AGENCY FINANCIAL REPORT

2020

 
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USDA | 2020 Agency Financial Report 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, Mail Stop 9430 

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.
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USDA | 2020 Agency Financial Report iii

Table of Contents 

▪ Message from Secretary Perdue ........................................................................... 1

▪ Section I Management’s Discussion and Analysis ................................................. 5

About USDA ............................................................................................................................... 5

USDA Organization Chart .......................................................................................................... 7

USDA Mission Areas .................................................................................................................. 8

USDA Program Performance ................................................................................................... 11

Future Demands, Risks, Uncertainties, Events, Conditions, and Trends ................................. 43

Analysis of Financial Statements and Stewardship Information ............................................. 45

Statement of Assurance .......................................................................................................... 58

Federal Managers’ Financial Integrity Act Report on Management Control ........................... 59

Compliance with Laws and Regulations .................................................................................. 66

Improper Payments Elimination and Recovery Act of 2010 as Amended ............................... 70

Federal Financial Management Improvement Act Report on 

Financial Management Systems Background .......................................................................... 71

Financial Management Systems Strategy ................................................................................ 73

▪ Section II Financial Information .........................................................................83

Message from the Office of the Chief Financial Officer .......................................................... 83

Independent Auditors Report ................................................................................................. 85

Agency Response to Auditors Report ...................................................................................... 95

Financial Statements ............................................................................................................... 96

Notes to the Financial Statements ........................................................................................ 101

Required Supplementary Information ................................................................................... 186
iv Table of Contents 

▪ Section III Other Information ........................................................................... 193

Response to Management Challenges .................................................................................. 193

Summary of Financial Statement Audit and Management Assurances ................................ 204

Payment Integrity Information Act of 2019 – 

Improper Payments Overview Payment Integrity ................................................................. 206

Fraud Reduction Report ........................................................................................................ 263

Inspector General Act Amendments of 1988: Management’s Report on Audit Follow-Up.. 267

Real Property ......................................................................................................................... 282

Civil Monetary Penalties ........................................................................................................ 283

Grants Program ..................................................................................................................... 301

▪ Abbreviations–Acronyms ................................................................................. 303
USDA | 2020 Agency Financial Report 1 

▪ 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 who honorably serve the people of American agriculture on a 

daily basis. As Secretary, I am 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 nearly every human 

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

department does every day, with employees in all 50 states, territories, 

and around the world. We have accomplished a lot in 2020 and, as a USDA family, have all 

worked to fulfill our vision to “Do Right and Feed Everyone”—all in the face of the COVID-19 

pandemic that wreaked havoc on American agriculture. 

2020 started strong with President Donald J. Trump signing the historic Phase One Trade 

Agreement between the United States and China. China is a market of tremendous potential for 

U.S. agriculture, and this deal will help U.S. exporters expand their sales. Our Foreign 

Agricultural Service (FAS), Animal and Plant Health Inspection Service (APHIS), and Food 

Safety Inspection Service (FSIS) continue to work cooperatively with China on the 

implementation of Phase One commitments and increases in U.S. exports of all manner of 

agricultural products. President Trump also signed the United States-Mexico-Canada Agreement, 

which was great news for America’s farmers and ranchers who now have even more market 

access to our neighbors to the north and the south. 

Additionally, USDA launched our Agriculture Innovation Agenda, a department-wide initiative 

to align resources, programs, and research to position American agriculture to meet future 

demands. We are mindful of the need for American agriculture to remain environmentally, 

socially, and economically sustainable, and we are as committed as ever to the continued success 

of America’s farmers, ranchers, foresters, and producers. 

This year, USDA also launched the second round of our rural broadband ReConnect program 

and received additional funding from the Coronavirus Aid, Relief, and Economic Security 

(CARES) Act. Access to high-speed broadband internet is not merely nice to have—it is a 

necessity in the 21st century. The COVID-19 pandemic introduced new challenges to our way of 

life. Social distancing guidelines put in place to help slow the spread of the Coronavirus caused 
2 Message from the Secretary 

millions to work from home and nationwide school closures. The unfortunate truth is that 

millions of Americans working, going to school, and living in America’s heartland still do not 

have access to high-speed broadband internet e-Connectivity. At USDA, we are working hard to 

change that. 

The COVID-19 pandemic also forced children out of the classroom, and USDA’s Food and 

Nutrition Service (FNS) acted quickly to waive restrictions and expand flexibilities across our 

programs to ensure our children continued to receive wholesome meals, safeguarding their 

wellness during times of need. We joined forces with local providers utilizing a range of innovative 

feeding programs to ensure children and families practicing social distancing could still receive 

healthy and nutritious food. Additionally, we collaborated with the Baylor Collaborative on 

Hunger and Poverty, McLane Global, PepsiCo, and others to deliver millions of meals per week to 

students of rural schools closed due to COVID-19. This whole of America approach to tackling the 

Coronavirus leveraged private sector ingenuity with the same federal financing as the Summer 

Food Service Program, and we are proud of what our FNS team accomplished. 

USDA also announced $19 billion in immediate assistance for America’s farmers and ranchers 

under the Coronavirus Food Assistance Program—better known as CFAP. The first $16 billion 

of this funding was in the form of direct payments to farmers to help them through these tough 

times. The next $3 billion provided for USDA’s Farmers to Families Food Box Program, which 

delivered millions of food boxes to food banks, community and faith-based organizations, and 

other non-profits that are serving Americans in need. USDA partnered with national, regional, 

and local suppliers, whose workforce was impacted by the closure of restaurants, hotels, and 

other food service businesses to continue to deliver American raised products to American 

families in need. 

I have traveled around the country to see firsthand this program in action, helping people who 

have fallen on hard times. It is an excellent example of Americans helping Americans, and 

something of which we should all be proud. 

Finally, we saw the best of America come alive in our FSIS employees and those working across 

the nation at meat and poultry processing plants. Keeping them safely operational during the 

COVID-19 crisis was critical to the nation’s food supply chain. We thank the patriotic and heroic 

meatpacking facility workers, the companies, and state and local public health authorities for 

working together to ensure operations resumed or continued safely so they could continue to 

provide an excellent meat selection to the millions of Americans who depend on them for food. 

There is no doubt that it has been a challenging year for American agriculture, and those 

challenges only intensified during the COVID-19 pandemic—but USDA took creative and 

decisive action to help our constituents in need. 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 are much the same. 
USDA | 2020 Agency Financial Report 3

As we look forward to 2021, 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 American 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 as we continue to Do Right and Feed Everyone. 

Sincerely, 

Sonny Perdue

U.S. Secretary of Agriculture

December 8, 2020
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USDA | 2020 Agency Financial Report 5 

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). 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. 
6 Section I | Management’s Discussion and Analysis 

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. 
USDA Organization Chart

USDA | 2020 Agency Financial Report 7

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 the 

Executive 

Secretariat

Office of 

Budget and 

Planning 

Analysis

Office of 

Communica

tions

Office of 

Tribal 

Relations

Office of 

Partnerships 

& Public 

Engagement

• Higher Education 

• Strategic Initiatives

• 2501 Grants 

Office of 

Hearings 

and Appeals

Office of the 

Chief 

Information 

Officer

Under Secretary for 

Farm Production & 

Conservation

• FPAC Business 

Center

• Farm Services 

Agency

• Risk Management 

Agency

• Natural Resources 

& Environment

Under Secretary for 

Food, Nutrition & 

Consumer Services

• Food & Nutrition 

Service

Under Secretary for 

Food Safety

• Food Safety 

Inspection Service

Under Secretary for 

Marketing & Regu

latory Programs

• Agricultural 

Marketing Service

• Animal & Plant 

Health Inspection 

Service

Under Secretary for 

Natural Resources 

& Environment

• Forest Service

Under Secretary for 

Rural 

Development

• Rural Housing 

Service

• Rural Utility Service

• Rural Business 

Cooperative Service

Under Secretary for 

Research, Educa

tion & Economics

• Office of the Chief 

Scientist

• Agricultural 

Research Service

• National Agricultural 

Statistical Service

• National Institute of 

Food & Agriculture

• Economic Research 

Service

Under Secretary for 

Trade & Foreign 

Agricultural Affairs

• Foreign Agricultural 

Service

- -

-
8 Section I | Management’s Discussion and Analysis 

▪ 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 science-based 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)
USDA | 2020 Agency Financial Report 9 

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. 

• Office of the Chief Scientist

• 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 
10 Section I | Management’s Discussion and Analysis 

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

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, D.C., 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
USDA | 2020 Agency Financial Report 11

▪ USDA Program Performance 

USDA Performance and Results for FY 2020 

The Government Performance and Results (GPRA) Modernization Act of 2010 requires agencies 

to update their strategic plan every 4 years. The U.S. Department of Agriculture’s (USDA or the 

Department) 2018—2022 Strategic Plan identifies the Department’s strategic goals and 

objectives. USDA reports annually on its progress toward its strategic objectives using Key 

Performance Indicators (KPIs) and Agency Priority Goals (APGs) in the Annual Performance 

Plan and Report published in conjunction with the President’s Budget. 

USDA follows GPRA guidelines for reporting data quality. The data collected and used by the 

Department to measure performance utilize a standardized methodology. This methodology has 

been vetted by Federally employed scientists and policymakers, and, ultimately, the leadership 

and undersecretaries of each respective mission area. All attest to the completeness, reliability, 

and quality of the data. Mission Areas within USDA are responsible for certifying that data 

provided undergo a thorough quality assurance process and provides assurance to the 

Performance Improvement Officer. Data quality information for the APG-related measures 

mentioned in this section can be found online at Performance.gov. 

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

the APGs and KPIs as a mechanism to gauge progress in achieving its mission. In fiscal year 

(FY) 2020, USDA had 36 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 KPIs and include a preliminary status in meeting 

performance targets for FY 2020 based on data gathered through the third quarter, where 

available. Final performance information and a detailed discussion of the Department’s FY 2020 

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

performance data will be presented in the FY 2020 USDA Annual Performance Plan and Report. 

The report is planned to be released with the President’s 2022 budget in February and will be 

available on the USDA Performance Improvement and Accountability website. 
12 Section I | Management’s Discussion and Analysis 

Agency Priority Goal: 

Increase Utilization of Agriculture Research 

PRIORITY GOAL 

Increasing the utilization of its research 

results into to real world technology 

improvements by developing methods 

to measure research utilization and 

inform program decision making. 

USDA introduced the APG Increase Utilization 

of Agriculture Research (REE-OCS) in FY 2020 

with the goal of increasing the utilization of its 

research results into real-world technology 

improvements by developing methods to measure 

research utilization and inform program decision 

making. To accomplish this goal, USDA 

launched the process of developing data-driven 

methods to measure the impact of research in 

sustainable agricultural intensification, 

agricultural climate adaptation, food and 

nutrition translation, and value-added innovations. As a first step, USDA introduced three 

internal “test-KPIs” in FY 2020 to quantify (1) technology transfer (patents licensed and issued), 

(2) agriculture workforce development, and (3) influence of USDA research on public policy 

(citations of REE reports). Lessons learned from these three inaugural KPIs are being used to 

develop future KPIs and improve on their existing methodologies and data sources. 

Existing organizational challenges such as identifying meaningful metrics to measure, track, and 

communicate the impact of USDA research, as well as existing paradigms surrounding the 

ability to link scientific research to real-world impact, was present. The Office of the Chief 

Scientist (OCS) took the lead in communicating the importance of research measurement and led 

efforts to coordinate a cultural shift among the USDA research agencies toward the development 

of a KPI-performance measurement culture. Strategies to accomplish this goal included not only 

the launching of the three, new “test-KPIs,” but also a first-of-its-kind “KPI Innovation Team” to 

drive the conversation of measuring the impact of science and research while developing new 

KPI candidates for future introduction. 

As FY 2020 draws to a close, the work of the KPI Innovation Team has not only been successful 

in reframing the paradigms around measuring research utilization and impact, but it also has 

unified many solo efforts across the USDA toward a common goal. Looking forward to FY 2021, 

the work of this APG will further advance the measurement and increase of research utilization 

into real-world technology improvements to USDA customers, producers, and industry. 
USDA | 2020 Agency Financial Report 13

Strategic Goal 1: 

Ensure USDA Programs are Delivered Efficiently, Effectively, 

with Integrity, and a Focus on Customer Service 

STRATEGIC OBJECTIVES 

Objective 1.1 

Modernize Information Technology 

Infrastructure, Facilities, and Support 

Services to Improve the Customer 

Experience 

Objective 1.2 

Maintain a High-Performing Workforce 

Through Employee Engagement and 

Empowerment 

Objective 1.3 

Reduce the Regulatory Burden and 

Streamline Processes 

Objective 1.4 

Improve Stewardship of Resources and 

Utilize Data-Driven Analyses to 

Maximize 

USDA will modernize and consolidate Information 

Technology (IT) infrastructure and services, as well 

as strengthen management and oversight of 

procurement, property, and finance to ensure 

resources are deployed as effectively and efficiently 

as possible. USDA will create a safe and modern 

space within which employees can work and feel 

empowered to find innovative solutions to serve 

customers’ needs and will promote accountability 

and professional development. USDA will leverage 

the strength and talent of its employees and reduce 

regulatory and administrative burdens to allow 

agencies to focus on their customers. Improved 

customer service and employee engagement will 

create a more effective and accessible USDA for all 

its stakeholders. 

Key Successes and Opportunities 

• Consolidation of Data Centers: USDA has 

made significant progress in the 

modernization and consolidation of 

Information Management.  The closure of the 

tiered data centers in FY 2020 has a reported 

cost savings of $11.384 million.  As of quarter 

(Q) 4 FY 2020, there has been 

$62.791 million in cumulative cost avoidance 

through USDA’s Data Center Optimization Initiative (DCOI) program. [Obj. 1.1] 

• Contact Center: USDA’s best in class customer contact center was implemented in Q(4) 

FY 2020. Outcomes from AskUSDA include: enhanced self-service, reduced call volume 

and costs, improved wait times, personalized inquiries and support, and improved 

business efficiencies. Over the course of its pilot program, AskUSDA successfully 

assisted with over 93,000 citizen inquiries, and the AskUSDA website resulted in over 

1.4 million knowledge article page views. [1.1] 
14 Section I | Management’s Discussion and Analysis 

• Agricultural Resources Management Survey Webtool: USDA’s Economic Research 

Service (ERS) rolled out a new tool to report relevant and timely financial statistics for 

U.S. farmers and ranchers. Every year, USDA asks farmers for information on the 

finances of their farming operations. This information, gathered through the Agricultural 

Resources Management Survey (ARMS), is USDA’s primary source of financial 

information on farm and farm household well-being and is critical to carrying out the 

research requested by Congress and other critical stakeholders. The tool provides a 

presentation-quality chart and table of this data. It includes an Application Program 

Interface that bypasses the web interface altogether and allows for more rapid access to 

the summary data for frequent users. [1.1] 

• Environmental Analysis and Decision-Making Reform: USDA’s Forest Service is 

working diligently to improve the efficiency and timeliness of its environmental analysis 

and decision-making processes. For example, in 2018, the White River National Forest 

produced four Environmental Assessments approving work at major ski resorts. 

The documents averaged 51 pages in length and took 130 days to produce using a 

repeatable, efficient process. This procedure represents more than an 80 percent decrease 

in planning time compared with the national average. The Forest Service also worked 

collaboratively with ski resort partners to redesign their Facility Design Review process, 

going from four review stages requiring 14 weeks to two review stages in 5 weeks, 

producing more predictable outcomes for partners. [1.1] 

• Data Analytics: USDA developed more than 200 dashboards to provide the latest 

information to customers and employees. These dashboards have more than 20,000 views 

monthly. The dashboards not only improve internal decision-making but also maximize 

the impact of citizen-facing programs across eight mission areas and seven administrative 

functions. USDA has made more than 1,600 internal datasets available publicly and is 

safeguarding privacy while also making more information available. [1.1] 

• End-User Consolidation: Instead of having each USDA mission area determine its own 

IT costs for equipment and services, the USDA has centralized 60 percent of USDA enduser services and closed 26 data centers. This process will be 100 percent complete in 

Fall 2020. This move saves $10 million in duplicative infrastructure costs, which means 

USDA can put that toward better serving customers. USDA will have a departmentwide 

cloud solution for secure, scalable, and efficient services in a fully managed 24/7 

environment. [1.1] 

• Improvements to USDA’s Network Service and eMail Accounts for USDA Employees: 

USDA is securing faster and cheaper network services, saving customers $570 million. 

USDA migrated 100,000 employees to Office 365 and 91 percent of its email accounts to 

a simpler usda.gov account. [1.1] 
USDA | 2020 Agency Financial Report 15

• Website Modernization: USDA websites had more than 700 unique, public, and active 

domains with more than three million web pages which included numerous broken links. 

As a result, in partnership with the GSA CoEs, USDA completed a Digital Assessment 

Report and is modernizing and optimizing USDA websites. USDA is removing broken 

links and webpages that do not receive traffic with the goal of achieving a best in class 

customer experience with one USDA look and feel. [1.1] 

• Specialty Crops Modernization: Several USDA programs support the development and 

use of automation or mechanization in the production and processing of U.S. specialty 

crops. Specialty crops are defined as fruits and vegetables, tree nuts, dried fruits, and 

horticulture and nursery crops, including floriculture. At $64.7 billion, specialty crops 

comprised one-third of U.S. crop receipts and one-sixth of receipts for all agricultural 

products in 2017. Many specialty crops are labor-intensive in production, harvesting, or 

processing. USDA has funded $287.7 million toward 213 projects to develop and 

enhance the use of automation or mechanization in specialty crop production and 

processing. [1.1] 

• Human Resource (HR) Task Force: USDA has established a task force led by the 

Deputy Secretary to address the human capital concerns facing the Agency. Leaders 

across the Department are collaborating to create an action plan to address concerns and 

to improve recruitment, retention, training, and succession planning. The Department also 

established risk ownership for Enterprise Risk #1 (People) for mitigation strategies. [1.2] 

• Investments in Socially Disadvantaged Farmers and Ranchers: USDA issued more 

than $16 million in grants to provide training, outreach, and technical assistance to 

underserved and veteran farmers and ranchers. This funding is available through the 

USDA’s Outreach and Assistance for Socially Disadvantaged Farmers and Ranchers and 

the Veteran Farmers and Ranchers Program (also known as the 2501 Program), managed 

by the USDA Office of Partnerships and Public Engagement (OPPE). [1.2] 

• Regulatory Reform: The President signed an executive order that requires agencies to 

revoke two regulations for every new rule they want to issue. Under Secretary Perdue’s 

leadership, however, USDA has completed 8 deregulatory items for every regulatory 

item for a total annualized regulatory savings of $199.388 million through FY 2019. 

(note: this is FY 2017 through FY 2019). In FY 2019, USDA completed 13 deregulatory 

action. USDA had no regulatory actions in FY 2019. [1.3] 

• Impact Expo Success: The Department held the first-ever Impact Expo with employees 

to celebrate the effect of its customer-focused IT modernization efforts. This event 

underlined the connection between modernization, customer experience, and USDA’s 

overall impact. The Expo featured projects from across the CoEs, OCX, USDA’s 

Customer Experience Champions Program, Office of the Chief Information Officer 
16 Section I | Management’s Discussion and Analysis 

(OCIO), and every USDA mission area to show how USDA is working together to 

modernize to best serve its customers. [1.4] 

• Fleet Services: As of Q2, FY 2020, USDA has 37,957 fleet vehicles, an increase from 

37,163 in FY 2019 due to the inability to dispose of vehicles as a result of the COVID-19 

pandemic. [1.4] 

• Reducing the Footprint: The Department identified 100,000 sq. ft. of office and 

warehouse space to dispose of in FY 2020 by either lease expiration or declared as excess 

real property in the case of owned assets. [1.4] 

• Introduced 3 New Key Performance Indicators (KPI): KPIs will measure the impact of 

USDA research and science investments. [1.4] 

Key Challenges and Risks 

• To more effectively manage its fleet portfolio, USDA is in the process of selecting and 

later migrating to an enterprise asset management solution. [1.4] 

• To reduce its real property portfolio, USDA is currently in a long-term planning process, 

which is contingent on collaboration with GSA and USDA mission areas and agencies as 

well as funding. [1.4] 

• The three new research and science KPIs are limited by current data availability and 

resource constraints causing calculations to be manual and labor-intensive. [1.4] 

Planned Actions and Risk Mitigation 

• The Department plans to consolidate space in the National Capital Region through 

USDA’s One Neighborhood initiative. [1.4] 

• USDA will identify leases and Occupancy Agreements in various metropolitan areas for 

footage and agreement reductions. Planning is in the initial stages. [1.4] 

• USDA will also identify additional space reduction efforts in its draft Capital Plan by 

identifying reduction projects in owned buildings, GSA-leased offices, and direct leases. 

[1.4] 

• USDA’s Office of the Chief Scientist is leading efforts to improve data sources for the 

new KPIs. The planned strategy should yield more reliable data, automated harvesting, 

and more frequent reporting in FY 2021 and FY 2022. [1.4] 
USDA | 2020 Agency Financial Report 17

Exhibit 1: Strategic Goal 1 Key Performance Indicators (KPI) 

KPI 

Historic Actuals Strategic Targets FY 20 

Results 

FY17 FY18 FY19 FY19 FY20 as of Q3 

Reduce number of Tier 1 data centers 

across the Department 39 18 6 5 2 2 

Reduce the Department’s overall real 

property footprint through effective 

disposal and consolidation efforts 

(Million Square Feet). 

31.9 31.7 31.3 31.3 31.2 31.2 

Reduce the Department’s total number 

of fleet vehicles (Thousand) 29.4 27.7 27.1 27.1 36.5 38.7 

FY = fiscal year; Q = quarter. 

Notes: Preliminary status is based on progress toward KPI as of the third quarter. The USDA Annual 

Performance Plan and Report, to be published in February 2021, will show the final FY 2020 results. 

Areas for Improvement 

USDA will strengthen its efforts in FY 2021 to identify stronger performance measures to 

support Goal 1. The Department will work closely with the newly established OCX for 

customer-centric measures, and with the Departmental Administration (DA) for human resources 

and technology-related measures. 

As a result of the pandemic, fleet disposals were delayed. The Department continues to work 

with the GSA to make progress on disposal schedules and activities. 
18 Section I | Management’s Discussion and Analysis 

Strategic Goal 2: 

Maximize the Ability of American Agricultural Producers to 

Prosper by Feeding and Clothing the World 

STRATEGIC OBJECTIVES 

Objective 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 

Objective 2.2 

Increase Agricultural Opportunities 

and Support Economic Growth by 

Creating New Markets and Supporting 

a Competitive Agricultural System 

Objective 2.3 

Protect Agricultural Health by 

Preventing and Mitigating the Spread 

of Agricultural Pests and Disease 

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 that they are well-positioned to secure a share of 

a growing market for agricultural products. 

Key Successes and Opportunities 

• Improved Loan Processing: 

The Department improved processing for 

new loans by introducing “bot” 

technology, which automates manual 

processes. The technology saves time and 

money by prepopulating forms, while also reducing errors. Plans for introducing more 

bots are underway. [2.1] 

• Increased Loan Coverage: USDA saw a substantial increase in direct and guaranteed 

loans. [2.1] 

• Hurricane Coverage: USDA has implemented new loan coverage whereby people can 

apply for loans to repair hurricane-related losses. This coverage will help stimulate the 

economy as thousands of people are affected by national disasters each year. [2.1] 

• Hemp Coverage: USDA is also expanding insurance coverage to hemp producers from 

national disasters in the United States. The pilot program provides coverage against loss 

of yield due to insurable causes of loss for hemp grown for fiber, grain, or Cannabidiol 
USDA | 2020 Agency Financial Report 19

(CBD) oil. Additionally, the Noninsured Crop Disaster Assistance Program (NAP) 

coverage protects against losses associated with lower yields, destroyed crops, or 

prevented planting where no permanent Federal crop insurance program is available. 

Hemp offers new economic opportunities for farmers, and they are anxious for a way to 

protect their product in the event of a natural disaster. [2.1] 

• Livestock & Poultry (LP) Program Success: The Livestock & Poultry (LP) program 

continues to deliver quality services efficiently, recovering nearly all costs for the service. 

LP has faced significant staffing challenges in the face of COVID-19 but has 

implemented strategies to ensure that meat, poultry, and shell egg customers can continue 

to move USDA-graded products in commerce. These actions resulted in 99.7 percent of 

the shifts being covered, with all scheduled customers receiving uninterrupted service. 

[2.2] 

• National Veterinary Stockpile Responsiveness: The National Veterinary Stockpile 

continued to respond and deploy countermeasures within 24 hours during the responses 

to virulent Newcastle disease (vND) and low pathogenic avian influenza (LPAI). 

The program provided logistical support and deployed critical veterinary supplies, 

depopulation equipment, and contractors to assist with response efforts, which were 

critical to the success of eradicating vND in California and containing LPAI in the 

Carolinas. [2.3] 

• Plant Pest Detection Enhanced Analysis: Plant Pest Detection started survey work in all 

50 States, 13 tribal areas, and three territories. The program delivered supplies, including 

traps and lures, to more than 300 field offices across the country. [2.3] 

Key Challenges and Risks 

• Delays in paper-based processing due to COVID-19 and the majority of administration 

staff teleworking. [2.1] 

• The unpredictable economic climate due to COVID-19 resulting in producer cash flow 

challenges [2.1] 

• Farmers understanding new coverage and utilizing updated systems. [2.1] 

• Inclement weather may delay the reporting of data. [2.1] 

• Prior to COVID-19, the primary challenge faced by LP included maintaining adequate 

grading staff to meet the customers’ needs, along with taking actions to promote their 

safety and health. [2.2] 

• Graders perform their duties in meat, poultry, or shell egg processing plants. No options 

are available for either telework or light duty. [2.2] 
20 Section I | Management’s Discussion and Analysis 

• Due to COVID-19, LP leadership anticipated losing approximately 40 percent of its 

grading staff due to self-certification for Weather and Safety Leave, self-quarantining, 

and becoming ill. [2.2] 

Planned Actions and Risk Mitigation 

• Loan-making and servicing flexibilities will be provided to farmers and ranchers as a 

response to COVID-19. [2.1] 

• The Farm Loan Programs (FLP) will enhance data analytics to aid in portfolio risk 

management. [2.1] 

• The Department is planning IT modernization and process reengineering by FLP to 

implement online customer services such as online loan applications and amortization 

payments. [2.1] 

• USDA will increase and strengthen the training of agents and farmers. [2.1] 

• Leadership is leveraging multiple strategies to compensate for staffing challenges and to 

maintain safe working conditions for staff. [2.2] 

• Strategies include using creative staffing schedules (limiting time in plants to only when 

grading function was required) and implementing contingency plans for reduced grader 

presence. Additionally, the Department is canceling annual leave for graders to ensure 

sufficient staffing levels, suspending air travel until late June, and providing financial 

incentives for staff to work in plants rather than take leave, which would have affected 

staffing. USDA is addressing safety issues by distributing face masks/shields and hand 

sanitizer directly to the graders. Relationships among the team are maintained and 

strengthened by holding three weekly all-hands calls for 700+ staff & weekly calls with 

50+ supervisors. [2.2] 

• By taking these actions, USDA was able to ensure that meat, poultry, and shell egg 

customers were able to move USDA-graded products in commerce. [2.2] 
USDA | 2020 Agency Financial Report 21

Exhibit 2: Strategic Goal 2 Key Performance Indicators (KPI) 

KPI 

Historic Actuals Strategic Targets FY 20 Results as 

of Q3 FY17 FY18 FY19 FY19 FY20 

Average number of days to process 

direct loans 31 30 32 30 32 33

Percentage of direct and guaranteed 

loan borrowers who are beginning 

farmers 

NA 55 54.5 53 59.9 59.1 

The annual normalized value of risk 

protection provided to agricultural 

producers through the Federal Crop 

Insurance Program ($ Billion) 

74.6 76.8 78.2 77.3 77.6 34.2 

Percentage of high-risk plant pests 

for which early detection surveys are 

conducted 

96 96 96 95 96

Annual Measure 

update provided 

in APPR 

Number of hours it takes to mobilize 

resources once it is determined that 

a Federal emergency response is 

needed to manage an agricultural 

outbreak (target of within 24 hours) 

24 24 24 24 24 24

First installment delinquency rate on 

direct loans 

New in 

FY 2020 

New in 

FY 2020 

New in 

FY 2020 

New in 

FY 2020 8 10

Direct loan delinquency rate New in 

FY 2020 

New in 

FY 2020 

New in 

FY 2020 

New in 

FY 2020 7 4.7 

Number of USDA Patents Licensed / 

Number of USDA Patents Granted New in 

FY 2020 

New in 

FY 2020 

New in 

FY 2020 

New in 

FY 2020 25

Annual Measure 

update provided 

in APPR 

Agriculture Workforce Development New in 

FY 2020 

New in 

FY 2020 

New in 

FY 2020 

New in 

FY 2020 2,437 

Annual Measure 

update provided 

in APPR 

Influence of USDA Research on 

Public Policy 

New in 

FY 2020 

New in 

FY 2020 

New in 

FY 2020 

New in 

FY 2020 119 99

Recover 83 percent of graders’ time 

through customer billings (for meat 

and poultry livestock) 

New in 

FY 2020 

New in 

FY 2020 

New in 

FY 2020 

New in 

FY 2020 83 94

FY = fiscal year; NA= not available; Q = quarter. 

Notes: Preliminary status is based on progress toward KPI as of the third quarter. The USDA Annual Performance 

Plan and Report (APPR), to be published in February 2021, will show the final FY 2020 results. 
22 Section I | Management’s Discussion and Analysis 

Areas for Improvement 

USDA will continue to identify methods to maintain adequate grading staff to meet the 

customers’ needs, as well as taking actions to promote their safety and health. 

Average Number of Days to Process Direct Loans: As projected in Q2, due to COVID-19 

measures requiring telework and limiting the number of staff who can be in a field office at the 

same time, an increase in the number of days to process direct loans is expected to rise. Loan 

making and servicing are primarily paper-based, and this process considerably delays the ability 

to finalize loan applications and other services for customers. The staff is using workarounds as 

much as possible; however, the duration and severity of the pandemic may cause the end year 

target to be missed and may carry into FY 2021 if the impact of the pandemic persists and/or 

there is a backlog of applications to process. 

Percentage of Direct and Guaranteed Loan Borrowers This metric has declined each month 

since January 2020 when it was 63 percent, and the Q3 Actual is slightly below the Q3 Target. 

The 6-month decline predates the pandemic and may reflect the longer-term stress in the farm 

economy, but more recently, compounded by the pandemic. Outreach by the Farm Service 

Agency (FSA) to customers has expanded during the pandemic. Resources are focused on 

providing assistance to borrowers to mitigate their actual or potential delinquencies, such as 

through loan restructures and postponing loan payments via a disaster-set-aside option that has 

been expanded to include Presidential Emergencies such as COVID-19. 

First Installment Delinquency Rate on Direct Loans: This KPI is a proxy for credit quality, 

with the expectation that a loan’s first installment will be paid. It is common to see this rate rise 

in December—April but decline as cash flows improve from commodity sales in the spring 

through autumn. Rather than this metric declining as it typically does when cash flows improve 

from commodity sales in the spring through autumn, the rate has increased. FLP is closely 

monitoring this metric and others due to the added pressures on commodity and livestock prices 

caused by COVID-19. 
USDA | 2020 Agency Financial Report 23

Strategic Goal 3: 

Promote American Agricultural Products and Exports 

STRATEGIC OBJECTIVES 

Objective 3.1 

Expand International Marketing 

Opportunities 

Objective 3.2 

Prevent or Resolve Barriers to Trade 

That Hinder U.S. Food and Agricultural 

Exports 

Objective 3.3 

Build Demand in Developing 

Countries Through Trade Capacity 

Building 

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 promotion 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 support 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 

further advance U.S. agriculture’s export.

Key Successes and Opportunities 

• Trade Value Preserved: The value of trade preserved in Q3 is $103 million, with 

$5.89 billion cumulative for FY 2020. This quarter’s success total is driven by the 

$60 million market opening for sorghum to Vietnam and $38 million in facilitating the 

release of detained shipments world-wide. [3.2] 

Key Challenges and Risks 

• The COVID-19 pandemic presents challenges to increasing agricultural exports as 

economies around the world place restrictions on exports during food security concerns, 

and trade shows are canceled or postponed. [3.1 and 3.2] 

• In Q3 of FY 2020, due to cancellations or postponements, USDA-endorsed trade shows 

and agribusiness trade missions generated $0 in 12-month projected sales. [3.1] 
24 Section I | Management’s Discussion and Analysis 

Planned Actions and Risk Mitigation 

• USDA is exploring alternative methods to in-person trade shows through the use of 

virtual technology. [3.1] 

• USDA is tracking barriers placed on U.S. agricultural exports and is poised to counter 

them at every opportunity aggressively. [3.2] 

Exhibit 3: Strategic Goal 3 Key Performance Indicators (KPI) 

KPI 

Historic Actuals Strategic Targets FY 20 Results 

as of Q3 FY17 FY18 FY19 FY19 FY20 

Value of trade preserved through 

resolution of foreign market access 

issues such as U.S. export detainment, 

restrictive SPS & TBT issues, and trade 

regulations (Billions) 

7.8 12.8 2.5 5.5 6 5.89 

Value of agricultural exports resulting 

from participation in foreign 

agricultural trade shows and trade 

missions (Billions) 

2.35 2.13 2.2 1.75 2.13 1.15 

FY = fiscal year; Q = quarter; SPS =Sanitation Performance Standard; TBT = Technical Barrier to 

Trade 

Notes: Preliminary status is based on progress toward KPI at the time of publication. The USDA Annual 

Performance Plan and Report, to be published in February 2021, will show the final FY 2020 results. 

Areas for Improvement 

In Q3, the Foreign Agricultural Service (FAS) began requiring its overseas offices to document 

the value of detained shipments. The FAS staff facilitated the clearance of these detained 

shipments through import inspection and customs by resolving issues involving documentation 

errors, certification errors, or misunderstanding the regulatory requirements of the importing 

trade partner. 

USDA will strengthen its efforts in FY 2021 to develop a measure for Objective 3.3.
USDA | 2020 Agency Financial Report 25

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. With this aim in mind, USDA will leverage 

funds, stimulate public-private partnerships, and engage in collaboration to build rural 

infrastructure, including broadband, community facilities, safe and affordable housing, and 

health services and facilities. It will also provide capacity building to help underserved 

communities become thriving communities. 

Key Successes and Opportunities 

• Rural eConnectivity Pilot Program (ReConnect): Broadband and Next Generation 

Precision Agriculture are critical components for creating vital access to world-class 

resources, tools, and opportunities for America’s farmers, ranchers, foresters, and 

producers. ReConnect offers unique Federal financing and funding options in the form of 

loans, grants, and loan/grant combinations to facilitate broadband deployment in areas of 

rural America that currently do not have sufficient access to broadband. In Round 1, 

Rural Development (RD) made 82 awards for $744 million in 34 States. For Round 2, 

RD received 172 applications from 42 States and funding requests totaling $1.57 billion. 

RD has approved investments in 39 projects through the second round representing 

$344,936,231 in grant and loan funding. The funded service areas include a total of 

56,435 households. USDA is reviewing applications and announcing approved projects 

on a rolling basis. 

• The funding request breakdown for Round 2: 100 percent grants: 123 applications for 

$904 million; 50/50 loan grant combos: 42 applications for $603 million; 100 percent 

loans: 7 applications for $63 million; $100 million of CARES Act funding included in 

Round 2 applications (11 initially eligible for $110 million). [4.1] 

• National Telecommunications and Information Administration (NTIA) Memorandum 

of Understanding (MOU): RD is sharing Geographic Information System (GIS)-level 

mapping data with NTIA for eight pilot States and the State of Georgia through an MOU 

to assist with underwriting. Additionally, it is coordinating awarded areas for Round 2 

with the Federal Communications Commission (FCC) to eliminate overlap with the FCC 

Rural Digital Opportunity Fund reverse auction this fall. [4.1]

• Farm Bill Regulations: RD has 23 regulations necessary to implement Farm Bill 

provisions. Twelve regulations are published or nearing publication. Six of the remaining 
26 Section I | Management’s Discussion and Analysis 

11 regulations do not require Office of Management and Budget (OMB) clearance. 

OneRD Guarantee Loan Initiative has been published. [4.1] 

• COVID-19 Response: Beginning in March of FY 2020, RD implemented 100 percent 

telework status for its employees. RD staff learned to use existing technology (Microsoft 

Teams) for improved communication, pivoted to online outreach, facilitated webinars in 

place of in-person meetings, and continued to obligate funds. RD quickly implemented 

several actions to mitigate the impact of COVID-19 on the delivery of programs to 

include enhanced data tools, improved service delivery through COVID-19 resource 

guides and webinars for customers, and an increased focus on managing the loan 

portfolio. RD has received over 91,000 loan servicing requests, of which 69,000 

represented the Single Family Housing Guaranteed loan program. RD consulted with 

loan recipients in good faith to alleviate defaults and processed the majority of requests. 

The deferrals represent a small percentage of the over 1.3 million loans in RD’s program 

portfolio. RD has also successfully implemented required sections of the CARES Act, 

including Broadband infrastructure and Distance Learning/Telemedicine funding, and 

funding for working capital loans through our Business and Industry Guarantee Loan 

Program. Communication with customers and communities needing assistance remains a 

priority for RD. [4.1] 

Key Challenges and Risks 

• Key challenges include remote, steep terrain that makes construction and maintenance 

costlier; fewer potential subscribers per mile of infrastructure to support the cost of 

service; and higher rates of unemployment, poverty, and outmigration in the subscriber 

base. Additionally, the relatively low population densities and incomes can mean fewer 

potential subscribers, making it difficult to recoup deployment costs. These conditions 

make it less likely that a private service provider will build out or maintain a broadband 

network. [4.1] 

Planned Actions and Risk Mitigation 

• Specific areas addressed by the Broadband Program include financing projects to 

improve telecommunications services in rural areas. [4.1] 
USDA | 2020 Agency Financial Report 27

Exhibit 4: Strategic Goal 4 Key Performance Indicators (KPI) 

KPI 

Historic Actuals Strategic Targets FY 20 

Results as 

of Q3 FY17 FY18 FY19 FY19 FY20 

Health Facilities: Percent of customers 

who are provided access to new and/or 

improved essential community facilities 

6 9.4 2.45 6.8 3 3.3 

Number of borrowers’ subscribers 

receiving new and/or improved 

telecommunication services (thousand) 

158 45 68.9 139 160 75

Percent of RD commercial/ 

infrastructure investments that 

leverage non-Federal funding 

NA 77 83 78 79 66

Percent of RD assistance that went to 

distressed communities NA 11 11 12 13 11

FY = fiscal year; NA = not available; Q = quarter; RD =Rural Development. 

Notes: Preliminary status is based on progress toward KPI as of the third quarter. The USDA Annual 

Performance Plan and Report, to be published in February 2021, will show the final FY 2020 results. 

Areas for Improvement 

Rural Development continued obligating funds in FY 2020 Q3 at a higher rate than previous 

fiscal years despite moving to 100 percent telework and other limitations of continuing operation 

during the pandemic. 

Table: Rural Development (RD) Obligation Rate Comparison by Fiscal Year Quarter 3 

Agency 

June 2018 June 2019 June 2020 

Available Obligations % Available Obligations % Available Obligations % 

RHS $28,708,518 $14,190,213 49% $29,364,472 $11,817,198 40% $30,125,819 $17,973,968 60% 

RUS 13,208,719 2,132,368 16% 11,768,087 2,381,208 20% 13,680,767 4,518,219 33% 

RBCS 2,225,222 1,457,746 66% 2,255,197 1,138,591 50% 5,096,321 1,168,639 23% 

RD $44,142,459 $17,780,327 40% $43,387,756 $15,336,997 35% $48,902,907 $23,660,827 48% 

RBCS = Rural Business-Cooperative Service; RHS = Rural Housing Service; RUS = Rural Utility Service. 

While obligation activity and loan making performance has been maintained under COVID-19, 

RD has experienced continued challenges reaching the targets for two KPIs: (1) percent of RD 

commercial/infrastructure investments that leverage non-Federal funding, and (2) percent of RD 

assistance that went to distressed communities 
28 Section I | Management’s Discussion and Analysis 

The Leveraging KPI Challenge: Due to COVID-19, the other funds invested alongside RD 

funds in projects have decreased. This reduction is especially true in rural infrastructure 

projects—water and electricity. 

The Distressed Communities KPI Challenge: Investment percentages in distressed communities 

increased or remained stable in RD programs. The increased year-over-year obligations in RD’s 

most extensive program, Single Family Housing Guaranteed (SFHG), however, reduced 

distressed community investment averages for RD as a whole. The SFHG program has obligated 

65 percent of the funds obligated thus far by RD. The program is designed to work with 

private-sector lenders to support mortgages to moderate-income families. Unlike RD’s direct 

lending and grant programs, the Department cannot target where guaranteed obligations originate 

because the private sector controls these loans. Only 9 percent of the funds obligated under 

SFHG are in distressed communities. While investments in distressed communities remained 

stable or increased in the other programs, it was not enough to overcome the lack of investment 

by SFHG. 

Distressed Communities were already vulnerable and became even more vulnerable under 

COVID-19. The RD Innovation Center (IC) facilitated a webinar discussion for all RD staff that 

focused on working with Distressed Communities—what works, what are the challenges, and 

what are new ways to engage and conduct outreach under COVID-19. 
USDA | 2020 Agency Financial Report 29

Strategic Goal 5: 

Strengthen the Stewardship of Private Lands Through 

Technology and Research 

STRATEGIC OBJECTIVES 

Objective 5.1 

Enhance Conservation Planning with 

Science-Based Tools and Information 

Objective 5.2 

Promote Productive Working Lands 

Objective 5.3 

Enhance Productive Agricultural 

Landscapes 

The world population is expected to reach 

9.6 billion by 2050. Feeding this population will 

require the adoption of new science and 

technologies and the implementation of 

science-based conservation plans to increase 

agricultural production sustainability. 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. 

Key Successes and Opportunities 

• Farmers.gov Launch: USDA implemented the Farmers.gov gateway. The gateway 

provides farmers, ranchers, and forest landowners with online self-service applications, 

educational materials, engagement opportunities, and business tools. The Department 

built the website around the needs of customers, with farmer-focused content, interactive 

tools, and a business data dashboard that allows producers more time to focus on their 

farm and less time filling out antiquated and time-intensive paper forms. [5.1] 

• Recreation.gov: This website and mobile app empowers forest enthusiasts along their 

entire travel journey to dream, plan, and experience national treasures, as well as share 

their memorable experiences to inspire others. Architects of Recreation.gov began from a 

foundation of Federal recreation data and valuable user feedback to create a service with 

instinctive workflows for visitors and Federal recreation managers, enhanced tripplanning and mapping features, and inspirational content for discovery. Since the 

Recreation.gov site launched in October 2018, it has hosted nearly 20 million users, 

41.7 million sessions, and 156 million page views. [5.1]. 
30 Section I | Management’s Discussion and Analysis 

• Customer Service Enhancements: USDA improved customer service through inventory 

assessment and application ranking automation. This revision makes processes more 

efficient for customers by determining service gaps and reducing labor hours in manually 

ranking applications. [5.1] 

• Expanded Conservation Reserve Program (CRP): Congress expanded the overall CRP 

acreage cap for producers in the 2018 Farm Bill. The CRP acreage allocation caps for 

buffers and wetlands were also removed. In exchange for a yearly rental payment, 

farmers who enrolled in the program agree to remove environmentally sensitive land 

from agricultural production and plant species that will improve environmental health 

and quality. The contracts for land that enrolled in CRP are 10-15 years in length. The 

long-term goal of the program is to re-establish valuable land cover to help improve 

water quality, prevent soil erosion, and reduce the loss of wildlife habitat. [5.2 and 5.3] 

Key Challenges and Risks

• The variation in producer interest and volatility of uncontrollable and sometimes 

unpredictable economic changes [5.1] 

• The agency streamlining efforts, management and monitoring of federal funds creates 

obstacles in knowledge transfer and ability to meet goals. [5.1] 

• The current economic and logistical obstacles add to the difficulty in Farm Bill 

implementation, as well as additional challenges caused by severe weather, and agency 

attrition [5.2 and 5.3] 

• Due to working remotely during COVID pandemic, there are added communication and 

implementation challenges. [5.1, 5.2, 5.3] 

Planned Actions and Risk Mitigation 

• Increase program outreach to key stakeholders. [5.1] 

• Build executive dashboards, scorecards, the status of funds, performance data charts with 

real-time data, and align process flows for streamlined program delivery. [5.2] 

• Key Performance Indicator training automates inventory assessment and application 

ranking tools, budget/performance integration, and staff training. [5.2 and 5.3] 
USDA | 2020 Agency Financial Report 31

Exhibit 5: Strategic Goal 5 Key Performance Indicators (KPI) 

KPI 

Historic Actuals Strategic Targets FY 20 Results as 

of Q3 FY17 FY18 FY19 FY19 FY20 

Acreage enrolled in CRP riparian 

and grass buffers (Cumulative, 

Million Acres) 

1.6 1.5 1.43 1.43 1.43 1.37 

Cropland with conservation 

applied to improve soil quality 

(Million Acres)—Environmental 

Quality Incentives Program 

(EQIP) 

3 3.1 3.4 3.1 3.1 3.4 

Cropland with conservation 

applied to improve soil quality 

(Million Acres)—Conservation 

Technical Assistance (CTA) 

5.9 6 5.7 5.9 6 3.3 

Tons of sediment prevented 

from leaving cropland and 

entering water bodies (Million 

Tons) 

4.8 5.3 6.3 5.7 5.7 3.8 

Working land protected by 

conservation easements 

(Thousand Acres) 

60.7 163 178 140 163 92

Contract Implementation Ratio 

(CIR, %) NA 87 87 87 87

Annual Measure 

update provided 

in APPR 

Annual Practice 

Implementation Rate (PIR, %) NA 51 55 53 53 45

Restored wetland acreage 

(Million Acres) 

New in 

FY 2020 

New in 

FY 2020 

New in 

FY 2020 

New in 

FY 2020 2.41 2.35 

CPR = Conservation Reserve Program; FY = fiscal year; NA = not available; Q = quarter. 

Notes: Preliminary status is based on progress toward KPI as of the third quarter. The USDA Annual 

Performance Plan and Report (APPR), to be published in February 2021, will show the final FY 2020 results. 

Areas for Improvement 

The CRP has been impacted by COVID-19 complications, although Q3 actuals still fall within 

the 10 percent range. Contract offers must be completed remotely, and outreach events are 

limited to virtual conferences. 
32 Section I | Management’s Discussion and Analysis 

Strategic Goal 6: 

Ensure Productive and Sustainable Use of the National Forest 

System Lands New in FY 2020 

STRATEGIC OBJECTIVES 

Objective 6.1 

Contribute to the Economic Health of 

Rural Communities Through Use and 

Access Opportunities 

Objective 6.2 

Ensure Lands and Watersheds Are 

Sustainable, Healthy, and Productive 

Objective 6.3 

Mitigate Wildfire Risk 

The Nation’s forests and grasslands are a 

fundamental part of the American landscape and 

are 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 National Forest Service (NFS) 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 the 

Nation’s forests offer. This work is complemented 

with USDA’s research in forestry, ecology, and 

economics to ensure world-class science guides effective policies and management practices. 

Key Successes and Opportunities 

• Visitor Satisfaction: In FY 2019, visitor satisfaction was rated at 95 percent due to 

continued efforts to provide access to quality landscapes, offer a variety of recreation 

opportunities and settings, and maintain recreation facilities to acceptable standards. [6.1] 

• Timber Sales: Forest product efficiencies and timber sale preparation reduce sale 

preparation times and will lead to increased production. New guidelines for market-based 

appraisals for timber sales may reduce the chance for newly offered timber sales having 

no bids. [6.2] 

• Hazardous Fuels: All regions showed steady accomplishments and were on pace with 

the 5-year average until mid-March when impacted by COVID-19. [6.3] 
USDA | 2020 Agency Financial Report 33

Key Challenges and Risks 

• Multiple interests in the use of national forest land and resources sometimes lead to 

conflicts among stakeholders and can present challenges in improving use and access for 

rural communities. [6.1] 

• In early FY 2020, various areas were negatively affected by weak or non-existent timber 

markets, inadequate timber mill capacity to use timber volume, and tariffs. By midMarch, economic uncertainties significantly affected timber markets, reduced demand, 

and resulted in no-bids on some advertised timber sales. COVID-19 restrictions delayed 

contractors and employees from working on sales and contributed to reduced demand. 

Forest product users are experiencing shutdowns and slowdowns due to waned demand. 

[6.2] 

• A quiet fall fire season contributed to the low treatments, and wet weather in the first 

quarter limited opportunities for prescribed burns. All regions placed a pause in 

prescribed fire implementation in March. Regions were looking to employ mechanical 

treatments for later in the year; however, concerns during the COVID-19 pandemic 

compelled local officials to restrict incoming resources for mechanical treatments. [6.3] 

Planned Actions and Risk Mitigation 

• The Department plans to update recreational and permitting tools to maintain a high 

visitor satisfaction rate and continue to build on pilot programs tested in 2019 to expand 

these online services to more locations. [6.1] 

• NFS is in the process of developing safe work assignments to achieve accomplishments 

while maintaining safety, implementing the Significant Overriding Public Interest 

(SOPI), working with regions to identify target timber sale forecasts, and shifting 

resources to support the additional timber volume. [6.2] 

• Hazardous Fuels program leaders are diversifying with mechanical and prescribed fire 

options and working with regions to assess needs versus capacity limitations to resolve 

issues. All regions are strongly evaluating shifting some prescribed fire projects to 

mechanical due to missed prescribed fire opportunities associated with COVID-19. 

Opportunities for prescribed fire projects may present themselves later in FY 2020 if the 

COVID-19 epidemic subsides. [6.3] 
34 Section I | Management’s Discussion and Analysis 

Exhibit 6: Strategic Goal 6 Key Performance Indicators (KPI) 

KPI 

Historic Actuals Strategic Targets FY 20 Results as 

of Q3 FY17 FY18 FY19 FY19 FY20 

Percent of customers satisfied with 

recreation facilities, services, and 

settings in National Forests 

NA 95 95 95 95

Annual Measure 

update provided 

in APPR 

Timber volume sold (Billion Board 

Feet) 2.9 3.2 3.27 3.7 3.7 1.87 

Annual acreage of NFS lands where 

final treatment effectively mitigates 

wildfire risk (Million Acres, 

Annually) 

.348 1.04 .85 1.1 1.1 0.51 

Annual acreage treated to reduce 

or maintain fuel conditions on NFS 

and non-Federal lands (Million 

Acres, Annually) 

.807 3.4 2.9 3.4 3.4 137 

FY =fiscal year; NA = not available; NFS = National Forest Service; Q = quarter. 

Notes: Preliminary status is based on progress toward KPI as of the third quarter. The USDA Annual 

Performance Plan and Report (APPR), to be published in February 2021, will show the final FY 2020 

results. 

Areas for Improvement 

USDA program staff may need to revisit strategies in meeting performance measures for timber 

volume sold and annual acreage treated to reduce or maintain fuel conditions on NFS and 

non-Federal lands. Several programmatic changes have occurred since baselines were set, 

leaving the need to improve the accuracy and feasibility of the measures. 
USDA | 2020 Agency Financial Report 35

Strategic Goal 7: 

Provide All Americans Access to a Safe, Nutritious, and Secure 

Food Supply 

STRATEGIC OBJECTIVES 

Objective 7.1 

Prevent Foodborne Illness and Protect 

Public Health 

Objective 7.2 

Provide Access to Safe and Nutritious 

Food for Low-Income People While 

Supporting a Pathway to SelfSufficiency 

Objective 7.3 

Support and Encourage Healthy 

Dietary Choices Through Data-Driven, 

Flexible, Customer-Focused 

Approaches 

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 

several 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. 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. These collaborations 

include research on the nutritional quality of 

American’s food and diets, as well as continuing 

to discover 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 to 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. 

Key Successes and Opportunities 

• Modernization Initiatives: USDA announced two final modernization initiatives in 

FY 2020. The final Modernization of Swine Slaughter Inspection Rule established an 

optional new inspection system for market hog slaughter establishments that has been 

demonstrated to provide public health protection that is at least equivalent to the existing 

inspection system. Modernization of egg products inspection amends the egg products 

inspection regulations by requiring Hazard Analysis and Critical Control Point (HACCP) 
36 Section I | Management’s Discussion and Analysis 

Systems for plants that process egg products consistent with the meat and poultry 

regulations. [7.1] 

• Roadmap to Reducing Salmonella: Driving Change through Science-Based Policy, 

outlines programs and policies that are science-based, data-driven, and promote 

innovation to reduce Salmonella in meat, poultry, and egg products. USDA discussed the 

Salmonella roadmap at a virtual public meeting on September 22, 2020. In addition to 

FSIS, USDA’s Agricultural Research Service (ARS), the U.S. Food and Drug 

Administration (FDA), and the Centers for Disease Control and Prevention (CDC) 

participated in the meeting. 

• Food Safety Outreach Plan: In FY 2020, USDA developed a high-level food safety 

outreach plan to drive positive consumer behavior change and reduce foodborne illness. 

[7.1] 

• Assistance for Small Scale Meat Processing: To assist small and very small meat 

processors, USDA hosted a webinar to assist small and very small meat processors by 

explaining the process for obtaining a FSIS grant of inspection and also discussing loans, 

grants, and loan guarantees offered by USDA Rural Development. Held in FY 2020, a 

video recording of the webinar and slides presented were made available on the FSIS 

website. FSIS senior leadership also met with small and very small plant owners and 

operators at three roundtables in Missouri, Illinois, and Texas. [7.1] 

• Ensure Safety of New Food Production Techniques: USDA and the Food and Drug 

Administration (FDA) established working groups in FY 2020, tasked with developing 

processes and procedures for the safe production of human food products derived from 

the cells of livestock and poultry. The working groups are addressing pre-market food 

safety assessments by the FDA, inspections, and the transition of oversight from FDA to 

USDA during the cell harvest stage and USDA labeling oversight. [7.1] 

• Supporting State Inspection Systems: FSIS secured the ability to fund 50 percent of 

State meat and poultry inspection programs through a $5 million funding increase from 

Congress. States had previously stated that low reimbursement rates could lead them to 

eliminate their inspection programs, which would require FSIS to provide inspection 

coverage for those State establishments and put additional pressure on FSIS inspection 

personnel and budget. [7.1] 

• Filling Frontline Positions: FSIS implemented a Public Health Veterinarian (PHV) 

incentive program that included new retention incentives and student loan repayment to 

improve recruitment and retention of these mission-critical positions. It also used the 

Direct-Hire Authority to increase and expedite the hiring of Food Inspectors (FI), 

Consumer Safety Inspectors (CSI), and PHVs. [7.1] 

• Newly Published Guidance Supporting Self-Sufficiency: USDA published the final rule, 

Supplemental Nutrition Assistance Program: Requirements for Able-Bodied Adults 
USDA | 2020 Agency Financial Report 37

without Dependents (ABAWD) in December 2019. The rule supported the Agency’s 

commitment to moving SNAP participants forward into work opportunities by modifying 

States’ ability to receive waivers of the ABAWD time limit. [7.2] 

• Newly Published Rule Supporting Education and Training: USDA published the 

proposed rule, Employment and Training Opportunities in the Supplemental Nutrition 

Assistance Program (SNAP) in March 2020. The rule codifies change from the 2018 

Farm Bill and expands the education and training components allowable under the 

Supplemental Nutrition Assistance Program (SNAP) Employment and Training (E&T). 

[7.2] 

• Newly Published Rule Supporting Simplifying Meal Patterns: USDA published the 

proposed rule, Simplifying Meal Service and Monitoring Requirements in the National 

School Lunch and School Breakfast Programs in January 2020. The rule includes 

provisions to help reduce burden while delivering essential nutrition benefits during the 

school year through the National School Lunch/School Breakfast Programs. [7.3] 

• Newly Published Rule to Strengthen Program Oversight: USDA published the proposed 

rule, Streamlining Program Requirements and Improving Integrity in the SFSP in January 

2020. The proposed rule codifies statutory requirements, policy improvements, and 

administrative flexibilities that are designed to strengthen oversight and operational 

performance in the delivery of essential nutrition benefits to children through the Summer 

Food Service Program (SFSP). [7.3] 

• New Grants to Improve Data and Expand Program Capacity in SNAP Employment 

and Training Programs: In September 2020, FNS awarded over $3.2 million in SNAP 

E&T Data and Technical Assistance (DATA)Grants to support improved E&T data 

collection and reporting across five SNAP state agencies, and awarded more than 

$6.7 million in SNAP E&T National Partnership Grants to help four national non-profit 

organizations expand program capacity to serve SNAP participants. [7.2] 

• COVID-19 Response: The Food and Nutrition Service (FNS) provided over 

4,000 program flexibilities in response to COVID-19, including: 

o Over 850 individual statutory and regulatory waiver requests for the Special 

Supplemental Nutrition Program for Women, Infants, and Children (WIC) from State 

agencies. [7.2] 

o Child Nutrition waivers across all State agencies and territories, including both Statespecific waivers and State election of over 50 nationwide waivers. The suite of 

waivers provided for the Seamless Summer Option (SSO) and the Summer Food 

Service Program (SFSP) include, most notably: 

▪ Allowing SFSP and SSO meals to be served in all areas and at no cost; 

▪ Permitting meals to be served outside of the typically-required group settings 

and meal times to support social distancing; 
38 Section I | Management’s Discussion and Analysis 

▪ Waiving meal pattern requirements as necessary; and 

▪ Allowing parents and guardians to pick-up meals for their children.[7.3] 

o Certain flexibilities to State SNAP agencies to support social distancing and 

streamline the application process such as limiting interview requirements, allowing 

streamlined interviews, easing telephonic signature requirements, providing 

extensions and flexibilities in conducting Quality Control interviews, extending 

certification periods and temporarily waiving periodic reporting, and expanding the 

allowable activities for which states can use vendor/private staff to manage increased 

workload. [7.2] 

o Emergency supplemental SNAP benefits to bring all eligible SNAP households up 

the maximum benefit level, totaling more than $2 billion per month. [7.2] 

• FNS used its USDA Foods—wholesome, nutritious, 100% American-grown products—

in new ways to respond to the pandemic, including: 

o Stepping up when foodbanks were struggling to receive additional outside donations 

and, through The Emergency Food Assistance Program, provided significantly more 

food and administrative funding—over $3 billion in total. This included $850 million 

in Congressional coronavirus relief, though USDA Foods represent only a portion of 

the resources food banks distribute each year. [7.2] 

o Providing short-term emergency support through Disaster Household Distributions, 

approving 58 State and Tribal agencies to distribute food to 14.4 million people in the 

Spring of 2020. [7.2] 

o Supporting participants in the Food Distribution Program on Indian Reservations 

(FDPIR) with an additional $100 million for COVID-19 response, which went to 

infrastructure grants, additional food distributions, and additional administrative 

support. [7.2] 

• During the pandemic, USDA has worked with program partners and public and private 

sector organizations to ensure that all those impacted can get the food they need through 

innovative means. Key examples include: 

o Working with states to provide benefits (similar to SNAP or “food stamps”) to 

children who normally receive free or reduced-price school meals through the 

Pandemic EBT or P-EBT program. P-EBT helps supplement family budgets by 

replacing the value of those lost school meals. SNAP and Child Nutrition agencies in 

each of the 50 states, the District of Columbia, and the U.S. Virgin Islands have 

collaborated to design, build, and administer P-EBT programs to distribute billions of 

dollars in food assistance to eligible children and their families. [7.2] 

o Expanding USDA’s innovative partnership with the Baylor University Collaborative 

on Hunger and Poverty, McLane Global, and PepsiCo. What began as a summer pilot 

project in 2019, was leveraged as Emergency Meals to You to address pandemic-
USDA | 2020 Agency Financial Report 39

related nutrition needs in rural areas. Meals to You boxes were delivered directly to 

children’s homes via the U.S. Postal Service or another delivery service. Each box 

contained 20 nutritious, shelf-stable meals including 10 breakfasts and 10 lunches/ 

suppers. Between April and August, the program provided over 38 million meals 

directly to the doorsteps of low-income rural children. [7.2 and 7.3] 

o Building on the Summer Site Finder Tool, USDA debuted a new interactive website 

to help families find meals for children while schools are closed. Throughout the 

pandemic, meals have been served at more than 87,000 locations (and counting); 

[7.2] 

o Supporting local partnerships such as with Panera and the Children’s Hunger Alliance 

(CHA) to provide freshly prepared and wholesome meals to children in need in the 

state of Ohio. Panera leveraged its supply chain and bakery-cafes to provide ready-toeat, freshly prepared meals to CHA for children. Meals included a menu of five 

different clean, wholesome choices from salad to sandwiches and veggie snack boxes 

including a new whole grain bread. These meals were offered at extreme discount to 

align with USDA school food prices. [7.2 and 7.3] 

Key Challenges and Risks 

• Statutory restrictions on billing for overtime for inspection personnel limits flexibility in 

scheduling that would improve work-life balance for and retention of FSIS inspection 

personnel. Changes in statutory restrictions will allow for ease of scheduling and possible 

restructuring of jobs while remaining cost-neutral for the industry. [7.1] 

• Salary, benefits, and other fixed costs represent nearly 94 percent of FSIS’s budget, 

leaving limited flexibility to fund high priority investments such as critical IT 

modernization investments meant to reduce foodborne illness and protect public health. 

[7.1] 

• Recruitment and retention of employees, particularly veterinarians and other front-line 

positions in FSIS, continues to be a challenge. [7.1] 

• FNS data availability, data quality from States, lag, and antiquated systems for reporting 

continue to present a challenge for FNS. [7.2] 

• COVID-19 has altered the landscape of E&T providers. Some had to suspend or 

eliminate services due to public health risk factors, while others have seen expansions 

with online services. Reinvigorating E&T under “new normal” conditions will take 

renewed commitment, creative thinking, and new approaches. [7.2] 

• Due to COVID-19, some WIC State Agencies observed the potential for delayed 

implementation of WIC Electronic Benefits Transfers (EBT). [7.2] 
40 Section I | Management’s Discussion and Analysis 

• School systems closed to help limit the spread of COVID-19 starting in early March for 

the 2019–2020 school year requiring a massive shift in how millions children were to be 

fed. [7.3] 

• The Department faced lawsuits on the final rule for flexibilities on milk, sodium, and 

whole grains (School Meals 1.0), which was vacated, and ABAWDs. [7.2 and 7.3] 

Planned Actions and Risk Mitigation 

• FSIS proposes to mitigate the overtime statutory restriction risk by requesting legislative 

language changes from Congress, as included in its FY 2021 budget request. [7.1] 

• FSIS will continue to advocate for additional funding in annual budget requests for high 

priority investments meant to reduce foodborne illness and protect public health. [7.1] 

• FSIS proposes to mitigate recruitment and retention challenges by continuing to use 

direct-hire authority to fill front-line positions. While USDA has permanent direct-hire 

authority to fill PHV positions, the Agency has secured authorization from the U.S. Office 

of Personnel Management (OPM) to increase its Direct Hire Authority (DHA) allocation of 

Food Inspector positions by 160 and extend the use of DHA until September 30, 2021. 

The increased allotment would need to be utilized within the next year. It will also continue 

to provide recruitment incentives to Veterinarians who choose to join FSIS and offer 

retention incentives to this target population. FSIS, in partnership with the Office of 

Personnel Management (OPM), will conduct a redesign of the FI assessment instrument 

position in Q4 of FY 2020. The redesign will assist FSIS efforts to acquire the highest 

quality candidates for the FI role, and ensure the personnel are prepared to carry out critical 

public health tasks in a modernized inspection environment. It will also improve FSIS’s 

ability to manage positions and make clear delineations between the FI and Consumer 

Safety Inspector positions. [7.1] 

• FNS is reengaging States and providing technical assistance on redesigning and 

reinvigorating their E&T programs. [7.2] 

• FNS is hosting the first-ever SNAP Employment and Training National Work Forum in 

October 2020, which will bring together SNAP E&T stakeholders from across the 

country to share and learn best practices for promoting and increasing employment 

among SNAP households through state SNAP E&T programs. [7.2] 

• FNS will continue to provide extensive technical assistance to WIC State agencies 

regarding meeting the EBT mandate of the statewide implementation date of 10/1/20. 

[7.2] 
USDA | 2020 Agency Financial Report 41

Exhibit 7: Strategic Goal 7 Key Performance Indicators (KPI) 

KPI 

Historic Actuals Strategic Targets FY 20 Results as 

of Q3 FY17 FY18 FY19 FY19 FY20 

Percentage of establishments that meet 

pathogen reduction performance 

standards 

77 71 84 72 87 85

Percentage of establishments whose 

Public Health Regulation (PHR) 

noncompliance rate decreases below 

the early warning cut point 120 days 

after receiving an Early Warning Alert 

(EWA) 

73 74 74 73 74 74

Percentage of American households 

with consistent, dependable access to 

food 

88.2 88.9 89.5 87.9 89

Annual Measure 

update provided 

in APPR 

Percentage of Supplemental Nutrition 

Assistance Program (SNAP) Employment 

& Training participants engaged in 

education and skills-based training 

NA 25.5 34.7 27.5 35.5 

Annual Measure 

update provided 

in APPR 

Annual percentage of eligible children 

participating in the National School 

Lunch Program (NSLP) 

55 58 57 59 59

Annual Measure 

update provided 

in APPR 

Annual percentage of eligible children 

participating in the School Breakfast 

Program (SBP) 

30 30 30 30 31

Annual Measure 

update provided 

in APPR 

FY = fiscal year; NA = not available; Q =quarter. 

Notes: Preliminary status is based on progress toward KPI as of the third quarter. The USDA Annual 

Performance Plan and Report (APPR), to be published in February 2021, will show the final FY 2020 results. 

Areas for Improvement 

USDA will consider a way in which performance reporting for all Goal 7’s KPIs can occur, 

notwithstanding the lag in annual reporting (for example, use the most recent available actuals). 

• The FY 2020 target for the percentage of establishments that meet pathogen reduction 

performance standards is currently unmet. While variation in this measure is typical, it 

appears that, in the short term, the trend is leveling off. It is currently undetermined if 

this leveling is due to the industry possibly reaching its limit on improvements in 

passing the standard, or if the industry is focused on addressing impacts of the Covid-19 

Pandemic that started in Q2 of FY 2020. FSIS is examining trends related to 
42 Section I | Management’s Discussion and Analysis 

establishments that either consistently or occasionally have failed the performance 

standard and develop strategies for improvement. 

COVID-19 has had a significant impact on FNS program operations, to include: 

• State SNAP agencies are adjusting referrals of individuals to E&T providers to 

accommodate public health requirements. Furthermore, States and E&T providers are 

being innovative and retooling their operations for a virtual environment and working to 

find employers or industries that are hiring. [7.2] 

• Even with the numerous flexibilities granted by FNS, many CN program operators are 

challenged to reach the entirety of the population they served pre-pandemic. 

Additionally, new activities, such as additional sanitation procedures and packaging 

meals for pick-up and/or delivering them directly to students, frequently incurred 

expenses. [7.3] 

• The pandemic also resulted in numerous program activities being delayed or postponed, 

including in-person training and conferences, administrative data collection, on-site 

monitoring activities, collaborative workgroups/partnerships, and grantmaking. Such 

challenges were also pronounced at the State and local levels, widely impacting program 

delivery and enrichment. FNS is working to continue as many of these activities as 

possible virtually. [7.3] 
USDA | 2020 Agency Financial Report 43

▪ 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 the U.S. Department of 

Agriculture (USDA or the Department). 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 may 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 significantly 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 
44 Section I | Management’s Discussion and Analysis 

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

security, and related emergency preparedness efforts. 

Mitigation Strategies: 

USDA has made great strides during fiscal year (FY) 2020 toward its mitigation strategies, under 

the auspices of its Enterprise Risk Management (ERM) program. Specifically, the Department 

leads a large-scale effort across mission areas to identify the top 10 enterprise risks, risk drivers, 

mitigation strategies, and key risk indicators. 

A risk owner was assigned to each risk, who prioritized the mitigation strategies into short– and 

long– term implementation. USDA will continue to advance the strategies in FY 2021, with 

periodic updates to the Deputy Secretary during Quarterly Strategic Reviews. 
USDA | 2020 Agency Financial Report 45

▪ Analysis of Financial Statements and 

Stewardship Information 

Consolidated Balance Sheets 

Total Assets 

Total assets for FY 2020 were $313,894 million, compared to $265,095 million for FY 2019, an 

increase of $48,799 million, or 18 percent. The following exhibit presents FY 2020 total assets. 

Exhibit 8: Total Assets ($ millions) 

Fund Balance with Treasury - $195,418

62%

Direct Loan and Loan Guarantees, Net - $110,235

35%

Accounts Receivable, Net - $3,873

1%

General Property, Plant and Equipment, Net - $2,399

1%

Other - $1,322

1%

Cash and Other Monetary Assets $381

0%

Investments $248

0%

Inventory and Related Property, Net $18

0%

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 12 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. 
46 Section I | Management’s Discussion and Analysis 

The following exhibit presents significant changes in total assets. 

Exhibit 9: Significant Changes in Total Assets ($ millions) 

$0

$50,000

$100,000

$150,000

$200,000

Fund Balance with Treasury

2020

$195,418 2019

$153,468 

Increase in Fund Balance with Treasury of $41,950 million mainly due to FSA Corona Virus 

Food Assistance Program (CFAP) and Wildfires and Hurricanes Indemnity Program (WHIP) of 

$17,737 million; FNS supplemental funding for COVID-19 of $16,313 million; AMS custom 

receipts from the Department of Homeland Security and COVID-19 Food Box Distribution 

Program of $9,116 million; Forest Service Wildland Fire Suppression Operations Reserve Fund 

of $1,598 million; NRCS transfer from CCC for Farm Bill funding of $1,530 million; RD loans 

and grants of $(2,280) million; and RMA underwriting gain and disaster relief of 

$(2,069) million.
USDA | 2020 Agency Financial Report 47

Total Liabilities 

Total liabilities for FY 2020 were $196,854 million, compared to $178,981 million for FY 2019, 

an increase of $17,873 million, or 10 percent. The following exhibit presents FY 2020 total 

liabilities. 

Exhibit 10: Total Liabilities ($millions) 

Debt $145,738

74%

Other $31,773

Benefits Due and Payable $13,330 16%

7%

Accounts Payable $3,766

2%

Loan Guarantee Liability $1,329

1%

Actuarial Federal Employees’ 

Compensation Act (FECA) Liability $679 

0%

Environmental and Disposal Liabilities $239

0%

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

primarily to Treasury by CCC, FSA and RD. For RD, the debt primarily represents financing to 

support electric and housing loan programs which represent 68 percent of the total debt. For 

CCC, the debt primarily represents financing for price support, export credit guarantees, disaster 

programs and loans related to farm storage facilities which represent 20 percent of the total debt. 

For FSA, the debt primarily represents financing to support direct and guaranteed loan programs, 

with the majority supporting operating, ownership, and emergency loans which represent 

12 percent of the total debt. 
48 Section I | Management’s Discussion and Analysis 

The following exhibit presents significant changes in total liabilities. 

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

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

Benefits Due and Payable

2020

$13,330 

2019

$5,147 

Accounts Payable

2020

$3,766 2019

$2,235 

Increase in Benefits Due and Payable of $8,183 million mainly due to FNS Child Nutrition (CN) 

and Supplemental Nutrition Assistance Program (SNAP) for COVID-19. 

Increase in Accounts Payable of $1,531 million mainly due to FSA CFAP and WHIP of 

$1,596 million; and CCC Trade Mitigation and Market Facilitation Programs of $(395) million.
USDA | 2020 Agency Financial Report 49

Consolidated Statements of Net Cost 

Net Cost of Operations 

Net cost of operations for FY 2020 was $191,679 million, compared to $144,647 million for 

FY 2019, an increase of $47,032 million, or 33 percent. 

The following exhibit presents FY 2020 net cost of operations by mission area. 

Exhibit 12: Net Cost of Operations by Mission Area ($millions) 

Food, Nutrition and Consumer Services $122,335

64%

Farm Production and Conservation $49,665

26%

Natural Resources and Environment $6,145

3%

Marketing and Regulatory Programs $4,611

2%

Rural Development $3,251

2%

Research, Education and Economics $2,956

1%

Staff Offices $1,252

1%

Food Safety $1,061

1%

Trade and Foreign Agricultural Affairs $403

0%
50 Section I | Management’s Discussion and Analysis 

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

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

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

Food, Nutrition and Consumer

Services

2020

$122,335

2019

$92,610

Farm Production and Conservation

2020

$49,665 2019

$36,619

Marketing and Regulatory Programs

2020

$4,611 2019

$1,758

Increase in Food, Nutrition and Consumer Services of $29,725 million mainly due to COVID-19 

for CN and SNAP. 

Increase in Farm Production and Conservation of $13,046 million mainly due to FSA CFAP and 

WHIP; RMA indemnities and disaster relief; and CCC Agriculture Risk Coverage (ARC), Price 

Loss Coverage (PLC), and Marketing Assistance Loans. 

Increase in Marketing and Regulatory Programs of $2,853 million mainly due to COVID-19 

Food Box Distribution Program.
USDA | 2020 Agency Financial Report 51

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 $358,184 million for FY 2020 compared to $271,914 million in 

FY 2019, an increase of $86,270 million, or 32 percent. The following exhibit presents FY 2020 

total budgetary resources by mission area. 

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

Food Nutrition and Consumer Services - $176,202

49%

Farm Production and Conservation - $108,877

30%

Rural Development - $42,011 12%

Natural Resources and Environment - $11,972

3%

Research, Education and Economics - $5,439

2%

Marketing and Regulatory Programs - $9,145

3%

Staff Offices - $2,320

1%

Food Safety - $1,463

0%

Trade and Foreign Agricultural Affairs $755

0%
52 Section I | Management’s Discussion and Analysis 

The following exhibit presents significant changes in total budgetary resources. 

Exhibit 15: Significant Changes in Total Budgetary Resources ($ millions) 

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

$180,000

Food, Nutrition and

Consumer Services

2020

$176,202

2019

$138,488

Farm Production and

Conservation

2020

$108,878

2019

$68,438

Natural Resources and

Environment

2020

$11,972

2019

$9,959

Marketing and Regulatory

Programs

2020

$9,145

2019

$4,822

Increase in Food, Nutrition and Consumer Services of $37,714 million mainly due to SNAP. 

Increase in Farm Production and Conservation of $40,440 million mainly due to FSA CFAP and 

WHIP; RMA indemnities and deferred premium; and CCC ARC, PLC, Conservation Reserve 

Program, and Trade Mitigation Programs. 

Increase in Natural Resources and Environment of $2,013 million mainly due to Wildland Fire 

Suppression Operations Reserve Fund. 

Increase in Marketing and Regulatory Programs of $4,323 million mainly due to COVID-19 

Food Box Distribution Program.
USDA | 2020 Agency Financial Report 53

Net Outlays 

Net Outlays were $184,248 million for FY 2020, compared to $150,152 million in FY 2019, an 

increase of $34,096 million or 23 percent. The following exhibit presents FY 2020 net outlays by 

mission area. 

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

Food Nutrition and Consumer Services - $114,219

62%

Farm Production and Conservation - $47,954

26%

Rural Development - $6,427

3%

Natural Resources and Environment - $5,850

3%

Marketing and Regulatory Programs - $5,017

3%

Research, Education and Economics - $2,952

2%

Food Safety - $1,043

1%

Staff Offices - $420

0%

Trade and Foreign Agricultural Affairs - $366

0%
54 Section I | Management’s Discussion and Analysis 

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

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

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

Food, Nutrition and

Consumer Services

2020

$114,219

2019

$92,577

Farm Production and

Conservation

2020

$47,956 2019

$40,986

Rural Development

2020

$6,427

2019

$4,166

Marketing and Regulatory

Programs

2020

$5,017

2019

$2,446

Increase in Food Nutrition and Consumer Services of $21,642 mainly due to COVID-19 for CN 

and SNAP. 

Increase in Farm Production and Conservation of $6,970 mainly due to the FSA CFAP and 

WHIP; RMA indemnities, deferred premium and disaster relief; and CCC Trade Mitigation 

Programs. 

Increase in Rural Development of $2,261 million mainly due to Rural Electric and Telephone 

and Rural Housing programs. 

Increase in Marketing and Regulatory Programs of $2,571 million mainly due to COVID-19 

Food Box Distribution Program.
USDA | 2020 Agency Financial Report 55

COVID-19 

The Coronavirus Aid, Relief, and Economic Security Act or the CARES Act became law in 

March 2020 in response to the COVID-19 (i.e., coronavirus disease 2019) outbreak and its 

impact on the economy, public health, state and local governments, individuals, and businesses. 

Division B, Emergency Appropriations for Coronavirus Health Response and Agency 

Operations provides FY 2020 supplemental appropriations for federal agencies to respond to the 

COVID-19 outbreak. USDA received $55,418 million for the following. 

Title I provides FY 2020 appropriations to the USDA for agricultural programs, including 

• the Office of the Secretary, 

• the Office of Inspector General, 

• the Animal and Plant Health Inspection Service, 

• the Agricultural Marketing Service, and 

• the Food Safety and Inspection Service. 

The title also provides appropriations to USDA for 

• the Farm Service Agency, 

• the Rural Business-Cooperative Service, 

• the Rural Utilities Service, and 

• the Foreign Agricultural Service. 

The title provides appropriations for several domestic food programs administered by the Food 

and Nutrition Service, including 

• Child Nutrition Programs; 

• the Supplemental Nutrition Assistance Program (SNAP, formerly known as the food 

stamp program); and 

• the Emergency Food Assistance Program (TEFAP). 

Title VII provides appropriations to the Forest Service for 

• Forest and Rangeland Research, 

• the National Forest System, 

• Capital Improvement and Maintenance, and 

• Wildland Fire Management. 
56 Section I | Management’s Discussion and Analysis 

The Families First Coronavirus Response Act also became law in March 2020 in response to the 

COVID-19 outbreak and provides supplemental appropriations to USDA of $17,800 million. 

Division A, Second Coronavirus Preparedness and Response Supplemental Appropriations Act, 

2020 Title 1 provides appropriations to the USDA for 

• the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC); and 

• the TEFAP. 

Division B, Nutrition Waivers expands food and nutrition programs of the USDA due to 

COVID-19 through Title I—Maintaining Essential Access to Lunch for Students Act, Title II—

COVID-19 Child Nutrition Response Act, and Title III—SNAP waivers. 

The supplemental appropriations are designated as emergency spending, which is exempt from 

discretionary spending limits. 

See Note 31, COVID-19 Activity for additional information. 

Stewardship Investments 

Stewardship investments are substantial investments made by the Federal Government for the 

benefit of the Nation but are not physical assets owned by the Federal Government. When 

incurred, they are treated as expenses in determining the net cost of operations. However, these 

items merit special treatment so that users of Federal financial reports know the extent of 

investments that are made for long-term benefit. Such investments are measured in terms of 

expenses incurred for non-Federal physical property, human capital, and research and 

development. The following exhibit presents a comparison of stewardship investments. 

Exhibit 18: Comparison of Stewardship Investments ($ millions)*

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

Research and Development

2020

$2,683

2019

$2,480

Human Capital

2020

$762

2019

$758

Non-Federal Property

2020

$91

2019

$78

* Research and Development for 2019 was reduced by $872 million to correct amount previously 

reported of $3,352 million. 
USDA | 2020 Agency Financial Report 57

Limitations of Financial Statements 

The principal financial statements are prepared to report the financial position, financial 

condition, and results of operations, pursuant to the requirements of 31 U.S.C. § 3515(b). 

The statements are prepared from records of Federal entities in accordance with Federal 

generally accepted accounting principles (GAAP) and the formats prescribed by OMB. Reports 

used to monitor and control budgetary resources are prepared from the same records. Users of 

the statements are advised that the statements are for a component of the U.S. Government. 
58 Section I | Management’s Discussion and Analysis 

▪ Statement of Assurance 

The United States Department of Agriculture (USDA) is providing a modified statement of 

assurance that the overall adequacy and effectiveness of internal control within the agency 

comply with Federal requirements. USDA has established and maintained effective internal 

controls and is providing reasonable assurance that the internal controls over operations are 

effective. Internal control mechanisms are in place throughout the Department to deter and detect 

unauthorized and misuse of program funds. 

As a result of the assessments conducted, USDA’s systems of internal control meet the 

objectives of the Federal Managers’ Financial Integrity Act (FMFIA) and the Federal Financial 

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

internal control related to (1) information technology (IT) and (2) financial management. There 

was also one instance of financial system non-conformance, which is also a non-compliance with 

FFMIA. In addition, USDA identified two other instances of non-compliance with laws and 

regulations. 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, 2020, and (2) internal control over reporting as of September 30, 2020. USDA is 

committed to operating its programs and operations in an effective and efficient manner; and, 

therefore, is executing plans to improve deficient internal controls. 

Sonny Perdue 

Secretary of Agriculture 

December 8, 2020 
USDA | 2020 Agency Financial Report 59

▪ 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 decision-making purposes. 

The U.S. Department of Agriculture (USDA or the Department) 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, the Federal Financial Management Improvement 

Act (FFMIA), other laws, OMB Circular No. A-123, and its Appendices A through D. All 

USDA managers must ensure their programs operate efficiently and effectively and comply with 

relevant laws. They must also ensure that 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 
60 Section I | Management’s Discussion and Analysis 

Fiscal Year (FY) 2020 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 Risk Management Agency, Natural Resources Conservation Service (NRCS), and 

Commodity Credit Corporation (CCC). 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 

(IPERA) of 2010, as amended. 

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

Nine ADA violations were reported to the President and Congress during the fiscal year. 

The Office of the General Counsel determined that two potential instances were not ADA 

violations; however, the occurrences have been referred to GAO for a determination. One 

instance is pending results from research and investigation for a determination as to whether or 

not violations occurred; and two are pending submission to the President and Congress. 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. 
USDA | 2020 Agency Financial Report 61

Summary of Outstanding Material Weaknesses 

The following exhibit provides FY 2020 accomplishments and FY 2021 planned actions toward 

resolving the outstanding material weaknesses. 

Exhibit 19: Summary of Outstanding Material Weaknesses 

1. USDA Information Technology (IT) 

Material Weaknesses 

Existing 

The Department needs to continue its efforts to improve 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 2021 

FY 2020 Accomplishments: FY 2021 Planned Actions: 

During FY 2020, the Office of the Chief Information 

Officer (OCIO): 

• Completed implementation of its Security 

Operations (SecOps) Consolidation initiative; 

• Performed security assessments on select mission 

areas; 

• Improved the High Vulnerability Assessment 

Security Domain rating from “At Risk” to 

“Managing Risk” and the Unprivileged Centralized 

Access Management capability from “High Risk” to 

“Managing Risk” as indicated in the third quarter 

OMB Risk Management Assessment report; 

• Achieved nine of 10 Cross-Agency Priority Goals in 

the third quarter of FY 2020; 

• Refined operational processes to align with 

Continuous Diagnostics and Mitigation (CDM) 

Phase 1 (Asset Management) and Phase 2 

(Identity and Access Management) tools; 

• Completed initial planning for the CDM Phase 3 

tools; 

• Implemented six audit recommendations from FY 

2018 and FY 2019; and 

• Achieved above-average scores on the Federal 

Information Technology Acquisition Reform Act 

(FITARA) Dashboard, in the categories of Data 

Center Optimization Initiative, Modernizing 

Government Technology, and Transparency and 

Risk Management. 

OCIO will: 

• Continue to refine operational processes to 

align with CDM Phases; 

• Deploy CDM Phase 3 tools (Network 

Security Management); 

• Continue implementing audit 

recommendations from FY 2018 and FY 2019; 

• Develop a risk management strategy that 

will align with USDA’s enterprise risk 

management governance; 

• Deploy or implement Security Posture 

Dashboard Report that will incorporate 

operational and compliance IT risk within 

one system; and 

• Publish Departmental Directives related to: 

Suitability Requirements Permitting 

Personnel Access to Information Systems; 

Information Systems Audit and 

Accountability; Firewall Technical Security 

Standard; Security Assessment and 

Authorization; and 

• Continue to track, monitor, and enforce 

security configuration baselines for USDA 

servers. 
62 Section I | Management’s Discussion and Analysis 

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 2022 

FY 2020 Accomplishments: FY 2021 Planned Actions: 

During FY 2020, NRCS: 

• Enhanced Financial Management Modernization 

Initiative (FMMI) and feeder system processes to 

produce aged Unliquidated Obligations (ULO) 

reports with period of performance data for 

obligations; 

• Established an ongoing process to maintain, 

monitor, and certify ULOs by period of 

performance to ensure ULOs are being closed 

out promptly to prevent a backlog of aged 

obligations from developing in the future; 

• Designed, implemented, and documented 

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 expense 

accrual process; 

• Provided additional guidance and/or training to 

employees over the recording of transactions 

with future economic benefits; 

• Evaluated the results of the FY 2020 financial 

audit and the lessons learned to ensure the 

proper controls are in place for those processes; 

and 

• Improved communication and coordination 

agency-wide. 

NRCS will: 

• Continue ongoing process improvements to 

maintain, monitor, and certify ULOs to 

ensure the accuracy of reported balances 

and maintenance of sufficient 

documentation; 

• Provide additional guidance and/or training 

to employees over the recording of 

transactions with future economic benefits; 

• Continue to provide guidance and/or 

training to employees over the recording of 

expense accruals; 

• Design, implement, and document policies 

and procedures to properly analyze and 

record internal use software expenditures 

and capitalized costs; and 

• Evaluate the results of the FY 2021 financial 

audit and the lessons learned to ensure the 

proper controls are in place. 
USDA | 2020 Agency Financial Report 63

3. Financial Management—Commodity Credit Corporation (CCC) 

Material Weaknesses 

Existing 

CCC needs to address material weaknesses related to Accounting for Budgetary 

Transactions and accrued liabilities. 

Overall Estimated 

Completion Date FY 2021 

FY 2020 Accomplishments: FY 2021 Planned Actions: 

During FY 2020 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; 

• Created 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; 

• Implemented continuous monitoring of the 

relationship between the Conservation Reserve 

Program (CRP) annual rental contracts and CRP cost 

share contracts, and the continuous monitoring of 

CRP cost share data; 

• Updated Standard Operating Procedure and 

checklist to include evaluation process for the U.S. 

Agency for International Development (USAID)’s 

cash adjustment, validated controls are working 

effectively, and documented the root cause of the 

deficiency and implemented corresponding 

compensating controls; 

• Continued development of a reconciliation/ analysis 

process for beginning of year balance for borrowing 

authority carried forward; 

• Continued to monitor the process for items 

requiring resolution and validated balance changes; 

• Periodically reviewed and updated accounting 

standards and validated that resulting changes have 

been tested and implemented; and 

• Continued with the execution of the existing Office 

of Management and Budget (OMB) Circular A-123, 

Appendix A, Corrective Action Plan over Accounting 

Estimates by further improving and enhancing the 

analysis, review, and recordation process. 

CCC will: 

• Continue to implement effective UDO 

monitoring controls at the program level 

throughout the organization. 
64 Section I | Management’s Discussion and Analysis 

4. Financial Management— Risk Management Agency (RMA) 

Material Weaknesses 

Existing 

(NEW) RMA needs to address material weaknesses related to estimated losses 

on insurance claims calculation. 

Overall Estimated 

Completion Date FY 2021 

FY 2020 Accomplishments: FY 2021 Planned Actions: 

• Perform a risk assessment to identify critical 

data inputs within the indemnities estimate 

model and design procedures to evaluate the 

completeness and accuracy of critical data 

inputs. 

• Review, update, and document policies, 

procedures, and controls (including reviewing 

official roles and responsibilities) for any model 

program or data preparation query changes and 

validate the appropriateness of the changes. 

• Perform a risk assessment to identify critical risk 

points within the indemnities estimate model 

process and design procedures to respond to 

the risk of errors within the model execution 

process. 

• Perform a risk assessment to identify areas in 

the model execution process that can be prone 

to manual error. 

• Design a review checklist to include a secondary 

review or validation to ensure completeness 

and accuracy of files used in the model 

execution process. 
USDA | 2020 Agency Financial Report 65

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 20). The weakness 

involves component agency-specific deficiencies for CCC. 

The following exhibit provides FY 2020 accomplishments and FY 2021 planned actions toward 

resolving the Department’s outstanding system non-conformance. 

Exhibit 20: Summary of Outstanding System Non-Conformance 

1. Funds Control Management— Commodity Credit Corporation (CCC) 

System 

Non-conformance Existing 

CCC system improvements that are needed in recording obligations at the 

transactional level. 

Overall Estimated 

Completion Date FY 2021 

FY 2020 Accomplishments: FY 2021 Planned Actions: 

During FY 2020 CCC: 

• Continued to evaluate all budgetary general and 

subsidiary ledgers to ensure they reflect the 

appropriate accounting and reporting guidance 

provided by the Office of Management and 

Budget (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 (ITSD) toward completing 

software modifications to ensure all program 

applications were in full compliance with the 

Funds Control/ Obligation Requirements (such as 

business events, establishments, liquidations, 

adjustments downward and upward) related to 

obligations at the transaction level in order to 

prepare for Financial Management Modernization 

Initiative (FMMI) conversion; and 

• Continued to implement the Farm Service Agency 

(FSA)/CCC Financial Improvement Program multiphased, multi-year project; move of all financial 

management processes from Farm Production 

and Conservation (FPAC) and its affiliated 

agencies’ accounting and feeder systems to 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 to partner with Deputy Administrator 

Farm Programs and ITSD toward completing 

software modifications to ensure all program 

applications were in full compliance with the 

Funds Control/Obligation Requirements (such as 

business events, establishments, liquidations, 

adjustments downward and upward) related to 

obligations at the transaction level in order to 

prepare for FMMI conversion; 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. 
66 Section I | Management’s Discussion and Analysis 

▪ Compliance with Laws and Regulations 

The U.S. Department of Agriculture (USDA or the Department) remains noncompliant, or 

potentially noncompliant with the Anti-Deficiency Act (ADA) identified in the following table. 

For additional information on noncompliance with laws, refer to 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 confirmed violations during 

FY 2021. The following tables provide further details of each violation. 

Anti-Deficiency Act 

Exhibit 21: Nine ADA Violations were Reported to the President and Congress During 2020 

Agency: Agricultural Research Service (ARS) Year Identified 

Violation: Unauthorized work during the shutdown—An employee entered 

documentation into a contract file during the government shutdown. 

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

FY 2019 

Agency: Commodity Credit Corporation (CCC) Year Identified 

Violation: 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 

the fiscal year-end close for FY 2017, CCC recorded an obligation of 

$2,319,369,741.34 for crop year 2017 ARC-CO. This commitment 

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

FY 2017 

Agency: CCC Year Identified 

Violation: 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 insufficient funds 

for all Crop Year 2017 contracts approved in FY 2018. This deficiency 

resulted in a $1,797,297 funding deficit and ADA violation. 

FY 2018 

Agency: Economic Research Service (ERS) Year Identified 

Violation: 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 the ERS, and ERS accepted the voluntary services in 

violation of 31 USC 1342. The ADA violation was approximately $1,503. 

FY 2019 
USDA | 2020 Agency Financial Report 67

Agency: Farm Service Agency (FSA) Year Identified 

Violation: 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 Salaries and 

Expenses (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. 

FY 2018 

Agency: FSA Year Identified 

Violation: FSA issued a contract for Information Technology (IT) investments, 

including the Commodity Credit Corporation 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 fiscal year (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 more than 

$25,000 prior to written approval by the Chief Information Officer.”

FY 2019 

Agency: FSA (previously CCC) Year Identified 

Violation: 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 resulted in an ADA violation. 

FY 2019 

Agency: Natural Resources Conservation Services (NRCS) Year Identified 

Violation: Computer equipment was purchased in the amount of $41,065 without 

obtaining the requisite information technology acquisition form signed 

and approved. 

FY 2019 

Agency: Office of Advocacy and Outreach (OAO) Year Identified 

Violation: 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. 

FY 2011 
68 Section I | Management’s Discussion and Analysis 

Exhibit 22: ADA Violation Pending Submission to the President and Congress 

Newly identified during FY 2020—two ADA violations are pending issuance of letters.

Agency Description of Violation Status 

CCC FY 2020 (NEW): Export Credit Guarantees (GSM) is a mandatory 

program authorized under 7 USC 5622 (program authority 

overall) and 7 USC 5641(b) (funding level). GSM had an 

approved apportionment in FY 2017 with a sufficient amount of 

budgetary resources to cover obligations during FY 2017. 

The budgetary resources included both the unobligated 

balance carried forward and a new mandatory appropriation. 

However, the unobligated balance carried forward consisted of 

indefinite budget authority which cannot be carried forward 

per the A-11. The current appropriation for that year was 

insufficient to cover the total obligations by $1,139,395.58. 

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’s 

Management’s Discussion 

and Analysis states 

pending; however, the 

following information was 

updated for this 

Consolidated AFR. 

OSEC FY 2017: Two provisions in the Consolidated Appropriations 

Act, 2017 were violated. USDA obligated and expended funds 

appropriated by the act to prepare and deliver the Secretary’s 

statements and to develop and publish the associated press 

release. USDA’s obligation and expenditure of appropriated 

amounts for this prohibited purpose also violated the 

Antideficiency Act, 31 U.S.C. § 1341(a)(1)(A). The cost 

associated with the violation is pending. 

GAO determined an ADA 

violation occurred. 

Potential ADA Violations—two prior year and one new potential violation were identified. 

These occurrences are pending results from research and investigation for a determination as to 

whether or not a violation occurred. This table provides a description and status. 

Exhibit 23: Prior Year and Newly Identified Potential ADA Violations 

Agency Description of Violation Status 

CCC FY 2017: The prior year accounting treatment 

for obligations related to the Conservation 

Reserve Program—Annual Rental contracts 

were determined to be in error with an ADA 

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 the Government 

Accountability Office (GAO) for 

additional investigation and 

determination. 
USDA | 2020 Agency Financial Report 69

Agency Description of Violation Status 

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 contract was signed. The 

ADA violation amount was $2,200,000. 

OGC determined that the error 

was not an ADA violation; 

however, the incident has been 

referred to GAO for additional 

investigation and determination. 

The Office of the 

Chief Information 

Officer (OCIO) 

FY 2020 (NEW): OCIO potentially used more 

than $22.5 million for consulting services that 

had been mandated for the acquisition of 

capital investments. 

Pending an OGC Determination 
70 Section I | Management’s Discussion and Analysis 

▪ 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 2019 Compliance with IPERA Requirements (50024-0015-11, dated May 2020) 

found two sections of non-compliance. 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: Payment Integrity Information Act of 2019 

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 

Farm Service Agency (FSA) Livestock 

Forage Disaster Program (LFP) 09/30/2021 

FSA Noninsured Crop Disaster 

Program (NAP) 07/01/2021 

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 Agency Financial Report (AFR) 

Food and Nutrition Service (FNS) 

School Breakfast Program 09/30/2021 

FSA LFP 09/30/2021 

FSA NAP 07/01/2021 

FSA Agriculture Risk Coverage 

(ARC)/Price Loss Coverage (PLC) 08/17/2020 

FSA Harvey – Emergency 

Conservation Program (ECP) 05/31/2022 
USDA | 2020 Agency Financial Report 71

▪ 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. 

Failure to resolve prior-year recommendations identified by the U.S. Department of 

Agriculture’s (USDA or the Department) 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 the Federal Information Security 

Modernization Act (FISMA) is 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 Federal Financial Management Improvement Act (FFMIA) 

Compliance 

Initiative Section of Non-Compliance Agency Target Completion Date 

Information 

Technology 

Federal Financial Management 

System (FFMS) requirements and 

information security policies, 

procedures, and/or practices. 

Multiple 12/31/2020 

Financial 

Management 

Federal accounting standards and U.S. 

Standard General Ledger (USSGL) at 

the transaction level. 

Natural Resources 

Conservation 

Service 

11/30/2021 

Federal accounting standards and 

USSGL at the transaction level. 

Commodity Credit 

Corporation 

9/30/2021 
72 Section I | Management’s Discussion and Analysis 

Fiscal Year 2020 Results 

During fiscal year (FY) 2020, the 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 in addressing the material weaknesses 

identified in the FY 2019 Agency Financial Report (AFR). USDA is not compliant with Federal 

accounting standards and the USSGL at the transaction level due to deficiencies identified for the 

Commodity Credit Corporation (CCC) and the National Resources Conservation Service 

(NRCS). Additionally, as reported in the FFMIA section of this report, USDA continues to have 

weaknesses in the information technology (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) 

CCC’s non-compliance 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 

its program obligation activity into the Financial Management Modernization Initiative (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. 

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

with FFMIA. 
USDA | 2020 Agency Financial Report 73

▪ Financial Management Systems Strategy 

The Financial Management Services (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 

USDA mission. Specifically, FMS provides cloud-based, commercial off-the-shelf (COTS) 

enterprise resource planning (ERP) software that equips USDA staff offices and agencies with 

the functionality needed to distribute, obligate, expend, and report on the funds entrusted to 

them by Congress. 

FMS operates as an internal Shared Services Provider (SSP) to USDA staff offices and agencies.

FMS offers cost-effective services and support through the consolidation of functions, standard 

processing, and repeatable processes. 

The OCFO is leveraging current financial systems successes to implement future programs that 

deliver efficient, cost-effective, mission-focused, collaboratively developed, and strategically 

aligned programs and tools. OCFO’s systems’ objectives for the future: 

• Build Financial System agility and visibility through integrated ERP systems capability 

and deploying emerging technology. 

• Increase the ability of OCFO systems to share, reuse, and integrate business capabilities, 

technology, and data across the agency and with external partners and stakeholders. 

• Increase application and system efficiencies through engagement in Department-wide 

application rationalization efforts. 

The financial systems’ future will involve implementing emerging ERP technology platforms, 

improving connectivity, reducing the marginal costs of accessing information, and providing 

new ways to aggregate and analyze information. 

Financial Management Lines of Business 

FMS’s mission as an internal SSP is to provide reliable, cost-effective, employee-centric systems 

and services to USDA organizations, thus enabling customers to focus on serving this great 

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

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

this vision are (1) communication, (2) governance, and (3) operations. 
74 Section I | Management’s Discussion and Analysis 

FMS’s 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; 

• Receivable management; 

• Property accounting; and 

• Grants management. 

FMS’s primary objectives are to provide the following: 

• An enterprise financial management service that is continuously enhanced to provide 

faster, less expensive, and less risky services than ever to customers; 

• 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 shared services 

retained in the future state portfolio; 

• More powerful and flexible financial management and reporting; 

• Administrative payments, collections, and certifications; and 

• The best possible customer-focused service and support. 
USDA | 2020 Agency Financial Report 75

Successes During Fiscal Year (FY) 2020 

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 with 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: to 

“[create] a workforce for the 21st century that is (1) highly-skilled, (2) results-oriented, 

(3) customer-focused, and (4) nimble.” 

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

to promote the procedures required to facilitate critical 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 2020, the team accomplished the following: 

• Developed and deployed 21 Robotics financial automations into production, saving 

24,960 annual hours; 

• 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; 

• Conducted the smooth transition of the USDA/RPA/SMO governing body for RPA to the 

Office of the Chief Information Officer (OCIO) Q2 of FY 2020. OCFO remains as a 

voting member of the OCIO/RPA/SMO and continues to work closely with the Digital 

Infrastructure Service Center (DISC) team sharing lessons learned to enhance RPA 

services within USDA; and 

• Established an OCFO Robotics team consisting of graduates of the RPA reskilling 

program and project managers to analyze, design, and develop financial RPAs with a 

focus on enterprise applications. 
76 Section I | Management’s Discussion and Analysis 

Farm Service Agency/Commodity Credit Corporation Financial Improvement 

Program 

The Farm Service Agency’s (FSA) financial accounting, including that of the Commodity Credit 

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

Financial Management Modernization Initiative (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 be required to align their feeder systems to produce auditable financial data to integrate with 

FMMI. In FY 2020, the Financial Improvement Program (FFIP) project: 

• Successfully established end-to-end outbound connectivity between FMMI and WebBased Supply Chain Management (WBSCM) for Budget Allotment; 

• Successfully established end-to-end outbound connectivity between FMMI and WBSCM 

for Funds Commitment; 

• 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 resolved a long-standing 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 

The ezFedGrants (eFG) System is an online system used for managing a grant’s entire life cycle. 

Members of grant-seeking 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, Grants Management Service (GMS) acts as the eFG system 

owner whose mission 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, 
USDA | 2020 Agency Financial Report 77

homeownership opportunities to low-and moderate-income rural Americans, organic agriculture, 

and numerous other grant and agreement related programs to serve the American public better. 

In FY 2020, GMS’s initiatives: 

• Implemented an upgrade to the grant recipient External Portal (Pega), which includes 

enhancements, an improved user experience (UX), user interface (UI), and system 

architecture; 

• Completed the National Institute of Food and Agriculture (NIFA) Release 2.0 Upgrade 

project and implemented backlogged enhancements within the eFG solution that brought 

NIFA closer to implementing the functionality required to process other forms of grants 

(for example, cooperative and competitive); 

• Provided system training to over 2,459 internal and external users on eFG. The eFG 

system has 5,274 users (3,960 external users and 1,314 internal users) to date and in 

FY 2020; 

• Continued to maintain 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 462 unique visitors in FY 2020; 

• Deployed 2,932 new FY 2020 agreements. Over the life of the eFG system, 15,076 

agreements have been deployed, and 8,094 are active or in draft status; 

• Resolved 5,079 Tier 0 through Tier 1 tickets through the OCFO Grants Helpdesk as a 

first responder to customer inquiries; and 

• Resolved 93 eFG system incidents (42 system defects and 51 enhancements) in FY 2020 

via the eFG Post- Production Support Team. Additionally, 1,263 priority one-time system 

fixes were also resolved in FY 2020. 

Agriculture Conference Management System 

The current Conference Transparency and Accountability Tool (CTAT), allows USDA to 

comply with Conference Reporting requirements outlined in the 2018 Farm Bill, the OMB 

Memorandum 17-08, and the Consolidated Appropriations Act, 2020 (Public Law [PL] 116-93). 

As the CTAT was custom built, it is not easily maintainable, configurable, and scalable. The tool 

has been maintained and supported on a limited budget and staffing plan. Users seek a more 

modern tool with increased user capabilities, including the ability to access the application on a 

mobile device and more transparency via a robust, drill-in dashboard. This project seeks to 

streamline the process and reduce the burden of planning conferences. The new tool will be 

easily configurable to meet mandates and other urgent enhancements promptly. 

The proposed scope of work for a new project known as Agriculture Conference Management 

System (AgCMS) is to provide a prototype to meet USDA specifications and comply with 
78 Section I | Management’s Discussion and Analysis 

conference requirements in the Farm Bill and OMB Memorandum 17-08. The scope also 

includes migrating all data from CTAT and ensuring the new system (built on the USDA 

Salesforce platform) can provide mobile capability, eAuth access, and up to 20 additional reports 

in addition to the same functionality as CTAT. 

In FY 2020, the AgCMS project: 

• Analyzed alternatives and determined Salesforce to be the most viable solution platform; 

• Established a service agreement with OCIO DISC for the AgCMS Salesforce release and 

configuration management service delivery; 

• Awarded the system implementation contract to Deloitte Touche Tohmatsu Limited; 

• Held discovery and master sprint planning sessions with the project stakeholders; and 

• Began initial backlog grooming (requirements) and initial iteration/sprint of 

design/development/testing. 

In FY 2021, the AgCMS project: 

• Will perform multiple iterations/sprints of design/development/testing; 

• Will migrate the existing conference data to the new system and set up user accounts; and 

• Will deploy the new system and train its user community. 

USDA Budget Modernization: FMMI Budget Enhancements 

The purpose of this project is to support the USDA Budget Modernization effort. OCFO’s role in 

this effort is to (1) ensure Budget Object Classification (BOC) code compliance with OMB 

Circular A-11; and (2) conduct a feasibility study for implementing budget enhancements to 

FMMI. 

The BOC initiative ensured that the use of BOC’s in FMMI complied with Section 83 of OMB 

Circular A-11. This effort includes: 

• Continuing analysis of all BOC Series; 

• Updating the BOC Manual; 

• Initiating incident tickets to ensure corrective actions were taken; 

• Performing analysis on other corrective actions to ensure data quality; and 

• Adding BOC standards to policy and process flows to maintain compliance with OMB 

Circular A-11. 

The BOC initiative will extend into FY 2021. 
USDA | 2020 Agency Financial Report 79

The feasibility study: 

• Identified and recommended options for enhancing the agency’s core financial system, 

FMMI, to record allotments at Congressional mandated levels (for example, Program, 

Project, or Activity); 

• Addressed opportunities for USDA to better align its end-to-end budget processes with 

Congressional and agency policy objectives that govern financial management systems. 

Enterprise Architecture Program 

The OCFO Enterprise Architecture (EA) Program is being implemented to deliver efficient, 

cost-effective, mission-focused, collaboratively developed, and strategically aligned programs 

and services to its many stakeholders and the Nation. This ground-up effort has achieved many 

focused objectives during FY 2020, including: 

• Implemented and rapidly matured the EA program during Q3 and Q4 to meet numerous 

Federal Legal Authorities and Regulatory Drivers, including many from the original 

Clinger-Cohen Act (CCA), to facilitate the responsible acquisition and management of IT 

throughout the Federal government. 

• Enhanced the oversight and accountability for the OCFO IT infrastructure and the 

efficient development, implementation, and maintenance of a secure and integrated IT 

infrastructure among the series of reforms the CCA codified, and which the EA Program 

helps to satisfy. Notable, among the many other legal authorities the OCFO EA Program 

satisfies, are the President’s Management Agenda, Capital Planning and Investment 

Control (CPIC), The E-Government Act of 2002, OMB Circular A-11, OMB Circular 

A-130, OMB policy memorandum M-07-11, H.R.1232—Federal Information Technology 

Acquisition Reform Act, and the Federal Enterprise Architecture Framework. 

• Provide senior leadership with increased transparency and visibility regarding IT 

Management and Spend-Management as well as a line of sight from strategic goals to 

business processes and continuing into the technology architecture (for example, data, 

software, hardware, and technology infrastructure). 

Capital Planning and Investment Control Program 

CPIC is a systematic approach to selecting, managing, and evaluating IT investments. CPIC is 

mandated by the Clinger-Cohen Act of 1996, which requires Federal agencies to focus on the 

results produced by IT investments. The OCFO CPIC Program identifies the processes and 

activities necessary to ensure that OCFO’s IT investments are well-planned, cost-effective, and 

support the missions and business goals of the Agency and USDA. 

The CPIC team continually monitors OCFO’s IT portfolio, eliminating weaknesses found and 

maintaining the health of the portfolio. Accomplished in FY 2020 were the following: 
80 Section I | Management’s Discussion and Analysis 

• Improved the health of 67 percent of OCFO’s Major & Non-Major Investments, 

achieving Chief Information Officer (CIO) rating scores of 4-Green or higher; 

• Implemented Investment Support Plans (ISPs) to monitor required artifacts for reporting 

purposes and to eliminate weaknesses found; 

• Alongside EA, provided guidance to the OCFO Project Management Office (PMO) with 

development of its Product Development Life Cycle (PDLC); and 

• Integrated the National Finance Center (NFC) into OCFO’s operational framework. 

Building on its successes in FY 2020, the CPIC team will achieve the following in FY 2021: 

• Streamline the OCFO IT Portfolio by removing investments handled by other Agencies; 

• Have 100 percent of OCFO’s Major & Non-Major Investments achieve CIO rating scores 

of 4-Green or higher; and 

• Incorporate the AgCMS into OCFO’s IT Portfolio as a Non-Major Investment. 

Other Initiatives 

Systems, Applications, and Products (SAP) G-Invoicing: OCFO is working to implement 

USDA Agencies into Treasury’s G-Invoicing initiative by June 30, 2022. 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 shared data repository for 

brokered transactions in accordance with 31 U.S.C. 3512(b) and 3515. 

SAP S/4 High-Performance Analytic Appliance (HANA): With the maturation of the FMMI 

solution, OCFO looks to SAP’s S/4 HANA as the evolution of the USDA financial management 

solution. The current FMMI solution utilizes siloed data storage that is near real-time. The 

current FMMI construct is outdated and will no longer be supported in the coming years. 

SAP S/4HANA is an ERP financial software that runs on SAP HANA’s in-memory platform, 

which allows users to run real-time reports on operational and financial data. Like other products 

on the HANA platform, the data is stored and processed so that in-memory users can analyze 

data quickly with few constraints. For example, users can run a soft close at any time of the day, 

month, or quarter with up-to-the-minute accuracy. As part of the ERP package, financial data 

and operational data are pulled from one centralized location, which allows decision makers to 

examine problems from an organizational view rather than a limited department view. 

FMMI Phase 4 Implementation: Rural Development (RD) is the last remaining USDA agency 

financially operating outside of FMMI. RD is not integrated with the rest of the USDA in the 

FMMI system, creating reconciliation and other issues, which include additional costs to 

maintain a separate set of systems. OCFO is developing a plan to migrate RD’s accounting into 

the standard FMMI system. The unique challenges presented by RD centers on its massive loan 
USDA | 2020 Agency Financial Report 81

servicing portfolio. With the work being conducted in support of FFIP, OCFO is striving to build 

reusable enterprise interfaces to implement RD into FMMI. 

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

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

will remediate their feeder systems to ensure auditable financial data integrates with FMMI. 

System for Award Management (SAM) Unique Entity Identifier (UEI): The U.S. Federal 

government has used services from the Dun and Bradstreet Corporation to both identify (using 

the DUNS® number) and validate/verify Federal contractors since 1978. In 1998, the Federal 

Acquisition Regulation (FAR) required entities to obtain a DUNS® number. In 2008, this 

requirement expanded to Federal financial assistance, affecting over 630,000 public and private 

entities seeking Federal contracts and/or grants. 

At the direction of the General Services Administration (GSA), the change the government is 

making creates predictability for the cost of entity validation services. By separating the 

government requirement for a UEI from the government requirement to validate that the entity is 

unique, competition is introduced into entity validation services. GSA then competed and 

awarded a new contract for entity validation services, which is not connected to the identifier 

itself. GSA chose to have the new, non-proprietary identifier both requested in and generated by 

SAM.gov to reduce the burden of change; the government and entities will transition from using 

the DUNS® number only once, even if in the future a different entity validation service provider 

is selected. All USDA systems will be impacted by this change to include FMMI. As a part of 

this revision, it is imperative that FMMI is at the leading edge of this transition.
Page Intentionally Blank 
USDA | 2020 Agency Financial Report 83

Section II 

Financial Information 

▪ Message from the Office of the Chief 

Financial Officer 

We are pleased to present the fiscal year 2020 United States Department of 

Agriculture (USDA) Agency Financial Report. 

The year 2020 has been professionally challenging for all USDA personnel. 

Despite the conditions we all faced, whether it was the Market Facilitation 

Payments Program that were rapidly deployed to help farmers in recent 

years, or the additional COVID-19-related programs, the USDA continues 

to demonstrate how rapidly we can respond to a major change to 

implement new programs. Not only did the entire USDA respond expeditiously to implement 

COVID-19-related programs, we did so while simultaneously shifting to an interim workplace 

arrangement to help protect the safety of our employees and contractors. In addition to fulfilling 

historical requirements and newly mandated programs, the organization continued to work on 

incremental change management initiatives. 

We are very proud of our employees. They all rose to the challenges of 2020 and demonstrated 

commitment to continuous improvement. These challenges include not only evaluating what we 

do but how we do it, with the goal of implementing logical, sustainable improvements that add 

value to the federal government and American taxpayers. 

For the fiscal year 2020, we would call the attention of the readers to the following: 

• G. Scott Soles is the Presidential Appointee Nominee for the USDA Chief Financial 

Officer (CFO) position. If confirmed by a Senate vote, Mr. Soles would hold the title of 

CFO. Meanwhile, he is working in the lead role of the Office of the Chief Financial 
84 Section II | Financial Information 

Officer as the Principal Deputy Chief Financial Officer, and therefore is the presenter of 

this message. 

• In the Assurance Statement of this report, the USDA reports two material weaknesses in 

internal control related to (1) information technology and (2) financial management. 

Please refer to the Federal Managers’ Financial Integrity Act and the Federal Financial 

Management Improvement Act, as well as the Summary of Financial Statement Audit 

and Management Assurances sections of this report for more information. 

• The Payment Integrity Information Act of 2019 (PIIA) takes effect this year. PIIA 

reorganized and revised several existing improper payments statutes, which establish 

requirements for agencies to cut down on improper payments. This act further provided 

for the Office of Management and Budget to establish pilot programs to test compliance 

and established an interagency working group on payment integrity. The users of this 

Agency Financial Report are encouraged to carefully read the “Payment Integrity” 

section of this report. As part of this reading, we highly encourage the readers to think 

critically about the testing methods used to estimate improper payments, the description 

of payments considered to be “improper,” and the vast management challenge of 

administering approximately 300 programs, products, and services designed to benefit a 

geographically widespread and diverse population, based substantially on individually 

self-certified applications. Federal agencies have been subject to the requirements of 

payment integrity-related regulations for many years. Notwithstanding the existence of 

any regulations, the USDA takes improper payment mitigation seriously. Consequently, 

we are actively pursuing improved risk identification processes and seeking continuous 

improvements in processes and controls designed to better mitigate improper payments 

in a cost-effective manner. 

Sincerely, 

G. Scott Soles 

Principal Deputy Chief Financial Officer 

December 8, 2020 
USDA | 2020 Agency Financial Report 85

Independent Auditors Report

OFFICE OF INSPECTOR GENERAL

United States Department of Agriculture

DATE: December 8, 2020 

AUDIT

NUMBER: 50401-0019-11 

TO: G. Scott Soles 

Principal Deputy Chief Financial Officer

Office of the Chief Financial Officer

Lynn Moaney 

Deputy Chief Financial Officer

ATTN: Annie Walker

Director

Internal Controls Division

FROM: Gil H. Harden

Assistant Inspector General for Audit 

SUBJECT: U.S. Department of Agriculture’s Consolidated Financial Statements for Fiscal 

Years 2020 and 2019 

This report presents the results of our audits of the U.S. Department of Agriculture’s (USDA) 

consolidated financial statements for the fiscal years ending September 30, 2020, and 2019. This

report contains an unmodified opinion on the financial statements, as well as the results of our 

assessments of USDA’s internal control over financial reporting and compliance with laws and 

regulations. Your response is included in its entirety in Exhibit A.

We appreciate the courtesies and cooperation extended to us by members of your staff during our 

audit fieldwork and subsequent discussions. This report contains publicly available information 

and will be posted in its entirety to our website (http://www.usda.gov/oig) in the near future.
86	 Section	II	|	Financial	Information

AUDIT REPORT 50401-0019-11

Independent Auditor’s 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 2020 and 2019. 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, 2020. Exhibit A presents USDA’s response in its entirety. 

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, 2020 and 2019, 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”). 

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. 

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 
USDA | 2020 Agency Financial Report 87

AUDIT REPORT 50401-0019-11

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, 2020 and 2019, 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), and Required Supplementary Information 

(RSI)1

 be presented to supplement the consolidated financial statements. Although the RSI is 

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 RSI in accordance with auditing standards generally accepted in the U.S., 

which consisted of inquiries of management 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 

1 The RSI consists of Deferred Maintenance and Repairs and the Combined Statements of Budgetary Resources (by 

component), which are included with the financial statements.
88	 Section	II	|	Financial	Information

AUDIT REPORT 50401-0019-11

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 RSI. 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 as of and for the 

year ended September 30, 2020, 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.
USDA | 2020 Agency Financial Report 89

AUDIT REPORT 50401-0019-11

Report on Compliance with Laws, Regulations, Contracts, and Grant Agreements

As part of obtaining reasonable assurance about whether USDA’s consolidated financial 

statements as of and for the year ended September 30, 2020, 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 2020, the Department reported 11 confirmed and 3 potential ADA violations 

in its agency financial report. 

Payment Integrity Information Act of 2019 (PIIA) 

During fiscal year 2020, we identified instances of noncompliance with the requirements of 

PIIA2

, 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.

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 Payment Integrity Information Act of 2019, Pub. L. No. 116-117, 134 Stat. 113 
90	 Section	II	|	Financial	Information

AUDIT REPORT 50401-0019-11

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, 2020. 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. 

December 4, 2020 
USDA | 2020 Agency Financial Report 91

AUDIT REPORT 50401-0019-11

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 addition, improvements are needed in internal controls over 

estimating losses on insurance claims related to Federal Crop Insurance Corporation/Risk 

Management Agency (FCIC/RMA). 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 

accrued liabilities. 

• NRCS disclosed material weaknesses related to controls over obligations and undelivered 

orders; controls over expenses; and entity level controls. 

• FCIC/RMA disclosed a material weakness related to the insurance loss estimation 

process. 

In its FMFIA Report on Management Control for fiscal year 2020, the Department reported the 

following corrective action plans to address the outstanding weaknesses from fiscal year 2019 

that remain material weaknesses for fiscal year 2020: 

• CCC, in fiscal year 2021, plans to continue to implement effective undelivered orders 

monitoring controls at the program level throughout the organization. 

• NRCS, in fiscal year 2021, plans to continue ongoing process improvements to maintain, 

monitor, and certify ULOs to ensure the accuracy of reported balances and maintenance 

of sufficient documentation. In addition, NRCS will continue to provide guidance 

and/or training to employees over the recording of expense accruals. 

• RMA, in fiscal year 2021, plans to perform a risk assessment to identify critical data 

inputs within the indemnities estimate model and design procedures to evaluate the 

completeness and accuracy of critical data inputs. Additionally, RMA will review, 

update, and document policies, procedures, and controls for any model program or data 

preparation query changes and validate the appropriateness of the changes.

Since USDA has actions planned and in progress, we are making no further recommendations 

herein.
92	 Section	II	|	Financial	Information

AUDIT REPORT 50401-0019-11

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 2020.3 USDA continues to take positive steps to improve its IT 

security posture, but many longstanding weaknesses remain. In fiscal years 2009-2019, there 

were 14 outstanding recommendations that remain unresolved – 11 recommendations were 

completed, and 3 recommendations are scheduled for closure after the date of our report. OIG 

also issued nine new recommendations based on security weaknesses identified in fiscal year

2020. 

OMB establishes standards for an effective level of security and considers “Managed and 

Measurable” as a sufficient level of security. However, OIG found the Department’s maturity 

level to be at the “Consistently Implemented” 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 5 metrics. Seven metrics’ 

maturity level was downgraded because of a new requirement related to supply chain risk 

management, and the most recent cyber incidents. The maturity level did not change for 55 

metrics. The Department and its agencies must develop and implement an effective plan to 

mitigate security weaknesses identified in the prior fiscal year recommendations. The Office of 

the Chief Information Officer (OCIO) generally agreed with the findings in the report. 

OIG issued an Independent Service Auditor’s Report4 on the results of the examination of the 

description of the National Finance Center’s (NFC) payroll and personnel system for processing 

user entities’ payroll and human resource transactions throughout the period October 1, 2019 to 

June 30, 2020 based on the criteria identified in NFC’s assertion and the OCIO’s assertion. The 

report also presents the results of the examination of the suitability of the design and operating 

effectiveness of NFC’s and OCIO’s controls included in the description to achieve the related 

control objectives stated in the description. The report contains an adverse opinion based on 

controls that were not suitably designed and operating effectively to provide reasonable 

assurance that the control objectives would be achieved. 

OIG also conducted an audit of Security Over Select USDA Agencies’ Networks and Systems5

. 

OIG reviewed relevant laws, regulations, and industry best practices in order to gain sufficient 

knowledge to evaluate USDA’s IT security posture. OIG found that the Department did not fully 

implement Federally-mandated controls. 

3 Audit Report 50503-0003-12, U.S. Department of Agriculture, Office of the Chief Information Officer, Fiscal Year

2020 Federal Information Security Modernization Act, issued October 2020. 4 Audit Report 11403-0003-12, Independent Service Auditor’s Report on the National Finance Center’s Description 

of its Payroll and Personnel System and the Suitability of the Design and Operating Effectiveness of its Controls for 

October 1, 2019 to June 30, 2020, issued November 2020. 5 Audit Report 50501-0022-12, Security Over Select USDA Agencies’ Networks and Systems Fiscal Year 2019, 

issued September 2020.
USDA | 2020 Agency Financial Report 93

AUDIT REPORT 50401-0019-11

Section 2: Significant Deficiency in Internal Control Over Financial 

Reporting 

Finding 3: Controls Over Unliquidated Obligations Can Be Strengthened

Since fiscal year 2012, our reports have identified deficiencies with controls over inactive 

ULOs.6 This year, our review disclosed that improvements are still needed.

We reviewed the completeness of obligation certifications submitted to the Department for the 

first through third quarters of fiscal year 2020; and for those certifications, further reviewed a 

nonstatistical selection of 145 inactive obligation balances for validity. We found that 64 ULOs 

were invalid and should have been deobligated prior to the sample date because no future 

expenditures were expected or because there were adjustments that lacked support and should 

have been de-obligated (i.e., reversed). In addition, we found that 11 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 did not bill, or submit final payments, to other 

USDA agencies.

The U.S. Department of the Treasury’s annual closing guidance (Treasury Bulletin No. 2020-19, 

2020 Year-end Closing), requires an annual review of ULOs. This ensures that agencies properly 

record transactions meeting the criteria of valid obligations set forth in 31 U.S.C. 1501. 

Departmental Regulation 2230-001, Reviews of Unliquidated Obligations, further requires 

quarterly reviews and certification as to the validity of obligated 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. Overall, this increases the risk of 

misstating obligations as of yearend.

Management generally agreed with our findings and will continue to implement controls over 

ULOs. Previously OIG recommended and the Department agreed to revise Departmental 

Regulation 2230-001, Reviews of Unliquidated Obligations, to assist agencies and staff offices in 

properly identifying and categorizing the current status of ULOs. The regulation was updated in 

October 2020; therefore, we are not making further recommendations. 

6 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.
94	 Section	II	|	Financial	Information

AUDIT REPORT 50401-0019-11

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 Chief Financial Officer

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 2020, 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 with 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 accrued liabilities. 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 their program obligation activity into Financial Management 

Modernization Initiative in a phased approach. 

2. 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. FMMI does not allow for updates to the period of 

performance related to these types of transactions. 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. 
USDA | 2020 Agency Financial Report 95

Agency Response to Auditors Report

United States

Department of

Agriculture

Office of the Chief

Financial Officer

1400 Independence

Avenue, SW

Washington, DC

20250

December 8, 2020

TO: Phyllis K. Fong 

Inspector General

Office of Inspector General

FROM: G. Scott Soles /S/

Principal Deputy Chief Financial Officer

SUBJECT: U.S. Department of Agriculture’s Financial Statements for Fiscal Years

2020 and 2019

The Department is pleased to respond to your audit report on the financial statements 

for fiscal years 2020 and 2019.

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
96 Section II | Financial Information 

▪ Financial Statements 

Consolidated Balance Sheets 

As of September 30, 2020 and 2019 ($ in millions) 

Item 2020 2019

Assets (Note 2): 

Intragovernmental: 

Fund Balance with Treasury (Note 3) $ 195,418 $ 153,468 

Investments (Note 5) 245 233 

Accounts Receivable (Note 6) 61 79 

Other (Note 11) 27 12 

Total Intragovernmental 195,751 153,792 

Cash and Other Monetary Assets (Note 4) 381 550 

Investments (Note 5) 3 3 

Accounts Receivable, Net (Note 6) 3,812 3,835 

Direct Loan and Loan Guarantees, Net (Note 7) 110,235 104,255 

Inventory and Related Property, Net (Note 8) 18 23 

General Property, Plant, and Equipment, Net (Note 9) 2,399 2,249 

Other (Note 11) 1,295 388 

Total Assets 313,894 265,095 

Stewardship PP&E (Note 10) 

Liabilities (Note 12): 

Intragovernmental 

Accounts Payable 28 1 

Debt (Note 13) 145,738 139,678 

Other (Note 15) 10,196 9,901 

Total Intragovernmental 155,962 149,580 

Accounts Payable 3,738 2,234 

Loan Guarantee Liability (Note 7) 1,329 434 

Actuarial Federal Employees’ Compensation Act (FECA) Liability 679 782 

Environmental and Disposal Liabilities (Note 14) 239 218 

Benefits Due and Payable 13,330 5,147 

Other (Notes 15 & 16) 21,577 20,586 

Total Liabilities 196,854 178,981 

Commitments and Contingencies (Note 17) 

Net Position: 

Unexpended Appropriations - Funds From Dedicated Collections (Combined) (Note 18) 191 180 

Unexpended Appropriations - All Other Funds (Combined) 82,751 71,271 

Cumulative Results of Operations - Funds From Dedicated Collections (Combined) (Note 18) 3,283 3,331 

Cumulative Results of Operations - All Other Funds (Combined) 30,815 11,332 

Total Net Position - Funds From Dedicated Collections (Combined Totals) (Note 18) 3,474 3,511 

Total Net Position - All Other Funds (Combined Totals) 113,566 82,603 

Total Net Position 117,040 86,114 

Total Liabilities and Net Position $ 313,894 $ 265,095 

The accompanying notes are an integral part of these statements. 
USDA | 2020 Agency Financial Report 97

Consolidated Statements of Net Cost 

For the Year Ended September 30, 2020, and 2019 ($ in millions)

Item 2020 2019

Farm Production and Conservation: 

Gross Costs $ 54,824 $ 39,653 

Less: Earned Revenue 5,159 3,034 

Net Costs 49,665 36,619 

Food, Nutrition, and Consumer Services: 

Gross Costs 122,391 92,657 

Less: Earned Revenue 56 47

Net Costs 122,335 92,610 

Food Safety: 

Gross Costs 1,321 1,313 

Less: Earned Revenue 260 248

Net Costs 1,061 1,065 

Marketing and Regulatory Programs: 

Gross Costs 5,627 3,052 

Less: Earned Revenue 1,016 1,294 

Net Costs 4,611 1,758 

Natural Resources and Environment: 

Gross Costs 7,033 6,180 

Less: Earned Revenue 888 842

Net Costs 6,145 5,338 

Rural Development: 

Gross Costs 6,842 6,538 

Less: Earned Revenue 3,591 3,672 

Net Costs 3,251 2,866 

Research, Education, and Economics: 

Gross Costs 3,059 3,069 

Less: Earned Revenue 103 138

Net Costs 2,956 2,931 

Trade and Foreign Agricultural Affairs: 

Gross Costs 475 416

Less: Earned Revenue 72 58

Net Costs 403 358

Staff Offices: 

Gross Costs 1,493 1,343 

Less: Earned Revenue 241 241

Net Costs 1,252 1,102 

Total Gross Costs 203,065 154,221 

Less: Total Earned Revenue 11,386 9,574 

Net Cost of Operations (Note 19) $ 191,679 $ 144,647 

The accompanying notes are an integral part of these statements. 
98 Section II | Financial Information 

Consolidated Statement of Changes in Net Position 

For the Year Ended September 30, 2020 ($ in millions) 

Item Funds From 

Dedicated Collections 

(Combined Totals) 

(Note 18) 

All Other Funds 

(Combined Totals) Eliminations Consolidated Total 

Unexpended Appropriations: 

Beginning Balances $ 180 $ 71,271 $ - $ 71,451 

Budgetary Financing Sources: 

Appropriations Received 11 212,782 - 212,793 

Appropriations Transferred In (Out) - (50) - (50) 

Other Adjustments - (8,931) - (8,931) 

Appropriations Used - (192,321) - (192,321) 

Total Budgetary Financing Sources 11 11,480 - 11,491 

Total Unexpended Appropriations 191 82,751 - 82,942 

Cumulative Results of Operations: 

Beginning Balances 3,331 11,332 - 14,663 

Budgetary Financing Sources: 

Other Adjustments - (340) - (340) 

Appropriations Used - 192,321 - 192,321 

Non-exchange Revenue 134 22,279 - 22,413 

Donations and Forfeitures of Cash and 

Equivalents 

 1 1 - 2 

Transfers In (Out) without Reimbursement 748 (2,326) 1,011 (567) 

Other Financing Sources (Non-Exchange): 

Transfers In (Out) without Reimbursement - 1,014 (1,011) 3 

Imputed Financing 68 2,916 (2,129) 855 

Other (182) (3,391) - (3,573) 

Total Financing Sources 769 212,474 (2,129) 211,114 

Net Cost of Operations (817) (192,991) 2,129 (191,679) 

Net Change (48) 19,483 - 19,435 

Cumulative Results of Operations 3,283 30,815 - 34,098 

Net Position $ 3,474 $ 113,566 $ - $ 117,040 

The accompanying notes are an integral part of these statements. 
USDA | 2020 Agency Financial Report 99

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 

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. 
100 Section II | Financial Information 

Combined Statements of Budgetary Resources 

For the Years Ended September 30, 2020 and 2019 ($ in millions) 

Item

2020 2019

Budgetary 

Non-Budgetary 

Credit Reform 

Financing 

Accounts Budgetary 

Non-Budgetary 

Credit Reform 

Financing 

Accounts 

Budgetary Resources: 

Unobligated Balance From Prior Year Budget Authority, Net $ 69,378 $ 5,958 $ 58,810 $ 4,703 

Appropriations (Discretionary and Mandatory) 211,126 1 150,957 84 

Borrowing Authority (Discretionary and Mandatory) 35,525 15,654 27,127 14,039 

Spending Authority From Offsetting Collections (Discretionary 

and Mandatory) 

 8,293 12,249 5,582 10,612 

Total Budgetary Resources 324,322 33,862 242,476 29,438 

Status of Budgetary Resources: 

New Obligations and Upward Adjustments (Total) 239,782 21,913 170,897 18,548 

Unobligated Balance, End of Year: 

Apportioned, Unexpired Accounts 47,873 11,257 35,683 10,088 

Exempt From Apportionment, Unexpired Accounts 7 - 1 - 

Unapportioned, Unexpired Accounts 4,437 692 9,042 802 

Unexpired Unobligated Balance, End of Year 52,317 11,949 44,726 10,890 

Expired Unobligated Balance, End of Year 32,223 - 26,853 - 

Unobligated Balance, End of Year (Total) 84,540 11,949 71,579 10,890 

Total Budgetary Resources 324,322 33,862 242,476 29,438 

Outlays, Net: 

Outlays, Net (Discretionary and Mandatory) 187,111 153,234 

Distributed Offsetting Receipts (-) (2,863) (3,082) 

Agency Outlays, Net (Discretionary and Mandatory) $ 184,248 $ 150,152 

Disbursements, Net (Total) (Mandatory) $ 2,547 $ 1,730 
USDA | 2020 Agency Financial Report 101 

▪ Notes to the Financial Statements 

As of September 30, 2020, and 2019 ($ in millions)

NOTE 1: Summary of 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.
102 Section II | Financial Information 

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 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. 
USDA | 2020 Agency Financial Report 103 

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. 

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 job-related 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 
104 Section II | Financial Information 

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. 

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. 
USDA | 2020 Agency Financial Report 105 

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 

Asbestos-Related Cleanup Costs, as amended, requires an estimate of both friable and nonfriable 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. 

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. 
106 Section II | Financial Information 

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. The insurance policies are structured as a contract between 

Approved Insurance Providers (AIPs) 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 (A&O) expense subsidy 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. 

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 

The Statement of Budgetary Resources and related note was reclassified to report disbursements 

for Non-Budgetary Credit Reform Financing Accounts separately, Investments was reclassified 

to report investment types for other securities, Direct Loan and Loan Guarantees, Net was 

reclassified for Schedule for Reconciling Subsidy Cost Allowance Balances (Post-1991 Direct 

Loans), Schedule for Reconciling Loan Guarantee Liability Balances (Post-1991 Loan 

Guarantees), and order of tables presented, Funds from Dedicated Collections was reclassified to 

present additional line items, and Reconciliation of Net Cost to Net Outlays was reclassified to 

remove Non-Budgetary Credit Reform Financing Account activity. The order of components 

presented in the Statement of Net Cost and related note, Funds from Dedicated Collections and 

Combining Statement of Budgetary Resources were reclassified to align with the organization 

chart. Distributed offsetting receipts were reclassified from the non-budgetary column to the 

budgetary column on the Statement of Budgetary Resources and related note to consistently 

apply credit reform guidance. 
USDA | 2020 Agency Financial Report 107 

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 2020 FY 2019 

Intragovernmental: 

Fund Balance with Treasury $ 319 $ 365 

Accounts Receivable 296 246 

Total Intragovernmental 615 611 

Cash and Other Monetary Assets 46 46 

Accounts Receivable 205 196 

Total Non-Entity Assets 866 853 

Total Entity Assets 313,028 264,242 

Total Assets $ 313,894 $265,095 

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 2020 FY 2019 

Status of Fund Balance with Treasury: 

Unobligated Balance: 

Available $ 59,138 $ 45,772 

Unavailable 37,446 36,802 

Obligated Balance Not Yet Disbursed 110,813 77,888 

Borrowing Authority Not Yet Converted to Fund Balance (53,640) (41,658) 

Authority Granted Prior to Credit Reform for Rental Assistance Grants (23) (27) 

Non-Budgetary Fund Balance with Treasury 41,684 34,691 

Total $ 195,418 $ 153,468 

NOTE 4: Cash and Other Monetary Assets 

For FY 2020 and FY 2019, cash and other monetary assets consists of Federal crop insurance 

escrow of $299 million and $390 million, deposits in transit of $36 million and $114 million, and 

single-family housing escrow of $46 million and $46 million, respectively. 

Item FY 2020 FY 2019 

Cash $ 381 $ 550 
108 Section II | Financial Information 

NOTE 5: Investments

FY 2020 

Cost 

Amortization 

Method 

Amortized 

(Premium) 

Discount 

Interest 

Receivable 

Investments, 

Net 

Other 

Adjustments 

Market 

Value 

Disclosure 

Intragovernmental Securities: 

Non-marketable - Market-based $ 243 Straight Line $ 1 $ 1 $ 245 $ - $ 245 

Total $ 243 $ 1 $ 1 $ 245 $ - $ 245 

Other Securities: 

Available for Sale $ 3 $ - $ - $ 3 $ - $ 3 

Total $ 3 $ - $ - $ 3 $ - $ 3 

FY 2019 

Cost 

Amortization 

Method 

Amortized 

(Premium) 

Discount 

Interest 

Receivable 

Investments, 

Net 

Other 

Adjustments 

Market 

Value 

Disclosure 

Intragovernmental Securities: 

Non-marketable - Market-based $ 232 Straight Line $ - $ 1 $ 233 $ - $ 233 

Total $ 232 $ - $ 1 $ 233 $ - $ 233 

Other Securities: 

Available for Sale $ 3 $ - $ - $ 3 $ - $ 3 

Total $ 3 $ - $ - $ 3 $ - $ 3 

The U. S. Treasury does not set aside assets to pay future expenditures associated with funds 

from dedicated collections; instead the cash generated from funds from dedicated Treasury 

securities are issued to the funds from dedicated collections as evidence of the dedicated receipts; 

Treasury securities held by the funds for dedicated collections are an asset of the fund(s) and a 

liability of the U. S. Treasury, and will be eliminated by consolidation in the U. S. Governmentwide financial statements; and when the funds from dedicated collections redeems their Treasury 

securities to make expenditures, the U. S. Treasury will finance those expenditures in the same 

manner that it finances all other expenditures. 
USDA | 2020 Agency Financial Report 109 

NOTE 6: Accounts Receivable, Net 

FY 2020 Accounts Receivable, 

Gross 

Allowance for 

Uncollectible Accounts 

Accounts Receivable, 

Net 

Intragovernmental $ 61 $ - $ 61 

With the Public 3,872 (60) 3,812 

Total $ 3,933 $ (60) $ 3,873 

Criminal Restitution $ 7 $ (7) $ - 

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) $ - 
110 Section II | Financial Information 

NOTE 7: Direct Loan and Loan Guarantees, Net 

Direct loan obligations and loan guarantee commitments made after fiscal year 1991, and the 

resulting direct loans or loan guarantees, are governed by the Federal Credit Reform Act of 1990, 

as amended. 

Direct loan obligations or loan guarantee commitments made pre-1992 are reported at either net 

present-value or net realizable value. 

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. 

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 guarantee and direct credit programs for buyers of U.S. exports, suppliers, and 

sovereign countries in need of food assistance. 
USDA | 2020 Agency Financial Report 111 

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 “microloan” category of FSFLs up to $50,000. 

Exhibit 26: 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 loan servicing options to borrowers whose accounts 

are distressed or delinquent. These options include reamortization, restructuring, loan deferral, 
112 Section II | Financial Information 

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 27: 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 
USDA | 2020 Agency Financial Report 113 

Events and Changes Having a Significant and Measurable Effect on Subsidy Rates, 

Subsidy Expense, and Subsidy Reestimates 

The annual reestimate process updates the budget assumptions with actual portfolio performance, 

interest rates, and updated estimates for future loan performance. The FY 2020 reestimate 

process resulted in a $157 million increase in the post-1991 estimated cost of the direct loan 

portfolio and a $747 million increase in the post-1991 estimated cost of the guaranteed loan 

portfolio, primarily comprised of the following programs. 

Direct Loans 

The Direct Farm category had a total reestimate of $114 million that was comprised of the 

following elements: a net upward 2020 reestimate of $122 million for ACIF farm loans, 

$17 million accrual for the 2019 ACIF technical reestimate, $16 million interest on the 

reestimate for ACIF (including accrual); a net downward of $(37) million for the remainder of 

the Farm category (essentially Farm Storage Facility Loans), and $(4) million interest on the 

reestimate for Farm Storage. 

The total upward reestimate for direct farm was $272 million, and the downward reestimate was 

$(187) million. The upward reestimate was comprised almost totally of direct ownership 

$214 million and direct operating $47 million. The downward reestimate split among direct 

operating $(81) million, direct ownership $(59) million and farm storage facility loans 

$(44) million. 

For the upward reestimate, the largest increase was in the FY 2020 farm ownership cohort. 

The change is not due to changes in actual or projected borrower performance to any significant 

extent. However, the actual 2020 cohort borrower interest rate (2.52%) was 1.11 percentage 

points less than the borrower interest rate assumed in the President’s Budget 2020 formulation 

estimate (3.63%). Since the cohort single effective discount rate of 3.60% remained unchanged 

from the 2020 budget formulation estimate, this creates an implied negative spread of -1.08% in 

the FY 2020 reestimate, in contrast to the 0.03 spread assumed in the 2020 budget formulation 

estimate. As a result, total scheduled interest as a percentage of total disbursements decreased 

from 61.7% to 48.6% (equates to decrease of $215 million), thereby leading to a large upward 

reestimate. After an interest rate reestimate is performed and a new single effective rate (SER) is 

calculated, we assume that this will change significantly in a downward direction at the end of 

FY 2021. 

For direct operating, most of the downward reestimates are concentrated in cohorts 2010 through 

2016. The updated default model resulted in a decrease in forecasted defaults (FY 2021 and 

beyond) ranging from -$18.7 million (61.5%) to -$1.6 million (22.5%) in the 2009-2017 cohorts. 

Decreases in forecasted defaults were the main driver of the reestimate in these cohorts. For 

direct ownership, the downward reestimate was all in cohort 2019. This was because the SER 

decreased by 0.51 percentage points, thereby increasing the present value of net cash inflows, 

and leading to a large downward reestimate. 
114 Section II | Financial Information

For farm storage, there was a downward reestimate in all except one cohort. Fewer prepayments 

than expected in FY 2020 contribute to the downward reestimate for cohorts 2010 through 2015. 

The fewer prepayments in FY 2020 are partially offset by increases in forecasted (FY 2021 and 

beyond) prepayments for cohorts 2010 – 2011, and more than offset by increases in forecasted 

prepayments for cohorts 2012 – 2015. For cohorts 2016 through 2018, principal payments 

exceeded expected principal payments by between $641 thousand and $3.7 million. For cohort 

2019, the largest downward reestimate, the change in the subsidy rate is due to discount rates 

(i.e. change due to interest) is -5.84 percentage points, which translates to a -$13.2 million 

downward subsidy adjustment. Increases in forecasted prepayments partially offset the effect of 

the SER revision.

The Direct Single-Family Housing program has a downward reestimate of $(138) million. The 

key drivers of the changes that caused the downward impact were the lag on Foreclosure, Real 

Estate Owned (REO) Recovery Curve, and the lag on REO. The projected lag on foreclosures 

decreased, which increased projected prepayments resulting in a downward impact on the total 

reestimate amount. The REO recovery curve increased from 3% to 4% which increased the 

projected recoveries, resulting in a downward impact to the total reestimate. The lag on REO 

increased from 23.94 months to 24.21 months which increased the months for future projections 

of lag on REO, which had a downward impact on the total reestimate. The FY 2019 and FY 2020 

cohorts also had decreases in the SER which results in the net present value of the cash flows 

increasing and a subsequent downward reestimate.

The Direct Community Facility program has an overall downward reestimate of $(123) million. 

The downward reestimate was primarily due to a decrease in the principal write off assumption, 

which decreased from 5.56% in FY 2019 to 4.49% in FY 2020, and a decrease in actual defaults 

written off. In addition, the more recent cohort years also experienced a decrease in the SER which 

caused the cost of borrowing for the Agency to decrease as well. This resulted in a downward 

reestimate as the net present value of cash flows increased due to the lower discount rate.

The Direct FFB Electric Program had an overall upward reestimate of $1,181 million which is 

comprised of a $816 million upward reestimate in the FFB program, a $300 million upward 

reestimate in the FFB Underwriter program, and a $68 million upward reestimate in the FFB 

Note Extension program. One of the main drivers of the upward reestimates in all Direct Electric 

Programs were the modification costs that were realized in FY 2019 but provided to FFB in FY 

2020 as part of an administrative solution. These modification costs were related to the 

implementation of the 2018 Agriculture Improvement Act language that allowed borrowers to 

prepay outstanding debt using Cushion of Credit balances. The negative modification cash flows 

decreased cash balances resulting in an upward impact to the reestimate.

The Direct Water and Environmental Disposal program had an overall downward reestimate of 

$(867) million. The downward reestimate was primarily attributed to the updated Miscellaneous 

Inflows curves which are based on actual data and are used to project future cashflows from 
USDA | 2020 Agency Financial Report 115 

Miscellaneous Inflows. The Miscellaneous Inflows curve increased from 0.04% to 5.79% due to 

FY 2019 actual data from Puerto Rico Aqueduct and Sewer Authority (PRASA) debt restructure. 

The downward reestimate was also caused by the updated SER which primarily decreased. As 

the SER decreases, the cost of borrowing for the Agency decreases as well, causing a downward 

reestimate as the net present value of cash flows increases due to the lower discount rate. 

Guaranteed Loans 

The Guaranteed Single-Family Housing Program had an overall upward reestimate of 

$809 million. The change in upward reestimates are attributed to updates to the model with the 

most recent economic assumptions including unemployment rates, treasury rates, and mortgage 

rate forecasts. The 2020 national unemployment rate forecast is downward sloping and the 

average unemployment rate in the next five years is forecasted to be higher than in the prior years. 

These forecasts in unemployment are also contributing to the five-year default forecast for the 

2019 cohort to significantly increase relative to the prior year reestimate model’s forecast for the 

same period. The increase in the five-year default forecast in the short term leads to an increase in 

the upward reestimate as that would signify additional costs associated with the programs. 

Loan Modifications 

Multi-Family Housing direct loan modifications related to the revitalization program, which 

began in FY 2006, continued through FY 2020. 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 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. 
116 Section II | Financial Information 

Foreclosed Property 

As of September 30, 2020 and 2019, foreclosed property consisted of 1,267 and 2,398 rural 

single family housing dwellings, with an average holding period of 16 and 15 months, 

respectively. As of September 30, 2020 and 2019, FSA-Farm Loan Program properties consist 

primarily of 125 and 110 farms, respectively. The average holding period for these properties in 

inventory for FY 2020 and FY 2019 was 77 and 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 $14,328 million and $14,458 million of Rural Housing borrowers’ unpaid loan 

principal as of September 30, 2020 and 2019 were receiving interest credit. If those loans receiving 

interest credit had accrued interest at the full-unreduced rate, interest income would have been 

approximately $666 million and $682 million higher for FY 2020 and FY 2019, respectively. 

At the end of FY 2020 and FY 2019, the RD portfolio contained approximately 48,280 and 

51,684 restructured loans with an outstanding unpaid principal balance of $2,584 million and 

$2,711 million, respectively. At the end of FY 2020 and FY 2019, the farm loan portfolio 

contained approximately 17,836 and 17,761 restructured loans with an outstanding unpaid 

principal balance of $1,402 million and $1,343 million, respectively. Direct credit and credit 

guarantee principal receivables in the food aid and export programs under rescheduling agreements 

as of September 30, 2020 and 2019, were $642 million and $825 million, respectively. 

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. 

Subsidy rates are used to compute each year’s subsidy expenses. The subsidy rates pertain only 

to the FY 2020 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. 
USDA | 2020 Agency Financial Report 117 

Table 1: Direct Loan and Loan Guarantees, Net 

FY 2020 Direct Loans Loans Receivable, 

Gross 

Interest 

Receivable 

Foreclosed 

Property 

Present Value 

Allowance 

Value of Assets 

Related to Loans 

Obligated Pre-1992 

Farm $ 161 $ 97 $ 7 $ (96) $ 169 

Food Aid 451 7 - (72) 386 

Housing 5,610 763 6 (613) 5,766 

Community Facility 8 - - - 8 

Electric 1,854 2 - (1,427) 429 

Telecommunications 40 - - - 40 

Water and Environmental 203 2 - - 205 

Intermediary Relending 2 - - - 2 

Pre-1992 Total 8,329 871 13 (2,208) 7,005 

Obligated Post-1991 

Farm 14,026 309 10 (576) 13,769 

Food Aid 479 9 - (80) 408 

Housing 17,803 465 77 (2,301) 16,044 

Community Facility 10,536 72 - (120) 10,488 

Electric 47,011 27 - (1,169) 45,869 

Telecommunications 2,735 1 - 10 2,746 

Water and Environmental 13,204 88 - 590 13,882 

Intermediary Relending 342 2 - (70) 274 

Business and Industry 46 - - (6) 40 

Economic Development 200 - - (16) 184 

Post-1991 Total 106,382 973 87 (3,738) 103,704 

Cushion of Credit (1,798) - - - (1,798) 

Total Direct Loan Program Receivables 112,913 1,844 100 (5,946) 108,911 

Defaulted Guarantee Loans 

Post-1991 

Farm 226 76 - (277) 25 

Export 387 17 - (238) 166 

Housing 126 - - (94) 32 

Community Facility 8 - - - 8 

Business and Industry 227 - - (43) 184 

Post-1991 Total 974 93 - (652) 415 

Total Defaulted Guarantee Loans 974 93 - (652) 415 

Loans Exempt from Credit Reform Act: 

Commodity Loans 902 11 - (4) 909 

Total Loans Exempt 902 11 - (4) 909 

Total Direct Loan and Loan Guarantees, Net $ 110,235 
118 Section II | Financial Information 

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 

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 

Pre-1992 Total 9,323 806 26 (2,541) 7,614 

Obligated Post-1991 

Farm 12,582 293 10 (462) 12,423 

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 

Post-1991 

Farm 207 68 - (256) 19 

Export 417 12 - (219) 210 

Housing 110 - - (81) 29 

Community Facility 6 - - - 6 

Business and Industry 187 - - (48) 139 

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 

Total Loans Exempt 565 8 - (4) 569 

Total Direct Loan and Loan Guarantees, Net $ 104,255 
USDA | 2020 Agency Financial Report 119 

Table 2: Total Amount of Direct Loans Disbursed (Post-1991) 

Direct Loan Programs FY 2020 FY 2019 

Farm $ 3,349 $ 2,584 

Housing 1,255 1,151 

Community Facility 1,278 1,530 

Electric 5,177 4,218 

Telecommunications 150 114 

Water and Environmental 1,271 780 

Intermediary Relending 16 18 

Business and Industry 5 5 

Economic Development 39 53 

Total Direct Loans Disbursed $ 12,540 $ 10,453 
120 Section II | Financial Information 

Table 3: Subsidy Expense for Direct Loans by Program and Component 

FY 2020 Direct Loan Programs Interest 

Differential Defaults 

Fees and 

Other 

Collections Other 

Subtotal 

Subsidy 

Total 

Modifications 

Interest 

Rate 

Reestimates 

Technical 

Reestimates 

Total 

Reestimates 

Total 

Subsidy 

Expense 

Farm $ (39) $ 76 $ (1) $ 7 $ 43 $ - $ (73) $ 187 $ 114 $ 157 

Export - - - - - - - 8 8 8 

Food Aid - - - - - - - 2 2 2 

Housing 67 52 - 5 124 7 (71) (67) (138) (7) 

Community Facility (134) 42 - 6 (86) - 152 (275) (123) (209) 

Electric (172) 14 (49) (25) (232) - (126) 1,307 1,181 949 

Telecommunications - 2 - (2) - - (30) 10 (20) (20) 

Water and Environmental 70 1 - (47) 24 - 50 (917) (867) (843) 

Intermediary Relending 4 - - - 4 - (2) 1 (1) 3 

Business and Industry - - - - - - - 1 1 1 

Economic Development 6 - - - 6 - - - - 6 

Total Direct Loan Subsidy Expense $ (198) $ 187 $ (50) $ (56) $ (117) $ 7 $ (100) $ 257 $ 157 $ 47 

FY 2019 Direct Loan Programs Interest 

Differential Defaults 

Fees and 

Other 

Collections Other 

Subtotal 

Subsidy 

Total 

Modifications 

Interest 

Rate 

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 
USDA | 2020 Agency Financial Report 121 

Table 4: Subsidy Rates For Direct Loans (percentage)

FY 2020 Interest 

Differential Defaults 

Fees and 

Other 

Collections Other Total 

Direct Loan Programs 

Farm Ownership (0.02) 0.18 - (0.25) (0.09) 

Farm Operating (3.40) 6.55 - 0.62 3.77 

Emergency Disaster (1.32) 6.52 - 0.16 5.36 

Indian Tribe Land Acquisition (18.62) - - - (18.62) 

Boll Weevil Eradication 0.13 - - (0.03) 0.10 

Indian Highly Fractionated Land 28.96 0.05 - (1.56) 27.45 

Heirs Property Relending Program 28.96 0.05 - (1.56) 27.45 

Farm Storage Facility Loan 0.06 - (0.27) (0.02) (0.23)

Sugar Storage Facility Loan Program (0.40) - - 0.02 (0.38)

Multifamily Housing Revitalization Seconds 57.99 0.42 - (0.06) 58.35 

Multifamily Revitalization Zero 52.70 0.34 - (0.18) 52.86 

Community Facility Loans (10.64) 3.63 - 2.05 (4.96)

Section 502 Single-Family Housing 3.40 4.89 - 0.70 8.99 

Section 515 Multi-Family Housing 30.83 0.88 - (1.36) 30.35 

Section 504 Housing Repair 21.06 (0.04) - (4.31) 16.71 

Section 514 Farm Labor Housing 31.62 0.17 - (0.58) 31.21 

Section 524 Site Development 4.70 5.45 - 0.77 10.92 

Section 523 Self-Help Housing 6.97 4.52 - 0.05 11.54 

Single-Family Housing Credit Sales (6.78) 2.23 - 2.70 (1.85)

Rural Microenterprise Direct Loans 12.82 2.06 - - 14.88 

Intermediary Relending Program 27.91 1.42 - (1.69) 27.64 

Rural Economic Development Loans 17.16 0.01 - (0.39) 16.78 

Water and Environmental 7.79 0.10 - (3.33) 4.56 

FFB Electric Loans (3.61) 0.01 - (0.27) (3.87) 

Treasury Telecommunication Loans 0.25 0.71 - 0.14 1.10 

FFB Telecommunications Loans (0.53) 0.16 - (2.05) (2.42) 

FFB Guaranteed Underwriting - 1.39 (1.78) - (0.39) 

Rural Energy Savings Program 16.24 1.36 - (0.35) 17.25 

Broadband Treasury Rate Loans 0.25 17.45 - 0.19 17.89 

Reconnect Direct Loans 13.11 22.17 - (0.83) 34.45 

Reconnect Grant Assisted Loans - 22.17 - 0.36 22.53 

Table 5: Schedule for Reconciling Subsidy Cost Allowance Balances (Post-1991) Direct Loans

Item FY 2020 FY 2019 

Beginning Balance of the Subsidy Cost Allowance $ 4,611 $ 4,102 

Add: Total Subsidy Expense for Direct Loans Disbursed During the Year As Shown in Table 3 (117) (117) 

Adjustments 

Loan Modifications 7 898 

Fees Received 78 88 

Loans Written Off (141) (653) 

Subsidy Allowance Amortization 146 649 

Other (350) 84 

Total Subsidy Cost Allowance Before Reestimates 4,234 5,051 

Add or Subtract Total Subsidy Reestimates As Shown in Table 3 157 (440) 

Ending Balance of the Subsidy Cost Allowance $ 4,391 $ 4,611 
122 Section II | Financial Information 

Table 6: Guaranteed Loans Outstanding 

FY 2020 

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 $ 18,738 $ 18,739 $ 1 $ 16,933 $ 16,934 

Export - 2,182 2,182 - 2,135 2,135 

Housing - 127,859 127,859 - 115,036 115,036 

Community Facility - 1,165 1,165 - 1,035 1,035 

Electric - 146 146 - 147 147 

Water and Environmental - 94 94 - 83 83 

Business and Industry - 8,114 8,114 - 5,900 5,900 

Total Guarantees Outstanding $ 1 $ 158,298 $ 158,299 $ 1 $ 141,269 $ 141,270 

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 

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 

Water and Environmental - 77 77 - 68 68 

Business and Industry 6 7,819 7,825 5 5,763 5,768 

Total Guarantees Outstanding $ 8 $ 153,068 $ 153,076 $ 7 $ 136,640 $ 136,647 
USDA | 2020 Agency Financial Report 123 

Table 7: Guaranteed Loans Disbursed 

Loan Guarantee Programs 

FY 2020 FY 2019 

Principal, Face Value 

Disbursed 

Principal, Guaranteed 

Disbursed 

Principal, Face Value 

Disbursed 

Principal, Guaranteed 

Disbursed 

Farm $ 3,915 $ 3,538 $ 3,059 $ 2,758 

Export 2,232 2,184 1,992 1,951 

Housing 22,102 19,892 14,528 13,075 

Community Facility 53 47 155 137 

Water and Environmental 20 17 9 8 

Business and Industry 1,234 942 1,293 990 

Total Guaranteed Loans Disbursed $ 29,556 $ 26,620 $ 21,036 $ 18,919 
124 Section II | Financial Information 

Table 8: Liability for Loan Guarantees (Present Value Method For Pre-1992 Guarantees) 

FY 2020 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 $ - $ 204 $ 204 

Export - 7 7 

Housing - 679 679 

Community Facility - 43 43 

Water and Environmental - 1 1 

Business and Industry - 395 395 

Total Liability for Loan Guarantees $ - $ 1,329 $ 1,329 

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 

Housing - (232) (232) 

Community Facility - 52 52 

Water and Environmental - 1 1 

Business and Industry - 388 388 

Total Liability for Loan Guarantees $ - $ 434 $ 434 
USDA | 2020 Agency Financial Report 125 

Table 9: Subsidy Expense for Loan Guarantees by Program and Component 

FY 2020 Loan Guarantee Programs 

Interest 

Supplement Defaults 

Fees and Other 

Collections Other Subtotal 

Total 

Modifications 

Interest Rate 

Reestimates 

Technical 

Reestimates 

Total 

Reestimates 

Total Subsidy 

Expense 

Farm $ - $ 26 $ (14) $ - $ 12 $ - $ 1 $ (36) $ (35) $ (23)

Export - - 10 (6) 4 - (1) 2 1 5 

Housing - 726 (859) - (133) - (18) 827 809 676 

Community Facility - 2 (1) - 1 - - (11) (11) (10) 

Business and Industry - 75 (45) - 30 - 1 (18) (17) 13 

Total Loan Guarantee Subsidy Expense $ - $ 829 $ (909) $ (6) $ (86) $ - $ (17) $ 764 $ 747 $ 661 

FY 2019 Loan Guarantee Programs 

Interest 

Supplement Defaults 

Fees and Other 

Collections Other Subtotal 

Total 

Modifications 

Interest Rate 

Reestimates 

Technical 

Reestimates 

Total 

Reestimates 

Total Subsidy 

Expense 

Farm $ - $ 25 $ (13) $ - $ 12 $ - $ (6) $ (11) $ (17) $ (5)

Export - - 9 (5) 4 - - (6) (6) (2) 

Housing - 502 (612) - (110) - (39) 90 51 (59) 

Community Facility - 6 (1) - 5 - - (5) (5) - 

Business and Industry - 87 (47) - 40 - (1) (49) (50) (10) 

Total Loan Guarantee Subsidy Expense $ - $ 620 $ (664) $ (5) $ (49) $ - $ (46) $ 19 $ (27) $ (76)
126 Section II | Financial Information 

Table 10: Subsidy Rates for Loan Guarantees (percentage) 

FY 2020 

Interest 

Differential Defaults 

Fees and Other 

Collections Other Total 

Guaranteed Loan Programs 

Farm Ownership—Unsubsidized - 0.87 (1.16) - (0.29) 

Farm Operating—Unsubsidized - 2.30 (1.24) - 1.06 

Conservation—Guaranteed - 0.68 (1.13) - (0.45) 

GSM 102 - 0.28 (0.49) - (0.21) 

Export Guarantee Program—Facilities - 1.94 (4.11) - (2.17) 

Community Facility Loan Guarantees - 3.84 (4.36) - (0.52) 

Guaranteed 538 Multi-Family Housing - 3.27 (7.80) - (4.53) 

Guaranteed 502 Single-Family Housing - 3.27 (3.83) - (0.56) 

Business and Industry Loan Guarantees - 5.89 (3.85) - 2.04 

Renewable Energy Loan Guarantees - 5.25 (1.72) - 3.53 

Section 9003 Loan Guarantees - 19.81 (4.94) 0.06 14.93 

Water and Environmental - 1.02 (0.87) - 0.15 

Table 11: Schedule for Reconciling Loan Guarantee Liability Balances 

(Post -1991 Loan Guarantees)

Item FY2020 FY2019 

Beginning Balance of the Loan Guarantee Liability $ 434 $ 502 

Add: Total Subsidy Expense for Guaranteed Loans Disbursed During the Year As Shown in Table 9 (86) (49) 

Adjustments 

Fees Received 625 632 

Interest Supplements Paid (8) (8)

Foreclosed Property and Loans Acquired 44 109 

Claim Payments to Lenders (410) (541)

Interest Accumulation on the Liability Balance 10 (8) 

Other (27) (176) 

Ending Balance of the Loan Guarantee Liability Before Reestimates 582 461 

Add or Subtract Total Subsidy Reestimates As Shown in Table 9 747 (27)

Ending Balance of the Loan Guarantee Liability $ 1,329 $ 434 

Table 12: Administrative Expenses

Item FY 2020 FY 2019 

Direct Loan Programs $ 489 $ 498 

Guaranteed Loan Programs 450 532 

Total Administrative Expenses $ 939 $ 1,030 
USDA | 2020 Agency Financial Report 127 

Table 13: Loans Receivable

Item FY 2020 

Loans Receivable, Gross, Start of Year $ 107,894 

Plus: Loans Disbursed 12,770 

Less: Principal Payments Received 7,147 

Less: Foreclosed Property 1 

Less: Loans Written Off 137 

Other (466)

Loans Receivable, Gross, End of Year $ 112,913 

Defaulted Guaranteed Loans Receivable, Start of Year $ 927 

Plus: Guarantee Payments 209 

Less: Principal Payments Received 59 

Less: Loans Written Off 103 

Defaulted Guaranteed Loans Receivable, End of Year $ 974 
128 Section II | Financial Information 

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 2020 Beginning Inventory Acquisitions Collateral Acquired Donations Others FY 2020 Ending Inventory 

Quantity Value Quantity Value Quantity Value Quantity Value Quantity Value Quantity Value 

Corn Meal Pounds 1 $ - 102 $ 22 - $ - (103) $ (22) - $ - - $ - 

Blended Foods Pounds 14 4 104 63 - - (118) (66) - (1) - - 

Dry Edible Beans Cwt. - 1 - 22 - - - (23) - - - - 

Dry Whole Peas Cwt. - 2 3 65 - - (3) (65) - (1) - 1 

Grain Sorghum Bushels - - 22 118 - - (22) (117) - - - 1 

Lentils Dry Cwt. - - 1 25 - - (1) (25) - - - - 

Nonfat Dry Milk Pounds - - 5 100 - - (5) (100) - - - - 

Rice Products Cwt., Pounds - 3 1 48 - - (1) (50) - - - 1 

Meat Pounds - - 11 731 - - (11) (731) - - - - 

Vegetable Oil Pounds 4 2 396 186 - - (376) (176) - 1 24 13 

Wheat Products Bushels, Pounds - - 25 214 - - (25) (214) - - - - 

Peanuts Pounds 26 5 - - 98 17 - - (124) (22) - - 

Soybeans Bushels, Pounds - - 137 22 - - (137) (22) - - - - 

Fruit and Nut Products Pounds - - 13 378 - - (13) (378) - - - - 

Cotton Bales - 5 - - 6 1,550 - - (6) (1,555) - - 

Other Various - 1 - 87 - - - (113) - 27 - 2 

Total Commodities $ 23 $ 2,081 $ 1,567 $ (2,102) $ (1,551) $ 18 

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 

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 - - - 29 - - - (31) - 3 - 1 

Total Commodities $ 46 $ 1,248 $ 157 $ (1,258) $ (170) $ 23 
USDA | 2020 Agency Financial Report 129 

NOTE 9: General Property, Plant, and Equipment (PP&E), Net 

FY 2020 

Category 

Useful Life 

(Years) Cost 

Accumulated 

Depreciation Net Book Value 

Land and Land Rights $ 70 $ - $ 70 

Improvements to Land 10 – 50 759 (751) 8 

Construction-in-Progress 235 - 235 

Buildings, Improvements and Renovations 15 – 30 3,144 (2,148) 995 

Other Structures and Facilities 15 – 50 1,868 (1,670) 197 

Equipment 5 – 20 1,933 (1,340) 593 

Assets Under Capital Lease 3 – 20 22 (19) 3 

Leasehold Improvements 10 91 (81) 9 

Internal-Use Software 5 – 8 1,305 (1,098) 207 

Internal-Use Software in Development 82 - 82 

Total $ 9,509 $ (7,107) $ 2,399 

Total PP&E and Accumulated Depreciation Net PP&E 

Balance Beginning of Year $ 2,249 

Capitalized Acquisitions 491 

Dispositions / Revaluations (64)

Depreciation Expense (277)

Balance at End of Year $ 2,399 

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 
130 Section II | Financial Information 

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 non-collection 

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 

FS-managed 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. 
USDA | 2020 Agency Financial Report 131 

• The property is recognized in an Agency-approved management plan. 

• The property exhibits critical deferred maintenance needs, and those needs have been 

documented. 

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 

site-structural components may be rehabilitated or reconstructed into viable historic properties to 
132 Section II | Financial Information 

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. 

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. 
USDA | 2020 Agency Financial Report 133

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.

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.
134 Section II | Financial Information 

FY 2020 (In Units) Beginning Balance Additions Withdrawals Ending Balance 

Heritage Assets 

National Forests 154 - - 154 

National Grasslands 20 - - 20 

Other Sites 170 2 (2) 170 

Research Centers 34 - - 34 

Library Collections 1 - - 1 

Total $ 379 $ 2 $ (2) $ 379 

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 18,641 308 - 18,949 

Total $ 18,820 $ 308 $ - $ 19,128 

FY 2019 (In Units) Beginning Balance Additions Withdrawals Ending Balance 

Heritage Assets 

National Forests 154 - - 154 

National Grasslands 20 - - 20 

Other Sites 173 1 (4) 170 

Research Centers 34 - - 34 

Library Collections 1 - - 1 

Total 382 1 (4) 379 

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 18,344 297 - 18,641 

Total 18,523 297 - 18,820 

NOTE 11: Other Assets 

In FY 2019, other assets included investments in trust for loan asset sales of $35 million and cost 

of loans sold of $2 million. 

Item FY 2020 FY 2019 

Intragovernmental 

Advances to Others $ 27 $ 12 

Subtotal Intragovernmental 27 12 

With the Public 

Advances to Others 1,295 351 

Other Assets - 37 

Total Other Assets $ 1,322 $ 400 
USDA | 2020 Agency Financial Report 135 

NOTE 12: Liabilities Not Covered by Budgetary Resources 

In FY 2020 and FY 2019, other intragovernmental liabilities not covered by budgetary resources 

included accruals for Federal Employee Compensation Act (FECA) of $131 million and 

$137 million, contract disputes claims payable to Treasury’s Judgment Fund of $27 million and 

$26 million, unemployment compensation of $10 million and $15 million, and Technology 

Modernization Fund of $10 million and $5 million, respectively. 

In FY 2020 and FY 2019, other liabilities with the public not covered by budgetary resources 

included estimated losses on insurance claims of $4,543 million and $4,483 million, 

underwriting gain of $1,525 million and $1,143 million, contingent liabilities of $521 million 

and $621 million, unfunded leave of $703 million and $645 million, Payments to States of 

$250 million and $107 million, single family housing escrow of $46 million and $46 million, 

loans paid in advance for multi-family housing of $25 million and $25 million, and stewardship 

contracting product sales of $5 million and $4 million, respectively. 

Item FY 2020 FY 2019 

Intragovernmental 

Other $ 178 $ 183 

Total Intragovernmental 178 183 

Actuarial Federal Employees’ Compensation Act (FECA) Liability 679 782 

Environmental and Disposal Liabilities 237 216 

Other 7,618 7,074 

Total Liabilities Not Covered by Budgetary Resources 8,712 8,255 

Total Liabilities Covered by Budgetary Resources 187,280 169,152 

Total Liabilities Not Requiring Budgetary Resources 862 1,574 

Total Liabilities $ 196,854 $ 178,981 
136 Section II | Financial Information 

NOTE 13: Debt 

FY 2020 Beginning Balance Net Borrowing Ending Balance 

Other Debt 

Debt to the Treasury $ 93,363 $ 5,696 $ 99,059 

Debt to the Federal Financing Bank 46,315 364 46,679 

Total Debt $ 139,678 $ 6,060 $ 145,738 

Classification of Debt: 

Intragovernmental Debt $ 145,738 

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 Debt $ 119,423 $ 20,255 $ 139,678 

Classification of Debt: 

Intragovernmental Debt $ 139,678 
USDA | 2020 Agency Financial Report 137 

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 2020 and FY 2019, 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 2020 and FY 2019, CCC estimates the liability for 

total cleanup costs for sites known to contain hazardous waste to be $47 million and $31 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 $47 million and $380 million. These 

estimates will change as new sites are discovered, remedy standards change, and new technology 

is introduced. 

In FY 2020 and FY 2019, ARS estimated the liability for cleanup of the Beltsville Agricultural 

Research Center (BARC) to be $32 million and $28 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 2020 and FY 2019, the Department estimated its liability for asbestos-related cleanup of real 

property to be $158 million and $157 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. 
138 Section II | Financial Information 

NOTE 15: Other Liabilities 

In FY 2020, other liabilities with related budgetary obligations with the public included 

Agricultural Risk Coverage of $1,118 million; Price Loss Coverage of $4,884 million; Grants, 

Subsidies, and Contributions of $3,434 million; Conservation Reserve Program of $1,796 million; 

Trade Mitigation Program of $34 million; and other accrued liabilities of $614 million. 

In FY 2020, other liabilities without related budgetary obligations with the public included 

Payments to States of $250 million, single family housing escrow of $46 million, loans paid in 

advance for multi-family housing of $25 million, and other accrued liabilities of $5 million. 

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 multi-family housing of $25 million, and other accrued liabilities of $4 million. 
USDA | 2020 Agency Financial Report 139 

FY 2020 Non-Current Current Total 

Intragovernmental: 

Other liabilities With Related Budgetary Obligations $ - $ 41 $ 41 

Employer Contributions and Payroll Taxes - 123 123 

Unfunded FECA Liability 70 61 131 

Other Unfunded Employment Related Liability - 10 10 

Liability for Advances and Prepayments - 9 9 

Liability for Clearing Accounts - 36 36 

Custodial Liability - 72 72 

Liability for Non-entity Assets - 9,737 9,737 

Other Liabilities Without Related Budgetary Obligations 27 10 37 

Subtotal Intragovernmental $ 97 $ 10,099 $ 10,196 

With the Public: 

Other liabilities With Related Budgetary Obligations $ - $ 11,880 $ 11,880 

Liability for Unpaid Insurance Claims - 1,278 1,278 

Liability for Unearned Insurance Premiums - 750 750 

Accrued Funded Payroll and Leave - 472 472 

Unfunded Leave - 703 703 

Liability for Advances and Prepayments - (531) (531) 

Other Deferred Credits - 16 16 

Liability for Nonfiduciary Deposit Funds and Undeposited Collections - 512 512 

Liability for Clearing Accounts - (29) (29) 

Actuarial Liabilities for Federal Insurance and Guarantee Programs 1,526 4,149 5,675 

Contingent Liabilities - 521 521 

Capital Lease Liability 3 1 4 

Other Liabilities Without Related Budgetary Obligations 25 301 326 

Subtotal With the Public $ 1,554 $ 20,023 $ 21,577 

Total Other Liabilities $ 1,651 $ 30,122 $ 31,773 
140 Section II | Financial Information 

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 - 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 Liabilities 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 
USDA | 2020 Agency Financial Report 141 

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 $65 million. This agreement is still in effect and as a result, 

USDA activities located in the Headquarters complex are not billed for rental costs. 
142 Section II | Financial Information 

FY 2020 

Capital Leases 

Summary of Assets Under Capital Leases Federal Non-Federal Total 

Land and Building $ - $ 22 $ 22 

Accumulated Amortization - (19) (19)

Total - 3 3 

Future Payments Due Land & Buildings Machinery & Equipment Totals 

 Federal Non-Federal Federal Non-Federal Federal Non-Federal 

Fiscal Year 2021 - 3 - - - 3 

Fiscal Year 2022 - 2 - - - 2 

Fiscal Year 2023 - 2 - - - 2 

Fiscal Year 2024 - 1 - - - 1 

Fiscal Year 2025 - - - - - - 

After 5 Years - 1 - - - 1 

Total Future Lease Payments - 9 - - - 9 

Less: Imputed Interest - 4 - - - 4 

Less: Executory Costs - 1 - - - 1 

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 2021 14 68 - - 14 68 

Fiscal Year 2022 1 47 - 1 1 48 

Fiscal Year 2023 1 38 - - 1 38 

Fiscal Year 2024 1 32 - - 1 32 

Fiscal Year 2025 - 25 - - - 25 

After 5 Years 2 110 - - 2 110 

Total Future Lease Payments 19 320 - 1 19 321 
USDA | 2020 Agency Financial Report 143 

FY 2019 

Capital Leases 

Summary of Assets Under Capital Leases Federal Non-Federal Total 

Land and Building $ - $ 26 $ 26 

Accumulated Amortization - (22) (22) 

Total 0 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 
144 Section II | Financial Information 

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 2020 

Legal Contingencies: 

Probable $ 521 $ 521 $ 525 

Reasonably Possible 130 161 

Environmental Contingencies 

Probable 239 239 239 

Reasonably Possible 47 380 

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 

Commitments to extend loan guarantees are estimated to be $6,189 million and $4,312 million in 

FY 2020 and FY 2019, respectively. 
USDA | 2020 Agency Financial Report 145 

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) 

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). 

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 Department of Commerce’s National Oceanic and Atmospheric 

Administration (NOAA). All remaining funding in excess of the amount made available under 

the 2008 Farm Bill to carry out Section 32 activities 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). 

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 
146 Section II | Financial Information 

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 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) 

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. 

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-for-profit 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 noyear 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). 

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. 
USDA | 2020 Agency Financial Report 147

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).

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. 

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).

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.
148 Section II | Financial Information 

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. 

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. 

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). 

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 
USDA | 2020 Agency Financial Report 149 

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. 

Other 

Financial information is summarized for all other funds from dedicated collections with total 

assets less than $50 million listed below. 

Natural Resources Conservation Service 

• Damage Assessment and Restoration Revolving Fund 

• Miscellaneous Contributed Funds 

Food Safety and Inspection Service 

• Expenses and Refunds, Inspection of Farm Products 

Agricultural Marketing Service 

• Inspection and Weighing Services 

• Perishable Agricultural Commodities Act 

• Wool Research, Development and Promotion Trust Fund 

Animal Plant Health Inspection Service 

• Gifts and Bequests 

• Miscellaneous Contributed Funds 

Forest Service 

• Acquisition of Lands for National Forests, Special Acts 

• Administration of Rights-of-Way and Other Land Uses Fund 

• Expenses, Brush Disposal 

• Gifts and Bequests 

• Gifts, Donations and Bequests for Forest and Rangeland Research 

• Hardwood Technology Transfer and Applied Research Fund 

• Land Between the Lakes Management Fund 

• Land Between the Lakes Trust Fund 

• Licensee Program 

• Midewin National Tallgrass Prairie Restoration Fund 

• MNP Rental Fee Account 

• Operation and Maintenance of Forest Service Quarters 

• Payment to Minnesota (Cook, Lake and Saint Louis Counties) 

• Quinault Special Management Area 

• Range Betterment Fund 

• Receipts for Construction of Administrative Improvements- Arizona and Taos, New 

Mexico Land Conveyance 

• Reforestation Trust Fund 
150 Section II | Financial Information 

• Resource Management Timber Receipts 

• Roads and Trails for States, National Forest Fund 

• Timber Roads, Purchaser Elections 

• Timber Sales Pipeline Restoration Fund 

Rural Development 

• Alternative Agricultural Research and Commercialization Revolving Fund 

Agricultural Research Service 

• Concessions Fees and Volunteer Services 

• Gifts and Bequests 

• Miscellaneous Contributed Funds 

National Agricultural Statistics Service 

• Miscellaneous Contributed Funds 

Economic Research Service 

• Miscellaneous Contributed Funds 

Foreign Agricultural Service 

• Foreign Service National Separation Liability Trust Fund 

• Gifts and Bequests 

• Miscellaneous Contributed Funds 

Office of the Secretary 

• Gifts and Bequests 

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 
USDA | 2020 Agency Financial Report 151 

Funds from Dedicated Collections AMS AMS APHIS FS

Expenses and 

Refunds, Inspection 

and Grading of Farm 

Products 

Funds for 

Strengthening 

Markets, Income, 

and Supply 

Agricultural 

Quarantine 

Inspection 

User Fee 

Account 

Acquisition of 

Lands to 

Complete Land 

Exchanges 

Cooperative 

Work 

Land 

Acquisition 

National Forest 

Fund Receipts 

National 

Grasslands 

Receipts 

Payments to 

States, 

National 

Forests Fund 

Balance Sheet As of September 30, 2020 

Intragovernmental: 

Fund Balance with Treasury $ 104 $ 1,285 $ 166 $ 40 $ 366 $ 134 $ 118 $ 73 $ 87 

Investments - - - - - - - - - 

Total Intragovernmental 104 1,285 166 40 366 134 118 73 87 

Investments - - - - - - - - - 

Accounts Receivable, Net 24 - 30 - 1 - 29 - - 

General Property, Plant, and Equipment, Net - 1 4 51 9 41 - - 2 

Other - - - - - - - - - 

Total Assets 128 1,286 200 91 376 175 147 73 89 

Intragovernmental: 

Other 9 1 2 - 1 - - - - 

Total Intragovernmental 9 1 2 - 1 - - - - 

Accounts Payable 1 12 1 - 2 - - - - 

Actuarial Federal Employees’ Compensation 31 - - - - - - - - 

Other 26 70 6 - 65 - - 17 228 

Total Liabilities 67 83 9 - 68 - - 17 228 

Unexpended Appropriations - - - - - - - - - 

Cumulative Results of Operations 61 1,203 191 91 308 175 147 56 (139) 

Total Liabilities and Net Position 128 1,286 200 91 376 175 147 73 89 

Statement of Net Cost For the Period Ended September 30, 2020 

Gross program costs 237 837 186 4 107 65 - 18 272 

Less Earned Revenue 193 5 521 9 96 - (3) 42 126 

Net Cost of Operations 44 832 (335) (5) 11 65 3 (24) 146 

Statement of Changes in Net Position For the period Ended September 30, 2020 

Net Position Beginning of Period 37 884 389 86 319 163 151 109 7 

Non-Exchange Revenue 1 - - - - - (1) (77) - 

Other Financing Sources 67 1,151 (533) - - 77 - - - 

Net Cost of Operations (44) (832) 335 5 (11) (65) (3) 24 (146) 

Change in Net Position 24 319 (198) 5 (11) 12 (4) (53) (146) 

Net Position End of Period $ 61 $ 1,203 $ 191 $ 91 $ 308 $ 175 $ 147 $ 56 $ (139) 
152 Section II | Financial Information 

Funds from Dedicated Collections FS NIFA 

Other Funds 

from Dedicated 

Collections 

Total Funds 

from Dedicated 

Collections 

Recreation Fee 

Demonstration 

Program 

Restoration of 

Forest Lands and 

Improvements 

State and 

Private 

Forestry 

Stewardship 

Contracting 

Product Sales 

Timber Salvage 

Sales 

Native American 

Institutions 

Endowment Fund 

Balance Sheet As of September 30, 2020 

Intragovernmental: 

Fund Balance with Treasury $ 133 $ 288 $ 218 $ 72 $ 80 $ 15 $ 324 $ 3,503 

Investments - - - - - 239 6 245 

Total Intragovernmental 133 288 218 72 80 254 330 3,748 

Investments - - - - - - 3 3 

Accounts Receivable, Net 2 - - 27 - - 6 119 

General Property, Plant, and Equipment, Net 2 2 - - 1 - 5 118 

Other - - 14 - - - - 14 

Total Assets 137 290 232 99 81 254 344 4,002 

Intragovernmental: 

Other 1 - - - 1 - 1 16 

Total Intragovernmental 1 - - - 1 - 1 16 

Accounts Payable 1 1 9 1 - - 3 31 

Actuarial Federal Employees’ Compensation - - - - - - - 31 

Other 2 - - 5 1 - 30 450 

Total Liabilities 4 1 9 6 2 - 34 528 

Unexpended Appropriations - - - - - 190 1 191 

Cumulative Results of Operations 133 289 223 93 79 64 309 3,283 

Total Liabilities and Net Position 137 290 232 99 81 254 344 4,002 

Statement of Net Cost For the Period Ended September 30, 2020 

Gross program costs 96 22 52 43 45 5 181 2,170 

Less Earned Revenue 93 1 - 63 34 5 168 1,353 

Net Cost of Operations 3 21 52 (20) 11 - 13 817 

Statement of Changes in Net Position For the period Ended September 30, 2020 

Net Position Beginning of Period 136 309 211 73 90 242 305 3,511 

Non-Exchange Revenue - - - - - - 30 (47) 

Other Financing Sources - 1 64 - - 12 (12) 827 

Net Cost of Operations (3) (21) (52) 20 (11) - (13) (817) 

Change in Net Position (3) (20) 12 20 (11) 12 5 (37) 

Net Position End of Period $ 133 $ 289 $ 223 $ 93 $ 79 $ 254 $ 310 $ 3,474 
USDA | 2020 Agency Financial Report 153 

AMS AMS APHIS FS

Funds from Dedicated Collections Expenses and 

Refunds, Inspection 

and Grading of Farm 

Products 

Funds for 

Strengthening 

Markets, Income, 

and Supply 

Agricultural 

Quarantine 

Inspection User 

Fee Account 

Acquisition of 

Lands to 

Complete Land 

Exchanges 

Cooperative 

Work 

Land 

Acquisition 

National 

Forest Fund 

Receipts 

National 

Grasslands 

Receipts 

Payments to 

States, 

National 

Forests Fund 

Balance Sheet As of September 30, 2019 

Intragovernmental: 

Fund Balance with Treasury $ 80 $ 1,038 $ 285 $ 36 $ 375 $ 122 $ 147 $ 145 $ 72 

Investments - - - - - - - - - 

Accounts Receivable, Net - 1 - - - - - - - 

Total Intragovernmental 80 1,039 285 36 375 122 147 145 72 

Investments - - - - - - - - - 

Accounts Receivable, Net 23 - 160 1 1 - 4 - - 

General Property, Plant, and Equipment, Net - - 4 49 9 41 - - 2 

Total Assets 103 1,039 449 86 385 163 151 145 74 

Intragovernmental: 

Other 8 - 2 - - - - - - 

Total Intragovernmental 8 - 2 - - - - - - 

Accounts Payable 1 - 1 - 2 - - - - 

Actuarial Federal Employees’ Compensation 35 - - - - - - - - 

Other 22 155 57 - 64 - - 36 67 

Total Liabilities 66 155 60 - 66 - - 36 67 

Unexpended Appropriations - - - - - - - - - 

Cumulative Results of Operations 37 884 389 86 319 163 151 109 7 

Total Liabilities and Net Position 103 1,039 449 86 385 163 151 145 74 

Statement of Net Cost For the Period Ended September 30, 2019 

Gross program costs 205 1,014 237 6 99 44 - 52 (46)

Less Earned Revenue 180 7 822 14 119 - (26) 37 150 

Net Cost of Operations 25 1,007 (585) (8) (20) 44 26 15 (196)

Statement of Changes in Net Position For the period Ended September 30, 2019 

Net Position Beginning of Period 31 768 343 78 64 94 181 110 (189)

Non-Exchange Revenue - - - - - - (4) 14 - 

Other Financing Sources 31 1,123 (539) - 235 113 - - - 

Net Cost of Operations (25) (1,007) 585 8 20 (44) (26) (15) 196 

Change in Net Position 6 116 46 8 255 69 (30) (1) 196 

Net Position End of Period $ 37 $ 884 $ 389 $ 86 $ 319 $ 163 $ 151 $ 109 $ 7 
154 Section II | Financial Information 

Funds from Dedicated Collections FS NIFA 

Other Funds 

from Dedicated 

Collections 

Total Funds 

from Dedicated 

Collections 

Recreation Fee 

Demonstration 

Program 

Restoration of 

Forest Lands and 

Improvements 

State and 

Private Forestry 

Stewardship 

Contracting 

Product Sales 

Timber 

Salvage Sales 

Native American 

Institutions 

Endowment Fund 

Balance Sheet As of September 30, 2019 

Intragovernmental: 

Fund Balance with Treasury $ 135 $ 307 $ 211 $ 59 $ 91 $ 15 $ 329 $ 3,447 

Investments - - - - - 227 5 232 

Accounts Receivable, Net - - - - - - - 1 

Total Intragovernmental 135 307 211 59 91 242 334 3,680 

Investments - - - - - - 3 3 

Accounts Receivable, Net 2 - - 20 - - 7 218 

General Property, Plant, and Equipment, Net 2 2 - - 1 - 5 115 

Total Assets 139 309 211 79 92 242 349 4,016 

Intragovernmental: 

Other - - - - 1 - 1 12 

Total Intragovernmental - - - - 1 - 1 12 

Accounts Payable 1 - - 2 - - 2 9 

Actuarial Federal Employees’ Compensation - - - - - - - 35 

Other 2 - - 4 1 - 41 449 

Total Liabilities 3 - - 6 2 - 44 505 

Unexpended Appropriations - - - - - 179 1 180 

Cumulative Results of Operations 136 309 211 73 90 63 304 3,331 

Total Liabilities and Net Position 139 309 211 79 92 242 349 4,016 

Statement of Net Cost For the Period Ended September 30, 2019 

Gross program costs 98 29 26 22 39 12 167 2,004 

Less Earned Revenue 97 6 - 30 46 5 159 1,646 

Net Cost of Operations 1 23 26 (8) (7) 7 8 358 

Statement of Changes in Net Position For the period Ended September 30, 2019 

Net Position Beginning of Period 114 128 155 55 42 237 200 2,411 

Non-Exchange Revenue - - - - - - 32 42 

Other Financing Sources 23 204 82 10 41 12 81 1,416 

Net Cost of Operations (1) (23) (26) 8 7 (7) (8) (358)

Change in Net Position 22 181 56 18 48 5 105 1,100 

Net Position End of Period $ 136 $ 309 $ 211 $ 73 $ 90 $ 242 $ 305 $ 3,511 
USDA | 2020 Agency Financial Report 155 

NOTE 19: Suborganization Program Costs 

FY 2020 

FPAC Business 

Center FSA CCC RMA NRCS FNS FSIS AMS APHIS FS

Farm Production and Conservation: 

Gross Costs $ 286 $ 15,770 $ 24,169 $ 11,842 $ 4,476 $ - $ - $ - $ - $ - 

Less: Earned Revenue 21 469 1,596 3,057 60 - - - - - 

Net Costs 265 15,301 22,573 8,785 4,416 - - - - - 

Food, Nutrition, and Consumer Services: 

Gross Costs - - - - - 123,345 - - - - 

Less: Earned Revenue - - - - - 61 - - - - 

Net Costs - - - - - 123,284 - - - - 

Food Safety: 

Gross Costs - - - - - - 1,370 - - - 

Less: Earned Revenue - - - - - - 264 - - - 

Net Costs - - - - - - 1,106 - - - 

Marketing and Regulatory Programs: 

Gross Costs - - - - - - - 4,044 1,726 - 

Less: Earned Revenue - - - - - - - 307 788 - 

Net Costs - - - - - - - 3,737 938 - 

Natural Resources and Environment: 

Gross Costs - - - - - - - - - 7,216 

Less: Earned Revenue - - - - - - - - - 905 

Net Costs - - - - - - - - - 6,311 

Rural Development: 

Gross Costs - - - - - - - - - - 

Less: Earned Revenue - - - - - - - - - - 

Net Costs - - - - - - - - - - 

Research, Education, and Economics: 

Gross Costs - - - - - - - - - - 

Less: Earned Revenue - - - - - - - - - - 

Net Costs - - - - - - - - - - 

Trade and Foreign Agricultural Affairs: 

Gross Costs - - - - - - - - - - 

Less: Earned Revenue - - - - - - - - - - 

Net Costs - - - - - - - - - - 

Staff Offices: 

Gross Costs - - - - - - - - - - 

Less: Earned Revenue - - - - - - - - - - 

Net Costs - - - - - - - - - - 

Total Gross Costs 286 15,770 24,169 11,842 4,476 123,345 1,370 4,044 1,726 7,216 

Less: Total Earned Revenue 21 469 1,596 3,057 60 61 264 307 788 905 

Net Cost of Operations $ 265 $ 15,301 $ 22,573 $ 8,785 $ 4,416 $ 123,284 $ 1,106 $ 3,737 $ 938 $ 6,311 
156 Section II | Financial Information 

FY 2020 RD ARS NASS NIFA ERS FAS Staff Offices Combined Total

Intra-entity 

Elimination Consolidated Total 

Farm Production and Conservation: 

Gross Costs $ - $ - $ - $ - $ - $ - $ - $ 56,543 $ (1,719) $ 54,824 

Less: Earned Revenue - - - - - - - 5,203 (44) 5,159 

Net Costs - - - - - - - 51,340 (1,675) 49,665 

Food, Nutrition, and Consumer Services: 

Gross Costs - - - - - - - 123,345 (954) 122,391 

Less: Earned Revenue - - - - - - - 61 (5) 56 

Net Costs - - - - - - - 123,284 (949) 122,335 

Food Safety: 

Gross Costs - - - - - - - 1,370 (49) 1,321 

Less: Earned Revenue - - - - - - - 264 (4) 260 

Net Costs - - - - - - - 1,106 (45) 1,061 

Marketing and Regulatory Programs: 

Gross Costs - - - - - - - 5,770 (143) 5,627 

Less: Earned Revenue - - - - - - - 1,095 (79) 1,016 

Net Costs - - - - - - - 4,675 (64) 4,611 

Natural Resources and Environment: 

Gross Costs - - - - - - - 7,216 (183) 7,033 

Less: Earned Revenue - - - - - - - 905 (17) 888 

Net Costs - - - - - - - 6,311 (166) 6,145 

Rural Development: 

Gross Costs 6,930 - - - - - - 6,930 (88) 6,842 

Less: Earned Revenue 3,601 - - - - - - 3,601 (10) 3,591 

Net Costs 3,329 - - - - - - 3,329 (78) 3,251 

Research, Education, and Economics: 

Gross Costs - 1,508 200 1,428 74 - - 3,210 (151) 3,059 

Less: Earned Revenue - 156 22 30 4 - - 212 (109) 103 

Net Costs - 1,352 178 1,398 70 - - 2,998 (42) 2,956 

Trade and Foreign Agricultural Affairs: 

Gross Costs - - - - - 506 - 506 (31) 475 

Less: Earned Revenue - - - - - 119 - 119 (47) 72 

Net Costs - - - - - 387 - 387 16 403 

Staff Offices: 

Gross Costs - - - - - - 1,616 1,616 (123) 1,493 

Less: Earned Revenue - - - - - - 1,239 1,239 (998) 241 

Net Costs - - - - - - 377 377 875 1,252 

Total Gross Costs 6,930 1,508 200 1,428 74 506 1,616 206,506 (3,441) 203,065 

Less: Total Earned Revenue 3,601 156 22 30 4 119 1,239 12,699 (1,313) 11,386 

Net Cost of Operations $ 3,329 $ 1,352 $ 178 $ 1,398 $ 70 $ 387 $ 377 $ 193,807 $ (2,128) $ 191,679 
USDA | 2020 Agency Financial Report 157 

FY 2019 

FPAC Business 

Center FSA CCC RMA NRCS FNS FSIS AMS APHIS FS

Farm Production and Conservation: 

Gross Costs $ 233 $ 2,603 $ 24,478 $ 10,018 $ 3,920 $ - $ - $ - $ - $ - 

Less: Earned Revenue 17 417 431 2,185 31 - - - - - 

Net Costs 216 2,186 24,047 7,833 3,889 - - - - - 

Food, Nutrition, and Consumer Services: 

Gross Costs - - - - - 93,573 - - - - 

Less: Earned Revenue - - - - - 48 - - - - 

Net Costs - - - - - 93,525 - - - - 

Food Safety: 

Gross Costs - - - - - - 1,355 - - - 

Less: Earned Revenue - - - - - - 249 - - - 

Net Costs - - - - - - 1,106 - - - 

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 

Rural Development: 

Gross Costs - - - - - - - - - - 

Less: Earned Revenue - - - - - - - - - - 

Net Costs - - - - - - - - - - 

Research, Education, and Economics: 

Gross Costs - - - - - - - - - - 

Less: Earned Revenue - - - - - - - - - - 

Net Costs - - - - - - - - - - 

Trade and Foreign Agricultural Affairs: 

Gross Costs - - - - - - - - - - 

Less: Earned Revenue - - - - - - - - - - 

Net Costs - - - - - - - - - - 

Staff Offices: 

Gross Costs - - - - - - - - - - 

Less: Earned Revenue - - - - - - - - - - 

Net Costs - - - - - - - - - - 

Total Gross Costs 233 2,603 24,478 10,018 3,920 93,573 1,355 1,563 1,605 6,336 

Less: Total Earned Revenue 17 417 431 2,185 31 48 249 306 1,048 858 

Net Cost of Operations $ 216 $ 2,186 $ 24,047 $ 7,833 $ 3,889 $ 93,525 $ 1,106 $ 1,257 $ 557 $ 5,478 
158 Section II | Financial Information 

FY 2019 RD ARS NASS NIFA ERS FAS Staff Offices Combined Total 

Intra-entity 

Elimination Consolidated Total 

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 

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 

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 

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 

Research, Education, and Economics: 

Gross Costs - 1,444 205 1,444 88 - - 3,181 (112) 3,069 

Less: Earned Revenue - 181 21 35 3 - - 240 (102) 138 

Net Costs - 1,263 184 1,409 85 - - 2,941 (10) 2,931 

Trade and Foreign Agricultural Affairs: 

Gross Costs - - - - - 434 - 434 (18) 416 

Less: Earned Revenue - - - - - 98 - 98 (40) 58 

Net Costs - - - - - 336 - 336 22 358 

Staff Offices: 

Gross Costs - - - - - - 1,422 1,422 (79) 1,343 

Less: Earned Revenue - - - - - - 968 968 (727) 241 

Net Costs - - - - - - 454 454 648 1,102 

Total Gross Costs 6,604 1,444 205 1,444 88 434 1,422 157,325 (3,104) 154,221 

Less: Total Earned Revenue 3,690 181 21 35 3 98 968 10,586 (1,012) 9,574 

Net Cost of Operations $ 2,914 $ 1,263 $ 184 $ 1,409 $ 85 $ 336 $ 454 $ 146,739 $ (2,092) $ 144,647 
USDA | 2020 Agency Financial Report 159

NOTE 20: 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

non-reimbursed 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.
160 Section II | Financial Information 

NOTE 21: Available Borrowing Authority, End of Period 

Available borrowing authority at September 30, 2020 and 2019 was $53,640 million and 

$41,658 million, respectively.

NOTE 22: Undelivered Orders at the End of the Period 

FY 2020 Federal Non-Federal FY 2019 Federal Non-Federal 

Paid $ 52 $ 1,313 Paid $ 13 $ 356 

Unpaid 4,541 78,440 Unpaid 2,772 58,083 

Total $ 4,593 $ 79,753 Total $ 2,785 $ 58,439 

NOTE 23: 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 
USDA | 2020 Agency Financial Report 161 

NOTE 24: Legal Arrangements Affecting Use of Unobligated 

Balances 

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 25: Explanation of Differences Between the SBR and the 

Budget of the U.S. Government 

The differences between the FY 2019 Statement of Budgetary Resources and the FY 2019 actual 

numbers presented in the FY 2021 Budget of the United States Government (Budget) are 

summarized below. 

FY 2019 

Item 

Budgetary 

Resources 

New Obligations & 

Upward 

Adjustments (Total) 

Distributed 

Offsetting Receipts Net Outlays 

Combined Statement of Budgetary Resources $ 271,914 $ 189,445 $ (3,082) $154,964 

Reconciling Items: 

Expired accounts (27,133) (277) - - 

APHIS Backdated Imputed Cost not Recorded on SBR - - - (7) 

Milk Market Orders Fund 58 58 - - 

Rounding (11) (13) - 4 

Budget of the United States Government $ 244,828 $ 189,213 $ (3,082) $154,961 

A comparison between the FY 2020 SBR and the FY 2020 actual numbers presented in the 

FY 2022 Budget cannot be performed as the FY 2022 Budget is not yet available. The FY 2022 

Budget is expected to be published in February 2021 and will be available from the U.S. 

Government Publishing Office. 
162 Section II | Financial Information 

NOTE 26: 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 2020 FY 2019 

Revenue Activity: 

Sources of Collections: 

Miscellaneous $ 167 $ 193 

Total Cash Collections 167 193 

Accrual Adjustments 10 8 

Total Custodial Revenue 177 201 

Disposition of Collections: 

Transferred to Others: 

Treasury (150) (184) 

(Increase )/Decrease in Amounts Yet to be Transferred (27) (17) 

Net Custodial Activity $ - $ - 
USDA | 2020 Agency Financial Report 163 

NOTE 27: Fiduciary Activities 

The department is responsible for one fiduciary fund. The 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, 2020 and 2019 

Item Rural Housing Insurance Fund 

FY 2020 

Rural Housing Insurance Fund 

FY 2019 

Fiduciary Net Assets, Beginning of Year $ 123 $ 124 

Contributions 461 439 

Disbursements To and On Behalf of Beneficiaries (469) (440) 

Increases/(Decrease) in Fiduciary Net Assets (8) (1) 

Fiduciary Net Assets, End of Year $ 115 $ 123 

Fiduciary Net Assets 

As of September 30, 2020 and 2019 

Item Rural Housing Insurance Fund 

FY 2020 

Rural Housing Insurance Fund 

FY 2019 

Fiduciary Assets: 

Cash and Cash Equivalents $ 115 $ 123 

Total Fiduciary Net Assets $ 115 $ 123 
164 Section II | Financial Information 

NOTE 28: 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 

interest revenue – investments, cost capitalization offset and bad debt expense. 

Other components of the budget outlays that are not part of net operating cost includes primarily 

accounts receivable, interest revenue, penalties and fines revenue, donated revenue, other revenue, 

collections for others, and financing sources transferred in from custodial statement collections. 
USDA | 2020 Agency Financial Report 165 

FY 2020 Intragovernmental With the Public Total 

Net Cost of Operations $ 4,019 $ 187,660 $ 191,679 

Components of Net Operating Cost Not Part of the Budgetary Outlays: 

Property, Plant, and Equipment Depreciation - (277) (277) 

Property, Plant, and Equipment Disposal & Reevaluation - 17 17 

Year-End Credit Reform Subsidy Reestimates 2,737 - 2,737 

Other - 301 301 

Increase/(Decrease) in Assets: 

Accounts Receivable 731 465 1,196 

Loans Receivable - 3,489 3,489 

Other Assets 40 867 907 

(Increase)/Decrease in Liabilities not Affecting Budget Outlays: 

Accounts Payable (1,413) (9,198) (10,611) 

Salaries and Benefits (31) (110) (141) 

Insurance and Guarantee Program Liabilities - 1,163 1,163 

Environmental and Disposal Liabilities - (21) (21) 

Other Liabilities (Unfunded Leave, Unfunded Federal Employees Compensation Act 

(FECA), Actuarial FECA) 

 (62) (2,566) (2,628) 

Other Financing Sources: 

Federal employee retirement benefit costs paid by OPM and imputed to the agency (855) - (855) 

Total Components of Net Operating Cost Not Part of the Budget Outlays 1,147 (5,870) (4,723) 

Components of the Budget Outlays That Are Not Part of Net Operating Cost 

Acquisition of Capital Assets - 116 116 

Acquisition of Inventory - (5) (5) 

Transfers Out (In) Without Reimbursement (2,748) - (2,748)

Other (238) 167 (71) 

Total Components of Budgetary Outlays That Are Not Part of Net Operating Cost (2,986) 278 (2,708) 

Net Outlays 2,180 182,068 184,248 

Related Amounts on the Statement of Budgetary Resources 

Outlays, Net 187,111 

Distributed Offsetting Receipts (2,863) 

Agency Outlays, Net $ 184,248 
166 Section II | Financial Information 

FY 2019 Intragovernmental With the Public Total 

Net Cost of Operations $ 4,138 $ 140,509 $ 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 2,162 - 2,162 

Other 6 178 184 

Increase/(Decrease) in Assets: 

Accounts Receivable 455 3,385 3,840 

Loans Receivable - 852 852 

Other Assets 3 (108) (105) 

(Increase)/Decrease in Liabilities not Affecting Budget Outlays: 

Accounts Payable (208) (425) (633) 

Salaries and Benefits (8) (19) (27) 

Insurance and Guarantee Program Liabilities - (2,901) (2,901) 

Environmental and Disposal Liabilities - (17) (17) 

Other Liabilities (Unfunded Leave, Unfunded Federal Employees Compensation Act 

(FECA), Actuarial FECA) 

 (53) 5,788 5,735 

Other Financing Sources: 

Federal employee retirement benefit costs paid by OPM and imputed to the agency (1,020) - (1,020) 

Total Components of Net Operating Cost Not Part of the Budget Outlays 1,337 6,465 7,802 

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 (2,227) - (2,227) 

Other (197) 34 (163) 

Total Components of Budgetary Outlays That Are Not Part of Net Operating Cost (2,424) 127 (2,297) 

Net Outlays 3,051 147,101 150,152 

Related Amounts on the Statement of Budgetary Resources 

Outlays, Net 153,234 

Distributed Offsetting Receipts (3,082) 

Agency Outlays, Net $ 150,152 
USDA | 2020 Agency Financial Report 167 

NOTE 29: Disclosure Entities and Related Parties 

Disclosure Entities 

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. 

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 2020, 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 $5.8 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: 

(1) The Secretary 

(2) The Under Secretary of Agriculture for Research, Education, and Economics 

(3) The Administrator of the Agricultural Research Service 

(4) The Director of the National Institute of Food and Agriculture 

(5) The Director of the National Science Foundation 
168 Section II | Financial Information 

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 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—

(1) the individual; 

(2) a relative (as defined in section 109 of the Ethics in Government Act of 1978 (5 U.S.C. 

App.)) of that individual; or 

(3) 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. 

In 2016, USDA and FFAR agreed to a Memorandum of Understanding defining in general terms 

the basis on which the parties will cooperate and to articulate the nature of the relationship 

between USDA and FFAR. The MOU will be effective for a term of five years, which term shall 

be renewable by mutual agreement of the Parties. 
USDA | 2020 Agency Financial Report 169 

Related Party 

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 Federally-sanctioned 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 2020, the non-Federal costs of administrating Federal milk marketing orders, including 

salaries and expenses, travel, and rent for office space were estimated to be $77 million. 

The Secretary’s oversight responsibilities of marketing orders by AMS is funded by the Funds 

for Strengthening Markets, Income and Supply (Section 32) account. 
170 Section II | Financial Information 

NOTE 30: Insurance Programs 

In crop year 2020, there were approximately 1.1 million standard reinsurance and livestock 

policies totaling approximately $127,000 million insurance protection in force. 

The AIPs for Fiscal Year 2020 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 

• XL Reinsurance America Inc. 

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 2020 and 2019. 
USDA | 2020 Agency Financial Report 171 

Federal Crop Insurance Program Resource and Resources Used 

Resource Fiscal Year 2020 Uses Fiscal Year 2020 

Producer Premiums Collected $ 3,891 Obligations for Delivery Costs $ 1,686 

Producer Fees Collected 23 Obligations for Indemnities 9,886 

Underwriting Loss Collected from AIPs 35 Obligations for Underwriting Gain 533

Appropriations 8,217 Obligations for Initiatives & Other Costs 38

Appropriations Transfers (13) 

Unobligated Balance Beginning of Year 584 Unobligated Balance End of Year 594

Total $ 12,737 Total $ 12,737 

Federal Crop Insurance Program Resource and Resources Used 

Resource Fiscal Year 2019 Uses Fiscal Year 2019 

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 obligated $66 million in S&E funds to administer 

the Federal Crop Insurance Program in 2020. 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 order to provide COVID-19 relief, RMA allowed additional time for policyholders to make 

payment of premium and administrative fees for the August 15 premium billing date, 

representing most of the year’s premium due. The estimated deferred collections in fiscal year 

2020 is $2,500 million. 

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 $2,500 million. 

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 2020, 

the catastrophic risk protection fees were $655 per crop per county and $30 for additional levels 

coverage per crop per county. 
172 Section II | Financial Information 

FCIC may request the Secretary of Agriculture to provide borrowing authority funds of the 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.

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-of-fiscal-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. 

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 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. 
USDA | 2020 Agency Financial Report 173 

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. 

Liability for Unearned Insurance 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 insurance 

premiums in Note 15, Other Liabilities. 

2020 2019

Liability for Unearned Insurance Premiums $ 750 $ 674

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. 

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. 
174 Section II | Financial Information 

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. 

Estimated Losses on Insurance Claims. 

The following tables show information for changes in the liability for estimated losses on 

insurance claims classified as liability for unpaid insurance claims and actuarial liabilities for 

federal insurance and guarantee programs in Note 15, Other Liabilities. 

Changes in Estimated Losses on Insurance Claims 2020 2019

Beginning Balance $ 4,923 $ 6,091 

Claims Expenses 9,886 9,313 

Payments to Settle Claims (9,974) (9,001) 

Adjustment of Accruals for Estimated Losses (56) (1,480) 

Ending Balance $ 4,891 $ 4,923 

The Claims Expenses represents actual claims reported. In fiscal year 2020 the actual claims 

reported were $573 million more than fiscal year 2019. This was a result of higher losses related 

to reinsurance year 2019. Payments to Settle Claims are the actual payments to producers. 

The Adjustment of Accrual for Estimated Losses is the reversal of the prior year accrual 

combined with the current year accrual for estimated losses. The indemnity projection is based on 

two major factors: losses due to a shortfall in yield and changes in commodity prices impacting 

revenue plans. The principal data source for yield projections is the NASS Crop Production 

report. The NASS Crop Production report is considered to represent USDA’s official perspective 

on the current state of agricultural production. It is based on a survey of growers along with 

inspections of randomly selected sections of farms. Although the NASS Crop Production report is 

scrutinized by multiple sources, it is still an estimate and is subject to some uncertainty. 

The revenue plans of insurance base their indemnities on the futures prices for specific contracts 

and exchanges. The best prediction of the final price for the futures contract is the most current 

price of the relevant commodities exchange. At the time the indemnity projection is made, up-todate futures prices are taken from multiple exchanges. Again, this is subject to uncertainty due to 

fluctuations in markets. 
USDA | 2020 Agency Financial Report 175 

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. 

Underwriting Gain 2020 2019

Current Year Estimated Gains $ 1,525 $ 1,143 

Actual Underwriting Gains 533 2,127 

Total Underwriting Gain Liability $ 2,058 $ 3,270 

The underwriting gain liability for fiscal year 2020 includes amounts for reinsurance year 2019 

and 2020. The reinsurance year 2020 estimated underwriting gain of $1,525 million was based 

on an estimated loss ratio of .81. The actual reinsurance year 2019 underwriting gain of 

$533 million was based on an actual loss ratio of 1.03 and will be paid in fiscal year 2021. 

At the end of fiscal year 2019, the underwriting gain liability includes amounts for reinsurance 

years 2018 and 2019. The reinsurance year 2019 estimated underwriting gain was $1,143 million 

and was based on a loss ratio of .92. The actual reinsurance year 2018 underwriting gain of 

$2,127 million was based on an actual loss ratio of .74 and was paid in fiscal year 2020. 
176 Section II | Financial Information 

NOTE 31: COVID-19 Activity 

The tables below summarize supplemental funding for COVID-19 and its financial statement impact.

COVID-19 Activity 

For the Year Ended 9/30/2020

Account Name 

Treasury 

Account Symbol Purpose 

Total 

Supplemental

Total 

Obligations

Amounts 

Remaining to 

be Obligated Total Outlays 

FSA- Processing, Research and Marketing, Office of the Secretary 12X0115 CARES Act $ 30,000 $ 13,521 $ 16,479 $ 10,689 

FSA-Salaries and Expenses 120/10600 CARES Act 3 3 - 3 

FNS-Supplemental Nutrition Assistance Program (SNAP) 120/13505 Families First Coronavirus Response Act 100 100 - 96 

FNS-SNAP 120/13505 CARES Act 15,810 15,750 60 15,688 

FNS-SNAP 1203505 Families First Coronavirus Response Act 12,800 11,718 1,082 8,425 

FNS-Commodity Assistance Program (CAP) 120/13507 Families First Coronavirus Response Act 400 214 186 96 

FNS-CAP 120/13507 CARES Act 450 391 59 161 

FNS-Special Supplemental Nutrition Program for Women, Infants and Children (WIC) 120/13510 Families First Coronavirus Response Act 500 - 500 - 

FNS-Child Nutrition Programs (CN) 120/13539 CARES Act 8,800 7,039 1,761 5,511 

FSIS-Food Safety and Inspection Service 120/13700 CARES Act 33 17 16 12 

AMS- Processing, Research and Marketing, Office of the Secretary 1200115 Families First Coronavirus Response Act 4,000 3,907 93 2,464 

AMS- Marketing Services 120/12500 CARES Act 45 13 32 12 

APHIS- Salaries and Expenses 120/11600 CARES Act 55 55 - 55 

Forest Service-Capital Improvement and Maintenance 120/11103 CARES Act 27 8 19 2 

Forest Service-Forest and Rangeland Research 120/11104 CARES Act 3 - 3 - 

Forest Service-National Forest System 120/11106 CARES Act 34 16 18 7 

Forest Service-Wildland Fire Management 120/11115 CARES Act 7 5 2 4 

Rural Development- Distance Learning, Telemedicine, and Broadband Program 12X1232 CARES Act 25 1 24 1 

Rural Development-Distance Learning, Telemedicine, and Broadband Program 120/11232 CARES Act 100 88 12 3 

Rural Development-Rural Business Program Account 120/11902 CARES Act 21 7 14 2 

FAS- Salaries and Expenses 120/12900 CARES Act 4 2 2 2 

OIG-Office of Inspector General 120/10900 CARES Act 1 1 - 1 

Total $ 73,218 $ 52,856 $ 20,362 $ 43,234 
USDA | 2020 Agency Financial Report 177 

COVID-19 Activity 

As of and For the Period Ended 9/30/2020

Account Name 

FSA- Processing, 

Research and 

Marketing, Office 

of the Secretary 

FSA- Salaries and 

Expenses 

FNS-Supplemental 

Nutrition 

Assistance 

Program (SNAP) FNS-SNAP FNS-SNAP 

FNS-Commodity 

Assistance 

Program (CAP) FNS-CAP 

FNS-Special 

Supplemental 

Nutrition Program 

for Women, 

Infants and 

Children (WIC) 

Treasury Account Symbol 12X0115 120/10600 120/13505 120/13505 1203505 120/13507 120/13507 120/13510 

Purpose CARES Act CARES Act 

Families First 

Coronavirus 

Response Act 

CARES Act 

Families First 

Coronavirus 

Response Act 

Families First 

Coronavirus 

Response Act 

CARES Act 

Families First 

Coronavirus 

Response Act 

Intragovernmental: 

Fund Balance with Treasury $ 19,312 $ - $ 4 $ 122 $ 4,375 $ 304 $ 289 $ 500 

Total Intragovernmental Assets 19,312 - 4 122 4,375 304 289 500 

Accounts Receivable, Net 3 - - - - - - - 

Total Assets 19,315 - 4 122 4,375 304 289 500 

Accounts payable 1,560 - - - - 2 4 - 

Benefits due and payable - - 4 62 3,293 - - - 

Other liabilities - - - - - 54 65 - 

Total liabilities 1,560 - 4 62 3,293 56 69 - 

Unexpended appropriations 4,217 - - 60 1,082 248 220 500 

Cumulative results of operations 13,538 - - - - - - - 

Total Liabilities and Net Position 19,315 - 4 122 4,375 304 289 500 

Gross program costs 12,245 3 100 15,750 11,718 152 230 - 

Net Cost of Operations 12,245 3 100 15,750 11,718 152 230 - 

Net position beginning of period - - - - - - - - 

Other financing sources 30,000 3 100 15,810 12,800 400 450 500 

Net cost of operations (12,245) (3) (100) (15,750) (11,718) (152) (230) - 

Change in Net Position 17,755 - - 60 1,082 248 220 500 

Net Position End of Period $ 17,755 $ - $ - $ 60 $ 1,082 $ 248 $ 220 $ 500 
178 Section II | Financial Information 

Account Name 

FNS-Child Nutrition 

Programs (CN) 

FSIS-Food Safety 

and Inspection 

Service 

AMS-Processing, 

Research and 

Marketing, Office 

of the Secretary 

AMS-Marketing 

Services 

APHIS- Salaries and 

Expenses 

Forest ServiceCapital 

Improvement and 

Maintenance 

Forest ServiceForest and 

Rangeland 

Research 

Forest ServiceNational Forest 

System 

Treasury Account Symbol 120/13539 120/13700 1200115 120/12500 120/11600 120/11103 120/11104 120/11106 

Purpose CARES Act CARES Act 

Families First 

Coronavirus 

Response Act 

CARES Act CARES Act CARES Act CARES Act CARES Act 

Intragovernmental: 

Fund Balance with Treasury $ 3,289 $ 21 $ 1,536 $ 33 $ - $ 24 $ 3 $ 27 

Total Intragovernmental Assets 3,289 21 1,536 33 - 24 3 27 

Total Assets 3,289 21 1,536 33 - 24 3 27 

Accounts payable - - 117 - - 2 - - 

Benefits due and payable 1,528 - - - - - - - 

Other liabilities - 1 - - - - - - 

Total liabilities 1,528 1 117 - - 2 - - 

Unexpended appropriations 1,761 20 1,419 33 - 22 3 27 

Cumulative results of operations - - - - - - - - 

Total Liabilities and Net Position 3,289 21 1,536 33 - 24 3 27 

Gross program costs 7,039 13 2,581 12 55 5 - 7 

Net Cost of Operations 7,039 13 2,581 12 55 5 - 7 

Net position beginning of period - - - - - - - - 

Other financing sources 8,800 33 4,000 45 55 27 3 34 

Net cost of operations (7,039) (13) (2,581) (12) (55) (5) - (7) 

Change in Net Position 1,761 20 1,419 33 - 22 3 27 

Net Position End of Period $ 1,761 $ 20 $ 1,419 $ 33 $ - $ 22 $ 3 $ 27 
USDA | 2020 Agency Financial Report 179 

Account Name 

Forest ServiceWildland Fire 

Management 

Rural DevelopmentDistance Learning, 

Telemedicine, and 

Broadband Program 

Rural DevelopmentDistance Learning, 

Telemedicine, and 

Broadband Program 

Rural DevelopmentRural Business 

Program Account 

FAS-Salaries and 

Expenses 

OIG-Office of 

Inspector General Total 

Treasury Account Symbol 120/11115 12X1232 120/11232 120/11902 120/12900 120/10900 

Purpose CARES Act CARES Act CARES Act CARES Act CARES Act CARES Act 

Intragovernmental: 

Fund Balance with Treasury $ 3 $ 24 $ 97 $ 19 $ 2 $ - $ 29,984 

Total Intragovernmental Assets 3 24 97 19 2 - 29,984 

Accounts Receivable, Net - - - - - - 3 

Total Assets 3 24 97 19 2 - 29,987 

Accounts payable - - - - - - 1,685 

Benefits due and payable - - - - - - 4,887 

Other liabilities - - - - - - 120 

Total liabilities - - - - - - 6,692 

Unexpended appropriations 3 24 97 19 2 - 9,757 

Cumulative results of operations - - - - - - 13,538 

Total Liabilities and Net Position 3 24 97 19 2 - 29,987 

Gross program costs 4 1 3 2 2 1 49,923 

Net Cost of Operations 4 1 3 2 2 1 49,923 

Net position beginning of period - - - - - - - 

Other financing sources 7 25 100 21 4 1 73,218 

Net cost of operations (4) (1) (3) (2) (2) (1) (49,923) 

Change in Net Position 3 24 97 19 2 - 23,295 

Net Position End of Period $ 3 $ 24 $ 97 $ 19 $ 2 $ - $ 23,295 
180 Section II | Financial Information 

RMA took numerous actions to provide relief in the face of the pandemic to ensure crop 

insurance continued to provide a farm safety net under such unprecedented times. RMA did not 

receive direct budgetary resources to respond to COVID-19 and most of the actions provided 

reporting flexibilities to AIP’s and producers. The most significant action involving financial 

resources was to allow additional time for policyholders to make payment of premium and 

administrative fee. The amount of this deferral is estimated to be $2,500 million. 

In accordance with the CARES Act, CCC received an appropriation for its Realized Loss 

Reimbursement based on financial results as of June 30, 2020, to reimburse FY 2020 losses up to 

$14,000 million. The reimbursement was meant to ensure that CCC had adequate funding to 

support producers affected by the COVID-19 pandemic. CCC typically receives the appropriation 

for reimbursement of realized losses in the first quarter of the following fiscal year. In addition, 

CCC transferred $6,500 million to the Office of the Secretary to provide additional funding for 

the Coronavirus Food Assistance Program. 
USDA | 2020 Agency Financial Report 181 

NOTE 32: Subsequent Events 

Hurricane Delta struck southern United States in October 2020 after the balance sheet date but 

prior to the release of the financial statements. The hurricane resulted in significant flooding 

impacting crops covered in the Federal Crop Insurance program; however, the full impact is not 

yet known. 

NOTE 33: 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 2019 FR can be found here: https://www.fiscal.treasury.gov/reports-statements/

and a copy of the 2020 FR will be posted to this site as soon as it is released. 

The term “intragovernmental” is used in this note to refer to amounts that results from other 

components of the Federal Government. 

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, non-profit entities, and State, local, and foreign governments.
182 Section II | Financial Information 

Reclassification of Balance Sheet to Line Items Used for the Government-wide Balance Sheet as of September 30, 2020

FY2020 USDA Balance Sheet Line Items Used to Prepare FY 2020 Government-wide Balance Sheet 

Financial Statement Line Amounts Dedicated 

Collections 

All Other 

Amounts Eliminations Total Reclassified Financial Statement Line 

Assets 

Intragovernmental: 

Fund Balance with Treasury (Note 3) 195,418 3,503 191,915 195,418 Fund Balance with Treasury (Note 3) 

Investments (Note 5) 245 244 244 Federal investments (Note 5) 

1 1 Interest receivable - investments (Note 5) 

Accounts Receivable, Net (Note 6) 61 7,654 (7,654) - Accounts receivable, capital transfers 

5,290 (5,229) 61 Accounts receivable, net 

Other (Note 11) 27 52 (25) 27 Advances to others and prepayments 

Total Intragovernmental 195,751 3,748 204,911 (12,908) 195,751 Total Intra-governmental 

Cash and Other Monetary Assets (Note 4) 381 381 381 Cash and other monetary assets (Note 4) 

Investments (Note 5) 3 3 3 Securities and investments (Note 5) 

Accounts Receivable, Net (Note 6) 3,812 119 3,693 3,812 Accounts receivable, net (Note 6) 

Direct Loan and Loan Guarantees, Net (Note 7) 110,235 110,235 110,235 Direct loan and loan guarantees receivable, net (Note 8) 

Inventory and Related Property, Net (Note 8) 18 18 18 Inventory and related property, net (Note 9) 

General Property, Plan, and Equipment, Net (Note 9) 2,399 118 2,281 2,399 General property, plant, and equipment, net (Note 10) 

Other (Note 11) 1,295 14 1,281 1,295 Other assets (Note 12) 

Total Assets 313,894 4,002 322,800 (12,908) 313,894 Total assets 

Stewardship PP&E (Note 10) 

Liabilities (Note 12): 

Intragovernmental: 

Accounts Payable 28 29 (1) 28 Accounts payable 

7,654 (7,654) - Accounts payable, capital transfers 

Debt (Note 13) 145,738 26 26 Interest payable - loans and not otherwise classified 

143,102 143,102 Loans payable 

2,610 2,610 Other Liabilities (Note 17) 

Other (Note 15) 10,196 233 233 Benefit program contributions payable (Note 15) 

5,305 (5,228) 77 Accounts payable 

34 (25) 9 Advances from others and deferred credits (Note 17) 

16 51 67 Other liabilities (without reciprocals) (Note 15) 

9,810 9,810 Liability to the General Fund of the U.S. Government for custodial and other non-entity assets (Note 17) 

Total Intragovernmental 155,962 16 168,854 (12,908) 155,962 Total Intra-governmental 

Accounts Payable 3,738 31 3,707 3,738 Accounts payable 

Loan Guarantee Liability (Note 7) 1,329 1,329 1,329 Loan guarantee liability (Note 8) 

Actuarial Federal Employees’ Compensation Act Liability 679 31 648 679 Federal employee and veteran benefits payable (Note 15) 

Environmental and Disposal Liabilities (Note 14) 239 239 239 Environmental and disposal liabilities (Note 16) 

Benefits Due and Payable 13,330 13,330 13,330 Benefits due and payable 

Other (Note 15 & 16) 21,577 7,703 7,703 Insurance and guarantee program liabilities 

703 703 Federal employee and veteran benefits payable (Note 15) 

450 12,721 13,171 Other liabilities (Notes 17, 18, and 19) 

Total Liabilities 196,854 528 209,234 (12,908) 196,854 Total liabilities 
USDA | 2020 Agency Financial Report 183 

FY2020 USDA Balance Sheet Line Items Used to Prepare FY 2020 Government-wide Balance Sheet 

Financial Statement Line Amounts Dedicated 

Collections 

All Other 

Amounts Eliminations Total Reclassified Financial Statement Line 

Commitments and Contingencies (Note 17) 

Net Position: 

Unexpended Appropriations - Funds from Dedicated 

Collections (Combined Totals) (Note 18) 191 191 191 

Unexpended appropriations - Funds from Dedicated Collections 

Unexpended Appropriations - All Other Funds (Combined 

Totals) 82,751 82,751 82,751 

Unexpended appropriations - Funds other than those from Dedicated Collections 

Cumulative Results of Operations - Funds from Dedicated 

Collections (Combined Totals) (Note 18) 3,283 2,033 2,033 

Cumulative results of operations - Funds from Dedicated Collections 

1,250 1,250 Reconciling Item - GTAS Presents This Line as a Consolidated Total 

Cumulative Results of Operations - All Other Funds 

(Combined Totals) 30,815 32,065 32,065 

Cumulative results of operations - Funds other than those from Dedicated Collections 

(1,250) (1,250) Reconciling Item - GTAS Presents This Line as a Consolidated Total 

Total Net Position - Funds from Dedicated Collections 3,474 3,474 3,474 Total net position - Funds from Dedicated Collections (Note 20) (Combined or Consolidated) 

Total Net Position - All Other Funds 113,566 113,566 113,566 Total net position - Funds other than those from Dedicated Collections (Combined or Consolidated) 

Total Net Position 117,040 3,474 113,566 117,040 Total Net Position 

Total Liabilities and Net Position 313,894 4,002 322,800 (12,908) 313,894 Total Liabilities and Net Position 
184 Section II | Financial Information 

Reclassification of Statement of Net Cost to Line Items Used for the Government-wide Statement of Net Cost for the Year Ending September 30, 2020

FY 2020 USDA SNC Line Items Used to Prepare FY 2020 Government-wide SNC 

Financial Statement Line Amounts Dedicated 

Collections 

All Other 

Amounts Eliminations Total Reclassified Financial Statement Line 

Gross Costs Gross Cost 

1,882 192,645 194,527 Non-federal gross cost 

Federal gross cost 

79 1,813 1,892 Benefit program costs (RC 26)/2 

68 2,916 (2,129) 855 Imputed costs (RC25)/2 

118 3,648 (2,472) 1,294 Buy/Sell Cost (RC24)/2 

14 14 Purchase of assets (RC 24)/2 

3,986 3,986 Borrowing and other interest expense (RC05)/2 

23 488 511 Other expenses (without reciprocals) (RC 29) 

(14) (14) Reconciling - Purchase of assets 

288 12,851 (4,601) 8,538 Total federal gross cost 

Total Gross Costs 203,065 2,170 205,496 (4,601) 203,065 Department total gross cost 

Earned Revenue Earned revenue 

1,234 8,834 10,068 Non-federal earned revenue 

Federal earned revenue 

19 3,040 (2,472) 587 Buy/sell revenue (exchange) (RC24)/2 

14 14 Purchase of assets offset (RC 24) / 2 

5 1 6 Federal securities interest revenue including associated gains and losses (exchange) (RC 03)/2 

640 640 Borrowing and other interest revenue (exchange) (RC 05)/2 

95 95 Collections Transferred in to a TAS Other Than the General Fund of the U.S. Government - Exchange (RC 13) 

(5) (5) 

Accrual of Custodial Collections Yet to be Transferred to a TAS Other Than the General Fund of the U.S. Government - Exchange 

(RC 14) 

(5) (5) Reconciling - Custodial revenue 

(14) (14) Reconciling - Purchase of assets offset 

119 3,671 (2,472) 1,318 Total federal earned revenue 

Less: Total Earned Revenue 11,386 1,353 12,505 (2,472) 11,386 Department total earned revenue 

Net Cost of Operations (Note 19) 191,679 817 192,991 (2,129) 191,679 Net cost of operations 
USDA | 2020 Agency Financial Report 185 

Reclassification of Statement of Changes in Net Position to Line Items Used for Government-wide Statement of Operations and Changes in Net Position for the Year Ending September 30, 2020

FY 2020 USDA SCNP Line Items Used to Prepare FY 2020 Government-wide SCNP 

Financial Statement Line Amounts Dedicated 

Collections 

All Other 

Amounts Eliminations Total Reclassified Financial Statement Lines 

Unexpended Appropriations: 

Beginning Balances 71,451 180 71,271 71,451 Net position, beginning of period 

Budgetary Financing Sources: 

Appropriations Received 212,793 11 212,782 212,793 Appropriations Received as Adjusted (Rescissions and Other Adjustments) (RC 41)/1 

4,033 (4,033) - Non-expenditure transfers-in of unexpended appropriations and financing sources (RC 08) /1 

Appropriations Transferred In (Out) (50) (4,083) 4,033 (50) Non-expenditure transfers-out of unexpended appropriations and financing sources (RC 08) /1 

Other Adjustments (8,931) (8,931) (8,931) Appropriations Received as Adjusted (Rescissions and Other Adjustments) (RC 41)/1 

Appropriations Used (192,321) (192,321) (192,321) Appropriations Used (RC 39) 

Total Budgetary Financing Sources 11,491 11 11,480 11,491 Total Budgetary Financing Sources 

Total Unexpended Appropriations 82,942 191 82,751 82,942 Total Unexpended Appropriations 

Cumulative Results of Operations: 

Beginning Balances 14,663 3,331 11,332 14,663 Net position, beginning of period 

Budgetary Financing Sources: 

Other Adjustments (340) (340) (340) Revenue and Other Financing Sources - Cancellations (RC 36) 

Appropriations Used 192,321 192,321 192,321 Appropriations expended (RC 38)/1 

Non-exchange Revenue 22,413 1 4 5 Other Taxes and Receipts 

133 22,275 22,408 

Collections transferred into a TAS Other Than the General Fund of the U.S. Government - Nonexchange 

(RC 15) 

Donations and Forfeitures of Cash and Equivalents 2 1 1 2 Other Taxes and Receipts 

Transfers In (Out) without Reimbursement (567) 15,266 76 (15,199) 143 Appropriation of unavailable special or trust fund receipts transfers-in (RC 07)/1 

(75) (15,124) 15,199 - Appropriation of unavailable special or trust fund receipts transfers-out (RC 07) /1 

6 80,486 (80,485) 7 Non-expenditure Transfers-In of Unexpended Appropriations and Financing Sources (RC 08)/1 

(14,435) (66,767) 80,485 (717) Non-expenditure Transfers-Out of Unexpended Appropriations and Financing Sources (RC 08)/1 

2 154 (156) - Expenditure transfers-in of financing sources (RC 09) /1 

(156) 156 - Expenditure transfers-out of financing sources (RC 09)/1 

(16) (995) 1,011 - Non-expenditure Transfers-Out of Financing Sources - Capital Transfers (RC 11) 

Other Financing Sources (Non-Exchange): 

Transfers In (Out) without Reimbursement 3 1,011 (1,011) - Non-expenditure Transfer-In of Financing Sources - Capital Transfers (RC 11) 

2,793 (2,791) 2 Transfers-In Without Reimbursement (RC 18)/1 

(2,790) 2,791 1 Transfers-Out Without Reimbursement (RC 18)/1 

Imputed Financing 855 68 2,916 (2,129) 855 Imputed Financing Sources (RC 25)/1 

Other (3,573) (182) (3) (185) Other Taxes and Receipts 

129 129 Reconciling - Custodial Revenue - Other taxes and receipts 

(3,016) (3,016) Non-entity collections transferred to the General Fund of the U.S. Government (RC 44) 

(129) (129) 

Reconciling - Custodial Revenue - Non-entity collections transferred to the General Fund of the U.S. 

Government (RC 44) 

(372) (372) 

Accrual for non-entity amounts to be collected and transferred to the General Fund of the U.S. 

Government (RC 48) 

(5) (5) 

Accrual of Collections Yet to be Transferred to a TAS Other Than the General Fund of the U.S. 

Government - Nonexchange (RC 16) 

5 5 

Reconciling - Custodial Revenue - Accrual of Collections Yet to be Transferred to a TAS Other Than the 

General Fund of the U.S. Government - Nonexchange (RC 16) 

Total Financing Sources 211,114 769 212,474 (2,129) 211,114 Total Financing Sources 

Net Cost of Operations (191,679) (817) (192,991) 2,129 (191,679) Net Cost of Operations 

Net Change 19,435 (48) 19,483 19,435 Net Change 

Cumulative Results of Operations 34,098 3,283 30,815 34,098 Cumulative Results of Operations 

Net Position 117,040 3,474 113,566 117,040 Net Position 
186 Section II | Financial Information 

▪ 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 30,000 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 

3,098 buildings on 403,307 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 28 sites, including 12 parcels of owned land, 

223 buildings, and about 222 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 roads, trails and 

bridges, are based on condition surveys performed on a 5-year revolving schedule. 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. Bridge class assessments occur 

on a 2-year or 4-year revolving schedule. To-date, surveys of all administrative buildings, dams, 

bridges, roads open to passenger cars, and recreation sites have been accomplished.

ARS, APHIS, and NRCS use similar condition surveys to estimate DM&R on all major classes 

of its PP&E and heritage assets. 
USDA | 2020 Agency Financial Report 187 

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. 

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 
188 Section II | Financial Information 

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. 

Deferred Maintenance and Repair Costs 

Asset Category 

FY 2020 Ending 

Balance 

FY 2020 Beginning 

Balance 

FY 2019 Ending 

Balance 

FY 2019 Beginning 

Balance 

General PP&E $ 6,343 $ 5,663 $ 5,663 $ 5,648 

Heritage Assets 223 210 210 180 

Total $ 6,566 $ 5,873 $ 5,873 $ 5,828 

DM&R costs increased mainly due to the estimate for passenger car roads within the NFS. 

The remaining increase is spread across all categories within General PP&E including bridges, 

buildings, dams, minor constructed features, trails, trail bridges, wastewater systems, and 

water systems. 
USDA | 2020 Agency Financial Report 189 

Combining Statement of Budgetary Resources (Unaudited) 

FPAC 

Business 

Center FSA CCC RMA NRCS FNS FSIS AMS APHIS 

FY 2020 

Budgetary Budgetary 

NonBudgetary 

Financing 

Accounts Budgetary 

NonBudgetary 

Financing 

Accounts Budgetary Budgetary Budgetary Budgetary Budgetary Budgetary 

Budgetary Resources: 

Unobligated balance from prior year budget authority, net $ 8 $ 5,146 $ 226 $ 1,175 $ 111 $ 626 $ 6,340 $ 40,053 $ 91 $ 856 $ 719 

Appropriations (discretionary and mandatory) 257 32,383 - 1,769 - 8,331 5,871 136,090 1,105 5,732 1,425 

Borrowing authority (discretionary and mandatory) - - 4,012 35,525 432 - - - - - - 

Spending authority from offsetting collections (discretionary and mandatory) 22 314 2,106 18 117 3,948 140 59 267 196 217 

Total budgetary resources 287 37,843 6,344 38,487 660 12,905 12,351 176,202 1,463 6,784 2,361 

Status of Budgetary Resources: 

New obligations and upward adjustments (total) (Note 23) 266 18,142 4,081 37,985 436 12,303 6,219 130,168 1,348 5,984 1,761 

Unobligated balance, end of year: 

Apportioned, unexpired accounts 14 19,573 1,958 49 41 599 3,483 16,501 105 354 545 

Exempt from apportionment, unexpired accounts - - - - - - - - - 7 - 

Unapportioned, unexpired accounts - 73 305 452 183 - 7 334 - 421 2 

Unexpired unobligated balance, end of year 14 19,646 2,263 501 224 599 3,490 16,835 105 782 547 

Expired unobligated balance, end of year 7 55 - 1 - 3 2,642 29,199 10 18 53 

Unobligated balance, end of year (total) 21 19,701 2,263 502 224 602 6,132 46,034 115 800 600 

Total budgetary resources 287 37,843 6,344 38,487 660 12,905 12,351 176,202 1,463 6,784 2,361 

Budget Authority and Outlays, Net 

Outlays, net (discretionary and mandatory) 251 14,540 18,636 10,490 4,278 114,224 1,061 3,830 1,390 

Distributed offsetting receipts (-) - (217) (23) - (1) (5) (18) (195) (8) 

Agency outlays, net (discretionary and mandatory) $ 251 $ 14,323 $ 18,613 $ 10,490 $ 4,277 $ 114,219 $ 1,043 $ 3,635 $ 1,382 

Disbursements, net (total) (mandatory) $ 1,452 $ (58) 
190 Section II | Financial Information 

FS RD ARS NASS NIFA ERS FAS 

Staff 

Offices Total 

FY 2020 

Budgetary Budgetary 

NonBudgetary 

Financing 

Accounts Budgetary Budgetary Budgetary Budgetary Budgetary Budgetary Budgetary 

NonBudgetary 

Financing 

Accounts 

Budgetary Resources: 

Unobligated balance from prior year budget authority, net $ 3,146 $ 8,103 $ 5,621 $ 826 $ 17 $ 727 $ 6 $ 301 $ 1,238 $ 69,378 $ 5,958 

Appropriations (discretionary and mandatory) 8,052 6,232 1 1,628 180 1,745 85 437 (196) 211,126 1 

Borrowing authority (discretionary and mandatory) - - 11,210 - - - - - - 35,525 15,654 

Spending authority from offsetting collections (discretionary and mandatory) 774 818 10,026 174 21 24 6 17 1,278 8,293 12,249 

Total budgetary resources 11,972 15,153 26,858 2,628 218 2,496 97 755 2,320 324,322 33,862 

Status of Budgetary Resources: 

New obligations and upward adjustments (total) (Note 23) 7,692 11,316 17,396 2,390 218 1,807 91 324 1,768 239,782 21,913 

Unobligated balance, end of year: 

Apportioned, unexpired accounts 2,279 2,580 9,258 217 - 751 4 340 479 47,873 11,257 

Exempt from apportionment, unexpired accounts - - - - - - - - - 7 - 

Unapportioned, unexpired accounts 2,000 1,187 204 - - (85) 1 10 35 4,437 692 

Unexpired unobligated balance, end of year 4,279 3,767 9,462 217 - 666 5 350 514 52,317 11,949 

Expired unobligated balance, end of year 1 70 - 20 - 23 1 81 39 32,223 - 

Unobligated balance, end of year (total) 4,280 3,837 9,462 237 - 689 6 431 553 84,540 11,949 

Total budgetary resources 11,972 15,153 26,858 2,627 218 2,496 97 755 2,321 324,322 33,862 

Budget Authority and Outlays, Net 

Outlays, net (discretionary and mandatory) 6,346 8,351 1,348 165 1,395 69 366 371 187,111 

Distributed offsetting receipts (-) (496) (1,924) (20) - (5) - - 49 (2,863) 

Agency outlays, net (discretionary and mandatory) $ 5,850 $ 6,427 $ 1,328 $ 165 $ 1,390 $ 69 $ 366 $ 420 $ 184,248 

Disbursements, net (total) (mandatory) $ 1,153 $ 2,547 
USDA | 2020 Agency Financial Report 191 

FPAC 

Business 

Center FSA CCC RMA NRCS FNS FSIS AMS APHIS 

FY 2019 

Budgetary Budgetary 

NonBudgetary 

Financing 

Accounts Budgetary 

NonBudgetary 

Financing 

Accounts Budgetary Budgetary Budgetary Budgetary Budgetary Budgetary 

Budgetary Resources: 

Unobligated balance from prior year budget authority, net $ - $ 2,807 $ 209 $ 1,035 $ 82 $ 582 $ 5,606 $ 34,903 $ 77 $ 518 $ 768 

Appropriations (discretionary and mandatory) 263 4,348 - 1,777 - 12,381 5,434 103,536 1,064 1,607 1,526 

Borrowing authority (discretionary and mandatory) - - 2,792 27,127 334 - - - - - - 

Spending authority from offsetting collections (discretionary and mandatory) 20 347 1,847 30 86 1,292 39 49 241 181 222 

Total budgetary resources 283 7,502 4,848 29,969 502 14,255 11,079 138,488 1,382 2,306 2,516 

Status of Budgetary Resources: 

New obligations and upward adjustments (total) (Note 23) 278 2,382 3,107 29,392 351 13,627 5,155 94,763 1,295 1,563 1,669 

Unobligated balance, end of year: 

Apportioned, unexpired accounts 5 4,939 1,516 215 38 621 3,247 16,742 74 221 779 

Exempt from apportionment, unexpired accounts - - - - - - - - - 1 - 

Unapportioned, unexpired accounts - 115 225 361 113 3 (2) 3,268 - 500 4 

Unexpired unobligated balance, end of year 5 5,054 1,741 576 151 624 3,245 20,010 74 722 783 

Expired unobligated balance, end of year - 66 - 1 - 4 2,679 23,715 13 21 64 

Unobligated balance, end of year (total) 5 5,120 1,741 577 151 628 5,924 43,725 87 743 847 

Total budgetary resources 283 7,502 4,848 29,969 502 14,255 11,079 138,488 1,382 2,306 2,516 

Budget Authority and Outlays, Net 

Outlays, net (discretionary and mandatory) 177 2,035 22,827 11,995 4,017 92,579 1,052 1,324 1,311 

Distributed offsetting receipts (-) - (27) (49) - 11 (2) (15) (180) (9) 

Agency outlays, net (discretionary and mandatory) $ 177 $ 2,008 $ 22,778 $ 11,995 $ 4,028 $ 92,577 $ 1,037 $ 1,144 $ 1,302 

Disbursements, net (total) (mandatory) $ 880 $ (19) 
192 Section II | Financial Information 

FS RD ARS NASS NIFA ERS FAS 

Staff 

Offices Total 

FY 2019 

Budgetary Budgetary 

NonBudgetary 

Financing 

Accounts Budgetary Budgetary Budgetary Budgetary Budgetary Budgetary Budgetary 

NonBudgetary 

Financing 

Accounts 

Budgetary Resources: 

Unobligated balance from prior year budget authority, net $ 1,518 $ 9,198 $ 4,412 $ 443 $ 20 $ 620 $ 3 $ 319 $ 393 $ 58,810 $ 4,703 

Appropriations (discretionary and mandatory) 7,766 6,005 84 1,703 176 1,730 87 428 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 1,111 8,679 141 21 23 2 75 1,113 5,582 10,612 

Total budgetary resources 9,959 16,314 24,088 2,287 217 2,373 92 822 2,632 242,476 29,438 

Status of Budgetary Resources: 

New obligations and upward adjustments (total) (Note 23) 7,152 8,114 15,090 1,477 217 1,674 88 541 1,510 170,897 18,548 

Unobligated balance, end of year: 

Apportioned, unexpired accounts 2,786 4,025 8,534 791 - 738 2 138 360 35,683 10,088 

Exempt from apportionment, unexpired accounts - - - - - - - - - 1 - 

Unapportioned, unexpired accounts 20 4,099 464 (1) - (61) - 9 727 9,042 802 

Unexpired unobligated balance, end of year 2,806 8,124 8,998 790 - 677 2 147 1,087 44,726 10,890 

Expired unobligated balance, end of year 1 76 - 20 - 22 2 134 35 26,853 - 

Unobligated balance, end of year (total) 2,807 8,200 8,998 810 - 699 4 281 1,122 71,579 10,890 

Total budgetary resources 9,959 16,314 24,088 2,287 217 2,373 92 822 2,632 242,476 29,438 

Budget Authority and Outlays, Net 

Outlays, net (discretionary and mandatory) 6,444 5,926 1,208 170 1,412 82 327 348 153,234 

Distributed offsetting receipts (-) (871) (1,760) (19) (4) (35) - (6) (116) (3,082) 

Agency outlays, net (discretionary and mandatory) $ 5,573 $ 4,166 $ 1,189 $ 166 $ 1,377 $ 82 $ 321 $ 232 $ 150,152 

Disbursements, net (total) (mandatory) $ 869 $ 1,730 
USDA | 2020 Agency Financial Report 193 

 Section III

Other Information 

▪ Response to Management Challenges 

The Office of Inspector General (OIG) provides oversight to U.S. Department of Agriculture 

(USDA or the Department) programs and operations to help ensure that USDA can provide the 

best possible service to the public and American agriculture. OIG focuses its efforts to advance 

the value, safety and security, and integrity of USDA programs. In providing such oversight, OIG 

makes recommendations to address agency programs and core management functions that may be 

vulnerable to waste, fraud, abuse, and mismanagement. These vulnerabilities can affect USDA’s 

ability to achieve its mission. Since the Reports Consolidation Act of 2000, OIG has annually 

reported on the Department’s progress in addressing its most critical management challenges. 

OIG has begun a process to improve how it presents USDA’s management challenges. The goal 

is to develop a more forward-looking approach for identifying and reporting these challenges, 

one that will emphasize new challenges on the horizon. 

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 and what remains to be done, if 

applicable. 

The following narratives summarize: 

• OIG identified management challenges; 

• USDA’s fiscal year (FY) 2020 agency accomplishments; and/or 

• FY 2021 planned actions to address these management challenges. 
194 Section III | Other Information 

CHALLENGE 1: 

USDA Needs to Improve Oversight and Accountability for its 

Programs 

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. Managers use these controls to ensure programs achieve intended results 

efficiently and effectively; they provide for program integrity and proper stewardship of 

resources. Since systemic control flaws can yield systemic program weaknesses, managers must 

continuously assess and improve their internal control systems. 

OIG Key Elements Identified: 

• Rural Housing Service (RHS)’s Multi-Family Housing (MFH) tenant certification files 

from selected States contained either inadequate documentation, errors in calculations, 

or both. 

• Natural Resources Conservation Service (NRCS) needs to improve the effectiveness of 

the Environmental Quality Incentives Program (EQIP)’s payment schedule process, 

including developing and implementing a process to validate component prices and 

ensuring the National Cost Team follows the improved payment schedule process. 

• NRCS did not annually review the component prices as required, and also did not 

consistently utilize a process for States to submit component price reconsiderations, 

which help ensure component prices more accurately reflect producer costs. 

Corrective Actions Completed and Planned: 

Rural Housing Service 

The overall issue is the property management’s lack of oversight for its programs, which can 

impair the agency’s efforts to verify tenant eligibility and provide accurate benefits to MFH 

tenants. MFH is in the process of organizing and implementing the required training for property 

management by December 31, 2020. 

Natural Resources Conservation Service 

The administration of payment schedules was transferred from the Office of the Regional 

Conservationists to the Policy and Program Analysis Division housed under the Management 

and Strategy Deputy Area. To mitigate the risk of improper payments, errors, and invalid 

scenarios, a direct data feed from the Payment Schedule Application (PSA) tool was integrated 

with the Program Contracts System (ProTracts). All component statuses in the PSA were 

changed from “Released” to “Auto Price Review” to ensure accuracy. Management streamlined 
USDA | 2020 Agency Financial Report 195 

the number of scenarios, components, and payment schedules required to be updated annually, 

resulting in less maintenance and oversight. A data dump of all vendor information and 

component price data was provided by the Client Experience Center (CEC), formerly Client 

Technology Services. Once all component prices are completed and reviewed in the external 

format, data will be transferred into the PSA. The National Core and Cost Teams streamlined the 

number of payment schedule scenarios and components requiring price updates. Annual 

technical review of all components and scenarios will continue to be performed by subject matter 

experts to ensure compliance with policy, conservation practice standards, and agency statutory 

and regulatory authorities. Internal audits were performed on financial data and documentation 

developed by the National Cost Team. 

CHALLENGE 2: 

Information Technology Security Needs Continuous 

Improvement 

Like other Departments, USDA faces threats to its information technology (IT) security, 

including threats from bad actors with the goal to exploit information system vulnerabilities. 

Despite efforts to strengthen its IT security posture, the Department still has not fully complied 

with the standards for safeguarding IT systems. 

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. 

Although Department leadership has emphasized overcoming these challenges and eventually 

reaching full compliance, the Department faces challenges in complying with the Federal 

Information Security Modernization Act (FISMA). 

OIG Key Elements Identified: 

• The Department and its agencies must also develop and implement an effective plan to 

mitigate security weaknesses identified in recommendations from prior fiscal years. 
196 Section III | Other Information 

• The Department and agencies did not fully implement the Federally-mandated controls to 

encrypt data. Until USDA is able to comply with Federal requirements and best practices, 

its systems and the sensitive data they contain could be at risk. 

Corrective Actions Completed and Planned: 

Office of the Chief Information Officer 

The draft policy titled “Privacy Policy and Compliance for Personally Identifiable Information 

(PII)” is currently progressing through the Department’s directives adjudication process. 

CHALLENGE 3: 

USDA Needs to Strengthen Program Performance and 

Performance Measures 

Each of USDA’s agencies should design, develop, and implement programs that reliably achieve 

their intended results. OIG has found that agencies do not always have adequate reviews or 

controls in place to supply the metrics necessary to evaluate programs. 

The Food Distribution Program on Indian Reservations (FDPIR) found that neither of the two 

Indian Tribal Organizations (ITO)— the organizations that distribute FDPIR locally—

we reviewed had submitted financial and participation reports by the required deadlines. 

OIG Key Elements Identified: 

• Food Nutrition Service (FNS) needs to put controls or processes in place to ensure that 

ITOs submitted required reports in a timely manner. 

• Without the necessary controls in place to ensure the reports are submitted on time, the 

metrics from those reports, such as expenses and participation levels, are unavailable to 

stakeholders. Additionally, without those metrics, FNS cannot timely and effectively 

assess program data to ensure program compliance and address any potential issues that 

may arise. 

• Agricultural Marketing Service (AMS) storage and handling of commodities for 

international food assistance programs found that warehouse operators did not 

consistently apply sanitation and safety standards to safeguard export food aid. 

• Language in the Export Food Aid Commodity (EFAC) Licensing Agreement for 

warehouse operators is too broad and can be left open to interpretation, leading to 

discrepancies in the application of standards by operators. 
USDA | 2020 Agency Financial Report 197 

• AMS should update the relevant guidance for sanitation and safety standards and the 

regulations for repairing EFAC bags. 

Corrective Actions Completed and Planned: 

Food Nutrition Service 

FNS updated its Risk-Based Management Evaluation Tool in April 2019 for FY 2020 

assessments to include new criteria on the timely submission of required reports. Additionally, 

the FNS’ Food Distribution Division (FDD) is finalizing guidance for all FNS Regional Offices 

that administer FDPIR to lay out follow-up and escalation procedures for untimeliness and 

noncompliance of reports related to the administration of FDPIR (for example, financial reports 

and monthly inventory reports). 

Agricultural Marketing Service 

A new notice has been drafted to inform the terminals and transload facilities of the permissible 

methods for mitigating losses due to damaged packaging for the food aid commodities. The draft 

notice is going through the internal review process and should be completed by November 30, 

2020. The new notice will be distributed to all relevant personnel when finalized. 

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, 

the Department 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 (high-risk) 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 with three in 2017. 
198 Section III | Other Information 

Finally, the Department substantially complied with four of the six improper payment 

requirements in FY 2018 compared with three in 2017. 

OIG Key Elements Identified: 

• Two USDA component agencies need to improve their overall financial management. 

• USDA needs to improve its IT Security and controls. 

• USDA needs to improve its controls over unliquidated obligations. 

Corrective Actions Completed and Planned for Financial Reporting: 

Food Nutrition Service 

FNS prepared a report to the necessary Congressional committees and the Office of Management 

and Budget (OMB) detailing the activities the agency has taken to complete the required actions 

for each consecutive year of noncompliance for the School Breakfast Program (SBP), as well as 

any new corrective actions the agency plans to take. The report to Congress and OMB was 

signed by the Office of the Secretary (OSEC) and delivered in late August 2020. The formal 

final action request is now being finalized. 

Farm Service Agency 

A notice was issued identifying causes of improper payments and reiterating applicable program 

policies. Deputy Administrators will reiterate the importance of following existing policies 

regarding signing and approving contracts before indicating approval in the applicable software 

system. Internal reviews will be conducted to enable earlier identification of errors that are 

occurring and the underlying reasons. Reviews will prompt communications on how policies and 

procedures should be applied. 

Livestock Forage Program (LFP) refresher training will be held for applicable states and 

counties. The root causes of improper payments will be stressed throughout several 

presentations. The Farm Service Agency (FSA) is identifying areas where software can be 

enhanced to mitigate errors, clarify policy, and provide training. This approach will enable 

earlier identification of errors and the underlying reasons, and prompt communications on how 

policies and procedures should be applied. A request for funding has been submitted to enhance 

LFP software with the ability to interface with farm record data to automatically generate a 

CCC-855, if needed, for owners/operators to complete to meet eligibility requirements. Software 

enhancements are contingent on budget availability. 

An updated Noninsured Crop Disaster Assistance Program (NAP) Checklist (CCC-770 NAP) 

has been issued that will assist NAP specialists to complete applications thoroughly with less 
USDA | 2020 Agency Financial Report 199 

administrative data errors The checklist is now required to be completed when an application for 

payment is filed. 

The Safety Net Division’s Disaster Assistance Section plans to complete additional NAP training 

for states with high error rates. The root causes of improper payments will be stressed throughout 

several presentations. 

Software enhancements were discussed that would require the Business File records to be read 

during the NAP payment process. Software enhancements are contingent on budget availability. 

Office of the Chief Financial Officer 

During FY 2020, the Department continued its efforts to reissue Unliquidated Obligations (ULO) 

Directive 2230-001 under the Directives Reform initiative. The report is a tool that reconciles to 

the general ledger and ensures that the ULO population is consistent, accurate, and complete. 

The ULO Directive was updated to (1) require the review of obligations inactive for 12 months 

and more than $100; (2) ensure internal ULO Aging Reports reconcile to the general ledger; and 

(3) ensure ULOs are categorized based on the nature of the activity to be researched.. 

CHALLENGE 5: 

USDA Needs to Improve Outreach Efforts 

USDA has emphasized its efforts to improve outreach, stressing that the Department must make 

significant progress to address past civil rights issues. Due to public attention concerning how 

USDA has treated members of socially disadvantaged groups, the Department faces challenges 

in earning those groups’ trust. 

OIG Key Elements Identified: 

• Florida State Agency sponsors of the Summer Food Service Program (SFSP) did not 

consistently ensure that all sites complied with FNS requirements and guidance related to 

outreach, promoted the program effectively, or served meals as announced in the State 

media campaign. 

• Florida State Agency should provide additional sponsor training on SFSP site-level 

outreach and strengthen its enforcement actions during site reviews. 

• Rural Development did not document their outreach activities for the Water and 

Environmental Programs in their designated system of record, Resource One. 

USDA has made progress to improve its outreach efforts. USDA has emphasized its efforts to 

improve outreach to new and beginning farmers and ranchers, local and regional food producers, 
200 Section III | Other Information 

women, and veterans. For example, the AMS Farmers Market and Local Food Promotion 

Program provides a competitive grants process to expand access to locally-produced agriculture 

products and develop new market opportunities for farmers, ranchers, and local and regional 

food businesses. In a recent audit of this program, we found that AMS officials effectively 

conducted program outreach and appeared cognizant of grant requirements. OIG’s review of 

Food Safety and Inspection Service’s (FSIS) Interstate Shipment (CIS) Program provides 

another example of the Department improving outreach for local and regional food producers. 

This program provides the opportunity to eligible State-inspected establishments with 25 or 

fewer employees in participating States to ship meat and poultry products across State lines and 

export them to foreign countries. In a recent audit of the CIS program, one of OIG’s objectives 

was to determine whether FSIS provides adequate enforcement and outreach; we found that 

FSIS’s enforcement and outreach for the CIS Program were adequate, and we had no reportable 

findings for this objective. 

Corrective Actions Completed and Planned for Financial Reporting: 

Food Nutrition Service 

FNS updated its Risk-Based Management Evaluation Tool in April 2019 for FY 2020 

assessments to include new criteria on the timely submission of required reports. Additionally, 

FNS’ Food Distribution Division is finalizing guidance for all FNS Regional Offices that 

administer FDPIR to lay out follow-up and escalation procedures for untimeliness and 

noncompliance of reports related to the administration of FDPIR (for example, financial reports 

and monthly inventory reports). 

Rural Utilities Service 

The overall finding identified areas where the Rural Utilities Service (RUS) can better track 

efforts to administer rural infrastructure programs that assist eligible Native American 

governments and communities. The agency provided enhancements where reports can be 

generated to identify which applications received Substantially Underserved Trust Areas 

(dependent of funding) and issued guidance requiring all Rural Development State offices to 

enter their outreach activities into Resource One. This audit was closed, and all corrective actions 

were implemented. 

CHALLENGE 6: 

Food Safety Inspections Need Improved Controls 

Food safety is vital to protecting the public health. Despite progress, FSIS continues to need 

improved controls in order to ensure the Nation’s supply of meat, poultry, and egg products is 

correctly handled, processed, labeled, and packaged. 
USDA | 2020 Agency Financial Report 201 

OIG Key Elements Identified 

• FSIS inspections need improved controls to ensure that imported meat and poultry 

products are safe, wholesome, and correctly labeled and packaged. 

• Inspection Program Personnel (IPP) did not verify all labels on imported meat and 

poultry products. 

• Lot unit count related to shipments of imported meat and poultry products did not match 

the numbers listed on the corresponding official foreign inspection certificates for those 

shipments. 

• Required label application packages were either incomplete, inaccurate, or unsupported. 

• FSIS’ Labeling and Program Delivery Staff (LPDS) should enhance its outreach efforts 

to establishments to ensure they are aware of all applicable mandatory labeling features 

for generic labels. 

Corrective Actions Completed and Planned: 

Food Safety and Inspection Service 

FSIS is developing virtual refresher training that focuses on the performance of the label 

verification procedure and verification of lot counts. FSIS will provide this training to IPP 

currently assigned to an import inspection establishment. In FY 2021, FSIS will create the 

schedule to begin providing training to the IPP. 

FSIS is revising Directive 9900.1, Imported Product Shipment Presentation, to clarify 

expectations and include clear instructions for verifying the unit counts of imported lots. Upon 

approval, in FY 2021, FSIS will issue the revised Directive 9900.1. 

FSIS is in the process of making the necessary corrections for the labels that FSIS has determined 

are missing information and updating the application in the Labeling Submission and Approval 

System (LSAS). FSIS has already begun its outreach to establishments through developing and 

revising labeling guidance on the FSIS website. FSIS will also schedule generic labeling webinars 

for its stakeholders that will include training on the mandatory labeling features. 

FSIS continues to send staff to meetings for various stakeholders (such as consulting firms and 

trade associations) to present information on various labeling subject matter. These presentations 

include general labeling requirements, including all mandatory features. 

In FY 2021, FSIS will continue to include entries in the Agency’s Constituent Update (which 

provides weekly FSIS updates on the FSIS web page) on a biweekly basis to help the industry 

understand and comply with FSIS labeling requirements. These entries provide information on 

various topics to help establishments comply with labeling requirements, such as information on 
202 Section III | Other Information 

completing the label application form, information on the label submission requirements for 

using special statements and claims, and information on label records that must be maintained by 

establishments. FSIS will continue its outreach efforts. 

FSIS is revising Directive 7221.1, Prior Labeling Approval, stating that IPP will select 

generically approved labels when conducting label verification activities scheduled for their 

assigned establishment(s). In addition, this updated directive needs to state that IPP will 

document noncompliance and require establishments to update its labels that are not in 

compliance with FSIS’s labeling regulations and policies. In FY 2021, FSIS will continue 

revising FSIS Directive 7221 and circulate the revised FSIS Directive 7221.1 for Agency-wide 

review and clearance. FSIS will issue FSIS Directive 7221.1. 

CHALLENGE 7: 

FNS Needs to Strengthen SNAP Management Controls 

SNAP is a critical safety net for many families and individuals in financial need. FNS needs to 

improve its oversight and quality control processes, or else taxpayer-funded assistance may not 

be delivered or used as intended. 

OIG Key Elements Identified: 

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. 

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. 

• FNS needs to strengthen its oversight of States’ administration of SNAP. 

• FNS did not have sufficient oversight of States’ spending to identify that 6 of the 10 State 

offices may have inappropriately replaced more than $27.5 million of State funds with 

Federal funds. 

• FNS and Puerto Rico’s Administration for Socioeconomic Development of the Family 

(ADSEF) were unable to plan before the hurricanes adequately and did not effectively 

coordinate funding distribution with other agencies. 

• Significant eligibility and payment issues were identified, including more than 

$2.9 million in overpayments and underpayments, and more than $1.2 million that went 

to deceased recipients. 
USDA | 2020 Agency Financial Report 203 

Corrective Actions Completed and Planned: 

Food and Nutrition Service 

FNS reviewed each State’s expenditures during the period of performance of the grant and asked 

States to substantiate that the reductions in expenditures in their regular Employment and 

Training (E&T) program occurred for reasons other than the receipt or expected receipt of the 

Federal Pilot funds. Some States were delayed in responding due to the timing of the request 

coinciding with COVID-19 work. 

Based on the SNAP review and the responses of the respective States, FNS concluded that each 

of the States complied with the legislative requirements and the terms of the grants. Therefore, 

no recovery of funds needs to occur. 

Puerto Rico submitted a NAP Disaster Plan to FNS on July 24, 2020. The FNS Mid-Atlantic 

Regional Office (MARO) is finishing their review of the plan to ensure that it accounts for 

varying funding levels and timelines. It is also reviewing how the eligibility criteria and NAP 

regulations will be adjusted following a disaster to identify better and assist those who are most 

impacted. 

FNS MARO instructed Puerto Rico via a letter dated November 15, 2019, to correct any 

inaccurate case data in the eligibility system. Puerto Rico has indicated that all identified benefit 

discrepancies have been corrected, and FNS MARO was scheduled to validate the corrections 

on-site in March 2020. This visit was canceled due to COVID-19, but FNS MARO has worked 

on a solution to validate remotely. 

The OIG USDA Management Challenges Report, issued September 2020, may be viewed in its 

entirety at the following website: https://www.usda.gov/oig/management-challeges/2020-

management-challenges. 
204 Section III | Other Information 

▪ Summary of Financial Statement Audit 

and Management Assurances 

Summary of Existing Material Weaknesses 

The U.S. Department of Agriculture’s (USDA or the Department) material weaknesses and 

financial system non-conformance, 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 28 and Exhibit 29.

Exhibit 28: Summary of Financial Statement Audit 

Audit Opinion: Unmodified 2020 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 29: Summary of Management Assurances 

Effectiveness of Internal Control Over Reporting (Federal Managers’ Financial Integrity Act 

[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 
USDA | 2020 Agency Financial Report 205 

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 

Non-Conformances 

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 
206 Section III | Other Information 

▪ Payment Integrity Information Act of 2019 –

Improper Payments Overview Payment 

Integrity 

The Improper Payment Elimination and Recovery Act of 2010 (IPERA) expanded requirements 

for identifying programs and activities susceptible to improper payments by requiring the head of 

each agency to review and identify programs and activities that may be susceptible to significant 

improper payments. It also revised requirements for estimating improper payments to require 

agency heads to: (1) produce a statistically valid estimate for the improper payments in their 

agencies; and (2) include such estimates in their annual financial statements. In addition to many 

other obligations, it also requires agency heads to conduct recovery audits for agency programs 

that expend $1 million or more annually if such audits would be cost-effective. 

IPERA was subsequently amended with the Improper Payments Elimination and Recovery 

Improvement Act of 2012 (IPERIA). This act required the Director of the Office of Management 

and Budget (OMB) to: (1) identify, annually, a list of high-priority federal programs for greater 

levels of oversight and review in which the highest dollar value or highest rate of improper 

payments occur or for which there is a higher risk of improper payments, and (2) coordinate with 

agencies to establish annual targets for reducing improper payments. 

The Payment Integrity Information Act of 2019 (PIIA) then reorganized and revised several 

existing improper payments statutes, which establish requirements for agencies to cut down on 

improper payments. This act allowed OMB to establish pilot programs to test compliance and 

established an interagency working group on payment integrity. 

These successive acts resulted in comprehensive and sophisticated reporting on improper 

payments, many of which are included and detailed in the following sections of the Agency 

Financial Report (AFR). In this report, the U.S. Department of Agriculture (USDA) provides a 

summary of any non-compliance findings and target dates for correction, a listing of all high-risk 

programs as well as corresponding risk assessments and sampling and estimation plans, payment 

integrity outlook tables, monetary loss, root causes, corrective actions plans, recovery audit data, 

and more. 

Reducing improper payments is a challenging but critical endeavor, noting there are many 

components of improper payments that do not always result in monetary loss to the Federal 

Government (that is, if approvals were not properly documented, but the correct amount of 

money was disbursed, USDA would still report the payment as improper). 
USDA | 2020 Agency Financial Report 207 

USDA is reporting the following major accomplishments with respect to improper payments: 

• Decreased total outlays of High-Risk Programs of $7 billion compared with fiscal year 

(FY) 2019 

• Increased total recovered dollars by $201.92 million compared with FY 2019 

• Recovered an additional $27.75 million through Internal Programs compared with 

FY 2019 

• Four of the 15 identified High-Risk Programs had $0 in improper payments 

• Approximately 25 percent of improper payments reported were not monetary losses 

• Natural Resources Conservation Service (NRCS) Farm Security and Rural Investment 

Act Program (FSRIP) is no longer considered a High-Risk Program 

Payment Integrity 

USDA—through its diverse portfolio of approximately 300 programs, products, and services—

touches the daily lives of nearly every American. These diverse USDA programs provide for the 

following: the fighting of forest fires, feeding school children, preserving our Nation’s natural 

resources, improving water quality, enhancing private working lands’ health, and providing 

agricultural producers with disaster recovery assistance. Collectively, USDA efforts promote a 

healthy American agricultural industry, providing food, feed, fiber, and timber to meet the 

expanding needs of America and the world at large. 

As a result, USDA’s inherent responsibility to properly steward our taxpayer resources is a top 

financial management priority. USDA managers work diligently to ensure that the right payment 

is made to the right individual or entity at the right time and for the approved purposes. USDA 

financial managers test transactions to determine which programs are susceptible to payment 

errors or making “improper payments.” 

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 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). This workgroup’s goal was to identify mitigation strategies 

that could be leveraged across Federal agencies. The workgroup identified multiple mitigation 

strategies and hopes to roll out a pilot program on behavioral insights utilizing the General 

Service Administration’s (GSA) Office of Evaluation Studies. 
208 Section III | Other Information 

During fiscal year (FY) 2020, USDA had 15 programs identified as susceptible to significant 

improper payments with outlays of approximately $89.97 billion, a reduction of approximately 

$7 billion from FY 2019. These programs are statistically sampled every year to ensure that the 

corrective actions effectively reduce improper payments while still allowing program 

participants to get the access they need. 

USDA received reporting relief by OMB for the following two programs: 

• Natural Resources Conservation Service (NRCS) Farm Security and Rural Investment 

Act Program (FSRIP): NRCS has demonstrated and documented a minimum of 2 

consecutive years where both improper payments and statutory thresholds were not 

exceeded. 

• Food and Nutrition Service (FNS) Summer Food Service Programs (SFSP): Due to the 

impact of COVID-19, FNS requested and received a 1-year extension from OMB to 

execute the Sampling Plan.

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 that was made to an ineligible recipient or for an ineligible good or service, 

or payments for good or services not received (except for such payments authorized by 

law); and 

• Any time an agency’s review is unable to discern whether a payment was proper due to 

insufficient or lack of documentation.

Are Improper Payments Required to be Reported? 

Yes, the Payment Integrity Information Act of 2019 (PIIA), as well as the preceding legislation 

(the Improper Payment Elimination and Recovery Act of 2010 [IPERA] amended by the 

Improper Payment Elimination and Recovery Improvement Act of 2012 [IPERIA]), require 

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). 

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 a 1.5 percent improper 
USDA | 2020 Agency Financial Report 209 

payment rate and at least $10 million in improper payments or exceeds $100 million 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 161 programs to ensure compliance with OMB Circular A-123, Appendix C, PIIA reporting. 

Fifteen of these programs are considered by OMB to be susceptible to making significant 

improper payments (hereinafter referred to as high-risk programs), and 146 programs are 

considered at low-risk for the potential in making 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 2020, 64 programs completed risk assessments. 

Two of these programs conducted quantitative risk assessments, while the other 62 used the 

Office of the Chief Financial Officer (OCFO)’s qualitative risk assessment process. 

A.1. Low-Risk Program Risk Assessment Process 

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. 

A.2. Quantitative Risk Assessments 

In FY 2020, the Farm Service Agency’s (FSA) Market Facilitation Program (MFP) and Trade 

Mitigation Program (TMP) expended more than $5 billion and were required to do a Quantitative 
210 Section III | Other Information 

Risk Assessment, per OMB Circular A-123, Appendix C. The results of the Quantitative Risk 

Assessments, in millions, are provided below: 

Exhibit 30: Quantitative Risk Assessments 

Program 

CY 

Outlays 

CY Improperly 

Paid % 

CY Improperly 

Paid $ Result 

MFP $8,560.90 5.58% $477.59 Program exceeds threshold for a high-risk program. MFP 

will report as a high-risk program in the FY 2021 AFR. 

TMP $5,403.10 5.70% $308.01 Program exceeds threshold for a high-risk program. TMP 

will report as a high-risk program in the FY 2021 AFR. 

B. High-Risk Programs 

USDA has 15 high-risk programs. Five 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) 

Summer Food Service Program (SFSP) 

Emergency Food Assistance Program (TEFAP)* 

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)* 

Wildfires and Hurricanes Indemnity Program (WHIP)* 

Natural Resources Conservation Service (NRCS) Emergency Watershed Protection- Disaster Relief Program* 

Risk Management Agency (RMA) Federal Crop Insurance Corporation (FCIC) 
USDA | 2020 Agency Financial Report 211 

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 broader 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. Food and Nutrition Service (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 all cases receiving benefits for the fiscal year under review. 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: No changes from what was reported in the FY 2019 AFR. 

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 (APECII) established estimates of erroneous payments for school year (SY) 2012–2013. FNS 
212 Section III | Other Information 

generates an annual 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 2018–2019. 

b. Change in sampling process: No changes from what was reported in the FY 2019 AFR. 

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 2017–2018 and will be 

released in 2020. 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 the 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: 

o Certification error is made up of estimates for FY 2019 obtained from an 

econometric model that uses FY 2009 survey data augmented with FY 2019 

food dollars and WIC Participant and Program Characteristics (PC) 2016 

certification data. 

o Annual vendor errors rates after FY 2012 use the error rate from the most recent 

statistically valid bookend WIC Vendor Management Study as the annual 

estimate of vendor error. 

b. Change in sampling process: No changes from what was reported in the FY 2019 AFR. 

c. Justification: Using the OMB-approved alternative methodology is currently the only 

way to report an improper payment rate for this program.
USDA | 2020 Agency Financial Report 213 

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: No changes from what was reported in the FY 2019 AFR. 

c. Justification: A plan was initially explored to develop a program-wide study that would 

examine reimbursements for meals served and develop program error measurements that 

complied with the requirements of the PIIA. Because of the complexities of the program, 

FNS estimated that it would cost $20 million to measure improper payments at the 

precision required by PIIA. This amount has not been provided. 

6. FNS Summer Food Service Program (SFSP) 

a. USDA has developed a study plan that will take advantage of USDA’s existing annual 

series of administrative monitoring visits. These visits offer the opportunity for USDA to 

collect the on-site data needed for the meal counting component of the SFSP improper 

payment estimate during their previously planned monitoring visits. Because USDA does 

not conduct enough monitoring visits each year to satisfy the sample size requirement for 

a nationally representative study that meets IPERA requirements, USDA proposes to 

combine data collected during 5 years to fulfil the study requirements (using a model 

similar to the Census Bureau’s American Community Survey). This approach will 

generate a high quality nationally representative study at reasonable cost. After the fifth 

year, USDA will maintain a 5-year moving average error rate and a dollar value of 

program error by replacing the oldest year’s data with data collected in the current year. 

USDA will begin the data collection in 2021. 

b. Changes in sampling process: Not available (N/A). This is the first year the program is 

reporting. 

c. Justification: Onsite observation of a decentralized national program is an expensive 

process. While the cost may be justified in large programs such as NSLP and SBP, 

SFSP’s outlays are much smaller. For this reason, FNS chooses to perform the necessary 

onsite data collection during previously scheduled onsite monitoring visits. The cost for a 
214 Section III | Other Information 

truly random sample at the site level would be excessive, and for this reason, FNS will 

visit an estimated 10 geographically clustered sites in each of the 35 different sponsors 

each year. Due to the size and decentralized nature of SFSP, FNS will collect data for 

5 years. 

7. FNS Hurricane Harvey - Commodity Assistance Program (also known as The 

Emergency Food Assistance Program [TEFAP]) 

a. Utilizes a full census review and reconciliation of funds received by each State, using 

USDA’s Web-based Supply Chain Management System (WebSCM). The seven states 

that accepted administrative funds through this disaster program were also required to 

submit supplemental reports through FNS’ Food Programs Reporting System. This 

prerequisite was required until funds were expended.

b. Changes in sampling process: N/A. This is the first year the program is reporting. 

c. Justification: Due to the small number of States receiving administrative funds and food 

through this program, FNS found it more efficient and cost-effective to conduct a full 

census review and reconciliation of all funds received by each State. 

8. Forest Service (FS) Hurricane Harvey-Capital Improvement and Maintenance (CIM) 

a. Utilizes a statistically valid sampling process. A sample was determined from payments 

made during FY 2019 using a 95-percent confidence level with a margin of error of plus 

or minus 10 percent. 

b. Change in sampling process: No changes from what was reported in the FY 2019 AFR. 

9. Farm Service Agency (FSA)/Commodity Credit Corporation (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 2019 AFR. 

10. 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 2019 AFR. 
USDA | 2020 Agency Financial Report 215 

11. FSA/CCC 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: No changes from what was reported in the FY 2019 AFR. 

12. FSA Hurricane 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: No changes from what was reported in the FY 2019 AFR. 

13. FSA Wildfires and Hurricanes Indemnity Program (WHIP) 

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. 

14. Natural Resources Conservation Service (NRCS) Emergency Watershed ProtectionDisaster Relief Program 

a. Utilizes a statistically valid and rigorous sampling process. A sample was determined 

from payments made during FY 2019 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. 

b. Change in sampling process: N/A. This is the first year this program is reporting. 

15. Risk Management Agency (RMA) Federal Crop Insurance Corporation (FCIC) 

a. Utilizes a statistically valid and rigorous sampling process. A sample determined from 

payments made during Reinsurance Year 2018 (July 2017 to June 2018) 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 2019 AFR. 
216 Section III | Other Information 

Payment Integrity Outlook Section 

The following table outlines USDA’s high-risk programs sampling and estimation results. 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 $ 

Food and Nutrition Service 

(FNS) Supplemental Nutrition 

Assistance Program (SNAP) 

[Note #1] 

55,459.55 92.64 51,378.53 7.36 4,081.02 3,424.70 656.32 55,459.55 7.36 4,081.02 

FNS National School Lunch 

Program (NSLP) 12,868.37 90.86 11,691.86 9.14 1,176.51 826.63 349.88 12,997.05 8.86 1,152.00 

FNS School Breakfast 

Program (SBP) 4,545.66 89.70 4,077.30 10.30 468.36 295.24 173.12 4,591.11 10.40 460.88 

FNS Special Supplemental 

Nutrition Program for 

Women, Infants, and Children 

(WIC) 

3,139.03 98.04 3,077.51 1.96 61.52 61.52 0.00 3,154.73 2.03 64.04 

FNS Child and Adult Care 

Food Program (CACFP) 654.47 99.46 650.94 0.54 3.53 2.66 0.87 634.83 0.54 3.43 

FNS Summer Food Service 

Program (SFSP) [Note #2] 481.03 100.00 481.03 0.00 0.00 0.00 0.00 482.00 0.00 0.00 

FNS Emergency Food 

Assistance Program (TEFAP) 

(Disaster) [Note #3] 

17.06 100.00 17.06 0.00 0.00 0.00 0.00 0.00 0.00 0.00 
USDA | 2020 Agency Financial Report 217 

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 $ 

Forest Service (FS) Capital 

Improvement and 

Maintenance (Hurricane 

Harvey-CIM) 

10.74 100.00 10.74 0.00 0.00 0.00 0.00 30.51 0.00 0.00 

Farm Service Agency (FSA) 

Livestock Forage Disaster 

Program (LFP) 

279.64 89.28 249.66 10.72 29.98 29.45 0.53 492.00 9.99 49.13 

FSA Noninsured Crop Disaster 

Assistance Program (NAP) 155.10 86.65 134.40 13.35 20.70 20.47 0.23 182.00 9.99 18.18 

FSA Agriculture Risk Coverage 

and Price Loss Coverage 

(ARC/PLC) 

1,091.90 95.28 1,040.39 4.72 51.51 51.51 0.00 2,591.00 4.62 119.60 

FSA Hurricane HarveyEmergency Conservation 

Program (Harvey-ECP) 

43.20 81.26 35.11 18.74 8.09 8.03 0.06 35.00 9.99 3.50 

FSA Wildfires and Hurricanes 

Indemnity Program (WHIP) 447.28 49.79 222.71 50.21 224.57 224.55 0.02 43.91 9.99 4.39 

Natural Resources 

Conservation Services (NRCS) 

Harvey Watershed 

70.50 100.00 70.50 0.00 0.00 0.00 0.00 189.00 0.00 0.00 

Risk Management Agency 

(RMA)Federal Crop Insurance 

Corporation (FCIC) Program 

Fund 

10,710.28 97.69 10,463.30 2.31 246.98 152.02 94.96 8,733.00 2.31 201.73 

USDA Total 89,973.81 92.92 83,601.04 7.08 6,372.77 5,096.78 1,275.99 89,615.69 6.87 6,157.90 
218 Section III | Other Information

Note #1: NRCS’s Farm Security and Rural Investment Program (FSRIP) was considered non-compliant with the Improper Payment Elimination Reduction 

Act (IPERA) in Fiscal Years 2013, 2014, and 2015, with improper payment estimates not meeting targets and/or exceeding the 10% statutory 

threshold. Through a series of corrective actions and internal control enhancements, NRCS’s FSRIP program has remained in compliance with 

IPERA since FY 2016. The Office of Management and Budget (OMB), granted NRCS relief from IPERA reporting for FSRIP on March 9, 2020. This 

IPERA reporting relief was realized after the NRCS started payment integrity testing in FY 2020. In FY 2020, NRCS followed an OMB approved 

Sampling Methodology, and statistically sampled and tested Farm Bill transactions based on FY 2019 outlays. Improper payments totaling $0 

were identified in the samples and the results were extrapolated to the entire Farm Bill population, resulting in an estimated $0 of improper 

payments. As a result, the NRCS is relieved of IPERA reporting requirements and Corrective Actions are no longer required by OMB.

Note #2: Due to the impact of COVID-19, FNS has requested and received a 1-year extension from OMB to execute the Sampling Plan for SFSP. As a result, 

FNS will be unable to report additional information until the next fiscal year.

Note #3: TEFAP disaster supplemental funds provided to States affected by Hurricanes Harvey, Irma, and Maria or wildfires in 2017 were allocated in July 

of 2018. Outlays totaled $5,243,224.08 in FY 2018 and $17,061,940.19 in FY 2019. A full census review and reconciliation of funds provided to 

each State was conducted on these funds, and no improper payments were identified.
USDA | 2020 Agency Financial Report 219 

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 33: Improper Payment Additional Breakdown Table ($ in millions) 

Program Federal Government Recipients of Federal Money 

FNS SNAP 4,081.02 

FNS NSLP 1,176.51 

FNS SBP 468.36 

FNS WIC 61.52 

FNS CACFP 3.53 

FNS SFSP 0.00 

FNS TEFAP 0.00 

FS Harvey-CIM 0.00 

FSA LFP 29.98 

FSA NAP 20.70 

FSA ARC/PLC 51.51 

FSA Harvey-ECP 8.09 

FSA WHIP 224.57 

NRCS – Harvey Watershed 0.00 

RMA FCIC 246.98 

Total 334.85 6,037.92 
220 Section III | Other Information 

Exhibit 34: Monetary Loss Breakdown Table ($ in millions) 

Monetary loss to the Federal Government is an amount that should not have 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 3,424.70 83.92 0.00 3,424.70 656.32 16.08 0.00 0.00 4,081.02 

FNS NSLP 826.63 70.26 0.00 826.63 349.88 29.74 0.00 0.00 1,176.51 

FNS SBP 295.24 63.04 0.00 295.24 173.12 36.96 0.00 0.00 468.36 

FNS WIC 0.00 0.00 0.00 0.00 61.52 100.00 0.00 0.00 61.52 

FNS CACFP 2.66 75.35 0.00 2.66 0.87 24.65 0.00 0.00 3.53 

FNS SFSP 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

FNS TEFAP 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

FS Harvey-CIM 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

FSA LFP 4.29 14.31 4.29 0.00 25.69 85.69 18.25 60.87 29.98 

FSA NAP 10.70 51.69 10.70 0.00 10.00 48.31 9.87 47.68 20.70 

FSA ARC/PLC 2.35 4.56 2.35 0.00 49.16 95.44 31.53 61.21 51.51 

FSA Harvey-ECP 2.07 25.57 2.07 0.00 6.02 74.43 3.92 48.45 8.09 

FSA WHIP 70.49 31.39 70.49 0.00 154.08 68.61 101.69 45.28 224.57 

NRCS Harvey 

Watershed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

RMA FCIC 152.02 61.55 0.00 152.02 94.96 38.45 0.00 0.00 246.98 
USDA | 2020 Agency Financial Report 221 

High-Priority Programs Section 

The criteria for determining when a program is high-priority are found in the 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 a high priority, and the following narrative addresses the 

additional reporting requirements that come with that designation. 

Food and Nutrition Service (FNS) Supplemental Nutrition Assistance Program (SNAP) 

The following narrative describes how SNAP’s corrective actions were specifically tailored to 

reflect better the unique processes, procedures, and risks involved in the program. The system 

operates through a regulatory defined valid statistical sample of cases that are pulled and 

reviewed using a two-tier system. An overview is described online at 

https://fns-prod.azureedge.net/sites/default/files/media/file/USDA_SNAPQC_Infographic-1.pdf. 

Results of the case reviews are entered into SNAP’s quality control system, which FNS uses to 

conduct a root cause analysis to identify the primary causes of errors at the National and State 

level. At the National level, the leading factors that contribute to more than 60 percent of all 

errors nationwide are: (1) wage and salary errors, (2) household composition errors, and 

(3) shelter deduction errors. FNS targets technical assistance at the Federal level to hold States 

accountable for implementing corrective action plans specifically tailored to preventing these 

errors. FNS requires States to provide regular progress reporting and uses State reported quality 

control data to measure the impact of corrective actions. Corrective action plans remain open 

until all activities are completed and validated. 

FNS also establishes Federal level corrective actions tailored to support State payment accuracy 

efforts. FNS identifies activities based on a sub-root cause analysis and uses a data-driven 

approach to target resources to States based on risk. The sub-root cause analysis further assesses 

the specific factors leading to errors. For example, wages and salary errors occur due to 

households failing to report information and State agencies failing to act on or properly verify 

income information. FNS identifies Federal level corrective actions to assist States with 

improving household reporting and working with States to increase how effectively they act on 

or verify information. This assistance ensures that corrective actions are tailored to specific and 

unique causes. 

The Food and Nutrition Act of 2008 establishes authority for FNS to collect over issuances and 

provide restitution to households for under issuances. FNS promulgated regulations at 7 CFR 

273.18 governing claims collection. FNS also assists SNAP State agencies using the Treasury 

Offset Program (TOP) to collect unpaid claims. FNS requires SNAP State agencies to collect all 

over-issuance claims identified by the Quality Control system. 
222 Section III | Other Information 

Improper Payment Root Cause Categories Section

Exhibit 35: Improper Payments Root Causes Table ($ in millions) 

Reason for Improper Payment 

FNS SNAP FNS NSLP FNS SBP 

Overpayments Underpayments Overpayments Underpayments Overpayments Underpayments 

Program design or Structural Issue 445.5 252.92 149.36 115.54

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 3,424.70 656.32 381.13 96.96 145.88 57.58

Other Party 

Medical Necessity 

Insufficient Documentation to Determine 

Other Reason 

TOTAL 3,424.70 656.32 826.63 349.88 295.24 173.12 
USDA | 2020 Agency Financial Report 223 

Exhibit 35: Improper Payments Root Causes Table ($ in millions) Continued 

Reason for Improper Payment 

FNS WIC FNS CACFP FNS SFSP 

Overpayments Underpayments Overpayments Underpayments Overpayments Underpayments 

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 

State and Local Agency 61.52 2.66 0.87

Other Party 

Medical Necessity 

Insufficient Documentation to Determine 

Other Reason 

TOTAL 61.52 0.00 2.66 0.87 0.00 
224 Section III | Other Information 

Exhibit 35: Improper Payments Root Causes Table ($ in millions) Continued 

Reason for Improper Payment 

FNS TEFAP FS – Harvey – CIM FSA LFP 

Overpayments Underpayments Overpayments Underpayments Overpayments Underpayments 

Program design or Structural Issue 

Inability to Authenticate 

Eligibility 

Inability to Access Data 

Data Needed Does Not Exist 6.5

Failure to Verify 

Death Data 

Income Data 

Excluded Party Data 

Prisoner Data 

Other Eligibility [Note # 1] 0.33

Administrative or Process 

Error Made By 

Federal Agency 4.37 0.53

State and Local Agency 

Other Party 

Medical Necessity 

Insufficient Documentation to Determine [Note # 2] 18.25

Other Reason 

TOTAL 0.00 0.00 0.00 0.00 29.45 0.53 
USDA | 2020 Agency Financial Report 225 

Exhibit 35: Improper Payments Root Causes Table ($ in millions) Continued 

Reason for Improper Payment 

FSA NAP FSA ARC/PLC FSA Harvey-ECP 

Overpayments Underpayments Overpayments Underpayments Overpayments Underpayments 

Program design or Structural Issue 

Inability to Authenticate 

Eligibility 

Inability to Access Data 

Data Needed Does Not Exist 0.17

Failure to Verify 

Death Data 

Income Data 

Excluded Party Data 

Prisoner Data 

Other Eligibility [Note # 1] 0.99

Administrative or Process 

Error Made By 

Federal Agency 9.61 0.23 19.98 3.94 0.06

State and Local Agency 

Other Party 

Medical Necessity 

Insufficient Documentation to Determine [Note # 2] 9.87 31.53 3.92

Other Reason 

TOTAL 20.47 0.23 51.51 8.03 0.06 
226 Section III | Other Information 

Exhibit 35: Improper Payments Root Causes Table ($ in millions) Continued 

Reason for Improper Payment 

FSA WHIP NRCS Watershed RMA FCIC 

Overpayments Underpayments Overpayments Underpayments Overpayments Underpayments 

Program design or Structural Issue 

Inability to Authenticate 

Eligibility 

Inability to Access Data 126.70 24.45

Data Needed Does Not Exist 1.55 

Failure to Verify 

Death Data 

Income Data 

Excluded Party Data 

Prisoner Data 

Other Eligibility [Note # 1] 3.30 

Administrative or Process 

Error Made By 

Federal Agency 118.03 

State and Local Agency 

Other Party 25.32 70.51

Medical Necessity 

Insufficient Documentation to Determine [Note # 2] 101.67 0.02 

Other Reason 

TOTAL 224.55 0.02 0.00 0.00 152.02 94.96 

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. 
USDA | 2020 Agency Financial Report 227 

Improper Payment Corrective Actions Section 

In the spring of 2020, USDA agencies analyzed transactions from previous years, as described in 

the Agency Financial Report (AFR)’s sampling section, and the results are published in the FY 

2020 AFR. Because USDA reports improper payments 1 year in arrears, corrective actions taken 

to reduce improper payments in FY 2020 have not been reflected in improper payment amounts 

of this report. USDA continues to enact specific corrective actions to resolve the root causes of 

improper payments and strategically strengthen program integrity while ensuring access to 

programs 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 take 

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 more than 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 actually 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). Corrective action plans for FSA’s high-risk programs reporting 

payment integrity results that exceed IPERA statutory thresholds, are located at 

https://www.fsa.usda.gov/programs-and-services/financial-management-info/index.

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.
228 Section III | Other Information 

Exhibit 36: 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 ➔ Certification Eligibility 

Amount Associated with the Root Cause 

(See Root Causes Table) ➔ $4,081.02 

Estimated Completion Date ➔ September 2020 

The following are corrective actions FNS has implemented at the Federal level to address this root 

cause: 

• In January 2020, FNS issued revised payment accuracy guidance to States called the “Keys to 

Payment Accuracy”, which shares general best practices for how States can establish an 

organization and culture designed to achieve payment accuracy. 

• In February 2020, FNS issued revised internal payment accuracy guidance that categorizes States 

into tiers based on data-driven risk, ensuring FNS technical assistance efforts are targeted. 

• FNS issues payment error rates annually, and States with poor performance are assessed financial 

liabilities. In FY 2020, FNS assessed roughly $43 million in penalties to State agencies. 

• FNS requires States to enter into corrective actions to address management evaluation findings or 

poor payment error rate performance. FNS also reviews and validates States’ corrective actions. 

• FNS conducts regular meetings and conference calls to promote States sharing best practices. 

Monthly payment error data are shared to ensure that results are monitored continuously 

throughout the year. 

The following are corrective actions FNS will implement at the Federal level by the end of FY 2020 to 

address the sub-root causes: 

• FNS will award Process, Technology, and Innovation Grants (PTIG) to States. These are awarded 

annually to help fund State operational improvements, which can lead to payment error 

reductions. 

• FNS will award State agencies grant funds to evaluate the effectiveness of using commercial data 

sources to verify the income of SNAP applicants. 

• FNS will award State agencies grant funds to fund projects that support their implementation of the 

SNAP Fraud Framework. 

• FNS will issue recommendations to select States to improve client notices in order to improve client 

reporting. 

• FNS will implement a newly revised corrective action process for State agencies to ensure States 

use data-driven analysis to develop more robust correction action plans, that progress is monitored 

more frequently, and that actions are taken promptly to address payment error reduction 

strategies. 

• FNS also notified Congress that USDA, pursuant to applicable legal authorities, will withhold the 

usual 50% reimbursement of state SNAP agency administrative funds for those states who fail to 

comply with their corrective action plans. The Secretary also called on Congress to fund an FY 2021 

budget proposal for electronic income verification. 
USDA | 2020 Agency Financial Report 229 

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) ➔ $698.42 

Corrective Actions Completion Date 

FNS worked with States that were awarded Administrative Review and 

Training (ART) grant funding to improve schools’ operational and oversight 

efforts in NSLP and SBP. Three States received ART grants to plan, develop, 

or adopt integrity-focused school meal applications consistent with the 

model application developed by USDA. 

FY 2020 

FNS continued management of a contracted research portfolio to measure 

and study the underlying causes of improper payments in the school meals 

programs. This includes the latest in the Access, Participation, Eligibility, and 

Certification Study (APEC) Series that is the basis for USDA’s official improper 

payment estimates that FNS will publish by early FY 2021. 

FY 2021 
230 Section III | Other Information 

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) ➔ $478.09 

Corrective Actions Completion Date 

Worked with States that received 2019 ART grants to build statewide 

online NSLP application systems. September 2020 

Promoted State Agency use of FNS Data Validation Service, a USDA 

created and maintained set of edit checks for the School Food Authority 

Verification Collection Report (FNS-742) to improve data integrity of the 

FNS-742 that annually provides FNS with school district-level certification 

verification results. 

September 2020 

Conducted analysis and correction where needed of the School Year 

2018-2019 FNS-742 School Food Authority (SFA) Verification Collection 

Report data & FNS 834 State Agency (NSLP/SNAP) Direct Certification 

Rate Data Element Report to ensure accuracy of States’ SY 2018-2019 

SNAP-DC performance rate and identify opportunities associated with 

under-reported direct certifications. 

September 2020 

Annually conduct on-site direct certification technical assistance site visits 

and reviews and approve State Agency direct certification Continuous 

Improvement Plans to improve the effectiveness of their direct 

certification processes. 

September 2020 
USDA | 2020 Agency Financial Report 231 

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) ➔ $264.9 

SBP’s corrective actions and completion dates are the same as NSLP’s across types of payment errors. 

To avoid repetition of the same corrective actions, please refer to NSLP’s corrective actions in the 

Program Design or Structural Issue root cause, previously described. 

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) ➔ $203.46 

SBP’s corrective actions and completion dates are the same as NSLP’s across types of payment errors. 

To avoid repetition of the same corrective actions, please refer to NSLP’s corrective actions in the 

Program Design or Structural Issue root cause, previously described. 
232 Section III | Other Information 

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: Improper payment 

rates in WIC are calculated based on two types of 

errors: (1) improper certification of participants, 

and (2) incorrect payments to retail vendors. FNS 

continues to take proactive measures to help WIC 

State agencies reduce improper payments. 

Amount Associated with the Root Cause 

(See Root Causes Table) ➔ $61.52 

Estimated Completion Date ➔ FY 2020 - 2023 

WIC Corrective Actions: 

• WIC Certification. Currently, FNS is revising the WIC Certification Handbook for State agencies, 

expected to be released in FY 2021. FNS is also conducting the National Survey of WIC ParticipantsIII 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 2020-2023, FNS’s management evaluation (ME) target area for WIC is 

Nutrition Services. Delivering high-quality nutrition services is essential to carrying out the 

Program’s mission and ensures WIC continues to support self-sufficiency through healthy 

outcomes for pregnant and postpartum mothers, infants, and young children. The Nutrition 

Services ME examines how State agencies plan for and deliver nutrition services, including nutrition 

and breastfeeding education. The FY 2020-2023 Target Area will also include a focus on updating 

existing ME materials and technology. The FY 2020 target area supports USDA and FNS priorities 

related to providing high-quality customer service to WIC State agency partners and ensuring 

integrity in the WIC Program through the timely resolution of issues identified through MEs. FNS 

continues to analyze ME data to identify opportunities to assist State agencies with improving 

program administration and integrity while reducing improper payments. 

• WIC Vendor Management. In FY 2017, FNS released the WIC Vendor Management and Food 

Delivery Handbook, 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 

working on the first update to the Handbook, including 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 and technical assistance This will ultimately be 

provided to State agency partners to support their efforts administering the Program in accordance 

with WIC regulations with a focus on financial integrity. 
USDA | 2020 Agency Financial Report 233 

PROGRAM: RMA FCIC 

Root Cause (See Root Causes Table) ➔ Administrative or Process Errors Made By Other Party 

USDA’s Sub-Root Cause ➔

The Standard Reinsurance Agreement (SRA) requires 

Approved Insurance Providers (AIPs) to conduct Actual 

Production History (APH) verification reviews. APH 

reviews are conducted to verify the accuracy of the 

approved APH yield, which is used to determine the 

amount of insurance on a policy. As farming operations 

continue to grow in size, APH reviews consequently 

consist of a larger amount of data that must be verified 

by the AIPs to assure the accuracy of the crop insurance 

policy. APH keying errors, such as those found as the 

result of IPERIA, are inevitable with the amount of data 

transcribed to run a $105 billion program. 

Amount Associated with the Root 

Cause (See Root Causes Table) ➔ $94.96 

Completion Date ➔ August 2021 

FCIC Corrective Actions: 

Nearly one-half of the Administrative or Process Errors were related to Actual Production History 

(APH). These errors range from unacceptable production evidence to the accuracy of production 

certification. To clarify the APH procedures and corrective action when conducting an APH review, RMA 

issued Manager’s Bulletin MGR-19-005. The procedures outlined in MGR-19-005 were incorporated 

into the Crop Insurance Handbook for report year (RY) 2020. To address concerns specific to the Apple 

program, RMA entered into a contract to assess the program, address program vulnerabilities, and 

provide proposed program changes. As part of this review and specific to production reporting, RMA is 

in the process of developing guidelines for production reporting to include identifying the types of 

records and required entries on records for reporting apple production. The policy is expected to be 

updated to address these and other concerns for the 2022 crop year (August 31, 2021). 
234 Section III | Other Information 

PROGRAM: RMA FCIC 

Root Cause 

(See Root Causes Table) ➔

Inability to Authenticate Eligibility: Data Needed Does Not 

Exist 

USDA’s Sub-Root Cause ➔

Nearly one-third of the improper dollars associated with 

APH errors resulted from the policyholder’s inability to 

support the selected unit structure. A majority of these 

policies dealt with enterprise unit (EU) structures certified 

below the EU level. 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 

unit structure cannot be supported. 

Amount Associated with the Root 

Cause (See Root Causes Table) ➔ $152.02 

Completion Date ➔ January, 2021 

FCIC Corrective Actions: 

Based on IPERIA results, RMA will issue an Informational Memorandum reminding policyholders of the 

requirement to keep production separate by unit and to certify to the accuracy of their production 

evidence. Additionally, RMA will conduct and present an analysis of APH data to the Product 

Management division as a proactive measure to spearhead future APH issues. 
USDA | 2020 Agency Financial Report 235 

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-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 apply 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’s 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. 
236 Section III | Other Information 

Farm Service Agency (FSA) 

These accountability mechanisms are applicable to the following programs: (1) Hurricane 

Harvey- Emergency Conservation Program, (2) Livestock Forage Disaster Program, 

(3) Noninsured Crop Disaster Assistance Program, (4) Agriculture Risk Coverage and Price Loss 

Coverage, and (5) Wildfires and Hurricanes Indemnity Program: 

FSA is creating a performance Oversight Review Process which 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, enabling each organization to compare its 

performance over time. It also allows management to hold low-performing employees 

accountable and award and recognize high-performing employees. This new Oversight 

Review Process requires the scoring of states and counties due to National and State 

program reviews. Training of pilot States was completed December 10-11, 2019, and the 

remaining States were trained in August of 2020. This new process was fully functioning 

and documenting performance on September 1, 2020. 

The Committee of Sponsoring Organizations of the Treadway Commission (COSO)’s 

Leveraging COSO across the Three Lines of Defense defines the three lines of defense of 

integrity oversight. In the current Farm Production and Conservation (FPAC) policy, 

FSA will be completing the first two lines of defense, with the new Oversight Review 

Process as the second line. The FPAC Business Center’s Performance, Accountability, 

and Risk Division will be completing an internal audit as the third line of defense on 

behalf of FSA. 

The following steps were completed for the 2020 performance plans 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 performancebased rating measures, for overall program administration at the National level. 

3. County office-level employees, including the County Executive Director, are responsible 

for making payments to producers and following all administrative steps. Employees will 

be evaluated on program delivery and their compliance with regulations, policies, and 

procedures through their performance plans. 

4. The Deputy Administrator of Field Operations facilitated meetings with the program areas 

to discuss any additional action necessary for senior management to address accountability 
USDA | 2020 Agency Financial Report 237 

as accountability issues arise. Such is the case with an ongoing Office of Inspector 

General (OIG) investigation resulting in fraudulent claims and employee involvement 

where fraud has been discovered. 

Risk Management Agency (RMA) 

These accountability mechanisms apply to the following program: Federal Crop Insurance 

Corporation (FCIC): 

1. RMA senior accountable officials’ annual performance plans are tied to USDA’s Strategic 

Goal 1: Ensure USDA programs are delivered efficiently, effectively, and with integrity 

and a focus on customer service, and RMA Strategic Goal 4: Safeguard the Integrity of the 

Federal Crop Insurance Program. 

2. RMA incorporated standards in the FY 2020 annual performance plans to ensure 

compliance personnel conduct Improper Payment Elimination and Recovery Improvement 

Act of 2012 (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 2019–March 2020 using statistical sampling and data 

mining reports. 

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 apply to the 

following program: Supplemental Nutrition Assistance Program (SNAP): 

Each fiscal year, the Food and Nutrition Service (FNS) determines SNAPs State and 

National error rates and any potential liabilities based on error rate performance. States 

with a 95-percent statistical probability that their error rates exceed 105 percent of the 

national performance measure for 2 consecutive fiscal years, and the State’s error rate is 

above 6 percent, are subject to financial liabilities for poor performance. In FY 2020, 

based on FY 2019 performance, FNS issued roughly $43 million in financial penalties to 

State agencies for poor payment accuracy performance. Additionally, as the 6 percent 

standard is statutory, FNS has a regulatory process that requires State agencies to enter 

into corrective action plans if their payment error rate exceeds 6 percent. In FY 2020, 

based on FY 2019 performance, 36 State agencies are required to conduct a root cause 

data analysis and submit corrective action plans to FNS with activities designed to reduce 

payment errors. 
238 Section III | Other Information

The following agency information systems and other infrastructure mechanisms apply 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 using 

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 2020 Budget requested a change 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 $20,233,000 was 

requested ($13,702,000 estimated in FY 2019). 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 change reflects $233,000 to match 

State and local index trends and an increase of $20 million per year above the funding previously 

provided for technology grants as part of the current law proposal. These additional grant funds 

will provide reliable dedicated funds for technology and enable States to begin to modernize 

basic systems to improve program operations, oversight, and overall program integrity.

CN Payment Accuracy—an increase of $187,000 was requested ($11,016,000 estimated in 

FY 2019). This funding supports FNS’s robust Federal oversight, monitoring, and technical 

assistance, which are essential to the identification, prevention, and resolution of erroneous 

payments. The change consists of $187,000 to match State and local index trends. 

CN Studies—a decrease of $6,278,000 was requested ($21,277,000 was estimated in FY 2019). 

FNS conducts a variety of studies, evaluations, and related activities that respond to the needs of 

policymakers and managers and help ensure that nutrition assistance programs achieve their 

goals effectively. This line supports the critical evaluations needed for the CN Programs, 

including the Federal staff needed to oversee this vital work. The change consists of a current 

law proposal to make CN Studies funds available until expended to allow for more efficiency 

and flexibility in conducting research and evaluation studies.

CN Administrative Reviews—$10 million was provided for training and technical assistance for 

State agencies responsible for reviewing local school food authorities participating 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. 
USDA | 2020 Agency Financial Report 239

The following agency information systems and other infrastructure mechanisms apply to the 

following programs: Child and Adult Care Food Program (CACFP): 

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 measuring errors 

or 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. 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 and 2021, respectively. 

The following agency information systems and other infrastructure mechanisms apply 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’s primary oversight mechanisms. 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 is working to 

develop the WIC Certification Handbook, which is expected to be released in FY 2021. 

Additional resources will be 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 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. 
240 Section III | Other Information 

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 Benefits Transfer (EBT) nationwide by October 1, 2020. EBT provides 

WIC State agencies with more accurate and timely data that they can use to 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) Noninsured Crop Disaster Assistance Program (NAP), (2) Hurricane 

Harvey – Emergency Conservation Program (HH-ECP), (3) Livestock Forage Disaster Program 

(4) Agriculture Risk Coverage and Price Loss Coverage and (5) Wildfires and Hurricanes 

Indemnity Program: 

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 recent results from the International Programs in Agriculture 

(IPIA) reviews and the Agricultural Adjustment Act of 2018 paragraph 1705 language, 

FSA is documenting findings from the reviews of employees’ work nationwide. With this 

performance documentation in place, organizational performance should improve. 

In the FY 2020 IPIA reviews, we examined FY 2019 payments (October 2018 through 

September 2019). The reviews identified FSA policy did not clearly outline the difference 

between improper payments according to the Improper Payment Elimination and 

Recovery Act of 2010 (IPERA) standards versus non-compliance based on FSA policy. 

FSA implemented the following to address these issues. 

Market Facilitation Program 

The Price Support Division (PSD) updated questions used by reviewers to clearly define 

common program errors identified by mismatched payment reports generated weekly by the 

MFP Team Lead. 

The MFP payment system used for the 2018 crop year required the user to enter the calculated 

payment in a separate system and select the correct commodity. However, for the 2019 crop 

year, the MFP application system automatically created a payable record upon the County 

Office Committee approval date being recorded, which dramatically decreased the number of 

improper payments. 

For both program years, the MFP payment system checked payment eligibility before obligating 

funds and made applicable reductions as necessary. 

In July 2020, the PSD issued a notice to all State and County offices summarizing MFP’s 

FY 2019 improper payment rates and provided guidance on how to address common errors. 
USDA | 2020 Agency Financial Report 241 

Noninsured Crop Disaster Assistance Program (NAP) 

On December 17, 2019, NAP Amendment 16 was published, requiring the completion of a 

CCC-770 NAP Checklist before all NAP payments are processed. In addition, a representative 

from each State Office, commonly the District Director, must review the first five applications 

for payment filed in each county office for each crop year. 

The Safety Net Division updated payment questions used by reviewers to define program error 

questions clearly and to align with the CCC-770 NAP checklist.

In May 2020, the Safety Net Division issued a Notice to all State and county offices 

summarizing NAP’s FY 2019 improper payment (IP) rates and provided guidance on how to 

address common errors. 

Hurricane Harvey - Emergency Conservation Program (HH-ECP) 

The Conservation Division conducted a National Conservation Training in October of 2019 that 

provided an overall program review for State Offices (STO) and was further provided to County 

Offices (COF). 

In December of 2019, the Conservation Division reviewed the questions reviewers use when 

investigating payments. The questions were re-written for 2020 and now are direct and focused 

on common program errors. 

Each month, the Conservation Division, along with the Program Delivery Division, hosts dial-in 

conferences with State office staff to provide additional clarification, answer questions, and give 

updated feedback on policy and other issues related to ECP. 

The Conservation Division has updated and revised Handbook 1-ECP. This handbook sets forth 

policy regarding ECP program management and provides for updates of new requirements and 

clarification of previous existing requirements. The Handbook is currently awaiting formal 

clearance and will be published and distributed in late Summer 2020.

FSA implemented a new internal review system, the Internal Review Documentation and 

Tracking System (IRDTS). In December of 2019, FSA trained nine pilot states on the system. 

The pilot training included practice reviews to ensure that reviews will be completed in 

accordance with policy. The remaining States were trained in July of 2020. 

The IRDTS software also included an automated function for the first five reviews required by 

State Office. This system was used in the implementation of the Coronavirus Food Assistance 

Program (CFAP). 
242 Section III | Other Information 

RMA 

The following agency information systems and other infrastructure mechanisms apply to the 

Federal Crop Insurance Corporation (FCIC) program: 

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 2020, 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 Federal salaries and related expenses to 

manage the program. The 2019 Budget includes approximately $58.361 million in 

discretionary appropriations for these 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 

FNS1 

The following barriers apply to the Supplemental Nutrition Assistance Program (SNAP) 

program: 

SNAP benefits are processed and administered by State agencies, with FNS oversight. 

State policy options, organizational structures, and use of technology vary from State to 

State, resulting in different root causes contributing to payment errors. 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. The liability process to establish financial penalties against State 

agencies is statutory. In addition, FNS has a regulatory process that requires States to 

enter into corrective actions at the State level to address payment error rates that exceed 

six percent, a standard established by law. 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 

1 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. 
USDA | 2020 Agency Financial Report 243 

FY 2020, FNS shared payment accuracy best practices among States, revise internal 

guidance, and to implement a more robust corrective action process. 

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 NSLP and SBP in 

particular, is highly decentralized. In the school meal programs alone, there are nearly 

97,000 schools and institutions that serve meals to 30 million children, and each one of 

those meals must follow meal pattern requirements. 

Federal appropriations fund the entire cost of program benefits and a significant portion 

of administrative expenses incurred by State agencies. While Federal funding strengthens 

the nutrition safety net with national eligibility standards and rules to ensure program 

access, it also means that 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 

now consider the program burdensome, especially the reporting requirements. Increasing 

the 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 apply to the 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 

structurally similar to the school meal programs in that there are more than 66,900 

childcare centers and 630 sponsors, and more than 90,900 Family Day Care Homes 

(FDCH) that provide CACFP benefits to children. Many of these organizations simply do 

not have the capacity to develop robust accountability processes, which puts an additional 

burden on Federal and State oversight and technical assistance systems. 
244 Section III | Other Information 

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. 

3. Adopt integrity-focused measures that are cost-effective. This approach is especially 

important in child and adult care settings that have limited resources. 

FSA 

The following barriers are applicable to the following programs: (1) Noninsured Crop Disaster 

Assistance Program, (2) Hurricane Harvey – Emergency Conservation Program, (3) Livestock 

Forage Disaster Program, (4) Agriculture Risk Coverage and Price Loss Coverage, and 

(5) Wildfires and Hurricanes Indemnity Program: 

The FSA is charged with managing more programmatic work resulting in more complex 

program oversight than in prior years. With the reductions in staffing, FSA’s capacity to 

do integrity reviews has diminished. 

In addition, FSA payment limitation software does not allow for multiple payment limits 

between different payment groups under the same program. This limitation has led to 

long delays and increased manual hours in order to disburse payments accurately. 

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 2019 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 2020: 

1. USDA utilizes two methods for payment recapture auditing: Supplier Credit Recovery 

Audit contractor and USDA program’s Internal Recovery Audit Plans. Most overpayments 

recovered are from sources other than payment recapture audits; 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. 
USDA | 2020 Agency Financial Report 245 

Results are shown in the Overpayments Recaptured through Payment Recapture Audit 

Table and the Overpayment Recaptures Outside of Recapture Audit Programs Table. 

2. USDA distributed $223.18 million in recovered funds in accordance with the Payment 

Integrity Information Act of 2019 (PIIA), as shown in the Disposition of Funds 

Recaptured Table. This amount is an increase of distributed recovered funds from 

FY 2019 of $31.5 million. 

3. Sixty-five programs participated in the Supplier Credit Recovery Audit, and 46 programs 

executed internal payment recapture plans, which were approved by the Office of the 

Chief Financial Officer (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, in addition to other methods. 

As outlined in OMB Circular A-123 Appendix C Part III Section C. 5 and 6, 79 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: 

Exhibit 37: Recoveries ($ in millions) 

0.42

222.76

367.52

Supplier Credit Recovery Audit, $0.42

USDA's Internal Recovery Audit Programs, $222.76

Recoveries Outside of Payment Recapture Audits, $367.52
246 Section III | Other Information 

Exhibit 38: 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 2019 

Expenditures [Note #2] 

1. Agricultural Marketing Service (AMS) Commodity 

Purchase Programs 

✓ ✓

2. AMS Salaries and Expenses ✓ ✓

3. AMS Grants Programs ✓ ✓

4. Animal and Plant Health Inspection Service (APHIS) 

Indemnity Program 

✓ ✓* 

5. APHIS Salaries and Expenses ✓ ✓

6. APHIS Buildings and Facilities ✓ ✓* 

7. APHIS Trust Funds ✓ ✓* 

8. APHIS Cooperative Agreements ✓

9. Agriculture Research Service (ARS) Building and Facilities ✓ ✓

10. ARS Hurricane Harvey – Buildings and Facilities ✓ ✓

11. Commodity Credit Corporation (CCC) Marketing 

Assistance Loan Program 

✓

12. CCC Administrative Contracts ✓

13. CCC Farm Storage Facility Loan ✓

14. CCC Hazardous Waste Activities ✓

15. CCC Dairy Indemnity ✓

16. CCC Biomass Corp Assistance Program ✓

17. CCC Emergency Forestry Conservation Reserve ✓

18. CCC Upland Cotton Economic Adjustment Assistance 

Program 

✓
USDA | 2020 Agency Financial Report 247 

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 2019 

Expenditures [Note #2] 

19. CCC Feedstock Flexibility Program ✓ ✓

20. CCC Marketing Programs ✓

21. CCC Food for Progress Program ✓ ✓

22. CCC Export Guarantee Program Level ✓

23. CCC Export 416 Ocean Transportation ✓ ✓

24. CCC Trade Adjustment Assistance Program ✓ ✓

25. CCC Tree Assistance Program ✓

26. CCC Emergency Assistance for Livestock, Honeybees, and 

Farm-Raised Fish 

✓

27. CCC Conservation Reserve Program ✓

28. CCC Livestock Forage Disaster Program ✓

29. CCC Livestock Indemnity Program ✓

30. CCC Supplemental Revenue Assistance Payments 

Program 

✓

31. CCC Pima Agriculture Cotton Trust Fund ✓

32. CCC Agricultural Wool Apparel Manufacturers ✓

33. CCC Agriculture Risk Coverage & Price Loss Coverage ✓

34. CCC Dairy Margin Coverage Program ✓

35. CCC Market Facilitation Program ✓

36. CCC Trade Mitigation Program ✓

37. CCC Noninsured Assistance Program ✓

38. CCC Loan Deficiency Payments ✓
248 Section III | Other Information 

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 2019 

Expenditures [Note #2] 

39. Conservation Research (CR) Salaries and Expenses ✓

40. Departmental Administration (DA) Agriculture Building 

and Facilities 

✓ ✓

41. DA Hazardous Materials Management ✓ ✓

42. DA Biobased Markets Program ✓

43. Foreign Agricultural Service (FAS) McGovern-Dole Food 

for Education Grants 

✓

44. FAS Salaries and Expenses ✓ ✓

45. Food and Nutrition Service (FNS) Hurricane Harvey –

Women, Infants, and Children 

✓

46. FNS Supplemental Nutrition Assistance Program ✓

47. FNS Hurricane Harvey – Nutrition Assistance Program ✓

48. FNS Commodity Supplement Food Program ✓ ✓

49. FNS Emergency Food Assistance Program ✓

50. FNS Food Distribution Program on Indian Reservations ✓ ✓

51. FNS Farmers Market Nutrition Program ✓

52. FNS Special Milk Program ✓

53. FNS Senior Farmers Market Nutrition Program ✓

54. FNS Commonwealth of the Northern Marianas Islands ✓

55. FNS American Samoa ✓

56. FNS National School Lunch Program ✓ ✓

57. FNS School Breakfast Program ✓

58. FNS Women, Infants & Children ✓
USDA | 2020 Agency Financial Report 249 

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 2019 

Expenditures [Note #2] 

59. FNS Child & Adult Care Food Program ✓ ✓

60. FNS Nutrition Assist – Puerto Rico ✓

61. FNS Summer Food Service Program ✓ ✓

62. FNS The Emergency Food Assistance Program ✓

63. FNS Program Administration ✓

64. Forest Service (FS) Wildland Fire Management –

Suppression 

✓ ✓

65. FS Land Acquisition ✓ ✓

66. FS Working Capital Fund ✓ ✓

67. FS Management of National Forest Lands for Subsistence 

Uses 

✓ ✓

68. FS Range Betterment Fund ✓ ✓

69. FS Hurricane Sandy – Emergency Forest Restoration 

Program 

✓ ✓

70. FS National Forest System ✓ ✓

71. FS Disaster Supplemental – National Forest System ✓ ✓

72. FS Wildland Fire Management ✓ ✓

73. FS Disaster Relief-Wildland Fire Management ✓ ✓

74. FS Capital Improvement and Maintenance ✓ ✓

75. FS Disaster Supplemental – Capital Improvement and 

Maintenance 

✓ ✓

76. FS State and Private Forestry ✓ ✓

77. FS Disaster Supplemental – State and Private Forestry ✓ ✓
250 Section III | Other Information 

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 2019 

Expenditures [Note #2] 

78. FS Forest and Rangeland Research ✓ ✓

79. FS Forest and Rangeland Research – Disaster Relief ✓

80. FS Stewardship Contracting Product Sales ✓ ✓

81. FS Forest Service Permanent Appropriations ✓ ✓

82. FS Forest Service Trust Funds ✓ ✓

83. Farm Service Agency (FSA) Agricultural Credit Insurance 

Fund – Program Act 

✓

84. FSA Reforestation Pilot Program ✓ ✓

85. FSA Wildfires and Hurricanes Indemnity Program ✓

86. FSA Salaries and Expenses ✓ ✓

87. FSA Public Law 480 ✓ ✓

88. FSA Emergency Conservation Program ✓

89. FSA Hurricane Harvey – Emergency Conservation 

Program 

✓

90. FSA State Mediation Grants ✓

91. FSA Grassroots Source Water Protection ✓

92. FSA Reimbursement Transportation Cost Payment 

Program 

✓

93. FSA Emergency Forest Restoration Program ✓

94. FSA Hurricane Mic & Flo Emergency Forest Restoration 

Program 

✓

95. FSA Hurricane Mic & Flo Emergency Conservation 

Program 

✓
USDA | 2020 Agency Financial Report 251 

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 2019 

Expenditures [Note #2] 

96. Food Safety and Inspection Service (FSIS) Salaries and 

Expenses 

✓ ✓

97. FSIS Cooperative State Food Safety and Inspection ✓

98. National Institute of Food and Agriculture (NIFA) 

Research and Education Activities 

✓

99. NIFA Extension Activities ✓

100. NIFA Integrated Activities ✓

101. NIFA Community Foods Project ✓

102. Natural Resources Conservation Service (NRCS) Farm Bill 

Financial Assistance 

✓ ✓

103. NRCS Conservation Technical Assistance (non-Farm Bill) ✓ ✓

104. NRCS Watershed Programs ✓ ✓

105. NRCS Emergency Watershed Protection – Disaster Relief ✓ ✓

106. NRCS Soil Surveys ✓ ✓

107. NRCS Plan Materials Centers ✓ ✓

108. NRCS Snow Survey and Water Supply Forecasting ✓ ✓

109. NRCS Water Bank/Damage Assessment ✓ ✓

110. NRCS PL 116-20 Disasters ✓ ✓

111. Office of Budget & Program Analysis (OBPA) Salaries and 

Expenses 

✓ ✓

112. Office of the Chief Economist (OCE) Salaries and 

Expenses 

✓ ✓

113. Office of Chief Financial Officer (OCFO) Salaries and 

Expenses 

✓ ✓
252 Section III | Other Information 

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 2019 

Expenditures [Note #2] 

114. Office of the Chief Information Officer (OCIO) Salaries 

and Expenses 

✓ ✓

115. Office of the General Counsel (OGC) Salaries and 

Expenses 

✓ ✓

116. Office of Hearings and Appeals (OHA) Salaries and 

Expenses 

✓ ✓

117. Office of Inspector General (OIG) Salaries and Expenses ✓ ✓

118. OIG Disaster-Related Appropriations ✓

119. Office of Partnerships and Public Engagement (OPPE) 

Outreach for Socially Disadvantaged Farmers 

✓ ✓

120. Office of the Secretary (OSEC) Salaries and Expenses ✓ ✓

121. Rural Business-Cooperative Service (RBCS) Grant 

Programs and Cooperative Agreement 

✓

122. RBCS Relending Programs ✓

123. RBCS Payment Programs ✓

124. RBCS Guaranteed Loan Programs ✓

125. Rural Development (RD) Salaries and Expenses ✓ ✓

126. Research, Education, and Economics Resources (REE) 

Salaries and Expenses 

✓ ✓

127. Rural Housing Service (RHS) Rental Assistance Program ✓

128. RHS Community Program Grants ✓

129. RHS Rural Community Development Initiative Grants ✓

130. RHS RD Voucher Program ✓ ✓
USDA | 2020 Agency Financial Report 253 

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 2019 

Expenditures [Note #2] 

131. RHS Multi-Family Housing Preservation & Revitalization 

Demo Program: 514/516 Loans/Grants & 515 Loans 

✓

132. RHS Direct Community Facility Loans ✓

133. RHS Direct Single Family Housing ✓

134. RHS Guaranteed Community Facility Loans ✓

135. RHS Guaranteed Multi-Family Housing Loans 

(Section 538 Loans) 

✓

136. RHS Guaranteed Single Family Housing Loans ✓

137. RHS Housing Loans and Grants – Other ✓

138. RHS Rural Rental Housing Loans 

(Section 515 Direct Rural Rental Housing Loans) 

✓

139. RHS Rural Rental Housing Loans 

(Section 515 Direct Rural Rental Housing Loans) 

✓

140. RHS Rural Rental Housing Loans (Section 515 Direct Rural 

Rental Housing Loans) - Hurricane Harvey 

✓

141. Risk Management Agency (RMA) Federal Crop Insurance 

Corporation Program Fund 

✓

142. Rural Utilities Service (RUS) Electric Loan Programs (CFDA 

10.850) — Federal Financing Bank (FFB) Guaranteed 

✓

143. RUS Grants – Other Electric – Telecom – Water and 

Environmental Programs (WEP) 

✓

144. RUS Congressional Earmarked Funds ✓

145. RUS Electric Loan Programs [Catalog of Federal Domestic 

Assistance (CFDA) 10.850]—Direct Treasury Rate 

✓

146. RUS Water and Waste Guaranteed Loans ✓
254 Section III | Other Information 

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 2019 

Expenditures [Note #2] 

147. RUS Rural Utilities Electric Program – Municipal ✓

148. RUS Revolving Loan Fund Program ✓

149. RUS Community Connect Grants ✓

150. RUS Public Television Digital Transition Grants ✓

151. RUS Water and Waste Disposal Systems for Rural 

Communities – Loans 

✓ ✓

152. RUS Rural Energy Savings Program ✓

153. RUS Broadband Telecom. Loans – Treasury Rate ✓

154. RUS Rural Telecommunications – Loans – Federal 

Financing Bank (FFB) Telecom 

✓

155. RUS Water and Waste Disposal Systems for Rural 

Communities – Grants – Disaster 

✓

156. RUS Water and Waste Disposal Systems for Rural 

Communities – Grants - Hurricane Harvey 

✓

157. RUS Water and Waste Disposal Loans & Grants Section 

306C (Native Tribes & Colonials) 

✓

158. RUS Rural Telecommunications Loans – Treasury Telecom 

Loans 

✓

159. RUS Rural Telecommunications Hardship Loans – Direct 

Telecom. Loans 

✓

160. RUS Rural Utilities Electric Program Direct 5% ✓

161. RUS Rural Telecommunications Distance Learning and 

Telemedicine 

✓

* All items with an Asterix (*) were granted an extension. 
USDA | 2020 Agency Financial Report 255 

Note #1: The FSIS justification for the State Inspection Program was provided in the FY 2016 AFR. The Waiver for the FSIS Salaries and Benefits was submitted 

December 2019. 

Note #2: These programs or activities had less than $1 million in FY 2019 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. 
256 Section III | Other Information 

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 2020 AFR Recapture reporting period, USDA 

recovered $590.69 million out of the identified $613.38 million through methods outside of 

Recapture Audit Programs (see Overpayment Recaptures Outside of Recapture Audit Table for 

additional breakout). This amount represents an increase of $201.92 million in recaptured funds 

from FY 2019. The following table provides detailed information regarding the recoveries 

collected through official payment recapture audits. 

Exhibit 39: Overpayments Recaptured Through Payment Recapture Audits Table ($ in millions) 

[Note #1] 

Program or Activity 

Amount 

Identified $ 

Amount 

Recaptured $ 

Current Year (CY) 

Recapture Rate % 

CY +1 Recapture 

Rate Target % 

Supplier Credit Recovery 

Audit Program 0.42 0.42 100.00 100.00 

APHIS Internal Program 0.00 0.00 0.00 0.00 

FSA/CCC Internal Program 218.10 205.90 94.41 95.34 

NIFA Internal Program 6.72 4.22 62.80 62.95 

RD Internal Programs 5.09 4.97 97.64 98.81 

RMA-Internal Program 9.53 4.77 50.01 50.03 

TOTAL 239.86 220.28 - - 

Note #1: The FY 2020 AFR Recapture Reporting Period consists of 4th quarter FY 2019, 1st quarter 

FY 2020, 2nd quarter FY 2020, and 3rd quarter FY 2020. 
USDA | 2020 Agency Financial Report 257 

Exhibit 40: Overpayment Recaptures Outside of Recapture Audit Programs ($ in millions) 

[Note #1] 

Program or Activity Amount Identified $ Amount Recaptured $ Recapture Rate % 

AMS 0.00 0.00 N/A 

APHIS 0.04 0.04 100.00 

DA 0.00 0.00 N/A 

FAS 0.00 0.00 N/A 

FNS 342.59 342.59 100.00 

FS 9.43 9.22 97.77 

FSA 14.21 14.04 98.80 

FSIS 0.00 0.00 N/A 

OHA/OPPE 0.00 0.00 N/A 

NRCS 2.11 1.52 71.91 

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 

RCBS 0.00 0.01 1.00+2

REE 0.15 0.09 54.98 

RHS 0.01 0.01 1.00 

RMA 0.00 0.00 N/A 

RUS 0.00 0.00 N/A 

OCR 0.00 0.00 N/A 

Total 368.54 367.52 99.72 

Note #1: The FY 2020 AFR Recapture Reporting Period consists of 4th quarter FY 2019, 1st quarter 

FY 2020, 2nd quarter FY 2020, and 3rd quarter FY 2020. 

2

 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. 
258 Section III | Other Information 

Exhibit 41: 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 

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 205.90 0.00 0.00 0.00 6.76 0.00 199.14 0.00 

Funds have 

not been 

distributed 

NIFA Internal Program 4.22 0.00 0.00 0.00 0.00 0.00 0.00 4.22 

Collection of 

disallowed 

award costs 

RD Internal Program 4.97 0.00 0.00 0.00 0.00 0.00 1.96 3.01 

Funds have 

not been 

distributed 

RMA-Federal Crop 

Insurance Corporation 4.77 0.00 0.00 0.00 4.77 0.00 0.00 0.00 N/A 

Supplier Credit Recovery 

Audit Program 0.42 0.00 0.01 0.00 0.00 0.00 0.00 0.41 

Insufficient 

information 

to categorize 

TOTAL 220.28 0.00 0.01 0.00 11.53 0.00 201.10 7.64 
USDA | 2020 Agency Financial Report 259 

Exhibit 42: Aging of Outstanding Overpayments Identified in the Payment Recapture Audits Table ($ in millions) 

Program or Activity 

FY 2020 

Remaining 

Uncovered 

Amount 

Outstanding 

(0–6 months) $ 

Amount Outstanding 

(6 months to 1 year) $ 

Amount Outstanding 

(more than 1 year) $ 

Amount determined 

not to be collectable $ 

Justification for 

amounts determined 

not to be collectable 

Supplier Credit Recovery 

Audit Program 0.00 0.00 0.00 0.00 0.00 N/A 

APHIS Internal Program 0.00 0.00 0.00 0.00 0.00 N/A 

FSA/CCC Internal 

Program 12.20 25.73 18.54 7.10 51.37 

Relief granted, finality 

rule, and small 

balance write-off 

NIFA Internal Program 2.50 0.00 0.00 0.00 0.00 N/A 

RD Internal Program 0.12 1.41 1.13 6.77 0.00 N/A 

RMA-Federal Crop 

Insurance Corporation 4.76 1.94 0.00 0.33 0.00 N/A 

TOTAL [Note #1] 19.58 29.08 19.67 14.20 51.37 

Note #1: USDA has $62.95 million (not including FY 2020 Remaining Uncovered) in amounts outstanding (that is, 17.08 percent of the total overpayments 

identified through payment recapture audits). USDA has $51.37 million in amounts determined not to be collectable (that is, 13.94 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 2020 because many USDA agencies recover money from previous years. 
260 Section III | Other Information 

Agency Reduction of Improper Payments with the Do Not Pay Initiative Section 

USDA continues to expand its use of Do Not Pay (DNP) services to include the DNP Portal. 

USDA has incorporated DNP advanced services (that is., continuous monitoring and batch 

matching) to ensure that verification eligibility processes are conducted pre-award and prepayment in accordance with the Payment Integrity Information Act of 2019 (PIIA). 

The Payment Integrity Information Act of 2019 was signed and became Public Law: 116-117 on 

03/02/2020. Subsection 3354, The Do Not Pay Initiative provides guidance to agencies regarding 

the use of DNP. 

Enrollment 

As of FY 2020, USDA has more than 1,600 active users spanning more than 65 program areas. 

In addition, the USDA DNP Authorizing Official has developed processes that support the use of 

DNP during the pre-award, pre-payment, and post-payment phases of the payment life cycle. 

In support of reducing improper payments from October 2019 through August 2020, the USDA 

conducted more than 123,000 online pre-award/pre-payment searches. 

USDA continues its partnership with DNP into FY 2021. The Office of the Chief Financial 

Officer is engaged in the DNP computer matching implementation process to utilize continuous 

monitoring to allow their finance system, Financial Management Modernization Initiative 

(FMMI), to verify payments directly within the DNP Portal. 

USDA Data and Do Not Pay Shared Data 

USDA incorporated the DNP Portal databases in the following ways: 

1. USDA utilizes the Death Records provided by the Social Security Administration, 

American InfoSource, the Department of Defense, and the Department of State to check 

Guaranteed Loans and Direct Loans Divisions during pre-award and post-payment 

activities. 

2. USDA utilizes the System for Award Management (SAM) database managed by the 

General Services Administration to check the status of an entity and the excluded parties 

list before awarding contracts, grants, cooperative agreements, and insurance programs. 

USDA payments made through Treasury are checked against this data source pre-payment. 

3. USDA utilizes the Credit Alert Verification Reporting System (CAIVRS), with 

information from the Department of Housing and Urban Development (HUD), Small 

Business Association (SBA), Department of Justice (DOJ), and Department of Veterans 

Affairs (VA) to determine if a loan applicant has any federal debt that is currently in 

default or foreclosure or has had a claim paid by the reporting agency within the past 

3 years before awarding loans. 
USDA | 2020 Agency Financial Report 261 

4. USDA’s Rural Development utilizes the Treasury Offset Program, a centralized offset 

program which collects delinquent debts owed to Federal agencies and States, for preaward verifications. 

USDA State Level Funds and Improper Payments 

USDA Office of the Chief Financial Officer (OCFO) is committed to the partnership with DNP’s 

effort to engage agencies that have federally funded, state-administered programs. USDA OCFO 

anticipates active participation for the Food Nutrition Services and Farm Service Agencies in 

FY 2021. 

Payment Activity Report Current Reporting and Use 

USDA incorporated the use of the Payment Activity Report for FY 2020. USDA funding 

resources and projections occur at year-end and begins the verification checks to payees 

regarding entity loans, with an occasional event during the year. Most single searches are 

conducted for applications for programs, to include loans (housing, food, farming, utilities). 

Matches

 -

 1,000,000

 2,000,000

 3,000,000

 4,000,000

 5,000,000

 6,000,000

Per Average Quarter

FY 19 FY 20

+24

Potential Savings

 $-

 $2,000,000

 $4,000,000

 $6,000,000

 $8,000,000

 $10,000,000

Per Average Quarter

FY 19 FY 20

+25
262 Section III | Other Information 

USDA Do Not Pay initiatives are having an impact; for the average fiscal quarter, matching has 

increased 24 percent from FY 2019 to FY 2020, with potential savings from those matches 

increasing 25 percent per quarter from FY 2019 to FY 2020. 

DNP FY 2021 

USDA plans to increase payment tracking for FY 2021 to include further analysis of root causes 

within our program areas, specifically looking at payment processing methods, duplication of 

payments, pre-payment verifications, and adjudication actions. The Department identified the 

need for analysis regarding payment verification through the scope of programs that are currently 

enrolled in DNP. The USDA will work with OMB, through the DNP Business Center, to provide 

analytics into the root causes of USDA improper payments. 
USDA | 2020 Agency Financial Report 263 

▪ 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 or the Department) continues 

to implement fraud risk management into its Departmentwide Enterprise Risk Management 

(ERM) program to effectively identify, assess, analyze, prioritize, document responses to, and 

monitor fraud risks. 

As the Department continues to implement the requirements of OMB Circular A-123, it will 

identify and implement best practices to identify and minimize risks and vulnerabilities to 

prevent fraud. 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), assesses internal and external fraud risk. This assessment requires the 

respondent to rate the susceptibility of the agency’s significant business processes to fraud. 

Outlined below are specific actions the Department is taking to integrate fraud risk prevention 

and monitoring into the management of internal controls. 

Technology: 

USDA continuously monitors 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. 

Access Controls: 

The USDA consolidated financial systems’ access controls are managed through the Governance 

Risk and Compliance 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 
264 Section III | Other Information 

and approval of mitigating controls to ensure that control strategies are properly documented and 

carried out by the requesting agency. 

Segregation of Duties: 

USDA’s combined financial system is configured so that conflicting roles are prohibited, 

ensuring proper segregation of duties (SOD). Those who initiate a transaction in the financial 

system are not allowed to approve that same transaction. There are also financially significant, 

agency-specific SOD controls documented and tested annually during the A-123, Appendix A 

assessment. The strict prohibition of conflicting roles reduces the risk of fraud. 

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. 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. 

Additional Fraud Risk Integration Efforts: 

To support OMB Circular No. A-123 compliance efforts, fraud assertions are included in each 

component agencies’ Certification Statements that support the Secretary’s Annual Management 

Assurance Statement. All component agency and staff office reports are reviewed to ensure that 

financial and administrative controls are established to identify and assess fraud risks. The design 

and implementation of control activities are specifically developed to prevent, detect, and respond 

to fraud, including improper payments identified as high risk. Component agencies continually 

review internal control processes to assist in improving the overall mission and operation. 

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 charge card programs and operations. The following provides 

information related to the management of fraud risk in some of these areas of operation. 

Payroll: 

In accordance with the Statement on Standards for Attestation Engagements No. 18, an annual 

examination is completed on the internal control environment to assess and evaluate the time and 

attendance, personnel, payroll, and master data business process controls, as well as information 
USDA | 2020 Agency Financial Report 265 

technology controls that support payroll and personnel services. Systems and controls are 

designed with the expectation that customer agencies implement their own system of internal 

controls. The National Finance Center (NFC) is responsible for the “processing” controls. 

The NFC’s processing controls related to its systems that support the delivery of 

payroll/personnel processing services cover a portion of overall internal controls for each 

customer agency. It is not feasible for the control objectives related to NFC’s services to be 

achieved solely by NFC. Therefore, each customer agency’s internal controls should be 

evaluated in conjunction with NFC’s controls, and these controls must work in tandem for the 

overall control to be effective. 

Beneficiary Payments: 

USDA’s Food, Nutrition, and Consumer Services (FNCS) has established appropriate policies 

and controls to track and report funding and expenditures. It has implemented corrective actions 

to mitigate the risk of fraud and inappropriate spending practices regarding activities and 

expenses related to emergency supplemental relief funding for the various agency programs. 

Through the collections process, FNCS Regional office staff perform a reconciliation of the 

amounts on the Treasury Offset Program (TOP) Collection/Payment worksheet and the TOP 

information submitted on each State agencies’ FNS-209 (Status of Claims against the 

Supplemental Nutrition Assistance Program [SNAP] Household). 

Grants: 

FNCS utilizes what is known as the “Draws and Expenditures” process. FNCS Regional offices 

perform a data reconciliation to ensure State agency expenditures do not exceed allocations by 

more than 5 percent. Also, a reconciliation is performed on the source documentation, and 

Automated Standard Application for Payment reports to USDA’s financial system reports to 

verify the validity of obligations and expenditures in the Financial Management Modernization 

Initiative (FMMI). 

Large Contracts: 

Large contracts are reported in the Federal Procurement Data System-Next Generation 

(FPDS-NG). This system is the current central repository for information on Federal contracting. 

The system contains detailed information on contracting actions that are more than the micropurchase threshold. In fiscal year (FY) 2021, the FPDS reports’ transition to beta.SAM.gov will 

be complete. The FPDS reports module will retire, and beta.SAM.gov will be the only place to 

create and run reports on contract data. 
266 Section III | Other Information 

Travel Charge Cards: 

The primary fraud risk management method USDA uses to mitigate travel charge card misuse is 

the blocking of 922 Merchant transactions with unauthorized vendors. Additionally, USDA uses 

Oversight Insights on Demand (IOD) compliance management tool, through a partnership with 

MasterCard Inc. and U.S. Bank, to identify and detect possible travel charge card misuse. IOD is 

a cloud-based system 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. 

USDA worked with Oversight to configure IOD to meet their needs. IOD delivers easy to 

understand dashboards and reports, with detailed findings and recommendations that can be used 

to make decisions and take action. 

Purchase Cards: 

The Office of Contracting and Procurement (OCP) established the USDA Charge Card Service 

Center (CCSC) to provide overall charge card management and oversight of the program. As a 

part of that management and oversight, the CCSC routinely monitors agency charge card 

transactions through a series of oversight and compliance reporting. These reports are created in 

the bank’s system Access Online Database and then distributed to USDA program offices for 

compliance review. As part of the transition to SmartPay3®, all U.S. Federal Government 

agencies were required to implement audit or data mining functionality to reduce improper 

payments to comply with the Improper Payments Elimination and Recovery Act (IPERA) and 

other laws and regulations. USDA selected MasterCard for SmartPay3®, which utilizes Insights 

on Demand (IOD) to provide audit capability, replacing various legacy systems. IOD fully 

automates the audit process, maintaining an electronic audit trail of all records, and eliminating 

the need to maintain paper records. The tool maintains audit information in a secure FedRAMP 

environment, ensuring against data loss and providing efficient workflow in the IOD Workbench 

paired with the business intelligence Dashboard. USDA anticipates fully implementing this tool 

by March 2021. 

Operations: 

USDA’s Farm Service Agency (FSA) assesses all applicable security controls and vulnerability 

scans as part of an Authority to Operate (ATO) process. All systems also go through the 

mandated IT Risk Management Framework process by third party assessors every 36 months. 
USDA | 2020 Agency Financial Report 267 

▪ 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 or the Department) 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 19 audits during fiscal year (FY) 2020. As of September 18, 2020, OIG 

and USDA agencies reached management decisions on 26 audits. As shown in the following 

exhibit, the Department’s inventory of open audits increased in FY 2020 by 8 percent from 

80 to 88. 
268 Section III | Other Information 

Exhibit 43: Open Audit Inventory 

0

20

40

60

80

100

120

FY 2016

96

FY 2017

103

FY 2018

100

FY 2019

80

FY 2020

88

Notes: The final FY 2019 ending balance was revised from 77 to 80 to include two audits transmitted 

by OIG after the close of the reporting period and one audit previously closed that was 

reopened during the fiscal year. 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 4 

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 44 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, the original dollar value of DC or FTBU, and an explanation 

as to why final action has not been taken. 
USDA | 2020 Agency Financial Report 269 

Exhibit 44: 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 the 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 19 audits that achieved final action during the fiscal year, six contained DC. The number 

of DC audits remaining in the inventory at the end of the fiscal year is 33, with a monetary value 

of $95,933,743 (see Exhibit 45). 

Exhibit 45: Inventory of Audits with Disallowed Costs (DC) 

Audits with DC # of Audits Amount ($) 

Beginning of the Period (October 1, 2019) * 28 $ 59,822,538 

Plus: New Management Decisions 6 $ 36,112,677 

Total Audits Pending Collection of DC 34 $ 95,935,215 

Less: Adjustments $ 1,472 

Revised Subtotal $ 95,933,743 

Less: Final Actions (Recoveries) 1 $ 0 

Audits with DC Requiring Final Action at the End of 

the Period (September 18, 2020) 33 $ 95,933,743 

*One audit was inadvertently identified as disallowed costs, and two additional audits with monetary 

amounts not tracked by OCFO. 
270 Section III | Other Information 

Exhibit 45Exhibit 45 and Exhibit 46: 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 45Exhibit 45 and Exhibit 46 does not equal the total resolved 

audit inventory balance in Exhibit 43. 

For DC audits that achieved final action in FY 2020, OIG and management agreed to collect 

$1,472. Final action occurred on three audits that involved FTBU amounts. Six FTBU audits 

remain in the inventory as of September 18, 2020, with a monetary value of $76,710,921.

(See Exhibit 46).

Exhibit 46: Inventory of Audits with Funds To Be Put To Better Use (FTBU) 

Audits with FTBU # of Audits Amount ($) 

Beginning of the Period (October 1, 2019) 9 $ 81,617,411 

Plus: New Management Decisions 0 $ 0 

Total Audits Pending 9 $ 81,617,411 

Less: Final Actions 3 $ 4,906,490 

Audits with FTBU Requiring Final Action at the End of 

the Period (September 18, 2020) 6 $76,710,921 

Disposition of FTBU: 

FTBU Implemented 3 $ 4,906,490 

FTBU Not Implemented $0

Total FTBU Amounts for Final Action Audits 3 $ 4,906,490 

The number of audits open 1 or more years without final action in FY 2020 increased from the 

previous fiscal year from 56 to 64. The ending inventory includes 14 audits that reached 1 year 

past the management decision date during FY 2020. USDA agencies continue to pursue 

remediation and/or compensating controls to address many of the underlying issues identified in 

these older audits. 
USDA | 2020 Agency Financial Report 271 

Exhibit 47: 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* 56

Plus: Audits that reached 1 year past MDD during FY 2020 14

Subtotal FY 2020 audits 1 year or more past MDD 70

Less: Audits closed 6 

Ending balance as of September 30, 2020 64

*Includes two audits that reached management decision (MD) after the close of the period and one audit 

that was reopened during the fiscal year. 

Agencies have completed planned corrective actions with the exception of 12 audits under 

collection for DC and the resolution of FTBU amounts. One audit is on schedule for completion. 

(See Exhibit 48).

Exhibit 48: Distribution of Audits Open 1 Year or More Past the Management Decision Date 

(MDD) 

Audits on Schedule Audits Behind Schedule Audits Under Collection 

# DC ($) FTBU ($) # DC ($) FTBU ($) # DC ($) FTBU ($) 

1 $0 $0 51 $53,047,236 $4,618,351 12 $6,594,535 $72,092,570 

DC = Disallowed Cost. FTBU = Funds to be Put to Better Use. 

On Schedule

1%

Under 

Collection

19%

Behind Schedule

80%
272 Section III | Other Information 

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 49. 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 49: Audits Open 1 Year or More Past the Management Decision Date (MDD) and Behind Schedule 

Animal and Plant Health Inspection Service (APHIS) 

Audits Date Issued 

Revised 

Completion Date Audit Title 

Monetary Amount 

DC ($) FTBU ($) Reason Pending 

33601-0001-41 12/09/2014 10/31/2020 Oversight of Research Facilities $0 $420,299 Issuance of 

policy/guidance 

50601-0001-32 09/22/2015 03/31/2021

Controls Over APHIS’s Introduction 

of Genetically Engineered 

Organisms 

$0 $0 Issuance of 

policy/guidance 

50601-0008-TE 01/28/2005 10/31/2020

Controls over APHIS’s Issuance of 

Genetically Engineered Organisms 

Release Permits 

$0 $0 Legislation Required 

50701-0001-21 09/21/2018 12/31/2020

USDA Agency Activities for 

Agroterrorism Prevention, 

Detection and Response 

$0 $0

Pending receipt and/or 

processing of final action 

documentation 

APHIS Subtotal (4) $0 $420,299 
USDA | 2020 Agency Financial Report 273 

Agricultural Research Service (ARS) 

Audits Date Issued 

Revised 

Completion Date Audit Title 

Monetary Amount 

DC ($) FTBU ($) Reason Pending 

50601-0006-TE 03/04/2004 12/31/2020 ARS’s Controls Over Plant Variety 

Protection and Germplasm Storage $0 $0 Administrative Action 

50601-0010-AT 03/8/2004 12/31/2020 

ARS’s Follow-Up Report on the 

Security of Biological Agents at 

USDA Laboratories 

$0 $0 Administrative Action 

ARS Subtotal (2) $0 $0 

Commodity Credit Corporation (CCC) 

Audits Date Issued 

Revised 

Completion Date Audit Title 

Monetary Amount 

DC ($) FTBU ($) Reason Pending 

06403-0001-11 11/9/2018 12/31/2020 CCC’s Financial Statements for FY 

2018 $0 $0

Receipt and/or processing 

of final action 

documentation 

CCC Subtotal (1) $0 $0 
274 Section III | Other Information 

Foreign Agricultural Service (FAS) 

Audits Date Issued 

Revised 

Completion Date Audit Title 

Monetary Amount 

DC ($) FTBU ($) Reason Pending 

07601-0001-22 03/31/2014 12/31/2020 Private Voluntary Organization 

Grant Fund Accountability $242,676 $8,481 

Receipt and/or processing 

of final action 

documentation 

07601-0001-41 07/13/2018 12/31/2020 Controls Over the Export Credit 

Guarantee Program $0 $0

Receipt and/or processing 

of final action 

documentation 

07601-0002-23 12/05/2016 12/31/2020 

FAS’s Monitoring of the 

Administration’s Trade Agreement 

Initiatives 

$0 $0

Receipt and/or processing 

of final action 

documentation 

50601-0001-22 03/28/2013 12/31/2020 

Effectiveness of FAS’s Recent 

Efforts to Implement Measurable 

Strategies Aligned to the 

Department’s Trade Promotion 

and Policy Goals 

$0 $0

Receipt and/or processing 

of final action 

documentation 

50601-0002-16 02/06/2014 12/31/2020 

Section 632(a) Transfer of Funds 

from the U.S. Agency for 

International Development 

(USAID) to USDA for Afghanistan 

$0 $0 Issuance of 

policy/guidance 

FAS Subtotal (5) $242,676 $8,481 
USDA | 2020 Agency Financial Report 275 

Food and Nutrition Service (FNS) 

Audits Date Issued 

Revised 

Completion Date Audit Title 

Monetary Amount 

DC ($) FTBU ($) Reason Pending 

27004-0001-23 09/24/2018 10/31/2020 New York’s Controls Over Summer 

Food Service Program $95,759 $0

Receipt and/or 

processing of final action 

documentation 

27004-0001-31 8/26/2019 12/31/2020 Florida’s Control Over Summer 

Food Service Program $495,907 $0 Conclusion of external action 

27004-0001-41 11/05/2018 11/15/2020 California’s Controls Over Summer 

Food Service Program $377,190 $0

Receipt and/or 

processing of final action 

documentation 

27004-0003-21 3/14/2019 12/31/2020 Summer Food Service Program in 

Texas Sponsor Costs $737,605 $0

Receipt and/or 

processing of final action 

documentation 

27004-0004-21 3/14/2019 10/31/2020 Texas Controls Over Summer Food 

Service Program $281,771 $0

Receipt and/or 

processing of final action 

documentation 

27601-0002-41 09/23/2015 12/31/2020 

FNS Quality Control Process for 

Supplemental Nutrition Assistance 

Program (SNAP) Error Rate 

$0 $0 Administrative Action 

27601-0003-10 09/27/2016 11/30/2020 

New Mexico’s Compliance with 

SNAP Certification of Eligible 

Households Requirements 

$9,784 $0 Administrative Action 

27601-0010-10 08/09/2017 12/31/2020 

Pennsylvania’s Compliance with 

SNAP Requirements for 

Participating State Agencies (7 

CFR, Part 272) 

$968 $0 Issuance of 

policy/guidance 
276 Section III | Other Information 

Audits Date Issued 

Revised 

Completion Date Audit Title 

Monetary Amount 

DC ($) FTBU ($) Reason Pending 

27601-0011-10 09/14/2017 12/31/2020 

South Carolina’s Compliance with 

SNAP Requirements for 

Participating State Agencies 

(7 CFR, Part 272) 

$26,209 $0 Issuance of 

policy/guidance 

27601-0012-10 09/28/2017 9/4/2020 

Washington’s Compliance with 

SNAP Requirements for 

Participating State Agencies 

(7 CFR, Part 272) 

$0 $0 Administrative Action 

27601-0013-10 12/19/2017 12/31/2020 

Compilation Report of States’

Compliance with SNAP 

Requirements for Participating 

State Agencies (7 CFR, Part 272) 

$0 $0 Issuance of 

policy/guidance 

27601-0019-10 9/28/2018 7/31/2021 

Compilation Report of States’

Compliance with Requirements for 

the Issuance and Use of 

Supplemental Nutrition Assistance 

Program Benefits 

$0 $0 Administrative Action 

FNS Subtotal (12) $2,025,193 $0 
USDA | 2020 Agency Financial Report 277 

Farm Service Agency (FSA) 

Audits Date Issued 

Revised 

Completion Date Audit Title 

Monetary Amount 

DC ($) FTBU ($) Reason Pending 

03601-0001-22 07/31/2014 12/31/2020 Compliance Activities $0 $0 Issuance of 

policy/guidance 

03601-0002-22 07/31/2014 12/31/2020 Economic Adjustment Assistance 

to Users of Upland Cotton $1,518,068 $0 Administrative Action 

03601-0002-31 9/20/2018 12/31/2020 Agriculture Risk Coverage Price 

Loss Coverage Programs $107,794 $0 Issuance of policy/guidance 

03702-0001-32 12/10/2014 3/31/2021 FSA Livestock Forage Program $208,374 $0

Pending systems 

development, 

implementation, or 

enhancement 

06401-0005-11 2/12/2016 10/30/2020 

Commodity Credit Corporation’s 

(CCC) Financial Statements for FY 

2015 and FY 2014 

$0 $0

Receipt and/or 

processing of final action 

documentation 

50024-0014-11 5/31/2019 12/31/2020 USDA’s FY 2018 Compliance with 

Improper Payment Requirements $0 $0

Receipt and/or 

Processing of final action 

documentation 

50601-0003-22 01/27/2017 12/31/2020 

Coordination of USDA Farm 

Program Compliance—FSA, Risk 

Management Agency, and Natural 

Resource Conservation Service 

$0 $0 Administrative Action 

FSA Subtotal (7) $1,834,236 $0 
278 Section III | Other Information 

Food Safety and Inspection Service (FSIS) 

Audits Date Issued 

Revised 

Completion Date Audit Title 

Monetary Amount 

DC ($) FTBU ($) Reason Pending 

24016-0001-23 02/18/2017 12/31/2021 FSIS Follow-up on the 2007 and 

2008 Audit Initiatives $0 $0 Issuance of policy/guidance 

FSIS Subtotal (1) $0 $0 

Natural Resources Conservation Service (NRCS) 

Audits Date Issued 

Revised 

Completion Date Audit Title 

Monetary Amount 

DC ($) FTBU ($) Reason Pending 

10099-0001-23 9/11/2018 3/31/2021 Controls Over Conservation 

Innovation Grants $5,637,749 $0 Issuance of policy/guidance 

10401-0009-11 11/13/2017 3/31/2021 NRCS’s Balance Sheet for FY 2017 $0 $0 Issuance of policy/guidance 

10403-0001-11 11/15/2018 3/31/2021 NRCS’s Balance Sheet for FY 2018 $0 $0 Issuance of policy/guidance 

10601-0001-32 9/27/2016 3/31/2021 Controls Over the Conservation 

Stewardship Program $0 $4,189,571 Receipt and/or processing of final action documentation 

10601-0002-31 07/30/2014 3/31/2021 NRCS Conservation Easement 

Compliance $0 $0 Issuance of policy/guidance 

10601-0004-31(2) 11/13/2017 3/31/2021 NRCS Regional Conservation 

Partnership Program Controls $267,410 $0 Administrative action 

10601-0005-31 9/24/2019 3/31/2021 Environmental Quality Incentives 

Program Payment Schedules $0 $0 Receipt and/or processing of final action documentation 

10601-0007-31 9/26/2019 3/31/2021 

Agricultural Conservation 

Easement Program—Application 

Process and Selection Priorities 

$0 $0 Issuance of policy/guidance 

NRCS Subtotal (8) $5,905,159 $4,189,571 
USDA | 2020 Agency Financial Report 279 

Office of the Chief Financial Officer (OCFO) 

Audits Date Issued 

Revised 

Completion Date Audit Title 

Monetary Amount 

DC ($) FTBU ($) Reason Pending 

50016-0001-23 09/28/2017 12/31/2020 Implementation of Suspension and 

Debarment Tools in USDA $0 $0 Issuance of policy/guidance 

50401-0013-11 11/15/2017 9/30/2021 USDA’s Consolidated Balance 

Sheet for FY 2017 $0 $0 Issuance of policy/guidance 

OCFO Subtotal (2) $0 $0 

Office of Chief Information Officer (OCIO) 

Audits Date Issued 

Revised 

Completion Date Audit Title 

Monetary Amount 

DC ($) FTBU ($) Reason Pending 

50501-0018-12 10/12/2018 3/31/2021 FY 2018 Federal Information 

Security Modernization Act Audit $0 $0 Issuance of policy/guidance 

50501-0020-12 6/27/2019 3/31/2021 Improper Usage of USDA’s 

Information Technology Resources $0 $0 Issuance of policy/guidance 

50501-0020-12(1) 6/26/2018 12/30/22 Improper Usage of USDA’s 

Information Technology Resources $0 $0

Receipt and/or processing 

of final action 

documentation 

OCIO Subtotal (3) $0 $0 
280 Section III | Other Information 

Office of Homeland Security and Emergency Coordination (OHSEC) 

Audits Date Issued 

Revised 

Completion Date Audit Title 

Monetary Amount 

DC ($) FTBU ($) Reason Pending 

61701-0001-21 03/27/2017 12/31/2020 Agroterrorism Prevention, 

Detection, and Response $0 $0 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 

DC ($) FTBU ($) Reason Pending 

50099-0003-21 09/18/2018 10/30/2020 USDA’s Management Over the 

Misuse of Government Vehicles $0 $0 Issuance of policy/guidance 

OPFM Subtotal (1) $0 $0 

Office of Small and Disadvantaged Business Utilization (OSDBU) 

Audits Date Issued 

Revised 

Completion Date Audit Title 

Monetary Amount 

DC ($) FTBU ($) Reason Pending 

50601-0003-23 9/28/2018 12/31/2020 OSDBU’s Control Over the 

Eligibility of Contract Recipients $0 $0 Issuance of policy/guidance 

OSDBU Subtotal (1) $0 $0 
USDA | 2020 Agency Financial Report 281 

Office of the Assistant Secretary for Civil Rights (OASCR) 

Audits Date Issued 

Revised 

Completion Date Audit Title 

Monetary Amount 

DC ($) FTBU ($) Reason Pending 

50099-0001-12 9/14/2015 9/30/2020 

Review of Expenditures Made by 

the Assistant Secretary for Civil 

Rights 

$0 $0 Administrative Action 

OASCR Subtotal (1) $0 $0 

Risk Management Agency (RMA) 

Audits Date Issued 

Revised 

Completion Date Audit Title 

Monetary Amount 

DC ($) FTBU ($) Reason Pending 

05601-0005-31 12/19/2017 12/31/2020 RMA’s Utilization of Contracted 

Data Mining Results $0 $0

Pending systems 

development, 

implementation, or 

enhancement 

05601-0006-31 7/26/2019 6/30/2021 

Annual Forage Program and 

Follow-Up on Pasture , Rangeland, 

and Forage Program 

Recommendations 

$43,039,972 $0 Issuance of policy/guidance 

RMA Subtotal (2) $43,039,972 $0

Total Number Audits (51) Total $53,047,236 $4,618,351 
282 Section III | Other Information 

▪ Real Property 

The United States Department of Agriculture (USDA) Federal Real Property Profile (FRPP) 

submission to the U.S. General Services Administration (GSA) for fiscal year 2019 has 

44,061 real property assets in its inventory for USDA. Of these, 23,313 assets are buildings. 

Approximately 86 percent of USDA’s buildings are owned, and 13 percent are leased. 

USDA has 19,558 structures, the overwhelming majority (99%) of which are owned. USDA 

occupies 55,309,564 square feet (SF) of space. Of this, owned assets comprise 39,981,165 SF 

and leased assets comprise 14,863,663 SF. 

USDA’s direct lease costs total $253,640,562 and of this, USDA pays $249,954,868 in total 

annual rent and $3,685,694 in total annual operating and maintenance costs. USDA also owns 

about 193 million acres of land and occupies over 1,000 General Services Administration (GSA) 

space assignments. GSA-controlled space costs USDA about $225 million in annual rental and is 

comprised of approximately 12 million SF of space. 

A complete federal listing of real property can be accessed via the GSA website listed below. 

https://www.gsa.gov/policy-regulations/policy/real-property-policy/asset-management/federalreal-property-profile-frpp/federal-real-property-public-data-set. 
USDA | 2020 Agency Financial Report 283 

▪ Civil Monetary Penalties 

The U.S. Department of Agriculture (USDA or the Department) 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 

(https://www.federalregister.gov/documents/2017/12/05/2017-26194/inflation-catch-up-adjustment-of-civil-monetary-penalty-amounts). 

Each year, the Department must update its civil monetary penalties to account for annual inflation. On June 17, 2020, the Department published 

the revised penalties for 2020 in the Federal Register (https://www.federalregister.gov/documents/2020/06/17/2020-09447/debt-management).

The table below briefly describes the penalty, under which authority it pertains, and the anticipated current penalty amount. 

Program Office 

Penalty 

(Name of Penalty) U.S.C. Citation 

Statutory Authority; 

Positive Law and Section 

Authority (Statute) 

Date of 

Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Agricultural 

Marketing Service.

Improper record keeping 7 U.S.C. 136i-1(d) Insecticides and 

Environmental Pesticide 

Control 

06/17/2020 Maximum of $964 in the case of the first 

offense, and a minimum of $1,872 in the 

case of subsequent offenses, except that 

the penalty will be less than $1,872 if the 

Secretary determines that the person 

made a good faith effort to comply. 

Agricultural 

Marketing Service.

Violation of the unfair 

conduct rule 

7 U.S.C. 499b(5) Perishable Agricultural 

Commodities Act 

06/17/2020 Maximum of $5,246. 

Agricultural 

Marketing Service. 

Violation of the licensing 

requirements 

7 U.S.C. 499c(a) Perishable Agricultural 

Commodities Act 

06/17/2020 Maximum of $1,675 for each such 

offense and not more than $418 for each 

day it continues, or a maximum of $418 

for each offense if the Secretary 

determines the violation was not willful. 

Agricultural 

Marketing Service. 

Civil penalty in lieu of 

license suspension 

7 U.S.C. 499h (e) Perishable Agricultural 

Commodities Act 

06/17/2020 Maximum penalty of $3,348 for each 

violative transaction or each day the 

violation continues. 
284 Section III | Other Information 

Program Office 

Penalty 

(Name of Penalty) U.S.C. Citation 

Statutory Authority; 

Positive Law and Section 

Authority (Statute) 

Date of 

Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Agricultural 

Marketing Service. 

Violation 7 U.S.C. 586 Export Apple Act 06/17/2020 Minimum of $151 and a maximum of 

$15,300. 

Agricultural 

Marketing Service. 

Violation 7 U.S.C. 596 Export Grape and Plum Act 06/17/2020 Minimum of $293 and a maximum of 

$29,276. 

Agricultural 

Marketing Service. 

Violation of an order 

issued by the Secretary 

7 U.S.C. 608c(14)(B) Agricultural Adjustment Act 06/17/2020 Maximum of $2,928. Each day the 

violation continues is a separate 

violation. 

Agricultural 

Marketing Service. 

Failure to file certain 

reports 

7 U.S.C. 610 (C) Agricultural Adjustment Act 06/17/2020 Maximum of $293. 

Agricultural 

Marketing Service. 

Violation of a seed 

program 

7 U.S.C. 1596(b) Federal Seed Act 06/17/2020 Minimum of $100 and a maximum of 

$1,996. 

Agricultural 

Marketing Service. 

Failure to collect any 

assessment or fee 

7 U.S.C. 2112(b) Cotton Research and 

Promotion Act 

06/17/2020 Maximum of $2,928. Each day the 

violation continues is a separate 

violation. 

Agricultural 

Marketing Service. 

Failure to pay, collect, or 

remit any assessment or 

fee for a violation 

7 U.S.C. 2621(b)(1) Potato Research and 

Promotion Act 

06/17/2020 Minimum of $1,312 and a maximum of 

$12,104. 

Agricultural 

Marketing Service. 

Failure to obey a cease 

and desist order 

7 U.S.C. 2621(b)(3) Potato Research and 

Promotion Act 

06/17/2020 Maximum of $1,312. Each day the 

violation continues is a separate 

violation. 

Agricultural 

Marketing Service. 

Failure to pay, collect, or 

remit any assessment or 

fee or for a violation of a 

program 

7 U.S.C. 2714(b)(1) Egg Research and 

Consumer Information Act 

06/17/2020 Minimum of $1,517 and a maximum of 

$15,174. 

Agricultural 

Marketing Service. 

Failure to obey a cease 

and desist order 

7 U.S.C. 2714(b)(3) Egg Research and 

Consumer Information Act 

06/17/2020 Maximum of $1,517. Each day the 

violation continues is a separate 

violation. 
USDA | 2020 Agency Financial Report 285 

Program Office 

Penalty 

(Name of Penalty) U.S.C. Citation 

Statutory Authority; 

Positive Law and Section 

Authority (Statute) 

Date of 

Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Agricultural 

Marketing Service. 

Failure to remit any 

assessment or fee or for a 

violation of a program 

7 U.S.C. 2908(a)(2) Beef Research and 

Information Act 

06/17/2020 Maximum of $11,837. 

Agricultural 

Marketing Service. 

Violation 7 U.S.C. 1596(b) Federal Seed Act 06/17/2020 Minimum of $100 and a maximum of 

$1,996. 

Agricultural 

Marketing Service. 

Failure to collect any 

assessment or fee for a 

violation 

7 U.S.C. 2112(b) Cotton Research and 

Promotion Act 

06/17/2020 Maximum of $2,928. Each day the 

violation continues is a separate 

violation. 

Agricultural 

Marketing Service. 

Failure to pay, collect, or 

remit any assessment or 

fee for a violation of a 

program 

7 U.S.C. 2621(b)(1) Potato Research and 

Promotion Act 

06/17/2020 Minimum of $1,312 and a maximum of 

$12,104. 

Agricultural 

Marketing Service. 

Failure to obey a cease 

and desist order 

7 U.S.C. 2621(b)(3) Potato Research and 

Promotion Act 

06/17/2020 Maximum of $1,312. Each day the 

violation continues is a separate 

violation. 

Agricultural 

Marketing Service. 

Failure to pay, collect, or 

remit any assessment or 

fee or for a violation of a 

program 

7 U.S.C. 2714(b)(1) Egg Research and 

Consumer Information Act 

06/17/2020 Minimum of $1,517 and a maximum of 

$15,174. 

Agricultural 

Marketing Service. 

Failure to obey a cease 

and desist order 

7 U.S.C. 2714(b)(3) Egg Research and 

Consumer Information Act 

06/17/2020 Maximum of $1,517. Each day the 

violation continues is a separate 

violation. 

Agricultural 

Marketing Service. 

Failure to remit any 

assessment or fee or for a 

violation of a program 

7 U.S.C. 2908(a)(2) Beef Research and 

Information Act 

06/17/2020 Maximum of $11,837. 

Agricultural 

Marketing Service. 

Failure to remit any 

assessment or for a 

violation of a program 

7 U.S.C. 3410(b) Wheat and Wheat Foods 

Research 

06/17/2020 Maximum of $2,928. 
286 Section III | Other Information 

Program Office 

Penalty 

(Name of Penalty) U.S.C. Citation 

Statutory Authority; 

Positive Law and Section 

Authority (Statute) 

Date of 

Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Agricultural 

Marketing Service. 

Failure to pay, collect, or 

remit any assessment or 

fee or for a violation 

7 U.S.C. 4314(b)(1) Floral Research and 

Consumer Information Act 

06/17/2020 Minimum of $1,378 and a maximum of 

$13,777. 

Agricultural 

Marketing Service. 

Failure to obey a cease 

and desist order under 

7 U.S.C. 4314(b)(3) Floral Research and 

Consumer Information Act 

06/17/2020 Maximum of $1,378. Each day the 

violation continues is a separate 

violation. 

Agricultural 

Marketing Service. 

Violation of an order 7 U.S.C. 4510(b) Dairy Promotion Program 06/17/2020 Maximum of $2,547. 

Agricultural 

Marketing Service. 

Pay, collect, or remit any 

assessment or fee or for a 

violation 

7 U.S.C. 4610(b)(1) Honey Research, 

Promotion, and Consumer 

Information Act 

06/17/2020 Minimum of $765 and a maximum of 

$7,846. 

Agricultural 

Marketing Service. 

Failure to obey a cease 

and desist order under 

7 U.S.C. 4610(b)(3) Honey Research, 

Promotion, and Consumer 

Information Act 

06/17/2020 Maximum of $785. Each day the 

violation continues is a separate 

violation. 

Agricultural 

Marketing Service. 

Violation of a program 7 U.S.C. 

4815(b)(1)(A)(i) 

Pork Promotion, Research, 

and Consumer Information 

Act of 1985 

06/17/2020 Maximum of $2,368. 

Agricultural 

Marketing Service. 

Failure to obey a cease 

and desist order 

7 U.S.C. 

4815(b)(3)(A) 

Pork Promotion, Research, 

and Consumer Information 

Act of 1985 

06/17/2020 Maximum of $1,184. Each day the 

violation continues is a separate 

violation. 

Agricultural 

Marketing Service. 

Failure to pay, collect, or 

remit any assessment or 

fee or for a violation of a 

program 

7 U.S.C. 4910(b)(1) Watermelon Research and 

Promotion Act 

06/17/2020 Minimum of $1,184 and a maximum of 

$11,837. 

Agricultural 

Marketing Service. 

Failure to obey a cease 

and desist order 

7 U.S.C. 4910(b)(3) Watermelon Research and 

Promotion Act 

06/17/2020 Maximum of $1,184. Each day the 

violation continues is a separate 

violation. 
USDA | 2020 Agency Financial Report 287 

Program Office 

Penalty 

(Name of Penalty) U.S.C. Citation 

Statutory Authority; 

Positive Law and Section 

Authority (Statute) 

Date of 

Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Agricultural 

Marketing Service. 

Failure to pay, collect, or 

remit any assessment or 

fee or for a violation of a 

program 

7 U.S.C. 6009(c)(1) Pecan Promotion and 

Research Act of 1990 

06/17/2020 Minimum of $1,928 and a maximum of 

$19,268. 

Agricultural 

Marketing Service. 

Failure to obey a cease 

and desist order 

7 U.S.C. 6009(e) Pecan Promotion and 

Research Act of 1990 

06/17/2020 Maximum of $1,926. 

Agricultural 

Marketing Service. 

Failure to pay, collect, or 

remit any assessment or 

fee or for a violation 

7 U.S.C. 6107(c)(1) Mushroom Promotion, 

Research, and Consumer 

Information Act of 1990 

06/17/2020 Minimum of $937 and a maximum of 

$9,365. 

Agricultural 

Marketing Service. 

Failure to obey a cease 

and desist order 

7 U.S.C. 6107(e) Mushroom Promotion, 

Research, and Consumer 

Information Act of 1990 

06/17/2020 Maximum of $937. Each day the 

violation continues is a separate 

violation. 

Agricultural 

Marketing Service. 

Failure to pay, collect, or 

remit any assessment or 

fee or for a violation 

7 U.S.C. 6207(c)(1) Lime Research, Promotion, 

and Consumer Information 

Act of 1990 

06/17/2020 Minimum of $937 and a maximum of 

$9,365. 

Agricultural 

Marketing Service. 

Failure to obey a cease 

and desist order 

7 U.S.C. 6207(e) Lime Research, Promotion, 

and Consumer Information 

Act of 1990 

06/17/2020 Maximum of $937. Each day the 

violation continues is a separate 

violation. 

Agricultural 

Marketing Service. 

Failure to pay, collect, or 

remit any assessment or 

fee or for a violation of a 

program 

7 U.S.C. 

6307(c)(1)(A) 

Soybean Promotion, 

Research, and Consumer 

Information Act 

06/17/2020 Maximum of $1,928. 

Agricultural 

Marketing Service. 

Failure to obey a cease 

and desist order 

7 U.S.C. 6307(e) Soybean Promotion, 

Research, and Consumer 

Information Act 

06/17/2020 Maximum of $9,593. Each day the 

violation continues is a separate 

violation. 
288 Section III | Other Information 

Program Office 

Penalty 

(Name of Penalty) U.S.C. Citation 

Statutory Authority; 

Positive Law and Section 

Authority (Statute) 

Date of 

Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Agricultural 

Marketing Service. 

Failure to pay, collect, or 

remit any assessment or 

fee or for a violation 

7 U.S.C. 

6411(c)(1)(A), & 

7 U.S.C. 

6411(c)(1)(B) 

Fluid Milk Promotion Act of 

1990 

06/17/2020 Minimum of $18,405 and a maximum of 

$187,296. 

Agricultural 

Marketing Service. 

Failure to obey a cease 

and desist order 

7 U.S.C. 6411(e ) Fluid Milk Promotion Act of 

1990 

06/17/2020 Maximum of $9,639. Each day the 

violation continues is a separate 

violation. 

Agricultural 

Marketing Service. 

Knowingly labeling or 

selling a product as 

organic 

7 U.S.C. 6519( c ) Organic Foods Production 

Act of 1990 

06/17/2020 Maximum of $18,730. 

Agricultural 

Marketing Service. 

Failure to pay, collect, or 

remit any assessment or 

fee or for a violation of a 

program 

7 U.S.C. 

6808(c)(1)(A)(i) 

Fresh Cut Flowers and 

Fresh Cut Greens 

Promotion and Information 

Act of 1993 

06/17/2020 Minimum of $883 and a maximum of 

$8,831. 

Agricultural 

Marketing Service. 

Failure to obey a cease 

and desist order 

7 U.S.C. 6808(e)(1) Fresh Cut Flowers and 

Fresh Cut Greens 

Promotion and Information 

Act of 1993 

06/17/2020 Maximum of $8,831. Each day the 

violation continues is a separate 

violation. 

Agricultural 

Marketing Service. 

Violation of a program 7 U.S.C. 

7107(c)(1)(A) 

Sheep Promotion, 

Research, and Information 

Act of 1994 

06/17/2020 Maximum of $1,722. 

Agricultural 

Marketing Service. 

Failure to obey a cease 

and desist order 

7 U.S.C. 7107(e) Sheep Promotion, 

Research, and Information 

Act of 1994 

06/17/2020 Maximum of $860. Each day the 

violation continues is a separate 

violation. 

Agricultural 

Marketing Service. 

Violation of an order or 

regulation issued 

7 U.S.C. 7419(c)(1) Commodity Promotion, 

Research, and Information 

Act of 1996, 

06/17/2020 Minimum of $1,625 and a maximum of 

$16,257 for each violation. 
USDA | 2020 Agency Financial Report 289 

Program Office 

Penalty 

(Name of Penalty) U.S.C. Citation 

Statutory Authority; 

Positive Law and Section 

Authority (Statute) 

Date of 

Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Agricultural 

Marketing Service. 

Failure to obey a cease 

and desist order 

7 U.S.C. 7419(e) Commodity Promotion, 

Research, and Information 

Act of 1996 

06/17/2020 Minimum of $1,625 and a maximum of 

$16,257. Each day the violation 

continues is a separate violation. 

Agricultural 

Marketing Service. 

Violation of an order or 

regulation issued 

7 U.S.C. 

7448(c)(1)(A)(i) 

Canola and Rapeseed 

Research, Promotion, and 

Consumer Information Act, 

06/17/2020 Maximum of $1,625 for each violation. 

Agricultural 

Marketing Service. 

Failure to obey a cease 

and desist order 

7 U.S.C. 7448 ( e ) Canola and Rapeseed 

Research, Promotion, and 

Consumer Information Act 

06/17/2020 Maximum of $8,128. Each day the 

violation continues is a separate 

violation. 

Agricultural 

Marketing Service. 

Violation of an order or 

regulation issued 

7 U.S.C. 7468(c)(1) National Kiwifruit Research, 

Promotion, and Consumer 

Information Act 

06/17/2020 Minimum of $813 and a maximum of 

$8,128 for each violation. 

Agricultural 

Marketing Service. 

Failure to obey a cease 

and desist order 

7 U.S.C. 7468 ( e ) National Kiwifruit Research, 

Promotion, and Consumer 

Information Act 

06/17/2020 Maximum of $813. Each day the 

violation continues is a separate 

violation. 

Agricultural 

Marketing Service. 

Violation of an order or 

regulation 

7 U.S.C. 7487(a) Popcorn Promotion, 

Research, and Consumer 

Information Act 

06/17/2020 Maximum of $1,625 for each violation. 

Agricultural 

Marketing Service. 

Violation 21 U.S.C. 

1041(c)(1)(A) 

Egg Products Inspection Act 06/17/2020 Maximum of $9,365 for each violation. 

Agricultural 

Marketing Service. 

Violation of an order or 

regulation issued 

7 U.S.C. 

7807(c)(1)(A)(i) 

Hass Avocado Promotion, 

Research, and Information 

Act of 2000 

06/17/2020 Minimum of $1,478 and a maximum of 

$14,790 for each violation. 

Agricultural 

Marketing Service. 

Failure to obey a cease 

and desist order 

7 U.S.C. 7807(e)(1 Hass Avocado Promotion, 

Research, and Information 

Act of 2000 

06/17/2020 Maximum of $14,790 for each offense. 

Each day the violation continues is a 

separate violation. 
290 Section III | Other Information 

Program Office 

Penalty 

(Name of Penalty) U.S.C. Citation 

Statutory Authority; 

Positive Law and Section 

Authority (Statute) 

Date of 

Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Agricultural 

Marketing Service. 

Violation of certain 

provisions 

7 U.S.C. 1636b(a)(1) Livestock Mandatory 

Reporting Act of 1999 

06/17/2020 Maximum of $15,300 for each violation. 

Agricultural 

Marketing Service. 

Failure to obey a cease 

and desist order 

7 U.S.C. 1636b(g)(3) Livestock Mandatory 

Reporting Act of 1999 

06/17/2020 Maximum of $15,300 for each violation. 

Each day the violation continues is a 

separate violation. 

Agricultural 

Marketing Service. 

Failure to obey an order 7 U.S.C. 

1637b(c)(4)(D)(iii) 

Dairy Product Mandatory 

Reporting Program 

06/17/2020 Maximum of $14,790 for each offense. 

Agricultural 

Marketing Service. 

Willful violation 7 U.S.C. 1638b(b)(2) Country of Origin Labeling 

Program 

06/17/2020 Maximum of $1,188 for each violation. 

Agricultural 

Marketing Service. 

Violation 7 U.S.C. 4535 and 

4510(b) 

Dairy Research Program 06/17/2020 Maximum of $2,547 for each violation. 

Agricultural 

Marketing Service. 

Violation by a packer or 

swine contractor 

7 U.S.C. 193(b) Packers and Stockyards 06/17/2020 Maximum of $29,270. 

Agricultural 

Marketing Service. 

Failure for a livestock 

market agency or dealer 

to register 

7 U.S.C. 203 Packers and Stockyards 06/17/2020 Maximum of $1,995 and not more than 

$100 for each day the violation 

continues. 

Agricultural 

Marketing Service. 

Operating without filing, 

or in violation of, a 

stockyard rate schedule, 

or of a regulation 

7 U.S.C. 207(g) Packers and Stockyards 06/17/2020 Maximum of $1,996 and not more than 

$100 for each day the violation 

continues. 

Agricultural 

Marketing Service. 

Stockyard owner, 

livestock market agency, 

or dealer, who engages in 

or uses any unfair, 

unjustly discriminatory, 

or deceptive practice 

7 U.S.C. 213(b) Packers and Stockyards 06/17/2020 Maximum of $29,270. 
USDA | 2020 Agency Financial Report 291 

Program Office 

Penalty 

(Name of Penalty) U.S.C. Citation 

Statutory Authority; 

Positive Law and Section 

Authority (Statute) 

Date of 

Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Agricultural 

Marketing Service. 

Stockyard owner, 

livestock market agency, 

or dealer, who knowingly 

fails to obey any order 

7 U.S.C. 211, 212, or 

213, codified at 

7 U.S.C. 215(a) 

Packers and Stockyards 06/17/2020 Maximum of $1,996. 

Agricultural 

Marketing Service. 

Live poultry dealer 

violations 

7 U.S.C. 228b-2(b) Packers and Stockyards 06/17/2020 Maximum of $85,150. 

Agricultural 

Marketing Service. 

Violation 7 U.S.C. 86(c) Grain Standards 06/17/2020 Maximum of $286,049 

Agricultural 

Marketing Service. 

Failure to comply with 

certain provisions 

7 U.S.C. 254 U.S. Warehouse Act 06/17/2020 Maximum of $36,975 per violation if an 

agricultural product is not involved in the 

violation. 

Animal and Plant 

Health Inspection 

Service 

Violation 7 U.S.C. 1596(b) Federal Seed Act 06/17/2020 Minimum of $100 and a maximum of 

$1,996. 

Animal and Plant 

Health Inspection 

Service 

Violation 7 U.S.C. 2149(b) Animal Welfare Act 06/17/2020 Maximum of $11,883, and knowingly fail 

to obey a cease and desist order has a 

civil penalty of $1,782. 

Animal and Plant 

Health Inspection 

Service 

Penalty for any person 

that causes harm to, or 

interferes with, an animal 

used for the purposes of 

official inspection by 

USDA 

7 U.S.C. 2279e(a) Farming Opportunities 

Training and Outreach 

06/17/2020 Maximum of $14,790. 

Animal and Plant 

Health Inspection 

Service 

Violation 7 U.S.C. 3805(a), Swine Health Protection Act 06/17/2020 Maximum of $29,726. 
292 Section III | Other Information 

Program Office 

Penalty 

(Name of Penalty) U.S.C. Citation 

Statutory Authority; 

Positive Law and Section 

Authority (Statute) 

Date of 

Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Animal and Plant 

Health Inspection 

Service 

Penalty for any person 

that violates or that 

forges, counterfeits, or, 

without authority from 

the Secretary, uses, 

alters, defaces, or 

destroys any certificate, 

permit, or other 

document 

7 U.S.C. 7734(b)(1) Plant Protection Act (PPA) 06/17/2020 Maximum of the greater of: $73,950 in 

the case of any individual, except that 

the civil penalty may not exceed 

$1,479 in the case of an initial violation 

of the PPA by an individual moving 

regulated articles not for monetary gain, 

$369,749 in the case of any other person 

for each violation, $594,129 for all 

violations adjudicated in a single 

proceeding if the violations do not 

include a willful violation, and 

$1,188,259 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 for in the PPA that results in 

the person deriving pecuniary gain or 

causing pecuniary loss to another. 
USDA | 2020 Agency Financial Report 293 

Program Office 

Penalty 

(Name of Penalty) U.S.C. Citation 

Statutory Authority; 

Positive Law and Section 

Authority (Statute) 

Date of 

Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Animal and Plant 

Health Inspection 

Service 

Penalty for any person 

that violates or that 

forges, counterfeits, or, 

without authority from 

the Secretary, uses, 

alters, defaces, or 

destroys any certificate, 

permit, or other 

document 

7 U.S.C. 8313(b)(1) Animal Health Protection 

Act (AHPA) 

06/17/2020 Maximum of the greater of: $70,972 in 

the case of any individual, except that the 

civil penalty may not exceed $1,420 in the 

case of an initial violation of the AHPA by 

an individual moving regulated articles 

not for monetary gain, $354,860 in the 

case of any other person for each 

violation, $594,129 for all violations 

adjudicated in a single proceeding if the 

violations do not include a willful 

violation, and $1,188,259 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. 

Animal and Plant 

Health Inspection 

Service 

Penalty for any person 

that violates certain 

regulations regarding 

transfers of listed agents 

and toxins or possession 

and use of listed agents 

and toxins 

7 U.S.C. 8401(i)(1) Agricultural Bioterrorism 

Protection Act of 2002 

06/17/2020 Maximum of $354,860 in the case of an 

individual and $709,721 in the case of 

any other person. 

Animal and Plant 

Health Inspection 

Service 

Violation 15 U.S.C. 1825(b)(1) Horse Protection Act 06/17/2020 Maximum of $5,856. 
294 Section III | Other Information 

Program Office 

Penalty 

(Name of Penalty) U.S.C. Citation 

Statutory Authority; 

Positive Law and Section 

Authority (Statute) 

Date of 

Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Animal and Plant 

Health Inspection 

Service 

Failure to obey Horse 

Protection Act 

disqualification 

15 U.S.C. 1825( c) Horse Protection Act 06/17/2020 Maximum of $11,444. 

Animal and Plant 

Health Inspection 

Service 

Knowingly violating, or, if 

in the business as an 

importer or exporter, 

violating, with respect to 

terrestrial plants, any 

provision 

16 U.S.C. 1540(a)(1), 

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) 

Endangered Species Act of 

1973 

06/17/2020 Maximum of $53,525 for each violation. 

Animal and Plant 

Health Inspection 

Service 

Knowingly violating, or, if 

in the business as an 

importer or exporter, 

violating, with respect to 

terrestrial plants, any 

other regulation 

 16 U.S.C. 1540(a)(1) Endangered Species Act of 

1973 

06/17/2020 Maximum of $25,632 for each violation. 

Animal and Plant 

Health Inspection 

Service 

Violating, with respect to 

terrestrial plants or any 

regulation, permit, or 

certificate 

 16 U.S.C. 1540(a)(1) Endangered Species Act of 

1973 

06/17/2020 Maximum of $1,351 for each violation. 
USDA | 2020 Agency Financial Report 295 

Program Office 

Penalty 

(Name of Penalty) U.S.C. Citation 

Statutory Authority; 

Positive Law and Section 

Authority (Statute) 

Date of 

Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Animal and Plant 

Health Inspection 

Service 

Knowingly and willfully 

violating 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 

 49 U.S.C. 80502(d) Transportation of Animals 06/17/2020 Minimum of $168 and a maximum of 

$860. 

Animal and Plant 

Health Inspection 

Service 

Violation and its 

implementing regulation 

7 U.S.C. 1901 note, 

as specified in 

9 CFR 88.6 

Commercial Transportation 

of Equine for Slaughter Act 

06/17/2020 Maximum of $812. 

Animal and Plant 

Health Inspection 

Service 

Knowingly violating 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 

16 U.S.C. 3373(a)(1) Lacey Act Amendments of 

1981 

06/17/2020 Maximum of $26,615 for each violation, 

as specified in 16 U.S.C. 3373(a)(1) (but if 

the plant has a market value of less than 

$356, 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 will not exceed the 

maximum provided for violation of said 

law, treaty, or regulation, or $26,615, 

whichever is less). 

Animal and Plant 

Health Inspection 

Service 

Violation 16 U.S.C. 3373(a)(2) Lacey Act Amendments of 

1981 

06/17/2020 Maximum of $665. 
296 Section III | Other Information 

Program Office 

Penalty 

(Name of Penalty) U.S.C. Citation 

Statutory Authority; 

Positive Law and Section 

Authority (Statute) 

Date of 

Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Food and Nutrition 

Service 

Violating a provision or a 

regulation under the Act, 

by a retail food store or 

wholesale food concern 

7 U.S.C. 2021(a) and 

(c) 

Food and Nutrition Act of 

2008 (Act) 

06/17/2020 Maximum of $118,826 for each violation. 

Food and Nutrition 

Service 

Trafficking in food 

coupons 

7 U.S.C. 

2021(b)(3)(B) 

Food and Nutrition Act of 

2008 (Act) 

06/17/2020 Maximum of $42,819 for each violation, 

except that the maximum penalty for 

violations occurring during a single 

investigation is $77,106. 

Food and Nutrition 

Service 

Sale of firearms, 

ammunitions, explosives, 

or controlled substances 

for coupons 

7 U.S.C. 

2021(b)(3)(C) 

Food and Nutrition Act of 

2008 (Act) 

06/17/2020 Maximum penalty for violations 

occurring during a single investigation is 

$77,106. 

Food and Nutrition 

Service 

Any entity that submits a 

bid to supply infant 

formula 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 

42 U.S.C. 

1786(h)(8)(H)(i) 

Special Supplemental 

Nutrition Program for 

Women, Infants, and 

Children 

06/17/2020 Maximum of $181,484,308. 

Food and Nutrition 

Service 

Vendor convicted of 

trafficking in food 

instruments 

42 U.S.C. 

1786(o)(1)(A) and 42 

U.S.C. 1786(o)(4)(B) 

Special Supplemental 

Nutrition Program for 

Women, Infants, and 

Children 

06/17/2020 Maximum of $15,692 for each violation, 

except that the maximum penalty for 

violations occurring during a single 

investigation is $62,767. 
USDA | 2020 Agency Financial Report 297 

Program Office 

Penalty 

(Name of Penalty) U.S.C. Citation 

Statutory Authority; 

Positive Law and Section 

Authority (Statute) 

Date of 

Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Food and Nutrition 

Service 

Vendor convicted of 

selling firearms, 

ammunition, explosive, or 

controlled substances in 

exchange for food 

instruments 

42 U.S.C. 

1786(o)(1)(B) and 42 

U.S.C. 1786(o)(4)(B) 

Special Supplemental 

Nutrition Program for 

Women, Infants, and 

Children 

06/17/2020 Maximum of $15,692 for each violation, 

except that the maximum penalty for 

violations occurring during a single 

investigation is $62,767. 

Food Safety and 

Inspection Service 

Violation 21 U.S.C. 

1041(c)(1)(A) 

Egg Products Inspection Act 06/17/2020 Maximum of $9,365 for each violation. 

Forest Service. Willful disregard of the 

prohibition against the 

export of unprocessed 

timber originating from 

Federal lands 

16 U.S.C. 

620d(c)(1)(A) 

Federal Lands 06/17/2020 Maximum of $963,837 per violation or 

three times the gross value of the 

unprocessed timber, whichever is 

greater. 

Forest Service. Violation 16 U.S.C. 

620d(c)(2)(A)(i) 

Forest Resources 

Conservation and Shortage 

Relief Act 

06/17/2020 Maximum of $144,576 per violation. 

Forest Service. Penalty for a person that 

should have known that 

an action was a violation 

regardless of whether 

such violation caused the 

export of unprocessed 

timber originating from 

Federal lands 

 16 U.S.C. 

620d(c)(2)(A)(ii), 

Forest Resources 

Conservation and Shortage 

Relief Act 

06/17/2020 Maximum of $96,384 per violation. 

Forest Service. Willful violation 16 U.S.C. 

620d(c)(2)(A)(iii) 

Forest Resources 

Conservation and Shortage 

Relief Act 

06/17/2020 Maximum of $963,837. 

Forest Service. Violation involving 

protections of caves 

 16 U.S. C. 

4307(a)(2) 

Federal Cave Resources 

Protection 

06/17/2020 Maximum of $21,065. 
298 Section III | Other Information 

Program Office 

Penalty 

(Name of Penalty) U.S.C. Citation 

Statutory Authority; 

Positive Law and Section 

Authority (Statute) 

Date of 

Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Federal Crop 

Insurance 

Corporation. 

Willfully or intentionally 

providing any false or 

inaccurate information 

7 U.S.C. 

1515(h)(3)(A) 

Federal Crop Insurance Act 06/17/2020 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 $12,502. 

Rural Housing 

Service. 

Violation of section 536 

of Title V of the Housing 

Act of 1949 

42 U.S.C. 

1490p(e)(2) 

Housing Act of 1949 06/17/2020 Maximum of $204,891 in the case of an 

individual, and a maximum of $2,048,915 

in the case of an applicant other than an 

individual. 

 Penalty for equity 

skimming 

42 U.S.C. 1490s(a)(2) Housing Act of 1949 06/17/2020 Maximum of $36,975. 

Rural Housing 

Service. 

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 laws and 

regulations 

42 U.S.C. 

1490s(b)(3)(A) 

Housing Act of 1949 06/17/2020 Maximum of the greater of twice the 

damages USDA, 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 $73,950 

per violation. 

Commodity Credit 

Corporation. 

Penalty for willful failure 

or refusal to furnish 

information, or willful 

furnishing of false 

information under 

Section 156 

7 U.S.C. 7272(g)(5) Federal Agricultural 

Improvement and Reform 

Act of 1996 

06/17/2020 Maximum of $16,257 for each violation. 
USDA | 2020 Agency Financial Report 299 

Program Office 

Penalty 

(Name of Penalty) U.S.C. Citation 

Statutory Authority; 

Positive Law and Section 

Authority (Statute) 

Date of 

Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Commodity Credit 

Corporation. 

Willful failure or refusal 

to furnish information or 

willful furnishing of false 

data by a processor, 

refiner, or importer of 

sugar, syrup, and 

molasses 

7 U.S.C. 7272(g)(5) Federal Agriculture 

Improvement and Reform 

Act of 1996

06/17/2020 Maximum of $16,257 for each violation. 

Commodity Credit 

Corporation. 

Filing a false acreage 

report that exceeds 

tolerance 

7 U.S.C. 7272(g)(5) Federal Agriculture 

Improvement and Reform 

Act of 1996 

06/17/2020 Maximum of $16,257 for each violation. 

Commodity Credit 

Corporation. 

Knowingly violating any 

regulation of the 

Secretary of the 

Commodity Credit 

Corporation pertaining to 

flexible marketing 

allotments for sugar 

7 U.S.C. 1359hh(b) Agricultural Adjustment Act 

of 1938 

06/17/2020 Maximum of $11,883 for each violation. 

Commodity Credit 

Corporation. 

Knowingly violating 

regulations promulgated 

by the Secretary 

pertaining to cotton 

insect eradication 

7 U.S.C. 1444a(d) Agricultural Act of 1949 06/17/2020 Maximum of $14,638 for each offense. 

Office of the 

Secretary. 

Making, presenting, 

submitting, or causing to 

be made, presented, or 

submitted a false, 

fictitious, or fraudulent 

claim 

 31 U.S.C. 3802(a)(1) Program Fraud Civil 

Remedies Act of 1986 

06/17/2020 Maximum of $11,666. 
300 Section III | Other Information 

Program Office 

Penalty 

(Name of Penalty) U.S.C. Citation 

Statutory Authority; 

Positive Law and Section 

Authority (Statute) 

Date of 

Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

 Office of the 

Secretary. 

Making, presenting, 

submitting, or causing to 

be made, presented, or 

submitted a false, 

fictitious, or fraudulent 

written statement 

 31 U.S.C. 3802(a)(2) Program Fraud Civil 

Remedies Act of 1986 

06/17/2020 Maximum of $11,666. 
USDA | 2020 Agency Financial Report 301 

▪ Grants Program 

Agencies and Staff Offices with grant and cooperative agreement programs must submit a brief 

high-level summary of expired awards which have not been closed. In the table below, they are 

to report the total number of Federal grant and cooperative agreement awards and balances for 

which closeout has not yet occurred, but for which the period of performance has elapsed by two 

years or more prior to September 30, 2020. 

USDA is providing the below table as required by OMB Circular A-136. This data will be the 

base for comparison in the FY 2021 Agency Financial Report. A brief narrative of the progress 

made over the next year will compared to the previous year’s report. The narrative will also 

address challenges preventing closeout of awards reported, and actions to be taken to close 

awards reported. Currently, this narrative is optional if the entity did not report on expired grants 

in FY 2019. USDA did not report expired grants in FY 2019 and therefore does not have any 

action to report. 

Exhibit 50: Grants Program Summary 

Category 2–3 Years >3–5 Years >5 Years 

Number of Grants/Cooperative 

Agreements with Zero Dollar Balances 492 156 52

Number of Grants/Cooperative 

Agreements with Undisbursed Balances 1,772 480 63

Total Amount of Undisbursed Balances $43,352,775.47 $22,121,102.35 $9,867,362.64 
Page Intentionally Blank 
USDA | 2020 Agency Financial Report 303 

Abbreviations–

Acronyms 

2501 Program ................. Outreach and Assistance for Socially Disadvantaged and Veteran 

Farmers and Ranchers Program 

— A — 

A&O ............................... Administrative and Operating Subsidy 

AAR .............................. Acquisition Approval Request 

ABAWD ....................... Able-Bodied Adults without Dependents 

ADA .............................. Anti-Deficiency Act 

ADSEF .......................... Administration for Socioeconomic Development of the Family 

AFR ............................... Agency Financial Report 

AgCMS ......................... Agriculture Conference Management System 

AgNIC ........................... Agriculture Network Information Collaborative 

AHPA ............................ Animal Health Protection Act 

AIP ................................ Approved Insurance Providers 

AMS .............................. Agricultural Marketing Service 

APEC ............................ Access, Participation, Eligibility, and Certification Study 

APEC-II ........................ Access, Participation, Eligibility, and Certification Study-II

APG ............................... Agency Priority Goal 

APH ............................... Actual Production History 

APHIS ........................... Animal and Plant Health Inspection Service 

APPR ............................. Annual Performance Plan and Report 

AQI ............................... Agricultural Quarantine Inspection 

ARC .............................. Agriculture Risk Coverage 

ARC CO ........................ Agriculture Risk Coverage-County 

ARMS ........................... Agricultural Resources Management Survey 
304 Abbreviations—Acronyms 

ARS ............................... Agricultural Research Service 

ART ............................... Administrative Review and Training 

ASCR ............................ Assistant Secretary for Civil Rights 

ATO .............................. Authority to Operate 

— B — 

BAR .............................. Budget and Accrual Reconciliation 

BARC ............................. Beltsville Agricultural Research Center 

BOC .............................. Budget Object Classification 

BPOI ............................. Basic Provisions of Insurance 

— C — 

CACFP .......................... Child and Adult Care Food Program 

CAIVRS ........................ Credit Alert Verification Reporting System 

CAP ............................... Cross-Agency Priority 

CARES Act ................... Coronavirus Aid, Relief, and Economic Security Act 

CBD .............................. Cannabidiol 

CBOs ............................. Certificates of Beneficial Ownership 

CCA .............................. Clinger-Cohen Act 

CCC ............................... Commodity Credit Corporation 

CCC BF ......................... Commodity Credit Corporation Budget Formulation 

CCSC ............................ Charge Card Service Center 

CDM ............................. Continuous Diagnostics and Mitigation 

CEC ............................... Client Experience Center 

CFAP ............................. Coronavirus Food Assistance Program 

CFDA ............................ Catalog of Federal Domestic Assistance 

CFO ............................... Chief Financial Officer 

CFR ............................... Code of Federal Regulations 

CHA .............................. Children’s Hunger Alliance 

CIH ................................ Crop Insurance Handbook 

CIM ............................... Capital Improvement and Maintenance 

CIO ................................ Chief Information Officer 

CIR ................................ Contract Implementation Ratio 

CIS ................................ Interstate Shipment 

CN ................................. Child Nutrition 

CoC ............................... Cushion of Credit 

CoEs .............................. Centers of Excellence 

COF ............................... County Office 
USDA | 2020 Agency Financial Report 305 

COSO ............................ Committee of Sponsoring Organizations of the Treadway Commission 

COTS ............................ Commercial Off-The-Shelf 

COVID-19 ..................... Coronavirus Disease 2019 

CPI ................................ Consumer Price Index 

CPIC .............................. Capital Planning and Investment Control 

CR ................................. Conservation Research 

CRP ............................... Conservation Reserve Program 

CTA ............................... Conservation Technical Assistance 

CTAT ............................ Conference Transparency and Accountability Tool 

CSI ................................ Consumer Safety Inspectors 

CY ................................. Current Year 

— D — 

DA ................................. Departmental Administration 

DATA ........................... Data and Technical Assistance 

DC ................................. Disallowed Costs 

DCOI ............................. Data Center Optimization Initiative 

DHS ............................... U.S. Department of Homeland Security 

DISC ............................. Digital Infrastructure Service Center 

DM&R .......................... Deferred Maintenance & Repairs 

DNP ............................... Do Not Pay 

DOJ ............................... U.S. Department of Justice 

DOL .............................. U.S. Department of Labor 

— E — 

E&T ............................... Employment and Training 

E-Board ......................... Executive Information Technology Investment Review Board 

EA ................................. Enterprise Architecture 

EBT ............................... Electronic Benefits Transfers 

ECP ............................... Emergency Conservation Program 

EFAC ............................ Export Food Aid Commodity 

eFG ................................ ezFedGrants 

ELC ............................... Entity Level Control 

EQIP .............................. Environmental Quality Incentives Program 

ERM .............................. Enterprise Risk Management 

ERS ............................... Economic Research Service 

EU ................................. Enterprise Unit 

EWA ............................. Early Warning Alert 
306 Abbreviations—Acronyms 

— F — 

FAQs ............................. Frequently Asked Questions 

FAR ............................... Federal Acquisition Regulation 

FAS ............................... Foreign Agricultural Service 

FCC ............................... Federal Communications Commission 

FCIC .............................. Federal Crop Insurance Corporation 

FDA ............................... Food and Drug Administration 

FDCH ............................ Family Day Care Home 

FDD ............................... Food Distribution Division 

FDPIR ........................... Food Distribution Program on Indian Reservations 

FECA ............................ Federal Employees’ Compensation Act 

FFAR ............................. Foundation for Food and Agricultural Research 

FFB ............................... Federal Financing Bank 

FFMIA .......................... Federal Financial Management Improvement Act 

FFMS ............................ Federal Financial Management System 

FI ................................... Food Inspectors 

FISMA .......................... Federal Information Security Modernization Act 

FITARA ........................ Federal Information Technology Acquisition Reform Act 

FLP ................................ Farm Loan Programs 

FMFIA .......................... Federal Managers’ Financial Integrity Act 

FMIA ............................. Federal Meat Inspection Act 

FMMI ............................ Financial Management Modernization Initiative 

FNCS ............................. Food, Nutrition, and Consumer Services 

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 

FRPP .............................. Federal Real Property Profile 

FS .................................. Forest Service 

FSA ............................... Farm Service Agency 

FSFL ............................. Farm and Sugar Storage Facilities 

FSH ............................... Forest Service Handbook 

FSIS ............................... Food Safety Inspection Service 

FSM ............................... Forest Service Manual 

FSRIP ............................ Farm Security and Rural Investment Act Program 

FTBU ............................ Funds to Be Put to Better Use 

FY ................................. Fiscal Year 
USDA | 2020 Agency Financial Report 307 

— G — 

GAO .............................. Government Accountability Office 

GIS ................................ Geographic Information System 

GMS .............................. Grants Management Service 

GPRA ............................ Government Performance and Results 

GSA ............................... General Services Administration 

GTAS ............................ Governmentwide Treasury Account Symbol Adjusted Trial Balance 

System 

— H — 

HACCP ......................... Hazard Analysis and Critical Control Point 

HANA ........................... High-Performance Analytic Appliance 

HH ................................. Hurricane Harvey 

HR ................................. Human Resources 

HUD .............................. U.S. Department of Housing and Urban Development 

— I — 

IAA ............................... Interagency Agreements 

IBNR ............................. Incurred but Not Reported 

IC ................................... Innovation Center 

IGT ................................ Intra-Governmental Transaction 

IOD ............................... Insights on Demand 

IP ................................... Improper Payment 

IPERA ........................... Improper Payments Elimination and Recovery Act of 2010 

IPERIA .......................... Improper Payment Elimination and Recovery Improvement Act of 

2012 

IRDTS ........................... Internal Review Documentation and Tracking System 

ISPs ............................... Investment Support Plans 

IT ................................... Information Technology 

ITO ................................ Indian Tribal Organizations 

— K — 

KPIs Key ....................... Performance Indicators 

— L — 

L&WCF ........................ Land and Water Conservation Fund 

LFP ................................ Livestock Forage Disaster Program 
308 Abbreviations—Acronyms 

LP .................................. Livestock & Poultry 

LPAI .............................. Low pathogenic avian influenza 

LPDS ............................. Labeling and Program Delivery Staff 

LSAS ............................. Labeling Submission and Approval System 

— M — 

MARO ........................... Mid-Atlantic Regional Office 

MD ................................ Management Decision 

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 — 

N/A ................................ Not Available 

NAL .............................. National Agricultural Library 

NAP ............................... Noninsured Crop Disaster Assistance Program 

NASS ............................ National Agricultural Statistics Service 

NFC ............................... National Finance Center 

NFS ............................... National Forest Service 

NIFA ............................. National Institute of Food and Agriculture 

NRCS ............................ Natural Resources Conservation Service 

NRHP ............................. National Register of Historic Places 

NSLP ............................. National School Lunch Program 

NTIA ............................. National Telecommunications and Information Administration 

— O — 

OAO .............................. Office of Advocacy and Outreach 

OASCR ......................... Office of the Assistant Secretary for Civil Rights 

OBPA ............................ Office of Budget & Program Analysis 

OCE ............................... Office of the Chief Economist

OCFO ............................ Office of the Chief Financial Officer 

OCIO ............................. Office of the Chief Information Officer 

OCP ............................... Office of Contracting and Procurement 

OCS ............................... Office of the Chief Scientist 

OCX .............................. Office of Customer Experience 
USDA | 2020 Agency Financial Report 309 

OFS ............................... Office of Food Safety 

OHA .............................. Office of Hearings and Appeals 

OHSEC ......................... Office of Homeland Security and Emergency Coordination 

OIG ............................... Office of Inspector General 

OGC .............................. Office of the General Counsel 

OMB ............................. Office of Management and Budget 

OPFM ............................ Office of Property and Fleet Management 

OPM .............................. Office of Personnel Management 

OPPE ............................. Office of Partnerships and Public Engagement 

OSDBU ......................... Office of Small and Disadvantaged Business Utilization 

OSEC ............................ Office of the Secretary 

— P — 

PC .................................. Program Characteristics 

PDLC ............................ Product Development Life Cycle 

PHA ............................... Priority Heritage Assets 

PHR ............................... Public Health Regulation 

PHV ............................... Public Health Veterinarian 

PII .................................. Personally Identifiable Information 

PIIA ............................... Payment Integrity Information Act of 2019 

PIR ................................ Practice Implementation Rate 

PL .................................. Public Law 

PLC ............................... Price Loss Coverage 

PMA .............................. President’s Management Agenda 

PMO .............................. Project Management Office 

PP&E ............................. Property, Plant and Equipment 

PPA ............................... Plant Protection Act 

ProTracts ....................... Program Contracts System 

PSA ............................... Payment Schedule Application 

PTIG .............................. Process, Technology, and Innovation Grants 

— Q — 

Q .................................... Quarter 

QC ................................. Quality Control 

— R — 

RBCS ............................ Rural Business-Cooperative Service 

RC&D ........................... Resource Conservation and Development 
310 Abbreviations—Acronyms 

RCOs ............................. Regional Compliance Offices 

RD ................................. Rural Development 

ReConnect ..................... Rural eConnectivity Pilot Program 

REE ............................... Research, Education, and Economics Resources 

REE-OCS ....................... Agency Priority Goal Increase Utilization of Agriculture Research 

RHIF ............................. Rural Housing Insurance Fund 

RHS ............................... Rural Housing Service 

RMA ............................. Risk Management Agency 

RPA ............................... Robotic Process Automation 

RUS ............................... Rural Utility Service 

RY ................................. Report Year 

— S — 

S&E ............................... Salaries and Expenses 

SAM .............................. System for Award Management 

SAP ............................... Systems, Applications, and Products 

SBA ............................... Small Business Association 

SBP ............................... School Breakfast Program 

SBR ............................... Statement of Budgetary Resources 

SecOps .......................... Security Operations 

SFA ............................... School Food Authority

SFFAS ........................... Statement of Federal Financial Accounting Standards 

SFHG ............................ Single Family Housing Guaranteed 

SFSP .............................. Summer Food Service Program 

SMO .............................. Services Management Office 

SNAP ............................ Supplemental Nutrition Assistance Program 

SOD ............................... Segregation of Duty 

SOPI .............................. Significant Overriding Public Interest 

SMO .............................. Services Management Office 

SPS ................................ Sanitation Performance Standard 

SRA ............................... Standard Reinsurance Agreement 

SSO ............................... Seamless Summer Option 

SSP ................................ Shared Services Provider 

STO ............................... State Office 

SY ................................. School Year 
USDA | 2020 Agency Financial Report 311 

— T — 

TB ................................. Technical Bulletin 

TBT ............................... Technical Barrier to Trade 

TEFAP .......................... The Emergency Food Assistance Program 

TFAA ............................ Trade and Foreign Agricultural Affairs 

TMP .............................. Trade Mitigation Program 

TOP ............................... Treasury Offset Program 

TPMC ............................ Tucson Plant Materials Center 

— U — 

UDO ............................... Undelivered Orders 

UEI ................................ Unique Entity Identifier 

UI .................................. User Interface 

ULO .............................. Unliquidated Obligations 

USAID .......................... U.S. Agency for International Development 

USDA ............................ U.S. Department of Agriculture 

USSGL .......................... U.S. Standard General Ledger 

UX ................................. User Experience 

— V — 

VA ................................. U.S. Department of Veterans Affairs 

vND ............................... Virulent Newcastle Disease 

— W — 

WebSCM .......................Web-based Supply Chain Management System 

WEP .............................. Water and Environmental Programs 

WHIP ............................ Wildfires and Hurricanes Indemnity Program 

WIC ............................... Special Supplemental Nutrition Program for Women, Infants, and 

Children