,120 1,741 577 151 5,924 628 5 43,725 87 743 847 

Total Budgetary Resources 7,502 4,848 29,969 502 11,079 14,255 283 138,488 1,382 2,306 2,516 

Budget Authority and Outlays, Net 

Outlays, Net (Discretionary and Mandatory) 2,035 880 22,827 (19) 4,017 11,995 177 92,579 1,052 1,324 1,311 

Distributed Offsetting Receipts (-) - (27) (1) (48) 11 - - (2) (15) (180) (9)

Agency Outlays, Net (Discretionary and Mandatory) 2,035 853 22,826 (67) 4,028 11,995 177 92,577 1,037 1,144 1,302 

FS FAS ARS NIFA ERS NASS RD DM Total

FY 2019 

Budgetary Budgetary Budgetary Budgetary Budgetary Budgetary Budgetary

Non-Budgetary 

Financing 

Accounts Budgetary Budgetary

Non-Budgetary 

Financing 

Accounts

Budgetary Resources:

Unobligated Balance From Prior Year Budget Authority, Net 1,518 319 443 620 3 20 9,198 4,412 393 58,810 4,703 

Appropriations (Discretionary and Mandatory) 7,766 428 1,703 1,730 87 176 6,005 84 1,126 150,957 84 

Borrowing Authority (Discretionary and Mandatory) - - - - - - - 10,913 - 27,127 14,039 

Spending Authority From Offsetting Collections (Discretionary and Mandatory) 675 75 141 23 2 21 1,111 8,679 1,113 5,582 10,612 

Total Budgetary Resources 9,959 822 2,287 2,373 92 217 16,314 24,088 2,632 242,476 29,438 

Status of Budgetary Resources: 

New Obligations and Upward Adjustments (Total) 7,152 541 1,477 1,674 88 217 8,114 15,090 1,510 170,897 18,548 

Unobligated Balance, End of Year: Apportioned, Unexpired Accounts 2,786 138 791 738 2 - 4,025 8,534 360 35,683 10,088 

Exempt From Apportionment, Unexpired Accounts - - - - - - - - - 1 - 

Unapportioned, Unexpired Accounts 20 9 (1) (61) - - 4,099 464 727 9,042 802 

Unexpired Unobligated Balance, End of Year 2,806 147 790 677 2 - 8,124 8,998 1,087 44,726 10,890 

Expired Unobligated Balance, End of Year 1 134 20 22 2 - 76 - 35 26,853 - 

Unobligated Balance, End of Year (Total) 2,807 281 810 699 4 - 8,200 8,998 1,122 71,579 10,890 

Total Budgetary Resources 9,959 822 2,287 2,373 92 217 16,314 24,088 2,632 242,476 29,438 

Budget Authority and Outlays, Net 

Outlays, Net (Discretionary and Mandatory) 6,444 327 1,208 1,412 82 170 5,926 869 348 153,234 1,730 

Distributed Offsetting Receipts (-) (871) (6) (19) (35) - (4) (4) (1,756) (116) (1,251) (1,831)

Agency Outlays, Net (Discretionary and Mandatory) 5,573 321 1,189 1,377 82 166 5,922 (887) 232 151,983 (101)
SECTION II | FINANCIAL INFORMATION 163

FSA CCC NRCS RMA FPAC FNS FSIS AMS APHIS

FY 2018 

Budgetary

Non-Budgetary 

Financing 

Accounts Budgetary

Non-Budgetary 

Financing 

Accounts Budgetary Budgetary

Business 

Center 

Budgetary Budgetary Budgetary Budgetary Budgetary

Budgetary Resources:

Unobligated Balance From Prior Year Budget Authority, Net 544 218 3,276 75 4,925 584 - 39,173 92 255 743 

Appropriations (Discretionary and Mandatory) 4,605 - 1,815 - 5,202 6,553 1 104,479 1,070 1,536 1,331 

Borrowing Authority (Discretionary and Mandatory) - 3,198 9,888 340 - - - - - - - 

Spending Authority From Offsetting Collections (Discretionary and 

Mandatory)

 370 1,813 46 87 65 3,760 - 59 208 180 198 

Total Budgetary Resources 5,519 5,229 15,025 502 10,192 10,897 1 143,711 1,370 1,971 2,272 

Status of Budgetary Resources: 

New Obligations and Upward Adjustments (Total) 2,740 2,879 14,384 345 4,999 10,315 1 99,734 1,295 1,464 1,520 

Unobligated Balance, End of Year: Apportioned, Unexpired Accounts 2,626 1,976 341 74 2,550 578 - 8,012 58 166 640 

Exempt From Apportionment, Unexpired Accounts - - - - - - - - - 1 - 

Unapportioned, Unexpired Accounts 78 374 299 83 (7) - - 6,179 - 320 4 

Unexpired Unobligated Balance, End of Year 2,704 2,350 640 157 2,543 578 - 14,191 58 487 644 

Expired Unobligated Balance, End of Year 75 - 1 - 2,650 4 - 29,786 17 20 108 

Unobligated Balance, End of Year (Total) 2,779 2,350 641 157 5,193 582 - 43,977 75 507 752 

Total Budgetary Resources 5,519 5,229 15,025 502 10,192 10,897 1 143,711 1,370 1,971 2,272 

Budget Authority and Outlays, Net 

Outlays, Net (Discretionary and Mandatory) 2,117 679 12,442 (90) 3,991 6,525 1 97,234 1,069 1,107 1,219 

Distributed Offsetting Receipts (-) - (178) (1) (30) (5) - - (6) (14) (169) (10)

Agency Outlays, Net (Discretionary and Mandatory) $ 2,117 $ 501 $ 12,441 $ (120) $ 3,986 $ 6,525 $ 1 $ 97,228 $ 1,055 $ 938 $ 1,209 

FS FAS ARS NIFA ERS NASS RD DM Total

FY 2018 

Budgetary Budgetary Budgetary Budgetary Budgetary Budgetary Budgetary

Non-Budgetary 

Financing 

Accounts Budgetary Budgetary

Non-Budgetary 

Financing 

Accounts

Budgetary Resources:

Unobligated Balance From Prior Year Budget Authority, Net 1,540 187 297 610 4 6 7,853 3,177 366 60,455 3,470 

Appropriations (Discretionary and Mandatory) 7,290 406 1,386 1,573 87 192 5,957 - 431 143,914 - 

Borrowing Authority (Discretionary and Mandatory) - - - - - - - 13,670 - 9,888 17,208 

Spending Authority From Offsetting Collections (Discretionary and 

Mandatory) 811 256 160 35 2 24 2,595 3,667 1,069 9,838 5,567 

Total Budgetary Resources 9,641 849 1,843 2,218 93 222 16,405 20,514 1,866 224,095 26,245 

Status of Budgetary Resources: 

New Obligations and Upward Adjustments (Total) 8,476 525 1,413 1,619 91 222 7,111 15,535 1,476 157,385 18,759 

Unobligated Balance, End of Year: Apportioned, Unexpired Accounts 1,108 163 413 666 - - 3,210 4,497 338 20,869 6,547 

Exempt From Apportionment, Unexpired Accounts - - - - - - - - - 1 - 

Unapportioned, Unexpired Accounts 52 9 1 (86) - - 5,985 482 11 12,845 939 

Unexpired Unobligated Balance, End of Year 1,160 172 414 580 - - 9,195 4,979 349 33,715 7,486 

Expired Unobligated Balance, End of Year 5 152 16 19 2 - 99 - 41 32,995 - 

Unobligated Balance, End of Year (Total) 1,165 324 430 599 2 - 9,294 4,979 390 66,710 7,486 

Total Budgetary Resources 9,641 849 1,843 2,218 93 222 16,405 20,514 1,866 224,095 26,245 

Budget Authority and Outlays, Net 

Outlays, Net (Discretionary and Mandatory) 7,234 369 1,148 1,344 87 190 3,140 3,116 350 139,567 3,705 

Distributed Offsetting Receipts (-) (736) (3) (25) 30 - 4 (4) (1,684) (23) (962) (1,892)

Agency Outlays, Net (Discretionary and Mandatory) $ 6,498 $ 366 $ 1,123 $ 1,374 $ 87 $ 194 $ 3,136 $ 1,432 $ 327 $ 138,605 $ 1,813 
164 USDA AGENCY FINANCIAL REPORT | 2019

Section III

Other Information

Response to Management Challenges

The Reports Consolidation Act of 2000 requires the U.S. Department of Agriculture’s (USDA) Office of 

Inspector General (OIG) to report annually on the most serious management challenges USDA and its 

agencies face. To identify these Departmental challenges, OIG provides an annual assessment of the 

previous year’s challenges to determine if they are still critical challenges; examines recently issued 

audit reports to identify critical issues that remain topical and where corrective action has not been 

satisfactorily implemented; identifies repeated inquiries or hotline trends in risk areas; assesses ongoing 

audit and investigative work to identify new issues; and analyzes new programs and activities that pose 

significant challenges due to size and complexity. 

OIG’s review of prior year and current year audit findings, as well as, the statuses of open 

recommendations has concluded that the Department remains vulnerable in these challenge areas. No 

challenges have been removed or added to this year’s report. Each challenge includes a discussion of the 

Department’s progress in addressing it, as well as what remains to be done, if applicable. 

The following narratives summarize: 

▪ OIG identified management challenges;

▪ USDA’s FY 2019 agency accomplishments; and 

▪ FY 2020 planned actions to address these management challenges. 

CHALLENGE 1: 

Management Needs to Improve Oversight and Accountability for its Programs 

USDA faces the challenge of managing a wide range of programs, each with their own requirements and 

vulnerabilities. In FY 2019, USDA’s 29 agencies and offices and nearly 100,000 employees were 

responsible for delivering approximately $144 billion in public services. Providing the appropriate level 

of oversight, while administering these programs so that every dollar spent accomplishes the intended 

results, poses significant challenges to USDA program managers. 

USDA managers are responsible for establishing an effective internal control system, ensuring a culture 

of compliance with those controls, and holding employees accountable for implementing those controls. 
SECTION III | OTHER INFORMATION 165

Managers use internal controls to ensure programs achieve intended results efficiently and effectively, 

and they provide for program integrity and proper stewardship of USDA’s resources. Since systemic 

control flaws can yield systemic program weaknesses—e.g., unrealized goals—managers must 

continuously assess and improve their internal control systems. If management does not emphasize those 

controls, federal programs will not function as intended. 

OIG Determined the Following: 

▪ The Office of Homeland Security and Emergency had not adequately overseen and coordinated 

USDA’s efforts to prevent, detect, and respond to agroterrorism. 

Corrective Actions Completed and Planned:

Office of Homeland Security and Emergency Coordination 

The Office of Homeland Security has submitted an update to Departmental Regulation (DR)-1800-001 

“Incident Preparedness, Response, and Recovery” that addresses how OSEC will oversee and coordinate 

USDA’s agroterrorism prevention, detection, and response activities. 
166 USDA AGENCY FINANCIAL REPORT | 2019

CHALLENGE 2: 

Information Technology Security Needs Continuous Improvement

Like other Departments, USDA faces threats to its IT security from adversarial nations, hostile non-state 

actors, and criminals seeking to exploit vulnerabilities. As Federal agencies rely more on data stored 

using information technology, the risk of a security breach increases. In recent years, USDA has taken 

action to improve its IT security. However, the Department still faces vulnerabilities across a broad front 

of IT security-related fields. Overall, USDA has not fully complied with the standards for safeguarding 

IT systems, as required by the Federal Information Security Modernization Act of 2014 (FISMA). 

The Department’s challenge is further complicated because, for USDA to attain a sustainable and secure 

IT posture, all of its component agencies must consistently implement Departmental policy.

In order to provide benefits and services to the American public, USDA must efficiently manage vast 

amounts of data. Some of this information is sensitive and its inappropriate release could cause 

significant problems. Members of the public apply for and access many USDA programs, benefits, and 

other services through online or mobile portals, which can require the transfer of personal information. 

USDA employees must be able to access, use, and communicate this information reliably and timely. 

The Department thus faces a significant challenge in safeguarding this information by protecting the 

security, confidentiality, and integrity of its IT infrastructure, even as it allows authorized users to access 

and use this information. 

While Department leadership has emphasized overcoming these challenges and eventually reaching full 

compliance, the Department faces great challenges in complying with FISMA. 

OIG Determined the Following: 

▪ USDA continues to take positive steps to improve its IT security posture. The Office of the Chief 

Information Officer has closed 47 out of OIG’s 67 recommendations to improve the overall 

security of USDA systems made in prior fiscal years. 

▪ The Department needs to improve its policies and procedures for preserving the privacy of users’ 

information. 

▪ The Department’s maturity level for an effective security was determined to be “defined” level, 

which indicates an ineffective level based on the Office of Management and Budget’s standard of 

“managed and measurable.” The Department needs to improve its score to an effective level.

▪ The Department did not fully implement Federally-mandated controls for security over USDA 

networks and systems. 
SECTION III | OTHER INFORMATION 167

Corrective Actions Completed or Planned: 

Office of the Chief Information Officer

In FY 2019 USDA implemented all overdue (FY 2009–FY 2017) recommendations including the 

18 overdue recommendations noted in the report. Implementing these recommendations closed 

11 audits. OCIO also implemented 4 recommendations from FY 2018 OIG audits. The Department will 

continue to promptly and effectively address open recommendations related to information technology 

security during FY 2020. 

A memorandum was issued to USDA’s agencies and staff offices which prescribed minimum safeguards 

to protect Personally Identifiable Information (PII). The Department also developed privacy policies and 

procedures to protect users’ personal information in accordance with statutory and regulatory 

requirements. 

During FY 2020 OCIO will: 

▪ Strengthen management controls related to the protection of PII on USDA information technology 

systems;

▪ Reevaluate its policy for encryption and require positive confirmation that appropriate federal 

encryption standards are in place for PII data in transit and data at rest; and

▪ Flag Plans of Action and Milestones (POAMs) associated with PII encryption and escalate 

noncompliance to the Mission Area leadership for immediate action.

In FY 2019, USDA raised the capability maturity model (CMM) level of 19 FISMA questions; a 

32 percent increase for USDA in FY 2019. This improvement reflects the Departments achievement in 

publishing seven new cybersecurity Departmental directives (6 policies, 1 procedure) and implementing 

cybersecurity tools to improve vulnerability management automation. 

During FY 2019, USDA partnered with the security community to implement best practices to address 

federally-mandated controls. In FY 2020, improvements to processes, additional implementation of 

continuous diagnostics and mitigation tool capabilities, coupled with an increase in human capital will 

expedite the full implementation of federally-mandated controls. 
168 USDA AGENCY FINANCIAL REPORT | 2019

CHALLENGE 3: 

USDA Needs to Strengthen Program Performance and Performance Measures 

Designing, developing, and implementing programs that reliably achieve their intended results has been 

a recurring challenge for the Department. OIG found that agencies do not have adequate reviews or 

controls in place to supply the metrics necessary to evaluate program performance. As a result, some 

agencies are using inaccurate or unreliable data in program performance reports.

USDA manages approximately 300 programs that provide a variety of services and financial assistance 

to the American public. This diverse portfolio of programs means that, for the Department to serve as a 

diligent steward of Federal funds, USDA must have well-designed programs with clear goals and 

performance measures.

The Government Performance and Results Modernization Act of 2010 set requirements for regular and 

recurring program performance assessment. In keeping with the law, an agency should have controls in 

place that allow it to regularly review a program’s performance, and then compile reports that allow it to 

measure and report on that performance. These reports allow the Department to fairly evaluate its 

programs’ successes and failures. The Department needs stronger program performance and 

performance measures. 

OIG Determined the Following: 

▪ The Foreign Agricultural Service (FAS) had not updated its Country Strategy Statements to align 

with the goals and objectives contained in its strategic plan. 

Corrective Actions Completed or Planned: 

Foreign Agricultural Service 

FAS’s 2019-2022 Strategic Plan was released on March 26, 2019. In August 2019, FAS issued new 

guidance for reviewing the Country Strategy Statements (CSS) that organizes and aligns the CSS 

objectives with those in the FAS Strategic Plan. Updates to the Country Strategy Statements will be 

completed by September 30, 2020. 
SECTION III | OTHER INFORMATION 169

CHALLENGE 4: 

USDA Needs to Strengthen Controls Over Improper Payments and Financial 

Management 

USDA continues to be noncompliant with Federal requirements for improper payments. Also, USDA 

needs to address internal control deficiencies to resolve ongoing problems with financial management 

and reporting. 

The Department’s annual financial reports provide the public, Congress, and the President with 

information regarding the funds spent on public services every year. These reports account for USDA’s 

costs and revenues, assets and liabilities, and other information. OIG reviews the Department’s financial 

reports annually, as required by law, to verify accuracy and compliance with Federal rules regarding 

high-dollar overpayments and improper payments. 

The Department has been making progress towards fully complying with improper payment 

requirements as set forth by the Improper Payments Information Act of 2002, as amended. In its eighth 

year of reporting, USDA identified nine programs as susceptible to significant improper payments (highrisk) in FY 2018, which is one fewer than the year before. Additionally, five of USDA’s nine high-risk 

programs were fully compliant in FY 2018, compared to three the year before. Finally, the Department 

substantially complied with four of the six improper payment requirements in FY 2018 compared to 

three the year before. 

OIG Determined the Following: 

▪ The Natural Resources Conservation Service and the Commodity Credit Corporation need to make 

further improvements to their overall financial management.

▪ USDA needs to improve its controls over financial reporting related to obligations. 

Corrective Actions Completed or Planned for Financial Reporting: 

Commodity Credit Corporation 

CCC will continue its efforts to:

▪ Implement effective Undelivered Orders (UDO) monitoring controls at the program level, to assess 

the accuracy and validity of open obligations; 

▪ Provide training to personnel in the field and county offices on the requirements of Office of 

Management and Budget Circular A-11 for recording obligations, and ensure program handbooks 

are up-to-date regarding execution and related accounting; 

▪ Implement effective automated and/or manual controls to evaluate the relationship between a 

Conservation Reserve Program (CRP) annual rental contract and CRP cost share contract, and 
170 USDA AGENCY FINANCIAL REPORT | 2019

develop and implement data analytic routines and management review controls related to program 

UDO populations to identify and correct abnormalities in the data; 

▪ Strengthen management controls related to the annual Agriculture Risk Coverage (ARC) and Price 

Loss Coverage (PLC) UDO calculation to ensure that it is performed at a level of precision to 

include relevant and accurate data elements; 

▪ Implement processes, procedures, and controls to ensure accurate recognition of adjustments to 

delivered orders are input into the accounting systems, and perform periodic reviews of the 

accounting events to validate the results of recorded transactions; 

▪ Implement effective automated budgetary funds control within its accounting systems to mitigate 

the occurrence of violations; 

▪ Implement effective internal controls to review and reconcile general ledger account interrelationships between borrowing authority and other budgetary accounts; and 

▪ Record borrowing authority at the appropriate program level to prevent abnormal balance and to 

assist in meaningful account review and reconciliation. 

Natural Resources Conservation Service 

In FY 2019, NRCS incorporated period of performance in obligation reports from the feeder system and 

added fiscal year of performance to ProTracts reports. In FY 2020, NRCS will enhance the feeder 

system and Financial Management Modernization Initiative (FMMI) processes to provide capability to 

produce aged Unliquidated Obligations (ULO) information. In addition, NRCS will establish an ongoing 

process to maintain, monitor, and certify ULOs by period of performance. NRCS will document internal 

controls to ensure transactional data and assumptions are reviewed. Additional guidance and training 

will also be provided to employees over the recording of transactions with future economic benefit. 

Office of the Chief Financial Officer

During FY 2019, a new ULO Aging Report was developed in the Department’s integrated financial 

management system, FMMI. The report is a tool that reconciles to the general ledger and helps to 

ensure that the ULO population is consistent, accurate, and complete. A ULO Directive was updated: 

(1) to require the review of obligations inactive for 12 months and more than $100, (2) to ensure 

internal ULO Aging Reports reconcile to the general ledger, and (3) ULOs are categorized based on 

the nature of the activity to be researched. During FY 2020, the Department will issue and implement 

ULO Directive 2230-001. 

Monthly ULO Departmental meetings were held in FY 2019 to discuss emerging issues identified by 

audits, and OMB Circular A-123 concerns. The monthly meetings will continue as needed for FY 2020. 
SECTION III | OTHER INFORMATION 171

CHALLENGE 5: 

USDA Needs to Improve Outreach Efforts 

The Secretary of Agriculture has stressed the importance of civil rights and equitable treatment in the 

Department’s outreach efforts. Now more than ever, in a time of heightened sensitivity and cultural awareness 

of discrimination and sexual misconduct, USDA needs to make efforts to reach out to—and ensure equal 

treatment of—minorities, women, and veterans, as well as new and beginning farmers and ranchers.

Due to a history of public attention concerning how USDA has treated members of sociallydisadvantaged groups—including both USDA employees and program recipients—the Department faces 

challenges in earning those groups’ trust.

USDA needs to make efforts to ensure its programs are equally accessible to all and its agencies and 

offices treat employees fairly and ethically. First, the Food, Conservation, and Energy Act of 2008 

directed that all pending claims and class actions brought against USDA by socially-disadvantaged 

farmers or ranchers, including Hispanics and women, based on racial, ethnic, or gender discrimination in 

farm program participation, be resolved in an expeditious and just manner. Second, in light of 

allegations of sexual harassment and misconduct within the Forest Service (FS), and in response to 

Congressional requests, OIG began a series of reviews in 2014 concerning the FS work environment and 

its handling of sexual harassment complaints, which has resulted in two audit reports and a survey in 

FS Region 5 regarding sexual harassment. 

OIG Determined the Following: 

▪ The Forest Service (FS) needs to ensure its actions hold individuals accountable, deter future 

sexual misconduct and harassment, and establish internal guidelines for documenting the 

justification when deviating from a recommended penalty. 

▪ The Food and Nutrition Service (FNS) needs to address findings from audits of State agencies 

administering the Summer Food Service Program.

Corrective Actions Completed or Planned for Financial Reporting:

Forest Service

FS recognizes the importance of all employees functioning at a high level of performance and behavior. FS 

has continued to make progress and implement solutions that will address OIG’s audit report. For FY 2020, 

the agency will research and investigate the best approach to complete the open recommendations.

Food and Nutrition Service 

Per OIG’s audit finding, the identified sponsor’s site review forms have been reviewed and confirmed 

by both the New York State agency and FNS to ensure that the sponsor is now correctly collecting the 

required ethnic and racial data.
172 USDA AGENCY FINANCIAL REPORT | 2019

CHALLENGE 6: 

Food Safety Inspections Need Improved Controls

The Food Safety and Inspection Service (FSIS) is responsible for protecting the public health by 

ensuring the safety of the Nation’s commercial supply of meat, poultry, and processed egg products. 

FSIS is tasked with reducing contamination and limiting illnesses through the regulation of agricultural 

food products. FSIS continues to face challenges, including gathering reliable data to help ensure safety 

verification tasks are completed, effective, and consistent. 

OIG Determined the Following: 

▪ FSIS lacked adequate management oversight to ensure inspectors’ compliance with verification 

requirements and that inspectors’ results were recorded in the Public Health Information System. 

Corrective Actions Completed and Planned: 

Food Safety and Inspection Service 

FSIS will revise and reissue Directive 5000.8, “Verifying Compliance with Requirements for Written 

Recall Procedures.” This directive will provide the instructions for inspection program personnel to 

follow and ensure establishments have prepared and maintained written recall procedures. The directive 

will be issued during FY 2020. 
SECTION III | OTHER INFORMATION 173

CHALLENGE 7: 

FNS Needs to Strengthen SNAP Management Controls

Although FNS has endeavored to improve management controls for SNAP, weaknesses continue to exist 

in controls over benefit distribution and quality control (QC) processes. The potential exists for billions 

of dollars of taxpayer-funded assistance not to be delivered or used as intended. 

As the largest benefit program within USDA, and one of the largest in the Federal Government, SNAP 

presents a unique challenge for the program’s managers. According to FNS, in May 2019, more than 

35.9 million people received $4.3 billion in SNAP benefits. 

Given SNAP’s size and significance, fraud, waste, and abuse are critical concerns. USDA loses 

hundreds of millions of dollars every year to fraud and crime associated with SNAP and other FNS food 

assistance programs. 

OIG Determined the Following: 

▪ FNS needs to evaluate the cost-benefit of changing the QC process from a two-tier process that 

relies on the States to make error determinations, to a one-tier process where only FNS or an 

unaffiliated third-party contractor reviews cases for errors. 

Corrective Actions Completed and Planned: 

Food and Nutrition Service 

FNS is near the completion of the study on the feasibility of revising the SNAP Quality Control review 

process. After completion, the results will be analyzed. The feasibility study is what informs the costbenefit analysis and what a realistic timeline would be for implementing a one-tier QC system. 

The OIG USDA Management Challenges Report, issued September 2019, may be viewed in its entirety 

at the following website: www.usda.gov/oig/index.htm. 
174 USDA AGENCY FINANCIAL REPORT | 2019

Summary of Financial Statement Audit and 

Management Assurances

SUMMARY OF EXISTING MATERIAL WEAKNESSES

The U.S. Department of Agriculture’s (USDA) material weaknesses and financial system nonconformance, as related to management’s assurance for the Federal Managers’ Financial Integrity Act 

(FMFIA) and the certification for the Federal Financial Management Improvement Act (FFMIA), are 

listed in Exhibit 29 and Exhibit 30. 

EXHIBIT 29: Summary of Financial Statement Audit 

Audit Opinion: Unmodified 2019 Consolidated Financial Statement Audit

Restatement: No

Material Weakness Beginning 

Balance New Resolved Consolidated Ending 

Balance

Improvement Needed in 

Financial Management 1 1 

Improvement Needed in 

Information Technology 

Security and Controls

1 1 

TOTAL MATERIAL 

WEAKNESSES 2 2 

EXHIBIT 30: Summary of Management Assurances

Effectiveness of Internal Control Over Reporting (FMFIA § 2)

Statement of Assurance: Modified

Material Weakness Beginning 

Balance New Resolved Consolidated Reassessed Ending 

Balance

Information Technology 1 1 

Financial Management 1 1 

TOTAL MATERIAL 

WEAKNESSES 2 2 
SECTION III | OTHER INFORMATION 175

Effectiveness of Internal Control Over Operations (FMFIA § 2)

Statement of Assurance: Unmodified

Material Weakness Beginning 

Balance New Resolved Consolidated Reassessed Ending 

Balance

TOTAL MATERIAL 

WEAKNESSES 0 0 

Conformance with Federal Financial Management System Requirements (FMFIA § 4)

Statement of Assurance: Systems do not conform to financial management system requirements

Material Weakness Beginning 

Balance New Resolved Consolidated Reassessed Ending 

Balance

Funds Control 

Management 1 1 

TOTAL 

NON-CONFORMANCES 1 1 

Compliance with Section 803 (A) of the Federal Financial Management Improvement Act (FFMIA)

Item Agency Auditor

1. Federal Financial Management System 

Requirements Lack of compliance noted Lack of compliance noted

2. Applicable Federal Accounting Standards Lack of compliance noted Lack of compliance noted

3. U.S. Standard General Ledger at 

Transaction Level Lack of compliance noted Lack of compliance noted
176 USDA AGENCY FINANCIAL REPORT | 2019

Payment Integrity

Getting Payments Right is a Federal Government-wide Cross-Agency Priority (CAP) goal to 

demonstrate stewardship of taxpayer dollars by reducing monetary loss and making payments correctly 

the first time. Although improper payments may compromise citizens’ trust in government, they are not 

always indicative of fraud, nor do they necessarily represent payments that should not have been made. 

Having the right information and the capacity to address root causes are critical components. 

The U.S. Department of Agriculture (USDA) continues to demonstrate a commitment to payment 

integrity through active participation in CAP Goal 9 Working Group, led by the Office of Management 

and Budget (OMB). USDA, along with other Federal agencies, analyzes strategic data use which 

includes identifying all available private and public data sets that could be used to perform payment 

eligibility checks. Agencies are working to increase program use of pre-checks and post-award analysis 

aimed at preventing monetary loss. 

USDA efforts resulted in statistically validating the Natural Resources Conservation Service’s (NRCS) 

Farm Security and Rural Investment Act Program’s (FSRIP), which improved its payment integrity 

levels above the statutory reporting threshold for 2 consecutive years and has received concurrence from 

the Office of the Inspector General (OIG) to request relief from reporting requirements from OMB.

WHAT ARE IMPROPER PAYMENTS?

OMB Memorandum M-18-20 defines an improper payment as: 

▪ Any payment that should not have been made or that was made in an incorrect amount (including 

overpayments and underpayments) under statutory, contractual, administrative, or other legally 

applicable requirements; 

▪ Any payment to an ineligible recipient, any payment for an ineligible good or service, any 

duplicate payment, any payment for a good or service not received (except for such payments 

where authorized by law), and any payment that does not account for credit for applicable 

discounts; and

▪ Any time an agency’s review is unable to discern whether a payment was proper as a result of 

insufficient or lack of documentation. 

ARE IMPROPER PAYMENTS REQUIRED TO BE REPORTED?

Yes, the Improper Payments Information Act of 2002 (IPIA), as amended by the Improper Payments 

Elimination and Recovery Act of 2010 (IPERA), the Improper Payments Elimination and Recovery 

Improvement Act of 2012 (IPERIA), and the Federal Improper Payments Coordination Act of 2015 

(FIPCA), requires executive agencies to identify programs that may be susceptible to significant 

improper payments, estimate the annual amount of improper payments, and submit those estimates 

through the Agency Financial Report (AFR). 
SECTION III | OTHER INFORMATION 177

A program that is determined to be susceptible to significant improper payments is referred to as a 

high-risk program within the USDA’s AFR. A high-risk program has both a 1.5 percent improper 

payment rate and at least $10 million in improper payments or exceeds $100 million dollars in improper 

payments (regardless of rate). Readers can obtain more detailed information on improper payments and 

information published in past AFRs at PaymentAccuracy.gov. 

RISK ASSESSMENTS SECTION

USDA has approximately 300 programs. Similar programs were grouped together to help identify and 

report improper payments. This method resulted in a USDA program inventory list of 156 programs for 

IPIA reporting purposes. Twelve of these programs are considered significant risk of improper payments 

and 144 programs are considered low-risk of improper payments. Risk assessments for low-risk 

programs are completed on a 3-year rotation cycle to monitor their susceptibility to improper payments. 

During FY 2019, 49 programs completed risk assessments. 

In FY 2019, USDA’s Office of the Chief Financial Officer (OCFO) updated its risk assessment guidance 

in response to the revised OMB Circular A-123, Appendix C. These updates include OCFO assigning a 

risk score to each completed risk assessment. Within each risk assessment, the program is required to 

document its mitigating factors that address the following risk factors: 

1. Whether the program or activity reviewed is new to the agency;

2. The complexity of the program or activity reviewed, particularly with respect to determining 

correct payment amounts; 

3. The volume of payments made annually; 

4. Whether payments or payment eligibility decisions are made outside of the agency, for example, 

by a State or local government, or a regional federal office;

5. Recent major changes in program funding, authorities, practices, or procedures; 

6. The level, experience, and quality of training for personnel responsible for making program 

eligibility determinations or certifying that payments are accurate; and

7. Significant deficiencies in the audit reports of the agency including, but not limited to, the agency’s 

Inspector General or the Government Accountability Office (GAO) audit report findings, or other 

relevant management findings that might hinder accurate payment certification.

In FY 2019, the Food and Nutrition Service conducted a risk assessment of the Summer Food Service 

Program to address a recommendation from an OIG audit. Based on the results of the risk assessment 

and the findings in the OIG audit, OCFO considers this program to be at high-risk for improper 

payments and will require this program to complete all the requirements of a program susceptible to 

significant improper payments in the FY 2020 AFR reporting year. 
178 USDA AGENCY FINANCIAL REPORT | 2019

In FY 2017, OCFO began a three year “Risk Assessment Methodology” pilot to leverage existing OMB 

Circular A-123, Appendix A, assessment methods to meet the OMB Circular A-123, Appendix C, risk 

assessment deliverable. In FY 2019, the following five programs continued to participate in the pilot: 

1. Animal and Plant Health Inspection Service (APHIS) Salaries and Expenses

2. APHIS Indemnity Program 

3. APHIS Buildings and Facilities

4. APHIS Trust Funds 

5. APHIS Cooperative Agreements

USDA is currently analyzing the results and lessons learned from the pilot to determine if this strategy is 

potentially feasible for other USDA low-risk programs and activities. If successfully implemented, this 

initiative would reduce USDA employees’ burden of utilizing two different risk assessment methods to 

evaluate USDA’s programs and activities and increase objectivity of the risk assessment method. 
SECTION III | OTHER INFORMATION 179

PROGRAMS SUSCEPTIBLE TO SIGNIFICANT IMPROPER PAYMENTS 

SECTION

USDA has 12 high-risk programs. Two of these programs (denoted with an asterisk) were appropriated 

under the Bi-Partisan Budget Act of 2018 and deemed susceptible to improper payments per 

OMB M-18-14: 

EXHIBIT 31: Programs Determined to be High-Risk:

Agency Name Program Name

Food and Nutrition Service (FNS)

Supplemental Nutrition Assistance Program (SNAP) 

National School Lunch Program (NSLP)

School Breakfast Program (SBP)

Special Supplemental Nutrition Program for Women, Infants, 

and Children (WIC)

Child and Adult Care Food Program (CACFP)

Forest Service (FS) Hurricane Harvey-Capital Improvement and Maintenance 

(Harvey-CIM)*

Farm Service Agency/ Commodity Credit 

Corporation (FSA/CCC)

Livestock Forage Disaster Program (LFP)

Noninsured Crop Disaster Assistance Program (NAP)

Agriculture Risk Coverage and Price Loss Coverage (ARC/PLC)

Hurricane Harvey-Emergency Conservation Program (ECP)*

Natural Resources Conservation Service 

(NRCS) Farm Security and Rural Investment Act Program (FSRIP)

Risk Management Agency (RMA) Federal Crop Insurance Corporation (FCIC)
180 USDA AGENCY FINANCIAL REPORT | 2019

SAMPLING AND ESTIMATION

Programs deemed high-risk are required to conduct an annual sample that complies with OMB Circular 

A-123, Appendix C. OMB categorizes sampling plans into three groups which are summarized below: 

1. Statistically Valid and Rigorous:

a. Based on unbiased randomized sampling and produce valid point estimates and 

confidence intervals around those estimates. 

b. Obtain a plus or minus 3 percent or better margin of error at the 95-percent confidence 

level for the improper payment percentage. 

2. Statistically Valid:

a. Based on unbiased randomized sampling and produce valid point estimates and 

confidence intervals around those estimates. 

b. Obtain a wider than plus or minus 3 percent or better margin of error at the 95-percent 

confidence level for the improper payment percentage.

3. Non-Statistically Valid:

a. Uses an approach other than what was described previously. 

b. Requires approval by the Director of OMB. 

The following are USDA’s high-risk programs and a brief description of the sampling processes used to 

conduct a statistically valid and/or rigorous sample or a justification for utilizing an OMB approved 

non-statistically valid sampling methodology:

1. FNS Supplemental Nutrition Assistance Program (SNAP)

a. Utilizes a statistically valid and rigorous sampling process. Cases, not payments, are the source 

of the sample. FNS requires states to pull a monthly random sample from the population of 

households receiving SNAP benefits for that given month. Most states draw the samples 

systematically (that is, using a constant sampling interval); however, some states employ simple 

random or stratified sampling techniques. The sample universe represents cases made in the prior 

fiscal year. FNS sample utilizes a 95-percent confidence interval resulting in a margin of error of 

plus or minus 0.24 percent. 

b. Change in sampling process: None. 

2. FNS National School Lunch Program (NSLP)

a. Utilizes a non-statistically valid sampling process for NSLP and the School Breakfast Program 

(SBP). The Access, Participation, Eligibility, and Certification Study-II (APEC-II) established 

estimates of erroneous payments for school year (SY) 2012–2013. FNS generates an annual 
SECTION III | OTHER INFORMATION 181

update for the improper payment measurements using statistical techniques based on the findings 

of this study. The payment estimates generated by the model represents SY 2017–2018. 

b. Change in sampling process: None. 

c. Justification: FNS must rely on periodic nationally representative studies to produce estimates of 

erroneous payments. Estimates of improper payments for SY 2012–2013 were produced in the 

NSLP/SBP’s APEC-II. Because of the scope and cost of such a study, it is more prudent to 

repeat it on a multi-year cycle. Contingent on available funding, FNS will produce an erroneous 

payment measurement through this type of study every 5 years. The next APEC Study is 

collecting data in SY 2017–18 and will be released in 2020. Also, as part of this same project, 

FNS will continue to refine estimation models that use administrative data from other sources in 

conjunction with the study data to “age” the data to annual estimates.

3. FNS School Breakfast Program (SBP) 

See NSLP narrative previously described.

4. FNS Special Supplemental Nutrition Program for Women, Infants, and Children 

(WIC) 

a. Utilizes a non-statistically valid sampling process. Estimates of improper payments in WIC focus 

on two components: certification error and vendor error. FNS makes use of periodic studies to 

assess the level of error in program payments and then “ages” the data to produce updated 

estimates for each reporting year. The National Survey of WIC Participants-II Study, published 

in April 2012, established estimates of erroneous payments due to certification error. The 2013 

WIC Vendor Management Study established the most recent national estimates of erroneous 

payments due to vendor error. FNS generates an annual update for the improper payment 

measurements of both components using statistical techniques based on the findings of these 

bookend studies. The sampling universe for: 

• certification error is made up of estimates for FY 2018 obtained from an econometric 

model that uses FY 2009 survey data augmented with FY 2018 food dollars and WIC 

Participant and Program Characteristics (PC) 2016 certification data; 

• vendor error is made up of estimates for FYs after FY 2012 use vendor error rates from 

the most recent statistically valid bookend study. 

b. Change in sampling process: In previous years, FNS reported improper payments associated with 

vendor errors, which included a component that does not meet OMB’s definition of improper 

payments.  The previous reporting methodology erroneously categorized savings that resulted 

from WIC State agency cost-containment policies as vendor underpayments. These vendor 

underpayments are not improper payments; they are actually consistent with statutory and 

regulatory objectives and result in desired program savings. 
182 USDA AGENCY FINANCIAL REPORT | 2019

Effective for the 2019 fiscal year reporting, FNS dropped the erroneously categorized vendor 

underpayments described previously from its improper payment total. Furthermore, FNS 

determined that the aging process for the vendor payment errors was producing erroneously high 

aged estimates of vendor error because the aging methodology estimated annual error based on 

the linear trend in error between two previous studies conducted in a predominantly paper 

voucher environment. Regardless of interventions to reduce vendor error or the move to 

electronic benefit transfer (EBT), the previous aging methodology would have always resulted in 

an increased vendor error rate over time. Therefore, FNS eliminated the aging component of the 

vendor error estimates and instead will use the error rates reported in the most recent statistically 

valid bookend study until a new bookend study is completed. FNS will retain the aging 

component of the certification error estimates. Additionally, while examining the WIC improper 

payment (IP) methodology in preparation for FY 2019 reporting, FNS identified an error in the 

aging program code for certification error that resulted in an inflated certification error rate. FNS 

has corrected the program code error and recalculated the series for certification error.

c. Justification: Because erroneous payment estimates need to be produced annually, and given that 

surveys to estimate vendor error are expensive to carry out, FNS requires a methodology to 

estimate vendor error annually based on estimates produced in the most recent studies of vendor 

error. Initial calculations to generate an annual estimate based on the linear trend between the 

two most recent bookend studies produced erroneously high aged estimates and were not 

sensitive to interventions to reduce error. Therefore, FNS now applies the error rate from the 

most recent statistically valid bookend study as the annual estimate of vendor error. 

5. FNS Child and Adult Care Food Program (CACFP)

a. Utilizes a non-statistically valid sampling process. In lieu of producing a program-wide improper 

payment measure, FNS has identified the Family Day Care Home (FDCH) component of this program 

as potentially high-risk. USDA estimates the error rate in CACFP FDCH reimbursement status through 

periodic sample-based studies. In years between studies, USDA updates the most recent study’s 

sample-based estimate with administrative data. FNS is working to develop an econometric model to 

improve its error estimates in non-study years. For the current year, however, USDA will apply the 

most recent study’s error rate to the current year’s reimbursement total. The latest CACFP study used 

sample payments made in October 2014 through August 2015. The improper payment measures 

presented do not include improper payments associated with the Adult Day Care component or Child 

Care Centers, nor do they include meal claiming error at this time. 

b. Change in sampling process: None. 

c. Justification: A plan was initially explored to develop a program-wide study which would 

examine reimbursements for meals served and develop program error measurements that 

complied with the requirements of the IPIA. Because of the complexities of the program, FNS 

estimated that it would cost $20 million to measure improper payments at the precision required 

by IPIA. This amount has not been provided. 
SECTION III | OTHER INFORMATION 183

6. FS Harvey-Capital Improvement and Maintenance (CIM)

a. Utilizes a statistically valid sampling process. A sample was determined from payments made 

during FY 2018 using a 95-percent confidence level with a margin of error of plus or minus 

10 percent. 

b. Change in sampling process: N/A. This is the first year this program is reporting.

7. Farm Service Agency/Commodity Credit Corporation (FSA/CCC) Livestock Forage 

Disaster Program (LFP)

a. Utilizes a statistically valid and rigorous sampling process. A sample was determined from the 

payments made in the prior fiscal year using a 95-percent confidence interval of plus or minus 

3 percent. A stratified simple random sampling is used to select payments for the sample.

b. Change in sampling process: No changes from what was reported in the FY 2018 AFR. 

8. FSA/CCC Noninsured Crop Disaster Assistance Program (NAP)

a. Utilizes a statistically valid and rigorous sampling process. A sample was determined from the 

payments made in the prior fiscal year using a 95-percent confidence interval of plus or minus 

3 percent. A stratified simple random sampling is used to select payments for the sample.

b. Change in sampling process: No changes from what was reported in the FY 2018 AFR. 

9. FSA Agriculture Risk Coverage and Price Loss Coverage (ARC/PLC)

a. Utilizes a statistically valid and rigorous sampling process. A sample was determined from the 

payments made in the prior fiscal year using a 95-percent confidence interval of plus or minus 

3 percent. A stratified simple random sampling is used to select payments for the sample.

b. Change in sampling process: N/A. This is the first year this program is reporting. 

10. FSA Harvey-Emergency Conservation Program (ECP)

a. Utilizes a statistically valid and rigorous sampling process. A sample was determined from the 

payments made in the prior fiscal year using a 95-percent confidence interval of plus or minus 

3 percent. A stratified simple random sampling is used to select payments for the sample.

b. Change in sampling process: N/A. This is the first year this program is reporting.

11. NRCS Farm Security and Rural Investment Act Program (FSRIP)

a. Utilizes a statistically valid and rigorous sampling process. A sample was determined from 

payments made during FY 2018 using a 95-percent confidence level with a margin of error of 

plus or minus 3 percent. Stratified random sampling is used to select payments for the sample. 
184 USDA AGENCY FINANCIAL REPORT | 2019

b. Change in sampling process: No changes from what was reported in the FY 2018 AFR. 

12. RMA Federal Crop Insurance Corporation (FCIC)

a. Utilizes a statistically valid and rigorous sampling process. A sample determined from payments 

made during reinsurance year 2017 (July 2016 to June 2017) using a 95-percent confidence level 

with a margin of error of plus or minus 2.5 percent. Stratified random sampling is used to select 

payments for the sample. 

b. Change in sampling process: No changes from what was reported in the FY 2018 AFR. 
SECTION III | OTHER INFORMATION 185

PAYMENT INTEGRITY OUTLOOK SECTION

The following table outlines USDA’s high-risk programs sampling and estimation results. See the annotated notes for programs that are flatlining 

their future year improper payment reduction target. Please refer to the Sampling and Estimation Section for additional information on the sampling 

timeframe of each high-risk program. 

EXHIBIT 32: Payment Integrity Outlook Table ($ in millions) 

Program

Current 

Year (CY) 

Outlays $

CY Properly Paid CY Improperly Paid (IP) CY +1 Estimated

Total % Total $ Total % Total $

Over 

Payment $

Under 

Payment $ Outlays $ IP % IP $ 

FNS Supplemental Nutrition 

Assistance Program (SNAP) 

[Note #1] 

59,104.37 93.20 55,082.66 6.80 4,021.71 3,306.08 715.63 59,104.37 6.80 4,021.75

FNS National School Lunch 

Program (NSLP) 12,576.56 90.92 11,434.15 9.08 1,142.41 811.07 331.34 12,790.36 8.80 1,125.34

FNS School Breakfast 

Program (SBP) 4,395.23 89.50 3,933.81 10.50 461.42 296.82 164.60 4,534.12 10.18 461.66

FNS Special Supplemental 

Nutrition Program for 

Women, Infants, and Children 

(WIC) [Note #2] 

3,376.56 97.97 3,308.16 2.03 68.40 68.40 0.00 3,393.44 2.03 68.89

FNS Child and Adult Care 

Food Program (CACFP) 

[Note #3] 

682.18 99.46 678.50 0.54 3.68 2.77 0.91 656.26 0.54 3.54

Forest Service (FS) Capital 

Improvement and 

Maintenance (Harvey-CIM) 

[Note #4] 

16.45 99.96 16.44 0.04 0.006 0.006 0.000 75.15 0.04 0.03
186 USDA AGENCY FINANCIAL REPORT | 2019

Program

Current 

Year (CY) 

Outlays $

CY Properly Paid CY Improperly Paid (IP) CY +1 Estimated

Total % Total $ Total % Total $

Over 

Payment $

Under 

Payment $ Outlays $ IP % IP $ 

Farm Service Agency (FSA) 

Livestock Forage Disaster 

Program (LFP) 

490.00 82.13 402.46 17.87 87.54 86.06 1.48 416.00 9.99 41.54

FSA Noninsured Crop Disaster 

Assistance Program (NAP) 183.63 76.87 141.15 23.13 42.48 42.43 0.05 150.00 9.99 14.98

FSA Agriculture Risk Coverage 

and Price Loss Coverage 

(ARC/PLC)

3,798.50 83.89 3,186.50 16.11 612.00 611.34 0.66 4,965.00 9.99 496.00

FSA Hurricane HarveyEmergency Conservation 

Program (Harvey-ECP)

18.80 84.15 15.82 15.85 2.98 2.98 0.00 397.00 9.99 39.67

Natural Resources 

Conservation Service (NRCS) 

Farm Security and Rural 

Investment Act Programs 

(FSRIP)

2,749.55 98.66 2,712.60 1.34 36.95 36.95 0.00 3,438.00 1.33 45.72

Risk Management Agency 

(RMA)Federal Crop Insurance 

Corporation (FCIC) Program 

Fund 

9,582.48 97.05 9,300.03 2.95 282.45 265.90 16.55 7,125.39 2.89 206.00

USDA Total 96,974.31 93.03 90,212.28 6.97 6,762.03 5,530.81 1,231.22 97,045.09 6.72 6,525.12

Note #1: SNAP currently lacks a sufficient baseline to accurately project future reduction target rates. This is the first year in many years that FNS has released an 

error rate where nearly all states have actual, not assigned rates. FNS has instituted a revised process that strengthens the integrity of the error rate. 

FNS plans to establish a baseline next year when there is a fuller picture of what error rates under this new process look like. The uncertainty created by 

these variables does not allow accurate future reduction target rate projections at this time, hence the need to flatline the CY+1 reduction target. 
SECTION III | OTHER INFORMATION 187

Note #2: WIC estimates were prepared using an OMB-approved non-statistical estimation methodology, which lacks the precision of an estimate developed 

using a random, statistical methodology. As a result, estimates will not be used to establish out-year reduction targets. Instead, the Current Year +1 

estimated target is set to the Current Year IP rate. New IP estimates and targets are established after the completion of periodic payment error studies 

(that is, the WIC Vendor Management bookend study and the National Survey of WIC Participants).

Note #3: FNS is working toward the development of a model to estimate CACFP Family Day Care Home tiering error in the years between sample-based studies. 

When the agency finalizes its model-based methodology, however, it will not be capable of measuring error any more precisely than the estimates 

generated by the agency’s sample-based studies. Once the agency conducts the next iteration in that series of studies, it will be able to set a new 

reduction target. In short, until the next study, the CACFP tiering error rate is best described as ‘less than 1 percent’, hence the need to flatline the 

CY+1 reduction target.

Note #4: FY 2019 is the initial reporting cycle for FS Hurricane Harvey-Capital Improvement and Maintenance (Harvey-CIM), therefore, FS has not established a 

baseline for estimating a reduction to improper payments for this fund and is flatlining the reduction target.

The following table displays supplemental information, providing a breakdown of specific USDA programs to the component reporting level.

EXHIBIT 33: Program Component Reporting Table ($ in millions) 

Program Current Year (CY) 

Outlays $

CY Improperly Paid

Total % Total $ Overpayment $ Underpayment $

FNS NSLP Total Program

12,576.56

9.08 1,142.41 811.07 331.34 

FNS NSLP Certification Error 8.28 1,040.76 763.26 277.50

FNS NSLP Counting Error 0.81 101.65 47.81 53.84

FNS SBP Total Program

4,395.23

10.50 461.42 296.82 164.60 

FNS SBP Certification Error 9.28 407.72 284.53 123.19

FNS SBP Counting Error 1.22 53.70 12.29 41.41

FNS WIC Total Program

3,376.56

2.03 68.40 68.40 0.00

FNS WIC Certification Error 1.72 58.22 58.22 0.00

FNS WIC Vendor Error 0.30 10.18 10.18 0.00
188 USDA AGENCY FINANCIAL REPORT | 2019

The following table provides information on the estimated amount of improper payments made directly by the Government and the amount of 

improper payments made by recipients of federal money.

EXHIBIT 34: Improper Payment Additional Breakdown Table ($ in millions) 

Program Federal Government Recipients of Federal Money

FNS SNAP 4,021.71

FNS NSLP 1,142.41

FNS SBP 461.42

FNS WIC 68.40

FNS CACFP 3.68

FS Harvey-CIM 0.006

FSA LFP 87.54

FSA NAP 42.48

FSA ARC/PLC 612.00

FSA Harvey-ECP 2.98

NRCS FSRIP 36.95

RMA FCIC 282.45

Total 781.96 5,980.07
SECTION III | OTHER INFORMATION 189

EXHIBIT 35: Monetary Loss Breakdown Table ($ in millions) 

Monetary loss to the Federal Government is an amount that should have not been paid and, in theory, should/could be recovered. Non-Monetary loss 

to the Federal Government is either an underpayment or a payment to the right recipient for the correct amount where the payment process fails to 

follow applicable regulations and/or statutes. Unknown, also referred to as Insufficient Documentation to Determine, is the estimated amount within 

the improper payment estimate that could either be proper or improper, but the agency is unable to discern. 

Program

Monetary Loss Non-Monetary Loss

Unknown/Insufficient 

Documentation to Determine

Total $ Total % Total $

Within Agency 

Control $

Outside Agency 

Control $ Total $ Total % Total $ Total %

FNS SNAP 3,306.08 82.21 3,306.08 715.63 17.79 4,021.71

FNS NSLP 811.07 71.00 811.07 331.34 29.00 1,142.41

FNS SBP 296.82 64.33 296.82 164.60 35.67 461.42

FNS WIC 68.40 100.00 68.40 0.00 0.00 68.40

FNS CACFP 2.77 75.27 2.77 0.91 24.73 3.68

FS Harvey-CIM 0.006 100.00 0.006 0.00 0.00 0.006

FSA LFP 33.20 37.93 33.20 1.48 1.69 52.86 60.38 87.54

FSA NAP 19.98 47.03 19.98 0.05 0.12 22.45 52.85 42.48

FSA ARC/PLC 257.16 42.02 257.16 0.66 0.11 354.18 57.87 612.00

FSA Harvey-ECP 2.19 73.49 2.19 0.00 0.00 0.79 26.51 2.98

NRCS FSRIP 21.07 57.02 21.07 15.88 42.98 36.95

RMA FCIC 265.90 94.14 265.90 16.55 5.86 282.45
190 USDA AGENCY FINANCIAL REPORT | 2019

High-Priority Programs Section

The criteria for determining when a program is high-priority are found in Office of Management and 

Budget (OMB) Circular A-123, Appendix C. High-priority programs are programs that report more than 

the $2 billion threshold in improper payments. USDA currently has one program designated as 

high-priority and the following narrative addresses the additional reporting requirements that come with 

that designation. 

FNS SNAP

▪ The following narrative describes how SNAP’s corrective actions were specifically tailored to 

better reflect the unique processes, procedures, and risks involved in the program. This program’s 

actual corrective actions to prevent future improper payments can be found in the “IMPROPER 

PAYMENT CORRECTIVE ACTIONS SECTION.” 

o SNAP is a federally funded, State-administered program. FNS works with State agencies to 

improve program administration, including preventing improper payments. FNS offers State 

Exchange funds to promote communication and partnerships between high- and 

low-performing State agencies, providing low-performing State agencies access to best 

practices and support. 

o States with high improper payment rates must submit corrective action plans that document 

how the State agency plans to improve payment accuracy and allow the corrective actions to 

be tailored to specific State needs and deficiencies.

▪ The following narrative describes the actions FNS has taken or plans to take to recover 

improper payments: 

o States issue supplements or establish claims for any under/overpayments discovered during 

the QC review.
SECTION III | OTHER INFORMATION 191

Improper Payment Root Cause Categories Section

EXHIBIT 36: Improper Payments Root Causes Table ($ in millions) 

Reason for Improper Payment

FNS SNAP FNS NSLP FNS SBP

OverpaymentsUnderpaymentsOverpaymentsUnderpaymentsOverpaymentsUnderpayments

Program design or Structural Issue 437.12 239.52 150.16 109.85

Inability to Authenticate Eligibility

Inability to Access Data

Data Needed Does Not Exist

Failure to Verify

Death Data

Income Data

Excluded Party Data

Prisoner Data

Other Eligibility

Administrative or Process Error 

Made By

Federal Agency

State and Local Agency 3,306.08 715.63 373.95 91.82 146.66 54.75

Other Party

Medical Necessity

Insufficient Documentation to Determine

Other Reason 

TOTAL 3,306.08 715.63 811.07 331.34 296.82 164.60
192 USDA AGENCY FINANCIAL REPORT | 2019

EXHIBIT 36: Improper Payments Root Causes Table ($ in millions) Continued

Reason for Improper Payment

FNS WIC FNS CACFP FS Harvey-CIM

OverpaymentsUnderpaymentsOverpaymentsUnderpaymentsOverpaymentsUnderpayments

Program design or Structural Issue

Inability to Authenticate Eligibility

Inability to Access Data

Data Needed Does Not Exist

Failure to Verify

Death Data

Income Data

Excluded Party Data

Prisoner Data

Other Eligibility

Administrative or Process Error 

Made By

Federal Agency 0.006

State and Local Agency 68.40 2.77 0.91

Other Party

Medical Necessity

Insufficient Documentation to Determine

Other Reason 

TOTAL 68.40 2.77 0.91 0.006
SECTION III | OTHER INFORMATION 193

EXHIBIT 36: Improper Payments Root Causes Table ($ in millions) Continued

Reason for Improper Payment

FSA LFP FSA NAP FSA ARC/PLC

OverpaymentsUnderpaymentsOverpaymentsUnderpaymentsOverpaymentsUnderpayments

Program design or Structural Issue

Inability to Authenticate 

Eligibility

Inability to Access Data

Data Needed Does Not Exist 16.92 1.62

Failure to Verify

Death Data

Income Data 2.49 0.18 7.56

Excluded Party Data

Prisoner Data

Other Eligibility [Note # 1] 0.20

Administrative or Process Error 

Made By

Federal Agency 13.79 1.48 17.98 0.05 249.60 0.66

State and Local Agency

Other Party

Medical Necessity

Insufficient Documentation to Determine [Note # 2] 52.86 22.45 354.18

Other Reason

TOTAL 86.06 1.48 42.43 0.05 611.34 0.66
194 USDA AGENCY FINANCIAL REPORT | 2019

EXHIBIT 36: Improper Payments Root Causes Table ($ in millions) Continued

Reason for Improper Payment

FSA Harvey-ECP NRCS FSRIP RMA FCIC

OverpaymentsUnderpaymentsOverpaymentsUnderpaymentsOverpaymentsUnderpayments

Program design or Structural Issue

Inability to Authenticate 

Eligibility

Inability to Access Data

Data Needed Does Not Exist 0.11 88.08 4.89

Failure to Verify

Death Data

Income Data

Excluded Party Data

Prisoner Data

Other Eligibility [Note # 1] 0.55 21.07

Administrative or Process 

Error Made By

Federal Agency 1.53 15.88

State and Local Agency

Other Party 177.82 11.66

Medical Necessity

Insufficient Documentation to Determine [Note # 2] 0.79

Other Reason

TOTAL 2.98 36.95 265.90 16.55

Note # 1: Failure to verify other eligibility includes program eligibility not being verified.

Note # 2: USDA uses the OMB Circular A-123, Appendix C root cause matrix in the AFR, which considers insufficient documentation to determine an 

overpayment. In OMB Circular A-136, insufficient documentation to determine is considered “unknown”, rather than an overpayment. Please go to the 

Monetary Loss Breakdown Table to see the amount of USDA’s improper payments attributed to the “unknown” category. 
SECTION III | OTHER INFORMATION 195

Improper Payment Corrective Actions Section

In the spring of 2019, USDA agencies analyzed transactions from previous years as described in the 

Agency Financial Report’s sampling section and the results are published in the FY 2019 AFR. Because 

USDA reports improper payments 1 year in arrears, corrective actions taken to reduce improper 

payments in FY 2019 have not been reflected in improper payment amounts of this report. USDA 

continues to enact specific corrective actions to resolve root causes of improper payments and 

strategically strengthen program integrity while ensuring access to program and activities. 

Programs and activities determined to have improper payments exceeding the susceptible to significant 

improper payment threshold (as required by OMB Memorandum M-18-20) must put in place a 

corrective action plan to prevent and reduce the improper payment amount. The following tables 

describe the actions taken and planned for each high-risk program that is above the aforementioned 

reporting threshold. Beginning in FY 2019, USDA required high-risk programs reporting more than the 

statutory threshold to categorize improper payments into “sub root causes” which provide an additional 

breakdown of the OMB root causes of error. The goal of the sub root cause is to help USDA obtain a 

clearer understanding of what truly caused the improper payments to occur and assist with mitigating the 

error from reoccurring.

Current corrective action plans are outlined in this section of the AFR, except for the Farm Service 

Agency’s (FSA). The following corrective actions are current as of June 28, 2019, which is OCFO’s 

deadline to ensure timely reporting of the AFR. Corrective action plans for FSA’s high-risk programs 

reporting more than the statutory threshold can be found at www.fsa.usda.gov/corrective-action-plans. 

OMB memorandum M-18-20, states: “Agencies should also describe the results of actions taken to 

address the root causes and the planned or actual completion date of the actions taken to address each 

root cause.” Some of the corrective actions offer an indication of the impact it will have on addressing a 

root cause; however, in most cases, a series of corrective actions have cumulative impacts in improving 

payment accuracy.
196 USDA AGENCY FINANCIAL REPORT | 2019

EXHIBIT 37: Program Corrective Actions Table ($ in millions) 

PROGRAM: FNS SNAP

Root Cause (See Root Causes Table)  Administrative or Process Error made by: State or 

Local Agency

USDA’s Sub Root Cause 

Data needed to verify payment was missing from 

the case file and was not noticed by the employee. 

Employee did not check the invoice prior to issuing 

payment to ensure they matched.

Amount Associated with the Root Cause 

(See Root Causes Table)  $4,021.71

Estimated Completion Date  June 2020

Supplemental Nutrition Assistance Program (SNAP) Corrective Actions: 

• FNS has a statutorily mandated liability system that sanctions States for poor performance and assesses 

financial liabilities for payment error rates in excess of the national average and that are above six percent. 

In July 2019, FNS issued over $26 million in sanctions to high-error states to ensure they are working 

diligently to improve accuracy. States must either pay the full amount immediately to the U.S. Treasury, or 

promptly reinvest half of these funds in FNS-approved actions to reduce errors, and pay the remainder if 

accuracy does not improve.

• FNS also has established a regulatory process for requiring States to implement robust corrective action 

plans to reduce payment errors. FNS requires States to submit corrective action plans for review and 

approval if any of the following conditions are met:

− The State’s payment error rate is six percent or greater,

− The State’s negative error rate is above the national average,

− Any deficiencies identified by a GAO, OIG, or FNS review or audit,

− If five percent or more of the State’s QC caseload is marked as incomplete,

− Any improper payments caused by State rules, practices, or procedures.

• FNS monitors State corrective action plans and provides technical assistance as necessary to help remedy 

deficiencies. FNS regulations require State corrective action plans to remain in effect until all deficiencies 

in program operations have been reduced substantially or eliminated.

• FNS operates a robust management evaluation process that regularly reviews State operations and 

compliance with Federal regulations. FNS issues reports that provide findings and outline management 

deficiencies which may lead to payment errors. States must enter into corrective actions to address 

deficiencies.

• FNS requires States to conduct a root cause analysis of what contributes to payment errors to aid in 

corrective action planning. FNS provides technical assistance to States that need help with their root cause 

analysis. SNAP’s quality control system codes errors to allow a root cause analysis in sufficient detail to 

identify whether the primary contributing factors are specific to policies or procedures; or whether they 

are statewide or limited in scope (such as concentrated in a single local office or county).
SECTION III | OTHER INFORMATION 197

PROGRAM: FNS SNAP (Continued)

• SNAP has an active payment accuracy workgroup that meets regularly to discuss the outcomes of on-going 

technical assistance and to share best practices among FNS Regional Offices to ensure a consistent 

approach with State partners.

• FNS has an internal process to categorize States to clearly identify those that pose the greatest risk for 

Federal dollar losses due to payment errors. This helps to ensure FNS technical assistance resources are 

targeted effectively. As part of this process, FNS uses an early warning system to monitor preliminary state 

reported data in order to identify deteriorating performance and to initiate actions to help States make 

improvements at the earliest opportunity.

• Nationally, 60 percent of SNAP’s payment errors are caused by State agencies. FNS works with States to 

strengthen the upfront eligibility determination process through system improvements, policy training, 

improved data matching and verification which are intended to reduce state caused errors.

− FNS providing $5 million in annual technology improvement grants to States to help update and 

strengthen systems. As an example, States are moving towards guided navigation to prompt 

accurate data entry or verification checks, as well as adding business rules based on policy, to 

reduce payment errors.

• Remaining 40 percent of payment errors are client caused. FNS works with States to improve client 

education efforts and the clarity of notices to ensure application and reporting instructions are clearly 

conveyed. 

Client caused errors can often occur when requirements are not communicated clearly and clients do not easily 

understand what documentation they must submit in order to verify their application. In FY 2019, FNS 

conducted a pilot project with a few States in our Mountain Plains Regional Office to improve the readability 

and accuracy of notices issued to clients. Based on this pilot, FNS is expanding this project into ten additional 

States in FY 2020 in order to reduce client caused errors.

• In FY 2020, FNS expects to release proposed and interim-final regulations that seek to reform the SNAP QC 

system. The rule includes interim-final provisions from the 2018 Farm Bill that strengthen the integrity of 

the measurement system. The proposed provisions of the rule are intended to modernize the QC system 

to improve transparency, accuracy, and alignment with the expectations of IPIA and OMB circulars. FNS 

utilized comments received from the FY 2018 RFI to inform these changes. 

• FNS continues to work with State partners to expand requirements for data matching and to ensure share 

best practices are disseminated as data matching is a proven strategy that can reduce payment errors. FNS 

currently requires States to conduct data matches prior to certification and recertification with Social 

Security Administration’s (SSA) Death Match, SSA’s Prisoner Verification System, the National Directory for 

New Hires, and FNS’s electronic Disqualified System. State partners also work with commercial data 

brokers to help verify identity, income, and assets; all of which can contribute to payment errors. 

Additionally, as part of the 2018 Farm Bill, FNS is currently working to expand the National Accuracy 

Clearinghouse (NAC) nationwide. The NAC was a successful pilot among five States that reduced instances 

of duplicate participation across State lines, where an individual applies to receive benefits in more than 

one State at the same time. The estimated completion date for this is FY 2021. 
198 USDA AGENCY FINANCIAL REPORT | 2019

PROGRAM: FNS NSLP

Root Cause (See Root Causes Table)  Program Design or Structural Issue 

USDA’s Sub Root Cause  Household error on application that leads to 

certification error.

Amount Associated with the Root Cause 

(See Root Causes Table)  $676.64 

Corrective Actions Completion Date

Promotion of USDA’s integrity focused web-based model school meal application. 

USDA’s 2019 Administrative Review and Training Grants (see the following details) 

encouraged States to submit proposals to develop State application systems with 

features similar to USDA’s model, specifically, features designed to reduce 

household reporting error. USDA is also engaging States in individual conversations 

about the use of online applications by their school districts.

September 2019

Finish data collection for the third national representative study of improper 

payments in the school meal programs and begin data analysis. FY 2020

Finish data collection on study to examine household nonresponse in the annual 

school meal verification process. The study examines the underlying eligibility of 

households that failed to respond to school district requests for verification 

documentation. This information may be used in the future by USDA and local 

school districts to develop new strategies to improve response rates, and to allow 

school districts to better target high-risk applicants in verification for cause efforts. 

FY 2020
SECTION III | OTHER INFORMATION 199

PROGRAM: FNS NSLP

Root Cause (See Root Causes Table)  Administrative or Process Errors Made by State or 

Local Agency 

USDA’s Sub Root Cause  Administrative certification error and error in 

aggregating meal counts for reimbursement.

Amount Associated with the Root Cause 

(See Root Causes Table)  $465.77 

Corrective Actions Completion Date

Updated Administrative Review (AR) guidance for SY 2019-2020. In Summer 2019, FNS 

will release a supplement to the AR guidance and provide information that primarily 

focuses on requirements that have changed as a result of recent regulations. 

July 2019

Currently conducting a study, “The Assessment of the Administrative Review (AR) 

Process,” which examines the extent to which the AR process effectively identifies 

risk areas and non-compliance with program requirements by school food 

authorities operating the programs. USDA will use those results to consider updates 

to the process. 

FY 2020

Conducted the sixth year of a demonstration project in selected school districts and 

States to test the potential for direct certification for free school meals using 

Medicaid data. USDA prepared reports of the first 2 years of the pilots in 2015 and 

2016. The agency is in the process of finalizing an evaluation of the demonstration 

project since 2016.

FY 2021

Offer States Administrative Review and Training (ART) grants to implement training 

and technology solutions to reduce and prevent administrative errors in local 

educational agencies (LEAs) that are at high-risk for such errors. The latest round of 

ART grants was awarded in June 2019 to seven state agencies to study and/or 

develop web-based meal applications containing integrity features comparable with 

those in the USDA’s web-based prototype; technology-based training solutions; 

automating currently manual administrative review processes; and creating online 

menu and training portals. 

September 2019

Continue to lead and coordinate meetings of the Child Nutrition State Systems 

Workgroup made up of USDA State, regional, and national office representatives. 

The purpose of this workgroup is to identify priorities for State and local 

automation to improve accountability, monitoring, training, and data quality. 

The workgroup is now planning the fifth in a series of State agency / USDA Child 

Nutrition Access and Accountability through Technology national training to be held 

in 2020. These trainings provide program stakeholders with an opportunity to 

identify innovative technology solutions to improve program integrity while 

expanding knowledge and skills in IT procurement and contract management, data 

analytics, and IT project management.

September 2019
200 USDA AGENCY FINANCIAL REPORT | 2019

PROGRAM: FNS NSLP (continued)

Corrective Actions Completion Date

USDA awarded Child Nutrition Technology Innovation Grants (TIG) in July 2019, to 

13 state agencies. Among the proposals awarded funding: development of 

interagency data sharing systems, mobile applications to record and track claims for 

program reimbursement, a customizable administrative review system in order to 

reduce data-entry errors, and the use of geocoding technology to improve 

identification and targeting of over/underserved areas.

September 2019

Annually approve State Agency direct certification Continuous Improvement Plans 

to improve the effectiveness of their direct certification processes. USDA’s most 

recent report to Congress on States’ direct certification performance, released in 

late 2018, shows that more States than ever are meeting the direct certification 

performance target required by statute. The most recent report shows that 

28 States met the statutory 95-percent direct certification target for school year 

2016-2017. That is up from 25 States the previous year, and 24 States in school 

years 2014-2015. 

September 2019

Continued management of a contracted research portfolio to measure and study 

the underlying causes of improper payments in FNS programs and to test solutions 

designed to reduce error. In addition to studies mentioned previously, USDA is 

finalizing an examination of the statutory Independent Review of Applications 

process to determine the effectiveness of a provision from the 2010 Healthy, 

Hunger-Free Kids Act that targets administrative error in the application 

certification process.

September 2019

Development and release of an optional data validation service for state agencies to 

improve the quality of school meal verification collection report data. September 2019
SECTION III | OTHER INFORMATION 201

PROGRAM: FNS SBP

Root Cause (See Root Causes Table)  Program Design or Structural Issue

USDA’s Sub Root Cause  Household error on applications that leads to 

certification error.

Amount Associated with the Root Cause 

(See Root Causes Table)  $260.01

SBP’s corrective actions and completion dates are the same as NSLP’s across type of payment error. To avoid 

repetition of the same corrective actions, please refer to NSLP’s corrective actions in the Program Design or 

Structural Issue root cause, described previously.

PROGRAM: FNS SBP

Root Cause (See Root Causes Table)  Administrative or Process Errors Made by State or 

Local Agency 

USDA’s Sub Root Cause  Administrative certification error and error in 

aggregating meal counts for reimbursement.

Amount Associated with the Root Cause 

(See Root Causes Table)  $201.41 

SBP’s corrective actions and completion dates are the same as NSLP’s across type of payment error. To avoid 

repetition of the same corrective actions, please refer to NSLP’s corrective actions in the Administrative or 

Process Errors Made by State or Local Agency root cause, described previously.
202 USDA AGENCY FINANCIAL REPORT | 2019

PROGRAM: FNS WIC

Root Cause (See Root Causes Table)  Administrative or Process Errors Made by State or 

Local Agency 

USDA’s Sub Root Cause  Certification/Vendor error

Amount Associated with the Root Cause 

(See Root Causes Table)  $68.40 

Estimated Completion Date  November 2020

WIC Corrective Actions: 

• WIC Certification. FNS has worked to develop the WIC Certification Handbook, which is expected to be 

released in FY 2020. FNS is also currently conducting the National Survey of WIC Participants-III Study, 

which is designed to provide nationally representative estimates of improper payments in the WIC 

Program arising from errors in the certification or denial of WIC applicants, and to investigate potential 

State and local agency characteristics that may correlate with these errors.

• WIC Oversight. In FY 2019, FNS’ management evaluation (ME) target area for WIC is ME Closure. This 

target area was selected to ensure that FNS’ oversight of the program includes both timely identification 

and correction of non-compliance. FNS focused ME resources on activities that support corrective action 

implementation and validation, including on-site ME closure visits, trainings/meetings, and risk-based MEs. 

The FY 2019 focus on ME Closure supports USDA and FNS priorities related to providing high-quality 

customer service to WIC State agency partners, as well as ensuring integrity in the WIC Program through 

the resolution of issues identified through MEs. FNS continues to analyze ME data to identify opportunities 

to improve program administration and integrity. 

• WIC Vendor Management. In FY 2017, FNS released the WIC Vendor Management and Food Delivery 

Handbook, which is a comprehensive, user-friendly summary of regulations, policy, and guidance related 

to WIC Vendor Management and Food Delivery. It also includes topical guidance designed to help State 

agencies effectively develop, assess, and implement vendor management and cost containment 

requirements. In FY 2019, FNS issued a new toolkit on assessing and developing WIC Vendor Peer Group 

Systems, and an updated tool for assessing WIC Vendor Cost Neutrality. FNS is currently working on the 

first update to the Handbook, which will include an additional chapter (Monitoring and Audits) and several 

new tip sheets designed to help WIC State agencies implement key requirements. A future release will 

include an additional chapter, Vendor Cost Containment, which will update and expand on existing 

guidance. 
SECTION III | OTHER INFORMATION 203

PROGRAM: RMA FCIC

Root Cause 

(See Root Causes Table)  Administrative or Process Errors Made By: Other Party

USDA’s Sub Root Cause 

Numerous natural disasters occurred in reinsurance year (RY) 2017 

which had a direct impact on the approved insurance providers (AIPs) 

processing of claims for the Federal crop insurance program. AIPs 

processed more claims within tight timeframes which increased the 

opportunity for administrative errors. In addition, more improper 

payments were found in the lower dollar policies. The AIPs may be 

concentrating efforts on ensuring high dollar policies are accurate 

and scrutinizing the low dollar policies less. More than one-half the 

administrative or process errors were found on the application. These 

errors included, but were not limited to, contract selections that 

were requested by the policyholder and not applied to the policy, 

contract selections that were applied to the policy and did not meet 

the minimum requirements, signature issues, and so on.

Amount Associated with the Root 

Cause (See Root Causes Table)  189.48

Completion Date  June 2019

FCIC Corrective Actions: 

Based on the results of the Improper Payments Elimination and Recovery Improvement Act of 2012 (IPERIA) 

review, RMA expanded its review of applications and claims at several AIPs to determine whether the AIPs have 

sufficient controls in place to process applications and claims correctly, particularly during a natural disaster. 

Some of the expanded reviews deal with the application process (contract selections/endorsements/options). 

RMA will also perform random reviews of low dollar policies to ensure AIPs are monitoring low dollar as well as 

high dollar policies.
204 USDA AGENCY FINANCIAL REPORT | 2019

PROGRAM: RMA FCIC

Root Cause 

(See Root Causes Table)  Inability to Authenticate Eligibility: Data Needed Does Not Exist

USDA’s Sub Root Cause 

Errors were found in the producer’s Actual Production History (APH) 

because AIPs and producers were inconsistently interpreting FCIC 

guidance. The Basic Provisions of Insurance (BPOI) require producers 

to support their production certification when selected for APH 

Review, and The Crop Insurance Handbook (CIH) outlines the 

required consequences when AIPs identify errors during APH audits. 

When AIPs conducted APH audits, they did not identify APH errors 

consistently and selected varying consequences to address the 

errors.

Amount Associated with the Root 

Cause (See Root Causes Table)  92.97

Completion Date  April 19, 2019

FCIC Corrective Actions: 

To address inconsistencies associated with the APH Review process, RMA issued Manager’s Bulletin MGR-2019-

0005 which clarifies procedures for conducting APH Audits and outlines corrective action (that is, assigned 

yields) when errors are found. 
SECTION III | OTHER INFORMATION 205

Internal Control Over Payment Integrity Section

USDA programs have implemented internal controls to prevent improper payments. USDA programs are:

▪ Enhancing communication of updated policies and guidance to the field offices; 

▪ Encouraging managers to build an atmosphere in which reducing improper payments is a top 

priority; 

▪ Establishing accountability through performance standards; 

▪ Examining root causes of error; 

▪ Developing appropriate corrective actions; and 

▪ Engaging critical stakeholders through communication and educational efforts. 

Accountability Section

Programs reporting more than the statutory improper payment threshold (per OMB Memorandum 

M-18-20) must complete the Accountability, Agency Information Systems and Other Infrastructures, 

and Barriers sections of the AFR. The following steps were taken to ensure that agency managers are 

held accountable for reducing and recovering improper payments: 

Food and Nutrition Service (FNS) 

These accountability mechanisms are applicable to the following programs: (1) Supplemental Nutrition 

Assistance Program (SNAP), (2) National School Lunch Program (NSLP), (3) School Breakfast Program 

(SBP), and (4) Special Supplemental Nutrition Program for Women, Infants, and Children (WIC): 

FNS’ goals and priorities include standards for meeting reduction targets, establishing and 

maintaining internal controls, improving stewardship of federal funds, and using data-driven 

strategies to improve program integrity. Within these priorities are specific goals that (1) apply to 

programs at high-risk for erroneous payments with a focus on continuing management 

improvements, and (2) strengthening controls over improper payments and financial management 

within FNS programs. Standards for meeting these targets are incorporated into each FNS 

manager’s performance plan.

FNS strives to improve nutrition assistance program management, including measures to improve 

the accuracy of administrative processes, while meeting its goal of providing food to vulnerable 

populations in the United States. Actions to advance this goal include setting annual priority goals 

and initiatives, especially for those programs that are at high-risk for erroneous payments. The WIC 

Program also works to strengthen controls over improper payments and financial management as 

part of FNS’ Agency Priority Plan. 
206 USDA AGENCY FINANCIAL REPORT | 2019

Farm Service Agency (FSA)

These accountability mechanisms are applicable to the following programs: (1) Hurricane HarveyEmergency Conservation Program, (2) Livestock Forage Disaster Program, (3) Noninsured Crop 

Disaster Assistance Program, and (4) Agriculture Risk Coverage and Price Loss Coverage.

The following steps were taken to ensure that agency managers are held accountable for reducing and 

recovering improper payments: 

FSA is creating a performance Oversight Review process will be used to improve individual and 

organizational effectiveness in accomplishing the Agency’s mission and goals. Although lacking in 

the past, improvement is possible with documentation of individual and organizational performance 

which enables management to hold poor performing employees accountable and award and 

recognize good performing employees. FSA is initiating a new Oversight Review Process that 

requires the scoring of states and counties as a result of national and State program reviews. 

Training of pilot States is scheduled for December 10 – 11 and the remaining States will be trained 

in March of 2020. This new process is scheduled to be fully functioning and documenting 

performance on July 1, 2020. 

The COSO Model of Three Lines of Defense model defines three lines of defense in doing integrity 

oversight. In the current policy FSA will be completing the first two line of defense, the second line 

of defense being our new oversight review process. The FPAC Business Center Performance, 

Accountability and Risk Division will be completing the third line of defense on behalf of FSA. 

The following steps were completed by September 2019 and are ongoing: 

1. The requirement to improve improper payments is included in the State Executive Director’s 

Performance Plan, Element 5, titled “Program Management.” 

2. Within the time constraints required by the Department, National Office and State Office (STO) 

managers are held accountable for ensuring that program policies and procedures are provided to 

the STO and County Office (COF) employees accurately and on a timely basis. National Office 

managers are also held accountable, as reflected in the performance-based rating measures, for 

overall program administration at the National level. 

3. COF employees, including the County Executive Director, are responsible for making payments 

to producers and following all administrative steps in doing so. Employees will be evaluated on 

program delivery and their compliance with regulations, policies, and procedures through their 

performance plans.

4. Deputy Administrator of Field Operations will facilitate meetings with the program areas to 

discuss any additional action necessary for senior management to address accountability as 

accountability issues arise. Such is the case with an ongoing OIG investigation resulting in 

fraudulent claims and employee involvement where fraud has been discovered. 
SECTION III | OTHER INFORMATION 207

Agency Information Systems and Other Infrastructure 

FSA has operated with the understanding that the internal controls, human capital, information systems, 

and other infrastructure needed to reduce improper payments is in place and active. With the most recent 

results from the IPIA reviews and with the Agricultural Adjustment Act of 2018 paragraph 1705 

language FSA is implementing a new Oversight Review process that will document the reviews of 

employees work nationwide. With this performance documentation in place, organizational performance 

will improve.

In addition, FSA is requesting funding to address NAP’s most frequent improper payment errors. The 

plan is to provide training to Alabama, Florida, and Georgia. Within these States is an area with NAP’s 

highest improper payment percentage. The region has good NAP participation and a wide variety of 

crops, including hand-harvested crops which can deteriorate quickly and may have multiple planting 

periods. Included in the request is training for Texas, which has a large NAP influence and their error 

rate has recently become a concern.

In accordance with Office of the Chief Financial Officer’s (OCFO) guidance, FSA will follow the 

normal budgetary processes within USDA and work with the Office of Budget and Program Analysis 

along with Budget personnel to seek departmental approval for funds to assist in resolving the noncompliance issues related to Noninsured Crop Disaster Assistance Program. 

Risk Management Agency (RMA) 

These accountability mechanisms are applicable to the following program: Federal Crop Insurance 

Corporation (FCIC): 

1. RMA senior accountable officials’ annual performance plans are tied to USDA’s Strategic 

Goal 2.1: Provide an effective financial safety net for farmers and ranchers to sustain 

economically viable agricultural production and support rural jobs and economic growth. 

2. RMA incorporated standards in the FY 2019 annual performance plans to ensure compliance 

personnel conduct IPERIA reviews to measure the Federal Crop Insurance Program (FCIP) 

improper payment error rate and perform data mining reviews to identify, reduce, and collect 

improper payments. RMA Regional Compliance Offices (RCOs) conducted IPERIA reviews 

between April 2018–March 2019 using statistical sampling and data mining reports. 
208 USDA AGENCY FINANCIAL REPORT | 2019

Agency Information Systems and Other Infrastructure

The following narratives describe whether an agency has internal controls, human capital, information 

systems, and other infrastructure it needs to reduce improper payments: 

FNS

The following agency information systems and other infrastructure mechanisms are applicable to the 

following program: Supplemental Nutrition Assistance Program:

Each fiscal year, the Food and Nutrition Service (FNS) determines the Supplemental Nutrition 

Assistance Program’s (SNAP) State and national error rates and any potential liabilities based on 

error rate performance. States that have a 95-percent statistical probability that their error rates 

exceed 105 percent of the national performance measure for two (2) consecutive fiscal years, and 

the State’s error rate is above 6 percent are subject to financial liabilities for poor performance.

The following agency information systems and other infrastructure mechanisms are applicable to the 

following programs: (1) National School Lunch Program (NSLP), and (2) School Breakfast Program 

(SBP):

NSLP and SBP do not have an administrative infrastructure for producing yearly estimates of 

improper payment rates and dollar values. Therefore, FNS uses its Access, Participation, Eligibility, 

and Certification (APEC) studies to provide baseline error rate estimates for NSLP and SBP. In 

non-study years, FNS provides annual estimates that use the baseline data from APEC, program 

administrative data, and macroeconomic indicators. Periodic updates to the APEC study series 

ensure that FNS has the necessary data to estimate and measure changes in erroneous payments 

over time. 

The FNS FY 2019 Budget requested an increase in funding for the following program integrity line 

items to establish and maintain effective internal controls to reduce improper payments. 

Child Nutrition (CN) Training and Technical Assistance—an increase of $233,000 was 

requested ($13,702,000 available for FY 2018). Effective and continual training and technical 

assistance are necessary to help States properly administer the CN program to ensure that States are 

equipped to identify and prevent fraud and abuse. This request reflects an increase in federal 

activity associated with this project, including implementation of the new requirements. 

CN Payment Accuracy—an increase of $187,000 was requested ($11,016,000 available for 

FY 2018). Federal oversight, monitoring, and technical assistance are essential to the identification, 

prevention, and resolution of erroneous payments. This request supports FNS’s efforts to reduce 

erroneous payments through training, technical assistance, and oversight. 

CN Studies—an increase of $362,000 was requested ($21,277,000 was estimated to be available 

for FY 2018). CN studies are essential to providing Congress, the States, and advocacy partners 

with critical information for the development of additional guidance, training, and policy options. 
SECTION III | OTHER INFORMATION 209

CN Administrative Reviews—$10 million was provided for training and technical assistance for 

State agencies responsible for reviewing local school food authorities that participate in the school 

meal programs. Local administrative reviews help ensure that school children are offered meals that 

meet regulatory standards and that the financial claims associated with those meals are appropriate.

The following agency information systems and other infrastructure mechanisms are applicable to the 

following programs: Child and Adult Care Food Program: 

CACFP does not have an infrastructure or methods for producing yearly estimates of improper 

payment rates and dollar values. FNS has developed a measurement methodology for one 

component of the program and is in the process of determining the feasibility of measuring errors in 

the remaining components. Because requirements vary significantly for each different type of 

program sponsor and site, a full and rigorous assessment of the rate of improper payments is 

extremely complex.

FNS continues to explore alternative methodologies for developing a reliable measurement for the 

Family Day Care Home meal claims component and has recently completed data collection on the 

latest study in this effort. FNS has also completed data collection on a study to measure program 

error in childcare centers. Publication of these two studies is expected in 2020. 

The following agency information systems and other infrastructure mechanisms are applicable to the 

following programs: Special Supplemental Nutrition Program for Women, Infants, and Children (WIC): 

WIC program integrity is a priority for FNS. FNS has the administrative infrastructure for meeting 

reduction targets, establishing and maintaining sufficient internal controls, and producing yearly 

estimates of WIC improper payment rates and dollar values. Management evaluations (MEs) are 

FNS’ primary oversight mechanism. MEs include onsite reviews of State and local agency 

operations, and reviews of program-specific documentation. FNS focuses WIC MEs on key areas 

related to program integrity and analyzes the resulting ME data to identify opportunities to improve 

program administration and integrity. FNS has also recently released several resources for WIC 

State agencies that target improvement in the areas of vendor management and certification. These 

resources include the WIC Vendor Management and Food Delivery Handbook, a new toolkit on 

assessing and developing WIC Vendor Peer Group Systems, and an updated tool for assessing WIC 

Vendor Cost Neutrality. FNS has also issued policy memoranda related to key certification topics 

and has worked to develop the WIC Certification and Eligibility Guide, which is expected to be 

released in FY 2020. Additional resources are developed as needed. 

The most cost-effective way for FNS to produce yearly estimates of WIC improper payments is by 

using periodic studies to estimate WIC certification and vendor payment errors. FNS uses the 

National Survey of WIC Participants and the WIC Vendor Management Study to estimate and 

report on payment errors. The results of these studies are also used to inform FNS’ program 

integrity work—including the development of additional guidance, training, and resources for WIC 

State agencies—and to provide information to Congress and other stakeholders. 
210 USDA AGENCY FINANCIAL REPORT | 2019

Additionally, FNS continues to look for innovative ways to leverage technology to improve WIC 

program integrity. FNS is working with WIC State agencies to implement WIC Electronic Benefit 

Transfer (EBT) nationwide by October 1, 2020. EBT provides WIC State agencies with more 

accurate and timely data that they can use to better monitor food costs and identify suspect 

transactions, in turn, reducing the risk of payment errors. 

FSA

The following agency information systems and other infrastructure mechanisms are applicable to the 

following programs: (1) Hurricane Harvey-Emergency Conservation Program, (2) Livestock Forage 

Disaster Program, (3) Noninsured Crop Disaster Assistance Program, and (4) Agriculture Risk Coverage 

and Price Loss Coverage: 

FSA has operated with the understanding that the internal controls, human capital, information 

systems, and other infrastructure needed to reduce improper payments is in place and active. With 

the most recent results from the IPIA reviews and with the Agricultural Adjustment Act of 2018 

paragraph 1705 language FSA is implementing a new Oversight Review process that will document 

the reviews of employees work nationwide. With this performance documentation in place, 

organizational performance will improve. 

In addition, FSA is requesting funding to address NAP’s most frequent improper payment errors. 

The plan is to provide training to Alabama, Florida, and Georgia. Within these States is an area with 

NAP’s highest improper payment percentage. The region has good NAP participation and a wide 

variety of crops, including hand-harvested crops which can deteriorate quickly and may have 

multiple planting periods. Included in the request is training for Texas, which has a large NAP 

influence and their error rate has recently become a concern. 

In accordance with Office of the Chief Financial Officer’s (OCFO) guidance, FSA will follow the 

normal budgetary processes within USDA and work with the Office of Budget and Program 

Analysis along with Budget personnel to seek departmental approval for funds to assist in resolving 

the non-compliance issues related to Noninsured Crop Disaster Assistance Program. 

RMA

The following agency information systems and other infrastructure mechanisms are applicable to the 

following program: Federal Crop Insurance Corporation (FCIC): 

One of RMA’s primary tools for assessing approved insurance providers’ (AIPs) compliance with 

all crop insurance program requirements is the AIP Performance Review (APR). During Fiscal 

Year 2019, RMA completed APRs of five AIPs to evaluate their internal controls to identify and 

address program vulnerabilities. 

Discretionary Funding including Salaries and Expenses (S&E): Discretionary funds for the Federal 

crop insurance program cover most of the federal salaries and related expenses to manage the 

program. The 2019 Budget includes about $58.36 million in discretionary appropriations for these 
SECTION III | OTHER INFORMATION 211

costs in which $1,000 of those funds shall be available for official reception and representation 

expenses. In addition, the Federal Crop Insurance Act authorizes the transfer of up to $7 million

each fiscal year from mandatory funding to the RMA S&E account for program compliance and 

integrity reviews.

Barriers Section

The following narratives describe any statutory or regulatory barriers that may limit the agency’s 

corrective actions in reducing improper payments and actions taken by the agency to mitigate the 

barriers’ effects:

FNS8

The following barriers are applicable to the following program: Supplemental Nutrition Assistance 

Program (SNAP): 

SNAP benefits are processed and administered by State agencies, with FNS oversight. The Food 

and Nutrition Act of 2008, as amended, provides disincentives in the form of financial penalties to 

encourage States to accurately issue SNAP benefits and maintain low improper payment rates. FNS 

provides oversight and technical assistance to States in measuring and reporting improper 

payments. Because FNS does not provide benefits directly to recipients, the Program must work 

through its State administering agencies to measure, monitor, and address improper payments. In 

recent years, FNS has made efforts to strengthen program integrity regarding improper payment 

measurement. It has instituted new procedures to strengthen monitoring and has conducted reviews 

of all State agency error rate measurements to identify areas for improvement and require corrective 

action for States where data collection issues were identified. 

The following barriers are applicable to the following programs: (1) National School Lunch Program 

(NSLP) and (2) School Breakfast Program (SBP): 

FNS is committed to ensuring that eligible individuals and families have access to the nutrition 

assistance they need while it works to reduce the risk of improper payments. That said, program 

administration in CN programs in general, and in NSLP and SBP in particular, is highly 

decentralized. In the school meal programs alone there are nearly 98,000 schools and 

institutions that serve meals to 30 million children and each one of those meals must follow 

meal pattern requirements.

The entire cost of program benefits and a significant portion of administrative expenses incurred by 

State agencies are funded by federal appropriations. While federal funding strengthens the nutrition 

safety net with national eligibility standards and rules to ensure program access, it also means that 

8 FNS’ Special Supplemental Nutrition Program for Women, Infants, and Children currently has no statutory or 

regulatory barriers that limit the agency’s corrective actions in reducing improper payments. 
212 USDA AGENCY FINANCIAL REPORT | 2019

USDA relies on States and localities to ensure the proper management of billions of dollars in 

federal funds. 

Approaches to reducing school meals improper payments must: 

1. Improve accuracy without compromising access for low-income families. A process that 

keeps eligible children from participating undermines the program; 

2. Not unduly increase the burden on schools and other partner institutions. Many schools 

consider the program, especially the reporting requirements, burdensome now. Adding 

burden could discourage schools from participating, decreasing access for some low-income 

children; and 

3. Be cost-effective. Improving accuracy is potentially resource-intensive, and policymakers 

must not create processes that increase net program costs.

The following barriers are applicable to the following programs: Child and Adult Care Food Program 

(CACFP):

FNS is committed to ensuring that eligible individuals and families have access to the nutrition 

assistance they need in their child and adult care food programs while still working to reduce the 

risk of improper payments. The decentralized nature of CACFP is similar to the school meal 

programs in that there are more than 66,000 child care centers, 670 Family Day Care Home 

(FDCH) sponsoring organizations, and approximately 97,000 FDCH providers that provide CACFP 

benefits to children. The vast majority of these organizations simply do not have the capacity to 

develop robust accountability processes, which puts a special burden on Federal and State oversight 

and technical assistance systems.

The approach to reducing CACFP improper payments is similar to that identified for school meals: 

1. Improve accuracy without compromising access for low-income families; and

2. Not unduly increase the burden on sponsors, daycare centers, family daycare homes, and 

other partner institutions. 

Adopt integrity-focused measures that are cost-effective. This approach is especially important in child 

and adult care settings that have particularly limited resources. 

FSA

The following barriers are applicable to the following programs: (1) Hurricane Harvey-Emergency 

Conservation Program, (2), Livestock Forage Disaster Program, (3) Noninsured Crop Disaster 

Assistance Program, and (4) Agriculture Risk Coverage and Price Loss Coverage: 

The FSA is charged with managing more programmatic work resulting in more complex program 

oversight than in prior years. With the reductions in staffing our capacity to do integrity reviews has 

diminished. 
SECTION III | OTHER INFORMATION 213

RMA

RMA is not subject to any critical statutory or regulatory barriers to reducing improper payments. 

Recapture of Improper Payments Reporting

OMB Circular A-123, Appendix C, requires agencies to conduct payment recapture auditing on all 

programs with more than $1 million in annual expenditures or provide justification that a payment 

recapture audit program would not be cost-effective. USDA utilized FY 2018 actual outlay information 

to determine which programs meet the $1 million payment recapture auditing requirement. The 

following results highlight the payment recapture activities completed in FY 2019: 

1. USDA utilizes two methods for payment recapture auditing: a Supplier Credit Recovery Audit 

contractor and USDA program’s Internal Recovery Audit Plans. Most overpayments recovered 

are from sources other than payment recapture audits, however, including improper payments 

identified through statistical samples, agency post-payment reviews or audits, OIG reviews, 

Single Audit reports, self-reported overpayments, or reports from the public. The following chart 

shows the amounts and percent of recoveries using each method. Results are shown in the 

Overpayments Recaptured through Payment Recapture Audit Table and Overpayment 

Recaptures Outside of Recapture Audit Programs Table.

EXHIBIT 38: Recoveries ($ in millions) 

 

2. USDA distributed $191.68 million in recovered funds in accordance with the Improper Payments 

Elimination and Recovery Act of 2010 (IPERA) as shown in the Disposition of Funds 

Recaptured Table.

3. Sixty-two programs participated in the Supplier Credit Recovery Audit, and 43 programs 

developed internal payment recapture plans, which were approved by OCFO. These internal 

plans identify and recover improper payments. Activities include data mining-initiated reviews, 

limited scope reviews, special investigations, eligibility verification, agency-wide audits, and so 
214 USDA AGENCY FINANCIAL REPORT | 2019

on. As outlined in OMB Circular A-123 Appendix C Part III Section C. 5 and 6, 44 programs 

submitted a cost-effective waiver to OMB. Note that a few programs utilize more than one of the 

previously described methods to meet payment recapture requirements. A list of programs 

categorized by recovery auditing activity is provided in the following table: 
SECTION III | OTHER INFORMATION 215

EXHIBIT 39: List of Programs Categorized by Recovery Auditing Activity Table

No. Program Name

Supplier Credit 

Recovery Audit

Internal Payment 

Recapture Audit

Programs with Approved 

Waivers Based CostEffectiveness [Note #1] 

Programs with less than 

$1 million in FY 2018 

Expenditures [Note #2] 

1 Agricultural Marketing Service (AMS) 

Commodity Purchase Programs 

2 AMS Grants Programs 

3 AMS Salaries and Expenses 

4 Animal and Plant Health Inspection Service 

(APHIS) Buildings and Facilities 

5 APHIS Cooperative Agreements 

6 APHIS Indemnity Program 

7 APHIS Salaries and Expenses 

8 APHIS Trust Funds 

9 Agricultural Research Service (ARS) Buildings 

and Facilities 

10 ARS Buildings and Facilities—Disaster 

11 Commodity Credit Corporation (CCC) 

Administrative Contracts 

12 CCC Agricultural Wool Apparel Manufacturers 

Trust Funds 

13 CCC Agriculture Risk Coverage and Price Loss 

Coverage



14 CCC Biomass Crop Assistance Program 

15 CCC Conservation Reserve Program 

16 CCC Dairy Domestic Donations 

17 CCC Dairy Indemnity 

18 CCC Emergency Assistance for Livestock, 

Honeybees, and Farm-Raised Fish Program 
216 USDA AGENCY FINANCIAL REPORT | 2019

EXHIBIT 39: List of Programs Categorized by Recovery Auditing Activity Table (Continued)

No. Program Name

Supplier Credit 

Recovery Audit

Internal Payment 

Recapture Audit

Programs with Approved 

Waivers Based CostEffectiveness [Note #1] 

Programs with less than 

$1 million in FY 2018 

Expenditures [Note #2] 

19 CCC Emergency Forestry Conservation Reserve 

20 CCC Export 416 Ocean Transportation  

21 CCC Export Guarantee Program Level  

22 CCC Farm Storage Facility Loan 

23 CCC Feedstock Flexibility Program 

24 CCC Food for Progress Program  

25 CCC Hazardous Waste Activities 

26 CCC Livestock Forage Disaster Program 

27 CCC Livestock Indemnity Program 

28 CCC Loan Deficiency Payments 

29 CCC Marginal Protection Program for Dairy 

Producers 

30 CCC Marketing Assistance Loan Program 

31 CCC Marketing Programs 

32 CCC Noninsured Crop Disaster Assistance 

Program



33 CCC Pima Agriculture Cotton Trust Fund 

34 CCC Supplemental Revenue Assistance 

Payments Program

 

35 CCC Tobacco Transition Payment Program  

36 CCC Trade Adjustment Assistance Program 

37 CCC Tree Assistance Program 

38 CCC Upland Cotton Economic Adjustment 

Assistance Program


SECTION III | OTHER INFORMATION 217

EXHIBIT 39: List of Programs Categorized by Recovery Auditing Activity Table (Continued)

No. Program Name

Supplier Credit 

Recovery Audit

Internal Payment 

Recapture Audit

Programs with Approved 

Waivers Based CostEffectiveness [Note #1] 

Programs with less than 

$1 million in FY 2018 

Expenditures [Note #2] 

39 Departmental Management (DM) Agriculture 

Buildings and Facilities 

40 DM Biobased Markets Program 

41 DM Hazardous Materials Management 

42 Foreign Agricultural Service (FAS) McGovernDole Food for Education Grants 

43 FAS Salaries and Expenses 

44 Food and Nutrition Service (FNS) American 

Samoa



45 FNS Child and Adult Care Food Program 

46 FNS Commonwealth of the Northern Mariana 

Islands 

47 FNS Commodity Assistance Program—Disaster 

48 FNS Commodity Supplemental Food Program 

49 FNS The Emergency Food Assistance Program 

50 FNS Farmers Market Nutrition Program 

51 FNS Food Distribution Program on Indian 

Reservations



52 FNS National School Lunch Program 

53 FNS Nutrition Assistance—Puerto Rico 

54 FNS Salaries and Benefits 

55 FNS School Breakfast Program 

56 FNS Senior Farmers Market Nutrition Program 

57 FNS Special Milk Program 
218 USDA AGENCY FINANCIAL REPORT | 2019

EXHIBIT 39: List of Programs Categorized by Recovery Auditing Activity Table (Continued)

No. Program Name

Supplier Credit 

Recovery Audit

Internal Payment 

Recapture Audit

Programs with Approved 

Waivers Based CostEffectiveness [Note #1] 

Programs with less than 

$1 million in FY 2018 

Expenditures [Note #2] 

58 FNS Special Supplemental Nutrition Program 

for Women, Infants, and Children (WIC) 

59 FNS WIC—Disaster 

60 FNS Summer Food Service Program 

61 FNS Supplemental Nutrition Assistance Program 

62 FNS Supplemental Nutrition Assistance 

Program—Disaster



63 Food Safety and Inspection Service (FSIS) 

Cooperative State Food Safety and Inspection 

64 FSIS Salaries and Expenses 

65 Farm Service Agency (FSA) Agricultural Credit 

Insurance Fund—Program Account



66 FSA Emergency Conservation Program 

67 FSA Emergency Conservation Program—Disaster 

68 FSA Emergency Forest Restoration Program 

69 FSA Grassroots Source Water Protection 

Program



70 FSA Market Facilitation Program 

71 FSA Public Law 480 

72 FSA Reforestation Pilot Program 

73 FSA Reimbursement Transportation Cost 

Payment Program



74 FSA Salaries and Expenses 

75 FSA State Mediation Grants 

76 FSA Wildfires and Hurricanes Indemnity 

Program (WHIP)


SECTION III | OTHER INFORMATION 219

EXHIBIT 39: List of Programs Categorized by Recovery Auditing Activity Table (Continued)

No. Program Name

Supplier Credit 

Recovery Audit

Internal Payment 

Recapture Audit

Programs with Approved 

Waivers Based CostEffectiveness [Note #1] 

Programs with less than 

$1 million in FY 2018 

Expenditures [Note #2] 

77 Forest Service (FS) Capital Improvement and 

Maintenance (CIM) 

78 FS CIM—Disaster 

79 FS Forest and Rangeland Research 

80 FS Permanent Appropriations 

81 FS Trust Funds 

82 FS Hurricane Sandy—Emergency Forest 

Restoration Program

 

83 FS Land Acquisition 

84 FS Management of National Forest Lands for 

Subsistence Uses 

85 FS National Forest System 

86 FS National Forest System—Disaster 

87 FS Range Betterment Fund 

88 FS State and Private Forestry 

89 FS State and Private Forestry—Disaster 

90 FS Stewardship Contracting Product Sales 

91 FS Wildland Fire Management 

92 FS Wildland Fire Management—Disaster 

93 FS Wildland Fire Management—Suppression 

94 FS Working Capital Fund 

95 National Institute of Food and Agriculture 

(NIFA) Community Foods Project 

96 NIFA Extension Activities 
220 USDA AGENCY FINANCIAL REPORT | 2019

EXHIBIT 39: List of Programs Categorized by Recovery Auditing Activity Table (Continued)

No. Program Name

Supplier Credit 

Recovery Audit

Internal Payment 

Recapture Audit

Programs with Approved 

Waivers Based CostEffectiveness [Note #1] 

Programs with less than 

$1 million in FY 2018 

Expenditures [Note #2] 

97 NIFA Integrated Activities 

98 NIFA Research and Education Activities 

99

Natural Resources Conservation Service (NRCS) 

Conservation Technical Assistance (non-Farm 

Bill)



100 NRCS Farm Security and Rural Investment Act 

Program (FSRIP) 

101 NRCS Plant Materials Centers 

102 NRCS Snow Survey and Water Supply 

Forecasting



103 NRCS Soil Surveys 

104 NRCS Watershed Programs 

105

NRCS Watershed & Flood Prevention 

Operations/Emergency Watershed Protection 

Program—Disaster



106 Office of Partnerships and Public Engagement 

(OPPE) Socially Disadvantaged Farmers 

107 Office of Budget and Program Analysis Salaries 

and Expenses 

108 Office of Civil Rights Salaries and Expenses 

109 Office of the Chief Economist Salaries and 

Expenses



110 Office of Chief Financial Officer (OCFO) Salaries 

and Expenses 

111 Office of the Chief Information Officer (OCIO) 

Salaries and Expenses 

112 Office of the General Counsel (OGC) Salaries 

and Expenses 
SECTION III | OTHER INFORMATION 221

EXHIBIT 39: List of Programs Categorized by Recovery Auditing Activity Table (Continued)

No. Program Name

Supplier Credit 

Recovery Audit

Internal Payment 

Recapture Audit

Programs with Approved 

Waivers Based CostEffectiveness [Note #1] 

Programs with less than 

$1 million in FY 2018 

Expenditures [Note #2] 

113 Office of Hearings and Appeals Salaries and 

Expenses



114 Office of Inspector General (OIG) Salaries and 

Expenses



115 OIG Disaster-Related Funds 

116 Office of the Secretary Salaries and Expenses 

117 Rural Business-Cooperative Service (RBS) Grant 

Programs and Cooperative Agreement



118 RBS Guaranteed Loan Programs 

119 RBS Payment Programs 

120 RBS Relending Programs 

121 Rural Development (RD) Salaries and Expenses 

122 Rural Housing Service (RHS) Community 

Program Grants



123 RHS Direct Community Facility Loans 

124 RHS Direct Single Family Housing 

125 RHS Farm Labor Housing Loans (Section 514) 

126 RHS Guaranteed Community Facility Loans 

127 RHS Guaranteed Single-Family Housing Loans 

128 RHS Guaranteed Multi-Family Housing (MFH) 

Loans (Section 538 Loans) 

129 RHS Housing Loans and Grants—Other 

130 RHS MFH Preservation & Revitalization Demo 

Program: 514/516 Loans/Grants & 515 Loans 

131 RHS Rental Assistance Program 

(Section 521 Rental Assistance) 
222 USDA AGENCY FINANCIAL REPORT | 2019

EXHIBIT 39: List of Programs Categorized by Recovery Auditing Activity Table (Continued)

No. Program Name

Supplier Credit 

Recovery Audit

Internal Payment 

Recapture Audit

Programs with Approved 

Waivers Based CostEffectiveness [Note #1] 

Programs with less than 

$1 million in FY 2018 

Expenditures [Note #2] 

132 RHS Rural Community Development Initiative 

Grants



133 RHS Rural Rental Housing Loans (Section 515 

Direct Rural Rental Housing Loans) 

134 RHS Rural Rental Housing Loans (Section 515 

Direct Rural Rental Housing Loans)—Disaster



135 RHS Voucher Program (Section 542)  

136 Rural Utilities Service (RUS) Broadband 

Telecom Loans—Treasury Rate



137 RUS Community Connect Grants 

138 RUS Congressional Earmarked Funds 

139

RUS Electric Loan Programs [Catalog of Federal 

Domestic Assistance (CFDA) 10.850]—Direct 

Treasury Rate

 

140 RUS Electric Loan Programs (CFDA 10.850)—

Federal Financing Bank (FFB) Guaranteed 

141 RUS Rural Energy Savings Program 

142 RUS Grants—Other Electric—Telecom Water 

and Environmental Programs (WEP) 

143 RUS Public Television Digital Transition Grants 

144 RUS Revolving Loan Fund Program 

145 RUS Rural Telecommunications Hardship 

Loans—Direct Telecom Loans 

146 RUS Rural Telecommunications Loans—

FFB Telecom Loans 

147 RUS Rural Telecommunications Loans—

Treasury Telecom Loans 
SECTION III | OTHER INFORMATION 223

EXHIBIT 39: List of Programs Categorized by Recovery Auditing Activity Table (Continued)

No. Program Name

Supplier Credit 

Recovery Audit

Internal Payment 

Recapture Audit

Programs with Approved 

Waivers Based CostEffectiveness [Note #1] 

Programs with less than 

$1 million in FY 2018 

Expenditures [Note #2] 

148 RUS Rural Utilities Electric Program—Direct 5 % 

149 RUS Rural Utilities Electric Program—Municipal 

Rate 

 

150 RUS Water and Waste Disposal Systems for 

Rural Communities—Grant



151 RUS Water and Waste Disposal Systems for 

Rural Communities—Loans

 

152

RUS Water and Waste Disposal Systems Loans 

and Grants Section 306C (Native Tribes & 

Colonials)



153 RUS Water and Waste Disposal Systems for 

Rural Communities—Grants—Disaster



154 RUS Water and Waste Guaranteed Loans 

155 Research, Education, and Economics (REE) 

Salaries and Expenses



156 Risk Management Agency Federal Crop 

Insurance Corporation


224 USDA AGENCY FINANCIAL REPORT | 2019

Overpayment Recaptures with and without Recapture Audit Programs 

USDA had mechanisms in place to collect overpayments, even prior to the establishment of official 

payment recapture audits. For the FY 2019 AFR Recapture reporting period [Note #3], USDA recovered 

$388.77 million out of the identified $389.19 million through methods outside of Recapture Audit 

Programs (see Overpayment Recaptures Outside of Recapture Audit Table for additional breakout). 

The following table provides detailed information regarding the recoveries collected through official 

payment recapture audits. 

EXHIBIT 40: Overpayments Recaptured Through Payment Recapture Audits Table ($ in millions) [Note #3] 

Program or Activity

Amount 

Identified $

Amount 

Recaptured $

Current Year (CY) 

Recapture Rate %

CY +1 Recapture 

Rate Target %

Supplier Credit Recovery 

Audit Program [Note #4] 0.29 0.29 100.00 100.00

APHIS Internal Program 0.00 0.00 0.00 0.00

FSA/CCC Internal Program 182.27 175.08 96.06 97.00

NIFA Internal Program 20.61 5.14 24.94 25.00

RD Internal Programs 6.48 4.93 76.08 77.00

RMA-Federal Crop 

Insurance Corporation 12.03 9.86 81.96 82.00

TOTAL 221.39 195.01 -- --
SECTION III | OTHER INFORMATION 225

EXHIBIT 41: Overpayment Recaptures Outside of Recapture Audit Programs ($ in millions) [Note #3] 

Program or Activity Amount Identified $ Amount Recaptured $ Recapture Rate % 

AMS 0.00 0.00 N/A

APHIS 0.15 0.15 100.00

DA 0.00 0.00 N/A

FAS 0.00 0.00 N/A

FNS 369.85 369.85 100.00

FS 3.78 3.31 87.57

FSA 7.98 9.80 122.819

FSIS 0.00 0.00 N/A

OHA/OPPE 0.00 0.00 N/A

NRCS 3.40 1.97 57.94

OBPA 0.00 0.00 N/A

OGC 0.00 0.00 N/A

OIG 0.00 0.00 N/A

OSEC/OCFO 0.00 0.00 N/A

OCIO/OCE 0.00 0.00 N/A

RBS 1.00 0.01 1.00

REE 3.87 3.66 94.57

RHS -0.84 0.01 -1.1910

RMA 0.00 0.00 N/A 

RUS 0.00 0.00 N/A

OCR 0.00 0.00 N/A

Total 389.19 388.77 99.89

9

 The amount recaptured can be higher than the amount identified within a specific time period given the nature of 

collections. Collections of overpayments occur after the identification of the overpayment which can lapse into 

other reporting periods and there may be instances that require multiple collections (such as a payment plan for 

individuals who have a lower income) in order to return the overpayment in full. 

10 RHS’ negative amount for Amount Identified was a result of a lawsuit, where the original 2016 receivable 

should not have been established. In 2019 a non-cash credit was processed to reverse the original receivable. 
226 USDA AGENCY FINANCIAL REPORT | 2019

EXHIBIT 42: Disposition of Funds Recaptured Through Payment Recapture Audit Programs Table ($ in millions) 

Program or Activity

Amount 

Recovered $

Agency Expenses 

to Administer 

the Program $

Payment 

Recapture 

Auditor Fees $

Financial 

Management 

Improvement 

Activities $

Original 

Purpose $ To OIG $

Returned to 

Treasury $ Other $

Justification 

for “Other” 

Amounts

Supplier Credit 

Recovery Audit 

Program [Note #4] 

0.29 0.00 0.07 0.00 0.00 0.00 0.00 0.29

Funds have 

not been 

distributed

APHIS Internal 

Program 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 N/A

FSA/CCC Internal 

Program 175.08 0.00 0.00 0.00 1.81 0.00 173.27 0.00 N/A

NIFA Internal Program 5.14 0.00 0.00 0.00 5.14 0.00 0.00 0.00 N/A

RD Internal Program 4.93 0.00 0.00 0.00 0.00 0.00 1.60 3.33

Funds have 

not been 

distributed

RMA-Federal Crop 

Insurance Corporation 9.86 0.00 0.00 0.00 9.86 0.00 0.00 0.00 N/A

Total 195.30 0.00 0.07 0.00 16.81 0.00 174.87 3.62

Funds have 

not been 

distributed. 
SECTION III | OTHER INFORMATION 227

EXHIBIT 43: Aging of Outstanding Overpayments Identified in the Payment Recapture Audits Table ($ in millions) 

Program or Activity

Amount 

Outstanding 

(0–6 months) $ 

Amount 

Outstanding 

(6 months to 1 year) $ 

Amount Outstanding 

(more than 1 year) $ 

Amount determined 

to not be collectable $ 

Justification for 

amounts determined 

not to be collectable

Supplier Credit Recovery Audit 

Program 0.00 0.00 0.00 0.00 N/A

APHIS Internal Program 0.00 0.00 0.00 0.00 N/A

FSA/CCC Internal Program 15.11 4.99 14.33 0.89

Relief granted, finality 

rule, and small balance 

write-off

NIFA Internal Program 4.14 11.33 0.00 0.00 N/A

RD Internal Program 2.15 1.10 5.94 0.00 N/A

RMA-Federal Crop Insurance 

Corporation 3.93 0.34 1.11 0.00 N/A

TOTAL [Note #5] 25.33 17.76 21.38 0.89 See previous 

justification. 

Note #1: OMB was notified of FNS’ determination in October 2016. FNS determined they would be unable to conduct an official payment recapture audit on its 

programs because States make payments to FNS program recipients. RD’s and FSIS’ justifications were provided in the FY 2016 AFR.

Note #2: These programs or activities had less than $1 million in FY 2018 expenditures. Outlay levels can vary year to year, which is why some of these programs 

are currently conducting recovery auditing despite being under the $1 million Improper Payments Elimination and Recovery Act of 2010 (IPERA) 

threshold.

Note #3: The FY 2019 AFR Recapture Reporting Period consists of 4th quarter FY 2018, 1st quarter FY 2019, 2nd quarter FY 2019, and 3rd quarter FY 2019. 

Note #4: The Supplier Credit Recovery Audit’s reporting timeframe is August 1, 2018, to July 30, 2019. 

Note #5: USDA has a total of $64.47 million dollars in amounts outstanding (that is, 29.12 percent of the total overpayments identified through payment 

recapture audits). USDA has a total of $0.89 million dollars in amounts determined to not be collectable (that is, 0.40 percent of the total overpayments 

identified through payment recapture audits). The amount outstanding may not match the overpayments identified minus the overpayments 

recovered for FY 2019 because many USDA agencies recover money from previous years. 
228 USDA AGENCY FINANCIAL REPORT | 2019

Agency Reduction of Improper Payments with the Do Not Pay Initiative Section

USDA continues to expand its use of the Department of Treasury’s (Treasury) Do Not Pay (DNP) portal 

in FY 2019 by utilizing continuous and batch monitoring tools. 

USDA OCFO started a roll-out plan to onboard the remaining USDA agencies who are not using DNP 

for pre-payment, pre-approval, and post-payment verifications. 

USDA and DNP 

USDA has completed two System of Records Notices (SORN) for USDA FSA. In addition, FSA is 

currently reviewing the requirements to transmit the Credit Alert Interactive Voice Response System 

(CAIVRS) data to the Treasury DNP Portal. The first transmittal of CAIVRS data took place between 

USDA and Treasury in September 2019. USDA is in the process of completing the Computer Matching 

Agreement (CMA) and the Memorandum of Understanding (MOU) for these two SORN’s. 

Also, the USDA National Finance Center is completing a process to utilize continuous monitoring in 

order to allow the Financial Management Modernization Initiative (FMMI) to verify payments directly 

with DNP.

USDA has participated in a few DNP focus groups this fiscal year at the Treasury DNP Business Center. 

These focus groups were coordinated through OCFO in collaboration with select USDA agencies. 

1. Aggregated Death Data and Advanced Matching 

Description: Treasury, through OCFO, requested one-on-one sessions with USDA users to walk 

through screen mock-ups of how the aggregate death data match could potentially be displayed, 

as well as potential matches using advanced matching. 

2. Payment Integration and Online Search 

Description: Treasury engaged USDA participants to provide feedback in reference to a potential 

single death match in the portal and the impact on agency processes. 

3. Opportunity to Improve the DNP Portal 

Description: USDA participants reviewed the DNP new user interface mock-ups and provided 

feedback to Treasury staff on value/usability to help identify areas for improvement. 

USDA has incorporated the DNP databases in the following ways: 

1. The death records maintained by the Commissioner of Social Security: USDA utilizes these 

records to check extensively for Farm Service Agency FY 2019 new enrollees, Guaranteed 

Loans, and Direct Loans Divisions on a post-payment basis. Several additional programs use this 

database in pre-award activities in the DNP portal. All USDA payments made through Treasury 

are checked against this database on a post-payment basis. 
SECTION III | OTHER INFORMATION 229

2. System for Award Management (SAM) database managed by the General Services 

Administration: USDA utilizes this system to check pre-award for most contracts, grants, 

cooperative agreements, and insurance programs. All USDA payments made through Treasury 

are checked against this database on a post-payment basis. 

3. CAIVRS managed by the Department of Housing and Urban Development: USDA utilizes this 

system to award loans. Rural Development (RD) signed an MOU with Treasury and updated its 

system of records notice. RD began transmitting its CAIVRS data to Treasury in June 2017. 

4. Debt Check Database managed by Treasury: RD utilizes this database for many pre-award 

verifications. 

5. List of Excluded Individuals/Entities (LEIE) managed by the Office of Inspector General of the 

U.S. Department of Health and Human Services: USDA utilizes this list to check for pre-award 

for loans, grants, and contracts. 

6. Prisoner Update Processing System (PUPS) managed by the Social Security Administration: 

USDA is not currently using this system but is evaluating programs that have the legal authority 

to use and benefit from this database. 

USDA has submitted a request to have these data sources available as part of the single batch and 

continuous monitoring done by USDA agencies. Once these data sources become available, USDA will 

be requesting Treasury to approve usage for three agencies. USDA will work with Treasury to develop 

the business rules by agency level on usage of these new data sources.

USDA and DNP Adjudication & Payment Activity 

USDA is currently utilizing the DNP payment activity reports and is working toward combining the 

adjudication reports and the USDA Local Security Administrator’s (LSA) monthly reports to create 

metrics of the dollar value on pre-approval and pre-payment checks using the DNP system. USDA is 

currently seeking to use quantitative analyses to provide management ways to decrease the improper 

payment rates by agency. 
230 USDA AGENCY FINANCIAL REPORT | 2019

Fraud Reduction Report

OVERVIEW

As required by the Office of Management and Budget (OMB) Circular No. A-123, Management’s 

Responsibility for Enterprise Risk Management and Internal Control (OMB Circular No. A-123), the 

U.S. Department of Agriculture (USDA) is in the process of implementing a Departmentwide Enterprise 

Risk Management (ERM) program that effectively identifies risks; assesses, analyzes, and prioritizes 

those risks; and documents and monitors these risks.

The implementation of ERM will help the Department and component agencies better identify our most 

significant fraud risk and take appropriate actions to reduce and prevent fraud. As the Department 

continues to implement the requirements of OMB Circular A-123, the Department will use agency best 

practices to identify and minimize risks and vulnerabilities to prevent fraud. Outlined below are specific 

actions the Department is taking to integrate fraud risk prevention and monitoring into the management 

of internal controls. 

RISK ASSESSMENT:

The Department’s annual risk assessment process, performed in conjunction with Appendix A to OMB 

Circular No. A-123, Management of Reporting and Data Integrity Risk (A-123 Appendix A), 

incorporates specific internal and external fraud risk. These questions allow the respondent to rate the 

susceptibility of the agency’s significant business processes to fraud. 

Additionally, as a requirement of the Statement on Auditing Standards (SAS) No. 122, Clarification and 

Recodification, specifically Audit (AU) Section 240, Consideration of Fraud in a Financial Statement 

Audit, the Office of the Chief Financial Officer (OCFO) disseminates and consolidates responses to a 

fraud questionnaire among USDA’s financial community. 

TECHNOLOGY: 

USDA continuously monitors 15 automated financial system controls. These controls are configured in 

the USDA financial system to identify exceptions for further analysis of potential fraud/misuse. 

Configuration changes are immediately reported as exceptions to responsible control owners and first 

line supervisors. An oversight workflow is established for approving the actions proposed by the control 

owner to correct any exception issues, assigning remediation tasks when needed, and closing the 

exception after the control owner completes the proposed actions. Reports are available to monitor 

exception activity by responsible personnel. 
SECTION III | OTHER INFORMATION 231

ENTITY LEVEL CONTROLS:

USDA agencies and staff offices are required to complete an annual Entity Level Control (ELC) 

assessment. The ELC assessment tool complies with the Government Accountability Office (GAO)—

Standards for Internal Control in the Federal Government (“Green Book”). As such, the assessment tool 

includes GAO Principle 8, which assesses fraud risk. Attributes include: (1) types of fraud, (2) fraud risk 

factors, and (3) responses to fraud risks. Key objectives for this assessment include: (1) identifying fraud 

risks based on fraud risk factors, (2) assessing identified fraud risks for significance, and (3) properly 

responding to identified fraud risks. 

ACCESS CONTROLS:

The USDA consolidated financial systems’ access controls are managed through the Governance Risk 

and Compliance (GRC) Access Control module. Access controls are configured to prevent conflicting 

accounting roles unless there is an immediate need that is fully documented, mitigated, and supported by 

compensating controls. There is a standard process for the review and approval of mitigating controls to 

ensure that control strategies are properly documented and carried out by the requesting agency. 

SEGREGATION OF DUTY: 

USDA’s consolidated financial system is configured in such a way that conflicting roles are prohibited, 

which ensures proper segregation of duty (SOD). Those who initiate a transaction in the financial system 

are not allowed to also approve that same transaction. There are also financially significant, agencyspecific SOD controls that are documented and tested annually during the A-123, Appendix A 

assessment. The strict prohibition of conflicting roles reduces the risk of fraud. 

ADDITIONAL FRAUD RISK INTEGRATION EFFORTS:

On October 15, 2018, the Office of Management and Budget, Chief Financial Officers (CFO) Council, 

in conjunction with the Department of Treasury-Office of the Fiscal Service, issued Program Integrity: 

The Anti-Fraud Playbook (Playbook), as a tool for Federal agencies implementing the Fraud Reduction 

and Data Analytics Act of 2015 to develop strategies to combat fraud. The Playbook was shared and 

discussed internally with USDA executives. USDA personnel also participated in the CFO Council 

Fraud Working Group and the Fiscal Service’s Roundtable discussions to collaborate and share 

ideas/resources to collectively apply Playbook concepts, and to develop informal support networks. 

To support OMB Circular No. A-123 compliance efforts, fraud assertions are included in each 

components FY 2019 Certification Statements that support the Secretary’s Management Assurance 

Statement. USDA component agencies’ and staff offices’ progress in establishing strategies, procedures, 

and other steps to curb fraud were reported and consolidated in the Agency Financial Report. All 

component agencies and staff offices reported that financial and administrative controls were established 

to identify and assess fraud risks, and control activities were designed and implemented to prevent, 

detect, and respond to fraud, including improper payments. 
232 USDA AGENCY FINANCIAL REPORT | 2019

Component agencies and staff offices also assessed the fraud risk principle in the Standards for Internal 

Control for Federal Government and OMB Circular A-123, with respect to leading practices for managing 

fraud risk; assessed risks and vulnerabilities to fraud, including payroll, beneficiary payments, grants, large 

contracts, and purchase and travel cards, as applicable; and established strategies, procedures, and other 

steps to curb fraud as part of internal control activities operating during the normal course of business.

Transactional control objectives to monitor adherence to control procedures that prevent or detect fraud are 

assessed annually through control effectiveness testing and the results are communicated to risk owners.

In prior year’s reports, USDA component agencies and staff offices reported specific fraud risk 

management activities to curb fraud. These efforts continue in USDA’s payroll, beneficiary payment, 

grant, large contract, and purchase and travel card programs and operations. The following provides 

new developments related to the management of fraud risk for travel cards:

Travel Cards—The primary fraud risk management method USDA uses to mitigate travel charge card 

misuse is the blocking of 922 Merchant Category Codes (MCCs). This procedure prevents cardholders 

from successfully completing transactions with unauthorized vendors. 

Additionally, USDA uses MasterCard (Oversight)-Insights on Demand (IOD) compliance management 

tool, to identify and detect possible travel charge card misuse. IOD is a cloud-based system, powered by 

Oversight Systems, that is used to analyze 100 percent of cardholder transaction data from multiple 

sources to assist travel managers in improving their operations. This tool applies complex predictive 

analytics, combined with transaction analysis, to uncover possible misuse and compliance violations, 

that could lead to fraud. 

Highlights of Oversights IOD:

▪ Oversight brings together the clues needed to identify travel charge card risks in real-time and help 

prevent wasteful spending, misuse, and fraud because it: 

o Automatically analyzes 100 percent of card transactions; 

o Compares transactions and runs multiple analytics in parallel; 

o Analyzes spending patterns and habits over time; and

o Reduces non-compliant spending by 70 percent. 

▪ Oversight automatically finds the problems for you, so you can focus on changing employee 

behavior, because it: 

o Identifies employees who frequently violate expense policy; 

o Determines root cause of behavior that needs to be corrected; 

o Alerts you to training opportunities, policy issues, and business process inefficiencies; and

o Potential to save travel budget by decreasing abuse. 
SECTION III | OTHER INFORMATION 233

▪ Reduce audit effort by 50 percent: 

o Oversight increases your audit scope from a typical sample analysis to 100 percent; 

o Automates data acquisition with your existing travel charge card vendor (and travel system 

if implemented); 

o Centralized system inspects transactions in a consistent manner; 

o Automatically tracks remediation activity with built-in workflow for email and audit trail; and

o Dashboard views flag highest priority risks for further investigation. 

USDA elected to use Oversight’s existing configuration for the first year of the program, with minor 

adjustments. Using travel charge card transaction data provided by the card vendor, Insights are 

delivered in easy to understand dashboards and reports, with detailed findings and recommendations that 

can be used to make decisions and take action. An Insight is made up of a collection of analytics 

(Indicators) designed to address a specific business objective. The results of IOD’s analysis are 

delivered to customers via two key browser-based components, the Dashboard and the Workbench. IOD 

automatically tracks and logs the actions for each finding, including input from emails related to 

reviews, investigations, and corrective activities. 

Oversight provides Insights for travel related expenses in the following areas: 

▪ Fraud Risk and Misuse—Detect high-risk transactions based on MCC and other criteria. Helps in 

understanding misclassifications, out of bounds transactions, and inappropriate venues, thereby, 

assisting an organization in enforcing travel policy. Outliers and patterns uncovered by this Insight 

can be used to find and stop abuse and misuse. Risk levels for more than 300 MCCs, pre-set to 

Oversight best practice values, are:

o High risk—Create an exception for every transaction with this MC Code. 

o Medium risk—Create an exception if there are more than three transactions or the cumulative 

dollar value is greater than $500 for this MC Code in a 30-day window for this card. 

o Low risk—Create an exception if there are more than 10 transactions or the cumulative dollar 

value is greater than $700 for this MC Code in a 30-day window for this card. 

o Zero—Turn off monitoring of this MC Code and create no exceptions for any transaction 

with this MC Code. 

▪ Travel Misuse—Detect patterns of misuse and excess in lower-risk MCC

▪ Suspicious Keywords—Flags purchases with suspicious keywords or phrases; current list has more 

than 700 keywords. The keywords are also assigned a risk level based on the amount of the 

transaction. The current defaults, which can be adjusted, are: 

o High risk keywords (no dollar threshold); 

o Medium risk keywords (minimum $500 threshold); and

o Low risk keywords (minimum of $700 threshold). 
234 USDA AGENCY FINANCIAL REPORT | 2019

Inspector General Act Amendments of 1988: 

Management’s Report on Audit Follow Up

BACKGROUND 

The Inspector General Act Amendments of 1988 (Public Law [P.L.] 100–504) require that each agency 

head submit semi-annual reports to Congress on the actions taken in response to the Office of Inspector 

General (OIG) audit, evaluation, and inspection reports. Consistent with the Reports Consolidation Act 

of 2000 (P.L. 106–531), the U.S. Department of Agriculture’s (USDA) Office of the Chief Financial 

Officer (OCFO) consolidates and annualizes the required semi-annual Inspector General Act 

Amendments’ reporting elements for inclusion in the annual Agency Financial Report (AFR). 

OIG audits USDA’s programs, systems, and operations. It then recommends improvements to 

management based on its findings. USDA management may agree or disagree with the audit’s findings 

or recommendations. An agreement is reached during the management-decision process. If management 

agrees with a recommendation, a written plan for corrective action with a target completion date is 

developed. The plan is then submitted to OIG for concurrence. If both OIG and management agree that 

the proposed corrective action will correct the weakness, a management decision is concluded for that 

recommendation. 

Audit follow-up ensures that prompt and responsive action is taken. USDA’s OCFO oversees audit 

follow-up for the Department. An audit remains open until all corrective actions for each 

recommendation are completed. As agencies complete planned corrective actions and submit closure 

documentation, OCFO reviews the submitted documentation for sufficiency and determines if final 

action can be completed. 

FISCAL YEAR RESULTS 

USDA agencies closed 50 audits during fiscal year (FY) 2019. As of September 22, 2019, OIG and 

USDA agencies reached management decisions on 25 audits. As shown in the following exhibit, the 

Department’s inventory of open audits decreased in FY 2019 by 25 percent from 100 to 75. 
SECTION III | OTHER INFORMATION 235

EXHIBIT 44: Open Audit Inventory

 

Note: The final FY 2018 ending balance was revised from 96 to 100 to include four audits transmitted by OIG after 

the close of the reporting period. These adjustments are also reflected in the beginning balances for audits with 

disallowed costs (DC) and/or Funds to Be Put to Better Use (FTBU) shown in Exhibit 46 and Exhibit 47. 

AUDIT FOLLOW-UP PROCESS

The Inspector General Act Amendments of 1988 require an annual report to Congress providing the 

status of resolved audits that remain open. Resolved audits are those for which management decision has 

been reached for all recommendations. Reports on resolved audits must include the elements listed in the 

following bullet points (see Exhibit 45 for definitions):

▪ Beginning and ending balances for the number of audit reports and dollar value of disallowed costs 

(DC) and Funds to Be Put to Better Use (FTBU); 

▪ The number of new management decisions reached;

▪ The disposition of audits with final action; and 

▪ Resolved audits that remain open 1 year or more past the management decision date require 

additional reporting elements. These elements include date issued, revised estimated completion 

date, original dollar value of DC or FTBU, and an explanation as to why final action has not been 

taken. 
236 USDA AGENCY FINANCIAL REPORT | 2019

EXHIBIT 45: Audit Follow-Up Definitions

Term Definition

Disallowed Cost 

(DC)

An incurred cost questioned by the Office of Inspector General (OIG) that management 

has agreed should not be chargeable to the Government. 

Final Action Actions that management has taken to address the audit findings and recommendations. 

Funds to Be Put to 

Better Use (FTBU)

An OIG recommendation that funds could be used more efficiently if management 

completes the recommendation, including: 

• Reductions in outlays or other savings;

• Deobligation of funds from programs or operations, or the withdrawal of subsidy 

costs on loans, guarantees, or bonds; and

• Implementation of recommended improvements for grants or contracts, or 

unnecessary expenditures noted in pre-award reviews of contracts or grant 

agreements. 

Management 

Decision

Agreement between management and OIG on corrective action needed to address audit 

findings and recommendations.

BEGINNING AND ENDING INVENTORY FOR AUDITS WITH 

DISALLOWED COSTS AND FUNDS TO BE PUT TO BETTER USE 

Of the 50 audits that achieved final action during the fiscal year, eight contained DC. The number of DC 

audits remaining in the inventory at the end of the fiscal year is 29, with a monetary value of 

$69,863,665 (see Exhibit 46). 

EXHIBIT 46: Inventory of Audits with Disallowed Costs (DC)

Audits with DC # of Audits Amount ($)

Beginning of the Period (October 1, 2018)* 30 $ 33,762,327

Plus: New Management Decisions 7 $ 60,790,615

Total Audits Pending Collection of DC 37 $ 94,552,942

Less: Adjustments ($ 12,588,243)

Revised Subtotal $ 81,964,699

Less: Final Actions (Recoveries) 8 $ 12,101,034

Audits with DC Requiring Final Action at the End of the 

Period (September 22, 2019) 29 $ 69,863,665

Exhibit 46 and Exhibit 47: include only those open audits with DC and FTBU, respectively. Additionally, some 

audits contain both DC and FTBU amounts. For this reason, the number of audits shown as the ending balances 

in Exhibit 46 and Exhibit 47 does not equal the total resolved audit inventory balance in Exhibit 44. 

*The beginning balance in Exhibit 46 was adjusted to include one audit with DC that was transmitted by OIG 

after the closing of the reporting period. 
SECTION III | OTHER INFORMATION 237

For DC audits that achieved final action in FY 2019, OIG and management agreed to collect 

$24,689,277 ($12,588,243 + $12,101,034). Based on further discovery and research to resolve the issues 

identified, adjustments were made totaling $12,588,243. Management recovered the remaining 

$12,101,034 as payment and $735,825 interest. 

Final action occurred on three audits that involved FTBU amounts. There are nine FTBU audits 

remaining in the inventory as of September 22, 2019, with a monetary value of $81,617,411 

(see Exhibit 47).

EXHIBIT 47: Inventory of Audits with Funds To Be Put To Better Use (FTBU)

Audits with FTBU # of Audits Amount ($)

Beginning of the Period (October 1, 2018)** 10 $189,486,587

Plus: New Management Decisions 2 $3,549,880

Total Audits Pending 12 $193,036,467

Less: Final Actions 3 $111,419,056

Audits with FTBU Requiring Final Action at the End of the 

Period (September 22, 2019) 9 $81,617,411

Disposition of FTBU:

FTBU Implemented 3 $111,419,056

FTBU Not Implemented $0

Total FTBU Amounts for Final Action Audits $111,419,056

** The beginning balance in Exhibit 47 was adjusted to include one audit with FTBU that was transmitted by 

OIG after the closing of the reporting period. 

The number of audits open 1 or more years without final action in FY 2019 decreased from the previous 

fiscal year from 65 to 53. The ending inventory includes 35 audits that reached 1 year past the 

management decision date during FY 2019. USDA agencies continue to pursue remediation and/or 

compensating controls to address many of the underlying issues identified in these older audits. 

EXHIBIT 48: The Number of Audits Open 1 or More Years Past the Management Decision Date (MDD) Remains 

the Same as the Previous Fiscal Year.

Audits 1 Year or More Past MDD # of Audits

Beginning of the period 65

Plus: Audits that reached 1 year past MDD during FY 2019 35

Subtotal FY 2019 audits 1 year or more past MDD 100

Less: Audits closed 47

Ending balance as of September 30, 2019 53
238 USDA AGENCY FINANCIAL REPORT | 2019

Agencies have completed planned corrective actions with the exception of eight audits under collection 

for DC (see Exhibit 49).

EXHIBIT 49: Distribution of Audits Open 1 Year or More Past the Management Decision Date (MDD)

Audits Behind Schedule Audits Under Collection

No. DC ($) FTBU ($) No. DC ($) FTBU ($)

45 $2,590,612 $12,674,961 8 $6,386,679 $70,324,242
SECTION III | OTHER INFORMATION 239

MANAGEMENT’S REPORT ON AUDIT FOLLOW UP

Audits without final action 1 year or more past the Management Decision Date (MDD) and behind schedule (excluding collections) are listed 

individually in Exhibit 50. The audits are categorized by agency and reason why final action has not occurred. More detailed information on 

audits under collection is available from OCFO. 

EXHIBIT 50: Audits Open 1 Year or More Past the MDD and Behind Schedule

Agricultural Marketing Service (AMS)

Audits Date Issued Revised 

Completion Date Audit Title Monetary Amount Reason Pending DC ($) FTBU ($)

03601-0002-41 09/26/2018 3/31/2020 Commodity Purchases for International 

Food Assistance Programs $0 $1,356,610 Ongoing administrative action

AMS Subtotal (1) $0 $1,356,610 

Animal and Plant Health Inspection Service (APHIS)

Audits Date Issued Revised 

Completion Date Audit Title Monetary Amount Reason Pending DC ($) FTBU ($)

33099-0001-23 05/31/2018 12/27/2019 Texas Boll Weevil Eradication 

Foundation Cooperative Agreement $1,472 $0 Pending issuance of 

policy/guidance

33601-0001-41 12/09/2014 12/27/2019 Oversight of Research Facilities $0 $420,299 Pending Office of General 

Counsel Decision/Opinion

50601-0001-32 09/22/2015 12/27/2019 Controls Over APHIS’ Introduction of 

Genetically Engineered Organisms $0 $0 Legislation Required

50601-0008-TE 01/28/2005 12/27/2019

Controls over APHIS’ Issuance of 

Genetically Engineered Organisms 

Release Permits

$0 $0 Legislation Required

50701-0001-21 09/21/2018 10/31/2019

USDA Agency Activities for 

Agroterrorism Prevention, Detection 

and Response

$0 $0

Pending receipt and/or 

processing of final action 

documentation

APHIS Subtotal (5) $1,472 $420,299 
240 USDA AGENCY FINANCIAL REPORT | 2019

Agricultural Research Service (ARS)

Audits Date Issued Revised 

Completion Date Audit Title Monetary Amount Reason Pending DC ($) FTBU ($)

50601-0006-TE 03/04/2004 12/30/2019 ARS’ Controls Over Plant Variety 

Protection and Germplasm Storage $0 $0 Ongoing Administrative 

Action 

50601-0010-AT 03/8/2004 12/30/2019

ARS’ Follow Up Report on the Security 

of Biological Agents at U.S. 

Department of Agriculture 

Laboratories

$0 $0 Pending issuance of 

policy/guidance

ARS Subtotal (2) $0 $0 

Commodity Credit Corporation (CCC)

Audits Date Issued Revised 

Completion Date Audit Title Monetary Amount Reason Pending DC ($) FTBU ($)

06401-0005-11 02/12/2016 09/30/2020 CCC’s Financial Statements for 

FY 2015 and 2014 $0 $0 Pending issuance of 

policy/guidance

CCC Subtotal (1) $0 $0 
SECTION III | OTHER INFORMATION 241

Foreign Agricultural Service (FAS)

Audits Date Issued Revised 

Completion Date Audit Title Monetary Amount Reason Pending DC ($) FTBU ($)

07601-0001-22 03/31/2014 12/30/2019 Private Voluntary Organization Grant Fund 

Accountability $242,676 $8,481

Pending receipt and/or 

processing of final action 

documentation

07601-0001-41 07/13/2018 12/30/2019 Controls Over the Export Credit Guarantee 

Program $0 $0 Ongoing administrative action

07601-0002-23 12/05/2016 12/30/2019 FAS’ Monitoring of the Administration’s 

Trade Agreement Initiatives $0 $0 Pending issuance of 

policy/guidance

50601-0001-22 03/28/2013 12/30/2019

Effectiveness of FAS’ Recent Efforts to 

Implement Measurable Strategies Aligned 

to the Department’s Trade Promotion and 

Policy Goals

$0 $0 Pending issuance of 

policy/guidance

50601-0002-16 02/06/2014 12/30/2019 Section 632(a) Transfer of Funds from 

USAID to USDA for Afghanistan $0 $0 Pending issuance of 

policy/guidance

FAS Subtotal (5) $242,676 $8,481 
242 USDA AGENCY FINANCIAL REPORT | 2019

Food and Nutrition Service (FNS)

Audits Date Issued Revised 

Completion Date Audit Title Monetary Amount Reason Pending DC ($) FTBU ($)

27004-0001-23 09/24/2018 10/31/2019 New York’s Controls Over Summer Food 

Service Program $95,759 $0 Ongoing Administrative 

Action

27004-0003-21(1) 9/7/2017 10/31/2019 Summer Food Service Program—Texas 

Sponsor Cost—Interim Report $110,670 $0

Pending receipt and/or 

processing of final 

action documentation

27601-0001-31 07/31/2013 2/29/2020

Controls for Authorizing Supplemental 

Nutrition Assistance Program (SNAP) 

Retailers

$0 $6,700,000 Legislation Required

27601-0002-41 09/23/2015 11/30/2019 FNS Quality Control Process for SNAP Error 

Rate $0 $0 Ongoing Administrative Action

27601-0003-10 09/27/2016 10/31/2019

New Mexico’s Compliance with SNAP 

Certification of Eligible Households 

Requirements

$9,784 $0 Ongoing Administrative 

Action

27601-0004-41 03/27/2018 10/31/2019 FNS Controls Over Summer Food Service 

Program $0 $0

Pending receipt and/or 

processing of final 

action documentation

27601-0008-10 06/14/2017 10/31/2019

Georgia’s Compliance with SNAP 

Requirements for Participating State 

Agencies (7 CFR, Part 272)

$1,427 $0 Ongoing Administrative 

Action

27601-0010-10 08/09/2017 12/31/2019

Pennsylvania’s Compliance with SNAP 

Requirements for Participating State 

Agencies (7 CFR, Part 272)

$969 $0 Pending issuance of 

policy/guidance

27601-0011-10 09/14/2017 12/31/2019

South Carolina’s Compliance with SNAP 

Requirements for Participating State 

Agencies (7 CFR, Part 272)

$26,209 $0 Pending issuance of 

policy/guidance

27601-0012-10 09/28/2017 12/31/2019

Washington’s Compliance with SNAP 

Requirements for Participating State 

Agencies (7 CFR, Part 272)

$0 $0 Ongoing Administrative 

Action

27601-0013-10 12/19/2017 12/31/2019

Compilation Report of States’ Compliance 

with SNAP Requirements for Participating 

State Agencies (7 CFR, Part 272)

$0 $0 Pending issuance of 

policy/guidance

FNS Subtotal (11) $244,818 $6,700,000 
SECTION III | OTHER INFORMATION 243

Farm Service Agency (FSA)

Audits Date Issued Revised 

Completion Date Audit Title

Monetary Amount

Reason Pending DC ($) FTBU ($)

03601-0001-22 07/31/2014 12/31/2019 Compliance Activities $0 $0 Pending issuance of 

policy/guidance

03601-0002-22 07/31/2014 12/31/2019 Economic Adjustment Assistance to 

Users of Upland Cotton $1,518,068 $0 Ongoing Administrative Action

03601-0002-31 9/20/2018 12/31/2019 Agriculture Risk Coverage Price Loss 

Coverage Programs $107,794 $0 Pending issuance of 

policy/guidance

03702-0001-32 12/10/2014 12/31/2019 Farm Service Agency Livestock Forage 

Program $208,374 $0

Pending systems development, 

implementation, or 

enhancement

50601-0003-22 01/27/2017 12/31/2019

Coordination of USDA Farm Program 

Compliance—Farm Service Agency, 

Risk Management Agency, and Natural 

Resource Conservation Service

$0 $0 Ongoing Administrative Action

FSA Subtotal (5) $1,834,236 $0 

Food Safety and Inspection Service (FSIS)

Audits Date Issued Revised 

Completion Date Audit Title

Monetary Amount

Reason Pending DC ($) FTBU ($)

24016-0001-23 02/18/2017 12/31/2019

Food Safety and Inspection Service 

Follow-up on the 2007 and 2008 Audit 

Initiatives

$0 $0 Pending issuance of 

policy/guidance

50601-0006-HY 07/15/2009 12/31/2019

Assessment of USDA’s Controls to 

Ensure Compliance with Beef Export 

Requirements 

$0 $0

Pending systems development, 

implementation, or 

enhancement 

FSIS Subtotal (2) $0 $0 
244 USDA AGENCY FINANCIAL REPORT | 2019

Forest Service (FS)

Audits Date Issued Revised 

Completion Date Audit Title

Monetary Amount

Reason Pending DC ($) FTBU ($)

08016-0001-23 12/01/2017 4/1/2020 Review of Forest Service Controls 

Over Explosives and Magazines $0 $0 Pending issuance of 

policy/guidance

FS Subtotal (1) $0 $0 

Natural Resources Conservation Service (NRCS)

Audits Date Issued Revised 

Completion Date Audit Title

Monetary Amount

Reason Pending DC ($) FTBU ($)

10401-0009-11 11/13/2017 12/31/2019

Natural Resource Conservation 

Service’s Balance Sheet for Fiscal Year 

2017

$0 $0 Pending issuance of 

policy/guidance

10601-0001-32 9/27/2016 12/31/2019 Controls Over the Conservation 

Stewardship Program $0 $4,189,571

Pending receipt 

and/or processing of 

final action 

documentation

10601-0002-31 07/30/2014 12/31/2019 NRCS Conservation Easement 

Compliance $0 $0 Pending issuance of 

policy/guidance

10601-0004-31(2) 11/13/2017 12/31/2019 NRCS Regional Conservation 

Partnership Program Controls $267,410 $0 Ongoing administrative action

NRCS Subtotal (4) $267,410 $4,189,571 
SECTION III | OTHER INFORMATION 245

Office of the Chief Financial Officer (OCFO)

Audits Date Issued Revised 

Completion Date Audit Title

Monetary Amount

Reason Pending DC ($) FTBU ($)

50016-0001-23 09/28/2017 12/31/2019

Implementation of Suspension and 

Debarment Tools in the U.S. 

Department of Agriculture

$0 $0 Pending issuance of 

policy/guidance

50401-0013-11 11/15/2017 12/31/2019

U.S. Department of Agriculture’s 

Consolidated Balance Sheet for Fiscal 

Year 2017 

$0 $0 Pending issuance of 

policy/guidance

OCFO Subtotal (2) $0 $0 

Office of Homeland Security and Emergency Coordination (OHSEC)

Audits Date Issued Revised 

Completion Date Audit Title

Monetary Amount

Reason Pending DC ($) FTBU ($)

61701-0001-21 03/27/2017 3/30/2020 Agroterrorism Prevention, Detection, 

and Response $0 $0 Pending issuance of 

policy/guidance

OHSEC Subtotal (1) $0 $0 

Office of Property and Fleet Management (OPFM) 

Audits Date Issued Revised 

Completion Date Audit Title

Monetary Amount

Reason Pending DC ($) FTBU ($)

50099-0003-21 09/18/2018 12/31/2019 USDA’s Management Over the 

Misuse of Government Vehicles $0 $0 Pending issuance of 

policy/guidance 

OPFM Subtotal (1) $0 $0 
246 USDA AGENCY FINANCIAL REPORT | 2019

Office of Small and Disadvantaged Business Utilization (OSDBU)

Audits Date Issued Revised 

Completion Date Audit Title

Monetary Amount

Reason Pending DC ($) FTBU ($)

50601-0003-23 9/28/2018 02/28/2020

Office of Small and Disadvantaged 

Business Utilization’s (OSDBU) 

Control Over the Eligibility of 

Contract Recipients

$0 $0 Ongoing administrative 

action

OSDBU Subtotal (1) $0 $0 

Risk Management Agency (RMA)

Audits Date Issued Revised 

Completion Date Audit Title

Monetary Amount

Reason Pending

DC ($) FTBU ($)

05601-0003-22 04/09/2018 10/31/2019 Actual Revenue History 

Underwriting for Sweet Cherries $0 $0

Pending receipt and/or 

processing of final action 

documentation

05601-0005-31 12/19/2017 12/31/2019 RMA’s Utilization of Contracted 

Data Mining Results $0 $0

Pending systems 

development, 

implementation, or 

enhancement 

RMA Subtotal (2) $0 $0 

Total Number Audits (45) Total $2,590,612 $12,674,961 
SECTION III | OTHER INFORMATION 247

Reduce the Footprint

The U.S. Department of Agriculture (USDA) successfully implemented the Office of Management and 

Budget (OMB) policy “Reduce the Footprint,” formally known as “Freeze the Footprint,” as an initiative 

to maintain its office and warehouse square footage baselines at the fiscal year (FY) 2012 levels through 

2015. Beginning in FY 2016, the policy shifted to an emphasis on disposal of excess real property held 

by the Federal Government, thus making the overall federal real estate asset portfolio more efficient. 

The Chief Financial Officer (CFO) Act entities are required to define annual targets to reduce their total 

square footage of domestic office and warehouse inventories in comparison to the revised FY 2015 

“Reduce the Footprint” baseline, as compiled by the General Services Administration (GSA). 

Exhibit 51: Reduce the Footprint Baseline Comparison

Square Feet (SF) (in millions)

Fiscal Year 2015 Baseline 2018 Change (2015–2018)

32.62 31.69 -.93%

EXHIBIT 52: Reporting of Operation and Maintenance Costs—Owned and Direct-Leased Facilities 

Operations and Maintenance (O&M) Costs ($ in millions)

Fiscal Year 2015 Baseline 2018 Change (2015–2018)

$580.20 $85.46 -60.6%

More information about Federal Real Property can be found in the Federal Real Property Profile 

Summary Report Library. 

USDA issued an Agriculture Property Management Regulation Advisory (AGPMR No. 15-05) 

providing policy guidance and procedures for the Reduce the Footprint OMB space initiative. Since 

FY 2012, Departments have been projecting their 5-year office and warehouse requirements. 

The Department has set forth processes and procedures to manage space needs at or below the FY 2015 

baseline, represented in Exhibit 51 and Exhibit 52. 

USDA continues to support footprint reductions by identifying opportunities for disposal, consolidation, 

and increased utilization of real property. The Department issued an updated AGPMR Advisory 

(No. 16-01), “Space Utilization Rate Policy,” to clarify the existing office utilization rate policy of 

150 square feet per person. These continuing actions represent USDA’s commitment to strategically 

managing and utilizing its space to achieve the highest return for the taxpayer. USDA also monitors 

compliance with this policy and requests agencies to submit waivers when this utilization rate cannot be 

met in new space acquisitions. USDA also provides periodic reports to senior management on agency 

compliance with this policy. USDA has also provided training to agencies to ensure an understanding of 

how utilization data is captured in the corporate property information system. 
248 USDA AGENCY FINANCIAL REPORT | 2019

Civil Monetary Penalties

USDA maintains regulations regarding civil monetary policies at Title 7 of the Code of Federal Regulations § 3.91. The Department has 

reviewed and updated the penalties in accordance with the Civil Monetary Penalties Inflation Act of 2015. On December 5, 2017, the 

Department published the revised listing of penalties in the Federal Register (www.federalregister.gov/documents/2017/12/05/2017-

26194/inflation-catch-up-adjustment-of-civil-monetary-penalty-amounts). The Department must update its civil monetary penalties to account 

for annual inflation. On March 14, 2018, the Department published the revised penalties for 2018 in the Federal Register

(https://www.federalregister.gov/documents/2018/03/14/2018-04832/civil-monetary-penalty-inflation-adjustment-for-2018). The table below 

briefly describes the penalty, under which authority it pertains, and the anticipated current penalty amount. 

Exhibit 53: Civil Monetary Penalties

Penalty (Name of Penalty) Authority (Statute) Date of Current 

Adjustment

Anticipated Current Penalty Level 

($ Amount)

Improper recordkeeping first-time offense; 

pesticides 

Federal Insecticide, Fungicide, and 

Rodenticide Act, 7 U.S.C. 136l(a) 

03/14/2018 $923 

Improper recordkeeping subsequent 

offense; pesticides 

Federal Insecticide, Fungicide, and 

Rodenticide Act, 7 U.S.C. 136l(a) 

03/14/2018 $1,795 

Violation of the unfair conduct rule Perishable Agricultural Commodities Act, 

codified at 7 U.S.C. 499b(5)

03/14/2018 $5,029 

Willful violation of the licensing 

requirements

Perishable Agricultural Commodities Act, 

codified at 7 U.S.C. 499c(a)

03/14/2018 $1,605 plus $401 per day for as long as the 

violation continues

Unwillful violation of the licensing 

requirements

Perishable Agricultural Commodities Act, 

codified at 7 U.S.C. 499c(a)

03/14/2018 $401 for each non-willful offense

Violative transaction Perishable Agricultural Commodities Act, 

codified at 7 U.S.C. 499h(e)

03/14/2018 $3,209 for each violative transaction or 

each day the violation continues

Violation Export Apple Act, 7 U.S.C. 586 03/14/2018 $147–$14,665

Violation Export Grape and Plum Act, codified at 

7 U.S.C. 596

03/14/2018 $281–$28,061
SECTION III | OTHER INFORMATION 249

Penalty (Name of Penalty) Authority (Statute) Date of Current 

Adjustment

Anticipated Current Penalty Level 

($ Amount)

Violation of an order issued by the Secretary Agricultural Adjustment Act, reenacted 

with amendments by the Agricultural 

Marketing Agreement Act of 1937, codified 

at 7 U.S.C. 608c(14)(B)

03/14/2018 $2,806—Each day the violation continues 

is a separate violation

Failure to file certain reports Agricultural Adjustment Act, reenacted by 

the Agricultural Marketing Agreement Act 

of 1937, codified at 7 U.S.C. 610(c)

03/14/2018 $281 

Violation of a seed program Federal Seed Act, codified at 

7 U.S.C. 1596(b)

03/14/2018 $96–$1,913

Failure to collect any assessment or fee for 

violation

Cotton Research and Promotion Act, 

codified at 7.U.S.C. 2112(b)

03/14/2018 $2,806 

Failure to pay, collect, or remit any 

assessment or fee for a violation of a 

program

Potato Research and Promotion Act, 

codified at 7 U.S.C. 2621(b)(1)

03/14/2018 $1,257–$12,570

Failure to obey a cease and desist order Potato Research and Promotion Act, 

codified at 7 U.S.C. 2621(b)(3)

03/14/2018 $1,257—Each day the violation continues 

is a separate violation

Failure to pay, collect, or remit any 

assessment or fee, or for a violation of a 

program

Egg Research and Consumer Information 

Act, codified at 7 U.S.C. 2714(b)(1)

03/14/2018 $1,454–$14,544

Failure to obey a cease and desist order Egg Research and Consumer Information 

Act, codified at 7 U.S.C. 2714(b)(3)

03/14/2018 $1,454

Failure to remit any assessment or fee, or 

for a violation of a program

Beef Research and Information Act, 

codified at 7 U.S.C. 2908(a)(2)

03/14/2018 $11,346 

Failure to remit any assessment or fee, or 

for a violation of a program

Wheat and Wheat Foods Research and 

Nutrition Education, codified at

7 U.S.C. 3410(b)

03/14/2018 $2,806 

Failure to pay, collect, or remit any 

assessment or fee, or for a violation of a 

program

Floral Research and Consumer Information 

Act, codified at 7 U.S.C. 4314(b)(1)

03/14/2018 $1,320–$13,205
250 USDA AGENCY FINANCIAL REPORT | 2019

Penalty (Name of Penalty) Authority (Statute) Date of Current 

Adjustment

Anticipated Current Penalty Level 

($ Amount)

Failure to obey a cease and desist order Floral Research and Consumer Information 

Act, codified at 7 U.S.C. 4314(b)(3)

03/14/2018 $1,320—Each day the violation continues 

is a separate violation

Violation of an order Dairy Promotion Program, codified at 

7 U.S.C. 4510(b)

03/14/2018 $2,442 

Failure to pay, collect, or remit any 

assessment or fee, or for a violation of a 

program

Honey Research, Promotion, and 

Consumer Information Act, codified at 

7 U.S.C. 4610(b)(1)

03/14/2018 $752–$7,250

Failure to obey a cease and desist order Honey Research, Promotion, and 

Consumer Information Act, codified at 

7 U.S.C. 4610(b)(3)

03/14/2018 $752—Each day the violation continues is 

a separate violation

Violation of a program Pork Promotion, Research, and Consumer 

Information Act of 1985, codified at 

7 U.S.C. 4815(b)(1)(A)(i)

03/14/2018 $2,269 

Failure to obey a cease and desist order Pork Promotion, Research, and Consumer 

Information Act of 1985, codified at 

7 U.S.C. 4815(b)(3)(A)

03/14/2018 $1,135—Each day the violation continues 

is a separate violation

Failure to pay, collect, or remit any 

assessment or fee, or for a violation of a 

program

Watermelon Research and Promotion Act, 

codified at 7 U.S.C. 4910(b)(1)

03/14/2018 $1,135–$11,346

Failure to obey a cease and desist order Watermelon Research and Promotion Act, 

codified at 7 U.S.C. 4910(b)(3)

03/14/2018 $1,135—Each day the violation continues 

is a separate violation

Failure to pay, collect, or remit any 

assessment or fee, or for a violation of a 

program 

Pecan Promotion and Research Act of 

1990, codified at 7 U.S.C. 6009(c)(1)

03/14/2018 $1,848–$18,477

Failure to obey a cease and desist order Pecan Promotion and Research Act of 

1990, codified at 7 U.S.C. 6009(e)

03/14/2018 $1,848 

Failure to pay, collect, or remit any 

assessment or fee, or for a violation of a 

program

Mushroom Promotion, Research, and 

Consumer Information Act of 1990, 

codified at 7 U.S.C. 6107(c)(1)

03/14/2018 $898–$8,977
SECTION III | OTHER INFORMATION 251

Penalty (Name of Penalty) Authority (Statute) Date of Current 

Adjustment

Anticipated Current Penalty Level 

($ Amount)

Failure to obey a cease and desist order Mushroom Promotion, Research, and 

Consumer Information Act of 1990, 

codified at 7 U.S.C. 6107(e)

03/14/2018 $898—Each day the violation continues is 

a separate violation

Failure to pay, collect, or remit any 

assessment or fee, or for a violation of a 

program

Lime Research, Promotion, and Consumer 

Information Act of 1990, codified at 

7 U.S.C. 6207(c)(1)

03/14/2018 $898–$8977

Failure to obey a cease and desist order Lime Research, Promotion, and Consumer 

Information Act of 1990, codified at 

7 U.S.C. 6207(e)

03/14/2018 $898—Each day the violation continues is 

a separate violation

Failure to pay, collect, or remit any 

assessment or fee, or for a violation of a 

program

Soybean Promotion, Research, and 

Consumer Information Act, codified at 

7 U.S.C. 6307(c)(1)(A)

03/14/2018 $1,848 

Failure to obey a cease and desist order Soybean Promotion, Research, and 

Consumer Information Act, codified at 

7 U.S.C. 6307(e)

03/14/2018 $9,239—Each day the violation continues 

is a separate violation

Failure to pay, collect, or remit any 

assessment or fee, or for an unwillful 

violation of a program

Fluid Milk Promotion Act of 1990, codified 

at 7 U.S.C. 6411(c)(1)(A) 

03/14/2018 $898–$8,977

Failure to pay, collect, or remit any 

assessment or fee, or for a willful violation 

of a program

Fluid Milk Promotion Act of 1990, codified 

at U.S.C. 6411(c)(1)(B)

03/14/2018 $17,952–$179,522

Failure to obey a cease and desist order Fluid Milk Promotion Act of 1990, codified 

at 7 U.S.C. 6411(e)

03/14/2018 $9,239 

Knowingly labeling or selling a product as 

organic except in accordance with the 

Organic Foods Production Act of 1990

Organic Foods Production Act of 1990, 

codified at 7 U.S.C. 6519(c) 

03/14/2018 $17,952 

Failure to pay, collect, or remit any 

assessment or fee, or for a violation of a 

program

Fresh Cut Flowers and Fresh Cut Greens 

Promotion and Information Act of 1993, 

codified at 7 U.S.C. 6808(c)(1)(A)(i)

03/14/2018 $847–$8,464
252 USDA AGENCY FINANCIAL REPORT | 2019

Penalty (Name of Penalty) Authority (Statute) Date of Current 

Adjustment

Anticipated Current Penalty Level 

($ Amount)

Failure to obey a cease and desist order Fresh Cut Flowers and Fresh Cut Greens 

Promotion and Information Act of 1993, 

codified at 7 U.S.C. 6808(e)(1)

03/14/2018 $8,464 

Violation of a program Sheep Promotion, Research, and 

Information Act of 1994, codified at 

7 U.S.C. 7107(c)(1)(A)

03/14/2018 $1,650 

Failure to obey a cease and desist order Sheep Promotion, Research, and 

Information Act of 1994, codified at 

7 U.S.C. 7107(e)

03/14/2018 $824—Each day the violation continues is 

a separate violation

Violation of an order or regulation Commodity Promotion, Research, and 

Information Act of 1996, codified at 

7 U.S.C. 7419(c)(1)

03/14/2018 $1,558–$15,582 for each violation

Failure to obey a cease and desist order Commodity Promotion, Research, and 

Information Act of 1996, codified at 

7 U.S.C. 7419(e)

03/14/2018 $1,558–$15,582 for each day the violation 

continues

Violation of an order or regulation Canola and Rapeseed Research, 

Promotion, and Consumer Information Act, 

codified at 7 U.S.C. 7448(c)(1)(A)(i)

03/14/2018 $1,558 for each violation

Failure to obey a cease and desist order Canola and Rapeseed Research, 

Promotion, and Consumer Information Act, 

codified at 7 U.S.C. 7448(e)

03/14/2018 $7,791 for each day the violation continues

Violation of an order or regulation National Kiwifruit Research, Promotion, 

and Consumer Information Act, codified at 

7 U.S.C. 7468(c)(1)

03/14/2018 $780–$7,791

Failure to obey a cease and desist order National Kiwifruit Research, Promotion, 

and Consumer Information Act, codified at 

7 U.S.C. 7468(e)

03/14/2018 $780 for each day the violation continues

Violation of an order or regulation Popcorn Promotion, Research, and 

Consumer Information Act, codified at 

7 U.S.C. 7487(a)

03/14/2018 $1,558 for each violation
SECTION III | OTHER INFORMATION 253

Penalty (Name of Penalty) Authority (Statute) Date of Current 

Adjustment

Anticipated Current Penalty Level 

($ Amount)

Certain violations Egg Products Inspection Act, codified at 21 

U.S.C. 1041(c)(1)(A)

03/14/2018 $8,977 for each violation

Violation of an order or regulation Hass Avocado Promotion, Research, and 

Information Act of 2000, codified at 

7 U.S.C. 7807(c)(1)(A)(i)

03/14/2018 $1,417–$14,177 for each violation

Failure to obey a cease and desist order Hass Avocado Promotion, Research, and 

Information Act of 2000, codified at 

7 U.S.C. 7807(e)(1)

03/14/2018 $14,177 for each offense. Each day the 

violation continues is a separate violation

Violation of certain provisions Livestock Mandatory Reporting Act of 

1999, codified at 7 U.S.C. 1636b(a)(1)

03/14/2018 $14,665 for each violation

Failure to obey a cease and desist order Livestock Mandatory Reporting Act of 

1999, codified at 7 U.S.C. 1636b(g)(3)

03/14/2018 $14,665 for each violation. Each day the 

violation continues is a separate violation

Failure to obey an order of the Secretary Dairy Product Mandatory Reporting 

Program, codified at 

7 U.S.C. 1637b(c)(4)(D)(iii)

03/14/2018 $14,177 for each violation

Willful violation of the program by a retailer 

or person engaged in the business of 

supplying a covered commodity to a retailer

Country of Origin Labeling Program, 

7 U.S.C. 1638b(b)(2)

03/14/2018 $1,139 for each violation

Violations of the program Dairy Research Program, codified at 

7 U.S.C. 4535 and 4510(b)

03/14/2018 $2,442 for each violation

Violation of the imported seed provisions Federal Seed Act, codified at 

7 U.S.C. 1596(b)

03/14/2018 $96–$1,913

Violation of the Animal Welfare Act Animal Welfare Act, codified at 

7 U.S.C. 2149(b)

03/14/2018 $11,390, and knowing failure to obey a 

cease and desist order has a civil penalty of 

$1,708

Any person that causes harm to, or 

interferes with, an animal used for the 

purposes of official inspection by the 

Department

Civil Penalties (Department of Agriculture), 

7 U.S.C. 2279e(a)

03/14/2018 $14,177 
254 USDA AGENCY FINANCIAL REPORT | 2019

Penalty (Name of Penalty) Authority (Statute) Date of Current 

Adjustment

Anticipated Current Penalty Level 

($ Amount)

Penalty for a violation of the Swine Health 

Protection Act 

Swine Health Protection Act, codified at 

7 U.S.C. 3805(a)

03/14/2018 $28,061 

Any person that violates the Plant 

Protection Act (PPA), or that forges, 

counterfeits, or, without authority from the 

Secretary, uses, alters, defaces, or destroys 

any certificate, permit, or other document 

provided for in the PPA

Plant Protection Act, 7 U.S.C. 7734(b)(1) 03/14/2018 $70,881 in the case of any individual (except 

that the civil penalty may not exceed $1,417 

in the case of an initial violation of the PPA 

by an individual moving regulated articles 

not for monetary gain); $354,402 in the 

case of any other person; $569,468 for 

violations adjudicated in a single proceeding 

if not a willful violation; $1,138,937 for 

violations adjudicated in a single proceeding 

if a willful violation; or twice the gross gain 

or gross loss for any violation, forgery, 

counterfeiting, unauthorized use, defacing, 

or destruction of a certificate, permit, or 

other document provided for in the PPA 

that results in the person deriving pecuniary 

gain or causing pecuniary loss to another
SECTION III | OTHER INFORMATION 255

Penalty (Name of Penalty) Authority (Statute) Date of Current 

Adjustment

Anticipated Current Penalty Level 

($ Amount)

Any person [except as provided in 7 U.S.C. 

8309(d)] that violates the Animal Health 

Protection Act (AHPA); or that forges, 

counterfeits, or, without authority from the 

Secretary, uses, alters, defaces, or destroys 

any certificate, permit, or other document 

provided under the AHPA

Animal Health Protection Act, 

7 U.S.C. 8313(b)(1)

03/14/2018 $68,027 in the case of any individual 

(except that the civil penalty may not 

exceed $1,360 in the case of an initial 

violation of the AHPA by an individual 

moving regulated articles not for monetary 

gain); $340,131 in the case of any other 

person for each violation; $569,468 for all 

violations adjudicated in a single 

proceeding if the violations do not include 

a willful violation; $1,138,937 for all 

violations adjudicated in a single 

proceeding if the violations include a willful 

violation; or twice the gross gain or gross 

loss for any violation, forgery, 

counterfeiting, unauthorized use, defacing, 

or destruction of a certificate, permit, or 

other document provided under the AHPA 

that results in the person’s deriving 

pecuniary gain or causing pecuniary loss to 

another person

Any person that violates certain regulations 

under the Agricultural Bioterrorism 

Protection Act of 2002 regarding transfers 

of listed agents and toxins or possession 

and use of listed agents and toxins

Bioterrorism Protection Act of 2002, 

codified at 7 U.S.C. 8401 (i)(1)

03/14/2018 $340,131 in the case of an individual and 

$680,262 in the case of any other person

Violation of the act Horse Protection Act, codified at 

15 U.S.C. 1825(b)(1)

03/14/2018 $5,612 

Failure to obey act disqualification Horse Protection Act, codified at 

15 U.S.C. 1825(c)

03/14/2018 $10,969 
256 USDA AGENCY FINANCIAL REPORT | 2019

Penalty (Name of Penalty) Authority (Statute) Date of Current 

Adjustment

Anticipated Current Penalty Level 

($ Amount)

Civil penalty for knowingly violating, or, if in 

the business as an importer or exporter, 

violating, with respect to terrestrial plants, 

any provision of the Endangered Species Act 

of 1973, any permit or certificate issued 

thereunder, or any regulation issued 

pursuant to section 9(a)(1)(A) through (F), 

(a)(2)(A) through (D), (c), (d) (other than 

regulations relating to record keeping or 

filing reports), (f), or (g), as set forth at 

16 U.S.C. 1540(a)(1)

Endangered Species Act of 1973, (16 U.S.C. 

1538(a)(1)(A) through (F), (a)(2)(A) through 

(D), (c), (d), (f), and (g)), as set forth at 16 

U.S.C. 1540(a)(1)

03/14/2018 $51,302 for each violation

Knowingly violating or, if in the business as 

an importer or exporter, violating, with 

respect to terrestrial plants, any other 

regulation under the Endangered Species 

Act of 1973, as set forth at 16 U.S.C. 

1540(a)(1)

Endangered Species Act of 1973, as set 

forth at 16 U.S.C. 1540(a)(1)

03/14/2018 $24,625 

Violation, with respect to terrestrial plants, 

of the Endangered Species Act of 1973, or 

any regulation, permit, or certificate issued 

thereunder, as set forth at 16 U.S.C. 

1540(a)(1)

Endangered Species Act of 1973, as set 

forth at 16 U.S.C. 1540(a)(1)

03/14/2018 $1,296 

Knowingly and willfully violating 49 U.S.C. 

80502 with respect to the transportation of 

animals by any rail carrier, express carrier, 

or common carrier (except by air or water); 

a receiver, trustee, or lessee of one of those 

carriers; or an owner or master of a vessel

28 Hour Law, 49 U.S.C. 80502(d) 03/14/2018 $165–$824

Violating a provision of or a regulation 

under the Act, by a retail food store or 

wholesale food concern

Food and Nutrition Act of 2008 (Act), or a 

regulation under the Act, codified at 

7 U.S.C. 2021(a) and (c)

03/14/2018 $113,894 
SECTION III | OTHER INFORMATION 257

Penalty (Name of Penalty) Authority (Statute) Date of Current 

Adjustment

Anticipated Current Penalty Level 

($ Amount)

Trafficking in food coupons Food and Nutrition Act of 2008 (Act), 

codified at 7 U.S.C. 2021(b)(3)(B)

03/14/2018 $41,042–$73,906

Sale of firearms, ammunitions, explosives, 

or controlled substances for coupons

Food and Nutrition Act of 2008 (Act), 

codified at 7 U.S.C. 2021(b)(3)(c)

03/14/2018 $36,953–$73,906

Any entity that submits a bid to supply 

infant formula to carry out the Special 

Supplemental Nutrition Program for 

Women, Infants, and Children and discloses 

the amount of the bid, rebate, or discount 

practices in advance of the bid opening, or 

for any entity that makes a statement prior 

to the opening of bids for the purpose of 

influencing a bid

Child Nutrition Act of 1966, as amended by 

Sec. 204 of the Child Nutrition Act of 1992, 

P.L. 1102-512., 42 U.S.C. 1786(h)(8)(H)(i)

03/14/2018 $173,951,364 

Vendor convicted of trafficking in food 

instruments

Child Nutrition Act of 1966, as amended by 

Sec. 203 (p)(1) of the William F. Goodling 

Child Nutrition Reauthorization Act of 1998, 

P.L. 105-336., 42 U.S.C. 1786(o)(1)(A) and 

42 U.S.C. 1786(o)(4)(B)

03/14/2018 $15,041–$60,161

Vendor convicted of selling firearms, 

ammunition, explosives, or controlled 

substances in exchange for food 

instruments

Child Nutrition Act of 1966, as amended by 

Sec. 203 (p)(1) of the William F. Goodling 

Child Nutrition Reauthorization Act of 

1998, P.L. 105-336., 42 U.S.C. 1786(o)(1)(B) 

and 42 U.S.C. 1786(o)(4)(B)

03/14/2018 $15,041–$60,161

Certain violations Egg Products Inspection Act, codified at 21 

U.S.C. 1041(c)(1)(A)

03/14/2018 $8,977 for each violation

Willful disregard of the prohibition against 

the export of unprocessed timber 

originating from Federal lands

Forest Resources Conservation & Shortage 

Relief Act of 1990, as amended, 16 U.S.C. 

620d(c)(1)(A)

03/14/2018 Has a maximum of $923,831 per violation 

or three times the gross value of the 

unprocessed timber, whichever is greater 
258 USDA AGENCY FINANCIAL REPORT | 2019

Penalty (Name of Penalty) Authority (Statute) Date of Current 

Adjustment

Anticipated Current Penalty Level 

($ Amount)

Violation in disregard of the Forest 

Resources Conservation and Shortage Relief 

Act or the regulations that implement such 

Act

Forest Resources Conservation & Shortage 

Relief Act of 1990, as amended, 16 U.S.C. 

620d(c)(2)(A)(i)

03/14/2018 $138,575 

Person that should have known that an action 

was a violation of the Forest Resources 

Conservation and Shortage Relief Act or the 

regulations that implement such Act

Forest Resources Conservation and Shortage 

Relief Act or the regulations that implement 

such Act, 16 U.S.C. 620d(c)(2)(A)(ii)

03/14/2018 $92,383 

Willful violation of the Forest Resources 

Conservation and Shortage Relief Act or the 

regulations that implement such Act

Forest Resources Conservation and 

Shortage Relief Act or the regulations that 

implement such Act, codified at 16 

U.S.C. 620d(c)(2)(A)(iii)

03/14/2018 $923,831 

Violation involving protections of caves Federal Cave Resources Protection Act of 

1988; P.L. 100-691; 102 Stat. 4546, 

16 U.S.C. 4307(a)(2)

03/14/2018 $20,191 

Packer or swine contractor violation Packers and Stockyards Act, 1921, as 

amended, 7 U.S.C. 193(b)

03/14/2018 $28,061

Livestock market agency or dealer failure to 

register

Packers and Stockyards Act of 1921, 

7 U.S.C. 203

03/14/2018 $1,913 

Livestock market agency or dealer failure to 

register

Packers and Stockyards Act of 1921, 

7 U.S.C. 203

03/14/2018 $96 each day the violation continues

Operating without filing, or in violation of, a 

stockyard rate schedule, or of a regulation 

or order of the Secretary made thereunder

Packers and Stockyards Act of 1921, 

7 U.S.C. 207(g)

03/14/2018 $1,913 

Operating without filing, or in violation of, a 

stockyard rate schedule, or of a regulation 

or order of the Secretary made thereunder

Packers and Stockyards Act of 1921, 

7 U.S.C. 207(g)

03/14/2018 $96 each day the violation continues

A stockyard owner, livestock market agency, 

and dealer violation

Packers and Stockyards Act of 1921, 

7 U.S.C. 213(b)

03/14/2018 $28,061 
SECTION III | OTHER INFORMATION 259

Penalty (Name of Penalty) Authority (Statute) Date of Current 

Adjustment

Anticipated Current Penalty Level 

($ Amount)

Stockyard owner, livestock market agency, 

and dealer compliance order

Packers and Stockyards Act of 1921, 

7 U.S.C. 215(a)

03/14/2018 $1,913 

Live poultry dealer violations Packers and Stockyards Act of 1921, 

7 U.S.C. 228b-2(b)

03/14/2018 $81,633 

Refusal of inspection and weighing services 

violation

7 U.S.C. 86(c) 03/14/2018 $274,235 

Any person who willfully and intentionally 

provides any false or inaccurate information 

to the Federal Crop Insurance Corporation, 

or to an approved insurance provider with 

respect to any insurance plan or policy that 

is offered under the authority of the Federal 

Crop Insurance Act, or who fails to comply 

with a requirement of the Federal Crop 

Insurance Corporation

Federal Crop Insurance Act, codified at 

7 U.S.C. 1515(h)(3)(A)

03/14/2018 Has a maximum of the greater of the 

amount of the pecuniary gain obtained as 

a result of the false or inaccurate 

information or the noncompliance; or 

$11,984

Violation of section 536 of Title V of the 

Housing Act of 1949

Section 536 of Title V of the Housing Act of 

1949, codified at 42 U.S.C. 1490p(e)(2)

03/14/2018 $196,387 in the case of an individual and 

$1,963,870 in the case of an applicant 

other than an individual

Equity skimming Section 543(a) of Title V of the Housing Act 

of 1949, codified at 42 U.S.C. 1490s(a)(2)

03/14/2018 $35,440 

Violation of regulations or agreements 

made in accordance with Title V of the 

Housing Act of 1949 by submitting false 

information, submitting false certifications, 

failing to timely submit information, failing 

to maintain real property in good repair and 

condition, failing to provide acceptable 

management for a project, or failing to 

comply with applicable civil rights statutes 

and regulations 

Section 543(b) of Title V of the Housing Act 

of 1949, codified at 42 U.S.C. 1490s(b)(3)(A)

03/14/2018 Has a maximum of the greater of: twice 

the damages the Department, guaranteed 

lender, or project that is secured for a loan 

under Title V, suffered or would have 

suffered as a result of the violation; or 

$70,881 per violation
260 USDA AGENCY FINANCIAL REPORT | 2019

Penalty (Name of Penalty) Authority (Statute) Date of Current 

Adjustment

Anticipated Current Penalty Level 

($ Amount)

Failure to comply with certain provisions U.S. Warehouse Act, codified at 

7 U.S.C. 254

03/14/2018 $35,440 

Willful failure or refusal to furnish 

information, or willful furnishing of false 

information 

Section 156 of the Federal Agricultural 

Improvement and Reform Act of 1996, 

codified at 7 U.S.C. 7272(g)(5).

03/14/2018 $15,582 for each violation

Willful failure or refusal to furnish 

information, or willful furnishing of false 

data by a processor, refiner, or importer of 

sugar, syrup, and molasses

Section 156 of the Federal Agriculture 

Improvement and Reform Act of 1996, 

codified at 7 U.S.C. 7272(g)(5)

03/14/2018 $15,582 for each violation 

Filing a false acreage report that exceeds 

tolerance

Federal Agriculture Improvement and 

Reform Act of 1996, Section 156, codified 

at 7 U.S.C. 7272(g)(5)

03/14/2018 $15,582 for each violation

Knowingly violating any regulation of the 

Secretary of the Commodity Credit 

Corporation pertaining to flexible marketing 

allotments for sugar

Section 359h(b) of the Agricultural 

Adjustment Act of 1938, codified at 

7 U.S.C. 1359hh(b)

03/14/2018 $11,390 for each violation

Knowingly violating any regulations 

promulgated by the Secretary pertaining to 

cotton insect eradication

Section 104(d) of the Agricultural Act of 

1949, codified at 7 U.S.C. 1444a(d)

03/14/2018 $14,031 

Making, presenting, submitting, or causing 

to be made, presented, or submitted, a 

false, fictitious, or fraudulent claim

Program Fraud Civil Remedies Act of 1986, 

codified at 31 U.S.C. 3802(a)(1)

03/14/2018 $11,182 

Making, presenting, submitting, or causing 

to be made, presented, or submitted, a 

false, fictitious, or fraudulent written 

statement

Program Fraud Civil Remedies Act of 1986, 

codified at 31 U.S.C. 3802(a)(2)

03/14/2018 $11,182 

Violation of any of the slaughter horse 

transportation regulations in 9 CFR part 88

Commercial Transportation of Equine for 

Slaughter Act, 7 U.S.C. 1901 note and its 

implementing regulations in 9 CFR part 88, 

as set forth in 9 CFR 88.6

03/14/2018 $5,000—Each horse transported in 

violation of Part 88 is a separate violation
SECTION III | OTHER INFORMATION 261

Penalty (Name of Penalty) Authority (Statute) Date of Current 

Adjustment

Anticipated Current Penalty Level 

($ Amount)

Knowingly violating section 3(d) or 3(f) of the 

Lacey Act Amendments of 1981, or for 

violating any other provision provided that, 

in the exercise of due care, the violator 

should have known that the plant was taken, 

possessed, transported, or sold in violation of 

any underlying law, treaty, or regulation

Lacey Act Amendments of 1981, 

16 U.S.C. 3373(a)(1)

03/14/2018 $25,928 for each violation (but if the plant 

has a market value of less than $350, and 

involves only the transportation, 

acquisition, or receipt of a plant taken or 

possessed in violation of any law, treaty, or 

regulation of the United States, any Indian 

Tribal law, any foreign law, or any law or 

regulation of any State, the penalty shall 

not exceed the maximum provided for 

violation of said law, treaty, or regulation, 

or $25,928, whichever is less)

Violating section 3(f) of the Lacey Act 

Amendments of 1981 

Lacey Act Amendments of 1981, 

16 U.S.C. 3373(a)(2)

03/14/2018 $648
262 USDA AGENCY FINANCIAL REPORT | 2019

Abbreviations—Acronyms 

A 

AAR Acquisition Approval Request

ADA Anti-deficiency Act

AFR Agency Financial Report

AGA Association of Government 

Accountants

AGPMR Agriculture Property Management 

Regulation

AHPA Animal Health Protection Act

AIP Approved Insurance Providers

AMS Agricultural Marketing Service

APEC Access, Participation, Eligibility, and 

Certification

APEC-II Access, Participation, Eligibility, and 

Certification Study-II

APH Actual Production History

APHIS Animal and Plant Health Inspection 

Service

APR AIP Performance Review

APR Annual Performance Report

AQI Agricultural Quarantine Inspection

AR Administrative Review

ARC Agriculture Risk Coverage

ARC/PLC Agriculture Risk Coverage and Price 

Loss Coverage

ARC-CO Agriculture Risk Coverage-County

ARS Agricultural Research Service

ART Administrative Review and Training

ASCR Assistant Secretary for Civil Rights

AU Audit

B 

BAR Budget and Accrual Reconciliation

BARC Beltsville Agricultural Research 

Center

BCAP Biomass Crop Assistance Program

BPOI Basic Provisions of Insurance

C 

CACFP Child and Adult Care Food Program

CAIVRS Credit Alert Interactive Voice 

Response System

CAP Cross-Agency Priority

CCC BF CCC Budget Formulation

CCC Commodity Credit Corporation

CDC Centers for Disease Control and 

Prevention

CDM Continuous Diagnostics Mitigation

CFDA Catalog of Federal Domestic 

Assistance

CFO Chief Financial Officer

CFR Code of Federal Regulations

CIH Crop Insurance Handbook

CIM Capital Improvement and 

Maintenance

CMA Computer Matching Agreement

CMM Capability maturity model
ABBREVIATIONS—ACRONYMS 263

CN Child nutrition

COF County Office

COTS Commercial Off-the-Shelf

CPI Consumer Price Index

CRP Conservation Reserve Program

CSS Country Strategy Statements

CTA Conservation Technical Assistance

CY Current year

D 

DAIMS DATA Act Information Model 

Schema

DATA Digital Accountability and 

Transparency Act

DC Disallowed costs

DCR Data Change Request

DHS Department of Homeland Security

DM Departmental Management

DM&R Deferred Maintenance & Repairs

DNP Do Not Pay

DOL U.S. Department of Labor

DR Departmental Regulation

E 

E&T Employment and training

EBT Electronic benefit transfer

ECP Emergency Conservation Program

eFG ezFedGrants

eFMS electronic Funds Management 

System

ELC Entity Level Control

EPA Environmental Protection Agency

EQIP Environmental Quality Incentive 

Program

ERM Enterprise Risk Management

ERP Enterprise Resource Planning

ERS Economic Research Service

EWA Early Warning Alert

F 

FABS Financial Assistance Broker 

Submission

FAS Foreign Agriculture Service

FCIC Federal Crop Insurance Corporation

FDA Food and Drug Administration

FDCH Family Day Care Home

FECA Federal Employees’ Compensation 

Act

FFAR Foundation for Food and Agriculture 

Research

FFATA Federal Funding Accountability and 

Transparency Act

FFB Federal Financing Bank

FFIP FPAC Financial Improvement 

Program

FFMIA Federal Financial Management 

Improvement Act

FFN Frost Freeze

FISMA Federal Information Security 

Management Act

FMFIA Federal Managers’ Financial Integrity 

Act

FMIA Federal Meat Inspection Act

FMMI Financial Management 

Modernization Initiative

FMS Financial Management Systems

FMT Financial Management Training
264 USDA AGENCY FINANCIAL REPORT | 2019

FNS Food and Nutrition Service

FPAC Farm Production and Conservation

FPDS-NG Federal Procurement Data System—

Next Generation

FR Financial Report of the U.S. 

Government

FS Forest Service

FSA Farm Service Agency

FSFL Farm and Sugar Storage Facilities

FSH Forest Service Handbook

FSIS Food Safety and Inspection Service

FSM Forest Service Manual

FSRIP Farm Security and Rural Investment 

Act Program

FSRS FFATA Sub-award Reporting System

FTBU Funds to Be Put to Better Use

FY Fiscal year

G 

GAAP Generally Accepted Accounting 

Principles

GAO Government Accountability Office

GL General Ledger

GMS Grant Management Service

GONE Grants Oversight and New Efficiency

GPRA Government Performance and 

Results Act

GRC Governance Risk and Compliance

GSA General Services Administration

GTAS Governmentwide Treasury Account 

Symbol

H 

Harvey-CIM Hurricane Harvey-Capital 

Improvement and Maintenance

HVAs High Value Assets

I 

IAA Inter/Intra-Agency Agreement

IAS Integrated Acquisition System

IBNR Incurred but Not Reported

IGT Intra-governmental transaction

INTR Interagency Agreement

IOD Insights on Demand

IP Improper payment

IPERA Improper Payment Elimination and 

Recovery Act

IPERIA Improper Payments Elimination and 

Recovery Improvement Act of 2012

IPIA Improper Payments Information Act 

of 2002

IT Information technology

L 

L&WCF Land and Water Conservation Fund

LEAs Local educational agencies

LEIE List of Excluded Individuals/Entities

LFP Livestock Forage Disaster Program

LSA Local Security Administrator
ABBREVIATIONS—ACRONYMS 265

M 

MCCs Merchant Category Codes

MD&A Management’s Discussion and 

Analysis

MDD Management Decision Date

ME Management evaluation

MFH Multi-Family Housing

MFP Market Facilitation Program

MOU Memorandum of Understanding

MRP Marketing and Regulatory Programs

N 

NAL National Agricultural Library

NAP Noninsured Crop Disaster Program

NASS National Agricultural Statistics 

Service

NCSS National Cooperative Soil Survey

NERAOC National Extension and Research 

Administrative Officers Conference

NFC National Finance Center

NFS National Forest System

NIFA National Institute of Food and 

Agriculture

NM New Measure

NRCS Natural Resources Conservation 

Service

NRHP National Register of Historic Places

NSLP National School Lunch Program

O 

OAO Office of Advocacy and Outreach

OCFO Office of the Chief Financial Officer

OCIO Office of the Chief Information 

Officer

OCP Office of Contracting and 

Procurement

OGC Office of the General Counsel

OHSEC Office of Homeland Security and 

Emergency Coordination

OIG Office of Inspector General

OMB Office of Management and Budget

OPFM Office of Property and Fleet 

Management

OPPE Office of Partnerships and Public 

Engagement

OSDBU Office of Small and Disadvantaged 

Business Utilization

P 

P.L. Public Law

PAR Performance and Accountability 

Report

PC Participant and Program 

Characteristics

PHA Priority Heritage Assets

PHR Public Health Regulation

PII Personally Identifiable Information

PLC Price Loss Coverage

PMA President’s Management Agenda

PMC Plant Materials Centers

POAMs Plans of Action and Milestones

PP&E Property, Plant and Equipment

PPA Plant Protection Act

PUPS Prisoner Update Processing System
266 USDA AGENCY FINANCIAL REPORT | 2019

Q 

QC Quality control

R 

R&D Research & Development

RBS Rural Business-Cooperative Service

RC&D Resource Conservation and

Development

RCOs Regional Compliance Offices

RD Rural Development

REE Research, Education, and Economics

RHIF Rural Housing Insurance Fund

RHS Rural Housing Service

RMA Risk Management Agency

RPA Robotic Process Automation

RUS Rural Utilities Service

RVA Risk and Vulnerability Assessment

RY Reinsurance year

S 

S&E Salaries and Expenses

SAM System for Award Management

SAS Statement on Auditing Standards

SBP School Breakfast Program

SBR Statement of Budgetary Resources

SCNP Statement of Changes in Net 

Position

SF Square feet

SFFAS Statement of Federal Financial 

Accounting Standards

SMO Services Management Office

SNAP Supplemental Nutrition Assistance 

Program

SOD segregation of duty

SORN System of Records Notice

SPAs Strategic Program Areas

SPS Secure Payment System

SSD Soil Science Division

STO State Office

SY School year

T 

TAP Tree Assistance Program

TB Technical Bulletin

TBT Technical Barriers to Trade

TFAA Trade and Foreign Agricultural 

Affairs

TIG Technology Innovation Grant

Top Treasury Offset Program

TPMC Tucson Plant Materials Center

Treasury U.S. Department of the Treasury

TSP Thrift Savings Plan
ABBREVIATIONS—ACRONYMS 267

U 

U.S.C. United States Code

UDO Undelivered order

UES Unified Export Strategy

UI User interface

ULO Unliquidated Obligation

USAID United States Agency for 

International Development

USDA U.S. Department of Agriculture

USSGL U.S. Standard General Ledger

UX User experience

W 

WBSCM Web-Based Supply Chain 

Management

WEP Water and Environmental Programs

WHIP Wildfires and Hurricanes Indemnity 

Program

WIC Special Supplemental Nutrition 

Program for Women, Infants, and 

Children