2017 AGENCY FINANCIAL REPORT 

Take care of the land 

and the land will take care of you.
2 

Non-Discrimination Statement

The U.S. Department of Agriculture (USDA) 

prohibits discrimination against its customers, 

employees, and applicants for employment on 

the basis of race, color, national origin, age, 

disability, sex, gender identity, religion, 

protected genetic information, reprisals for 

whistle blowing or filing grievances, and, 

where applicable, political beliefs, marital 

status, familial or parental status, sexual 

orientation; or whether all or part of an 

individual’s income is derived from any 

public assistance program or any program or 

activity conducted or funded by the 

Department. (Not all prohibited 

discrimination will apply to all programs 

and/or employment activities.)

TO FILE AN EMPLOYMENT 

COMPLAINT 

If you wish to file an employment complaint, 

you must contact the agency’s Equal 

Employment Opportunity (EEO) Counselor 

within 45 days of the date of the alleged 

discriminatory act, event, or personnel action. 

Contact the EEO Counselor that serves the 

agency you feel has discriminated against 

you. Additional information can be found on 

the USDA Office of the Assistant Secretary of 

Civil Rights Web site.

TO FILE A PROGRAM 

COMPLAINT 

To file a program discrimination complaint, 

please complete the USDA Program 

Discrimination Complaint form. You or your 

authorized representative must sign the 

complaint form. You are not required to use 

the complaint form; you may write a letter 

instead. If you write a letter, it must contain 

all of the information requested in the form 

and be signed by you or your authorized 

representative. Incomplete information will 

delay the processing of your complaint. 

Persons with disabilities who require 

alternative means for communication of 

program information (Braille, large print, 

audiotape, etc.) should contact USDA’s 

Technology Accessible Resources Give 

Employment Today (TARGET) Center at 

(202) 720-2600 (voice and 

Telecommunication Device for the Deaf 

[TDD]).

Send your completed USDA Program 

Discrimination Complaint form or letter to us 

by mail, fax, or email to the address below. 

Employment civil rights complaints will not 

be accepted through the email address. 

U.S. Department of Agriculture

Director, Office of Adjudication

1400 Independence Avenue, SW, 

Washington, DC 20250-9410 

Fax: (202) 690-7442 

E-mail: program.intake@usda.gov
USDA Agency Financial Report | 2017

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About the Report

The purpose of the U.S. Department of 

Agriculture (USDA) fiscal year (FY) 2017 

Agency Financial Report (AFR) is to inform 

Congress, the President, and the American 

people how USDA has used Federal resources 

entrusted to the Department in FY 2017. 

USDA strives to do the following: remove 

obstacles in order to give farmers, ranchers, 

foresters, and producers every opportunity to 

prosper; prioritize customer service every day 

for American taxpayers and consumers; 

ensure that the food we put on the table to 

feed our families meets the strict safety 

standards we have established; and be good 

stewards of the land to leave it better than we 

found it. USDA has demonstrated good 

stewardship of taxpayer resources by putting 

in place well-controlled and well-managed 

business lines and financial management 

systems and processes. USDA has chosen to 

produce both an AFR and an Annual 

Performance Report (APR) for FY 2017. 

USDA will include its FY 2017 APR with its 

Congressional Budget Justification and will 

post this AFR online at www.usda.gov. 

This AFR provides high-level financial and 

highlighted performance results with 

assessments of controls, a summary of 

challenges, and USDA stewardship 

information. The AFR enables the President, 

Congress, and the public to assess USDA 

accomplishments and understand its financial 

position. USDA’s end-of-fiscal-year financial 

position includes, but is not limited to, 

financial statements, notes to the financial 

statements, and a report of the independent 

auditors. The report satisfies the reporting 

requirements contained in the following laws 

and regulations: 

• Improper Payments Elimination and 

Recovery Act of 2010;

• Improper Payments Elimination and 

Recovery Improvement Act of 2012 

(IPERIA);

• Government Performance and Results Act 

(GPRA) of 1993; 

• GPRA Modernization Act of 2010; 

• Improper Payments Information Act of 

2002;

• Reports Consolidation Act of 2000;

• Government Management Reform Act of 

1994;

• Chief Financial Officers Act of 1990;

• Federal Managers’ Financial Integrity Act 

of 1982;

• Federal Financial Management 

Improvement Act of 1996;

• Office of Management and Budget Circular 

A-123, Management’s Responsibility for 

Internal Controls;

• GONE Act, PL 114-117; and

• Office of Management and Budget Circular 

A-136, Financial Reporting Requirements.

The APR is a detailed report on USDA’s 

progress toward achieving the goals and 

objectives described in the Agency’s Strategic 

Plan and Annual Performance Plan, including 

progress on the strategic objectives, 

performance goals, and Agency Priority 

Goals. The report will be delivered to 

Congress with the annual budget submission. 

This report is to be posted on these Web sites: 

Performance.gov and www.usda.gov. 
4 

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USDA Agency Financial Report | 2017 

5 

Table of Contents 

Message from Secretary Perdue 6

Section I: Management’s Discussion and Analysis 8

About USDA .................................................................................................................................... 8

USDA Mission Areas ..................................................................................................................... 10

USDA Program Performance ....................................................................................................... 12

Future Demands, Risks, Uncertainties, Events, Conditions, and Trends .................................... 20

Financial Statement Highlights ....................................................................................................21

Statement of Assurance ...............................................................................................................23

Federal Managers’ Financial Integrity Act Report on Management Control .............................. 24

Compliance with Laws and Regulations ...................................................................................... 31

Improper Payments Elimination and Recovery Act of 2010 (IPERA) ..........................................36

Federal Financial Management Improvement Act Report on Financial Management Systems .....37

Financial Management Systems Strategy ....................................................................................39

Other Management Information, Initiatives, and Issues ............................................................42

Limitations of Financial Statement ..............................................................................................44

Section II: Financial Information 45

Message from the Acting Deputy Chief Financial Officer ........................................................... 45

Independent Auditors Report ...................................................................................................... 47

Agency Response to Auditors Report .......................................................................................... 67

Consolidated Balance Sheet ........................................................................................................ 69

Notes to the Consolidated Balance Sheet ...................................................................................70

Required Supplementary Stewardship Information.................................................................. 104

Required Supplementary Information .......................................................................................113

Section III: Other Information 119

Unaudited Financial Statements ................................................................................................ 119

Unaudited Notes to Financial Statements ................................................................................. 123

Response to Management Challenges ...................................................................................... 142

Summary of Financial Statement Audit and Management Assurances .................................... 153

Payment Integrity Management ................................................................................................ 155

Fraud Reduction Report ............................................................................................................. 207

Inspector General Act Amendments of 1988: Management’s Report on Audit Follow Up ..... 211

Reduce the Footprint .................................................................................................................225

Civil Monetary Penalties ............................................................................................................ 226

Grant Oversight & New Efficiency (GONE) Act .......................................................................... 246

Abbreviations & Acronyms 247
6 

Message from Secretary Perdue

In my short time as the United States Secretary of Agriculture (USDA), 

we have accomplished a great deal. This would not have been possible 

without the finest group of public servants in the United States who make 

up the Department. 

Our policies have been guided by four principles that have informed our 

every decision and action. First, we have helped maximize the ability of 

the men and women of America’s agriculture and agribusiness sector to 

create jobs, to produce and sell the foods and fiber that feed and clothe 

the world, and to reap the earned rewards of their labor. It is our aim to remove every obstacle 

possible and give farmers, ranchers, and producers every opportunity to prosper. Second, we 

have worked hard to prioritize customer service every day for American taxpayers and 

consumers. They will expect, and have every right to demand, that their government conduct the 

people’s business efficiently, effectively, and with the utmost integrity. Third, as Americans 

expect a safe and secure food supply, USDA has continued to serve in the critical role of 

ensuring that the food we put on the table to feed our families meets the strict safety standards 

we have established. We must never forget that we are the fortunate beneficiaries of past 

generations who put a premium on smart stewardship — protecting, preserving, and entrusting 

us with those valuable resources. And finally, we have kept in mind that America’s agricultural 

bounty comes directly from the land. Today, those land resources sustain more than 320 million

Americans and countless millions more around the globe. My farmer father’s words still ring 

true: We’re all stewards of the land, owned or rented, and our responsibility is to leave it better 

than we found it. 

Today, we are engaged in a global economy in which the United States is a world leader. We are 

blessed to be able to produce more than our citizens can consume, which implies that we should 

sell the bounty around the world. The relationship between the USDA and its trade 

representatives, as well as with the U.S. Trade Representative and the Department of Commerce, 

have been vital. The work of promoting American agricultural products to other countries began 

with those relationships and will benefit us domestically, just as it will fulfill the moral 

imperative of helping to feed the world. These ideas must also light the path we walk at USDA, 

and just as we have done over the past 6 months, we will continue to be unapologetic advocates 

for American agriculture.

The USDA I envisioned in my first days as Secretary was one that is fact-based, and which 

makes data-driven, customer-focused decisions. We are working each day to make this a reality. 

We are opposed to lamenting the difficult challenges we face, instead focusing our efforts to find 

solutions to problems. The public servants who work at USDA know that they work on behalf of 

the American people, and those people — our customers — expect results. No doubt, there is 

great talent here at this agency — probably more than at any other place in the Federal 

Government — both in the Washington Capital Region and in even greater numbers in the world 

that stretches out across America and the globe. It truly is a pleasure to learn from them. 
USDA Agency Financial Report | 2017

7 

As a simple Georgia farm boy, making sure Americans who make their livelihood in the 

agriculture industry are thriving is near and dear to my heart. We have continued to champion 

the concerns of American agriculture and worked tirelessly to solve the issues facing our farm 

families. As shown in this report and mentioned above, here at USDA, we strive to efficiently 

deliver services to our customers — the taxpayers of America. The ranchers, farmers, foresters, 

producers, and consumers we serve are the heart of this country, and we would not be here 

without them. They deserve the best we have to offer, and I know that is exactly what they get 

from us.

Sincerely, 

Sonny Perdue 

U.S. Secretary of Agriculture

November 14, 2017 
8 

Section I

Management’s Discussion 

and Analysis (Unaudited)

About USDA 

President Abraham Lincoln founded the U.S. 

Department of Agriculture (USDA) in 1862 

with the goal of providing effective leadership 

to the Nation on food, agriculture, natural 

resources, and related issues. Since 1862, the 

dedicated public servants at USDA help 

millions of Americans every day. As 

Americans, you are part of the USDA story 

that has had a tradition of excellence in public 

service for over 150 years.

We would like you to learn more about 

USDA and the Agencies and Offices that 

touch every American, every day. More 

information about the Department, our 

history, and our leaders can be found at 

www.usda.gov. 

Mission Statement

USDA provides leadership on food, 

agriculture, natural resources, rural 

development, nutrition, and related issues 

based on sound public policy, the best 

available science, and efficient management. 

As public servants, our greater understanding 

of these important rules help serve USDA’s 

motto to “Do Right and Feed Everyone” so 

that we enhance the American public’s 

confidence in the integrity and important 

work of USDA. 

Vision Statement 

To remove every obstacle possible and give 

farmers, ranchers, and producers every 

opportunity to prosper; to prioritize customer 

service every day for American taxpayers and 

consumers; to ensure the food we put on the 

table to feed our families meets the strict 

safety standards we have established; to be 

good stewards of the land, owned or rented, 

and leave it better than we found it; and to 

“Do Right and Feed Everyone.”

Core Values 

Our success depends on the following: 

• Ensuring USDA programs are delivered 

efficiently, effectively, and with integrity

• Maximizing the ability of American 

agricultural producers to prosper by 

feeding and clothing the world

• Promoting American agricultural 

products and exports 

• Facilitating rural prosperity and 

economic development 

• Strengthening the stewardship of private 

lands through technology and research

• Ensuring productive and sustainable use 

of our national forest system lands 

• Providing all Americans access to a safe, 

nutritious, and secure food supply. 
USDA Agency Financial Report | 2017

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USDA ORGANIZATION CHART 

Secretary Assistant to the Secretary for 

Rural Development

• Rural Utilities Service

• Rural Housing Service

• Rural Business-Cooperative 

Service Deputy Secretary

Office of the 

Chief 

Economist

Office of 

Hearings and 

Appeals

Office of the 

Inspector 

General

Office of the 

General 

Counsel

Office of the 

Chief Financial 

Officer

Office of 

Budget and 

Program 

Analysis

Office of 

Communications

Office of Small 

and 

Disadvantaged 

Business 

Utilization

Partnerships 

and Public 

Policy

• Office of Tribal Relations

• Office of Advocacy and 

Outreach

• Center for Faith-based 

and Neighborhood 

Partnerships

• Military Veterans 

Agricultural Liaison/ 

Veterans Initiative

• Youth Initiative

Assistant 

Secretary for 

Administration

Chief Information Officer

Assistant 

Secretary for 

Congressional 

Relations

Assistant 

Secretary for 

Civil Rights

Under Secretary for Natural 

Resources and Environment

• Forest Service

Under Secretary for Farm 

and Foreign Agricultural 

Services

• Farm Service Agency

• Risk Management Agency

• Natural Resources 

Conservation Service

Under Secretary for Trade 

and Foreign Agricultural 

Affairs

• Foreign Agricultural Service

Under Secretary for Food, 

Nutrition, and Consumer 

Services

• Food and Nutrition Service

• Center for Nutrition Policy 

and Promotion

Under Secretary for Food 

Safety

• Food Safety and Inspection 

Service

Under Secretary for 

Research, Education, and 

Economics

• Agricultural Research 

Service 

• National Institute of Food 

and Agriculture 

• Economic Research Service 

• National Agricultural 

Statistics Service

Under Secretary for 

Marketing and Regulatory 

Programs

• Agricultural Marketing 

Service

• Animal and Plant Health 

Inspection Service

• Grain Inspection Packers 

and Stockyards 

Administration
SECTION I | Management’s Discussion and Analysis

10

USDA Mission Areas

RURAL DEVELOPMENT

Rural Development (RD) is committed to 

helping improve the economy and quality of 

life in all of rural America by providing 

financial programs to support essential public 

facilities and services such as water and sewer 

systems, housing, health clinics, emergency 

service facilities, and electric and telephone 

service. RD promotes economic development 

by providing loans to businesses through 

banks and community-managed lending 

pools, while also assisting communities to 

participate in community empowerment 

programs. 

• Rural Housing Service

• Rural Utilities Service

• Rural Business Cooperative Service

TRADE AND FOREIGN 

AGRICULTURAL AFFAIRS

Trade and Foreign Agricultural Affairs 

(TFAA) is American agriculture’s 

unapologetic advocate and chief salesman 

around the world. With a sharp focus on 

foreign markets, the TFAA ensures that 

American producers are well equipped to sell 

their products and feed the world. 

• Foreign Agricultural Service

FOOD, NUTRITION, AND 

CONSUMER SERVICES

Food, Nutrition, and Consumer Services 

(FNCS) works to harness the Nation’s 

agricultural abundance to end hunger and 

improve health in the United States. 

FNCS administers Federal domestic nutrition 

assistance programs. The Center for Nutrition 

Policy and Promotion (CNPP) links scientific 

research to the nutritional needs of consumers 

through science-based dietary guidance, 

nutrition policy coordination, and nutrition 

education. 

• Food and Nutrition Service

• Center for Nutrition Policy and 

Promotion

FARM AND FOREIGN 

AGRICULTURAL SERVICES 

Farm and Foreign Agricultural Services 

(FFAS) is focused on domestic agricultural 

issues by providing a simplified one-stop shop 

for USDA’s primary customers, the men and 

women farming, ranching, and foresting across 

America. FFAS helps to keep America’s 

farmers and ranchers in business as they face 

the uncertainties of weather and markets and 

delivers commodity, credit, conservation, 

disaster, and emergency assistance programs 

that help improve the stability and strength of 

the agricultural economy.

• Farm Service Agency

• Risk Management Agency

• Natural Resources Conservation Service

NATURAL RESOURCES AND 

ENVIRONMENT

Natural Resources and Environment (NRE) 

oversees efforts to do the following: get our 

forests working again, to make them more 

productive, as well as create more jobs. 

The focus of NRE is on ensuring we are good 

neighbors and are managing our forests 
USDA Agency Financial Report | 2017

11

effectively, efficiently, and responsibly, as 

well as working with states and local 

governments to ensure the utmost 

collaboration. 

• Forest Service

FOOD SAFETY

The Office of Food Safety ensures that the 

Nation’s commercial supply of meat, poultry, 

and egg products is safe, wholesome, and 

properly labeled and packaged. Food Safety 

serves in the critical role of ensuring the food 

we put on the table to feed our families meets 

the strict safety standards we have 

established. 

• Food Safety and Inspection Service

RESEARCH, EDUCATION, AND 

ECONOMICS

Research, Education, and Economics (REE) is 

dedicated to the creation of a safe, 

sustainable, competitive U.S. food and fiber 

system, as well as strong communities, 

families, and youth through integrated 

research, analysis, and education. 

• Agricultural Research Service

• National Institute of Food and 

Agriculture

• Economic Research Service

• National Agricultural Statistics Service

MARKETING AND 

REGULATORY PROGRAMS

Marketing and Regulatory Programs (MRP) 

facilitates domestic and international 

marketing of U.S. agricultural products and 

ensures the health and care of animals and 

plants. MRP agencies are active participants 

in setting national and international standards. 

• Agricultural Marketing Service

• Animal and Plant Health Inspection 

Service

• Grain Inspection Packers and Stockyards 

Administration
SECTION I | Management’s Discussion and Analysis

12

USDA Program Performance

USDA PERFORMANCE AND

RESULTS FOR FY 2017 

The U.S. Department of Agriculture’s 

(USDA) mission is to provide leadership on 

food, agriculture, natural resources, rural 

development, nutrition, and related issues 

based on sound public policy, the best 

available science, and efficient management. 

For purposes of the Agency Financial 

Report (AFR), a performance summary is 

provided using the Department’s key 

performance indicators as a mechanism to 

gauge progress in achieving its mission. In 

fiscal year (FY) 2017, USDA had 37 key 

performance indicators.

The following tables and discussion provide 

a high-level description of key focus areas 

for the Department that are being tracked 

and managed through USDA’s performance 

management process, in alignment with the 

Department’s mission areas. The tables 

provide key performance indicator historical 

results, and include FY 2017 preliminary 

results indicating anticipation in meeting/not 

meeting performance targets.

Final performance information and a 

detailed discussion of the Department’s 

FY 2017 performance results, assessment 

methodologies, metrics, external reviews, 

and documentation of performance data will 

be presented in the FY 2017 USDA Annual 

Performance Report. The report is planned 

to be released with the President’s 2019 

budget in February and will be available on 

the USDA Performance Improvement and 

Accountability Web site. 

The data used by the Department to measure 

performance is collected using standardized 

methodology. This methodology has been 

vetted by federally employed scientists and 

policymakers, and, ultimately, the leadership 

and Under Secretaries of each respective 

mission area. All attest to the completeness, 

reliability, and quality of the data.

FARM AND FOREIGN AGRICULTURAL SERVICES 

Farm and Foreign Agricultural Services (FFAS) 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. FFAS agencies implement programs designed to mitigate the significant risks of 

farming through crop insurance services, conservation programs and technical assistance, and 

commodity, lending, and disaster programs. 

Fiscal Year 2013 

Actual

2014 

Actual

2015 

Actual

2016 

Actual

2017 

Target

2017 

Preliminary

Conservation Reserve 

Program (CRP) restored 

wetland acreage (millions 

of acres)

2.09 2.00 1.93 2.09 1.9 Meet
USDA Agency Financial Report | 2017

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Fiscal Year 2013 

Actual

2014 

Actual

2015 

Actual

2016 

Actual

2017 

Target

2017 

Preliminary

Percentage of Direct and 

Guaranteed lending to 

Socially Disadvantaged 

Farmers (SDA)

13.60 14.20 15.00 15.90 17 Meet

Percentage of Direct and 

Guaranteed lending to 

Beginning Farmers (BF)

70 79.2 85.6 95.5 100 Meet

Normalized value of risk 

protection provided to 

agricultural producers 

through the Federal Crop 

Insurance Program 

($ in billions)

66.00 67.90 68.7 74.0 63.6 Meet

Conservation Technical 

Assistance (CTA) land 

with conservation applied 

to improve water quality 

(millions of acres)

N/A 18.2 18.1 15.8 15.8 Meet

CTA cropland with 

conservation applied to 

improve soil quality 

(millions of acres)

N/A 6.2 6.0 6.0 5.9 Meet

CTA grazing and forest 

land with conservation 

applied to protect and 

improve the resource 

base (millions of acres)

N/A 13.1 13.1 11.1 13.0 Meet

Environmental Quality 

Incentives Program (EQIP) 

land with conservation 

applied to improve water 

quality (millions of acres)

N/A 12.3 12.7 10.5 13.5 Meet

EQIP cropland with 

conservation applied to 

improve soil quality 

(millions of acres)

N/A 3.1 3.0 2.8 3.0 Meet
SECTION I | Management’s Discussion and Analysis

14

Fiscal Year 2013 

Actual

2014 

Actual

2015 

Actual

2016 

Actual

2017 

Target

2017 

Preliminary

EQIP grazing land and 

forest land with 

conservation applied to 

protect and improve the 

resource base (millions of 

acres)

N/A 14.8 13.9 12.6 13.5 Meet

EQIP non-Federal land 

with conservation applied 

to improve fish and 

wildlife habitat quality 

(millions of acres)

N/A 1.4 1.4 1.0 0.9 Meet

FOOD, NUTRITION, AND CONSUMER SERVICES

Food, Nutrition, and Consumer Services (FNCS) works to harness the Nation’s agricultural 

abundance to end hunger and improve health in the United States. Within FNCS, the Food and 

Nutrition Service administers Federal domestic nutrition assistance programs, and the Center for 

Nutrition Policy and Promotion links scientific research to the nutrition needs of consumers 

through science-based dietary guidance, nutrition policy coordination, and nutrition education. 

Fiscal Year 2013 

Actual

2014 

Actual

2015 

Actual

2016 

Actual

2017 

Target

2017 

Preliminary

Prevalence of food insecurity in 

households with children 

(percentage)

19.5 19.2 16.6 16.5 18.5 Deferred1

Annual percentage of eligible 

people participating in the 

Supplemental Nutrition 

Assistance Program (SNAP)

85 85 N/A Deferred2 85 Deferred

SNAP payment accuracy rate

(percentage) 96.8 96.3 N/A N/A 96.34 Deferred3

 

1 FY 2017 data will be released in the first quarter of FY 2018.

2 FY 2016 data will be available in 2018. FY 2017 data will be available in 2019.

3 FY 2017 data will be available in June 2018.
USDA Agency Financial Report | 2017

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Fiscal Year 2013 

Actual

2014 

Actual

2015 

Actual

2016 

Actual

2017 

Target

2017 

Preliminary

SNAP benefits redeemed 

annually at farmers markets 

and direct marketing farmers 

($ in millions)

17.5 18.8 19.4 20.2 20 Deferred4

Annual percentage of eligible 

people participating in the 

National School Lunch Program 

55.7 54.8 55.4 54.7 58.3 Deferred5

Annual percentage of children 

participating in the 

free/reduced price school lunch 

program that participate in 

summer feeding programs 

16.3 17.5 17.1 16.7 17.4 Deferred6

FOOD SAFETY

USDA protects public health by ensuring the safety of the Nation’s commercial supply of meat, 

poultry, and egg products. This mission area also plays a key role in supporting Healthy People 

2020 goals7 and other crosscutting and targeted activities that promote food safety with partner 

agencies, including the U.S. Department of Health and Human Services’ Food and Drug 

Administration and Centers for Disease Control and Prevention. 

Fiscal Year 2013 

Actual

2014 

Actual

2015 

Actual

2016 

Actual

2017 

Target

2017 

Preliminary

Percentage of establishments 

that meet pathogen 

reduction performance 

standards8

N/A N/A N/A N/A 77.0 Deferred

Percentage of establishments 

whose non-compliance rate 

decreases 120 days after 

receiving an early warning 

alert9

N/A N/A N/A N/A 74.0 Deferred

 

4 FY 2017 data will be available Q1, 2018.

5 FY 2017 data will be available Q1, 2018.

6 FY 2017 data will be available Q1, 2018.

7 See Healthy People 2020. Work is underway to develop Healthy People 2030 goals. 8 This is a new performance measure for FY 2017; actual data from 2013-2016 is not available.

9 This is a new performance measure for FY 2017; actual data from 2013-2016 is not available.
SECTION I | Management’s Discussion and Analysis

16

MARKETING AND REGULATORY PROGRAMS

Marketing and Regulatory Programs facilitate domestic and international marketing of U.S. 

agricultural products and ensures the health and care of animals and plants. MRP agencies are 

active participants in setting national and international standards. 

Fiscal Year 2013 

Actual

2014 

Actual

2015 

Actual

2016 

Actual

2017 

Target

2017 

Preliminary

Cumulative number of 

biotechnology products 

deregulated by USDA 

based on scientific 

determinations that they 

do not pose a plant pest 

risk to agriculture

102 109 117 124 127 Meet

NATURAL RESOURCES AND ENVIRONMENT

Natural Resources and Environment ensures the health of the land through sustainable 

management. Its agency works to prevent damage to natural resources and the environment, 

restore the resource base, and promote good land management. 

Fiscal Year 2013 

Actual

2014 

Actual

2015 

Actual

2016 

Actual

2017 

Target

2017 

Preliminary 

Annual acres of public and 

private forest lands restored 

or enhanced (millions of 

acres)

2.53 2.91 3.10 3.22 2.90 Meet 

Volume of timber sold (billion 

board feet) 2.610 2.831 2.867 2.942 3.200 Meet 

Percentage of National 

Forests and Grassland 

watersheds in properly (class 

1 watersheds) functioning 

condition

52 52 52 53 53 Deferred10

Acres of Wildland Urban 

Interface hazardous fuels 

treated to reduce the risk of 

catastrophic wildfire (millions 

of acres)

1.737 1.725 1.577 2.016 1.80 Meet

 

10 Results are not available for this measure until after the end of FY 2017.
USDA Agency Financial Report | 2017

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RURAL DEVELOPMENT 

Rural Development is committed to helping improve the economy and quality of life in all of 

rural America by providing financial programs to support essential public facilities and services 

as water and sewer systems, housing, health clinics, emergency service facilities, and electric and 

telephone service. Rural Development promotes economic development by providing loans to 

businesses through banks and community-managed lending pools, while also assisting 

communities to participate in community empowerment programs.

Fiscal Year 2013 

Actual

2014 

Actual

2015 

Actual

2016 

Actual

2017 

Target

2017 

Preliminary

Number of jobs created 

or saved through USDA 

financing of businesses

44,419 41,202 52,697 51,286 39,764 Meet

Homeownership 

opportunities provided 170,055 146,388 141,314 123,817 173,678 Meet

Health Facilities: 

Percentage of 

customers who are 

provided access to new 

and/or improved 

essential community 

facilities 

5.4 6.8 12.0 11.7 5.0 Meet

Safety Facilities: 

Percentage of 

customers who are 

provided access to new 

and/or improved 

essential community 

facilities 

3.4 3.7 7.2 5.0 3.2 Meet

Educational Facilities: 

Percentage of 

customers who are 

provided access to new 

and/or improved 

essential community 

facilities 

9.3 6.2 7.9 14.9 5.0 Meet

Number of 

borrowers/subscribers 

receiving new and/or 

improved electric 

facilities (millions)

8.7 4.6 5.5 5.5 5.1 Meet
SECTION I | Management’s Discussion and Analysis

18

Fiscal Year 2013 

Actual

2014 

Actual

2015 

Actual

2016 

Actual

2017 

Target

2017 

Preliminary

Number of 

borrowers/subscribers 

receiving new or 

improved 

telecommunications 

services (millions)

.120 .084 .095 .079 .100 Meet

Number of population 

receiving new or 

improved service from 

agency-funded water 

facilities (millions)

1.8 2.2 2.4 2.2 1.7 Meet

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 to ensure that USDA speaks with a unified voice on 

international agriculture issues domestically and abroad. It oversees and facilitates foreign 

market access and promotes opportunities for U.S. agriculture through various trade programs 

and high-level government negotiations. 

Fiscal Year 2013 

Actual

2014 

Actual

2015 

Actual

2016 

Actual

2017 

Target

2017 

Preliminary

Value of agricultural 

exports resulting from 

participation in foreign 

food and agricultural 

trade shows ($ in billions)

1.48 1.50 1.52 1.28 1.5 Meet

Value of trade preserved 

annually through USDA 

staff intervention leading 

to resolution of foreign 

market access issues such 

as U.S. export 

detainment, restrictive 

Sanitary/ Phytosanitary or 

Technical Barrier to Trade 

issues and trade 

regulations ($ in billions)

3.80 6.40 3.6 5.0 3.8 Meet
USDA Agency Financial Report | 2017

19

DEPARTMENTAL MANAGEMENT

Departmental Management (DM) provides management leadership to ensure that USDA’s 

administrative programs, policies, advice, and counsel meet the needs of USDA program 

organizations, consistent with laws and mandates. DM is also tasked to provide safe and efficient 

facilities and services to customers.

Fiscal Year 2013 

Actual

2014 

Actual

2015 

Actual

2016 

Actual

2017 

Target

2017 

Preliminary

Number of employees 

participating in core 

telework

9,723 10,455 11,798 12,342 12,240 Deferred11

Amount of leased 

office and warehouse 

space controlled by 

USDA (millions of 

square feet) 

25.6 24.9 23.9 23.2 23.2 Deferred12

 

11 Results are not available for this measure until after the end of FY 2017.

12 Results are not available for this measure until after the end of FY 2017.
SECTION I | Management’s Discussion and Analysis

20

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). USDA science 

research, education, and extension services 

will continue to be the foundation for 

understanding developments and making 

advances in solving agricultural and societal 

challenges. USDA is working with the U.S. 

Department of Homeland Security to help 

protect agriculture from intentional and 

accidental acts that might impact America’s 

food supply or natural resources. 

EXTERNAL FACTORS THAT 

CHALLENGE USDA’S ABILITY 

TO ACHIEVE ITS GOALS

INCLUDE THE FOLLOWING:

• Weather-related hardships, including 

disasters related to the increasing 

intensity and duration of extreme 

weather and climate change, both 

domestically and internationally; 

• The risk of catastrophic fire, depending 

on weather, drought conditions, and the 

expanding number of communities in 

the wildland-urban interface;

• Non weather-related hardships and 

other uncontrollable events, both 

domestically and internationally; 

• Domestic and international 

macroeconomic factors, including 

consumer purchasing power, the 

strength of the U.S. dollar, and political 

changes abroad that could impact 

domestic and global markets greatly at 

any time;

• Sharp fluctuations in farm prices, 

interest rates, and unemployment that 

could impact the ability of farmers, 

other rural residents, communities, and 

businesses to qualify for credit and 

manage debt; 

• The impact of future economic 

conditions and actions by a variety of 

Federal, State, and local Governments 

that could influence the sustainability of 

rural infrastructure;

• The increased movement of people and 

goods, which provides the opportunity 

for crop and animal pests and diseases 

to move quickly across domestic and 

international boundaries; 

• Potential exposure to hazardous 

substances, which may threaten human 

health as well as the environment; and 

• The ability of the public and private 

sectors to collaborate effectively on 

food safety, security, and related 

emergency preparedness efforts.
USDA Agency Financial Report | 2017

21

Financial Statement Highlights

BALANCE SHEET

TOTAL ASSETS

Total assets for FY 2017 were $226 billion. The following exhibit presents FY 2017 total assets. 

EXHIBIT 1: Total Assets ($ in billions) 

54% 44%

1% 0.5% 0.5%

Fund Balance with Treasury - $122

Direct Loan and Loan Guarantees,

Net - $100

General Property, Plant and Equipment,

Net - $2

Accounts Receivable, Net - $1

Other $1

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 87 percent of the total Department loan programs. Loan 

programs administered by FSA represent 10 percent of the total. FSA supports farmers who are 

temporarily unable to obtain private, commercial credit. The remaining 3 percent represents 

commodity loans and credit programs administered by the Commodity Credit Corporation 

(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.
SECTION I | Management’s Discussion and Analysis

22

TOTAL LIABILITIES

Total liabilities for FY 2017 were $164 billion. The following exhibit presents FY 2017 total 

liabilities. 

EXHIBIT 2: Total Liabilities ($ in billions)

72%

23%

2%

1%

1% 1%

Debt $118

Other $38

Benefits Due and Payable $4

Accounts Payable $2

Loan Guarantee Liability $1

Federal Employee and Veteran

Benefits

 $1

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

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

for price support, export credit guarantees, disaster programs and loans related to farm storage 

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

programs, with the majority supporting operating, ownership, and emergency loans. For RD, the 

debt primarily represents financing to support electric and housing loan programs. 
USDA Agency Financial Report | 2017

23

Statement of Assurance

The U.S. Department of Agriculture (USDA) is providing modified assurance that USDA’s 

systems of internal control comply with the Federal Managers’ Financial Integrity Act (FMFIA) 

objectives. USDA’s systems of internal control meet the objectives of the FMFIA and the 

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

weaknesses in internal control, one financial system non-conformance, and three instances of 

non-compliance with laws and regulations. Management is providing reasonable assurance that 

the internal controls over operations are effective. The details of the exceptions are provided in 

the FMFIA, FFMIA, and Summary of Financial Statement Audit and Management Assurances 

sections of this report. 

USDA assessed its financial management systems and internal controls over the effectiveness 

and efficiency of operations and compliance with applicable laws and regulations as of 

September 30, 2017, and financial reporting as of June 30, 2017. The assessment included the 

safeguarding of assets and compliance with applicable laws and regulations in accordance with 

the requirements of Office of Management and Budget (OMB) Circular No. A-123, 

Management’s Responsibility for Enterprise Risk Management and Internal Control. 

No other material weaknesses were found in the design or operation of the internal control over 

(1) the effectiveness and efficiency of operations and compliance with applicable laws and 

regulations as of September 30, 2017, and (2) financial reporting as of June 30, 2017. 

Sonny Perdue 

Secretary of Agriculture

November 14, 2017 
SECTION I | Management’s Discussion and Analysis

24

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) 

evaluated its internal controls in accordance 

with Office of Management and Budget 

(OMB) Circular No. A-123, Management’s 

Responsibility for Enterprise Risk 

Management and Internal Control. 

The Department operates a comprehensive 

internal control program. This program 

ensures compliance with the requirements of 

FMFIA and other laws, and OMB Circular 

No. A-123, Appendices A through D. All 

USDA managers must ensure that 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 and the Government 

Accountability Office, 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. 

FISCAL YEAR 2017 RESULTS

The Department has two existing material 

weaknesses in internal controls over financial 

reporting: Information Technology (IT) and 

financial management. The material weakness 

for financial management is due to 

improvements needed in accounting and 

internal controls related to the Natural 

Resources Conservation Service (NRCS) and 

the Commodity Credit Corporation (CCC). 

USDA also has one existing system nonconformance related to Funds Control 

Management within the CCC, which will be 

resolved by the end of fiscal year (FY) 2019. 

The Food and Nutrition Service and the Farm 

Service Agency (FSA) are non-compliant 

with laws and regulations related to the 

Improper Payments Elimination and 

Recovery Act of 2010, as amended. 

USDA has identified violations or potential 

violations with the Anti-deficiency Act 

(ADA). USDA has reported all of its ADA 
USDA Agency Financial Report | 2017

25

violations to the President and Congress with 

the exception of the ADA violation for Office 

of Advocacy and Outreach (OAO) that is still 

in the process of being reported. A detailed 

description and summary of the Department’s 

ADAs, as well as, additional USDA noncompliances with laws 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. 

SUMMARY OF OUTSTANDING MATERIAL WEAKNESSES

The following exhibit provides FY 2017 accomplishments and FY 2018 planned actions toward 

resolving the outstanding material weaknesses. 

EXHIBIT 3: Summary of Outstanding Material Weaknesses

1. USDA Information Technology (IT)

Material Weaknesses 

Existing 

The Department lacks an effective information security program.

Unimplemented recommendations that address many longstanding 

weaknesses (related to risk management, configuration management, 

identity and access management, security training, information 

security continuous monitoring, incident response and contingency 

planning) remain outstanding. (Department)

Overall Estimated 

Completion Date FY 2020 

 FY 2017 Accomplishments: FY 2018 Planned Actions:

During FY 2017 The Office of the Chief 

Information Officer (OCIO): 

 Continued the monitoring and closing of 

outdated Plan of Actions and Milestones 

(POA&Ms) identified as part of the IT Material 

Weakness, and reported progress to USDA 

leadership. Ensured proper and full 

remediation of weaknesses across the USDA 

enterprise;

 Continued to perform security assessments 

to analyze component agencies’ 

information architecture and related 

processes to develop a threat profile; 

 Continued to perform penetration testing:

OCIO in collaboration with the U.S. 

OCIO will: 

 Continue to track outdated POA&Ms 

identified as part of material weakness 

and report progress to USDA leadership 

on a weekly basis. Leveraging the 

department’s biweekly scorecard 

reports and weekly meetings with our 

agencies, OCIO will continue our effort 

to work with specific agencies to 

achieve proper and full remediation of 

weaknesses across USDA;

 As FY 2018 funding permits, perform 

security assessments on select 

agencies;

 Perform penetration testing of all 
SECTION I | Management’s Discussion and Analysis

26

1. USDA Information Technology (IT) Continued

 FY 2017 Accomplishments: FY 2018 Planned Actions:

Department of Homeland Security (DHS) 

continued their vulnerability scans under 

the Binding Operational Directive, and the 

Agriculture Security Operations Center 

continued integration with the DHS 

Continuous Diagnostics Mitigation (CDM) 

program;

 Continued to enhance centralized 

configuration management monitoring tools 

(currently IBM BigFix, formerly known as 

Tivoli Endpoint Manager) to monitor agency 

assets running specific operating systems;

 Continued to formalize its internal 

monitoring processes into a Standard 

Operating Procedure (SOP); 

 Continued to implement the ASOC Change 

Advisory Board processes to document and 

control access of personnel to systems; 

document and control configuration 

changes to systems on a risk basis; 

document, evaluate and make risk-based 

recommendations to leadership regarding 

US Government Configuration Baseline 

waivers; 

 USDA continued working on the finalization of 

the DHS’ CDM, which will further enhance 

OCIO’s configuration management oversight 

function and timely coordination with 

subcomponents to ensure policy compliance;

 Continued to further enforce Personal 

Identity Verification (PIV)/Homeland Security 

Presidential Directive (HSPD) 12 mandatory 

compliance for privileged and nonprivileged 

users to meet published FY 2017 CrossAgency Priority (CAP) and Federal 

Information Security Management Act 

(FISMA) goals; and continued to develop

additional implementation guidance for 

multi-factor authentication for network and 

application access, as needed.

USDA agencies in FY 2018; OCIO will 

also continue to assess DHS’ Cyber 

Hygiene Assessment reports and work 

with agencies to remediate findings of 

critical vulnerabilities in 30 days or 

less; and OCIO plans to continue its 

integration of CDM;

 Continue to enhance centralized 

configuration management monitoring 

by leveraging CDM Phase 1 tools;

 Continue to formalize its internal 

monitoring processes into an SOP; 

 Continue to mature and evolve the 

Change Advisory Board roles and 

responsibilities to meet the needs of 

the organization, including evolving to 

a paperless electronic process 

conducive to seamless customer 

service;

 Transition CDM Phase 1 tools and 

CDM dashboard to full operations in 

Q2 FY 2018. As FY 2018 funding 

permits, OCIO plans to maintain 

operations of CDM Phase 1 tools and 

CDM dashboard through Q4 FY 2018; 

and

 In collaboration with USDA agencies 

and mission areas OCIO will define a: 

o high-level strategy for “further 

enforcing” PIV authentication for 

logical system access throughout 

USDA, 

o set of high level milestones for 

accomplishing that strategy, and 

o process to oversee and measure 

progress.
USDA Agency Financial Report | 2017

27

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

Material Weakness 

Existing 

NRCS needs improved controls over obligations and undelivered 

orders, as well as, accounting and controls over expenses.

Overall Estimated 

Completion Date FY 2018 

FY 2017 Accomplishments: FY 2018 Planned Actions:

During FY 2017 NRCS: 

 Monitored the activity of upward and 

downward adjustments to ensure balances 

were appropriate; 

 Monitored open obligations to ensure they 

are recorded and liquidated timely; and

 Enhanced policy and control procedures for 

period-end accruals.

NRCS will: 

 Re-engineer the process for reviewing data 

files to ensure that invalid upward and 

downward adjustments are identified and 

negated in a timely manner;

 Improve the transparency of recording and 

liquidating obligations by utilizing new 

systems, such as the use of ezFedGrants and 

ServiceNow; and

 Implement a confirmation process, including 

negative confirmations, for all divisions to 

ensure direct-entry expense accruals are 

recorded.

2. Financial Management – Commodity Credit Corporation (CCC)

Material 

Weaknesses Existing

CCC needs to address material weaknesses related to accounting 

estimates and maintenance of accounting records. 

Overall Estimated 

Completion Date FY 2018 

FY 2017 Accomplishments: FY 2018 Planned Actions:

During FY 2017 CCC: 

 Continued to update Standard Operating 

Procedures (SOPs), policies, checklists, etc., 

to incorporate the requirements for 

identifying the need for, preparing, 

supporting, validating, reviewing, recording, 

and performing look-backs of accounting 

estimates;

 Developed effective information and 

communication processes to ensure

policies and procedures, that may give rise

to the recognition of accounting, are

CCC will: 

 Continue the implementation of 

processes, procedures, and controls to 

improve the accuracy and timeliness of 

the FBWT reconciliation, including 

reconciliations of related child agency 

FBWT accounts; 

 Implement an independent review and 

reconciliation of Fund Balance with 

Treasury for USAID and monitor internal 

controls regarding FBWT reconciliations

in accordance with guidelines in the
SECTION I | Management’s Discussion and Analysis

28

2. Financial Management – Commodity Credit Corporation Continued

FY 2017 Accomplishments: FY 2018 Planned Actions:

communicated and applied throughout 

the agency. Also ensured that technical 

accounting issues are identified, analyzed, 

and resolved in a timely manner;

 Implemented processes, procedures, and 

effective controls to enable the timely 

preparation of financial statements and 

sufficient evidential matter to support 

accounting transactions;

 Provided updated status to the Office of 

Management and Budget (OMB) A-123, 

Appendix A Corrective Action Plans;

 Designed and implemented Business 

Portfolio Manual (BPM) to document 

business procedures including program 

accounting flow and key internal controls;

 Designed and implemented policies, 

procedures, and controls to accept, 

track, and monitor agreements entered 

into with other agencies (customers);

 Continued to refine the reconciliation 

process for budgetary and proprietary 

balances with trading partners;

 Conducted training for the Financial 

Management Division staff and managers 

to provide an in-depth look at the U.S. 

Standard General Ledger and its practical 

uses in performing key activities that 

ultimately support data integrity and the 

agency’s ability to compile complete, 

accurate and reliable financial statements;

 Implemented reconciliation processes 

to ensure Fund Balance With Treasury 

(FWBT), Accounts Receivable, and 

Accounts Payable transactions are 

timely and accurately recorded in the 

general ledger system;

 Implemented a reconciliation process to 

assess and review CCC-related 

transactions and balances reported in 

“Treasury Financial Manual;”

 Ensure the month-end reconciliations 

for significant accounts are performed 

timely and reviewed at appropriate 

precision levels through the 

implementation of dollar materiality 

thresholds that are monitored by 

management. Reconciled differences 

identified should be corrected timely in 

the subsidiary or General Ledger (GL). 

Research and identify existing unknown 

differences per Account Reconciliation 

and Analysis Policy;

 Continue to refine SOPs, policies, 

checklists, etc., to incorporate the 

requirements for identifying the need 

for, preparing, supporting, validating, 

reviewing and recording, and

performing look-backs of accounting 

estimates;

 Continue to develop effective 

information and communication 

processes to ensure that policies and 

procedures related to programs or 

events that may give rise to the 

recognition of accounting transactions 

are consistently communicated and 

applied throughout the agency and that 

technical accounting issues are 

identified, analyzed, and resolved in a 

timely manner;

 Continue to implement processes, 

procedures, and effective controls to 

enable the timely preparation of 

financial statements and sufficient 

evidential matter to support accounting 

transactions;

 Continue with the execution of the 

existing OMB A-123, Appendix A 

Corrective Action Plan, Maintaining, 

Controlling, and Monitoring the CORE 
USDA Agency Financial Report | 2017

29

2. Financial Management – Commodity Credit Corporation Continued

FY 2017 Accomplishments: FY 2018 Planned Actions:

the U.S. Agency for International 

Development (USAID) general ledger for 

FBWT;

 Implemented a process to calculate 

accruals and advances for CCC funded 

USAID grants;

 Expanded tie-point analysis process to 

include additional training and 

workshops to provide expert assistance 

with reconciliations, trial balance 

analytics, clean-up projects, abnormal 

balances, and variances; and

 Developed and implemented software

modifications to the Commodity Loan 

Processing System and Automated 

Cotton Reporting System to incorporate 

Commodity Certificate Exchange (CCE)

functionality, including providing the 

correct accounting entries to CCC’s 

General Ledger — CORE to remediate 

the condition.

General Ledger by further improving 

and enhancing CCC reconciliations and 

account analysis;

 Continually refine the accrual and 

advance calculation process for USAID 

grants funded by CCC; and

 Continue to refine the reconciliation 

process for unexpended appropriations, 

cumulative results of operations, 

allocation transfers, unapportioned 

authority, allotments, undelivered 

orders, delivered orders, expended 

appropriations, and operating expenses.
SECTION I | Management’s Discussion and Analysis

30

SUMMARY OF OUTSTANDING SYSTEM NON-CONFORMANCE

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

is included in the Federal Financial Management Improvement Act (FFMIA) Report on 

Financial Management Systems (Exhibit 4). The weakness involves component agency-specific 

deficiencies for CCC.

The following exhibit provides FY 2017 accomplishments and FY 2018 planned actions toward 

resolving the Department’s outstanding system non-conformance. 

EXHIBIT 4: Summary of Outstanding System Non-conformance

1. Funds Control Management

System Non-conformance 

Existing 

System improvements needed in recording obligations at the 

transactional level. (CCC)

Overall Estimated 

Completion Date FY 2019

FY 2017 Accomplishments: FY 2018 Planned Actions:

During FY 2017 CCC: 

 Developed policy, procedures and 

systems functionality to support the 

budget execution process for CCC 

programs; 

 Worked with Deputy Administrator Farm 

Programs and Information Technology 

Services Division towards completing 

software modifications to ensure all 

program applications are in full compliance 

with the Funds Control/ Obligation 

Requirements (i.e., business events, 

establishments, liquidations, adjustments 

{downward and upward}, etc.) related to 

obligations at the transaction level; and

 Completed the integration of two "material" 

CCC programs (the Non-Insured Crop Disaster 

Assistance Program and the Livestock 

Indemnity Program) with the electronic Funds 

Management System (eFMS)/County Operated 

Facility (COF) to achieve full funds control at a 

transaction level. 

CCC will: 

 Continue to establish Funds Control 

Levels by Program; 

 Update policy, procedures and systems 

functionality to support the budget 

execution process for CCC programs; 

 Continue to partner with Deputy 

Administrator Farm Programs and 

Information Technology Services Division 

towards completing software 

modifications to ensure all program 

applications are in full compliance with 

the Funds Control/Obligation 

Requirements (i.e., business events, 

establishments, liquidations, 

adjustments {downward and upward}, 

etc.) related to obligations at the 

transaction level; and

 Implement the ARC County Pilot 

Program with the eFMS/COF to achieve 

full funds control at a transaction level. 
USDA Agency Financial Report | 2017

31

Compliance with Laws and Regulations 

A summary of deficiencies and non-compliances are identified in the following table as well as in 

the Improper Payments Elimination and Recovery Act of 2010 (IPERA), Federal Managers’ 

Financial Integrity Act and Federal Financial Management Improvement Act sections of this 

report. For fiscal year (FY) 2017, the U.S. Department of Agriculture (USDA) has made progress 

in mitigating prior year non-compliances with laws and regulations. Despite the Department’s 

efforts, USDA is non-compliant or potentially non-compliant with the following acts: 

• Anti-deficiency Act (ADA);

• Digital Accountability and Transparency Act of 2014 (DATA Act); and

• Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. 

The Department will monitor to resolve and/or mitigate these violations during FY 2018. 

The following tables provide further details of each violation. 

ANTI-DEFICIENCY ACT

ADA Violations Reported to the President and Congress During FY 2017 

AGENCY Violation Year 

Identified Description Status

Farm Service 

Agency (FSA)

(ADA), 

31 U.S.C. 

§ 1517(a)

FY 2014 Office of Management and 

Budget (OMB) approved an 

apportionment request for 

$1 million from FSA for the 

purchase of guaranteed loans 

in FY 2014. On February 25, 

2014, FSA made several loan 

purchases, obligating 

$1,302,823.57, thus 

exceeding the 

apportionment for such 

purchases. On March 7, 

2014, FSA requested another 

apportionment to cover the 

deficiency. OMB approved 

the request and apportioned 

funds on March 31, 2014.

FSA’s Farm Loan 

Operations Office 

completed 

corrective action to 

ensure future 

payments are 

obligated only within 

approved 

apportionment 

limits. 
SECTION I | Management’s Discussion and Analysis

32

AGENCY Violation Year 

Identified Description Status

Forest 

Service (FS)

(ADA), 

31 U.S.C.

§ 1341 (a) (1), 

and 

Governmentwide General 

Provisions 

§ 603 violation 

for FY 1990 

through 

FY 2009

FY 2015 The violation related to the 

agency’s employment in 

California of two citizens of 

Palau. The two Palauan 

employees did not, in 1990, 

fall within any of the 

categories that would have 

permitted payment of their 

salaries using Forest Service 

appropriations. 

ADA violation was 

reported to 

Congress and the 

President on 

September 13, 2017.

Office of the 

Chief 

Financial 

Officer 

(OCFO)

(ADA) General 

Provision (GP) 

706 of the 

Agriculture, 

Rural 

Development, 

Food and Drug 

Administration, 

and Related 

Agencies 

Appropriations 

Act, 2016, 

Pub. L. 114–

113, Div. A 

(Dec. 18, 2015)

FY 2016 USDA is prohibited from 

making certain obligations 

for Information Technology 

(IT) projects without the 

prior written approval of the 

Chief Information Officer 

(CIO). Specifically, GP 706 

states “none of the funds 

available to the Department 

of Agriculture for 

information technology 

shall be obligated for 

projects, contracts, or other 

agreements over $25,000 

prior to receipt of written 

approval by the Chief 

Information Officer.” OCFO 

obligated funds in excess of 

the $25,000 on four 

occasions prior to an 

approved Acquisition 

Approval Request from CIO. 

ADA violations were 

reported to the 

Congress and 

President on April 6, 

2017. 
USDA Agency Financial Report | 2017

33

ADA Violation Not Reported to the President and Congress During FY 2017 

AGENCY Description of Potential Violation Status

Office of Advocacy 

and Outreach (OAO)

PRIOR YEAR: The Office of Advocacy and 

Outreach (OAO) identified an ADA 

violation for fiscal years 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.

The ADA violation is in the 

process of being reported to 

Congress and the President.

Potential ADAs — In addition to the violations that were reported to the President and Congress 

during FY 2017, there was one potential ADA from the prior year that remains unresolved. Three

potential ADAs were identified during FY 2017. These occurrences were in various stages during 

the fiscal year, and are pending results from research and investigation for a determination as to 

whether or not a violation actually occurred. This table provides a status. 

AGENCY Description of Potential Violation Status

The Foreign 

Agricultural Service 

(FAS)

PRIOR YEAR: FAS identified a potential 

violation of an ADA that may have occurred

in its FY 2009 appropriation. 

FAS has completed its 

analyses and identified the 

causes of this potential 

violation. During FY 2017, the 

Office of the General Counsel

(OGC) made a determination 

that FAS properly adjusted its 

accounts to correct the errors 

that had created the negative 

balance. With these account 

adjustments, there is no ADA 

violation.

Commodity Credit 

Corporation (CCC)

PRIOR YEAR: FY 2016, a potential ADA 

violation may have occurred in CCC’s 

expenditures. Expenditures for CCC 

interest to Treasury appear to have 

exceeded amounts initially apportioned by 

OMB. CCC expended approximately 

$37 million in interest to Treasury, more 

than the apparently apportioned amount 

FSA is seeking further review 

of the legal authority of CCC 

with respect to the 

apportionment requirements 

with the OGC in conjunction 

with the Office of 

Management and Budget.
SECTION I | Management’s Discussion and Analysis

34

AGENCY Description of Potential Violation Status

of $29.9 million; however, there is some 

question about the apportionment 

requirements for interest to Treasury. 

Office of the Chief 

Financial Officer/ 

National Finance 

Center 

(OCFO/NFC) 

FY 2017: The National Finance Center (NFC) 

has been managing web pages for the New 

Orleans chapter of the Association of 

Government Accountants (AGA), which is a 

non-governmental organization, on the NFC 

website at no cost to AGA. The services 

provided were minimal and were limited to 

basic maintenance of AGA web pages, and 

updates to contact information or changes 

of officers. An investigation into this 

situation determined that NFC has been 

maintaining the AGA web pages since 1999.

NFC also maintains the Federal Executive 

Board (FEB) web pages in a similar manner 

to the AGA, and these services are 

performed at no cost to the FEB.

OGC is reviewing for a 

determination.

Office of the 

Secretary 

(USDA/OSEC)

FY 2017: A recent decision by the U.S. 

Government Accountability Office (GAO) 

General Counsel determined that, under 

the previous administration, USDA/OSEC 

violated the purpose statute, improperly 

augmented several of its appropriations, 

and potentially violated the Anti-deficiency 

Act when it obligated several of its 

appropriations for the expenses of 

separately funded USDA components. 

Allegedly, USDA improperly relied on the 

Economy Act to enter into interagency 

agreements, under which the agency 

obligated its appropriations for (1) Rural 

Development Salaries and Expenses, 

(2) Food and Nutrition Service, Nutrition 

Programs Administration, and (3) Office of 

Civil Rights, for personnel details that GAO 

determined did not actually occur. Instead, 

these appropriations were used for the 

salaries and benefits of employees 

performing work for separately funded 

USDA components. The Economy Act was 

The Department will seek an 

OGC determination. 
USDA Agency Financial Report | 2017

35

AGENCY Description of Potential Violation Status

referenced as the authority to transfer the 

appropriations. The purpose statute was 

violated when the incorrect appropriation 

was used for the salaries and benefits in 

question and improperly augmented the 

appropriations of these other USDA 

components. If upon adjusting its accounts 

to charge the correct appropriations, USDA 

has incurred obligations in excess of those 

appropriations, and potentially violated the 

Anti-deficiency Act.

Commodity Credit 

Corporation (CCC)

FY 2017: The prior year accounting 

treatment for obligations related to the 

Conservation Reserve Program - Annual 

Rental contracts was determined to be in 

error. Only the annual portion of the 

contract values was recorded as an 

obligation, whereas OMB Circular No. A-11, 

requires recognition of the obligation in the 

amount necessary to cover the full-term of 

the contractual obligation. As a result, CCC 

recorded approximately $10 billion in 

obligations as a beginning balance 

adjustment, whereby apportioned authority 

may not have been available in prior years. 

CCC will seek an OGC 

determination.

DIGITAL ACCOUNTABILITY AND TRANSPARENCY ACT OF 2014 

(DATA ACT)

USDA was unable to submit complete, accurate and timely files required for DATA Act 

reporting by the deadline of April 30, 2017. USDA made improvements to the submissions in 

fiscal quarters 3 and 4. 

FEDERAL CIVIL PENALTIES INFLATION ADJUSTMENT ACT 

IMPROVEMENTS ACT OF 2015

USDA has not updated the catch-up calculations in its draft rule from 2016 to 2017. 

The Department is in the process of revising the draft rule for submission and publication in the 

Federal Register. 
SECTION I | Management’s Discussion and Analysis

36

Improper Payments Elimination and Recovery 

Act of 2010 (IPERA) 

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

Payment Elimination and Recovery Act (IPERA). For FY 2017, two USDA agencies were 

non-compliant. 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 of this report. 

EXHIBIT 5: Outstanding Initiative to Achieve Compliance

Initiative Section of Non-compliance Agency/Program Target 

Completion Date

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

Improper Payments Elimination and Recovery Improvement Act of 201

2

Publish improper payment 

estimates for all high-risk 

programs and activities

Food and Nutrition Service 

(FNS) Supplemental 

Nutrition Assistance 

Program (SNAP)

11/15/2018

FNS Child and Adult Care 

Food Program (CACFP)

11/15/2020

Publish and meet annual 

reduction targets for each 

program assessed to be at risk 

and measured for improper 

payments

FNS National School Lunch 

Program (NSLP)

11/15/2018

FNS School Breakfast 

Program (SBP)

11/15/2018

FNS Special Supplemental 

Nutrition Program; 

Women, Infants, and 

Children

11/15/2018

Farm Service Agency (FSA) 

Noninsured Assistance 

Program (NAP)

11/15/2018

Report a gross improper payment 

rate of less than 10 percent for 

each program and activity for 

which an improper payment 

estimate was obtained and 

published in the Performance and 

Accountability Report (PAR) or 

Agency Financial Report (AFR)

FNS National School Lunch 

Program (NSLP)

11/15/2020

FNS School Breakfast 

Program (SBP)

11/15/2020
USDA Agency Financial Report | 2017

37

Federal Financial Management Improvement 

Act Report on Financial Management Systems 

BACKGROUND

The Federal Financial Management 

Improvement Act (FFMIA) is designed to 

improve financial and program managers’ 

accountability, provide better information for 

decision-making, and improve the efficiency 

and effectiveness of Federal programs. 

FFMIA requires that financial management 

systems provide reliable, consistent disclosure 

of financial data in accordance with generally 

accepted accounting principles and standards. 

These systems must also comply with 

(1) Federal Financial Management System 

(FFMS) requirements; (2) applicable Federal 

accounting standards; and (3) the U.S. 

Standard General Ledger (USSGL) at the 

transaction level. 

Additionally, the Federal Information Security 

Management Act (FISMA) requires that there 

be no significant weaknesses in information 

security policies, procedures, or practices to be 

substantially compliant with FFMIA. The 

information technology (IT) non-compliance is 

also reported as a material weakness and is 

included in the Federal Managers’ Financial 

Integrity Act Report on Management Control. 

Failure to resolve prior year recommendations 

identified by USDA’s Office of Inspector 

General (OIG) has prevented the Department 

from mitigating repeated deficiencies and 

receiving a quality rating on the five 

Cybersecurity Framework security functions. 

More detailed information on the status of 

corrective actions planned and to be completed 

to comply with FISMA is also provided in the 

Response to Management Challenges section 

of this report.

The following exhibit contains the outstanding initiatives to achieve compliance. 

EXHIBIT 6: Initiatives to Be Completed

OUTSTANDING INITIATIVES TO ACHIEVE 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.

NRCS 9/30/2018

Federal accounting standards, and 

USSGL at the transaction level. CCC 9/30/2019
SECTION I | Management’s Discussion and Analysis

38

FISCAL YEAR 2017 RESULTS

During fiscal year (FY) 2017, the U.S. 

Department of Agriculture (USDA) evaluated 

its financial management systems to assess 

compliance with FFMIA. In assessing FFMIA 

compliance, USDA considered auditors’ 

opinions on component agencies’ financial 

statements, and progress made in addressing 

the material weaknesses identified in the 

FY 2016 Agency Financial Report. USDA is 

not compliant with Federal accounting 

standards and the USSGL at the transaction 

level due to deficiencies identified for the 

Commodity Credit Corporation and Natural 

Resources Conservation Service. 

Additionally, as reported in the FMFIA 

section of this report, USDA continues to 

have weaknesses in IT controls and Federal 

Financial Management Systems 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)

Non-compliance with Federal accounting 

standards 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 U.S. Standard General 

Ledger. 

During FY 2017, CCC continued their efforts 

to modernize their systems to become 

compliant with the funds control/obligation 

requirements related to recording obligations 

at the transactional level. 

NATURAL RESOURCES CONSERVATION 

SERVICE (NRCS)

Deficiencies in applicable Federal accounting 

standards, including the USSGL at the 

transaction level, were noted for obligations 

incurred, including accrued expenses and 

undelivered orders; recoveries of prior year 

unpaid obligations and unexpended 

appropriations as it relates to accrued 

expenses.

NRCS continues working to mitigate auditoridentified deficiencies and substantially 

comply with FFMIA. 
USDA Agency Financial Report | 2017

39

Financial Management Systems Strategy 

The Financial Management Systems (FMS) component of OCFO is responsible for providing 

timely, accurate, and complete financial information to USDA agencies to enable them to 

execute the mission of USDA. Specifically, FMS provides cloud-based, Commercial Off the 

Shelf (COTS) Enterprise Resource Planning (ERP) software that provides USDA Agencies with 

the functionality they need to distribute, obligate, expend, and report on the funds entrusted to 

them by Congress. 

FMS Operates as an Internal Shared Services Provider to USDA agencies, pooling resources to 

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

and repeatable processes. 

FINANCIAL MANAGEMENT

LINES OF BUSINESS

The COTS ERP Systems, Applications, and 

Products (SAP) offering is housed in the FMS

Division. Under the Financial Management 

Modernization Initiative (FMMI), over the 

past eight years, this system has become the 

USDA Financial Management (FM) solution 

which covers almost all USDA accounting 

activity. Efforts are currently under way to 

migrate all remaining accounting activity that 

is not in FMMI over the next 3 years. 

In addition, USDA has recently expanded its 

portfolio of services to include ezFedGrants 

(EFG), a SAP-based grants management tool 

that is fully integrated with the USDA core 

accounting system. Grants management is a 

major activity of many USDA Agencies and 

this system, integrated with FMMI, assists 

grants managers to run their grants programs 

efficiently and improve the accuracy of their 

accounting.

MISSION

FMS’ mission as an internal Financial Shared 

Service Provider is to provide reliable, costeffective, employee-centric systems and 

services to USDA organizations, thus allowing 

our customers to focus on serving this great 

Nation through their mission delivery. FMS’ 

goal is to provide the necessary activities for 

executing the Financial Management Lines of 

Business vision. The three key components of 

this vision are communication, governance, 

and operations. By executing these 

components, USDA will deliver a successful 

shared service offering.

FMS’ activities are focused on financial 

management services. The list of financial 

management services includes:

• Budget execution;

• General ledger accounting;

• Financial reporting;

• Audit support; 

• Payroll accounting; 

• Investment accounting; 

• Commercial vendor payments; 

• Temporary duty travel payments; 

• Permanent change of station employee 

relocation payments; 

• Grant payments; 

• Purchase card payments;
SECTION I | Management’s Discussion and Analysis

40

• Lease accounting;

• Intragovernmental payments; 

• Intragovernmental collections; 

• Receivable management; 

• Property accounting; 

• Child care; and

• Grants management.

By offering a solution that is proven and 

operating, and which meets all compliance 

requirements, a customer is jump started in 

coming online with a state-of-the-art, fully 

configured ERP solution built for financials. 

FMS’ primary objectives for this shared 

services effort are to provide the following: 

• An enterprise financial management 

service that allows customers to reap the 

benefits of faster, less expensive, and less 

risky services as compared to starting 

with a new ERP or financial management 

implementation;

• Integration with the National Finance 

Center (NFC) payroll processing 

services;

• Budget status forecasting;

• An enterprise grants management service 

that allows customers to utilize a full 

life-cycle management tool for grants 

administration that provides visibility to 

both the government and the grant 

recipient;

• A complete audit-compliant financial 

solution with full documentation meeting 

financial requirements; 

• Continuous process, operational, and 

organizational improvements for those 

shared services retained in the future state 

portfolio; 

• More powerful and flexible financial 

management and reporting; 

• Administrative payments, collections, 

and certifications;

• Editing/auditing capabilities that are 

100-percent computerized; and 

• The best possible customer focused 

service and support. 

PROVIDER STATUS

As a Federal Shared Service Provider (FSSP), 

USDA continues to work with Unified Shared 

Services Management (USSM) at GSA and 

the Office of Financial Innovation and 

Transformation (OFIT) at Treasury to ensure 

our FMS-based services adhere to the 

required guidelines with respect to services, 

pricing, governance, and service level 

metrics. 

SUCCESSES

During fiscal year (FY) 2017, USDA 

succeeded in the following ways: 

• Built a data extraction methodology and 

harmonized data model that allows future 

grants customers to develop reports using 

data from Estimated Construction Cost 

(ECC), Certified Reference Material 

(CRM), Pega, and agency repositories. 

This enhances the attractiveness of our 

grants management solution for USDA 

customers, as well as customers in other 

organizations; 

• Completed high-level requirements 

gathering and planning to enable the 

Forest Service (FS) to begin deployment 

activities for EFG in 2018; 

• Opened discussions with Rural 

Development (RD) about bringing loans 

into the USDA SAP corporate solution; 
USDA Agency Financial Report | 2017

41

• Implemented an EFG interface with 

Grants.gov. Grants.gov is a clearinghouse 

that allows Federal agencies to get grant 

opportunities out to the public and 

receive applications from the public. The 

interface with EFG will streamline the 

process with a paperless flow;

• Implemented an enterprise version of 

EFG with the National Institute of Food 

and Agriculture (NIFA) and the Animal 

and Plant Health Inspection Service 

(APHIS); 

• Converged existing EFG agencies into 

the enterprise solution (Foreign 

Agriculture Service [FAS], Agricultural 

Marketing Service [AMS], Office of 

Advocacy and Outreach [OAO], and the 

National Resources Conservation Service 

[NRCS]);

• Migrated several agencies into the 

Budget Status of Funds (BSF) tool (FAS, 

NRCS, RD, and the Risk Management 

Agency [RMA]);

• Deployed the Allotment Planning 

Module for NRCS; 

• Migrated USDA’s SAP-based financial 

management system to the cloud — 

This has improved performance, reduced 

risks and costs, increased flexibility, and 

improved testing and training. Stability 

and performance was improved by over 

400 percent by this migration to a 

commercial cloud. By working in the 

cloud, we will be able to offer shared 

service customers a robust and reliable 

platform that allows them to focus on 

their core mission.

FUTURE ROADMAP: SAP

USDA goals for the future include as follows: 

• Roll the SAP grants solution out to all 

USDA agencies and to agencies outside 

USDA; 

• Create a new line of business to 

specifically support grants management; 

and

• Begin the integration of loan programs 

into the SAP solution within USDA. 

FY 2017 and planned FY 2018 releases and 

upgrades include the following: 

• SAP software release;

• General Financial Management 

Modernization Initiative enhancements;

• High-Performance Analytic Appliance 

(HANA) business warehouse; and 

• Financial Statement Data Warehouse 

(FSDW) migration.
SECTION I | Management’s Discussion and Analysis

42

Other Management Information, Initiatives, 

and Issues

DIGITAL ACCOUNTABILITY 

AND TRANSPARENCY ACT

(DATA ACT)

In May 2014, the Digital Accountability and 

Transparency (DATA) Act was enacted.

This Act extends Federal Funding 

Accountability and Transparency Act 

(FFATA) reporting by adding additional data 

elements to the previous FFATA reporting on 

financial assistance and procurements. The 

U.S. Department of the Treasury (Treasury) 

and the Office of Management and Budget 

(OMB) and Federal agencies are responsible 

for implementing the Act. Federal agencies 

are required to produce seven files as listed 

below and report them to the Treasury Broker 

quarterly:

• File A: Appropriations data by Treasury 

Symbol 

• File B: Appropriations by Treasury 

Symbol, Budget Object Classification 

Code (BOC), and Program Activity (PA).

The total of File B should equal the total 

of File A.

• File C: Financial attributes from the 

General Ledger(s) (GL) for each financial 

assistance award and procurement 

contract over the micro purchase 

threshold. 

ο This file is compared and reconciled 

with the D1 and D2 files. For each 

award reported on the D1 and D2 

files, the corresponding GL 

transactions are reflected on File C.

• File D1: Procurement data from the 

Federal Procurement Data System 

(FPDS). (Daily to FPDS) 

• File D2: Financial Assistance award

attributes. 

ο Agencies submit data to the 

repository, which conducts edits and 

then transmits all error-free data to 

USAspending.gov. Records with 

errors are sent back to the agencies 

and staff offices for correction before 

resubmission. 

• File E: Financial Assistance Subaward 

Reporting (Pulled by the broker from the 

Federal Funding Accountability and 

Transparency Act Subaward Reporting 

System [FSRS]).

• File F: Top five most highly compensated 

officers (Pulled by Broker from System 

for Award Management [SAM]). 

USDA developed a DATA Act repository to 

store data from all the U.S. Department of 

Agriculture (USDA) agencies and staff 

offices. This repository contains the data 

necessary to create files A-C by pulling data 

from the Financial Management 

Modernization Initiative (FMMI) general 

ledger. The Rural Development (RD) and 

Farm Service Agencies (FSA) use separate 

GLs (RD and FSA also have FMMI activity) 

and submit file A-C data to the repository. 

USDA is also a Financial Shared Service 

Provider, servicing 23 small government 

agency clients. All USDA and customer data 

is held in the FMMI repository. 
USDA Agency Financial Report | 2017

43

D1 file data is submitted as frequently as 

daily to FPDS. The repository pulls in all data 

submitted to FPDS at quarter end for 

reconciliation purposes. 

File D2 is submitted from agencies and staff 

offices to the repository where the files are 

checked for errors. All records that are errorfree are submitted to USAspending.gov for 

posting. Error records are sent back to the 

agencies and staff offices for correction and 

resubmission. 

Files E and F are pulled by the Treasury 

broker quarterly, so the data is not maintained 

in the USDA DATA Act repository.

OMB and Treasury developed phased 

guidance for implementation of the DATA 

Act. Guidance to date includes OMB 

Memorandum 15-12,13 Management 

Procedures Memorandum (MPM) 2016-0314

and OMB Memorandum 17-04.15 Treasury 

published version 1.1 of the Requirements 

Submission Specifications (RSS) and 

Interface Design Document (IDD) on June 30, 

2017. It will be implemented in the fall of 

2017. USDA is a government leader in the 

workgroups charged with the governmentwide DATA Act implementation and in 

developing the guidance listed above. 

The Office of the Chief Financial Officer 

(OCFO) leads the DATA Act implementation 

 

13 https://obamawhitehouse.archives.gov/

sites/default/files/omb/memoranda/2015/m15-12.pdf

14 https://obamawhitehouse.archives.gov/

sites/default/files/omb/financial/memos/man

agement-procedures-memorandum-no-2016-

03-additional-guidance-for-data-actimplementation.pdf

15 https://obamawhitehouse.archives.gov/

sites/default/files/omb/memoranda/2017/m17-04.pdf

for USDA. OCFO Financial Management 

Services (FMS) developed a data repository 

for the Department to collect all DATA Act 

elements. The repository connects to the Beta 

USAspending.gov Web site and will report 

the data using Treasury’s data broker. 

USDA’s Senior Accountable Official, the 

Chief Financial Officer, established a USDA 

DATA Act implementation team. This group 

inventoried DATA Act elements in the USDA 

agency source systems and coordinated any 

needed system changes to become compliant. 

USDA has four main general ledgers and 

multiple awards systems where data resides. 

Despite significant challenges (including a 

tornado that left the National Finance Center 

in New Orleans, where the FMS is 

headquartered, without a facility), USDA 

submitted DATA Act reporting by the May 

2017 deadline. 

USDA submitted third quarter data to the 

USAspending.gov Web site in August 2017. 

The data quality had improved compared to 

the second quarter. Fourth quarter data will be 

reported in November 2017. USDA is focused 

on improving data quality. OCFO developed a 

tool to assist USDA Agencies and Staff 

Offices to report financial assistance and 

Procurement Award Identification (IDs) to its 

GLs, a new requirement as of January 1, 

2017. As Agencies address transactions and 

associate the correct Award ID or mark the 

transaction as not DATA Act reportable, 

matching transactions in the GLs to the 

Awards reported in files D1 and D2 will 

improve. OCFO began training agencies in 

August and will conduct several such 

trainings to assist the agencies with this task.

The level of effort and research required to 

address transactions without Award IDs or 

marked as not reportable will take several 

reporting quarters to complete. 
SECTION I | Management’s Discussion and Analysis

44

At least four USDA agencies are using the 

Department’s grants system, which will 

improve reporting capabilities and will 

provide standardization for many grants 

programs. More agencies are exploring 

migration to the Department’s grants solution, 

which may potentially yield even more 

efficiencies and standardization. 

OCFO also works with the Office of 

Procurement and Property Management 

(OPPM) to ensure that procurement reporting 

will adhere to DATA Act requirements. 

Together, OCFO and OPPM are reviewing 

procurement reporting policies and 

procedures to ensure that data is reported and 

certified by the agencies to be both timely and 

accurate in the Department’s Integrated 

Acquisition System (IAS), as well as other 

procurement systems used by the Forest 

Service and the FSA.

Limitations of Financial Statement

The Consolidated Balance Sheet has been prepared to report the financial position of the entity, 

pursuant to the requirements of 31 United States Code (U.S.C.) 3515(b). While the balance sheet 

has been prepared from the books and records of the entity in accordance with generally 

accepted accounting principles for Federal entities and the formats prescribed by the Office of 

Management and Budget (OMB), the statement is in addition to the financial reports used to 

monitor and control budgetary resources, which are prepared from the same books and records. 

The statement should be read with the realization that it is for a component of the United States 

Government, a sovereign entity.
USDA Agency Financial Report | 2017

45

Section II: 

Financial Information 

Message from the Acting Deputy Chief 

Financial Officer

The U.S. Department of Agriculture (USDA) is leading the charge in providing a safe, nutritious, 

and efficient food supply with a concentrated investment in the economic growth of rural America. 

With over $225 billion in assets, $138 billion in annual spending, and approximately $100 billion

in loans to America’s farmers and ranchers, responsible financial controls are a necessity that we 

embrace. Our mission includes feeding upwards of 44 million low-income individuals a day and 

would not be possible without reliable controls. USDA’s focus on responsible financial 

stewardship is a vital component in supporting program delivery of the very tangible work of the 

Department.

Presented here, as Acting Deputy Chief Financial Officer for the USDA, is the Agency Financial 

Report (AFR) for fiscal year (FY) 2017. This report shows the progress made to provide fiscally 

sound, cost-effective program delivery. Because we are accountable to the American taxpayer, 

we strive for peak performance in all facets of our work. Through the collaborative efforts of 

USDA managers, employees, business partners, and stakeholders, we have made significant 

strides in advancing the Department’s goal of excellence in financial management. 

For the Office of the Chief Financial Officer (OCFO), this has been a year marred by the 

unexpected. Yet our resiliency in carrying out the mission and ensuring financial integrity 

remains unwavering. This was exemplified when the National Finance Center managed to 

process $2.9 billion in payroll on time for more than 600,000 federal employees in the same 

week a tornado hit their facility. This accomplishment has made USDA the “Gold Standard” 

for Continuity of Operations (COOP) preparedness across Federal Government. In addition, we 

migrated the USDA corporate financial system, including the integrated Grants management 

system, to a commercial cloud provider. The migration reduces operating costs and eliminates 

the requirement for continued capital investment in USDA owned hardware to support the 

financial system. 

USDA also made significant progress in the area of improper payments, including having eight 

programs removed from the Office of Management and Budget (OMB) list of programs 

susceptible to significant improper payments, thereby reducing the number of high risk programs 

from eighteen down to ten. Through aggressive measures to revise sampling and estimation 

methodology, as well as implementation of purposeful corrective actions, the Risk Management 

Agency Federal Crop Insurance Corporation program was removed from the OMB High-Priority 
SECTION II | Financial Information

46

Program List. This is the first program in the Federal Government to be removed from the High 

Priority List.

Even still, there is more work to do, particularly related to management challenges. 

We recognize the importance of continuous process improvement over our internal controls, 

including any areas of weakness identified by our independent auditors. The Office of Inspector 

General (OIG) has made assessments of our management challenges, and we are committed to 

advancing the resolution of any deficiencies reported and will continue to build upon experiences 

gained through our annual financial statement audit. 

We are proud of the accomplishments of our hard-working employees at USDA. All of us are 

committed to the sound management of resources under our stewardship. We remain steadfast 

and committed to making greater financial management improvements in FY 2018. At every 

level, we are committed to being a proactive, cost-effective organization that is transparent and 

accountable for the programs we deliver. Ultimately our efforts will result in setting the highest 

achievable standard of excellence in managing taxpayers’ dollars. 

Lynn M. Moaney 

Acting Deputy Chief Financial Officer

November 14, 2017 
USDA Agency Financial Report | 2017

47

Independent Auditors Report

United States Department of Agriculture 

Office of Inspector General

Washington, D.C. 20250

DATE: November 15, 2017 

AUDIT

NUMBER: 50401-0013-11 

TO: Lynn Moaney 

Acting Deputy Chief Financial Officer 

Office of the Chief Financial Officer

ATTN: Annie Walker 

Director

Internal Control Division 

FROM: Gil H. Harden

Assistant Inspector General for Audit 

SUBJECT: U.S. Department of Agriculture’s Consolidated Balance Sheet for

Fiscal Year 2017 

This report presents the results of our audit of the Department of Agriculture’s consolidated 

balance sheet for the fiscal year ending September 30, 2017. The report contains an unmodified 

opinion on the financial statement, as well as the results of our assessment of the Department’s

internal control over financial reporting and compliance with laws and regulations. Your 

response is included in its entirety in exhibit D. 

In accordance with Departmental Regulation 1720-1, please furnish a reply within 60 days

describing the corrective actions taken or planned, and timeframes for implementing the 

recommendation for which management decision has not been reached. Please note that the 

regulation requires management decision to be reached on all recommendations within 6 months 

from report issuance, and final action to be taken within 1 year of each management decision to 

prevent being listed in the Department’s annual Agency Financial Report. 

We appreciate the courtesies and cooperation extended to us by members of your staff during our 

audit. This report contains publicly available information and will be posted in its entirety to our 

website https://www.usda.gov/oig in the near future.
SECTION II | Financial Information

48

Table of Contents

Independent Auditor’s Report..............................................................................1

Report on the Financial Statements.............................................................1

Opinion on the Consolidated Financial Statement.....................................2

Other Matters.................................................................................................2

Report on Internal Control Over Financial Reporting ............................. 3

Report on Compliance and Other Matters.................................................4

Purpose of the Report on Internal Control Over Financial Reporting

and the Report on Compliance and Other Matters...................................6

Section 1: Material Weaknesses in Internal Control Over Financial 

Reporting...............................................................................................................7

Finding 1: Improvements are Needed in Overall Financial 

Management...................................................................................................7

Finding 2: Improvements are Needed in Overall Information 

Technology Security Program......................................................................8

Section 2: Significant Deficiency in Internal Control Over Financial 

Reporting...............................................................................................................9

Finding 3: Controls Over Unliquidated Obligations Can Be 

Strengthened ..................................................................................................9

Recommendation 1:...............................................................................10

Section 3: Noncompliance with Laws and Regulation...................................11

Finding 4: Lack of Substantial Compliance with FFMIA Requirements

.......................................................................................................................11

Finding 5: Anti-deficiency Act Violations................................................12

Finding 6: DATA Act Non-Compliance ...................................................14

Abbreviations........................................................................................................15

Exhibit A: Summary of Open Recommendations from Prior Years.............16

Exhibit B: Status of Prior Year Material Weaknesses and Significant 

Deficiencies ............................................................................................................17

Exhibit C: Status of Prior Year Noncompliance Findings..............................18

Exhibit D: Agency’s Response............................................................................19

Exhibit E: Agency’s Financial Report...............................................................20
USDA Agency Financial Report | 2017

49

AUDIT REPORT 50401-0013-11 1

Independent Auditor’s Report

Lynn Moaney

Acting Deputy Chief Financial Officer

Office of the Chief Financial Officer

The United States Department of Agriculture’s (USDA) Office of Inspector General (OIG) 

audited the consolidated balance sheet of the Department for fiscal year 2017. 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

related to the balance sheet.

The “Findings and Recommendations” 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, 2017. Exhibit A summarizes the current year status of

prior years’ open audit recommendations. Exhibit B shows the status of prior year internal 

control weaknesses. Exhibit C provides an update to previously reported instances of 

noncompliance with laws and regulations. USDA’s response is presented in its entirety in 

Exhibit D. 

Report on the Financial Statements

We have audited the accompanying consolidated balance sheet of USDA as of September 30, 

2017, and the related notes (hereinafter referred to as the “consolidated financial statement”). 

The objective of our audit was to express an opinion on the fair presentation of this consolidated 

financial statement.

Management’s Responsibility for the Consolidated Financial Statement

Management is responsible for the preparation and fair presentation of this consolidated financial 

statement 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 the consolidated financial statement that is free from 

material misstatement, whether due to fraud or error. 

Auditor’s Responsibility

Our responsibility is to express an opinion on this consolidated financial statement based on our 

audit. We conducted our audit 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 17-03, Audit Requirements for Federal Financial Statements. Those standards 

and OMB Bulletin 17-03 require that we plan and perform the audit to obtain reasonable 

assurance about whether the consolidated financial statement is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and 

disclosures in the consolidated financial statement. The procedures selected depend on the 
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2 AUDIT REPORT 50401-0013-11

auditor’s judgement, including the assessment of the risks of material misstatement of the 

consolidated financial statement, 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 statement 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 the accounting policies used and the 

reasonableness of significant accounting estimates made by management, as well as evaluating 

the overall presentation of the consolidated financial statement. Our audit 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 Statement

In our opinion, the consolidated financial statement referred to above presents fairly, in all 

material respects, the financial position of USDA as of September 30, 2017, in accordance with 

accounting principles generally accepted in the U.S. 

Other Matters 

Required Supplementary Information

Accounting principles generally accepted in the U.S. require that the information in the 

Management’s Discussion and Analysis (MD&A), Required Supplementary Information (RSI), 

and Required Supplementary Stewardship Information (RSSI) be presented to supplement the 

basic consolidated financial statement. Such information, although not part of the basic 

consolidated financial statement, is required by the Federal Accounting Standards Advisory 

Board, which considers it to be an essential part of financial reporting for placing the basic 

consolidated financial statement in an appropriate operational, economic, or historical context. 

We have applied certain limited procedures to the MD&A, RSI, and RSSI in accordance with 

auditing standards generally accepted in the U.S., which consisted of inquiries of management 

about the methods of preparing the information and comparing the information for consistency 

with management’s responses to our inquiries, the basic consolidated financial statement, and 

other knowledge we obtained during our audit of the basic consolidated financial statement. 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 audit was conducted for the purpose of forming an opinion on the basic consolidated 

financial statement 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 basic 

consolidated financial statement or the RSI. Additionally, the accompanying consolidated 

statement of net cost, consolidated statement of changes in net position, combined statement of 

budgetary resources, and the related notes for the year ended September 30, 2017, are included. 

This information has not been subjected to the auditing procedures applied in our audit of the 
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AUDIT REPORT 50401-0013-11 3

basic consolidated balance sheet, 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 statement, we considered 

USDA’s internal control over financial reporting (internal control) to determine the audit 

procedures that are appropriate in the circumstances for the purpose of expressing our opinion on 

the consolidated financial statement, but not for the purpose of expressing an opinion on the 

effectiveness of USDA’s internal control or on management’s assertion on internal control 

included in the MD&A. Accordingly, we do not express an opinion on the effectiveness of 

USDA’s internal control or on management’s assertion on internal control included in the 

MD&A. 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 purposes described in the preceding 

paragraph and was not designed to identify all deficiencies in the 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 statement will not be 

prevented, or detected and corrected, on a timely basis. 

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. 

OMB Bulletin 17-03 requires us to describe significant deficiencies and material weaknesses 

identified during our audit, and in the event that no material weaknesses were identified, to so 

report. In our fiscal year 2017 audit, we noted certain matters involving internal control that we 

consider to be significant deficiencies. Specifically, we identified weaknesses in USDA’s:

• overall financial management,

• information technology (IT) security program, and

• controls over unliquidated obligations.

We determined that the first two deficiencies are also material weaknesses. These deficiencies 

are discussed in this report in the “Findings and Recommendations,” Sections 1 and 2. 

OMB Bulletin 17-03 also requires us to compare the material weaknesses identified in the audit 

with the material weaknesses identified in USDA’s FMFIA Report on Management Control. We 

noted no exceptions.
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4 AUDIT REPORT 50401-0013-11

Report on Compliance and Other Matters

As part of obtaining reasonable assurance about whether USDA’s consolidated financial 

statement is free from 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 amounts and disclosures in the consolidated financial statement. 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. 

We also performed tests of USDA’s compliance with certain provisions referred to in 

Section 803(a) of the Federal Financial Management Improvement Act of 1996 (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 and Recommendations,” 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. 

As discussed in Finding 5 of the “Findings and Recommendations,” Section 3, of this report, our 

tests disclosed instances of noncompliance with the Anti-Deficiency Act (ADA); some of these 

ADA violations are still in the process of being reported to Congress and the President. In 

addition, we identified USDA’s noncompliance with the Digital Accountability and 

Transparency Act of 2014 (DATA Act), described in more detail in Finding 6 of the “Findings 

and Recommendations,” Section 3. 

Additionally, during fiscal year 2017, we identified instances of noncompliance with the 

requirements of the Improper Payments Elimination and Recovery Act of 2010 (IPERA), 

regarding the design of program internal controls related to reporting improper payments. A 

separate report will be issued with further details on the Department’s compliance with improper 

payment requirements.1

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. 

 

1 IPERA amended the Improper Payments Information Act of 2002, Public Law 107-300. These two laws address 

improper payment requirements.
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AUDIT REPORT 50401-0013-11 5

Auditor’s Responsibilities 

We are responsible for: (1) obtaining a sufficient understanding of internal control over financial 

reporting and compliance to plan the audit, (2) testing whether USDA’s financial management 

systems substantially comply with FFMIA requirements referred to above, and (3) testing 

compliance with certain provisions of laws, regulations, contracts, and grant agreements that 

have a direct effect on the determination of material amounts and disclosures in the consolidated 

financial statement. 

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 in internal control, misstatements due to error or 

fraud, losses, or noncompliance may nevertheless occur and not be detected. We also caution 

that projecting our audit results to future periods is subject to risk that controls may become 

inadequate because of changes in conditions or that the degree of compliance with controls may 

deteriorate. In addition, we caution that our internal control testing may not be sufficient for 

other purposes. 

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 disclosures in the consolidated financial statement for the fiscal year ended 

September 30, 2017. We caution that noncompliance may occur and not be detected by these 

tests and that such testing may not be sufficient for other purposes. Also, our work on FFMIA 

would not necessarily disclose all instances of noncompliance with FFMIA requirements. 

Management’s Response 

Management’s response to the report is presented in Exhibit D. We did not audit USDA’s 

response and, accordingly, we express no opinion on it. 

Status of Prior Year’s Findings and Recommendations

We reviewed the status of open recommendations from prior years, prior year internal control 

deficiencies, and prior year noncompliance issues. The status of these items is presented in 

Exhibits A, B, and C.
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6 AUDIT REPORT 50401-0013-11

Purpose of the Report on Internal Control Over Financial Reporting and the Report on 

Compliance and Other Matters

The purpose of the “Report on Internal Control Over Financial Reporting” and the “Report on 

Compliance and Other Matters” sections of this report is solely to describe the scope of our 

testing of internal control and compliance and the result of that testing, and not to provide an 

opinion on the effectiveness of USDA’s internal control or compliance. These reports are an 

integral part of an audit performed in accordance with government auditing standards in 

considering USDA’s internal control and compliance. Accordingly, these reports are not suitable 

for any other purpose. 

Gil H. Harden

Assistant Inspector General for Audit 

Washington, D.C. 

November 14, 2017 
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AUDIT REPORT 50401-0013-11 7

Findings and Recommendations

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 the Natural 

Resources Conservation Service (NRCS). USDA also has one existing system non-conformance 

related to Funds Control Management within CCC, which is expected to be resolved by the end 

of fiscal year 2019. In conducting our review, we noted the following areas where 

improvements are needed in overall financial management. Specifically: 

• One component of USDA’s financial reporting, CCC, disclosed material weaknesses 

related to accounting for budgetary transactions and accounting estimates. The 

Department also continued to report improvements needed in recording obligations at the 

transaction level for CCC.

• One component of USDA’s financial reporting, NRCS, disclosed material weaknesses 

related to controls over obligations and undelivered orders; and accounting and controls 

over expenses.

In its FMFIA Report on Management Control for fiscal year 2017, the Department reported the 

above material weakness for overall financial management with the following corrective action 

plans: 

• CCC, in fiscal year 2018, plans to implement improvements and refine processes for 

account reconciliations and analysis and the calculation of accruals and advances for the 

U.S. Agency for International Development grants funded by CCC. Some of these 

actions include updating policies and procedures, developing effective communication 

processes, and improving the timeliness of financial statement preparation and applicable 

support. 

• NRCS, in fiscal year 2018, plans to re-engineer the process for reviewing data files to 

ensure invalid adjustments are identified and negated in a timely manner, improve the 

transparency of recording and liquidating obligations, and implement a confirmation 

process to ensure direct-entry expense accruals are recorded.

Since USDA has actions planned and in progress, we are making no further recommendations 

herein.
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8 AUDIT REPORT 50401-0013-11

Finding 2: Improvements are Needed in Overall Information Technology 

Security Program

As required by the Federal Information Security Modernization Act of 2014 (FISMA), OIG 

reviewed USDA’s ongoing efforts to improve its IT security program and practices during fiscal 

year 2017.2

 

USDA is working to improve IT security, but many longstanding weaknesses remain. We 

continue to find that the Department has not implemented corrective actions in response to prior 

OIG recommendations. For FISMA audits from 2009 through 2016, OIG made 67 

recommendations for improving the overall security of USDA’s systems. Forty of the 67 

recommendations have been closed, 1 open recommendation has not yet surpassed its 

implementation date, and the remaining 26 open recommendations are overdue. Our testing 

identified that security weaknesses still exist for five closed recommendations. 

Our testing also identified weaknesses in seven subject areas as defined for review by FISMA: 

risk management, configuration management, identity and access management, security training, 

information security continuous monitoring, incident response, and contingency planning. 

We noted the Office of the Chief Information Officer (OCIO) continues to take positive steps 

towards improving the Department’s security posture. For instance, the Department’s 

participation in the Continuous Diagnostic and Mitigation project should expand its continuous 

diagnostic capabilities and provide a step forward to attaining a higher security capability. 

OCIO concurred with the findings in the report. No new recommendations were made as the 

prior FISMA reports addressed the security weaknesses noted this year. As a result, we are 

making no further recommendations in this report. 

 

2 Audit Report 50501-0015-12, U.S. Department of Agriculture, Office of the Chief Information Officer, 

Fiscal Year 2017 Federal Information Security Modernization Act, issued October 2017.
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AUDIT REPORT 50401-0013-11 9

Section 2: Significant Deficiency in Internal Control Over Financial 

Reporting 

Finding 3: Controls Over Unliquidated Obligations Can Be Strengthened

Last year, our report identified deficiencies with controls over inactive Unliquidated Obligations 

(ULO).3

 This year, our review disclosed that additional improvements are needed for selected 

agencies.

We statistically selected 100 ULOs from 14 agencies and offices for which no activity had 

occurred for over 1 year, as of March 31, 2017. We found that five ULOs from four agencies4

were invalid because no future expenditures were expected. We also found two ULO balances

that were valid, but should have been liquidated prior to the sample date if those had been 

properly monitored. 

We nonstatistically selected three agencies and reviewed their obligation certifications submitted 

to the Department for the third quarter of fiscal year 2017. To assess the appropriateness of the 

ULO certifications, we then selected 11 obligation balances nonstatistically from each of the 

three certifications. We found that one agency did not deobligate a ULO deemed invalid within 

the required time frame and incorrectly completed the certification statement by listing the 

incorrect number and dollar amount of ULOs.5

The U.S. Department of the Treasury’s (Treasury) annual closing guidance (Treasury 

Bulletin 2017-08, 2017 Yearend Closing, dated June 1, 2017), requires an annual review of 

ULOs. Departmental Regulation 2230-1, Reviews of Unliquidated Obligations, dated 

October 15, 2014, further requires quarterly reviews and certifications as to the validity of ULO 

balances from agency Chief Financial Officers (CFO).

Ineffective monitoring and reviewing, as well as inappropriate certifying to the validity of 

obligation balances, resulted in invalid obligations remaining open. Invalid obligations 

improperly restrict the availability of funding authority. This also increases the risk of misstating 

obligations as of yearend. 

Management generally agreed with our findings and will continue to implement controls over 

unliquidated obligations.

 

3 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.

4 Agricultural Marketing Service, Animal and Plant Health Inspection Service, Agricultural Research Service and 

Forest Service (FS).

5 The National Agricultural Statistics Service should have deobligated one ULO shortly after being deemed invalid 

and certified incorrect obligation data.
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10 AUDIT REPORT 50401-0013-11

Recommendation 1:

Provide additional oversight to ensure that financial reporting controls over ULOs are 

strengthened and maintained.
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AUDIT REPORT 50401-0013-11 11

Section 3: Noncompliance with Laws and Regulation

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. 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. FFMIA also requires auditors to report in their CFO Act 

financial statement audit reports whether financial management systems substantially comply 

with FFMIA’s system requirements.

During fiscal year 2017, 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 for two of its 

component agencies relating to financial management, described below.

1. CCC was not compliant with Federal accounting standards for weaknesses in the 

accounting for budgetary transactions and accounting estimates. In addition, financial 

management systems did not record certain accounting events at the transaction level in 

accordance with USSGL. During fiscal year 2017, CCC continued their efforts to 

modernize their systems to become compliant with the funds control/obligation 

requirements related to recording obligations at the transaction level. 

2. Deficiencies in NRCS’ applicable Federal accounting standards, including the USSGL at 

the transaction level, were noted for obligations incurred, including accrued expenses and 

undelivered orders; recoveries of prior year unpaid obligations and unexpended 

appropriations as it relates to accrued expenses. NRCS continues working to mitigate 

auditor-identified deficiencies and substantially comply with FFMIA. 

See Finding 1 of this report for more details on CCC and NRCS issues.

Due to planned actions, we are making no further recommendations in this report.
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Finding 5: Anti-deficiency Act Violations

In fiscal year 2017, the Department reported several actual and potential ADA violations in its 

Agency Financial Report. These violations are discussed in detail below. 

In fiscal year 2015, FS identified an ADA violation for fiscal years 1990 through 2009, under 31 

U.S. Code (U.S.C.) § 1341(a)(1). The violation related to the agency’s employment in California 

of two citizens of Palau. This use of Federal appropriations violated a general provision of 

appropriations acts, which prohibited the use of appropriations to employ non-U.S. citizens. 

This ADA violation was reported to Congress and the President during fiscal year 2017. 

The Farm Service Agency (FSA) identified an ADA violation under 31 U.S.C. § 1517(a). In 

fiscal year 2014, OMB approved an apportionment request for $1 million from FSA for the 

purchase of guaranteed loans. On February 25, 2014, FSA made several loan purchases, 

obligating $1,302,823.57, thus exceeding the apportionment for such purchases. On March 7, 

2014, FSA requested another apportionment to cover the deficiency. OMB approved the request 

and apportioned funds on March 31, 2014. FSA’s Farm Loan Operations Office completed 

corrective actions to ensure future payments are obligated only within approved apportionment 

limits. The ADA violation was reported to Congress and the President during fiscal year 2017. 

In fiscal year 2016, the Office of the Chief Financial Officer (OCFO) identified an ADA 

violation under General Provision (GP) 706 of the Agriculture, Rural Development, Food and 

Drug Administration, and Related Agencies Appropriations Act of 2016, Public Law 114-113, 

Div. A (Dec. 18, 2015), which prohibits USDA from making certain obligations for IT projects 

without prior written approval. Specifically, GP 706 states, “none of the funds available to 

USDA for IT shall be obligated for projects, contracts, or other agreements over $25,000 prior to 

receipt of written approval by the Chief Information Officer (CIO).” OCFO obligated funds in 

excess of $25,000 on four occasions prior to an approved Acquisition Approval Request from the 

CIO. These violations were reported to Congress and the President during fiscal year 2017. 

The Office of Advocacy and Outreach (OAO) identified an ADA violation for fiscal years 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. The ADA violation is in the process of being reported to 

Congress and the President. 

In fiscal year 2015, the Foreign Agricultural Service (FAS) identified a potential ADA violation 

that may have occurred in its fiscal year 2009 appropriation. FAS has completed its analyses and 

identified the causes of this potential violation. During fiscal year 2017, the Office of the 

General Counsel (OGC) made a determination that FAS properly adjusted its accounts to correct 

the errors that had created the negative balance. With these account adjustments there was no 

ADA violation. 

In fiscal year 2016, a potential ADA violation may have occurred in CCC expenditures. 

Expenditures for CCC interest to Treasury appear to have exceeded apportioned amounts. CCC 
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AUDIT REPORT 50401-0013-11 13

expended approximately $37 million in interest to Treasury, more than the apportioned amount 

of $29.9 million; however, there is some question about the apportionment requirements for 

interest to Treasury. FSA is seeking further review of the legal authority of CCC, with respect to 

the apportionment requirements, with OGC in conjunction with the Office of Management and 

Budget. 

In fiscal year 2017, the National Finance Center (NFC) identified a potential ADA violation. 

The NFC has been managing Web pages for the New Orleans chapter of the Association of 

Government Accountants (AGA), which is a non-governmental organization, on the NFC Web 

site at no cost to AGA since 1999. The services provided were minimal, and were limited to 

basic maintenance of AGA Web pages, and updates to contact information or changes of 

officers. NFC also maintains the Federal Executive Board (FEB) Web pages in a similar manner 

to the AGA, and these services are performed at no cost to the FEB. OGC is reviewing the 

potential violation.

In fiscal year 2017, the U.S. Government Accountability Office (GAO) determined that, under 

the previous administration, the Office of the Secretary violated the purpose statute, improperly 

augmented several of its appropriations, and potentially violated the ADA when it obligated 

several of its appropriations for the expenses of separately funded USDA components. 

Allegedly, USDA improperly relied on the Economy Act to enter into interagency agreements, 

under which the agency obligated its appropriations for (1) Rural Development Salaries and 

Expenses, (2) Food and Nutrition Service, Nutrition Programs Administration, and (3) Office of 

Civil Rights, for personnel details that GAO determined did not actually occur. Instead, these 

appropriations were used for the salaries and benefits of employees performing work for 

separately funded USDA components. The Economy Act was referenced as the authority to 

transfer the appropriations, however, the purpose statute was violated when the incorrect 

appropriation was used for the salaries and benefits in question and improperly augmented the 

appropriations of these other USDA components. If USDA subsequently exceeds appropriations 

by adjusting its accounts to correct the charges, then a potential ADA violation could occur. The 

Department will seek a determination by OGC. 

In fiscal year 2017, CCC identified a potential ADA violation. Prior year accounting treatment 

for obligations related to the Conservation Reserve Program annual rental contracts was 

determined to be in error. Only the annual portion of the contract values was recorded as an 

obligation, whereas OMB Circular No. A-11 requires recognition of the obligation in the amount 

necessary to cover the full-term of the contractual obligation. As a result, CCC recorded 

approximately $10 billion in obligations as a beginning balance adjustment, whereby 

apportioned authority may not have been available in prior years. CCC will seek a determination 

by OGC. 
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Finding 6: DATA Act Non-Compliance

The DATA Act6 was enacted on May 9, 2014, to expand the reporting requirements pursuant to 

the Federal Funding Accountability and Transparency Act of 20067 (FFATA). The DATA Act 

expanded FFATA by disclosing direct Federal agency expenditures and linking data, establishing 

Governmentwide data standards, simplifying reporting for entities receiving Federal funds, 

improving the quality of data submitted, and applying approaches developed by the Recovery 

Accountability and Transparency Board to spending across the Federal Government. Under the 

DATA Act, Federal agencies and their components were required to begin reporting data during 

fiscal year 2017. 

During fiscal year 2017, OIG conducted an audit8 to review the data USDA submitted for the 

DATA Act April 2017 reporting deadline for completeness, timeliness, quality, and accuracy. 

We found while USDA submitted and certified second quarter files to Treasury’s broker by the 

reporting deadline, the files were incomplete and of insufficient quality.

Specifically, USDA submitted data, which only contained 1 of 670 required Treasury account 

symbols, 6 of 576 program activities, and a third, blank file, even though the third file was 

supposed to include all financial award data for the quarter. This occurred, in part, because 

USDA's DATA Act repository was not fully functional at the time of the second quarter 

submission, OCFO did not have formalized policies and procedures in place to govern the 

DATA Act submission and reconciliation process within USDA, and not all USDA agencies 

submitted the required financial award data to OCFO for processing to Treasury. As a result, 

OIG recommended that, as the Department moves forward, USDA should take appropriate 

action to improve the quality of its data by ensuring its future quarterly data submissions are 

timely, complete, and accurate for display on USASpending.gov. 

OCFO generally agreed with the findings and recommendations made in our DATA Act audit; 

therefore, we are making no further recommendations in this report.

 

6 DATA Act, Pub. L. No. 113-101.

7 FFATA, Pub. L. 109-282.

8 Audit Report 11601-0001-22, USDA’s 2017 Compliance with the Digital Accountability and Transparency Act 

(DATA Act), issued November 2017.
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AUDIT REPORT 50401-0013-11 15

Abbreviations 

ADA ............................ Anti-Deficiency Act

AGA ........................... Association of Government Accountants 

CCC............................. Commodity Credit Corporation 

CFO ............................. Chief Financial Officer

CIO.............................. Chief Information Officer

DATA Act .................. Digital Accountability and Transparency Act of 2014 

FAS ............................. Foreign Agricultural Service

FEB ............................ Federal Executive Board

FFATA ....................... Federal Funding Accountability and Transparency Act of 2006 

FFMIA ........................ Federal Financial Management Improvement Act of 1996 

FFMSR ........................ Federal Financial Management System Requirements 

FISMA ........................ Federal Information Security Modernization Act of 2014 

FMFIA ........................ Federal Managers’ Financial Integrity Act of 1982

FS ............................... Forest Service

FSA ............................. Farm Service Agency

GAO ........................... Government Accountability Office

GP .............................. General Provisions 

IT ................................. information technology 

IPERA ........................ Improper Payments Elimination and Recovery Act of 2010 

MD&A ........................ Management’s Discussion and Analysis 

NFC ............................ National Finance Center

NRCS .......................... Natural Resources Conservation Service 

OAO ............................ Office of Advocacy and Outreach

OCFO .......................... Office of the Chief Financial Officer

OCIO .......................... Office of the Chief Information Officer

OGC......................Office of the General Counsel

OIG ............................. Office of Inspector General

OMB ........................... Office of Management and Budget

RSI .............................. Required Supplementary Information

RSSI ........................... Required Supplementary Stewardship Information

Treasury ...................... U.S. Department of the Treasury

ULO ............................ Unliquidated Obligations 

U.S. ............................. United States of America

U.S.C. .......................... United States Code 

USSGL ........................ U.S. Standard General Ledger

USDA.......................... United States Department of Agriculture
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Exhibit A: Summary of Open Recommendations from Prior Years

Report 50401-0011-11, Department of Agriculture’s Consolidated Balance Sheet for Fiscal 

Year 2016, dated December 6, 2016.

Finding 3: Controls Over Financial Reporting Can be Strengthened

Recommendation 1

Provide additional oversight to ensure that controls over financial reporting are strengthened and 

maintained, including those over ULOs and transactions resulting in negative (abnormal) fund 

balances.

Recommendation 2 

Provide oversight to ensure that property is classified properly, including Work-In-Progress and 

lease agreements.

Departmental Status

OCFO stated both recommendations are in the process of being closed. 

OIG Results 

OIG did not identify similar deficiencies during our review of the fiscal year 2017 financial 

statements in regards to abnormal balances and property. However, we continue to find similar 

deficiencies related to ULOs and have issued a repeat Finding 3 and recommendation. 
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AUDIT REPORT 50401-0013-11 17

Exhibit B: Status of Prior Year Material Weaknesses and 

Significant Deficiencies

This table reports the fiscal year 2017 status of material weaknesses and significant deficiencies 

reported in fiscal year 2016. 

Control Deficiency 2016 Status 2017 Status

Overall Financial 

Management Material Weakness Material Weakness

Overall Information 

Technology Security Program Material Weakness Material Weakness

Financial Reporting Controls Significant Deficiency Significant Deficiency
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Exhibit C: Status of Prior Year Noncompliance Findings 

Report 50401-0011-11, U.S. Department of Agriculture’s Consolidated Balance Sheet for 

Fiscal Year 2016, dated December 6, 2016. 

Finding 4: Lack of Substantial Compliance with FFMIA Requirements 

Reported Noncompliance

The Department reported a lack of substantial compliance with the FFMIA requirements. The 

Department reported that it was not compliant with FFMSR, applicable accounting standards, 

USSGL at the transaction level, and FISMA requirements. 

Status

In fiscal year 2017, the Department continued to report substantial noncompliance with FFMSR, 

applicable accounting standards, USSGL at the transaction level, and FISMA requirements, as 

discussed in Finding 4. 

Finding 5: ADA Violations 

Reported Noncompliance

In fiscal year 2016, the Department reported seven actual and two potential ADA violations in its 

Agency Financial Report. Specifically, FS identified an ADA related to the agency’s 

employment of non-U.S. citizens, FSA reported an ADA exceeding OMB approved 

apportionment request by $302,823.57, OAO identified an ADA exceeding the amount available 

for “Outreach and Assistance for Socially Disadvantaged and Veteran Farmers and Ranchers” 

grants, and OCFO obligated funds for IT on four occasions prior to an approved Acquisition 

Approval Request from the CIO. These ADA’s are in the process of being reported to Congress 

and the President. Also, FAS identified a potential ADA with its fiscal year 2009 appropriation 

and CCC identified a potential ADA with expenditures for interest to Treasury that appear to 

have exceeded amounts initially apportioned by OMB. These potential ADA’s are in the process 

of being researched to make final determinations. 

Also in fiscal year 2016, the Department reported a potential ADA by OAO associated with the 

Strikeforce Initiative and a potential ADA by the Office of the Assistant Secretary for Civil 

Rights, however after further research; both agencies determined these were not ADA violations. 

Status

As discussed in Finding 5, this weakness continues to exist. 
USDA Agency Financial Report | 2017

67

AUDIT REPORT 50401-0013-11 19

Agency Response to Auditors Report

Exhibit D: Agency’s Response 

USDA’S

RESPONSE TO AUDIT REPORT
SECTION II | Financial Information

68

United States 

Department of 

Agriculture

Office of the Chief

Financial Officer

1400 

Independence

Avenue, SW

Washington, D.C. 

20250

 November 14, 2017 

TO: Phyllis K. Fong 

Inspector General

Office of Inspector General

FROM: Lynn Moaney /s/

Acting Deputy Chief Financial Officer 

SUBJECT: U.S. Department of Agriculture’s Consolidated Balance Sheet for Fiscal 

Year 2017 

The Department is pleased to respond to your audit report on the Consolidated Balance Sheet for 

fiscal year 2017. 

We concur with the findings in the report. We generally agree with the recommendations in the 

report and will develop corrective action plans with milestones to address the findings within 60 

days.

I would like to express my appreciation for the cooperation and professionalism displayed by 

your staff and your contract auditors during the course of your audit. 
USDA Agency Financial Report | 2017

69

Consolidated Balance Sheet

As of September 30, 2017 ($ in millions)

 

The accompanying notes are an integral part of these statements.
SECTION II | Financial Information

70

Notes to the Consolidated Balance Sheet 

As of September 30, 2017 ($ in millions)

NOTE 1: Significant Accounting 

Policies

ORGANIZATION

USDA provides a wide variety of services in 

the United States and around the world. 

USDA is organized into eight distinct mission 

areas and their agencies that execute these 

missions. 

Listed below are the missions and the 

agencies within each mission including three 

Government corporations: 

Rural Development

• Rural Development (RD) 

ο Alternative Agricultural Research and 

Commercialization Corporation 

(AARC)

Food Safety

Food Safety and Inspection Service (FSIS) 

Marketing and Regulatory Programs (MRP)

• Agricultural Marketing Service (AMS)

• Animal and Plant Health Inspection 

Service (APHIS)

• Grain Inspection, Packers and Stockyards 

Administration (GIPSA) 

Natural Resources and Environment (NRE)

• Forest Service (FS)

Food, Nutrition, and Consumer Services (FNCS)

• Food and Nutrition Service (FNS) 

Farm and Foreign Agricultural Services (FFAS)

• Farm Service Agency (FSA)

ο Commodity Credit Corporation (CCC) 

• Natural Resources Conservation Service 

(NRCS)

• Risk Management Agency (RMA)

ο Federal Crop Insurance Corporation 

(FCIC)

Trade and Foreign Agricultural Affairs (TFAA)

Foreign Agricultural Service (FAS)

Research, Education, and Economics (REE)

• Agricultural Research Service (ARS)

• National Institute of Food and 

Agriculture (NIFA) 

• Economic Research Service (ERS)

• National Agricultural Statistics Service 

(NASS)

PRESENTATION

The Consolidated Balance Sheet for FY 2017 

is presented for audit, in lieu of the basic 

statements on a comparative basis as required 

by OMB Circular A-136, to sustain the 

improvements made from the prior year. 

The Consolidated Statement of Net Cost, 

Consolidated Statement of Changes in Net 

Position and the Combined Statement of 

Budgetary Resources and related notes are 

presented in the Other Information section as 

unaudited. The financial statements 

consolidate all of the agencies’ results. 

The effects of intradepartmental activity and 

balances are eliminated, except for the 
USDA Agency Financial Report | 2017

71

Statement of Budgetary Resources (SBR) that 

is presented on a combined basis. The financial 

statements are prepared in accordance with 

generally accepted accounting principles for 

the Federal Government.

USE OF ESTIMATES

The preparation of financial statements 

requires management to make estimates and 

assumptions that affect the amounts reported 

in the financial statements and accompanying 

notes. Actual results could differ from those 

estimates.

REVENUE AND OTHER FINANCING 

SOURCES

Revenue from exchange transactions is 

recognized when persuasive evidence of an 

arrangement exists, delivery has occurred or 

services have been rendered, sales price is 

fixed or determinable, and collection is 

reasonably assured. In certain cases, the 

prices charged by the Department are set by 

law or regulation, which for program and 

other reasons may not represent full cost. 

Prices set for products and services offered 

through the Department’s working capital 

funds are intended to recover the full costs 

incurred by these activities. Revenue from 

non-exchange transactions is recognized 

when a specifically identifiable, legally 

enforceable claim to resources arises, to the 

extent that collection is probable and the 

amount is reasonably estimable. 

Appropriations are recognized as a financing 

source when used. An imputed financing 

source is recognized for costs subsidized by 

other Government entities. 

INVESTMENTS 

The Department is authorized to invest certain 

funds in excess of its immediate needs in 

Treasury securities. Investments in nonmarketable 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 fiscal 1991 are reported 

based on the present value of the net cashflows 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 fiscal 1992 are valued using 

either the present-value or net realizable 

methods. Under the present-value method, the 

outstanding principal of direct loans is 
SECTION II | Financial Information

72

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. Barter Delivery Obligations (BDO) 

are valued at the net sales proceeds. BDO are 

exchanged for food products to be utilized in 

domestic and export food programs. 

PROPERTY, PLANT AND EQUIPMENT

Property, Plant and Equipment (PP&E) are 

stated at cost less accumulated depreciation. 

Depreciation is determined using the straightline 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. 

FUNDS FROM DEDICATED

COLLECTIONS

In accordance with Statement of Federal 

Financial Accounting Standards (SFFAS) 43, 

Funds from Dedicated Collections, USDA has 

reported the funds from dedicated collections 

for which it has program management 

responsibility when the following three 

criteria are met: 1) a statute committing the 

Federal Government to use specifically 

identified revenues and/or other financing 

sources that are originally provided to the 

Federal Government by a non-Federal source 

only for designated activities, benefits or 

purposes; 2) explicit authority for the fund to 

retain revenues and/or other financing sources 

not used in the current period for future use to 

finance the designated activities, benefits, or 

purposes; and 3) a requirement to account for 

and report on the receipt, use, and retention of 

the revenues and/or other financing sources 

that distinguishes the fund from the Federal 

Government’s general revenues. 

CONTINGENCIES

Contingent liabilities are recognized when a 

past event or exchange transaction has 

occurred, a future outflow or other sacrifice of 

resources is probable, and the future outflow 

or sacrifice of resources is measurable.
USDA Agency Financial Report | 2017

73

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 

Each entity’s full cost should incorporate the 

full cost of goods and services that it receives 

from other entities. The entity providing the 

goods or services has the responsibility to 

provide the receiving entity with information 

on the full cost of such goods or services 

either through billing or other advice.

Recognition of inter-entity costs that are not 

fully reimbursed is limited to material items 

that: 1) are significant to the receiving entity, 

2) form an integral or necessary part of the 

receiving entity’s output, and 3) can be 

identified or matched to the receiving entity 

with reasonable precision. Broad and general 

support services provided by an entity to all 

or most other entities should not be 

recognized unless such services form a vital 

and integral part of the operations or output of 

the receiving entity.

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 non-friable asbestos-related cleanup 

costs; recognition of a liability and related 

expense for those costs that are both probable 

and reasonably estimable; and disclosure of 

information related to friable and non-friable 

asbestos-related cleanup costs that are 

probable but not reasonably estimable in a 

note to the financial statements. 

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, 
SECTION II | Financial Information

74

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. 

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. 

FY 2017

Intragovernmental:

Fund balance with Treasury $ 260

Accounts Receivable 331

Subtotal Intragovernmental 591

With the Public:

Cash and other monetary assets 41

Accounts receivable 144

Subtotal With the Public 185

Total non-entity assets 776

Total entity assets 224,939

Total Assets $ 225,715
USDA Agency Financial Report | 2017 

75

NOTE 3: Fund Balance with Treasury 

Other Fund Types include deposit and clearing accounts. 

FY 2017

Fund Balances:

 Trust Funds $ 429

 Special Funds 22,489

 Revolving Funds 23,578

 General Funds 74,834

 Other Fund Types 242

Total 121,572

NOTE 4: Cash and Other Monetary Assets 

For FY 2017, cash mostly consists of Federal crop insurance escrow of $157 million, deposits in 

transit of $57 million and single family housing escrow of $41 million.

FY 2017

Cash $ 255

NOTE 5: Investments 

FY 2017 Amortized Market

Amortization (Premium) Interest Investments, Value

Method Cost Discount Receivable Net Disclosure

Intragovernmental:

Non-marketable

Par value $ - $ - $ - $ - $ -

Market-based Straight Line 215 - 1 216 216

Total $ 215 $ - $ 1 $ 216 $ 216

With the Public:

AARC $ 3 $ - $ - $ 3 $ 3

Total $ 3 $ - $ - $ 3 $ 3

NOTE 6: Accounts Receivable, Net 

FY 2017

Accounts 

Receivable, 

Gross

Allowance for 

Uncollectible 

Accounts

Accounts 

Receivable, 

Net

Intragovernmental $ 108 $ - $ 108

With the Public 1,317 (162) 1,155

Total $ 1,425 $ (162) $ 1,263
SECTION II | Financial Information

76

NOTE 7: Direct Loans and 

Guarantees, Non-Federal 

Borrowers

DIRECT LOANS

Direct loan obligations or loan guarantee 

commitments made pre-1992 and the resulting 

direct loans or loan guarantees are reported at 

either net present-value or net realizable value. 

Direct loan obligations or loan guarantee 

commitments made post-1991 and the Federal 

Credit Reform Act of 1990 as amended 

govern the resulting direct loan or loan 

guarantees. The Act requires agencies to 

estimate the cost of direct loans and loan 

guarantees at present value for the budget. 

Additionally, the present value of the subsidy 

costs (i.e., interest rate differentials, interest 

subsidies, delinquencies and defaults, fee 

offsets, and other cash flows) associated with 

direct loans and loan guarantees are 

recognized as a cost in the year the loan or 

loan guarantee is disbursed. The net present 

value of loans or defaulted guaranteed loans 

receivable at any point in time is the amount 

of the gross loan or defaulted guaranteed 

loans receivable less the present value of the 

subsidy at that time.

The net present value of Direct Loan and 

Loan Guarantees, Net is not necessarily 

representative of the proceeds that might be 

expected if these loans were sold on the open 

market.

Direct Loan and Loan Guarantees, Net at the 

end of FY 2017 was $99,816 million. Loans 

exempt from the Federal Credit Reform Act 

of 1990 represent $394 million of the total. 

Table 1 illustrates the overall composition of 

the Department’s credit program balance 

sheet portfolio by mission area and credit 

program for FY 2017. 

Beginning in FY 2012, advance payments 

surpassed the loans receivable balance in the 

Rural Utilities Liquidating Fund. This was due 

to an increased volume in advance payments 

and a normal reduction to the Liquidating 

Portfolio. The Omnibus Budget Act of 1987, 

section 313, authorized the accumulation of 

Cushion of Credit (CoC) in the Revolving 

Fund. Borrowers may make advance payments 

up to their liquidating and financing total Rural 

Utilities Service debt. To accurately represent 

the value of Electric and Telecommunication 

assets, RD reports the CoC amounts as a 

separate line item in Table 1. 

During the fiscal year, the gross outstanding 

balance of the direct loans obligated post-1991 

is adjusted by the value of the subsidy cost 

allowance held against those loans. Current 

year subsidy expense, modifications and 

reestimates all contribute to the change of the 

subsidy cost allowance throughout the year. 

The subsidy cost allowance was $4,384 million

during FY 2017. Table 2 shows the subsidy 

cost allowance balances for FY 2017.

Total direct loan subsidy expense is a 

combination of subsidy expense for new 

direct loans disbursed in the current year, 

modifications to existing loans, and interest 

rate and technical reestimates to existing 

loans. Total direct loan subsidy expense in 

FY 2017 was $236 million. Table 3 illustrates 

the breakdown of total subsidy expense for 

FY 2017 by program. 

Direct loan volume was $9,323 million in 

FY 2017. Volume distribution between 

mission area and program is shown in Table 4. 

GUARANTEED LOANS 

Guaranteed loans are administered in 

coordination with conventional agricultural 

lenders for up to 95 percent of the principal 

loan amount. Under the guaranteed loan 
USDA Agency Financial Report | 2017 

77

programs, the lender is responsible for 

servicing the borrower’s account for the life 

of the loan. The Department, however, is 

responsible for ensuring borrowers meet 

certain qualifying criteria to be eligible and 

monitoring the lender’s servicing activities. 

Borrowers interested in guaranteed loans must 

apply to a conventional lender, which then 

arranges for the guarantee with a Department 

agency. Estimated losses on loan and foreign 

credit guarantees are reported at net present 

value as Loan Guarantee Liability. Defaulted 

guaranteed loans are reported at net present 

value as Loans Receivable and Related 

Foreclosed Property, Net. 

Guaranteed loans outstanding at the end of 

FY 2017 were $146,425 million in outstanding 

principal and $130,843 million in outstanding 

principal guaranteed. Table 5 shows the 

outstanding balances by credit program. 

During the fiscal year, the value of the 

guaranteed loans is adjusted by the value of 

the loan guarantee liability held against those 

loans. Current year subsidy expense, 

modification, and reestimates all contribute to 

the change of the loan guarantee liability 

through the year. The loan guarantee liability 

is a combination of the liability for losses on 

pre-1992 guarantees and post-1991 

guarantees. Table 6 shows that total liability 

was $794 million during FY 2017. Table 7

shows the total loan guarantee liability. 

Total guaranteed loan subsidy expense is a 

combination of subsidy expense for new 

guaranteed loans disbursed in the current 

year, modifications to existing loans, and 

interest rate and technical reestimates to 

existing loans. Total guaranteed loan subsidy 

expense in FY 2017 was negative 

$548 million. Table 8 illustrates the 

breakdown of total subsidy expense for 

FY 2017 by program. 

Guaranteed loan volume was $25,897 million 

in FY 2017. Volume distribution between 

mission area and program is shown in Table 9. 

ADMINISTRATIVE EXPENSES 

Consistent with the Federal Credit Reform 

Act of 1990, as amended, subsidy cash flows 

exclude direct Federal administrative 

expenses. Administrative expenses for 

FY 2017 are shown in Table 10. 

SUBSIDY RATES 

Subsidy rates are used to compute each year’s 

subsidy expenses. The subsidy rates disclosed 

in Table 11 and Table 12 pertain only to the 

FY 2017 cohorts. These rates cannot be 

applied to the direct and guaranteed loans 

disbursed during the current reporting year to 

yield the subsidy expense. The subsidy 

expense for new loans reported in the current 

year could result from disbursements of loans 

from both current year cohorts and prior-year 

cohorts. The subsidy expense reported in the 

current year also includes reestimates. 

CREDIT PROGRAM DISCUSSION AND 

DESCRIPTIONS 

The Department offers direct and guaranteed 

loans through credit programs in the FFAS 

mission area through the FSA and the CCC, 

and in the RD mission area. 

FARM AND FOREIGN AGRICULTURAL 

SERVICES (FFAS) MISSION AREA 

The FFAS mission area helps keep America’s 

farmers and ranchers in business as they face 

the uncertainties of weather and markets. 

FFAS delivers commodity, credit, 

conservation, disaster, and emergency 

assistance programs that help strengthen and 

stabilize the agricultural economy. FFAS 

contributes to the vitality of the farm sector 
SECTION II | Financial Information 

78

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 needy 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. 

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 2016 to add eligibility for portable 

storage structures, portable equipment, and 

storage and handling trucks, and to reduce the 

down payment and documentation 

requirements for a new “microloan” category 

of FSFLs up to $50,000. 
USDA Agency Financial Report | 2017 

79

FARM AND FOREIGN AGRICULTRUAL SERVICES 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 non-profit organizations and userowned 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, lowering interest 

rate, acceptance of easements, and debt writedowns. 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 lowincome 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. 
SECTION II | Financial Information 

80

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 Biobased 

Product Manufacturing 

Assistance Program Loan 

Guarantees 

Water and Waste Disposal 

Direct Loans, Loan 

Guarantees 

Water and Waste Disposal 

Technical Assistance 

Rural Broadband Direct Loans 

and Loan Guarantees 

Electric and 

Telecommunications Direct 

Loans and Loan Guarantees 

Distance Learning and 

Telemedicine Loans 

EVENTS AND CHANGES HAVING A 

SIGNIFICANT AND MEASURABLE 

EFFECT ON SUBSIDY RATES, SUBSIDY 

EXPENSE, AND SUBSIDY REESTIMATES 

The Federal Credit Reform Act of 1990, as 

amended, governs the proprietary and 

budgetary accounting treatment of direct and 

guaranteed loans. The long-term cost to the 

Government for direct loans or loan 

guarantees is referred to as “subsidy cost.” 

Under the Act, subsidy costs for loans 

obligated beginning in FY 1992 are 

recognized at the net present value of 

projected lifetime costs in the year the loan is 

disbursed. Subsidy costs are revalued 

annually. Components of subsidy include 

interest subsidies, defaults, fee offsets, and 

other cash flows. 

The annual reestimate process updates the 

budget assumptions with actual portfolio 

performance, interest rates, and updated 

estimates for future loan performance. 

The FY 2017 reestimate process resulted in a 

$308 million increase in the post-1991 

estimated cost of the direct loan portfolio and a 

$494 million decrease in the post-1991 

estimated cost of the guaranteed loan portfolio, 

primarily comprised of the following programs. 

Direct Loans 

The Food Aid category had a total reestimate 

of $105 million; $70 million upward and 

$175 million downward. The Debt Reduction 

Fund comprised 30 million of the upward and 

160 million of the downward reestimate. 

The Debt Reduction Fund had not been 

reestimated since FY 2007. The large 

downward reestimate can be attributed to the 

difference between the large cash balances 

that have built up in the years since FY 2007 

as compared to balances of outstanding loans. 

The Electric Program had an overall upward 

reestimate of $194 million as compared to an 

overall upward of $103 million in FY 2016.
USDA Agency Financial Report | 2017 

81

The change in material programs in FY 2017

was comprised primarily of $75 million

upward reestimate in the Federal Financing 

Bank (FFB) program, and an $80 million 

downward reestimate in the FFB Underwriter 

program. The FFB program disbursed less 

funds than what was projected in the previous 

year resulting in a decreased amount of 

projected collection of interest, driving the 

reestimate upward. The trend of upward 

reestimates continued to occur in the FFB 

Underwriters program due to updated interest 

rate projections used in the economic 

assumptions. 

Guaranteed Loans 

The Guaranteed Single Family Housing 

Section 502 Program had an overall 

downward reestimate of $330 million as 

compared to an overall downward of 

$4,231 million in FY 2016. The FY 2017 

downward reestimate was comprised of an 

overall net downward reestimate of 

$36 million in the material programs. This 

resulted from a downward reestimate of 

$101 million, in the Blended component of 

the program, netted to an upward reestimate 

of $65 million, in the Purchased component 

of the program. The blended component’s 

change is mostly attributed to large downward 

reestimates in the last two cohort years due to 

upfront fees charged to borrowers, increasing 

the overall cash balances. The purchased 

component experienced an increase in actual 

defaults in FY 2017 as compared with 

FY 2016 for cohort years 2008 and 2010. 

The Guaranteed Business and Industry 

Program had an overall downward reestimate 

of $171 million in FY 2017 as compared to 

downward of $10 million in FY 2016.

The material programs in FY 2017 

experienced an overall downward reestimate 

of $116 million. The program had a reduction 

in anticipated defaults in later cohort years, 

which lowered the projected subsidy level 

resulting in the overall downward reestimate. 

Loan Modifications 

A modification is any Government action 

different from the baseline assumptions that 

affect the subsidy cost, such as a change in 

the terms of the loan contract. The cost of a 

modification is the difference between the 

present value of the cash flows before and 

after the modification. 

Multi-Family Housing direct loan 

modifications related to the revitalization 

program, which began in FY 2006, continued 

through FY 2017. 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. 

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. 

Foreclosed Property 

Property is acquired largely through 

foreclosure and voluntary conveyance. 

Acquired properties associated with loans are 

reported at their market value at the time of 

acquisition. The projected future cash flows 

associated with acquired properties are used 

in determining the related allowance (at 

present value). 
SECTION II | Financial Information 

82

As of September 30, 2017, foreclosed 

property consisted of 1,145 rural single family 

housing dwellings, with an average holding 

period of 16 months. As of September 30, 

2017, FSA-Farm Loan Program properties 

consist primarily of 99 farms. The average 

holding period for these properties in 

inventory for FY 2017 was 64 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 $15,375 million of Rural 

Housing Service unpaid loan principal as of 

September 30, 2017 were receiving interest 

credit. If those loans receiving interest credit 

had accrued interest at the full-unreduced rate, 

interest income would have been approximately 

$744 million higher for FY 2017. 

At the end of FY 2017, the RD portfolio 

contained approximately 58,524 restructured 

loans with an outstanding unpaid principal 

balance of $2,900 million. At the end of 

FY 2017, the farm loan portfolio contained 

approximately 17,835 restructured loans with 

an outstanding unpaid principal balance of 

$1,264 million. Direct credit and credit 

guarantee principal receivables in the food aid 

and export programs under rescheduling 

agreements as of September 30, 2017 were 

$1,012 million. 
USDA Agency Financial Report | 2017 

83

TABLE 1: Direct Loan and Loan Guarantees, Net 

FY 2017 Loans Present Value of Assets

Direct Loans Receivable, Interest Foreclosed Value Related to

Gross Receivable Property Allowance Loans

Obligated Pre-1992

Farm $ 268 $ 16 $ 5 $ (16) $ 273

Export - - - - -

Food Aid 1,049 13 - (215) 847

Housing 6,642 115 12 (30) 6,739

Community Facility 18 - - - 18

Electric 2,357 12 - (1,460) 909

Telecommunications 114 - - - 114

Water and Environmental 328 3 - - 331

Intermediary Relending 9 - - - 9

Business and Industry - - - - -

Economic Development - - - - -

Pre-1992 Total 10,785 159 17 (1,721) 9,240

Obligated Post-1991

Farm 10,951 169 11 (447) 10,684

Export - - - - -

Food Aid 685 10 - (121) 574

Housing 17,951 143 62 (2,215) 15,941

Community Facility 7,497 53 - (140) 7,410

Electric 45,831 268 - (626) 45,473

Telecommunications 3,826 3 - (7) 3,822

Water and Environmental 12,266 88 - (228) 12,126

Intermediary Relending 370 2 - (90) 282

Business and Industry 42 - - (3) 39

Economic Development 186 - - (14) 172

Post-1991 Total 99,605 736 73 (3,891) 96,523

Cushion of Credit (6,840) - - - (6,840)

Total Direct Loan Program Receivables 103,550 895 90 (5,612) 98,923

Defaulted Guarantee Loans

Pre-1992

Farm - - - - -

Export 2 - - - 2

Food Aid - - - - -

Housing - - - - -

Community Facility - - - - -

Electric - - - - -

Telecommunications - - - - -

Water and Environmental - - - - -

Intermediary Relending - - - - -

Business and Industry - - - - -

Economic Development - - - - -

Pre-1992 Total 2 - - - 2

Post-1991

Farm 166 1 - (164) 3

Export 471 21 - (246) 246

Food Aid - - - - -

Housing 73 1 - (36) 38

Community Facility 7 - - - 7

Electric - - - - -

Telecommunications - - - - -

Water and Environmental - - - - -

Intermediary Relending - - - - -

Business and Industry 247 4 - (48) 203

Economic Development - - - - -

Post-1991 Total 964 27 - (494) 497

Total Defaulted Guarantee Loans 966 27 - (494) 499

Loans Exempt from Credit Reform Act:

Commodity Loans 392 3 - (1) 394

Other Foreign Receivables - - - - -

Total Loans Exempt 392 3 - (1) 394

Total Direct Loan and Loan Guarantees, Net $ 99,816
SECTION II | Financial Information 

84

TABLE 2: Subsidy Cost Allowance Balances (Post-1991) Direct Loans 

Ending balance of the subsidy cost allowance $ 4,384

TABLE 3: Subsidy Expense for Direct Loans by Program and Component 

FY 2017

Interest Fees and Other Subtotal Total Interest Rate Technical Total Total Subsidy

Differential Defaults Collections Other Subsidy Modifications Reestimates Reestimates Reestimates Expense

Direct Loan Programs

Farm $ (38) $ 84 $ (1) $ 3 $ 48 $ - $ (112) $ 188 $ 76 $ 124

Export - - - - - - - 2 2 2

Food Aid - - - - - - - (105) (105) (105)

Housing 53 45 - 6 104 3 (20) 27 7 114

Community Facility (164) 47 - (1) (118) - (5) 65 60 (58)

Electric (104) 6 (14) (33) (145) - 236 (42) 194 49

Telecommunications - 5 - (5) - - (22) 56 34 34

Water and Environmental 48 1 - (22) 27 - 25 18 43 70

Intermediary Relending 5 - - - 5 - (2) (8) (10) (5)

Business and Industry - - - - - - - 6 6 6

Economic Development 4 - - - 4 - 1 - 1 5

Total Direct Loan Subsidy Expense $ (196) $ 188 $ (15) $ (52) $ (75) $ 3 $ 101 $ 207 $ 308 $ 236
USDA Agency Financial Report | 2017 

85

TABLE 4: Total Amount of Direct Loans Disbursed (Post-1991)

FY 2017

Direct Loan Programs

Farm $ 2,398

Export -

Food Aid -

Housing 1,123

Community Facility 1,638

Electric 3,045

Telecommunications 216

Water and Environmental 851

Intermediary Relending 17

Business and Industry 5

Economic Development 30

Total Direct Loans Disbursed $ 9,323

TABLE 5: Guaranteed Loans Outstanding 

Pre-1992 Post-1991 Total Pre-1992 Post-1991 Total

FY 2017

Outstanding 

Principal,

Outstanding 

Principal,

Outstanding 

Principal,

Outstanding 

Principal,

Outstanding 

Principal,

Outstanding 

Principal,

Face Value Face Value Face Value Guaranteed Guaranteed Guaranteed

Loan Guarantee Programs

Farm $ 2 $ 16,380 $ 16,382 $ 2 $ 14,762 $ 14,764 

Export - 1,671 1,671 - 1,638 1,638 

Food Aid - - - - - - 

Housing 1 120,408 120,409 1 108,329 108,330 

Community Facility - 1,129 1,129 - 1,002 1,002 

Electric 3 166 169 3 166 169 

Telecommunications - - - - - - 

Water and Environmental - 114 114 - 101 101 

Intermediary Relending - - - - - - 

Business and Industry 4 6,547 6,551 3 4,836 4,839 

Economic Development - - - - - - 

Total Guarantees Outstanding $ 10 $ 146,415 $ 146,425 $ 9 $ 130,834 $ 130,843 
SECTION II | Financial Information 

86

TABLE 6: Liability for Loan Guarantees (Present Value Method for Pre-1992 Guarantees) 

FY 2017

Liabilities for 

Losses on Pre1992 

Guarantees 

Present Value

Liabilities for Loan 

Guarantees on Post1991 Guarantees 

Present Value

Total Liabilities for 

Loan Guarantees

Loan Guarantee Programs

Farm $ - $ 207 $ 207

Export - 13 13

Food Aid - - -

Housing - 115 115

Community Facility - 43 43

Electric - - -

Telecommunications - - -

Water and Environmental - 1 1

Intermediary Relending - - -

Business and Industry - 415 415

Economic Development - - -

Total Liability for Loan Guarantees $ - $ 794 $ 794

TABLE 7: Loan Guarantee Liability 

Ending balance of the loan guarantee liability $ 794
USDA Agency Financial Report | 2017 

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TABLE 8: Subsidy Expense for Loan Guarantees by Program and Component 

FY 2017

Total

Interest Fees and Other Total Interest Rate Technical Total Subsidy

Loan Guarantee Programs Supplement Defaults Collections Other Subtotal Modifications Reestimates Reestimates Reestimates Expense

Farm $ - $ 32 $ (17) $ - $ 15 $ - $ 2 $ (13) $ (11) $ 4

Export - - 9 (5) 4 - - 5 5 9

Food Aid - - - - - - - - - -

Housing - 708 (846) - (138) - 21 (351) (330) (468)

Community Facility - 4 (1) - 3 - - 12 12 15

Electric - - - - - - - - - -

Telecommunications - - - - - - - - - -

Water and Environmental - - - - - - - - - -

Intermediary Relending - - - - - - - - - -

Business and Industry - 109 (47) - 62 - 2 (172) (170) (108)

Economic Development - - - - - - - - - -

Total Loan Guarantee Subsidy Expense $ - $ 853 $ (902) $ (5) $ (54) $ - $ 25 $ (519) $ (494) $ (548)

TABLE 9: Guaranteed Loans Disbursed 

Principal, Face 

Value Disbursed

Principal, 

Guaranteed 

Disbursed

Loan Guarantee Programs

Farm $ 3,640 $ 3,280

Export 1,745 1,709

Food Aid - -

Housing 19,009 17,108

Community Facility 92 81

Electric - -

Telecommunications - -

Water and Environmental 8 7

Intermediary Relending - -

Business and Industry 1,403 1,084

Economic Development - -

Total Guaranteed Loans Disbursed $ 25,897 $ 23,269

FY 2017
SECTION II | Financial Information 

88

TABLE 10: Administrative Expenses 

FY 2017

Direct Loan Programs $ 520

Guaranteed Loan Programs 504

Total Administrative Expenses $ 1,024

TABLE 11: Subsidy Rates for Direct Loans (percentage) 

FY 2017 Interest 

Differential Defaults

Fees and 

Other 

Collections Other Total

Direct Loan Programs

Farm Ownership (1.11) 0.14 - (0.64) (1.61)

Farm Operating (3.00) 6.97 - 0.29 4.26

Emergency Disaster (3.87) 9.27 - 0.20 5.60

Indian Tribe Land Acquisition (21.54) - - - (21.54)

Boll Weevil Eradication (0.52) - - (0.14) (0.66)

Farm Storage Facility Loan Program (1.01) 0.02 (0.27) (0.05) (1.31)

Sugar Storage Facility Loan Program (2.22) 0.03 - (0.01) (2.20)

Multi-Family Housing Relending Demo 32.41 - - (0.03) 32.38

Multi-Family Housing Revitalization Seconds 56.65 0.43 - (0.06) 57.02

Multi-Family Housing Revitalization Zero 51.14 0.34 - (0.19) 51.29

Community Facility Loans (5.65) 3.44 - (0.34) (2.55)

Community Facility Relending (13.85) 8.42 - 1.60 (3.83)

Section 502 Single-Family Housing 1.83 4.71 - 0.23 6.77

Section 515 Multi-Family Housing 30.03 0.66 - (1.08) 29.61

Section 504 Housing Repair 17.73 (0.03) - (3.76) 13.94

Section 514 Farm Labor Housing 29.96 0.26 - (0.65) 29.57

Single-Family Housing Credit Sales (9.42) 2.27 - 4.79 (2.36)

Rural Microenterprise Direct Loans 9.72 2.68 - - 12.40

Intermediary Relending Program 29.09 1.61 - (1.70) 29.00 

Rural Economic Development Loans 14.24 0.02 - (0.03) 14.23 

Water and Waste Disposal Loans 9.40 0.08 - (5.14) 4.34

FFB Electric Loans (4.34) 0.02 - (0.61) (4.93)

Treasury Telecommunication Loans 0.18 0.40 - 0.32 0.90

FFB Telecommunications Loans 0.03 0.28 - (2.85) (2.54)

FFB Guaranteed Underwriting - 1.45 (5.23) - (3.78) 

Rural Energy Savings Program 13.59 1.27 - (0.43) 14.43 

Broadband Treasury Loans 0.18 16.59 - (0.13) 16.64 
USDA Agency Financial Report | 2017 

89

TABLE 12: Subsidy Rates for Loan Guarantees (percentage) 

FY 2017 Interest 

Differential Defaults

Fees and 

Other 

Collections Other Total

Guaranteed Loan Programs

Farm Ownership—Unsubsidized - 1.17 (1.24) - (0.07) 

Farm Operating—Unsubsidized - 2.34 (1.27) - 1.07 

Conservation—Guaranteed - 0.98 (1.30) - (0.32) 

GSM 102 - 0.39 (0.63) - (0.24) 

Export Guarantee Program—Facilities - 0.65 (4.61) - (3.96) 

Community Facility Loan Guarantees - 3.12 (0.88) - 2.24 

Guaranteed 538 Multi-Family Housing - 3.99 (7.52) - (3.53) 

Guaranteed 502 Single-Family Housing - 3.49 (4.25) - (0.76) 

Business and Industry Loan Guarantees - 7.75 (3.91) - 3.84 

Renewable Energy Loan Guarantees - 5.91 (1.27) - 4.64 

Section 9003 Loan Guarantees - 24.09 (3.72) 0.44 20.81 

Water and Waste Disposal Loans - 1.35 (0.87) - 0.48 

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. 

(Quantities In Millions)

Commodities: Unit of Measure Quantity Value

Corn Meal Pounds 2 $ 1

Blended Foods Pounds 4 2

Dry Edible Beans Cwt. - -

Dry Whole Peas Cwt. - 6

Emergency Food Ration Bars Pounds - -

Grain Sorghum Bushels - 2

Lentils Dry Cwt. - -

Nonfat Dry Milk Pounds - -

Rice Products Cwt., Pounds - 1

Meat Pounds - -

Vegetable Oil Pounds 2 1 1 3

Wheat Products Bushels, Pounds - -

Other Various XXXX 1 0

Total Commodities XXXX $ 3 5

Allowance for losses -

Barter Delivery Obligations (BDO) -

Total Inventory and Related Property, Net $ 3 5

Ending Inventory

FY 2017
SECTION II | Financial Information 

90

NOTE 9: General Property, Plant, and Equipment (PP&E), Net 

FY 2017 Useful Net

Life Accumulated Book

Category (Years) Cost Depreciation Value

Land and Land Rights $ 70 $ - $ 70

Improvements to Land 10 - 50 757 (733) 24

Construction-in-Progress 47 - 47

Buildings, Improvements and Renovations 15 - 30 3,094 (1,906) 1,188

Other Structures and Facilities 15 - 50 1,844 (1,613) 231

Equipment 5 - 20 1,777 (1,298) 479

Assets Under Capital Lease 3 - 20 34 (28) 6

Leasehold Improvements 10 80 (75) 5

Internal-Use Software 5 - 8 1,185 (955) 230

Internal-Use Software in Development 74 - 74

Total $ 8,962 $ (6,608) $ 2,354

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 multipleuse 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: 
USDA Agency Financial Report | 2017 

91

Priority Heritage Assets (PHA): Heritage 

assets of distinct public value that are, or 

should be, actively maintained, and meet one 

or more of the following criteria: 

• The property is recognized through an 

official designation, such as a listing on 

the National Register of Historic Places, 

State register, etc. 

• The property is recognized through prior 

investment in preservation, interpretation, 

and use. Any improvement to a PHA that 

meets real property designation criteria is 

considered real property. 

• The property is recognized in an Agencyapproved 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 greater 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. 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, the NAL 

serves as the U.S. center for the international 

agricultural information system. 

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 provide forest visitors 
SECTION II | Financial Information 

92

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. 

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 
USDA Agency Financial Report | 2017 

93

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 

FY 17 (In Units)

Ending Balance

Heritage Assets

National Forests 154

National Grasslands 2 0

Other Sites 175

Research Centers 3 4

Library Collections 1

Total 384

Stewardship Land

National Forests 154

National Grasslands 2 0

Research and Experimental Areas 3

National Preserves and Other Areas 2

Conservation Easements 17,954

Total 18,133

NOTE 11: Other Assets 

In FY 2017, other assets included investments 

in trust for loan asset sales of $37 million. 

FY 2017

Intragovernmental:

Advances to Others $ 3

Subtotal Intragovernmental 3

With the Public:

Advances to Others 161

Other Assets 37

Total Other Assets $ 201
SECTION II | Financial Information 

94

NOTE 12: Liabilities Not Covered By Budgetary Resources 

In FY 2017, other intragovernmental liabilities not covered by budgetary resources included 

accruals for Federal Employee Compensation Act (FECA) of $153 million, contract disputes 

claims payable to Treasury’s Judgment Fund of $27 million, unemployment compensation of 

$15 million, and custodial of $11 million. 

In FY 2017, other liabilities with the public not covered by budgetary resources included future 

funded indemnity costs of $7,748 million, estimated underwriting gain on crop insurance of 

$994 million, unfunded leave of $613 million, contingent liabilities of $509 million, Payments to 

States of $77 million, single family housing escrow of $41 million, loans paid in advance for 

multi-family housing of $24 million, and clearing accounts of $7 million. 

FY 2017

Intragovernmental:

Other $ 206

Subtotal Intragovernmental 206

With the Public:

Accounts Payable -

Federal employee and veterans' benefits 901

Environmental and disposal liabilities 201

Other 10,013

Subtotal With the Public 11,115

Total liabilities not covered by budgetary resources 11,321

Total liabilities covered by budgetary resources 153,032

Total Liabilities $ 164,353

NOTE 13: Debt 

FY 2017 Ending Balance

Intragovernmental

Debt to the Treasury $ 72,598

Debt to the Federal Financing Bank 45,433

Total Intragovernmental 118,031

Agency Debt:

Held by the Public -

Total Debt $ 118,031
USDA Agency Financial Report | 2017

95

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 2017, FS 

estimates the liability for total cleanup costs 

for sites known to contain hazardous waste to 

be $2 million, based on actual cleanup costs at 

similar sites. In FY 2017, CCC estimates the 

liability for total cleanup costs for sites known 

to contain hazardous waste to be $21 million, 

based on actual cleanup costs at similar sites. 

CCC estimates the range of potential future 

losses due to remedial actions to be between 

$21 million and $156 million. These estimates 

will change as new sites are discovered, 

remedy standards change, and new 

technology is introduced. 

In FY 2017, ARS estimated the liability for 

cleanup of the Beltsville Agricultural 

Research Center (BARC) to be $21 million. 

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 2017, the Department 

estimated its liability for asbestos-related 

cleanup of real property to be $157 million. 

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.

NOTE 15: Other Liabilities

In FY 2017, other liabilities with related 

budgetary obligations with the public include 

Agricultural Risk Coverage of $3,779 million; 

Price Loss Coverage of $3,349 million; 

Grants, Subsidies, and Contributions of 

$3,205 million; Conservation Reserve 

Program of $1,743 million; underwriting 

gains on crop insurance of $2,583 million; 

indemnity payments not yet disbursed of 

$158 million; and other accrued liabilities of 

$1,011 million. 

In FY 2017, other liabilities without related 

budgetary obligations with the public include 

estimated underwriting gains on crop 

insurance of $994 million, Payments to States 

of $77 million, single family housing escrow 

of $41 million, loans paid in advance for 

multi-family housing of $24 million, and 

other accrued liabilities of $4 million.
SECTION II | Financial Information 

96

FY 2017 Non-Current Current Total

Intragovernmental:

Other Liabilities With Related Budgetary Obligations $ - $ 4 $ 4

Employer Contributions and Payroll Taxes - 8 3 8 3

Unfunded FECA Liability 8 2 7 2 154

Other Unfunded Employment Related Liability - 1 5 1 5

Liability for Advances and Prepayments - 3 9 3 9

Liability for Nonfiduciary Deposit Funds and Undeposited Collections - 1 0 1 0

Liability for Clearing Accounts - (84) (84)

Custodial Liability - 6 2 6 2

Liability for Non-entity Assets Not Reported on the Statement of Custodial Activities - 10,326 10,326

Other Liabilities Without Related Budgetary Obligations 2 7 - 2 7

Subtotal Intragovernmental 109 10,527 10,636

With the Public:

Other Liabilities With Related Budgetary Obligations - 15,828 15,828

Accrued Funded Payroll and Leave - 348 348

Unfunded Leave - 613 613

Liability for Advances and Prepayments - 145 145

Other Deferred Credits - 715 715

Liability for Nonfiduciary Deposit Funds and Undeposited Collections - 417 417

Liability for Clearing Accounts - (7) (7)

Actuarial Liability for Federal Insurance and Guarantee Programs - 7,748 7,748

Contingent Liabilities - 509 509

Capital Lease Liability 5 2 7

Other Liabilities Without Related Budgetary Obligations 1,018 122 1,140

Subtotal With the Public 1,023 26,440 27,463

Total Other Liabilities $ 1,132 $ 36,967 $ 38,099

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 $63 million. This 

agreement is still in effect and as a result, 

USDA activities located in the Headquarters 

complex are not billed for rental costs. 
USDA Agency Financial Report | 2017 

97

FY 2017

Capital Leases:

Summary of Assets Under Capital Leases

Land and Building $ 34

Machinery and Equipment -

Accumulated Amortization (28)

Future Payments Due:

Land & Buildings Machinery & 

Equipment

Other Totals

Fiscal Year

2018 6 - - 6

2019 5 - - 5

2020 4 - - 4

2021 3 - - 3

2022 3 - - 3

After 5 Years 1 - - 1

Total Future Lease Payments 22 - - 22

Less: Imputed Interest 11 - - 11

Less: Executory Costs 4 - - 4

Less: Lease Renewal Options - - - -

Net Capital Lease Liability 7 - $ - 7

Lease liabilities covered by budgetary resources 7

Operating Leases:

Future Payments Due:

Fiscal Year Land & Buildings Machinery & 

Equipment

Other Totals

2018 127 - - 127

2019 108 - - 108

2020 87 - - 87

2021 75 - - 75

2022 62 - - 62

After 5 Years 214 - - 214

Total Future Lease Payments $ 673 $ - $ - $ 673

NOTE 17: Commitments and 

Contingencies 

The Department is subject to various claims 

and contingencies related to lawsuits as well 

as commitments under contractual and other 

commercial obligations. 

For cases in which payment has been deemed 

probable and for which the amount of potential 

liability has been estimated, $509 million has 

been accrued in the financial statements as of 

September 30, 2017. 

No amounts have been accrued in the 

financial statements for claims where the 

amount is uncertain or where the probability 

of judgment against USDA is remote. The 

Department’s potential liability for claims 

where a judgment against the Department is 

reasonably possible ranges from $43 million 

to $131 million as of September 30, 2017.

Commitments to extend loan guarantees are 

estimated to be $5,624 million in FY 2017.

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. 
SECTION II | Financial Information 

98

AGRICULTURAL MARKETING SERVICE 

(AMS) 

Funds for Strengthening Markets, Income, 

and Supply 

This fund is used to purchase commodities for 

schools and elderly feeding programs, to 

provide goods and other necessities in 

emergencies and disasters, and to purchase 

agricultural commodities to stabilize markets. 

The fund is permanently financed by statutory 

transfer of an amount equal to 30 percent of 

customs receipts collected during each calendar 

year and is automatically appropriated for 

expanding outlets for perishable, non-price 

supported commodities. An amount equal to 

30 percent of receipts collected on fishery 

products is transferred to the Food and Nutrition 

Service and is used to purchase commodities 

under section 6 of the National School Lunch 

Act and other authorities specified in the child 

nutrition appropriation. Funds are available 

under section 32 of the Act of August 24, 1935, 

as amended (7 U.S.C. 612c). 

Expenses and Refunds, Inspection and 

Grading of Farm Products 

The commodity grading programs provide 

grading, examination, and certification 

services for a wide variety of fresh and 

processed food commodities using federally 

approved grade standards and purchase 

specifications. This fund is financed by the 

collection of fees charged to producers of 

various food commodities who request, on a 

voluntary basis, inspection and grading of 

agricultural food commodities. This program 

is authorized by the Agricultural Marketing 

Act of 1946 (7 U.S.C. 1621–1627).

ANIMAL PLANT HEALTH INSPECTION 

SERVICE (APHIS) 

Agricultural Quarantine Inspection User Fee 

Account 

This fund is used to record and report 

expenditures and revenue associated with 

operating Agricultural Quarantine Inspection 

(AQI) activities at ports of entry. The Farm 

Bill of 1990, as amended by the Federal 

Agriculture Improvement and Reform Act of 

1996, gave the Animal and Plant Health 

Inspection Service (APHIS) the authority to 

charge user fees for AQI services and to use 

the revenue to fund AQI activities. In March of 

2003, a portion of the AQI program was 

transferred to the Department of Homeland 

Security (DHS); however, APHIS retained the 

authority to collect AQI revenue. APHIS 

transfers a portion of the revenue to DHS 

periodically throughout the year to fund its 

expenditures. The revenue in the fund is 

collected from airlines, air passengers, vessels, 

trucks, and railroad cars that are subject to AQI 

inspection at ports of entry. These user fees are 

an inflow of revenue from the public that is 

used to fund AQI inspections that are required 

by APHIS and DHS. The authority is codified 

in 21 U.S.C. 136(a). 

FOREST SERVICE (FS) 

Cooperative Work 

Cooperative contributions are deposited for 

disbursement in compliance with the terms and 

provisions of the agreement between the 

cooperator and the FS. Cooperators include 

timber purchasers, not-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. 
USDA Agency Financial Report | 2017 

99

Land Acquisition 

Each fiscal year this fund receives a transfer 

of recreation user fees from the Department of 

the Interior’s Land and Water Conservation 

Fund, to be used for the acquisition of land or 

waters, or interest therein, including 

administrative expenses, to carry out the 

provisions of the Land and Water 

Conservation Fund Act of 1965, as amended 

(16 U.S.C. 460l-4-11), pertaining to the 

preservation of watersheds. The Land 

Acquisition program is authorized by the 

Interior and Related Agencies Appropriations 

Act of December 30, 1982 (96 Stat. 1983, 

Public Law 97-394). 

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. 

State, Private and International Forestry, 

Land and Water Conservation Fund 

The Fiscal Year 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, funded 

previously by State and Private Forestry 

general appropriation. To accommodate the 

new financing arrangement and at OMB’s 

request, the U.S. Department of the Treasury 

established a new special fund, “State, Private 

and International Forestry, Land and Water 

Conservation Fund.” The program 

expenditures include grants and an occasional 

land purchase, but no real property will be 

procured or constructed. 

Recreation Fee Demonstration Program 

The Recreation Fee Demonstration Program 

fund receives deposits of recreation fees 

collected from projects that are part of the 

Recreation Fee Demonstration Program. 

These monies are retained and used for 

backlog repair and maintenance of recreation 

areas, sites or projects. These funds are also 

used for interpretation, signage, habitat or 

facility enhancement, resource preservation, 

annual operation, maintenance, and law 

enforcement related to public use of 

recreation areas and sites. The Recreation Fee 

Demonstration Program is authorized by 

16 U.S.C. 4601-6(a). 

National Forest Fund Receipts 

The Act of May 23, 1908, as amended 

(16 U.S.C. 500), requires (with a few 

exceptions) that all receipts from national 

forest activities be aggregated each fiscal year 

in order to calculate the portion which is paid 

to the States in which the national forests are 

located. The payments must be used for 

public schools and roads in the county or 

counties in which the national forests are 

situated. Originally, the States’ portion of 

receipts was 25 percent, but past statutory 

amendments have changed the calculation 

factors from time to time. Receipts include 

revenues from the sale of timber and other 

forest products; fees for grazing, special-use 

permits, power and mineral leases; and 

recreation user fees. 
SECTION II | Financial Information 

100

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 United States Treasury and are 

appropriated and 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. 

Payments to Counties, National Grasslands 

Payments to Counties, Title III, BankheadJones Farm Tenant Act (Act) authorizes 

national grassland or land utilization project 

receipts to be shared through grants with local 

governments for the purposes stated in the Act. 

At the end of each calendar year, 25 percent of 

the net revenues from each national grassland or 

land utilization project are paid to the counties 

in which such lands are located. These 

payments are not in lieu of taxes. Receipts from 

the Act designated as either national grasslands 

or land utilization projects are to be credited to a 

special account. 

Acquisition of Lands to Complete Land 

Exchanges 

As authorized by 7 statutes, this program is 

funded annually by congressional 

appropriation action, with forest revenues 

generated by the occupancy of public land or 

from the sale of natural resources other than 

minerals. All funds appropriated that remain 

unobligated at the end of the fiscal year are 

returned to the receipts of the affected 

national forests. These funds are used to 

purchase land and for related expenditures 

such as title search, escrow, recording, and 

personnel costs when the purchase is 

considered necessary to minimize soil erosion 

and flood damage. This appropriation is 

available for land acquisition within the 

exterior boundaries of the national forests. 

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 
USDA Agency Financial Report | 2017 

101

Knutson-Vandenberg Act, 16 U.S.C. 576); 

and apply the excess to other authorized 

stewardship projects. Finally, the Forest 

Service is required to annually report to the 

Committee of Agriculture, Nutrition, and 

Forestry of the Senate and the Committee on 

Agriculture of the House of Representatives 

on the status and accomplishments of these 

agreements and contracts. 

NATIONAL INSTITUTE OF FOOD AND 

AGRICULTURE (NIFA) 

Native American Institutions Endowment Fund 

The Native American Institutions Endowment 

Fund was authorized by Public Law 103-382 

and provided an initial installment to establish 

an endowment to benefit the 1994 land-grant 

institutions. The public law states that 

“This program will enhance educational 

opportunities for Native Americans by building 

educational capacity at these institutions in the 

areas of student recruitment and retention, 

curricula development, faculty preparation, 

instruction delivery systems, and scientific 

instrumentation for teaching.” While the 

principal (corpus) of the fund cannot be used, 

the interest that is earned on the endowment 

fund investments in Treasury instruments can 

be used for the purposes described above. After 

the close of a fiscal year, the income is 

distributed after making adjustments for the cost 

of administering the fund. 

OTHER 

Financial information is summarized for all 

other funds from dedicated collections with 

total assets less than $50 million listed below. 

Agricultural Marketing Service 

• Perishable Agricultural Commodities Act 

• Wool Research, Development and 

Promotion Trust Fund 

Animal Plant Health Inspection Service 

• Miscellaneous Contributed Funds

• Gifts and Bequests 

Forest Service 

• Roads and Trails for States, National 

Forest Fund 

• Reforestation Trust Fund 

• Timber Sales Pipeline Restoration Fund 

• Operation and Maintenance of Forest 

Service Quarters 

• Timber Roads, Purchaser Elections 

• Range Betterment Fund 

• Acquisition of Lands for National 

Forests, Special Acts

• Receipts for Construction of 

Administrative Improvements- Taos, 

New Mexico, Land Conveyance 

• Payment to Minnesota (Cook, Lake and 

Saint Louis Counties) 

• Licensee Program 

• Resource Management Timber Receipts 

• Quinault Special Management Area 

• MNP Rental Fee Account 

• Land Between the Lakes Management 

Fund 

• Administration of Rights-of-Way and 

Other Land Uses Fund 

• Hardwood Technology Transfer and 

Applied Research Fund 

• Gifts, Donations and Bequests for Forest 

and Rangeland Research 

• Land Between the Lakes Trust Fund 

• Timber Salvage Sales 

• Expenses, Brush Disposal 
SECTION II | Financial Information 

102

• Midewin National Tallgrass Prairie 

Restoration Fund 

• Gifts and Bequests 

Natural Resources Conservation Service 

• Damage Assessment and Restoration 

Revolving Fund 

• Miscellaneous Contributed Funds 

Agricultural Research Service 

• Concessions Fees and Volunteer Services 

• Gifts and Bequests 

• Miscellaneous Contributed Funds 

Rural Development 

• Alternative Agricultural Research and 

Commercialization Revolving Fund 

Foreign Agricultural Service 

• Miscellaneous Contributed Funds 

• Gifts and Bequests 

• Foreign Service National Separation 

Liability Trust Fund 

Grain Inspection, Packers and Stockyards 

Administration 

• Inspection and Weighing Services 

Food Safety and Inspection Service 

• Expenses and Refunds, Inspection of 

Farm Products 

National Agricultural Statistics Service 

• Miscellaneous Contributed Funds 

Economic Research Service 

• Miscellaneous Contributed Funds 

Office of the Secretary 

• Gifts and Bequests 

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 Agency Financial Report | 2017 

103

AMS AMS APHIS FS FS FS FS FS

Funds for 

Strengthening 

Markets, Income, 

and Supply

Expenses and 

Refunds, 

Inspection and 

Grading of Farm 

Products

Agricultural 

Quarantine 

Inspection User 

Fee Account Cooperative Work Land Acquisition

Payments to States, 

National Forests 

Fund

State, Private, 

and International 

Forestry, Land 

and Water 

Conservation 

Fund

Recreation Fee 

Demonstration 

Program

Balance Sheet As of September 30, 2017 12X5209 12X8015 12X5161 12X8028 12X5004 12X5201 12X5367 12X5268

Fund Balance with Treasury $ 546 $ 8 3 $ 224 $ 230 $ 5 0 $ 109 $ 139 $ 9 3

Investments - - - - - - - -

Other Assets 2 1 7 146 1 3 4 2 2 4 4

Total Assets 548 100 370 243 9 2 111 143 9 7

Other Liabilities 2 9 5 6 7 4 7 4 - 5 4 - 3

Total Liabilities 2 9 5 6 7 4 7 4 - 5 4 - 3

Unexpended Appropriations - - - - - - - -

Cumulative Results of Operations 519 4 4 296 169 9 2 5 7 143 9 4

Total Liabilities and Net Position 548 100 370 243 9 2 111 143 9 7

FS FS FS FS FS NIFA

National Forest 

Fund Receipts

Restoration of 

Forest Lands and 

Improvements

Payments to 

Counties, 

National 

Grasslands

Acquisition of 

Lands to 

Complete Land 

Exchanges

Stewardship 

Contracting 

Product Sales

Native American 

Institutions 

Endowment Fund Other Total

Balance Sheet As of September 30, 2017 125008 12X5215 125896 12X5216 12X5540 12X5205

Fund Balance with Treasury $ 108 $ 192 $ 9 2 $ 2 9 $ 4 0 $ 1 6 $ 314 $ 2,265

Investments - - - - - 210 8 218

Other Assets 8 2 - 5 2 1 5 - 1 6 323

Total Assets 116 194 9 2 8 1 5 5 226 338 2,806

Other Liabilities - 1 1 7 - 3 - 6 9 380

Total Liabilities - 1 1 7 - 3 - 6 9 380

Unexpended Appropriations - - - - - 155 1 156

Cumulative Results of Operations 116 193 7 5 8 1 5 2 7 1 268 2,270

Total Liabilities and Net Position 116 194 9 2 8 1 5 5 226 338 2,806
SECTION II | Financial Information 

104

Required Supplementary Stewardship 

Information 

Stewardship Investments (Unaudited) 

FY 2017

Expense

Non-Federal Physical Property:

Food and Nutrition Service

Supplemental Nutrition Assistance Program $ 21

Special Supplemental Nutrition Program 6

National Institute of Foods and Agriculture

Extension 1890 Facilities Program 20

Total Non-Federal Property $ 47

Human Capital:

National Institute of Foods and Agriculture

Higher Education and Extension Programs $ 564

Food and Nutrition Service

Supplemental Nutrition Assistance Program 83

Agricultural Research Service

National Agricultural Library 25

Risk Management Agency

Risk Management Education 10

Total Human Capital $ 682
USDA Agency Financial Report | 2017 

105

FY 2017

Expense

Research and Development:

Basic Research: 

Agricultural Research Service

Human Nutrition $ 43

Product Quality/Value Added 51

Livestock Production 44

Crop Production 112

Food Safety 56

Livestock Protection 47

Crop Protection 99

Environmental Stewardship 108

National Institute of Foods and Agriculture

Land-grant University System 809

Forest Service 62

Total Basic Research 1,431$ 

Applied Research: 

Agricultural Research Service

Human Nutrition $ 35

Product Quality/Value Added 40

Livestock Production 36

Crop Production 90

Food Safety 45

Livestock Protection 38

Crop Protection 78

Environmental Stewardship 86

National Institute of Foods and Agriculture

Land-grant University System 300

Forest Service 244

Economic Research Service

Economic and Social Science 86

National Agricultural Statistics Service

Statistical 5

Total Applied Research 1,083$ 

Development: 

Agricultural Research Service

Human Nutrition 9$ 

Product Quality/Value Added 10

Livestock Production 9

Crop Production 22

Food Safety 11

Livestock Protection 9

Crop Protection 20

Environmental Stewardship 22

National Institute of Foods and Agriculture

Land-grant University System 510

Forest Service 3

National Agricultural Statistics Service

Statistical 4

Total Development $ 629

Total Research and Development 3,143$ 
SECTION II | Financial Information 

106

NON-FEDERAL PHYSICAL 

PROPERTY 

FOOD AND NUTRITION SERVICE (FNS) 

FNS’ non-Federal physical property consists of 

computer systems and other equipment 

obtained by State and local governments for the 

purpose of administering the SNAP. The total 

SNAP expense for ADP Equipment & Systems 

has been reported as of the date of FNS’ 

financial statements. FNS’ non-Federal physical 

property also consists of computer systems and 

other equipment obtained by the State and local 

governments for the purpose of administering 

the Special Supplemental Nutrition Program for 

Women, Infants, and Children. 

NATIONAL INSTITUTE OF FOOD AND 

AGRICULTURE (NIFA) 

The Extension 1890 facilities program 

supports the renovation of existing buildings 

and the construction of new facilities as well 

as computers and equipment purchases that 

permit faculty, students, and communities to 

benefit fully from the partnership between 

USDA and the 1890 Land-Grant Universities. 

HUMAN CAPITAL 

NATIONAL INSTITUTE OF FOOD AND 

AGRICULTURE 

The higher education programs include 

graduate fellowship grants, competitive 

challenge grants, secondary/2-year 

postsecondary grants, Hispanic serving 

institutions education grants, a multicultural 

scholars program, a Native American 

institutions program, a Native American 

institutions endowment fund, an Alaska 

Native serving and a Native Hawaiian serving 

institutions program, resident instruction 

grants and distance education grants for 

insular areas, and a capacity building program 

at the 1890 institutions. These programs 

enable universities to broaden their curricula, 

increase faculty development and student 

research projects, and increase the number of 

new scholars recruited in the food and 

agriculture sciences. NIFA also supports 

extension-related work at 1862 and 1890 

land-grant institutions throughout the country 

through formula and competitive programs. 

FOOD AND NUTRITION SERVICE 

FNS’ human capital consists of employment 

and training (E&T) for SNAP. The E&T 

program requires recipients of SNAP benefits 

to participate in an employment and training 

program as a condition to SNAP eligibility. 

Outcome data for the E&T program is only 

available through the third quarter. As of this 

period, FNS’ E&T program has placed 

369,576 work registrants subject to the 

3-month SNAP participant limit and 947,487 

work registrants not subject to the limit in 

either job-search, job training, job-workfare, 

education, or work experience. 

AGRICULTURAL RESEARCH SERVICE 

(ARS) 

The National Agricultural Library (NAL) 

provides services directly to the staff of USDA 

and to the public, primarily via its website, 

https://www.nal.usda.gov. As the world’s 

leading agricultural library, NAL has expertise 

in information and knowledge management, 

and a wide variety of subject areas, including 

nutrition and food safety, animal welfare, 

invasive species, lifecycle assessment, and 

long-term agroecosystem research. 

RISK MANAGEMENT AGENCY (RMA) 

Federal Crop Insurance Corporation (FCIC) 

has formed partnerships with NIFA, the 

Commodity Futures Trading Commission, the 
USDA Agency Financial Report | 2017 

107

USDA National Office of Outreach, the 

Economic Research Service (ERS), and 

private industry to leverage the Federal 

Government’s funding of its Risk 

Management Education (RME) program by 

using both public and private organizations to 

help educate their members in agricultural 

risk management. RME expanded State and 

Regional education partnerships; encouraged 

the development of information and 

technology-based decision aids; facilitated 

local crop insurance education and risk 

management training workshops throughout 

the Nation through cooperative agreements 

with educational institutions and communitybased outreach organizations. 

During fiscal year 2017, the RME program 

worked toward its goals by funding risk 

management sessions, most of which directly 

target producers. The number of producers 

reached through these sessions is approximately 

130,173 in fiscal year 2017. In addition to 

reaching producers, some training sessions 

helped those who work with producers (such as 

lenders, agricultural educators, and other 

agricultural professionals) to better understand 

those areas of risk management with which they 

may be unfamiliar. Total RME obligations 

incurred by FCIC were approximately 

$10 million in fiscal year 2017. 

RESEARCH AND 

DEVELOPMENT 

AGRICULTURAL RESEARCH SERVICE 

(ARS) 

ARS’ mission is to conduct research to 

develop and transfer solutions to agricultural 

problems of high national priority and provide 

information access and dissemination to: 

ensure high quality, safe food, and other 

agricultural products; assess the nutritional 

needs of Americans; sustain a competitive 

agricultural economy; enhance the natural 

resource base and the environment; and 

provide economic opportunities for rural 

citizens, communities, and society as a whole. 

New Products/Product Quality/Value Added 

ARS has active research programs directed 

toward: improving the efficiency and 

reducing the cost for the conversion of 

agricultural products into biobased products 

and biofuels; developing new and improved 

products for domestic and foreign markets; 

and providing higher quality, healthy foods 

that satisfy consumer needs in the United 

States and abroad. 

Livestock Production 

ARS’ research program is directed toward 

fostering an abundant, safe, nutritionally 

wholesome, and competitively priced supply 

of animal products produced in a viable, 

competitive, and sustainable animal 

agriculture sector of the U.S. economy by: 

safeguarding and utilizing animal genetic 

resources, associated genetic and genomic 

databases, and bioinformatic tools; 

developing a basic understanding of food 

animal physiology to address priority issues 

related to animal production, animal wellbeing, and product quality and healthfulness; 

and developing information, best management 

practices, novel and innovative tools, and 

technologies that improve animal production 

systems, enhance human health, and ensure 

domestic food security. The research is 

heavily focused on the development and 

application of genomics technologies to 

increase the efficiency and product quality of 

beef, dairy, swine, poultry, aquaculture, and 

sheep systems. Areas of emphasis include 

increasing the efficiency of nutrient 

utilization, increasing animal well-being and 

reducing stress in production systems, 

increasing reproductive rates and breeding 
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animal longevity, developing and evaluating 

non-traditional production systems (e.g., 

organic and natural), and evaluating and 

conserving animal genetic resources. 

Crop Production 

ARS’ program focuses on developing and 

improving ways to reduce crop losses while 

protecting and ensuring a safe and affordable 

food supply. The program concentrates on 

production strategies that are environmentally 

friendly, safe to consumers, and compatible 

with sustainable and profitable crop production 

systems. Research activities are directed at 

safeguarding and utilizing plant genetic 

resources and their associated genetic, 

genomic, and bioinformatic databases that 

facilitate selection of varieties and/or 

germplasm with significantly improved traits. 

Research activities attempt to minimize the 

impacts of crop pests while maintaining 

healthy crops and safe commodities that can be 

sold in markets throughout the world. 

The agency is conducting research to discover 

and exploit naturally occurring and engineered 

genetic mechanisms for plant pest control, 

develop agronomic germplasm with durable 

defensive traits, and transfer genetic resources 

for commercial use. ARS is also providing 

taxonomic information on invasive species that 

strengthens prevention techniques, aids in 

detection/identification of invasive pests, and 

increases control through management tactics 

that restore habitats and biological diversity. 

Food Safety 

ARS’ research program is designed to yield 

science-based knowledge on the safe 

production, storage, processing, and handling 

of plant and animal products, and on the 

detection and control of pathogenic bacteria 

and fungi, parasites, chemical contaminants, 

and plant toxins. All of ARS’ research 

activities involve a high degree of cooperation 

and collaboration with USDA’s Research, 

Education, and Economics agencies, as well 

as with the Food Safety and Inspection 

Service (FSIS), Animal and Plant Health 

Inspection Service (APHIS), the Food and 

Drug Administration (FDA), the Centers for 

Disease Control and Prevention (CDC), the 

Department of Homeland Security (DHS), 

and the Environmental Protection Agency 

(EPA). The agency also collaborates in 

international research programs to address 

and resolve global food safety issues. Specific 

research efforts are directed toward 

developing new technologies that assist ARS 

stakeholders and customers, including 

regulatory agencies, industry, and commodity 

and consumer organizations in detecting, 

identifying, and controlling foodborne 

diseases that affect human health. 

Livestock Protection 

ARS’ program is directed at protecting and 

ensuring the safety of the Nation’s agriculture 

and food supply through improved disease 

detection, prevention, control, and treatment. 

Basic and applied research approaches are 

used to solve animal health problems of high 

national priority. Emphasis is given to 

methods and procedures to control animal 

diseases through the discovery and 

development of diagnostics, vaccines, 

biotherapeutics, animal genomics 

applications, disease management systems, 

animal disease models, and farm biosecurity 

measures. The research program has the 

following strategic objectives: establish ARS 

laboratories into a fluid, highly effective 

research network to maximize use of core 

competencies and resources; use specialized 

high containment facilities to study zoonotic 

and emerging diseases; develop an integrated 

animal and microbial genomics research 

program; establish core competencies in 

bovine, swine, ovine, and avian immunology; 
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launch a biotherapeutic discovery program 

providing alternatives to animal drugs; build a 

technology driven vaccine and diagnostic 

discovery research program; develop core 

competencies in field epidemiology and 

predictive biology; establish a best-in-class 

training center for our Nation’s veterinarians 

and scientists; and develop a model 

technology transfer program to achieve the 

full impact of ARS research discoveries. 

The ARS animal research program includes 

the following core components: biodefense 

research, animal genomics and immunology, 

zoonotic diseases, respiratory diseases, 

reproductive and neonatal diseases, enteric 

diseases, parasitic diseases, and transmissible 

spongiform encephalopathies. 

Crop Protection 

ARS’ Crop Protection research program is 

directed to protect crops from insect and 

disease loss through research to understand 

pest and disease transmission mechanisms, and 

to identify and apply new technologies that 

increase our understanding of virulence factors 

and host defense mechanisms. The program’s 

research priorities include: identification of 

genes that convey virulence traits in pathogens 

and pests; factors that modulate infectivity, 

gene functions, and mechanisms; genetic 

profiles that provide specified levels of disease 

and insect resistance under field conditions; 

and mechanisms that reduce the spread of pests 

and infectious diseases. ARS is developing 

new knowledge and integrated pest 

management approaches to control pest and 

disease outbreaks as they occur. Its research 

will improve the knowledge and understanding 

of the ecology, physiology, epidemiology, and 

molecular biology of emerging diseases and 

pests. This knowledge will be incorporated 

into pest risk assessments and management 

strategies to minimize chemical inputs and 

increase production. Strategies and approaches 

will be available to producers to control 

emerging crop diseases and pest outbreaks and 

to address quarantine issues. 

Human Nutrition 

Maintenance of health throughout the lifespan 

along with prevention of obesity and chronic 

diseases via food-based recommendations are 

the major emphases of ARS’ Human 

Nutrition Research Program. These healthrelated goals are based on the knowledge that 

deficiency diseases are no longer the primary 

public health concerns in the United States; 

excessive consumption has become the 

primary nutrition problem in the American 

population. This is reflected by increased 

emphasis on prevention of obesity, from basic 

science through intervention studies to 

assessments of large populations. The 

agency’s research program also studies 

essential nutrients and nonessential, health 

promoting components in foods. To better 

define the role of nutrition in pregnancy and 

growth of children, and for healthier aging, 

four specific areas of research are 

emphasized: nutrition monitoring; the 

scientific basis for dietary recommendations; 

prevention of obesity and related diseases; 

and life stage nutrition and metabolism. 

Environmental Stewardship 

ARS’ research program emphasis is in 

developing technologies and systems that 

support sustainable production and enhance 

the Nation’s vast renewable natural resource 

base. The agency is currently developing the 

scientific knowledge and technologies needed 

to meet the challenges and opportunities 

facing U.S. agriculture in managing water 

resource quality and quantity under different 

climatic regimes, production systems, and 

environmental conditions. 

ARS’ research also focuses on developing 

measurement, prediction, and control 
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technologies for emissions of greenhouse 

gases, particulate matter, ammonia, hydrogen 

sulfide, and volatile organic compounds 

affecting air quality and land-surface climate 

interactions. The agency is a leader in 

developing measurement and modeling 

techniques for characterizing gaseous and 

particulate matter emissions from agriculture. 

In addition, ARS is evaluating strategies for 

enhancing the health and productivity of soils, 

including developing predictive tools to 

assess the sustainability of alternative land 

management practices. Finding mechanisms 

to aid agriculture in adapting to changes in 

atmospheric composition and climatic 

variations is also an important component of 

this program. 

ARS’ range and grazing land research 

objectives include the conservation and 

restoration of the Nation’s range land and 

pasture ecosystems and agroecosystems 

through improved management of fire, 

invasive weeds, grazing, global change, and 

other agents of ecological change. The agency 

is currently developing improved grass and 

forage legume germplasm for livestock, 

conservation, bioenergy, and bioproduct 

systems as well as grazing-based livestock 

systems that reduce risk and increase 

profitability. In addition, ARS is developing 

whole system management strategies to 

reduce production costs and risks. 

National Agricultural Library 

The library provides services directly to the 

staff of USDA and to the public, primarily via 

the NAL website. NAL is the premier library 

for collecting, managing, and disseminating 

agriculture information. It delivered about 57 

million page views and almost 1.5 million 

searches in FY 2017. 

Buildings and Facilities 

ARS has over 100 laboratories, primarily 

located throughout the United States. ARS’ 

facilities are designed to meet the needs of its 

scientists and support personnel to accomplish 

the agency’s mission. 

NATIONAL INSTITUTE OF FOOD AND 

AGRICULTURE (NIFA) 

NIFA participates in a nationwide land-grant 

university system of agriculture related 

research and program planning and 

coordination between State institutions and 

USDA. It assists in maintaining cooperation 

among the State institutions, and between the 

State institutions and their Federal research 

partners. NIFA administers competitive grants 

and capacity/formula payments to State 

institutions to leverage State and local 

funding for agriculture research. 

FOREST SERVICE (FS) 

Forest Service Research & Development 

(R&D) has an integrated portfolio that 

supports achievement of the agency’s 

strategic goals. The FS R&D structure has 

two components: Priority Research Areas and 

Strategic Program Areas (SPAs). 

The Priority Research Areas address urgent 

needs in seven areas: Forest Disturbances, 

Forest Inventory and Analysis, Watershed 

Management and Restoration, Bioenergy and 

Biobased Products, Urban Natural Resources 

Stewardship, Nanotechnology, and Localized 

Needs Research. 

The SPAs are the long-term programs from 

which Priority Research Areas are funded; the 

SPAs are summarized here. 

Wildland Fire and Fuels 

R&D provides managers with the knowledge 

and tools to reduce negative impacts, while 
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111

enhancing the beneficial effects of wildland 

fire, as a natural process. This knowledge and 

these tools are critical to understanding the 

human process of fire and fuels management 

on society and the environment. 

Research focuses on understanding and 

modeling fundamental fire processes; 

interactions of fire with ecosystems; and the 

environmental, social, and economic aspects 

of fire, as well as evaluating the integrated 

management strategies and disturbance 

interactions at multiple scales and the 

application of fire research to address 

management problems. 

Invasive Species 

R&D provides the scientific information, 

methods, and technology to reduce or 

eliminate the introduction, spread, and impact 

of invasive species and to restore or improve 

the functionality of ecosystems affected by 

invasive species. 

Research focuses on non-native plants, 

animals, fish, insects, diseases, invertebrates, 

and other species whose introduction is likely 

to cause economic or environmental harm to 

an ecosystem. 

Water, Air, and Soil 

R&D enables the sustainable management of 

these essential resources by providing clear air 

and safe drinking water, by protecting lives 

and property from wildfire and smoke, and by 

adapting to climate variability and change. 

The program features ecosystem services with 

a high level of integration between water, air, 

and soil research, such as the effects of 

climate variability and change on water 

budgets or carbon sequestration metrics from 

an ecosystem perspective. 

Wildlife and Fish 

R&D relies upon interdisciplinary research to 

inform policy initiatives affecting wildlife and 

fish habitat on private and public lands, and the 

recovery of threatened or endangered species. 

Scientists investigate the complex interactions 

among species, ecosystem dynamics and 

processes, land use and management, and any 

emerging broadscale threats, including global 

climate change, loss of open space, invasive 

species, and disease. 

Resource Management and Use 

R&D provides the scientific and technology 

base to sustainably manage and use forest 

resources and forest fiber-based products. 

Research focuses on the plant sciences, soil 

sciences, social sciences, silviculture, 

productivity, forest and range ecology 

management, harvesting and operations, forest 

and biomass products and utilization, 

economics, urban forestry, and climate change. 

Outdoor Recreation 

R&D promotes human and ecological 

sustainability by researching environmental 

management, activities, and experiences that 

connect people with the natural world. 

Research in outdoor recreation is 

interdisciplinary, focusing on nature-based 

recreation and the changing trends in 

American society; connections between 

recreation visitors, communities, and the 

environment; human benefits and 

consequences of recreation and nature contact; 

the effectiveness of recreation management 

and decision-making; and sustaining 

ecosystems affected by recreational use. 

Inventory and Monitoring 

R&D provides the resource data, analysis, and 

tools needed to monitor forest ecosystems 
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vulnerable to rapid change due to threats from 

fire, insects, disease, natural processes, or 

management actions. From their research, 

scientists determine the status and trend of the 

health of the Nation’s forests and grasslands, 

and the potential impact from climate change. 

Their research integrates the development and 

use of science, technology, and remotely 

sensed data to better understand the 

incidences of forest fragmentation over time 

from changes in land use or from insects, 

disease, fire, and extreme weather events. 

A representative summary of FY 2017 

accomplishments include the following: 

• 46 new interagency agreements and 

contracts 

• 23 interagency agreements and contracts 

continued 

• 1,809 articles published in journals 

• 206 articles published in all other 

publications 

• 5 patents granted 

ECONOMIC RESEARCH SERVICE (ERS) 

ERS provides economic and other social 

science research and analysis for public and 

private decisions on agriculture, food, natural 

resources, and rural America. Research results 

and economic indicators on these important 

issues are fully disseminated through published 

and electronic reports and articles, special staff 

analyses, briefings, presentations and papers, 

databases, and individual contacts. ERS’ 

objective information and analysis helps public 

and private decision makers attain the goals 

that promote agricultural competitiveness, food 

safety and security, a well-nourished 

population, environmental quality, and a 

sustainable rural economy. 

NATIONAL AGRICULTURAL STATISTICS 

SERVICE (NASS) 

NASS conducts research to improve the 

statistical methods and related technologies 

used to produce U.S. agriculture statistics. 

The research agenda has two primary areas of 

emphasis: the National Agriculture Statistics 

Service estimation program and the Census of 

Agriculture program. For each, the goal is the 

development of improved estimates at lower 

cost, with reduced respondent burden, and with 

valid measures of uncertainty. All facets of the 

estimation process are considered, from 

increasing efficiencies in sampling and data 

collection to enhancing the statistical 

methodology used to analyze the data. Two 

high priority items within the research effort 

are exploring approaches to reducing 

respondent burden and model-based estimates. 

The use of previously reported, remotely 

sensed, and administrative data have the 

potential to substantially reduce respondent 

burden, but can also introduce bias. Assessing 

the best ways to use these data and continue to 

produce precise statistics is a major effort. 

Models are used to combine data from 

disparate sources, from sample surveys to 

remote sensing, resulting in improved 

estimates with valid measures of uncertainty. 

Going forward, users of NASS services and 

products will be increasingly dependent upon 

methodological and technological efficiencies. 
USDA Agency Financial Report | 2017 

113

Required Supplementary Information 

DEFERRED MAINTENANCE 

AND REPAIRS (UNAUDITED) 

The Forest Service is steward to nearly 

193 million acres of national forests and 

grasslands within the NFS. On these NFS 

lands, the agency manages major assets that 

are categorized as general PP&E, including 

nearly 40,000 administrative, recreation, and 

research buildings and approximately 27,000 

recreational sites, such as campgrounds, 

picnic areas, trailheads, and interpretive sites. 

Across the NFS, the agency also manages 

over 370,000 miles of roads, of which 

65,000 miles are for passenger vehicles; over 

159,000 miles of trails for motorized and nonmotorized use; nearly 13,340 road and trail 

bridges; and over 1,700 Forest Service-owned 

and Special Use Permitted dam structures. 

ARS owns/manages approximately 15 million 

gross square feet of facility space in 3,000 

buildings on 379,000 acres of land. APHIS 

operates approximately 28 facilities, which 

includes 378 buildings, in the United States 

and 14 facilities/buildings internationally. 

The NRCS portfolio of owned assets 

encompasses 29 sites, including 13 parcels of 

owned land, 224 buildings, and about 221 

other structures. 

Deferred Maintenance & Repairs (DM&R) 

estimates include capitalized PP&E, 

non-capitalized heritage assets, and 

non-capitalized or fully depreciated PP&E. 

No DM&R is reported for stewardship land 

because land is considered to be in acceptable 

condition unless an environmental 

contamination or liability is identified and the 

land cannot be used for its intended purpose. 

Stewardship land easements are excluded 

from DM&R since ownership is retained by 

the landowner. 

DEFINING AND IMPLEMENTING 

MAINTENANCE AND REPAIRS POLICIES 

IN PRACTICE 

Policies for ranking and prioritizing DM&R 

activities for most assets, except bridges, are 

based on condition surveys performed on a 

5 year revolving schedule. Bridge class 

assessments occur on a 2-year revolving 

schedule. To-date, surveys of all 

administrative buildings, dams, bridges, roads 

open to passenger cars, and recreation sites 

have been accomplished. The agency’s 

DM&R for NFS passenger car roads is 

determined annually from random sample 

surveys providing a moderate level of 

confidence in the accuracy of the data 

reported. DM&R is not reported for roads that 

are not part of the passenger-car system. 

ARS, APHIS, and NRCS use similar 

condition surveys to estimate DM&R on all 

major classes of its PP&E and heritage assets. 

RANKING AND PRIORITIZING 

MAINTENANCE AND REPAIRS 

ACTIVITIES 

Maintenance and repair activities are 

prioritized based on condition surveys and 

ranked based on PP&E and heritage assets 

that pose serious threats to public health or 

safety, a natural resource, or the ability of the 

agency to implement its mission. 
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114

FACTORS CONSIDERED IN SETTING 

ACCEPTABLE CONDITION 

The standards for acceptable operating 

condition for various classes of PP&E and 

heritage assets are as follows: 

Conditions of roads and bridges within the 

NFS road system are measured by various 

standards: 

• Federal Highway Administration 

regulations for the Federal Highway 

Safety Act. 

• Best management practices for the 

nonpoint source provisions of the Clean 

Water Act from U.S. Environmental 

Protection Agency and States. 

• Road management objectives developed 

through the National Forest Management 

Act forest planning process. 

• Forest Service directives — Forest 

Service Manual (FSM) 7730, Operation 

and Maintenance; Forest Service 

Handbook (FSH) 7709.56a, Road 

Preconstruction, and FSH 7709.56b, 

Transportation Structures Handbook.

Dams in the NFS are managed according to 

FSM 7500, Water Storage and Transmission, 

and FSH 7509.11, Dams Management 

Handbook. The condition of a dam is 

acceptable when the dam meets current design 

standards and does not have any deficiencies 

that threaten the safety of the structure or public. 

For dams to be rated in acceptable condition, 

the agency needs to restore the dams to the 

original functional purpose, correct unsightly 

conditions, or prevent more costly repairs. 

Buildings in the NFS shall comply with the 

International Family of Building and Related 

Codes, the National Fire Protection 

Association Life Safety Code, the Forest 

Service Health and Safety Handbook, and the 

Occupational Safety Health Administration as 

determined by condition surveys and safety 

inspections. These requirements are found in 

FSM 7310, Buildings and Related Facilities, 

revised November 19, 2004. 

Recreation facilities in the NFS are located 

within recreation sites that range from highly 

developed sites to general forest areas such as 

campgrounds, trailheads, trails, water and 

wastewater systems, interpretive facilities, and 

visitor centers. Recreation sites are managed in 

accordance with Federal laws and regulations 

(Code of Federal Regulations [CFR] 36). 

Detailed management guidelines are contained 

in FSM 2330, Publicly Managed Recreation 

Opportunities, and forest- and regional-level 

user guides. Quality standards for developed 

recreation sites in the NFS were established as 

Meaningful Measures for health and 

cleanliness, settings, safety and security, 

responsiveness, and the condition of the facility. 

Trails and trail bridges in the NFS are 

managed according to Federal law and 

regulations (CFR 36). More specific direction 

is contained in FSM 2350, Trail, River, and 

Similar Recreation Opportunities, and the 

FSH 2309.18, Trails Management Handbook.

ARS, APHIS, and NRCS define acceptable 

condition in accordance with standards 

comparable to those used in private industry 

for buildings and other structures. 
USDA Agency Financial Report | 2017 

115

DEFERRED MAINTENANCE AND REPAIR COSTS 

FY 2017

Ending Balance

Asset Category

General PP&E $ 5,342

Heritage Assets 150

Total $ 5,492
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116

Statement of Budgetary Resources (Unaudited) 

FY 2017 FSA CCC FAS RMA FNS FSIS AMS APHIS GIPSA

Non-Budgetary Non-Budgetary

Financing Financing

Budgetary Accounts Budgetary Accounts Budgetary Budgetary Budgetary Budgetary Budgetary Budgetary Budgetary

Budgetary Resources:

Unobligated balance, brought forward, October 1: $ 429 $ 861 $ 550 $ 143 $ 312 $ 578 39,105$ $ 100 $ 141 $ 599 $ 3 9

Adjustment to unobligated balance brought forward, October 1 (+ or -) (Note 21) - - 7 2 - - - - - - - -

Unobligated balance brought forward, October 1, as adjusted 429 861 622 143 312 578 39,105 100 141 599 3 9

Recoveries of prior year unpaid obligations 7 4 114 3,891 7 3 2 2 1,759 2 2 1 3 6 3 2

Other changes in unobligated balance (+ or -) (31) (744) 109 (34) (8) - (8,005) (6) (3) (11) -

Unobligated balance from prior year budget authority, net 472 231 4,622 116 336 580 32,859 116 151 651 4 1

Appropriations (discretionary and mandatory) 2,017 - 1,958 - 402 5,171 107,466 1,046 1,197 1,320 4 3

Borrowing authority (discretionary and mandatory) - 2,466 14,451 275 - - - - - - -

Spending authority from offsetting collections (discretionary and mandatory) 367 1,023 2 0 145 (1) 3,675 5 9 220 114 207 5 5

Total budgetary resources 2,856 3,720 21,051 536 737 9,426 140,384 1,382 1,462 2,178 139

Status of Budgetary Resources:

New obligations and upward adjustments (total) (Note 24) 2,340 3,043 20,299 350 616 8,846 100,988 1,291 1,262 1,478 9 7

Unobligated balance, end of year: - - - - - - - - - - -

Apportioned, unexpired accounts 368 458 190 4 8 9 2 577 6,851 7 0 132 581 3 3

Exempt from apportionment, unexpired accounts - - 8 3 3 - - - - 1 - -

Unapportioned, unexpired accounts 7 2 219 478 135 (18) - 8,889 - 5 4 6 5

Unexpired unobligated balance, end of year 440 677 751 186 7 4 577 15,740 7 0 187 587 3 8

Expired unobligated balance, end of year 7 6 - 1 - 4 7 3 23,656 2 1 1 3 113 4

Unobligated balance, end of year (total) 516 677 752 186 121 580 39,396 9 1 200 700 4 2

Total budgetary resources 2,856 3,720 21,051 536 737 9,426 140,384 1,382 1,462 2,178 139

Change in Obligated Balances:

Unpaid obligations:

Unpaid obligations, brought forward, October 1 392 484 23,869 125 732 3,415 9,173 154 647 487 1 2

Adjustments to unpaid obligations, start of year (+ or -) (Note 21) - - 8,554 - - - - - - - -

New obligations and upward adjustments 2,340 3,043 20,299 350 616 8,846 100,988 1,291 1,262 1,478 9 7

Outlays (gross)(-) (2,274) (2,914) (19,893) (308) (481) (7,970) (98,816) (1,273) (1,252) (1,449) (93)

Recoveries of prior year unpaid obligations (-) (74) (114) (3,891) (7) (32) (2) (1,759) (22) (13) (63) (2)

Unpaid obligations, end of year 384 499 28,938 160 835 4,289 9,586 150 644 453 1 4

Uncollected payments:

Uncollected payments, Federal sources, brought forward, October 1 (-) (55) (10) (136) (14) (279) - (2) (46) (15) (232) (7)

Change in uncollected payments, Federal sources (+ or -) 7 (3) 1 4 1 3 131 - (2) - (2) (4) 1

Uncollected payments, Federal sources, end of year (-) (48) (13) (122) (1) (148) - (4) (46) (17) (236) (6)

Memorandum (non-add) entries:

Obligated balance, start of year (+ or -) 337 474 32,287 111 453 3,415 9,171 108 632 255 5

Obligated balance, end of year (+ or -) 336 486 28,816 159 687 4,289 9,582 104 627 217 8

Budget Authority and Outlays, Net 

Budget authority, gross (discretionary and mandatory) 2,384 3,489 16,429 420 401 8,846 107,525 1,266 1,311 1,527 9 8

Actual offsetting collections (-) (discretionary and mandatory) (430) (2,068) (7,819) (383) (132) (3,677) (59) (219) (112) (204) (56)

Change in uncollected customer payments from Federal sources 7 (3) 1 4 1 3 131 - (2) - (2) (4) 1

 (discretionary and mandatory) - - - - - - - - - - -

Recoveries of prior year paid obligations (discretionary and mandatory) 1 - 136 - 1 - 1 - - - -

Anticipated offsetting collections (+ or -) (discretionary and mandatory) - - - - - - - - - - -

Budget authority, net (discretionary and mandatory) 1,962 1,418 8,760 5 0 401 5,169 107,465 1,047 1,197 1,319 4 3

Outlays, gross (discretionary and mandatory) 2,274 2,914 19,893 308 481 7,970 98,816 1,273 1,252 1,449 9 3

Actual offsetting collections (discretionary and mandatory) (-) (430) (2,068) (7,819) (383) (132) (3,677) (59) (219) (112) (204) (56)

Outlays, net (discretionary and mandatory) 1,844 846 12,074 (75) 349 4,293 98,757 1,054 1,140 1,245 3 7

Distributed offsetting receipts (-) - (318) 5 (48) (3) - 5 (14) (160) (11) -

Agency outlays, net (discretionary and mandatory) 1,844$ $ 528 12,079$ $ (123) $ 346 4,293$ 98,762$ 1,040$ $ 980 1,234$ $ 3 7
USDA Agency Financial Report | 2017 

117

FY 2017 FS NRCS ARS NIFA ERS NASS RD DO TOTAL

Non-Budgetary Non-Budgetary

Financing Financing

Budgetary Budgetary Budgetary Budgetary Budgetary Budgetary Budgetary Accounts Budgetary Budgetary Accounts

Budgetary Resources:

Unobligated balance, brought forward, October 1: 1,948$ 4,611$ $ 342 $ 520 2$ 1$ 6,908$ $ 14,415 $ 238 56,423$ $ 15,419

Adjustment to unobligated balance brought forward, October 1 (+ or -) (Note 21) - - - - - - - - - 7 2 -

Unobligated balance brought forward, October 1, as adjusted 1,948 4,611 342 520 2 1 6,908 14,415 238 56,495 15,419

Recoveries of prior year unpaid obligations 318 286 3 8 2 9 2 1 3 165 959 1 4 6,723 1,080

Other changes in unobligated balance (+ or -) (145) (15) (10) (8) (1) - (328) (5,367) (4) (8,466) (6,145)

Unobligated balance from prior year budget authority, net 2,121 4,882 370 541 3 1 4 6,745 10,007 248 54,752 10,354

Appropriations (discretionary and mandatory) 6,224 4,521 1,298 1,517 8 8 171 5,311 - 438 140,188 -

Borrowing authority (discretionary and mandatory) - - - - - - - 12,717 - 14,451 15,458

Spending authority from offsetting collections (discretionary and mandatory) 734 3 4 126 3 2 3 2 2 2,865 7,805 1,126 9,658 8,973

Total budgetary resources 9,079 9,437 1,794 2,090 9 4 207 14,921 30,529 1,812 219,049 34,785

Status of Budgetary Resources:

New obligations and upward adjustments (total) (Note 24) 7,787 4,839 1,513 1,503 9 1 207 7,114 22,912 1,472 161,743 26,305

Unobligated balance, end of year: - - - - - - - - - - -

Apportioned, unexpired accounts 1,029 1,774 263 653 - - 6,945 7,174 292 19,850 7,680

Exempt from apportionment, unexpired accounts - - - - - - - - - 8 4 3

Unapportioned, unexpired accounts 257 236 1 (86) - - 744 443 1 5 10,653 797

Unexpired unobligated balance, end of year 1,286 2,010 264 567 - - 7,689 7,617 307 30,587 8,480

Expired unobligated balance, end of year 6 2,588 1 7 2 0 3 - 118 - 3 3 26,719 -

Unobligated balance, end of year (total) 1,292 4,598 281 587 3 - 7,807 7,617 340 57,306 8,480

Total budgetary resources 9,079 9,437 1,794 2,090 9 4 207 14,921 30,529 1,812 219,049 34,785

Change in Obligated Balances:

Unpaid obligations:

Unpaid obligations, brought forward, October 1 2,539 4,600 468 1,999 3 6 4 6 3,927 21,113 438 52,934 21,722

Adjustments to unpaid obligations, start of year (+ or -) (Note 21) - - - - - - - - - 8,554 -

New obligations and upward adjustments 7,787 4,839 1,513 1,503 9 1 207 7,114 22,912 1,472 161,743 26,305

Outlays (gross)(-) (7,104) (3,833) (1,314) (1,346) (88) (205) (6,686) (19,656) (1,406) (155,483) (22,878)

Recoveries of prior year unpaid obligations (-) (318) (286) (38) (29) (2) (13) (165) (959) (14) (6,723) (1,080)

Unpaid obligations, end of year 2,904 5,320 629 2,127 3 7 3 5 4,190 23,410 490 61,025 24,069

Uncollected payments:

Uncollected payments, Federal sources, brought forward, October 1 (-) (415) (166) (148) (58) (13) (2) (27) (534) (285) (1,886) (558)

Change in uncollected payments, Federal sources (+ or -) 5 3 6 6 6 3 - (2) (64) (41) 158 (54)

Uncollected payments, Federal sources, end of year (-) (410) (130) (142) (52) (10) (2) (29) (598) (326) (1,728) (612)

Memorandum (non-add) entries:

Obligated balance, start of year (+ or -) 2,124 4,434 320 1,941 2 3 4 4 3,900 20,579 153 59,602 21,164

Obligated balance, end of year (+ or -) 2,494 5,190 487 2,075 2 7 3 3 4,161 22,812 164 59,297 23,457

Budget Authority and Outlays, Net 

Budget authority, gross (discretionary and mandatory) 6,958 4,555 1,424 1,549 9 1 193 8,176 20,522 1,564 164,297 24,431

Actual offsetting collections (-) (discretionary and mandatory) (739) (70) (134) (40) (6) (22) (3,446) (10,875) (1,084) (18,249) (13,326)

Change in uncollected customer payments from Federal sources 5 3 6 6 6 3 - (2) (64) (41) 158 (54)

 (discretionary and mandatory) - - - - - - - - - - -

Recoveries of prior year paid obligations (discretionary and mandatory) - 1 2 2 - - 2 - - 146 -

Anticipated offsetting collections (+ or -) (discretionary and mandatory) - - - - - - - - - - -

Budget authority, net (discretionary and mandatory) 6,224 4,522 1,298 1,517 8 8 171 4,730 9,583 439 146,352 11,051

Outlays, gross (discretionary and mandatory) 7,104 3,833 1,314 1,346 8 8 205 6,686 19,656 1,406 155,483 22,878

Actual offsetting collections (discretionary and mandatory) (-) (739) (70) (134) (40) (6) (22) (3,446) (10,875) (1,084) (18,249) (13,326)

Outlays, net (discretionary and mandatory) 6,365 3,763 1,180 1,306 8 2 183 3,240 8,781 322 137,234 9,552

Distributed offsetting receipts (-) (568) (5) (27) (7) - - - (8,512) (3) (788) (8,878)

Agency outlays, net (discretionary and mandatory) 5,797$ 3,758$ 1,153$ 1,299$ $ 8 2 $ 183 3,240$ $ 269 $ 319 136,446$ $ 674
SECTION II | Financial Information 

118

RISK ASSUMED INFORMATION (UNAUDITED) 

Risk assumed is generally measured by the present value of unpaid expected losses net of 

associated premiums based on the risk inherent in the insurance or guarantee coverage in force. 

Risk assumed information is in addition to the liability for unpaid claims from insured events 

that have already occurred. The assessment of losses expected based on the risk assumed are 

based on actuarial or financial methods applicable to the economic, legal and policy environment 

in force at the time the assessments are made. The FCIC has estimated the loss amounts based on 

the risk assumed for its programs to be $8,361 million as of September 30, 2017. 
USDA Agency Financial Report | 2017 

119

Section III: 

Other Information 

Unaudited Financial Statements 
SECTION II | Financial Information 

120

Consolidated Statement of Net Cost 

For the Year Ended September 30, 2017 ($ in Millions) 

2017

Rural Development:

 Gross Costs 6,531$ 

 Less: Earned Revenue 4,045

 Net Costs 2,486

Food Safety: 

 Gross Costs 1,290

 Less: Earned Revenue 233

 Net Costs 1,057

Marketing and Regulatory Programs:

 Gross Costs 2,709

 Less: Earned Revenue 1,155

 Net Costs 1,554

Natural Resources and Environment:

 Gross Costs 6,999

 Less: Earned Revenue 648

 Net Costs 6,351

Food, Nutrition, and Consumer Services:

 Gross Costs 99,000

 Less: Earned Revenue 5 8

 Net Costs 98,942

Farm and Foreign Agricultural Services:

 Gross Costs 26,664

 Less: Earned Revenue 2,785

 Net Costs 23,879

Trade and Foreign Agricultural Affairs:

 Gross Costs 463

 Less: Earned Revenue 9 1

 Net Costs 372

Research, Education, and Economics:

 Gross Costs 3,034

 Less: Earned Revenue 158

 Net Costs 2,876

Departmental Offices:

 Gross Costs 1,317

 Less: Earned Revenue 260

 Net Costs 1,057

Total Gross Costs 148,007

Less: Total Earned Revenue 9,433

Net Cost of Operations (Note 19) 138,574$ 

The accompanying notes are an integral part of these statements. 
USDA Agency Financial Report | 2017 

121

Consolidated Statement of Changes in Net Position 

For the Year Ended September 30, 2017 ($ in Millions) 

Funds From

Dedicated

Collections All Other Consolidated

(Note 18) Funds Eliminations Total

Cumulative Results of Operations:

Beginning Balances $ 2,715 $ (2,723) $ - $ (8)

 Budgetary Financing Sources:

Other Adjustments - (430) - (430)

Appropriations Used - 135,406 - 135,406

Non-exchange Revenue - 6 - 6

Donations and Forfeitures of Cash and Equivalents 1 1 - 2

Transfers In (Out) without Reimbursement 11 9,210 776 9,997

 Other Financing Sources (Non-Exchange):

Transfers In (Out) without Reimbursement - 775 (776) (1)

Imputed Financing 40 3,211 (2,462) 789

Other 27 (1,955) - (1,928)

Total Financing Sources 79 146,224 (2,462) 143,841

Net Cost of Operations (524) (140,512) 2,462 (138,574)

Net Change (445) 5,712 - 5,267

 Cumulative Results of Operations 2,270 2,989 - 5,259

Unexpended Appropriations:

Beginning Balances 144 53,788 - 53,932

 Budgetary Financing Sources:

 Appropriations Received 12 152,979 - 152,991

 Appropriations Transferred In (Out) - 351 - 351

 Other Adjustments - (15,765) - (15,765)

 Appropriations Used - (135,406) - (135,406)

Total Budgetary Financing Sources 12 2,159 - 2,171

Unexpended Appropriations 156 55,947 - 56,103

Net Position $ 2,426 $ 58,936 $ - $ 61,362

The accompanying notes are an integral part of these statements. 
SECTION II | Financial Information 

122

Combined Statement of Budgetary Resources 

For the Year Ended September 30, 2017 ($ in Millions) 

2017

Non-Budgetary

Credit Reform

Financing

Budgetary Accounts

Budgetary Resources:

Unobligated balance, brought forward, October 1: $ 56,423 $ 15,419

Adjustment to unobligated balance brought forward, October 1 (+ or -) (Note 21) 72 -

Unobligated balance brought forward, October 1, as adjusted 56,495 15,419

Recoveries of prior year unpaid obligations 6,723 1,080

Other changes in unobligated balance (+ or -) (8,466) (6,145)

Unobligated balance from prior year budget authority, net 54,752 10,354

Appropriations (discretionary and mandatory) 140,188 -

Borrowing authority (discretionary and mandatory) 14,451 15,458

Spending authority from offsetting collections (discretionary and mandatory) 9,658 8,973

Total budgetary resources 219,049 34,785

Status of Budgetary Resources:

New obligations and upward adjustments (total) (Note 24) 161,743 26,305

Unobligated balance, end of year:

Apportioned, unexpired accounts 19,850 7,680

Exempt from apportionment, unexpired accounts 84 3

Unapportioned, unexpired accounts 10,653 797

Unexpired unobligated balance, end of year 30,587 8,480

Expired unobligated balance, end of year 26,719 -

Unobligated balance, end of year (total) 57,306 8,480

Total budgetary resources 219,049 34,785

Change in Obligated Balance:

Unpaid obligations:

Unpaid obligations, brought forward, October 1 52,934 21,722

Adjustment to obligated balance, start of year (net)(+ or -) (Note 21) 8,554 -

New obligations and upward adjustments 161,743 26,305

Outlays (gross) (-) (155,483) (22,878)

Recoveries of prior year unpaid obligations (-) (6,723) (1,080)

Unpaid obligations, end of year 61,025 24,069

Uncollected payments:

Uncollected customer payments from Federal sources, brought forward, October 1 (-) (1,886) (558)

Change in uncollected customer payments from Federal sources (+ or -) 158 (54)

Uncollected payments, Federal sources, end of year (-) (1,728) (612)

Memorandum (non-add) entries:

Obligated balance, start of year (+ or -) 59,602 21,164

Obligated balance, end of year (+ or -) 59,297 23,457

Budget Authority and Outlays, Net:

Budget authority, gross (discretionary and mandatory) 164,297 24,431

Actual offsetting collections (discretionary and mandatory) (-) (18,249) (13,326)

Change in uncollected customer payments from Federal sources 158 (54)

 (discretionary and mandatory)(+ or -)

Recoveries of prior year paid obligations (discretionary and mandatory) 146 -

Anticipated offsetting collections (discretionary and mandatory) (+ or -) - -

Budget authority, net (discretionary and mandatory) 146,352 11,051

Outlays, gross (discretionary and mandatory) 155,483 22,878

Actual offsetting collections (discretionary and mandatory) (-) (18,249) (13,326)

Outlays, net (discretionary and mandatory) 137,234 9,552

Distributed offsetting receipts (-) (788) (8,878)

Agency outlays, net (discretionary and mandatory) $ 136,446 $ 674

The accompanying notes are an integral part of these statements. 
USDA Agency Financial Report | 2017 

123

Unaudited Notes to Financial Statements 

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. 

Status of Fund Balance with Treasury:

Unobligated Balance:

 Available 27,617

 Unavailable 38,261

Obligated Balance not yet Disbursed 82,595

Borrowing Authority not yet Converted to Fund Balance (48,470)

Authority Granted Prior to Credit Reform for Rental Assistance Grants (41)

Non-Budgetary Fund Balance with Treasury 21,610

Total $ 121,572

NOTE 7: Direct Loans and Guarantees, Non-Federal Borrowers 

TABLE 2: Schedule for Reconciling Subsidy Cost Allowance Balances (Post-1991) Direct Loans 

FY 2017

Beginning balance of the subsidy cost allowance $ 4,824

Add: Subsidy expense for direct loans disbursed during the year by component

Interest rate differential costs (196)

Default costs (net of recoveries) 188

Fees and other collections (15)

Other subsidy costs (52)

Total subsidy expense prior to adjustments and reestimates (75)

Adjustments

Loan modifications 3

Fees received 65

Loans written off (609)

Subsidy allowance amortization (206)

Other 74

Total subsidy cost allowance before reestimates 4,076

Add or subtract subsidy reestimates by component

Interest rate reestimate 101

Technical/default reestimate 207

Total reestimates 308

Ending balance of the subsidy cost allowance $ 4,384
SECTION III | Other Information 

124

TABLE 7: Schedule for Reconciling Loan Guarantee Liability 

FY 2017

Beginning balance of the loan guarantee liability $ 1,529

Add:Subsidy expense for guaranteed loans disbursed during the year by component

Interest supplement costs -

Default costs (net of recoveries) 853

Fees and other collections (902)

Other subsidy costs (5)

Total of the above subsidy expense components (54)

Adjustments

Loan guarantee modifications -

Fees received 643

Interest supplements paid (9)

Foreclosed property and loans acquired 51

Claim payments to lenders (794)

Interest accumulation on the liability balance 29

Other (107)

Ending balance of the subsidy cost allowance before reestimates 1,288

Add or subtract subsidy reestimates by component:

Interest rate reestimate 25

Technical/default reestimate (519)

Total of the above reestimate components (494)

Ending balance of the loan guarantee liability $ 794
USDA Agency Financial Report | 2017 

125

NOTE 8: Inventory and Related Property, Net 

(Quantities In Millions)

Commodities: Unit of Measure Quantity Value Quantity Value Quantity Value Quantity Value Quantity Value Quantity Value

Corn Meal Pounds 6 $ 1 8 1 $ 1 3 - $ - (85) $ (13) - $ - 2 $ 1

Blended Foods Pounds 2 7 9 9 6 3 1 - - (119) (36) - (2) 4 2

Dry Edible Beans Cwt. - 3 - 3 - - - (6) - - - -

Dry Whole Peas Cwt. - 5 3 7 0 - - (3) (69) - - - 6

Emergency Food Ration Bars Pounds - - - - - - - - - - - -

Grain Sorghum Bushels - - 1 5 6 9 - - (15) (68) - 1 - 2

Lentils Dry Cwt. - - - 1 4 - - - (14) - - - -

Nonfat Dry Milk Pounds - - - - - - - - - - - -

Rice Products Cwt., Pounds - 1 2 4 7 - - (2) (47) - - - 1

Meat Pounds - - - - - - - - - - - -

Vegetable Oil Pounds 1 0 6 196 9 8 - - (185) (92) - 1 2 1 1 3

Wheat Products Bushels, Pounds - - 4 9 192 - - (30) (135) (19) (57) - -

Other Various XXXX - XXXX 3 4 XXXX - XXXX (24) XXXX - XXXX 1 0

Total Commodities XXXX $ 2 5 XXXX $ 571 XXXX $ - XXXX $ (504) XXXX $ (57) XXXX $ 3 5

Allowance for losses -

Barter Delivery Obligations (BDO) -

Total Inventory and Related Property, Net $ 3 5

FY 2017 FY 2017

Beginning Inventory Acquisitions Collateral Acquired Donations Other Ending Inventory

NOTE 10: Stewardship PP&E 

FY 17 (In Units)

Ending Balance Additions Withdrawals

Beginning 

Balance

Heritage Assets

National Forests 154 - - 154

National Grasslands 20 - - 20

Other Sites 175 2 (2) 175

Research Centers 34 - - 34

Library Collections 1 - - 1

Total 384 2 (2) 384

Stewardship Land

National Forests 154 - - 154

National Grasslands 20 - - 20

Research and Experimental Areas 3 - - 3

National Preserves and Other Areas 2 - - 2

Conservation Easements 17,954 282 - 17,672

Total 18,133 282 - 17,851
SECTION III | Other Information 

126

NOTE 13: Debt 

FY 2017

Beginning 

Balance Net Borrowing Ending Balance

Intragovernmental

Debt to the Treasury $ 78,239 $ (5,641) $ 72,598

Debt to the Federal Financing Bank 43,363 2,070 45,433

Total Intragovernmental 121,602 (3,571) 118,031

Agency Debt:

Held by the Public - - -

Total Debt $ 121,602 $ (3,571) $ 118,031

NOTE 18: Funds from Dedicated Collections 

AMS AMS APHIS FS FS FS FS FS

Funds for 

Strengthening 

Markets, Income, 

and Supply

Expenses and 

Refunds, 

Inspection and 

Grading of Farm 

Products

Agricultural 

Quarantine 

Inspection User 

Fee Account Cooperative Work Land Acquisition

Payments to States, 

National Forests 

Fund

State, Private, 

and International 

Forestry, Land 

and Water 

Conservation 

Fund

Recreation Fee 

Demonstration 

Program

Statement of Net Cost For the Period

Ended September 30, 2017

Gross program costs 805 197 226 110 4 6 7 3 4 4 7 9

Less Earned Revenue 7 158 702 107 - 5 2 - 101

Net Cost of Operations 798 3 9 (476) 3 4 6 2 1 4 4 (22)

Statement of Changes in Net Position

For the period Ended September 30, 2017

Net Position Beginning of Period 514 5 3 264 311 109 7 8 153 102

Other Financing Sources 803 3 0 (444) (139) 2 9 - 3 4 (30)

Net Cost of Operations (798) (39) 476 (3) (46) (21) (44) 2 2

Change in Net Position 5 (9) 3 2 (142) (17) (21) (10) (8)

Net Position End of Period $ 519 $ 4 4 $ 296 $ 169 $ 9 2 $ 5 7 $ 143 $ 9 4
USDA Agency Financial Report | 2017 

127

FS FS FS FS FS NIFA

National Forest 

Fund Receipts

Restoration of 

Forest Lands and 

Improvements

Payments to 

Counties, 

National 

Grasslands

Acquisition of 

Lands to 

Complete Land 

Exchanges

Stewardship 

Contracting 

Product Sales

Native American 

Institutions 

Endowment Fund Other Total

Statement of Net Cost For the Period

Ended September 30, 2017

Gross program costs 2 4 3 1 0 1 0 2 8 6 266 1,945

Less Earned Revenue - 3 8 1 5 - 3 1 5 205 1,421

Net Cost of Operations 2 5 (5) 1 0 (3) 1 6 1 524

Statement of Changes in Net Position

For the period Ended September 30, 2017

Net Position Beginning of Period 108 376 5 2 9 1 4 9 215 384 2,859

Other Financing Sources 1 0 (178) 1 8 - - 1 2 (54) 9 1

Net Cost of Operations (2) (5) 5 (10) 3 (1) (61) (524)

Change in Net Position 8 (183) 2 3 (10) 3 1 1 (115) (433)

Net Position End of Period $ 116 $ 193 $ 7 5 $ 8 1 $ 5 2 $ 226 $ 269 $ 2,426
SECTION III | Other Information 

128

NOTE 19: Sub-Organization Program Costs/Program Costs by Segment 

FY 2017

Intragovernmental With the Public Intragovernmental With the Public Intragovernmental With the Public

Rural Development:

Gross Costs $ - $ - $ - $ - $ - $ -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Food Safety: 

Gross Costs - - - - - -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Marketing and Regulatory Programs:

Gross Costs - - - - - -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Natural Resources and Environment:

Gross Costs - - - - - -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Food, Nutrition, and Consumer Services:

Gross Costs - - - - - -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Farm and Foreign Agricultural Services:

Gross Costs 924 1,364 1,577 11,812 601 3,312

Less: Earned Revenue 109 267 2 9 238 4 4 2 0

Net Costs 815 1,097 1,548 11,574 557 3,292

Trade and Foreign Agricultural Affairs:

Gross Costs - - - - - -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Research, Education, and Economics:

Gross Costs - - - - - -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Departmental Offices:

Gross Costs - - - - - -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Total Gross Costs 924 1,364 1,577 11,812 601 3,312

Less: Total Earned Revenue 109 267 2 9 238 4 4 2 0

Net Cost of Operations $ 815 $ 1,097 $ 1,548 $ 11,574 $ 557 $ 3,292

FSA CCC NRCS
USDA Agency Financial Report | 2017 

129

FY 2017

Intragovernmental With the Public Intragovernmental With the Public Intragovernmental With the Public

Rural Development:

Gross Costs $ - $ - $ - $ - $ - $ -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Food Safety: 

Gross Costs - - - - 393 960

Less: Earned Revenue - - - - 1 233

Net Costs - - - - 392 727

Marketing and Regulatory Programs:

Gross Costs - - - - - -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Natural Resources and Environment:

Gross Costs - - - - - -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Food, Nutrition, and Consumer Services:

Gross Costs - - 956 98,897 - -

Less: Earned Revenue - - 1 5 7 - -

Net Costs - - 955 98,840 - -

Farm and Foreign Agricultural Services:

Gross Costs 7 6 8,832 - - - -

Less: Earned Revenue - 2,125 - - - -

Net Costs 7 6 6,707 - - - -

Trade and Foreign Agricultural Affairs:

Gross Costs - - - - - -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Research, Education, and Economics:

Gross Costs - - - - - -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Departmental Offices:

Gross Costs - - - - - -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Total Gross Costs 7 6 8,832 956 98,897 393 960

Less: Total Earned Revenue - 2,125 1 5 7 1 233

Net Cost of Operations $ 7 6 $ 6,707 $ 955 $ 98,840 $ 392 $ 727

RMA FNS FSIS
SECTION III | Other Information 

130

FY 2017

Intragovernmental With the Public Intragovernmental With the Public Intragovernmental With the Public

Rural Development:

Gross Costs $ - $ - $ - $ - $ - $ -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Food Safety: 

Gross Costs - - - - - -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Marketing and Regulatory Programs:

Gross Costs 185 1,039 394 1,110 3 6 6 7

Less: Earned Revenue 1 0 221 5 2 844 1 5 4

Net Costs 175 818 342 266 3 5 1 3

Natural Resources and Environment:

Gross Costs - - - - - -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Food, Nutrition, and Consumer Services:

Gross Costs - - - - - -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Farm and Foreign Agricultural Services:

Gross Costs - - - - - -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Trade and Foreign Agricultural Affairs:

Gross Costs - - - - - -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Research, Education, and Economics:

Gross Costs - - - - - -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Departmental Offices:

Gross Costs - - - - - -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Total Gross Costs 185 1,039 394 1,110 3 6 6 7

Less: Total Earned Revenue 1 0 221 5 2 844 1 5 4

Net Cost of Operations $ 175 $ 818 $ 342 $ 266 $ 3 5 $ 1 3

AMS APHIS GIPSA
USDA Agency Financial Report | 2017 

131

FY 2017

Intragovernmental With the Public Intragovernmental With the Public Intragovernmental With the Public

Rural Development:

Gross Costs $ - $ - $ - $ - $ - $ -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Food Safety: 

Gross Costs - - - - - -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Marketing and Regulatory Programs:

Gross Costs - - - - - -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Natural Resources and Environment:

Gross Costs 1,389 5,838 - - - -

Less: Earned Revenue 168 492 - - - -

Net Costs 1,221 5,346 - - - -

Food, Nutrition, and Consumer Services:

Gross Costs - - - - - -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Farm and Foreign Agricultural Services:

Gross Costs - - - - - -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Trade and Foreign Agricultural Affairs:

Gross Costs - - 9 7 396 - -

Less: Earned Revenue - - 139 - - -

Net Costs - - (42) 396 - -

Research, Education, and Economics:

Gross Costs - - - - 299 1,182

Less: Earned Revenue - - - - 9 5 7 6

Net Costs - - - - 204 1,106

Departmental Offices:

Gross Costs - - - - - -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Total Gross Costs 1,389 5,838 9 7 396 299 1,182

Less: Total Earned Revenue 168 492 139 - 9 5 7 6

Net Cost of Operations $ 1,221 $ 5,346 $ (42) $ 396 $ 204 $ 1,106

FS FAS ARS
SECTION III | Other Information 

132

FY 2017

Intragovernmental With the Public Intragovernmental With the Public Intragovernmental With the Public

Rural Development:

Gross Costs $ - $ - $ - $ - $ - $ -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Food Safety: 

Gross Costs - - - - - -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Marketing and Regulatory Programs:

Gross Costs - - - - - -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Natural Resources and Environment:

Gross Costs - - - - - -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Food, Nutrition, and Consumer Services:

Gross Costs - - - - - -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Farm and Foreign Agricultural Services:

Gross Costs - - - - - -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Trade and Foreign Agricultural Affairs:

Gross Costs - - - - - -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Research, Education, and Economics:

Gross Costs 5 8 1,293 3 4 5 8 6 3 157

Less: Earned Revenue 3 6 7 6 - 2 0 3

Net Costs 2 2 1,286 2 8 5 8 4 3 154

Departmental Offices:

Gross Costs - - - - - -

Less: Earned Revenue - - - - - -

Net Costs - - - - - -

Total Gross Costs 5 8 1,293 3 4 5 8 6 3 157

Less: Total Earned Revenue 3 6 7 6 - 2 0 3

Net Cost of Operations $ 2 2 $ 1,286 $ 2 8 $ 5 8 $ 4 3 $ 154

NIFA ERS NASS
USDA Agency Financial Report | 2017 

133

FY 2017

Intragovernmental With the Public Intragovernmental With the Public Intragovernmental With the Public

Rural Development:

Gross Costs $ 4,041 $ 2,590 $ - $ - $ 4,041 $ 2,590

Less: Earned Revenue 574 3,483 - - 574 3,483

Net Costs 3,467 (893) - - 3,467 (893)

Food Safety: 

Gross Costs - - - - 393 960

Less: Earned Revenue - - - - 1 233

Net Costs - - - - 392 727

Marketing and Regulatory Programs:

Gross Costs - - - - 615 2,216

Less: Earned Revenue - - - - 6 3 1,119

Net Costs - - - - 552 1,097

Natural Resources and Environment:

Gross Costs - - - - 1,389 5,838

Less: Earned Revenue - - - - 168 492

Net Costs - - - - 1,221 5,346

Food, Nutrition, and Consumer Services:

Gross Costs - - - - 956 98,897

Less: Earned Revenue - - - - 1 5 7

Net Costs - - - - 955 98,840

Farm and Foreign Agricultural Services:

Gross Costs - - - - 3,178 25,320

Less: Earned Revenue - - - - 182 2,650

Net Costs - - - - 2,996 22,670

Trade and Foreign Agricultural Affairs:

Gross Costs - - - - 9 7 396

Less: Earned Revenue - - - - 139 -

Net Costs - - - - (42) 396

Research, Education, and Economics:

Gross Costs - - - - 454 2,690

Less: Earned Revenue - - - - 157 8 6

Net Costs - - - - 297 2,604

Departmental Offices:

Gross Costs - - 395 995 395 995

Less: Earned Revenue - - 966 1 2 966 1 2

Net Costs - - (571) 983 (571) 983

Total Gross Costs 4,041 2,590 395 995 11,518 139,902

Less: Total Earned Revenue 574 3,483 966 1 2 2,251 8,132

Net Cost of Operations $ 3,467 $ (893) $ (571) $ 983 $ 9,267 $ 131,770

RD DO TOTAL
SECTION III | Other Information 

134

FY 2017 Intradepartmental

Eliminations GRAND TOTAL

Rural Development:

Gross Costs $ (100) $ 6,531

Less: Earned Revenue (12) 4,045

Net Costs (88) 2,486

Food Safety: 

Gross Costs (63) 1,290

Less: Earned Revenue (1) 233

Net Costs (62) 1,057

Marketing and Regulatory Programs:

Gross Costs (122) 2,709

Less: Earned Revenue (27) 1,155

Net Costs (95) 1,554

Natural Resources and Environment:

Gross Costs (228) 6,999

Less: Earned Revenue (12) 648

Net Costs (216) 6,351

Food, Nutrition, and Consumer Services:

Gross Costs (853) 99,000

Less: Earned Revenue - 5 8

Net Costs (853) 98,942

Farm and Foreign Agricultural Services:

Gross Costs (1,834) 26,664

Less: Earned Revenue (47) 2,785

Net Costs (1,787) 23,879

Trade and Foreign Agricultural Affairs:

Gross Costs (30) 463

Less: Earned Revenue (48) 9 1

Net Costs 1 8 372

Research, Education, and Economics:

Gross Costs (110) 3,034

Less: Earned Revenue (85) 158

Net Costs (25) 2,876

Departmental Offices:

Gross Costs (73) 1,317

Less: Earned Revenue (718) 260

Net Costs 645 1,057

Total Gross Costs (3,413) 148,007

Less: Total Earned Revenue (950) 9,433

Net Cost of Operations $ (2,463) $ 138,574
USDA Agency Financial Report | 2017

135

NOTE 20: Cost of Stewardship 

PP&E 

The acquisition cost of stewardship land in 

FY 2017 was $217 million.

NOTE 21: Adjustments to 

Unobligated Balance, Brought 

Forward, October 1, and 

Obligated Balance, Start of 

the Year

As a result of weaknesses identified in the FY 

2015 independent audit engagement, CCC 

undertook a clean-up effort related to 

Undelivered Orders (UDOs), identifying, with 

program management and third party 

agencies, appropriate adjustments. CCC 

management’s objective was to achieve 

sufficient data accuracy to validate open UDO 

balances. CCC administers 37 programs, and 

within those programs, 138 program types. 

Obligations for each program type have 

differing trigger points and defined processes 

for evaluating and maintaining valid open 

obligations. All 37 programs and their 

corresponding program types were assessed 

as to materiality and certain attributes that 

would indicate obligations may be inactive. 

As a result of its efforts, CCC increased the 

unobligated balance brought forward October 

1, 2016, $72 million and recognized $1.2 

billion in reductions (deobligation) to the 

October 1, 2016 UDO balance, offset by a 

$9.7 billion increase in the UDO balance, 

related to the CRP. Such efforts also 

identified and corrected processes to identify 

and estimate obligations, improved internal 

processes for review and adjustment of 

obligations, and improved processes 

dependent on obligations established by third 

party agencies. 

NOTE 22: Terms of Borrowing 

Authority Used

The Secretary of Agriculture has the authority 

to make and issue notes to the Secretary of the 

Treasury for the purpose of discharging 

obligations for RD’s insurance funds and 

CCC’s nonreimbursed realized losses and 

debt related to foreign assistance programs. 

The permanent indefinite borrowing authority 

includes both interest bearing and non-interest 

bearing notes. These notes are drawn upon 

daily when disbursements exceed deposits. 

Notes payable under the permanent indefinite 

borrowing authority have a term of one year. 

On January 1 of each year, USDA refinances 

its outstanding borrowings, including accrued 

interest, at the January borrowing rate.

In addition, USDA has permanent indefinite 

borrowing authority for the foreign assistance 

and export credit programs to finance 

disbursements on post-credit reform, direct 

credit obligations, and credit guarantees. In 

accordance with the Federal Credit Reform 

Act of 1990, as amended, USDA borrows 

from Treasury on October 1, for the entire 

fiscal year, based on annual estimates of the 

difference between the amount appropriated 

(subsidy) and the amount to be disbursed to 

the borrower. Repayment under this 

agreement may be, in whole or in part, prior 

to maturity by paying the principal amount of 

the borrowings plus accrued interest to the 

date of repayment. Interest is paid on these 

borrowings based on weighted average 

interest rates for the cohort, to which the 

borrowings are associated. Interest is earned 

on the daily balance of uninvested funds in 

the credit reform financing funds maintained 

at Treasury. The interest income is used to 

reduce interest expense on the underlying 

borrowings.
SECTION III | Other Information 

136

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. 

NOTE 23: Available Borrowing Authority, End of Period 

Available borrowing authority at September 30, 2017 was $48,470 million. 

NOTE 24: Apportionment Categories of Obligations Incurred: 

Direct vs. Reimbursable Obligations 

FY 2017

Direct Reimbursable Total

Apportionment by Fiscal Quarter $ 43,293 $ 1,999 $ 45,292

Apportionment for Special Activities 134,120 699 134,819

Exempt from Apportionment 7,930 7 7,937

Total Obligations Incurred $ 185,343 $ 2,705 $ 188,048

NOTE 25: UNDELIVERED ORDERS AT THE END OF THE PERIOD

Budgetary resources obligated for undelivered orders as of September 30, 2017 were 

$62,185 million.
USDA Agency Financial Report | 2017 

137

NOTE 26: 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. 

NOTE 27: Legal Arrangements 

Affecting Use of Unobligated 

Balances 

Unobligated budget authority is the difference 

between the obligated balance and the total 

unexpended balance. It represents that portion 

of the unexpended balance unencumbered by 

recorded obligations. Appropriations are 

provided on an annual, multi-year, and no-year 

basis. An appropriation expires on the last day 

of its period of availability and is no longer 

available for new obligations. Unobligated 

balances retain their fiscal-year identity in an 

expired account for an additional five fiscal 

years. The unobligated balance remains 

available to make legitimate obligation 

adjustments, i.e., to record previously 

unrecorded obligations and to make upward 

adjustments in previously underestimated 

obligations for five years. At the end of the fifth 

year, the authority is canceled. Thereafter, the 

authority is not available for any purpose. 

Any information about legal arrangements 

affecting the use of the unobligated balance of 

budget authority is specifically stated by 

program and fiscal year in the appropriation 

language or in the alternative provisions 

section at the end of the appropriations act. 
SECTION III | Other Information 

138

NOTE 28: Explanation of Differences Between the SBR and the 

Budget of the U.S. Government 

A comparison between the FY 2017 SBR and the FY 2017 actual numbers presented in the 

FY 2019 Budget cannot be performed as the FY 2019 Budget is not yet available. The FY 2019 

Budget is expected to be published in February 2018 and will be available from the U.S. 

Government Publishing Office. 

NOTE 29: 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. 

Revenue Activity: FY 2017

Sources of Collections:

Miscellaneous $ 194

Total Cash Collections 194

Accrual Adjustments 2

Total Custodial Revenue 196

Disposition of Collections:

Transferred to Others:

Treasury (178)

States and Counties -

( Increase )/Decrease in Amounts Yet to be Transferred (18)

Net Custodial Activity $ -
USDA Agency Financial Report | 2017 

139

NOTE 30: Fiduciary Activities 

Rural Housing Insurance Fund (RHIF) was established by Public Law 89-117 pursuant to section 

517 of title V of the Housing Act of 1949, which authorized RD to collect escrow payments on 

behalf of new and existing Single Family Housing borrowers. Other fiduciary activities by RD 

include but are not limited to collections from borrowers, interest paid on escrow accounts, and 

payments to insurance agencies and taxing authorities. 

Rural Housing

Insurance

Fund

2017

Fiduciary net assets, beginning of year $ 113

 Fiduciary revenues -

 Contributions 432

 Investment earnings -

 Gain (Loss) on disposition of investments, net -

 Administrative and other expenses -

 Disbursements to and on behalf of beneficiaries (429)

Increases/(Decrease) in fiduciary net assets 3

Fiduciary net assets, end of year $ 116

Schedule of Fiduciary Activity

For the period Ended September 30, 2017

Rural Housing 

Insurance

Fund

2017

Fiduciary Assets

 Cash and cash equivalents $ 116

 Investments -

 Other assets -

Fiduciary Liabilities -

 Less: Liabilities -

Total Fiduciary Net Assets $ 116

Fiduciary Net Assets

For the period Ended September 30, 2017
SECTION III | Other Information

140

NOTE 31: Reconciliation of Budgetary Resources Obligated to

Net Cost of Operations 

Budgetary and proprietary accounting information are inherently different because of the types 

of information and the timing of their recognition. The reconciliation of budgetary resources 

obligated and the net cost of operations provides a link between budgetary and proprietary 

accounting information. It serves not only to explain how information on net obligations relates 

to the net cost of operations, but also to assure integrity between budgetary and proprietary 

accounting. 

Net obligations and the net cost of operations are different because (1) the net cost of operations 

may be financed by non-budgetary resources (e.g., imputed financing); (2) the budgetary and 

non-budgetary resources used may finance activities that are not components of the net cost of 

operations; and (3) the net cost of operations may contain components that do not use or generate 

resources in the current period.
USDA Agency Financial Report | 2017 

141

2017

Resources Used to Finance Activities:

Budgetary Resources Obligated -

Obligations Incurred $ 188,048

Less: Spending authority from offsetting collections and recoveries 39,274

Obligations net of offsetting collections and recoveries 148,774

Less: Distributed Offsetting receipts 9,666

Net Obligations 139,108

Other Resources -

Donations and forfeitures of property -

Transfers in(out) without reimbursement (1)

Imputed financing from costs absorbed by others 789

Other (1,928)

Net other resources used to finance activities (1,140)

Total resources used to finance activities 137,968

Resources Used to Finance Items not Part of the Net Cost of Operations:

Change in undelivered orders (1,027)

Resources that fund expenses recognized in prior periods (1,961)

Budgetary offsetting collections and receipts that do not affect net cost of operations -

Credit program collections which increase liabilities for loan guarantees or allowances for subsidy 16,111

Change in Unfilled Customer Orders 11

Decrease in exchange revenue receivable from public 7,318

Other 9,618

Resources that finance the acquisition of assets (29,513)

Other resources or adjustments to net obligated resources that do not affect net cost of operations (511)

Total resources used to finance items not part of the net cost of operations 46

Total resources used to finance the net cost of operations 138,014

Components of the Net Cost of Operations that will not Require or Generate

Resources in the Current Period:

Components Requiring or Generating Resources in Future Periods -

Increase in annual leave liability (2)

Increase in environmental and disposal liability 4

Upward/Downward reestimates of credit subsidy expense 1,003

Increase in exchange revenue receivable from the public (1,383)

Other (1)

Total components of Net Cost of Operations that will require or generate

 resources in future periods (379)

Components not Requiring or Generating Resources -

Depreciation and amortization 393

Revaluation of assets or liabilities (17)

Other Components not Requiring or Generating Resources:

Bad Debt Expense 108

Cost of Goods Sold 57

Other 398

Total components of Net Cost of Operations that will not require or generate resources 939

Total components of Net Cost of Operations that will not require or generate

 resources in the current period 560

Net Cost of Operations $ 138,574
SECTION III | Other Information 

142

Response to Management Challenges 

The Reports Consolidation Act of 2000 

requires the U.S. Department of Agriculture’s 

(USDA) Office of Inspector General (OIG) to 

report annually on the most serious 

management challenges USDA and its 

agencies face. To identify these Departmental 

challenges, OIG provides an annual 

assessment of the previous year’s challenges 

to determine if they are still critical 

challenges; examines recently issued audit 

reports to identify critical issues that remain 

topical and where corrective action has not 

been satisfactorily implemented; identifies 

repeated inquiries or hotline trends in risk 

areas; assesses ongoing audit and 

investigative work to identify new issues; and 

analyzes new programs and activities that 

pose significant challenges due to size and 

complexity. 

Based on OIG’s review of the challenges 

cited in fiscal year (FY) 2016, it concluded 

that these challenge areas continue to be 

critical for the Department. No challenges 

have been removed or added to this year’s 

report. Each challenge includes a discussion 

of the Department’s progress in addressing it 

as well as what remains to be done, if 

applicable. 

The following narratives summarize: 

• OIG-recognized management challenges; 

• USDA’s FY 2017 agency 

accomplishments; and 

• FY 2018 planned actions to address these 

management challenges. 

CHALLENGE 1: 

USDA Needs to Improve Oversight 

and Accountability for its Programs 

USDA, much like other agencies and 

departments throughout the Government, 

faces challenges in overseeing its many 

programs. USDA employs nearly 100,000 

employees in 17 agencies and 18 staff offices; 

in total, these employees operate 

approximately 300 programs responsible for 

delivering about $143 billion in public 

services annually. Overseeing these programs 

so every dollar spent accomplishes the 

intended results poses significant challenges 

to USDA program managers. 

USDA managers are responsible for 

establishing and maintaining an effective 

internal control system, ensuring a culture of 

compliance with those controls, and holding 

employees accountable for implementing 

those controls. Managers use internal controls 

to ensure programs achieve intended results 

efficiently and effectively; they provide for 

program integrity and proper stewardship of 

resources. 

OIG DETERMINED THE FOLLOWING 

• Office of Homeland Security and 

Emergency Coordination (OHSEC) had 

not adequately overseen and coordinated 

USDA’s efforts to prevent, detect, and 

respond to agroterrorism; 

• OHSEC did not demonstrate that USDA 

was in compliance with Homeland 

Security Presidential Directive 9 

requirements to defend the agriculture 

and food system against terrorist attacks, 

major disasters, and other emergencies; 
USDA Agency Financial Report | 2017 

143

• USDA needs to take additional steps to 

improve its agencies’ data sharing 

practices; and 

• USDA was not always transferring funds 

between agencies appropriately, and OIG 

questioned $43 million in transfers. 

CORRECTIVE ACTIONS COMPLETED 

AND PLANNED: 

Office of Homeland Security and Emergency 

Coordination

OHSEC instituted bi-weekly meetings on 

general oversight and compliance in order to 

monitor the progress of audit 

recommendations. These meetings occurred 

between the responsible Division Chief, 

OHSEC Office of the Director, and the 

Assistant Secretary for Administration. The 

Assistant Secretary for Administration 

appointed an independent official to 

periodically affirm that OHSEC is 

implementing appropriate internal controls 

relative to classified information. 

The Office of the General Counsel (OGC) 

rendered an opinion on OHSEC’s authorities 

under statute and regulation. That opinion is 

crucial in determining the next steps for other 

audit recommendations and general 

programmatic implementation. 

In FY 2018, OHSEC plans to continue status 

meetings for all programs to ensure progress 

in finding remediation and continue the 

practice of layered oversight. OHSEC also 

plans to finalize procedures and consolidate 

multiple data calls into one cohesive 

collection effort. An independent official 

appointed by the Assistant Secretary for 

Administration will conduct a review of the 

status of internal controls for classified 

National security information. OHSEC is in 

the process of developing and implementing a 

written procedure on how it oversees and 

coordinates USDA’s agroterrorism 

prevention, detection, and response activities. 

Farm and Foreign Agricultural Services 

The Farm and foreign Agricultural Services 

(FFAS) is continuing to collect data in order 

to continually improve the Acreage Crop 

Reporting Streamlining Initiative (ACRSI) 

initiative. The ACRSI will outline the FFAS 

Undersecretary’s, Administrators’, and the 

Office of the Chief Information Officer’s 

(OCIO) roles to ensure payments are made in 

accordance with individual program rules and 

ensures compliance requirements. 

The Farm Service Agency (FSA) / 

Commodity Credit Corporation (CCC) and 

the Natural Resources Conservation Service 

(NRCS) Memorandum of Understanding 

(MOU) on data sharing has been signed and 

implemented. In the MOU, the sub-agencies 

mutually agree to cooperate at all levels to 

share data which, among many other things, 

will help ensure consistent implementation of 

conservation program payment eligibility and 

limitation requirements. Furthermore, the 

agencies will meet quarterly to exchange 

information about the status of information 

shared under this MOU, provide information 

about other data collection activities of the 

respective agencies, and identify potential 

additional data sharing activities that would 

be beneficial to streamline application 

processes for producers. 

The MOU is designed to broadly describe a 

multi-year agreement between the two agencies 

supporting data share without describing 

specific datasets. The agreement includes 

provisions for allowing read-only access to both 

agencies’ data systems including cropping 

history reports. The agencies’ data teams will 

meet quarterly to refine, improve, and add to the 

agreement as needed. 
SECTION III | Other Information 

144

NRCS will revise the Program Manual, Part 

507 Subpart K and Part 508, to incorporate 

communication with FSA about inconsistencies 

that arise with respect to participant-reported 

information throughout the agreement’s 

administration. NRCS will clarify the 

Conservation Stewardship Program Policy 

Manual for field employee use to determine and 

document cropping history and prioritize the 

documentation. The MOU’s information 

sharing activities will be conducted in 

compliance with USDA’s non-disclosure 

obligations for certain information pursuant to 

Section 1619 of the 2008 Farm Bill. 

Office of the Chief Financial Officer 

The Office of the Chief Financial Officer 

(OCFO) issued Departmental Regulation (DR) 

2235-001 “Economy Act Agreements” on the 

preparation of the Economy Act Agreements 

and the use of that authority. The Department’s 

financial management system was enhanced to 

provide Inter-Agency Agreement (IAA) 

functionality, including identification of the 

legal authority for the agreement. 

CHALLENGE 2: 

Information Technology Security 

Needs Continuous Improvement

Despite actions to improve information 

technology (IT) security, USDA continues to 

display weaknesses in planning, management, 

and oversight of its cybersecurity initiatives 

that affect the Department’s compliance with 

standards for safeguarding IT systems as 

directed in the Federal Information Security 

Modernization Act of 2014 (FISMA). 

The degree to which USDA complies with 

FISMA and other security guidance directly 

correlates to the security posture of each 

agency and office. USDA senior management 

needs to make sure agencies and offices 

understand how implementation of IT security 

directly impacts USDA’s overall security 

posture. For USDA to attain a security 

posture that is secure and sustainable, all 

35 of its agencies and offices must 

consistently implement Departmental policy 

based on a standard methodology. When 

every agency and office is in compliance with 

USDA’s policies, USDA as a whole will be 

compliant with FISMA and, more 

importantly, have a sustainable security 

posture. 

OIG DETERMINED THE FOLLOWING: 

The Department faces great challenges in 

complying with the 2014 FISMA: 

• The OCIO has not implemented 

corrective actions that the Department 

committed to in response to prior OIG 

recommendations. Of the 61 

recommendations made by OIG in 

FYs 2009 through 2015, OCIO 

implemented corrective action for 

39 recommendations, but OIG’s testing 

identified that security weaknesses still 

exist in 3 closed recommendations; and 

• OCIO policies and programs designed to 

address FISMA requirements have not 

been completed or fully implemented, 

and USDA has not fully developed an 

organizational perspective that includes a 

comprehensive governance structure and 

organization-wide risk management 

strategy. 

CORRECTIVE ACTIONS COMPLETED OR 

PLANNED: 

Office of the Chief Information Officer 

OCIO will continue to work closely with the 

U.S. Department of Homeland Security 

(DHS) on the Continuous Diagnostics and 

Monitoring Program. USDA is entering the 

operational readiness review and transition to 
USDA Agency Financial Report | 2017 

145

full operational capability for Phase 1, which 

is planned to be completed during FY 2018.

USDA initiated and will continue to work 

with DHS on the planning and design phases 

for Phase 2. 

OCIO concurred with OIG’s 61 

recommendations for improving the overall 

security of USDA’s systems. USDA has 

responded to and closed 39 of the 

recommendations. OCIO will continue to 

work to close the remaining 22 OIG 

recommendations. In FY 2018, OCIO will 

continue to mature its compliance oversight 

and risk management process and provide 

additional supporting documentation to 

address the weaknesses identified by OIG as 

unresolved. 

USDA will develop an organization-wide risk 

management strategy that will give the 

Department an organizational perspective for 

risk management that includes a 

comprehensive governance structure. 

To eliminate gaps, OCIO will perform a 

comprehensive review of the cybersecurity 

and the risk management development policy 

and approval process. This action will 

enhance customer service and experience, 

streamline and/or reduce the process steps, 

and shorten the time required to develop and 

approve a cybersecurity policy. 

CHALLENGE 3: 

USDA Needs to Strengthen 

Program Performance and 

Performance Measures 

Designing, developing, and implementing 

programs that reliably achieve their intended 

results has been a recurring challenge for the 

Department. OIG found that agencies do not 

have adequate reviews or controls in place to 

supply the metrics necessary to evaluate 

program performance. In some programs, the 

strategy for measuring performance is missing 

altogether. As a result, some agencies are 

using inaccurate or unreliable data in program 

performance reports. 

USDA manages approximately 300 programs 

that provide a variety of services and financial 

assistance to the American public. This 

diverse portfolio of programs means that, for 

the Department to serve as a diligent steward 

of Federal funds, USDA must have welldesigned programs with clear goals and 

performance measures. 

The Government Performance and Results 

Modernization Act of 2010 set requirements 

for regular and recurring program 

performance assessment. In keeping with the 

law, an agency should have controls in place 

that allow it to regularly review a program’s 

performance, and then compile reports that 

allow it to measure that performance. These 

reports allow the Department to fairly 

evaluate its programs’ successes and failures. 

OIG DETERMINED THE FOLLOWING: 

• Rural Utilities Service (RUS) did not have 

the relevant quantitative performance 

measures needed to assess and monitor the 

Energy Efficiency and Conservation Loan 

Program (EECLP) performance, or have a 

process to obtain appropriate and reliable 

performance information; 

• Rural-Business Cooperative Services 

(RBS) needs to strengthen internal 

controls over approving and servicing 

Rural Energy for America Program 

(REAP) loans and grants; 

• NRCS must continue ongoing, specific, 

and concerted collaboration with other 

USDA agencies on a regular basis to 

identify common information used by 

agencies in the administration of the 

Conservation Stewardship Program; and 
SECTION III | Other Information 

146

• Forest Service (FS) needs to identify 

particular goals and objectives for 

managing deferred maintenance (DM) so 

it can successfully reduce the backlog of 

repairs to buildings and infrastructure on 

FS land. 

CORRECTIVE ACTIONS COMPLETED OR 

PLANNED: 

Rural Utility Service 

The RUS Electric Program (EP) leadership 

approved a mechanism to collect the data by 

an Excel spreadsheet, indicating the key 

EECLP performance measures. The plan to 

develop an automated system with an 

electronic reporting functionality will be 

implemented as RUS obtains additional 

funding.

Rural Business-Cooperative Service 

The RBS developed Energy Efficiency 

Improvement (EEI) performance report 

templates that allow REAP loan and grant 

recipients to accurately calculate and report 

energy savings for irrigation, lighting, grain 

dryer, and renewable energy and residential 

projects. 

RBS met with their State and field office 

staffs to provide in-depth training on the use 

of the new EEI performance report templates. 

Meeting participants received guidance on 

system management, data management, 

servicing, accountability, and performance 

measure reporting. Training was provided to 

the REAP loan and grant recipients on using 

and submitting EEI performance reports. 

Natural Resources Conservation Service 

Please refer to Management Challenge 1 for 

the agency response. 

Forest Service 

The FS has reviewed the existing protocols 

used to calculate and report DM for bridges, 

roads, buildings, dams and water, and 

wastewater systems. Recreation sites have 

developed and adopted national and regional 

strategies to address DM for facilities, 

features on recreation sites, and trails 

managed for public use. Additionally, FS has 

many existing partnerships that assist with 

routine maintenance and are included in the 

various strategies. However, this is not 

sufficient to significantly reduce the backlog. 

FS will develop an investment strategic plan 

to address the DM backlog. This plan will 

define the long-term vision with goals and 

objectives to be achieved over the span of 

several years. The plan will also prescribe a 

multi-year program of work, including: 

development of improved management 

controls for reporting of DM, infrastructure 

training, infrastructure data integrity, national 

prioritization of assets, and the 

decommissioning of unneeded assets and 

oversight. The plan will identify 

implementation strategies consistent with 

current and projected funding levels and 

resources. Performance measures will be 

dependent on and reflect funding realities. In 

the event of significant new funding, the plan 

will identify methods and means designed to 

enable expedited implementation of efforts to 

achieve DM management objectives. 

CHALLENGE 4: 

USDA Needs to Strengthen 

Controls Over Improper Payments 

and Financial Management 

USDA continues to be non-compliant with 

Federal requirements for improper payments. 

Also, USDA needs to address internal control 
USDA Agency Financial Report | 2017 

147

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 about the nearly 

$143 billion spent on public services every 

year. These reports account for USDA’s costs 

and revenues, assets and liabilities, and other 

information, such as improper payments. 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. Improper payments occur 

when funds go to the wrong or ineligible 

recipient, the proper recipient receives an 

incorrect amount of funds or uses funds in an 

improper manner, or documentation is not 

available to support a payment. Not all 

improper payments involve fraud or waste; 

payment errors are sometimes inadvertent or 

based on missing documentation. Regardless 

of origin, improper payments affect the 

integrity of Federal programs. 

OIG DETERMINED THE FOLLOWING: 

USDA did not comply with all requirements 

set by the Improper Payments Information 

Act (IPIA) of 2002, as amended, for the sixth 

consecutive year. 

• Discrepancies were found between 

supporting documentation and 

information reported in the Agency 

Financial Report (AFR) due to ongoing 

internal control weaknesses in the OCFO 

quality review process; 

• CCC demonstrated material weaknesses 

in its accounting estimates and the 

maintenance of its accounting records 

due to continued deficiencies with 

internal controls; and 

• NRCS has material weaknesses in 

internal control in accounting for 

obligations and expenses. 

CORRECTIVE ACTIONS COMPLETED OR 

PLANNED: 

Office of the Chief Financial Officer 

OCFO incorporated recommended formatting 

changes and updated the Standard Operating 

Procedures (SOP) for the review of the 

Improper Payments Appendix of the AFR. 

These changes will help ensure consistency, 

accuracy, and completeness of the information. 

Commodity Credit Corporation 

Completed actions to address CCC’s financial 

reporting deficiencies are as follows: 

• Designed and implemented policies and 

procedures to require communication and 

collaboration between the decentralized 

groups involved in the review of 

undelivered orders; 

• Developed effective information and 

communication processes to ensure that 

policies and procedures related to 

programs or events that may give rise to 

the recognition of accounting transactions 

are consistently communicated and 

applied throughout the agency and that 

technical accounting issues are identified, 

analyzed, and resolved in a timely 

manner; 

• Modified the policies and procedures 

related to the review of stale obligations 

by developing detailed, written 

procedures to facilitate adequate and 

consistent review across the various 

groups performing the reviews; 

• Designed and implemented processes, 

procedures, and effective controls to 

enable the timely preparation of financial 
SECTION III | Other Information 

148

statements and sufficient evidential 

matter to support accounting transactions; 

• Designed and implemented policies, 

procedures, and controls to accept, track, 

and monitor agreements entered into with 

other agencies; 

• Conducted a detailed review of the 

transactions and balances reported in the 

general ledger to ensure that CCC 

maintains adequate supporting 

documentation for transactions and 

balances reported in the general ledger 

and that the supporting documentation is 

readily available; and 

• Designed and implemented policies, 

procedures, and controls to review 

Unfilled Customer Orders balances to 

determine whether they should still be 

open, or whether the funding should be 

returned to the ordering agency before 

the period of availability of the funding 

appropriation ends. 

FSA/CCC will evaluate its programs to 

determine the feasibility of implementing 

functionality to automatically deobligate 

undelivered orders. This study will take into 

consideration technical and programmatic 

limitations, and develop the conceptual 

system design. FSA will also continue to 

implement automated funds control for all 

obligations and expenditures at the transaction 

level within the core financial system and 

implement the necessary compensating 

controls until such automated controls are 

fully implemented. 

Natural Resources Conservation Service 

NRCS planned corrective actions for FY 2018 

and completed actions for FY 2017 can be 

found in the FMFIA section of this report. 

CHALLENGE 5: 

USDA Needs to Improve Outreach 

Efforts 

USDA has emphasized its efforts to improve 

outreach to new and beginning farmers and 

ranchers, local and regional food producers, 

minorities, women, and veterans. As part of 

these efforts, the Department has stressed the 

importance of civil rights, highlighting that 

significant progress needs to be made in 

working with communities when addressing 

past civil rights issues. Due to a history of 

public attention concerning how USDA has 

treated members of socially disadvantaged 

groups, the Department faces challenges in 

earning those groups’ trust. 

In recent years, OIG has completed audits 

intended to help resolve long standing 

complaints against USDA. The Food, 

Conservation, and Energy Act of 2008 directed 

that all pending claims and class actions (for 

example, Pigford v. Glickman, Garcia v. 

Vilsack, and Love v. Vilsack) brought against 

USDA by socially disadvantaged farmers or 

ranchers, including Hispanics and women, 

based on racial, ethnic, or gender 

discrimination in farm program participation, 

be resolved in an expeditious and just manner. 

OIG’s review of the claims administration 

process for these class actions generally found 

that the process for resolving these complaints 

was strong, and appropriate payments were 

being made to eligible farmers. 

OIG also performed audits designed to help 

the Department improve outreach to socially 

disadvantaged groups and evaluated the 

effectiveness of the Department’s activities 

related to providing assistance to beginning 

farmers and ranchers. 
USDA Agency Financial Report | 2017 

149

OIG DETERMINED THE FOLLOWING: 

FSA could not demonstrate that it 

successfully reached out to some targeted 

audiences, such as specific underserved 

groups and veterans as a result of OIG’s 

review of the Microloan Program. 

CORRECTIVE ACTIONS COMPLETED OR 

PLANNED: 

Farm Service Agency 

FSA has taken several actions to increase and 

track its outreach efforts to underserved 

communities. These efforts include the 

actions below: 

• Implemented the enhancements to the 

Microloan module of the Direct Loan 

System; 

• Entered into over 101 cooperative 

agreements with local, State, and national 

partners that benefitted all 50 States and 

territories. The proposals awarded are to 

conduct outreach, technical, and financial 

assistance on FSA programs to 

underserved communities; 

• State offices will conduct informational 

sessions annually with nonprofits and 

organizations who have received funding 

from USDA agencies as part of their 

outreach strategy to underserved 

communities; 

• Review State reports of county outreach 

activities monthly in the Outreach 

Tracking and Information System (OTIS); 

• Provide quarterly progress reports to the 

Administrator and State Executive 

Directors; 

• Continue to evaluate effective means of 

data collection to enable the agency to 

better track customer traffic with respect 

to outreach activities; 

• Required each State Executive Director 

to designate one person to coordinate 

outreach efforts — including the role of 

Farm Loan Program outreach efforts; and 

• Required State Outreach Coordinators 

and State Executive Directors to include 

measurable outreach goals in the 

Strategic Outreach Plans that specify 

targeted outreach efforts for farm loan 

programs in each county of their state. 

FSA continues to evaluate an effective means 

of data collection that may enable the agency 

to better track customer traffic with respect to 

outreach activities. Outreach tracking will be 

made available through the Bridges To 

Opportunity (BTO) system (which provides 

producers a centralized location for farm 

program information) to eliminate duplicative 

efforts in more than one system. 

CHALLENGE 6: 

Food Safety Inspections Need 

Improved Controls

The Food Safety and Inspection Service 

(FSIS) has taken action to improve food 

safety and the humane handling of animals at 

the plants FSIS inspects. However, OIG 

found that FSIS continues to face challenges 

gathering reliable data to ensure safety 

verification tasks are completed, effective, 

and consistent. FSIS also continues to face 

challenges in training, documenting and 

tracking, overseeing, testing, and verifying 

that the Nation’s commercial supply of meat, 

poultry, and egg products complies with 

regulatory requirements. 

FSIS inspectors verify that the Nation’s 

commercial supply of meat, poultry and egg 

products are safe, wholesome, and correctly 

handled, processed, labeled, and packaged. 

FSIS has approximately 9,600 employees, 

which includes inspection personnel stationed 
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150

at approximately 6,500 federally inspected 

establishments. Slaughter and processing 

facilities are responsible for implementing 

FSIS’ directives for controlling hazards in food 

production. To assess the overall effectiveness 

of the establishments’ food safety systems, 

inspectors verify whether an establishment is 

meeting its regulatory requirements and has 

addressed the relevant food safety hazards for 

all of its processes, products, and intended 

uses. To this end, FSIS inspectors must 

reliably and timely access, input, and use 

information in its reporting systems. 

OIG DETERMINED THE FOLLOWING: 

• FSIS did not ensure that inspectors 

follow corrective actions as designed to 

prevent reported conditions from 

recurring. FSIS officials either did not 

effectively monitor or did not hold their 

staff accountable when these actions did 

not correct the problems identified; 

• FSIS must enhance its methods of 

verifying labels for undeclared allergens 

with a more robust approach; and 

• FSIS needs to improve how it monitors 

and documents food safety tasks specific 

to allergens. 

CORRECTIVE ACTIONS COMPLETED 

AND PLANNED: 

Food Safety and Inspection Service 

FSIS will conduct a comprehensive review of 

its directives and notices. During this review, 

the allergens-related directives and notices will 

be reviewed for consistency and assurance that 

the allergen verification task is a priority 3 

level; instructions will be updated, if needed. 

Also, as part of FSIS’ comprehensive 

management controls program, FSIS will 

assess and verify the effectiveness of 

corrective actions implemented. 

CHALLENGE 7: 

FNS Needs to Strengthen SNAP 

Management Controls 

Although FNS has endeavored to improve 

management controls for the Supplemental 

Nutrition Assistance Program (SNAP), 

weaknesses continue to exist in controls over 

administrative tasks, benefit distribution, and 

quality control (QC) processes. The potential 

exists for billions of dollars of taxpayerfunded assistance not to be delivered or used 

as intended. 

As the largest benefit program within USDA 

and one of the largest in the Federal 

Government, SNAP presents a unique 

challenge for the program’s managers. In 

FY 2016, SNAP provided monthly food 

assistance for nearly 44 million low-income 

individuals and disbursed almost $67 billion 

in benefits. Given SNAP’s size and 

significance, fraud, waste, and abuse are 

critical concerns. OIG’s audit work focuses 

on improving the efficiency of program 

administration and maintaining the integrity 

of Federal funds. 

OIG DETERMINED THE FOLLOWING: 

• FNS needs to improve its QC process 

regarding how States determine 

household eligibility, as well as how they 

calculate and issue benefits for SNAP; 

• FNS’ lack of oversight and weaknesses in 

State and county controls over SNAP 

administrative costs led to inaccurate 

program financial reporting and 

questioned costs; 

• FNS needs to strengthen SNAP 

administration controls to verify the 

identity of authorized SNAP retailers and 

take appropriate actions to address 

incorrect information; and 
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151

• FNS has not designed controls to ensure 

consistent and accurate reporting by 

retailers in the two information systems 

used to administer SNAP. 

CORRECTIVE ACTIONS COMPLETED 

AND PLANNED: 

Food and Nutrition Service 

FNS codified procedures by updating to the 

QC Management Evaluation Guide. 

This guide is for use by Federal staff when 

reviewing State agencies (SA) for compliance 

with QC policy and consists of two modules: 

review of QC integrity and review of dropped 

cases. The guide includes a comprehensive 

interview template for Federal reviewers to 

complete with SA staff at all levels and case 

review sheets for Federal reviewers to 

complete using documents provided by the 

State. Following FNS’ SOPs for management 

evaluations, States are issued a report that 

details observations, findings, and 

recommendations; and the SA must provide a 

Corrective Action Plan (CAP) within 60 days. 

At the beginning of FY 2017, FNS issued an 

update to the FNS Handbook 310 “SNAP 

Quality Control Handbook.” The updated 

handbook included updates in the following 

areas: (1) requirements of verification; (2) the 

use of “likely conclusion;” (3) reinforcing the 

reviewers obligation to verify compliance with 

Employment and Training (E&T) 

requirements; and 4) addressing review 

procedures for simplified reporting households 

and includes specific language clarifying the 

timelines for reporting and acting on changes. 

FNS is awaiting completion of a study titled 

“Feasibility of Revising the SNAP Quality 

Control Review Process,” and the results of 

this study will determine what FNS would 

need to do to consider implementing a onetier QC system. 

The FNS Midwest Regional Office (MWRO) 

sent a memorandum to the Ohio Department 

of Job and Family Services (ODJFS) 

instructing them to establish procedures for 

properly reporting SNAP E&T expenditures 

in the correct funding category. This task was 

completed, and a copy of the new written 

procedures were provided to FNS. 

The MWRO also worked with ODJFS to 

review $3,575,424 in E&T expenditures, and 

determined that the movement of funds by 

ODJFS between certain E&T funding 

categories was appropriate. Therefore, FNS 

did not need to establish an account 

receivable with the State. 

FNS continued to work on verifying the 

identity of owners found on the Death Master 

List produced by OIG and take corrective 

actions to correct any misinformation or 

remove owners that are no longer living. FNS 

has completed 80 percent of the provided list 

and continues to work through the remaining 

entries. Additionally, FNS has undertaken 

work to review the list of 176 owners with 

reported birthdates making them under of the 

age of 18. In cases where this is due to a data 

entry error, corrections will be made in the 

Store Tracking and Redemption System 

(STARS). For cases that are not the result of 

data entry errors, FNS will contact the listed 

owner to determine if there are other owners of 

the store that should be added to STARS. Any 

store where the sole owner is under the age of 

18 will be withdrawn pending a review of the 

age of majority in that particular State. FNS 

also provided training in April 2017 reiterating 

current FNS policy, which states that if a 

retailer applicant is under 18 years of age, staff 

must check with the appropriate State to 

definitively determine the age of majority. 

FNS will complete reviews of the 1,819 

owners on the Death Master File and 

implement corrective actions as warranted. 
SECTION III | Other Information 

152

Upon completion of the reviews, FNS will 

research and determine the procedures 

necessary to design controls to identify and 

correct information indicating deceased 

owners. 

The OIG USDA Management Challenges 

Report issued September 8, 2017, may be 

viewed in its entirety at the following Web 

site: https://www.usda.gov/oig/webdocs/ 

MgmtChallenges2017.pdf
USDA Agency Financial Report | 2017 

153

Summary of Financial Statement Audit and 

Management Assurances 

SUMMARY OF EXISTING MATERIAL WEAKNESSES 

The U.S. Department of Agriculture’s (USDA) material weaknesses and financial system nonconformance, as related to management’s assurance for the Federal Managers’ Financial 

Integrity Act (FMFIA) and the certification for the Federal Financial Management Improvement 

Act (FFMIA), are listed in Exhibit 7 and Exhibit 8. 

EXHIBIT 7: Summary of Financial Statement Audit 

AUDIT OPINION: Unmodified 2017 Consolidated Balance Sheet 

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 8: Summary of Management Assurances

EFFECTIVENESS OF INTERNAL CONTROL OVER FINANCIAL REPORTING (FMFIA § 2) 

STATEMENT OF ASSURANCE: 

Material Weakness Beginning 

Balance New Resolved Consolidated Reassessed Ending Balance 

Information 

Technology 1 1 

Financial 

Management 1 1 

TOTAL MATERIAL 

WEAKNESSES 2 

 

2 
SECTION III | Other Information 

154

EFFECTIVENESS OF INTERNAL CONTROL OVER OPERATIONS (FMFIA § 2) 

STATEMENT OF ASSURANCE: 

Material Weakness Beginning 

Balance New Resolved Consolidated Reassessed Ending Balance 

TOTAL MATERIAL 

WEAKNESSES 0 

 

0 

CONFORMANCE WITH FINANCIAL MANAGEMENT SYSTEM REQUIREMENTS (FMFIA § 4) 

STATEMENT OF ASSURANCE: SYSTEMS DO NOT CONFORM TO FINANCIAL MANAGEMENT SYSTEM 

REQUIREMENTS 

Material Weakness Beginning 

Balance New Resolved Consolidated Reassessed Ending 

Balance 

Funds Control 

Management 1 1 

TOTAL NONCONFORMANCES 1 

 

1 

COMPLIANCE WITH 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 
USDA Agency Financial Report | 2017 

155

Payment Integrity Management

WHAT IS PAYMENT INTEGRITY? 

Payment integrity means ensuring payments 

made to people on behalf of government are 

managed correctly and that appropriate 

internal controls and checks and balances 

exist to minimize the likelihood of errors. 

When payment errors occur, they are referred 

to as improper payments.

WHAT ARE IMPROPER 

PAYMENTS? 

The Office of Management and Budget 

(OMB) Memorandum M-15-02 defines an 

improper payment as: 

“any payment that should not have been 

made or that was supposed to be made, but 

is in an incorrect amount under statutory, 

contractual, administrative, or other legally 

applicable requirements. 

Incorrect amounts are overpayments or 

underpayments made to eligible recipients 

(including inappropriate denials of 

payment or service, any payment that does 

not account for credit for applicable 

discounts, payments that are for an 

incorrect amount, and duplicate payments). 

An improper payment also includes any 

payment that was made to an ineligible 

recipient or for an ineligible good or 

service, or payments for goods or services 

not received (except for such payments 

authorized by law). In addition, when an 

agency’s review is unable to discern 

whether a payment was proper as a result 

of insufficient or lack of documentation, 

this payment must also be considered an 

improper payment.”

ARE IMPROPER PAYMENTS 

REQUIRED TO BE REPORTED? 

Yes. The Improper Payments Information Act 

of 2002 (IPIA), as amended by the Improper 

Payments Elimination and Recovery Act of 

2010 (IPERA), and the Improper Payments 

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 to Congress. 

A program with the potential for significant 

improper payments, also known as a high-risk 

program, has both a 1.5-percent improper 

payment rate and at least $10 million in 

improper payments, or exceeds $100 million 

dollars in improper payments. Readers can 

obtain more detailed information on improper 

payments and information published in past 

Agency Financial Reports (AFR) at: 

PaymentAccuracy.gov. 

RESULTS FOR FISCAL YEAR 

2017

• The U.S. Department of Agriculture 

(USDA) has 10 high-risk programs as 

compared to 18 in fiscal year (FY) 2016. 

With concurrence from the Office of 

Inspector General (OIG) and OMB, 

USDA removed the following eight 

programs from the OMB High-Risk List:

1. Natural Resources Conservation 

Service (NRCS) Hurricane Sandy, 

Emergency Watershed Protection 

Program; 
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156

2. Forest Service (FS) Hurricane Sandy, 

Emergency Forest Restoration Program; 

3. FS Hurricane Sandy, Capital 

Improvement and Maintenance; 

4. Farm Service Agency (FSA) 

Hurricane Sandy, Emergency 

Conservation Program; 

5. FSA Livestock Indemnity Program; 

6. FSA Supplemental Revenue 

Assistance Program; 

7. FSA Hurricane Sandy, Emergency 

Forest Restoration Program; and 

8. Rural Housing Service (RHS) Rental 

Assistance Program (RAP). 

• Four of the ten remaining high-risk 

programs, appear to be fully compliant 

with IPERA. 

 FSA Loan Deficiency Payments (LDP) 

 FSA Livestock Forage Disaster 

Program (LFP) 

 NRCS Farm Security and Rural 

Investment Act Program (FSRIP) 

 Risk Management Agency (RMA) 

Federal Crop Insurance Corporation 

(FCIC) 

• FSA LDP and LFP were non-compliant 

in FY 2016, but are now considered 

“Compliant” with IPERA law. 

• Improper payments in FY 2017 were 

$3.33 billion, compared to $3.35 billion 

in FY 2016.

The same numbers when expressed as a 

percentage are misleading. USDA’s improper 

payment percentage for the remaining 

10 high-risk programs rose from 8.86 percent 

in FY 2016 to 9.93 percent in FY 2017. This 

is because Food and Nutrition Service (FNS) 

programs with historically higher error rates 

now comprise a larger percentage of the total 

high-risk program outlays in FY 2017.

• USDA’s recovery auditing efforts yielded 

$860.08 million: 

 $0.28 million from the Supplier Credit 

Recovery Audit program, 

 $245.25 million from USDA 

programs’ internal payment recapture 

audits, and 

 $614.55 million outside of payment 

recapture audits. 

• In July 2017, USDA’s Rural 

Development (RD) transmitted Credit 

Alert Interactive Voice Response System 

(CAIVRS) data to Treasury’s new 

CAIVRS database for Do Not Pay 

(DNP). USDA is one of the six source 

Federal agencies for this data. This data 

is used to check the eligibility of loan 

applicants at the time of award. 

I. RISK ASSESSMENT 

USDA’s Office of the Chief Financial Officer 

(OCFO) conducted a “Risk Assessment 

Methodology Pilot” intended to reduce 

burdens on agencies by leveraging existing 

A-123 Appendix A assessment methods, to 

meet the A-123 Appendix C risk assessment 

deliverable. In FY 2017, the following five 

programs participated in the Appendix A pilot: 

1. Animal and Plant Health Inspection 

Service (APHIS) Salaries and Expenses

2. APHIS Indemnity Program 

3. APHIS Buildings and Facilities 

4. APHIS Trust Funds 

5. APHIS Cooperative Agreements 

USDA will analyze the results and lessons 

learned, to determine if this strategy is 
USDA Agency Financial Report | 2017 

157

potentially feasible for other USDA programs 

and activities. 

OCFO issued guidance for the A-123 

Appendix C risk assessment process and 

performed extensive reviews of draft risk 

assessments. The following evaluation criteria 

are included as part of USDA’s risk 

assessment process: 

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; 

7. Inherent risks of improper payments due 

to the nature of agency programs or 

operations; 

8. 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; and 

9. Results from prior improper payment 

work. 

While USDA is cited as having approximately 

300 programs, similar programs were grouped 

together to help identify and report improper 

payments. This resulted in a USDA program 

inventory list of 149 programs, for IPERA 

reporting purposes. Of these 149 programs, ten 

are considered to be at significant risk of 

improper payments, and 139 are considered to 

be low risk. Risk assessments for low-risk 

programs are completed on a 3-year rotating 

cycle. During FY 2017, the following 57 

programs completed risk assessments and were 

determined to be low risk: 

1. Commodity Credit Corporation (CCC) 

Marketing Assistance Loan Program 

2. CCC Conservation Reserve Program 

3. CCC Dairy Domestic Donations 

4. CCC Farm Storage Facility Loan 

5. CCC Upland Cotton Economic 

Adjustment Assistance Program 

6. CCC Sugar Purchase Program 

7. CCC Feedstock Flexibility Program 

8. CCC Export Guarantee Program

9. CCC Trade Adjustment Assistance 

Program 

10. CCC Agriculture Risk Coverage and 

Price Loss Coverage 

11. CCC Margin Protection Program for 

Dairy Producers 

12. Foreign Agricultural Service McGovernDole Food for Education Grants 

13. Farm Service Agency (FSA) Emergency 

Conservation Program 

14. FSA Grassroots Source Water Protection 

Program 

15. FSA Reimbursement Transportation Cost 

Payment Program

16. FSA Emergency Forest Restoration 

Program 
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158

17. FSA Reforestation Pilot Program 

18. Food and Nutrition Service (FNS) 

Nutrition Assistance — Puerto Rico 

19. FNS Summer Food Service Program 

20. FNS The Emergency Food Assistance 

Program 

21. FNS Salaries and Benefits 

22. FNS Commodity Supplemental Food 

Program 

23. FNS Farmers Market Nutrition Program 

24. Forest Service Land Acquisition 

25. Natural Resources Conservation Service 

(NRCS) Soil Surveys 

26. NRCS Plant Materials Centers 

27. Rural Business Service (RBS)-

Cooperative Service Relending Programs 

28. Rural Development (RD) Salaries and 

Expenses 

29. Rural Housing Service (RHS) Direct 

Single Family Housing 

30. RHS Guaranteed Community Facility 

Loans 

31. RHS Guaranteed Multi-Family Housing 

Loans (Section 538 Loans) 

32. RHS Housing Loans and Grants — Other 

33. RHS Farm Labor Housing Loans 

(Section 514) and Grants (Section 516) 

34. RHS Rural Rental Housing Loans 

(Section 515 Direct Rural Rental 

Housing Loans) 

35. RHS RD Voucher Program (Section 542) 

36. Rural Utilities Service (RUS) Broadband 

Telecom Loans — Treasury Rate 

37. RUS Water and Waste Disposal Systems 

for Rural Communities — Grants 

38. RUS Rural Telecommunications Loans 

— Treasury Telecom Loan 

39. RUS Electric Loan Programs — Direct 

Treasury Rate 

40. RUS Rural Utilities Electric Program —

Municipal Rate

41. RUS Community Connect Grants 

42. RUS Public Television Digital Transition 

Grants 

43. RUS Rural Energy Savings Program 

44. RUS Appalachian Regional Commission 

Grants — Water & Waste 

45. RUS Delta Regional Authority Grants — 

Water & Waste Projects

46. Agriculture Research Service Buildings 

and Facilities 

47. Departmental Management (DM) 

Agriculture Buildings and Facilities 

48. DM Hazardous Materials Management 

49. DM Biobased Markets Program 

50. Office of the Secretary Salaries and 

Expenses 

51. Office of Advocacy and Outreach — 

Outreach for Socially Disadvantage 

Farmers 

52. Office of Civil Rights Salaries and 

Expenses 

53. National Appeals Division Salaries and 

Expenses 

54. Office of Budget and Program Analysis 

Salaries and Expenses 

55. Office of the Chief Economist Salaries 

and Expenses 

56. Office of the Chief Financial Officer 

Salaries and Expenses 

57. Office of the General Counsel Salaries 

and Expenses 
USDA Agency Financial Report | 2017 

159

USDA has 10 programs susceptible to significant improper payments (high-risk programs): 

Agency Name Program Name 

Food and Nutrition Services (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 Programs (CACFP) 

Farm Service Agency/ Commodity 

Credit Corporation (FSA/CCC) 

Loan Deficiency Payments (LDP) 

Livestock Forage Disaster Program (LFP) 

Noninsured Crop Disaster Assistance Program (NAP) 

Natural Resources Conservation 

Service (NRCS) 

Farm Security and Rural Investment Act Program 

(FSRIP) 

Risk Management Agency (RMA) Federal Crop Insurance Corporation (FCIC) 

II. SAMPLING AND 

ESTIMATION 

When programs are susceptible to significant 

improper payments, USDA is required to 

conduct an annual sample that complies with 

OMB Circular A-123, Appendix C. This is 

accomplished by conducting a standard 

statistically valid sample or an OMB 

approved alternative methodology. 

The following is a list of USDA’s high-risk 

programs and a brief description of the 

sampling processes that used a standard 

statistically valid sample or their justification 

for utilizing an OMB approved alternative 

methodology: 

1. FNS SNAP 

a. The FY 2016 State-reported data 

provided to FNS did not allow for the 

determination of State error rates. The 

State error rates are used to calculate the 

national payment error rate each fiscal 

year. Since USDA was unable to obtain 

validated State error rates, USDA 

decided not to report a SNAP payment 

error rate in the FY 2017 AFR. 

b. Change in sampling process: While there 

were no changes in the FY 2016 

sampling process, SNAP was unable to 

validate State data; therefore, no U.S.-

wide payment error rate was calculated. 

FNS has taken steps to ensure that States 

have a better understanding of the review 

process to ensure that future years can be 

validated. 

2. FNS NSLP 

a. Access, Participation, Eligibility, and 

Certification Study-II (APEC-II) 
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160

established estimates of erroneous 

payments due to certification error and 

non-certification error for school year 

2012–2013. FNS generates an annual 

update for the improper payment 

measurements of both components using 

statistical techniques based on the 

findings of this study. The sample 

universe represents payments made in 

school year 2015-2016.

b. Change in sampling process: None. 

c. Justification: Using the OMB-approved 

alternative methodology is currently the 

only way to report an improper payment 

rate for these programs. 

3. FNS SBP 

a. APEC-II established estimates of 

erroneous payments due to certification 

error and non-certification error for 

school year 2012-2013. FNS generates an 

annual update for the improper payment 

measurements of both components using 

statistical techniques based on the 

findings of this study. The sample 

universe represents payments made in 

school year 2015-2016.

b. Change in sampling process: None. 

c. Justification: Using the OMB approved 

alternative methodology is currently the 

only way to report an improper payment 

rate for these programs. 

4. FNS WIC 

a. 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 represents 

payments made in October 2015 through 

September 2016. 

b. Change in sampling process: None. 

c. Justification: Using the OMB-approved 

alternative methodology is currently the 

only way to report an improper payment 

rate for these programs. 

5. FNS CACFP 

a. 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. A three-stage 

sample design was used. The first stage 

was developing a sample of States, from 

which a sample of sponsors was selected 

at the second stage, and a sample of 

FDCHs was selected in the final stage. 

FNS measured the level of erroneous 

payments due to sponsor error for the 

two types of program reimbursement 

(Tier 1 and Tier 2). The sampling 

universe represents payments made in 

October 2015 through September 2016. 

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 errors 

at this time. 
USDA Agency Financial Report | 2017 

161

b. Change in sampling process: None. 

c. Justification: Using the OMB-approved 

alternative methodology is currently the 

only way to report an improper payment 

rate for these programs. 

6. FSA/CCC LDP 

a. Determined a sample from the payments 

made in the prior fiscal year using a 90-

percent confidence interval of plus or 

minus 2.5 percent points. 

b. Change in sampling process: None. 

7. FSA/ CCC LFP 

a. Determined a sample from the payments 

made in the prior fiscal year using a 90-

percent confidence interval of plus or 

minus 2.5 percent points. 

b. Change in sampling process: None. 

8. FSA/CCC NAP 

a. Determined a sample from the payments 

made in the prior fiscal year using a 90-

percent confidence interval of plus or 

minus 2.5 percent points. 

b. Change in sampling process: None. 

9. NRCS FSRIP 

a. Determined a sample from the payments 

made in the prior fiscal year using a 90-

percent confidence interval of plus or 

minus 2.5 percent points. 

b. Change in sampling process: Testing for 

FY 2017 was done quarterly, rather than 

at the close of the fiscal year, as was 

done previously. Farm Bill Salaries, 

which were classified as technical 

assistance in prior years as a low-risk 

program, are now incorporated into the 

testing population. 

10.RMA FCIC 

a. Sample resulted in a confidence interval 

of 95 percent plus or minus 1.45 percent 

points. Sampling period is for the 

reinsurance year 2015, which is based on 

the yearly reinsurance agreements in 

effect with Approved Insurance 

Providers (AIP) July 2014 to June 2015. 

b. Change in sampling process: For 

FY 2017 and beyond, RMA sampled and 

will continue to sample from all crops 

and all related insurance types, as 

compared to sampling one crop and one 

type of insurance. RMA will continue to 

develop an estimated improper payment 

rate applicable to the entire program. 
SECTION III | Other Information 

162

III. PAYMENT INTEGRITY REPORTING 

Table 13 shows USDA’s high-risk programs sampling and estimation results. See the annotated notes for additional program 

explanations as appropriate. 

TABLE 13: Payment Integrity Outlook ($ in Millions) 

Table presents results for all USDA Programs Susceptible to Improper Payments 

Program 

Previous Year (PY) Outlays $ PY Improper Payment (IP) % PY IP $ Current Year (CY) Outlays $ CY Properly Paid % CY IP % CY Properly Paid $ CY IP $ CY Overpayment $ CY % of Overpayments CY Underpayment $ CY % of Underpayments CY +1 Est. Outlays $ CY + 1 Est. IP % CY + 1 Est. IP $ 

FNS Supplemental Nutrition Assistance 

Program (SNAP) [Note #1] 

N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 

FNS National School Lunch Program 

(NSLP) Total Program [Note #2] 

$11,994.80 

15.17% 

$1,819.74 

$12,258.11 

84.70% 15.30% 

$10,382.62 

$1,875.49 $1,372.30 

73.17% 

$503.19 

26.83% 

$12,414.71 

14.08% 

$1,747.99 

FNS School Breakfast Program (SBP) 

Total Program [Note #2] 

$3,959.60 

22.48% 

$890.17 

$4,212.55 

77.25% 22.75% 

$3,254.19 

$958.36 $760.08 

79.31% 

$198.28 

20.69% 

$4,488.13 

20.75% 

$931.29 

FNS Special Supplemental Nutrition 

Program for Women, Infants, and 

Children (WIC) Total Program 

$4,335.00 

4.79% 

$207.65 

$3,949.36 

95.01% 

4.99% 

$3,752.29 

$197.07 $115.13 

58.42% 

$81.94 

41.58% 

$3,811.38 

3.88% 

$147.88 
USDA Agency Financial Report | 2017 

163

Program 

Previous Year (PY) Outlays $ PY Improper Payment (IP) % PY IP $ Current Year (CY) Outlays $ CY Properly Paid % CY IP % CY Properly Paid $ CY IP $ CY Overpayment $ CY % of Overpayments CY Underpayment $ CY % of Underpayments CY +1 Est. Outlays $ CY + 1 Est. IP % CY + 1 Est. IP $ 

FNS Child and Adult Care Food Program 

(CACFP) Total Program [Note #3] 

N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 

FSA Loan Deficiency Payments (LDP) 

$124.01 

3.21% 

$3.98 

$171.72 

98.30% 

1.70% 

$168.80 

$2.92 $2.86

97.95% 

$0.06 

2.05% 

$229

1.69% 

$3.87 

FSA Livestock Forage Disaster Program 

(LFP) 

$2,581.12 

4.74% 

$122.35 $457.31 

96.86% 

3.14% 

$442.97 

$14.34 $11.38 

79.36% 

$2.96 

20.64% 

$336

3.10% 

$10.42 

FSA Livestock Indemnity Program (LIP) 

$54.27 

12.87% 

$6.98 

OMB concurred that the FSA Livestock Indemnity Program (LIP) met the 

requirements for relief from annual reporting, as the improper payments rate 

reported has been under the reporting threshold* for more than 2 

consecutive years: LIP is relieved of annual improper payments reporting, in 

accordance with the Office of Management and Budget Circular A-123, 

Appendix C. 

FSA Supplemental Revenue Assistance 

Payments Program (SURE) 

$4.55 

11.53% 

$0.52 

OMB concurred that the FSA Supplemental Revenue Assistance Payments 

(SURE) met the requirements for relief from annual reporting, as the 

improper payments rate reported has been under the reporting threshold* 

for more than 2 consecutive years: SURE is relieved of annual improper 

payments reporting, in accordance with the Office of Management and 

Budget Circular A-123, Appendix C. 
SECTION III | Other Information 

164

Program 

Previous Year (PY) Outlays $ PY Improper Payment (IP) % PY IP $ Current Year (CY) Outlays $ CY Properly Paid % CY IP % CY Properly Paid $ CY IP $ CY Overpayment $ CY % of Overpayments CY Underpayment $ CY % of Underpayments CY +1 Est. Outlays $ CY + 1 Est. IP % CY + 1 Est. IP $ 

FSA Noninsured Crop Disaster 

Assistance Program (NAP) 

$128.85 

5.47% 

$7.05 

$139.60 

91.51% 

8.49% 

$127.75 

$11.85 $11.58 

97.72% 

$0.27 

2.28% 

$154

7.49% 

$11.53 

FSA Hurricane Sandy — Emergency 

Conservation Program (ECP) 

$0.04 

0.18% 

$0.0001 

OMB concurred that the FSA Hurricane Sandy — Emergency Conservation 

Program (ECP) met the requirements for relief from annual reporting, as the 

improper payments rate reported has been under the reporting threshold* 

for more than 2 consecutive years: ECP is relieved of annual improper 

payments reporting, in accordance with the Office of Management and 

Budget Circular A-123, Appendix C. 

FSA Hurricane Sandy — Emergency 

Forest Restoration Program (EFRP) 

$0.79 

1.43% 

$0.01 

OMB concurred that the FSA Hurricane Sandy — Emergency Forest 

Restoration Program (EFRP) met the requirements for relief from annual 

reporting, as the improper payments rate reported has been under the 

reporting threshold* for more than 2 consecutive years: EFRP is relieved of 

annual improper payments reporting, in accordance with the Office of 

Management and Budget Circular A-123, Appendix C, revised Parts I and H. 

NRCS Farm Security and Rural 

Investment Act Programs (FSRIP) 

$1,994.14 

2.38% 

$47.41 

$2,304.27 

98.88% 

1.12% 

$2,278.44 

$25.83 $25.83 

100.00% 

$0 

0.00% 

$2,637.77 

1.11% 

$29.20 
USDA Agency Financial Report | 2017 

165

Program 

Previous Year (PY) Outlays $ PY Improper Payment (IP) % PY IP $ Current Year (CY) Outlays $ CY Properly Paid % CY IP % CY Properly Paid $ CY IP $ CY Overpayment $ CY % of Overpayments CY Underpayment $ CY % of Underpayments CY +1 Est. Outlays $ CY + 1 Est. IP % CY + 1 Est. IP $ 

NRCS Hurricane Sandy —Emergency 

Watershed Protection Program (EWPP) 

$5.08 

0.00% 

$0 

OMB concurred that the NRCS Hurricane Sandy — Emergency Watershed 

Protection Program (EWPP) met the requirements for relief from annual 

reporting, as the improper payments rate reported has been under the 

reporting threshold* for more than 2 consecutive years: EWPP is relieved of 

annual improper payments reporting, in accordance with the Office of 

Management and Budget Circular A-123, Appendix C. 

RHS Rental Assistance Program (RAP) 

$1,141.39 

1.10% 

$12.56 

OMB concurred that the RHS Rental Assistance Program (RAP) met the 

requirements for relief from annual reporting, as the improper payments rate 

reported has been under the reporting threshold* for more than 2 

consecutive years: RAP is relieved of annual improper payments reporting, in 

accordance with the Office of Management and Budget Circular A-123, 

Appendix C. 

RMA Federal Crop Insurance 

Corporation (FCIC) Program Fund 

[Note #4] 

$11,503.29 

2.02% 

$232.37 

$9,162.33 

98.04% 

1.96% 

$8,982.56 

$179.77 $167.74 

93.31% 

$12.03 

6.69% 

$4,158.00 

1.95% 

$81.08 
SECTION III | Other Information 

166

Program 

Previous Year (PY) Outlays $ PY Improper Payment (IP) % PY IP $ Current Year (CY) Outlays $ CY Properly Paid % CY IP % CY Properly Paid $ CY IP $ CY Overpayment $ CY % of Overpayments CY Underpayment $ CY % of Underpayments CY +1 Est. Outlays $ CY + 1 Est. IP % CY + 1 Est. IP $ 

FS Hurricane Sandy — EFRP 

$0.06 

0.00% 

$0 

OMB concurred that the FS Hurricane Sandy — Emergency Forest Restoration 

Program (EFRP) met the requirements for relief from annual reporting, as the 

improper payments rate reported has been under the reporting threshold* 

for more than 2 consecutive years: EFRP is relieved of annual improper 

payments reporting, in accordance with the Office of Management and 

Budget Circular A-123, Appendix C. 

FS Hurricane Sandy — Capital 

Improvement and Maintenance (CIM) 

$0.58 

0.00% 

$0 

OMB concurred that the FS Hurricane Sandy — Capital Improvement and 

Maintenance (CIM) met the requirements for relief from annual reporting, as 

the improper payments rate reported has been under the reporting 

threshold* for more than 2 consecutive years: CIM is relieved of annual 

improper payments reporting, in accordance with the Office of Management 

and Budget Circular A-123, Appendix C. 

USDA Total 

[Note #5] 

$37,827.57 

8.86% 

$3,350.79 

$32,655.25 

90.00% 10.00% 

$29,389.62 

$3,265.63 $2,466.90 

75.54% 

$798.73 

24.46% 

$28,228.99 

10.50% 

$2,963.26 

Note *: Reporting thresholds in OMB Circular A-123 Appendix C, are programs exceeding (1) both 1.5 percent of program outlays 

and $10,000,000 of all program or activity payments made during the fiscal year reported or (2) $100,000,000 (regardless 

of the improper payment percentage of total program outlays). 
USDA Agency Financial Report | 2017 

167

Note #1: The SNAP error rate with reduction targets and root cause categories will be available in FY 2018. 

Note #2: Information has not been adjusted for interaction between the different sources of certification error and 

counting/claiming error. 

Note #3: CACFP currently tests and reports on the Family Day Care Homes (FDCH) tiering decision component of the payment 

process. FNS continues to evaluate the measurement processes for the CACFP meal claim component. FNS has not set a 

date for measurement and reporting. 

Note #4: USDA sampling typically tests the prior year’s outlays or an OMB-approved alternative sampling plan. For RMA’s FCIC 

program, current year reflects the 2015 reinsurance year which ran from July 1, 2014, through June 30, 2015. Section II 

above discusses this in more detail. 

Note #5: USDA’s fiscal year 2018 error rate is estimated to be higher than the fiscal year 2017 error rate because of changing 

outlays. Programs with higher error rates like NSLP and SBP are estimated to have increasing outlays while eight programs 

with low error rates have been removed from the high-risk list. These outlay changes cause USDA’s weighted average error 

rate to increase. 

TABLE 13.1 displays supplemental information, providing a breakdown of specific USDA programs to the component reporting level. 

TABLE 13.1: Program Component Reporting ($ in Millions) 

Program 

Previous 

Year (PY) 

Outlays $ 

PY Improper 

Payment (IP) 

% PY IP $ 

Current 

Year (CY) 

Outlays $ CY IP % CY IP $ 

CY Overpayment $ CY Underpayment $ 

FNS NSLP Total Program 11,994.80 15.17% 1,819.74 12,258.11 15.30% 1,875.49 1,372.30 503.19 

FNS NSLP 

Certification Error 11,994.80 9.21% 1,105.19 12,258.11 9.26% 1,135.10 784.23 350.87 

FNS NSLP 

Counting/Claiming 

Error 

11,994.80 5.96% 714.54 12,258.11 6.04% 740.39 588.07 152.32 
SECTION III | Other Information 

168

Program 

Previous 

Year (PY) 

Outlays $ 

PY Improper 

Payment (IP) 

% PY IP $ 

Current 

Year (CY) 

Outlays $ CY IP % CY IP $ 

CY Overpayment $ CY Underpayment $ 

FNS SBP Total Program 3,959.60 22.48% 890.17 4,212.55 22.75% 958.36 760.08 198.28 

FNS SBP Certification 

Error 3,959.60 10.39% 411.22 4,212.55 10.59% 446.11 298.89 147.22 

FNS SBP 

Counting/Claiming 

Error 

3,959.60 12.10% 478.95 4,212.55 12.16% 512.25 461.19 51.06 

FNS WIC Total Program 4,335.00 4.79% 207.65 3,949.36 4.99% 197.07 115.13 81.94 

FNS WIC Certification 

Error N/A 2.71% 123.00 3,949.36 2.50% 98.54 98.54 0 

FNS WIC Vendor Error N/A 1.91% 87.00 3,949.36 2.49% 98.53 16.59 81.94 

FNS CACFP Total Program 

[Note #1] CACFP tests and reports on the FDCH tiering decision component of the payment process. 

FNS CACFP FDCH —

Tiering Decisions 910.91 0.54% 4.92 844.64 0.54% 4.56 3.43 1.13 

FNS CACFP FDCH —

Meal Claims 

FNS continues to evaluate the measurement processes for the CACFP meal claim component. FNS has 

not set a date for measurement and reporting. 

Note #1: CACFP CY+1 estimated outlays are $888.75 and the CY+1 estimated improper payment dollar amount is $4.80. The CY+1 

error rate is flatlined at 0.54%, as approved by OMB, because CACFP is currently reporting an improper payment rate 

below the high-risk threshold and continued reduction of improper payments may not be cost effective. 
USDA Agency Financial Report | 2017 

169

Table 14 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. 

TABLE 14: Improper Payment Additional Breakdown ($ in Millions) 

Program Federal Government Recipients of Federal Money 

FNS SNAP [Note #1] N/A N/A 

FNS NSLP 0.0 1,875.49 

FNS SBP 0.0 958.36 

FNS WIC 0.0 197.07 

FNS CACFP [Note #1] N/A N/A 

FSA LDP 2.92 0.0 

FSA LFP 14.34 0.0 

FSA NAP 11.85 0.0 

NRCS FSRIP 25.83 0.0 

RMA FCIC 0.0 179.77 

Total 54.94 3,210.69 

Note #1: Since SNAP did not report an error rate for FY 2017, a breakdown of root causes and 

associated costs is unavailable. The SNAP error rate with reduction targets and root 

cause categories will be available in FY 2018. Also, CACFP currently tests and reports 

on the FDCH tiering decision component of the payment process. FNS continues to 

evaluate the measurement processes for the CACFP meal claim component. FNS has 

not set a date for measurement and reporting. As a result, a breakdown for CACFP is 

unavailable. 
SECTION III | Other Information 

170

DISCUSSION OF SUPPLEMENTAL 

MEASURES 

High-priority programs are required to submit 

supplemental measures. The criteria for 

determining when a program is high priority 

are found in OMB Circular A-123, Appendix 

C. High-priority programs are those programs 

that report more than the $750 million 

threshold in improper payments, did not 

report an error amount in the current reporting 

year but previously reported an error amount 

over the threshold, or have not yet established 

a program error rate and have measured 

components that were above the threshold. 

USDA currently has the following three 

programs designated as high-priority 

programs. 

1. FNS SNAP 

a. FNS SNAP: The Department will not 

release a SNAP national payment 

error rate for benefits issued in 

FY 2016. FNS expects to report to the 

Department a valid FY 2017 error rate 

no later than June 30, 2018. 

2. FNS NSLP 

USDA reports two supplemental measures for 

the NSLP on PaymentAccuracy.gov. 

They are: 

a. The first is the percent of students 

directly certified for free school meals 

as a percent of all students certified for 

free meals. The figure is updated 

annually based on information reported 

to FNS by State each October. This 

figure summarizes State and school 

district success in transitioning from 

traditional applications that exhibit 

relatively high error rates, to direct 

certification, with much lower error 

rates. 

b. The second is the number of State 

agencies that receive State Technology 

Grants from USDA. This figure is an 

indirect measure of State agency 

investments in technology 

improvements and automation that 

reduces the risk of human error, 

particularly in recordkeeping and 

counting and claiming meals for 

Federal reimbursement. This figure is 

also reported on an annual cycle that 

coincides with the award of State 

agency grants by USDA. 

3. FNS SBP

USDA reports two supplemental measures for 

the SBP on PaymentAccuracy.gov. They are: 

a. The first is the percent of students 

directly certified for free school meals 

as a percent of all students certified for 

free meals. The figure is updated 

annually based on information reported 

to FNS by that State each October. This 

figure summarizes State and school 

district success in transitioning from 

traditional applications that exhibit 

relatively high error rates, to direct 

certification, with much lower error 

rates. 

b. The second is the number of State 

agencies that receive State Technology 

Grants from USDA. This figure is an 

indirect measure of State agency 

investments in technology 

improvements and automation that 

reduces the risk of human error, 

particularly in recordkeeping and 

counting and claiming meals for 

Federal reimbursement. This figure is 

also reported on an annual cycle that 

coincides with the award of State 

agency grants by USDA. 
USDA Agency Financial Report | 2017 

171

IV. PAYMENT INTEGRITY IMPROVEMENT: IMPROPER PAYMENT ROOT CAUSE 

CATEGORIES 

TABLE 15: Type of Improper Payment ($ in Millions) 

Reason for Improper Payment 

FNS SNAP [Note #1] FNS NSLP [Note #2] FNS SBP [Note #2] FNS WIC 

Overpayments Underpayments Overpayments Underpayments Overpayments Underpayments Overpayments Underpayments 

Program design or Structural Issue 461.75 300.31 163.93 125.12 

Inability to Authenticate Eligibility 

Failure to 

Verify 

Death Data 

Financial Data 

Excluded Party 

Data 

Prisoner Data 

Other Eligibility 

Administrative 

or Process 

Error Made By 

Federal Agency 

State and Local 

Agency $910.55 $202.88 $596.15 $73.16 $115.13 $81.94 

Other Party 

Medical Necessity 

Insufficient Documentation to 

Determine 

Other Reason 

TOTAL N/A N/A $1,372.30 $503.19 $760.08 $198.28 $115.13 $81.94 
SECTION III | Other Information 

172

Reason for Improper Payment 

FNS CACFP [Note #2] FSA LDP FSA LFP 

Overpayments Underpayments Overpayments Underpayments Overpayments Underpayments 

Program design or Structural Issue 

Inability to Authenticate Eligibility $2.29 

Failure to Verify 

Death Data 

Financial Data 

Excluded Party Data 

Prisoner Data 

Other Eligibility 

Administrative or 

Process Error Made By 

Federal Agency $1.75 $0.06 $4.71 $2.96 

State and Local Agency $3.43 $1.13 

Other Party 

Medical Necessity 

Insufficient Documentation to Determine $1.11 $4.38 

Other Reason 

TOTAL $3.43 $1.13 $2.86 $0.06 $11.38 $2.96 
USDA Agency Financial Report | 2017 

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Reason for Improper Payment 

FSA NAP NRCS FSRIP RMA FCIC 

Overpayments Underpayments Overpayments Underpayments Overpayments Underpayments 

Program design or Structural Issue 

Inability to Authenticate Eligibility $13.27 $105.04 $5.57 

Failure to Verify 

Death Data 

Financial Data 

Excluded Party Data 

Prisoner Data 

Other Eligibility $0.04 

Administrative or 

Process Error Made By 

Federal Agency $9.80 $0.27 $12.56 

State and Local Agency 

Other Party $62.70 $6.46 

Medical Necessity 

Insufficient Documentation to Determine $1.74 

Other Reason 

TOTAL $11.58 $0.27 $25.83 $0.00 $167.74 $12.03 

Note #1: Based on an in-depth, systematic review of all State quality control systems, USDA determined it could not release a 

national SNAP error rate for FY 2016. USDA is unable to calculate a national error rate due to the unreliability of some 

State-reported data. 

Note #2: For NSLP and SBP, improper payments attributed to the root cause, “program design or structural issue” are the estimated 

value of applicant errors on school meal applications. Applicants for free or reduced price school meal benefits do not 

provide supporting documentation at the time of application. Although school districts select a sample of approved 

applications for follow-up verification review, the size of that sample is fixed by statute at 3 percent of approved 

applications (Sec. 9(b)(3)(D)(iii) of the Richard B. Russell National School Lunch Act). 
SECTION III | Other Information 

174

Improper payments attributed to the root cause, “administrative or process error made by State or local agency” include 

the estimated value of administrative errors in the application process and in the process of counting and claiming eligible 

meals for Federal reimbursement.
USDA Agency Financial Report | 2017 

175

V. PAYMENT INTEGRITY 

IMPROVEMENT: IMPROPER 

PAYMENT CORRECTIVE 

ACTIONS 

SPECIAL NOTE TO READER: 

In the spring of 2017, USDA agencies 

analyzed transactions from FY 2016. The 

results are published in the FY 2017 AFR. 

Please keep this in mind when narratives cite 

FY 2016 transactions in this report. 

Each program is required to develop a 

Corrective Action Plan. Exhibit 9 below 

describes actions taken and planned for each 

high-risk program that is above the reporting 

threshold (error rate equal or above 1.5 

percent and improper payment amount of 

$10 million or more). 

OMB Circular A-136, revised on August 15, 

2017, Section II.5.5 Payment Integrity; 

subsection I. Payment Reporting, paragraph e., 

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.” While some of the corrective actions 

offer an indication of how they will address a 

root cause, USDA is not equipped with reliable 

data to accurately quantify how each corrective 

action may have resulted in payment accuracy 

improvements. In most cases, a series of 

corrective actions may have cumulative 

impacts to improving payment accuracy. The 

FNS School Lunch Program performs an 

APEC study every 5 years. The numerous 

corrective actions implemented for the past 

several years cannot be evaluated until the next 

5-year study is completed in 2018–2019. 

In addition to Discussions of Supplemental 

Measures from section III above, HighPriority Discussions are provided below for 

USDA’s high-priority programs NSLP, SBP, 

and FCIC. For clarification regrading SNAP 

and CACFP, see Note #1 that follows 

Exhibit 9 below.

EXHIBIT 9: Program Corrective Action Plans ($ in Millions) 

PROGRAM: FNS SNAP 

Root Cause (See Table 15 above) 

Administrative or Process Errors Made by: State or 

Local Agency [Note #1] 

Amount Associated with the Root 

Cause (See Table 15 above) 

 Not Available. 

Estimated Completion Date  September 2018 

SNAP Corrective Actions: 

The law requires that States with a high error rate for 2 or more subsequent years pay a financial 

liability to SNAP. States have the option to invest 50 percent of this financial liability back into the 

SNAP program and hold the remaining 50 percent in abeyance, which must be paid if the State’s 

error rate does not improve in the upcoming year. The 50 percent invested back into the program 

is called new investment. States must target their new investment money towards the issues that 

caused the State’s error rate. Each State conducts a root cause analysis to determine the causes 

for their errors as part of the new investment plan. New investments are completely State funded 
SECTION III | Other Information 

176

PROGRAM: FNS SNAP 

and not eligible for Federal matching. In the past, States have used their new investment funds to 

undertake a document scanning project to ensure client documents are more easily accessible, 

training to help eligibility workers better understand and follow SNAP rules, and a rewrite of the 

State’s policy manual so that it is easier for workers to read, access, and understand. 

Business Process Reengineering (BPR) is the analysis and redesign of a process or workflow in 

order to achieve greater efficiency. When States apply BPR to their SNAP certification process, the 

resulting savings in staff time create an opportunity to channel savings into activities that improve 

customer service, application processing timelines, payment accuracy, and negative errors. FNS is 

currently facilitating BPR in three States. The Process and Technology Improvement Grants (PTIGs), 

provide grantees with funding to improve the quality and efficiency of operations and processes in 

SNAP offices. Grantees often combine BPR initiatives with modernization efforts to improve the 

accuracy and efficiency of the certification process so that eligible SNAP participants receive the 

correct amount of benefits they are entitled to thus reducing the amount of improper payments. 

Each year FNS awards a total of $5 million dollars in PTIG grants to States. 

Note #1: Since SNAP did not report an error rate for FY 2017, this breakdown is unavailable. 

The SNAP error rate, with reduction targets and root cause categories, will be 

available in FY 2018. Also, CACFP currently tests and reports on the FDCH tiering 

decision component of the payment process. FNS continues to evaluate the 

measurement processes for the CACFP meal claim component. FNS has not set a date 

for measurement and reporting. 

PROGRAM: FNS NSLP 

Root Cause (See Table 15 above)  Program Design or Structural Issue 

Amount Associated with the Root 

Cause (See Table 15 above)  $762.06 (millions) 

Estimated Completion Date  September 2018 

NSLP Corrective Actions: 

▪ Release an annual updated school meal application form and a Web-based application with 

evidence-based features to address household error. 

▪ Continue a trial to reduce household nonresponse rates in the verification process. 

▪ Continued expansion of the Community Eligibility Provision to reduce application-based error. 

▪ Update the State agency Administrative Review (AR) guidance for State agencies and 

school districts. 

▪ Conduct a national collection of information at the School Food Authority and site levels on 

the AR form for analysis. 

▪ Conduct a demonstration in seven States to evaluate direct certification for free and 

reduced price meals using Medicaid data. 
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PROGRAM: FNS NSLP 

▪ Lead model requirements training for State and local entities. 

▪ Conduct a data study to establish best practices in collection, reporting, and monitoring of 

program data at State and local levels. Host the third national technology training for State 

agencies and technology vendors. 

▪ Provide technical assistance to improve direct certification of children through the use of 

Food Distribution Program on Indian Reservations data. 

▪ Invest in State technology systems to reduce administrative error through AR and Training 

Grants. 

▪ Provide ongoing training, technical assistance, and peer-to-peer mentorship of school food 

service professionals through the FNS "Team Up for School Nutrition Success Initiative.”

PROGRAM: FNS NSLP 

Root Cause (See Table 15 above) 

Administrative or Process Errors Made by: 

State or Local Agency 

Amount Associated with the Root 

Cause (See Table 15 above)  $1,113.43 (millions) 

Estimated Completion Date  September 2018 

NSLP Corrective Actions: 

▪ Release an annual updated school meal application form and a Web-based application with 

evidence-based features to address household error. 

▪ Continue a trial to reduce household nonresponse rates in the verification process. 

▪ Continued expansion of the Community Eligibility Provision among eligible schools to 

reduce application-based error. 

▪ Update the State agency Administrative Review (AR) guidance for State agencies and 

school districts. 

▪ Conduct a national collection of information at the School Food Authority (SFA) and site 

levels on the AR form for analysis. 

▪ Conduct a demonstration in seven States to evaluate direct certification for free and 

reduced price meals using Medicaid data. 

▪ Lead model requirements training for State and local entities. 

▪ Conduct a data study to establish best practices in collection, reporting, and monitoring of 

program data at State and local levels. Host the third national technology training for State 

agencies and technology vendors. 

▪ Provide technical assistance to improve direct certification of children through the use of 

Food Distribution Program on Indian Reservations data. 
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PROGRAM: FNS NSLP 

▪ Invest in State technology systems to reduce administrative error through AR and Training 

Grants. 

▪ Provide ongoing training, technical assistance, and peer-to-peer mentorship of school food 

service professionals through the FNS "Team Up for School Nutrition Success Initiative.”

High-Priority Discussions: 

The FNS activities summarized in the corrective action plan were guided by FNS research 

findings. The 2015 APEC-II study, in particular, provides the agency with actionable information 

on program error at four critical points: (1) when households complete applications for school 

meal benefits, (2) when school districts certify those applications, (3) when cafeteria staff 

determines whether the meals served are reimbursable, and (4) when meal counts are 

aggregated and submitted for reimbursement. 

In addition to estimating the dollar value of program error at each of these steps, APEC-II offers 

insight into the nature and causes of that error. With information from APEC and other FNS 

studies, as well as from information gathered over many years from State agency ARs of school 

districts and FNS reviews of State agencies, FNS has tailored its corrective actions to target the 

processes at greatest risk for error. A few examples are included below: 

▪ The agency’s considerable efforts to improve direct certification performance and the 

adoption of Community Eligibility Provision (CEP). APEC-II finds that both of these are 

associated with significantly less certification error than the traditional application process. 

▪ FNS redesigned the AR process and AR reporting. The redesign of the AR was guided by 

careful review and analysis of past review findings, and places increased emphasis on the 

processes and sites that pose the greatest risk for error. As mentioned above, the 

redesigned AR reporting form, FNS-640, seeks to capture information at both the State and 

site levels to provide better information about where and how errors occur and the 

characteristics that could contribute to program errors and improper payments. Collecting 

this data will support more meaningful analysis of the data. Better analysis will guide more 

effective monitoring and technical assistance to school districts by State agencies and FNS. 

▪ Training modules developed for the recently developed Professional Standards 

requirements include those that target administrative tasks and business processes 

identified as high risk by the AR and APEC. 

▪ Development of the agency’s redesigned paper application prototype was guided by 

human-centered design research that seeks to improve clarity to reduce household 

reporting mistakes. The agency’s recently released Web-based application prototype 

includes elements that respond directly to APEC findings on household and administrative 

certification error. 

▪ The agency’s work on the development of model requirements for State agency and school 

district information systems has been guided from the start by a careful examination and 

analysis of existing system capabilities. It is also guided by USDA research that 

demonstrates a link between certain processes and a reduction in program error, 

particularly the automation of student certification and meal counting and claiming. 
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PROGRAM: FNS SBP 

Root Cause (See Table 15 above)  Program Design or Structural Issue 

Amount Associated with the Root 

Cause (See Table 15 above)  $289.05 (millions) 

Estimated Completion Date  September 2018 

SBP Corrective Actions: 

▪ Release an annual updated school meal application form and a Web-based application with 

evidence-based features to address household error. 

▪ Continue a trial to reduce household nonresponse rates in the verification process. 

▪ Continue the expansion of the Community Eligibility Provision among eligible schools to 

reduce application-based error. 

▪ Update the State agency Administrative Review (AR) guidance for State agencies and 

school districts. 

▪ Conduct a national collection of information at the SFA and site levels on the AR form for 

analysis. 

▪ Conduct a demonstration in seven States to evaluate direct certification for free and 

reduced price meals using Medicaid data. 

▪ Conduct training of the model requirements for State and local entities. 

▪ Conduct a data study to establish best practices in collection, reporting, and monitoring of 

program data at State and local levels. 

▪ Host the third national technology training for State agencies and tech vendors. 

▪ Provide technical assistance to improve direct certification of children through the use of 

the Food Distribution Program on Indian Reservations data. 

▪ Provide ongoing investment in State technology systems to reduce administrative error 

through AR and Training Grants. 

▪ Provide ongoing training, technical assistance, and peer-to-peer mentorship of school food 

service professionals through the FNS "Team Up for School Nutrition Success Initiative."
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PROGRAM: FNS SBP 

Root Cause (See Table 15 above) 

Administrative or Process Errors Made by: 

State or Local Agency 

Amount Associated with the Root 

Cause (See Table 15 above)  $669.31 (millions) 

Estimated Completion Date  September 2018 

SBP Corrective Actions: 

▪ Release an annual updated school meal application form and a Web-based application with 

evidence-based features to address household error. 

▪ Continue a trial to reduce household nonresponse rates in the verification process. 

▪ Continue the expansion of the Community Eligibility Provision among eligible schools to 

reduce application-based error. 

▪ Update the State agency Administrative Review (AR) guidance for State agencies and 

school districts. 

▪ Conduct a national collection of information at the SFA and site levels on the AR form for 

analysis. 

▪ Conduct a demonstration in seven States to evaluate direct certification for free and 

reduced price meals using Medicaid data. 

▪ Conduct training of the model requirements for State and local entities. 

▪ Conduct a data study to establish best practices in collection, reporting, and monitoring of 

program data at State and local levels. 

▪ Host the third national technology training for State agencies and tech vendors. 

▪ Provide technical assistance to improve direct certification of children through the use of 

the Food Distribution Program on Indian Reservations data. 

▪ Provide ongoing investment in State technology systems to reduce administrative error 

through AR and Training Grants. 

▪ Provide ongoing training, technical assistance, and peer-to-peer mentorship of school food 

service professionals through the FNS "Team Up for School Nutrition Success Initiative."

High-Priority Discussions: 

The FNS activities summarized in the corrective action plan were guided by FNS research 

findings. The 2015 APEC-II study, in particular, provides the agency with actionable information 

on program error at four critical points: (1) when households complete applications for school 

meal benefits, (2) when school districts certify those applications, (3) when cafeteria staff 

determines whether the meals served are reimbursable, and (4) when meal counts are 

aggregated and submitted for reimbursement. 

In addition to estimating the dollar value of program error at each of these steps, APEC-II offers 

insight into the nature and causes of that error. With information from APEC and other FNS 

studies, as well as from information gathered over many years from State agency administrative 
USDA Agency Financial Report | 2017 

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PROGRAM: FNS SBP 

reviews of school districts and FNS reviews of State agencies, FNS has tailored its corrective 

actions to target the processes at greatest risk for error. A few examples are included below: 

▪ The agency’s considerable efforts to improve direct certification performance and the 

adoption of Community Eligibility Provision (CEP). APEC-II finds that both of these are 

associated with significantly less certification error than the traditional application process. 

▪ FNS redesigned the AR process and AR reporting. The redesign of the AR was guided by 

careful review and analysis of past review findings, and places increased emphasis on the 

processes and sites that pose the greatest risk for error. As mentioned above, the 

redesigned AR reporting form, FNS-640 seeks to capture information at both the State and 

site levels to provide better information about where and how errors occur and the 

characteristics that could contribute to program errors and improper payments. Collecting 

this data will support more meaningful analysis of the data. Better analysis will guide more 

effective monitoring and technical assistance to school districts by State agencies and FNS. 

▪ Training modules developed for the recently developed Professional Standards 

requirements include those that target administrative tasks and business processes 

identified as high risk by the AR and APEC. 

▪ Development of the agency’s redesigned paper application prototype was guided by 

human-centered design research that seeks to improve clarity to reduce household 

reporting mistakes. The agency’s recently released Web-based application prototype 

includes elements that respond directly to APEC findings on household and administrative 

certification error. 

▪ The agency’s work on the development of model requirements for State agency and school 

district information systems has been guided from the start by a careful examination and 

analysis of existing system capabilities. It is also guided by USDA research that 

demonstrates a link between certain processes and a reduction in program error, 

particularly the automation of student certification and meal counting and claiming. 

PROGRAM: FNS WIC 

Root Cause (See Table 15 above) 

Administrative or Process Errors Made by: 

State or Local Agency 

Amount Associated with the Root 

Cause (See Table 15 above)  $197.07 (millions) 

Estimated Completion Date  September 2018 

WIC Corrective Actions: 

FNS’ two most recently completed target area management evaluation (ME) cycles covered areas 

where improper payments are most likely to occur: Vendor Management and Certification and 

Eligibility. After completing a target area cycle, FNS assesses the results and works to efficiently 

resolve all issues through corrective actions, technical assistance, and the sharing of best practices. 
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182

PROGRAM: FNS WIC 

As follow-up to the Vendor MEs, FNS provided targeted, risk-based technical assistance to several 

State agencies; has provided numerous trainings on key topics; has developed several tools for 

State agency use; and released a comprehensive Vendor Management Handbook in FY 2017. 

As follow-up to the Certification and Eligibility MEs, FNS provided several webinars on key topics, 

released two policy memorandums to provide clarification to State agencies, and plans to release 

and train State agencies on a Certification and Eligibility Handbook in FY 2018. 

PROGRAM: FNS CACFP 

Root Cause (See Table 15 above) 

Administrative or Process Errors Made by: 

State or Local Agency [Note #1] 

Amount Associated with the Root 

Cause (See Table 15 above)  $4.56 (millions) 

Estimated Completion Date  September 2018 

CACFP Corrective Actions: 

▪ Released updated guidance on the At-Risk Afterschool Meals Program. 

▪ Released the CACFP Meal Benefit Income Eligibility Application to reduce error in the 

income eligibility applications. 

▪ Released updated policy memorandums to minimize meal counting and claiming errors. 

▪ FNS plans to release Child Nutrition Technology Innovation grants by March 2018. 

▪ Conduct an ongoing study to measure and monitor error in CACFP sponsor-tiering 

determinations. 

▪ Conduct a field study to a take a comprehensive measure of erroneous payments in child 

care centers and center sponsors. 

▪ Conduct a field study to identify a reliable method to measure meal-claiming error in 

CACFP day care homes. 
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PROGRAM: FSA LFP 

Root Cause (See Table 15 above)  Inability to Authenticate 

Amount Associated with the Root 

Cause (See Table 15 above)  $2.29 (millions) 

Estimated Completion Date  September 2017 

LFP Corrective Actions: 

FSA has determined that 16 percent of error is associated with documentation not existing to 

support livestock producers owning or leasing grazing land, and it was not on file prior to the 

application being approved. 

The LFP program manager notified State and field staff to review acceptable documentation 

requirements to support that grazing land is owned or leased, and that the documentation is on 

file before the application is approved. 

PROGRAM: FSA LFP 

Root Cause (See Table 15 above) 

Administrative or Process Errors Made by: 

Federal Agency 

Amount Associated with the Root 

Cause (See Table 15 above)  $7.67 (millions) 

Estimated Completion Date  September 2017 

LFP Corrective Actions: 

FSA has determined that 53 percent of the error is associated with program software 

inadequacies. 

During the summer of 2017, FSA had written software system requirements, that once 

contracted, will enable LFP application software to interface with Crop Application Reporting 

Software and resolve this issue. In the interim, the LFP program managers notified State and field 

staff to double-check acreages until the software interface is installed. 
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PROGRAM: FSA LFP 

Root Cause (See Table 15 above)  Insufficient Documentation to Determine 

Amount Associated with the Root 

Cause (See Table 15 above)  $4.38 (millions) 

Estimated Completion Date  September 2017 

LFP Corrective Actions: 

FSA has determined that 31 percent of error is associated with payments being made with 

incomplete or improperly filed farm operating plans, acreage reports, highly-erodible land 

conservation, and wetland conservation certifications. 

The LFP program manager notified State and field staff to review acceptable documentation 

requirements for such forms. 

PROGRAM: FSA NAP 

Root Cause (See Table 15 above) 

Administrative or Process Errors Made by: 

Federal Agency 

Amount Associated with the Root 

Cause (See Table 15 above)  $10.07 (millions) 

Estimated Completion Date  July 2017 

NAP Corrective Actions: 

Full automation, beginning with Application for Coverage, Acreage reports, Summary of 

Coverage, Notice of Loss and Application for Payment, has been developed and tested and will 

be released soon. 

On May 24, 2017, Notice NAP-189 was posted, emphasizing the responsibility of the County 

Office to maintain signatures and dates in the approved yield software because other NAP 

applications check against these dates. 

These two automated procedures should reduce administrative and process errors. 
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185

PROGRAM: FSA NAP 

Root Cause (See Table 15 above)  Insufficient Documentation to Determine 

Amount Associated with the Root 

Cause (See Table 15 above)  $1.74 (millions) 

Estimated Completion Date  July 2017 

NAP Corrective Actions: 

Flags in automation will prevent or warn user that required documentation is missing. 

Notice NAP-188, issued May 1, 2017, initiated a review of NAP payments for improper payments 

and created State NAP review teams which analyzed selected payments for errors and corrected 

errors found within 30 days. The Notice identified prior year discrepancies to ensure thorough 

reviews. 

These actions should reduce errors in this category. 

PROGRAM: FSA NAP 

Root Cause (See Table 15 above)  Failure to Verify: Other Eligibility Data 

Amount Associated with the Root 

Cause (See Table 15 above)  $0.04 (millions) 

Estimated Completion Date  July 2017 

NAP Corrective Actions: 

Automation of the process will require eligibility to be entered and complete. When an entry is 

incomplete, it will be auto-flagged for follow up action. 

Notice NAP-188, issued May 1, 2017, initiated a review of NAP payments for improper payments 

and created State NAP review teams, which analyzed selected payments for errors and corrected 

errors found within 30 days. The Notice identified prior-year discrepancies to ensure thorough 

reviews. 

These actions should reduce errors in this category. 
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186

PROGRAM: RMA FCIC 

Root Cause (See Table 15 above) 

Administrative or Process Errors Made by: 

Other Party 

Amount Associated with the Root 

Cause (See Table 15 above)  $69.16 (millions) 

Estimated Completion Date  July 2018 

FCIC Corrective Actions: 

Conduct outreach to applicable Approved Insurance Providers (AIP) to incorporate acreage data 

verification into agent and adjustor training or notifications. The Regional Compliance Offices 

(RCOs) will review the AIP’s procedures and controls in place to reduce the amount of 

administrative errors. 

PROGRAM: RMA FCIC 

Root Cause (See Table 15 above)  Inability to Authenticate Eligibility 

Amount Associated with the Root 

Cause (See Table 15 above)  $110.61 (millions) 

Estimated Completion Date  March 2018 

FCIC Corrective Actions: 

Issue informational memorandum reminding producers about record retention requirements 

outlined in the Common Crop Insurance Basic Provisions, Section 21. The RCOs will review the 

AIP’s procedures and controls in place to reduce the amount of errors related to records 

retention. 
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INTERNAL CONTROL OVER IMPROPER PAYMENTS

As shown in Table 16 below, 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. 

TABLE 16: Status of Internal Controls 

Internal Control 

Standards 

FNS 

SNAP 

FNS 

NSLP 

FNS 

SBP

FNS 

WIC 

FNS 

CACFP 

FSA/CCC 

LFP 

FSA/CCC 

NAP 

RMA 

FCIC 

Control 

Environment 3 3 3 3 3 4 4 3 

Risk Assessment 3 3 3 3 3 3 3 3 

Control Activities 3 3 3 3 3 3 3 3 

Information and 

Communication 3 3 3 3 3 4 4 3 

Monitoring 3 3 3 3 3 4 4 3 

Legend: 

4 = Sufficient controls are in place to prevent improper payments. 

3 = Controls are in place to prevent improper payments but there is room for improvement. 

2 = Minimal controls are in place to prevent improper payments. 

1 = Controls are not in place to prevent improper payments. 
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188

ACCOUNTABILITY 

The following steps were taken to ensure that 

agency managers are held accountable for 

reducing and recovering improper payments: 

Food and Nutrition Service (FNS) 

For items 1-3 below, the agency goals and 

priorities are incorporated into each 

manager’s performance plan. Standards for 

meeting reduction targets and establishing and 

maintaining sufficient internal controls have 

been incorporated into each manager’s plan 

since 2005. 

1. FNS has established corporate priorities 

to improve stewardship of Federal funds 

and to improve program management. 

Within these priorities are specific goals 

applicable to programs at high risk for 

erroneous payments. The goal for SNAP, 

NSLP, SBP, WIC, and CACFP is to 

continue management improvements. 

2. In NSLP and SBP, USDA has a strategic 

objective to improve nutrition assistance 

program management that is managed by 

FNS, including a measure to improve the 

accuracy of school administrative 

processes that certify children for school 

meals. As part of its actions to advance 

this objective, FNS sets annual priority 

goals and initiatives, including specific 

goals applicable to programs at high risk 

for erroneous payments. 

3. FNS has a corporate priority to maintain 

a high standard of integrity in SNAP. 

This priority includes specific goals to 

support achievement of error rate goals, 

to use multiple strategies to support 

payment accuracy even as program 

participation increases, and to participate 

actively in efforts related to the 

President’s Executive Order on Improper 

Payments. 

Farm Service Agency (FSA) 

The following steps were completed by 

September 2016 and are ongoing: 

1. FSA has a performance management 

program in place to improve individual 

and organizational effectiveness in 

accomplishing the Agency’s mission and 

goals. This program provides for 

improper payments to be included in the 

State Executive Director’s Performance 

Plan, Element 5, titled “Program 

Management.” 

2. National Office and State Office (STO) 

managers are held accountable for 

ensuring that program policies and 

procedures are provided to the STO and 

County Office (COF) employees 

accurately and on a timely basis. 

National Office managers are also held 

accountable, as reflected in the 

performance-based rating measures, for 

overall program administration at the 

National level. In accordance with 

Agency performance management 

requirements in FSA Handbook 5-PM 

and FSA Notice PM-2948, all FSA 

employees have performance elements 

that are aligned with applicable strategic 

goals and objectives from FSA’s 

FY 2016–18 Strategic Plan. Goal #4, 

Objectives 4.1 and 4.2, specifically 

address accountability and internal 

controls. In addition, all field office 

employees who work with farm program 

payments have an improper payments 

performance standard as detailed in FSA 

Notice PM-2948. 

3. COF employees, including the County 

Executive Director, are responsible for 

making payments to producers and 

following all administrative steps in 

doing so. Employees will be evaluated on 

program delivery, and their compliance 
USDA Agency Financial Report | 2017 

189

with regulations, policies, and procedures 

through their performance plans. 

4. The Deputy Administrator of Field 

Operations will facilitate meetings with 

the program areas to discuss any 

additional action necessary for senior 

management to address accountability. 

5. FSA’s 2016-2018 Strategic Plan, in 

accordance with USDA’s effort to 

develop comprehensive internal controls, 

quality assurance processes and systems, 

and compliance with the IPIA, 

incorporates the priority of reducing 

improper payments into its strategic 

planning documents. 

Risk Management Agency (RMA) 

1. RMA senior accountable officials’ 

annual performance plans are tied to 

Goal #4 of the Strategic Plan — 

“Safeguarding the integrity of the Federal 

crop insurance program.” The 

performance measure in RMA’s Strategic 

Plan is to reduce the improper payment 

rate from 5.23 percent in 2013 to 

4.9 percent by 2018. RMA exceeded 

their strategic targets and the actual 

improper payment rate was 1.96 percent, 

in FY 2017. This is outstanding. 

2. RMA incorporated standards in the 

FY 2017 annual performance plans to 

ensure compliance personnel conduct 

IPERIA reviews to measure the Federal 

Crop Insurance Program (FCIP) 

improper payment error rate and perform 

data mining reviews to identify, reduce, 

and collect improper payments. RMA 

Regional Compliance Offices (RCOs) 

conducted Improper Payments 

Elimination and Recovery Improvement 

Act of 2012 reviews between March 

2016–May 2017 using statistical 

sampling and data mining reports. 

AGENCY INFORMATION SYSTEMS AND 

OTHER INFRASTRUCTURE 

FNS 

1. CACFP does not have an infrastructure 

or methods for producing yearly 

estimates of improper payment rates and 

dollar values. FNS has developed a 

measurement methodology for one 

component of the program and is in the 

process of determining the feasibility of 

measuring error in a second component. 

CACFP payments and claim information 

are transferred between FNS, State 

agencies, program sponsors, and program 

sites; each transaction represents a risk 

for improper payment. 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 awarded a contract in September 

2014 to conduct a new CACFP study to 

look at alternative methodologies for 

developing a reliable measurement for 

the meal claims component. This new 

study is expected to be completed by 

September 30, 2020. 

2. The NSLP does not have an 

administrative infrastructure for 

producing yearly estimates of improper 

payment rates and dollar values. FNS 

uses its periodic Access, Participation, 

Eligibility, and Certification (APEC) 

study to provide a baseline error rate 

estimate and an aging methodology to 

update this estimate annually using 

program administrative data and 

macroeconomic indicators. FNS has 

worked with OMB to provide an annual 

estimate using an approved methodology 

to estimate payment errors. The 
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190

continuance of the APEC study will 

enable FNS to estimate and measure 

changes in erroneous payments over time 

and would help inform FNS, Congress, 

the States, and advocacy partners for the 

development of additional guidance, 

training, and policy options. 

3. The FNS FY 2017 Budget requests an 

increase in funding for the following 

program integrity line items to establish 

and maintain effective internal controls 

to reduce improper payments as follows: 

a. Child Nutrition (CN) Training and 

Technical Assistance 

b. CN Payment Accuracy

CN Training and Technical Assistance —

an increase of $21 million was requested 

($13,137,000 enacted for FY 2016). 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 is especially critical 

because of the changes made to these vital 

programs by the Healthy, Hunger-Free Kids 

Act of 2010, which reauthorized these 

programs and instituted new requirements on 

State agencies. This request reflects an 

increase in Federal activity associated with 

this project, including implementation of the 

new requirements. 

CN Payment Accuracy — an increase of 

$585,000 was requested ($10,562 million

enacted for FY 2016). Robust Federal 

oversight, monitoring, and technical 

assistance are essential to the identification, 

prevention, and resolution of erroneous 

payments. This request supports FNS’ efforts 

to reduce erroneous payments through 

training, technical assistance, and oversight. 

An increase of $500,000 is related to an 

Enhanced State/Local Reporting proposal. 

FNS’ FY 2017 Budget reflects the same level 

of funding as in previous years to continue 

effective internal control measures to promote 

program integrity for the Coordinated Review 

Effort. 

Administrative Reviews — $10 million was 

provided for training and technical assistance 

for State agencies responsible for reviewing 

local school food authorities that participate 

in the school meal programs. Local 

administrative reviews help ensure that school 

children are offered meals that meet 

regulatory standards and that the financial 

claims associated with those meals are 

appropriate. 

FSA

FSA has the internal controls, human capital, 

information systems, and other infrastructure 

needed to reduce improper payments. 

RMA 

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). RMA completed a pilot APR of three 

AIPs, which evaluated their internal controls 

to identify and address program 

vulnerabilities. 

Discretionary Funding — Salaries and 

Expenses (S&E) — Discretionary funds for 

the Federal crop insurance programs cover 

most of Federal salaries and related expenses 

to manage the program. The 2017 Budget 

request included about $67 million in direct 

discretionary appropriations for these costs, 

$8 million below FY 2016. In addition, 

Section 11021 of the Agricultural Act of 2014 

mandated the transfer of up to $9 million each 

fiscal year from the FCIC mandatory account 

to the RMA S&E account for program 

compliance and integrity reviews. 
USDA Agency Financial Report | 2017 

191

BARRIERS 

FNS 

Federal nutrition assistance was not designed 

with accuracy as its primary purpose; 

accountability is often a secondary 

consideration to other concerns in managing 

the program. Some policy choices, many 

embodied in law, greatly impact the risk of 

improper payments and the ability to mitigate 

them. Congress, through legislation, defines 

the limits of authority for accountability. 

The mandated goal of simplifying access to 

benefits must be balanced against the goal of 

reducing improper and erroneous payments. 

Provisions that improve access can increase 

the risk of improper payments. While the 

risks involved vary by program, some general 

characterizations can be made: 

Program administration is highly 

decentralized and can involve a myriad of 

governmental and non-governmental 

organizations. For example, there are 

approximately 58,403 child and adult care 

centers, 775 Family Day Care Home (FDCH) 

sponsoring organizations, and approximately 

108,400 FDCH providers through which 

CACFP benefits are distributed. Many of 

these organizations simply do not have the 

capacity to develop robust accountability 

processes, which puts a special burden on 

Federal and State oversight and technical 

assistance systems. 

States and localities tend to focus on managing 

local funds, rather than Federal funds. One 

hundred percent of benefit costs and a 

significant portion of administrative expenses 

incurred by State agencies are funded by 

Federal appropriations. Although this 

distribution of costs has contributed to the 

strength of the nutrition safety net with 

national eligibility standards and program 

access, States and localities may reasonably be 

expected to put a higher priority on managing 

programs funded with local revenues than 

those subsidized by the Federal Government. 

Proper implementation of nutrition assistance 

programs requires a high degree of accuracy. 

This accuracy helps to ensure that benefits are 

targeted to those most in need, that there is 

uniformity of access across the country, and 

that benefits can only be used for food. Such 

exacting standards do, however, create a 

significant number of opportunities for error. 

Current legislation, while it does include 

some changes requested by the 

Administration to improve accountability, 

measures, limits USDA’s ability to act in this 

area due to concerns about potential barriers 

to participation. The mandated goal of 

simplifying access to benefits must be 

balanced against the goal of reducing 

improper and erroneous payments. In 

addition, program administration is highly 

decentralized; there are approximately 

100,000 school meals locations at which 

benefits are provided. Many of these benefit 

providers simply do not have the capacity to 

develop robust accountability processes. 

For these reasons, any approach 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 would undermine the 

program; 

2. Not unduly increase the burden on 

schools. Many schools consider the 

program burdensome now. Adding 

burden could discourage schools from 

participating, decreasing access for some 

low-income children; 

3. Be cost effective. Improving accuracy is 

potentially resource-intensive, and 
SECTION III | Other Information 

192

policymakers must not create a process 

that increases net program costs; and 

4. Answer the needs of other users of 

program data, which often use 

certification data to distribute millions of 

dollars in other kinds of benefits to 

schools (e.g. Title I, State and local 

education funding). As these needs 

contribute to the problem, a solution may 

also require new commitments from 

those users. 

In SNAP, the 2002 Farm Bill restricted the 

liability levels States can be sanctioned due to 

high error rates and also restricted the amount 

of bonus funding available to States that do a 

good job reducing and maintaining a low 

error rate. The goal of providing easy access 

to benefits must be balanced with the goal of 

reducing improper and erroneous payments. 

FSA

One barrier that limits FSA’s ability to 

recover improper payments is the Department 

of Agriculture Reorganization Act of 1994, 

Section 281. This legislation provides that 

“Each decision of a State, County, or area 

committee or an employee of such a 

committee, made in good faith in the absence 

of misrepresentation, false statement, fraud, 

or willful misconduct shall be final not later 

than 90 calendar days after the date of filing 

of the application for benefits, [and]...no 

action may be taken...to recover amounts 

found to have been disbursed as a result of the 

decision in error unless the participant had 

reason to believe that the decision was 

erroneous.” This statute is commonly referred 

to as the “Finality Rule”. 

RMA 

RMA is not subject to any critical statutory or 

regulatory barriers to reducing improper 

payments. 

RECAPTURE OF IMPROPER PAYMENTS 

REPORTING 

USDA is required to conduct payment 

recapture auditing on all programs with over 

$1 million in annual expenditures, or provide 

justification that a payment recapture audit 

program would not be cost effective, per 

OMB Circular A-123 Appendix C. To 

determine which programs meet the 

$1 million payment recapture auditing 

requirement, USDA utilized FY 2016 actual 

outlay information. The following results 

highlight the payment recapture activities 

completed in FY 2017: 

1. USDA recaptured approximately 

$0.28 million from its Supplier Credit 

Recovery Audit contractor (0.03 percent 

of USDA’s total identified 

overpayments), $245.25 million from 

USDA programs’ internal payment 

recapture audits (28.26 percent of 

USDA’s total identified overpayments), 

and $614.55 million outside of payment 

recapture audits (70.81 percent of 

USDA’s total identified overpayments). 

Results shown in Table 17.

2. USDA distributed $243.97 million in 

recovered funds in accordance with 

IPERA as shown in Table 18.

3. Sixty programs participated in the 

Supplier Credit Recovery Audit, and 

43 programs developed internal payment 

recapture plans, which were approved by 

OCFO. These internal plans identify and 

recover improper payments. Activities 

include data mining-initiated reviews, 

limited scope reviews, special 

investigations, eligibility verification, 

agency wide audits, etc. As outlined in 

OMB Circular A-123 Appendix C Part I 

Section D. 5 and 6, 40 programs 

submitted a cost-effective waiver to 
USDA Agency Financial Report | 2017 

193

OMB. A detailed list of programs 

categorized by recovery auditing activity 

is as follows: 

Supplier Credit Recovery Audit Programs 

1. Agricultural Marketing Service (AMS) 

Commodity Purchase Programs 

2. AMS Grants Programs 

3. AMS Salaries and Expenses 

4. Animal and Plant Health Inspection 

Service (APHIS) Buildings and Facilities 

5. APHIS Indemnity Program 

6. APHIS Salaries and Expenses 

7. APHIS Trust Funds 

8. Agricultural Research Service (ARS) 

Buildings and Facilities 

9. Commodity Credit Corporation (CCC) 

Export 416 Ocean Transportation 

[Note #8] 

10. CCC Food for Progress Program 

[Note #1] 

11. Office of Civil Rights (CR) Salaries and 

Expenses 

12. Departmental Management (DM) 

Agriculture Buildings and Facilities 

13. DM Biobased Markets Program 

14. DM Hazardous Materials Management 

15. Foreign Agricultural Service (FAS) 

McGovern-Dole Food for Education 

Grants 

16. Farm and Foreign Agricultural Services 

(FFAS) 

17. Food and Nutrition Service (FNS) Child 

and Adult Care Food Program 

18. FNS Commodity Supplemental Food 

Program 

19. FNS The Emergency Food Assistance 

Program 

20. FNS Food Distribution Program on 

Indian Reservations 

21. FNS National School Lunch Program 

22. FNS Salaries and Benefits 

23. FNS Summer Food Service Program 

24. Food Safety and Inspection Salaries and 

Expenses 

25. Farm Service Agency (FSA) Public 

Law 480

26. Forest Service (FS) Capital Improvement 

and Maintenance 

27. FS Forest and Rangeland Research 

28. FS Permanent Appropriations 

29. FS Trust Funds 

30. FS Hurricane Sandy — Emergency 

Forest Restoration Program [Note #8] 

31. FS Land Acquisition 

32. FS Management of National Forest 

Lands for Subsistence Uses 

33. FS National Forest System 

34. FS Range Betterment Fund 

35. FS State and Private Forestry

36. FS Stewardship Contracting Product 

Sales 

37. FS Wildland Fire Management 

38. FS Wildland Fire Management 

— Suppression 

39. FS Working Capital Fund 

40. Grain Inspection Packers and Stockyards 

Administration 

41. National Appeals Division (NAD) 

Salaries and Expenses 
SECTION III | Other Information 

194

42. Natural Resources Conservation Service 

(NRCS) Conservation Technical 

Assistance (non-Farm Bill) 

43. NRCS Farm Security and Rural 

Investment Act Program (FSRIP) 

44. NRCS Hurricane Sandy, Emergency 

Watershed Protection Program 

45. NRCS Plant Materials Centers 

46. NRCS Snow Survey and Water Supply 

Forecasting 

47. NRCS Soil Surveys 

48. NRCS Watershed Programs 

49. Office of Advocacy and Outreach for 

Socially Disadvantaged Farmers 

50. Office of Budget and Program Analysis 

Salaries and Expenses 

51. Office of the Chief Economist Salaries 

and Expenses 

52. Office of Chief Financial Officer 

(OCFO) Salaries and Expenses 

53. Office of the Chief Information Officer 

(OCIO) Salaries and Expenses 

54. Office of the General Counsel (OGC) 

Salaries and Expenses 

55. Office of Inspector General (OIG) 

Salaries and Expenses 

56. Office of the Secretary Salaries and 

Expenses 

57. Rural Development (RD) Salaries and 

Expenses 

58. Rural Housing Service (RHS) Voucher 

Program (Section 542) [Note #1] 

59. Rural Utilities Service (RUS) Water and 

Waste Disposal Systems for Rural 

Communities- Loans [Note #2] 

60. Research, Education, and Economics 

(REE) Salaries and Expenses 

Programs and Activities with Internal 

Payment Recapture Plan 

1. APHIS Internal Program 

a. APHIS Cooperative Agreements 

2. FSA/CCC Internal Program 

a. CCC Administrative Contracts 

b. CCC Agriculture Risk Coverage and 

Price Loss Coverage 

c. CCC Agricultural Wool Apparel 

Manufacturers Trust Funds 

d. CCC Biomass Crop Assistance 

Program 

e. CCC Conservation Reserve Program 

f. CCC Cotton Transition Assistance 

Program 

g. CCC Dairy Indemnity 

h. CCC Emergency Assistance for 

Livestock, Honeybees, and Farm 

Raised Fish Program 

i. CCC Emergency Forestry 

Conservation Reserve 

j. CCC Export Guarantee Program 

Level [Note #8] 

k. CCC Farm Storage Facility Loan 

l. CCC Food for Progress Program 

[Note #1] 

m. CCC Hazardous Waste Activities 

n. CCC Hurricane Sandy — Emergency 

Forest Restoration Program 

o. CCC Livestock Forage Disaster 

Program 

p. CCC Livestock Indemnity Program 

q. CCC Loan Deficiency Payments 
USDA Agency Financial Report | 2017 

195

r. CCC Margin Protection Program for 

Dairy Producers 

s. CCC Marketing Assistance Loan 

Program 

t. CCC Marketing Programs 

u. CCC Noninsured Crop Disaster 

Assistance Program

v. CCC Pima Agriculture Cotton Trust 

Fund 

w. CCC Supplemental Revenue 

Assistance Payments Program 

[Note #8] 

x. CCC Tobacco Transition Payment 

Program [Note #8] 

y. CCC Tree Assistance Program 

z. CCC Upland Cotton Economic 

Adjustment Assistance Program 

aa. FSA Agricultural Credit Insurance 

Fund- Program Account 

bb. FSA Emergency Conservation 

Program 

cc. FSA Emergency Forest Restoration 

Program 

dd. FSA Grassroots Source Water 

Protection Program 

ee. FSA Reimbursement Transportation 

Cost Payment Program 

ff. FSA State Mediation Grants 

3. National Institute of Food and 

Agriculture (NIFA) Internal Program 

a. NIFA Community Foods Project 

b. NIFA Extension Activities 

c. NIFA Integrated Activities 

d. NIFA Research and Education 

Activities 

4. RD Internal Program 

a. RHS Direct Single Family Housing 

b. RHS Guaranteed Single Family 

Housing 

c. RHS Rental Assistance Program 

d. RHS Voucher Program (Section 

542) [Note #1] 

e. RUS Appalachia Regional 

Commission Grants — Water & 

Waste 

5. Risk Management Ageny (RMA) 

a. Federal Crop Insurance Corporation 

Programs and Activities with Approved Cost 

Effective Waivers [Note #3] 

1. FNS America Samoa 

2. FNS Commonwealth of the Northern 

Mariana Islands 

3. FNS Farmers Market Nutrition Program 

4. FNS Nutrition Assistance-Puerto Rico 

5. FNS School Breakfast Program 

6. FNS Senior Farmers Market Nutrition 

Program 

7. FNS Special Milk Program 

8. FNS Supplemental Nutrition Assistance 

Program 

9. FNS Special Supplemental Nutrition 

Program for Women, Infants, and 

Children 

10. Food Safety and Inspection Service 

(FSIS) Cooperative State Food Safety 

and Inspection

11. Rural Business-Cooperative Service 

(RBS) Grant Programs 
SECTION III | Other Information 

196

12. RBS Guaranteed Loan Programs 

13. RBS Relending Programs 

14. RBS Payment Programs 

15. RHS Community Program Grants 

16. RHS Farm Labor Housing Loans 

(Section 514) Farm Labor Housing 

Grants (Section 516) 

17. RHS Direct Community Facility Loans 

18. RHS Housing Loans and Grants — Other 

19. RHS Guaranteed Community Facility 

Loans 

20. RHS Guaranteed Multi-Family Housing 

(MFH) Loans (Section 538 Loans) 

21. RHS MFH Preservation & Revitalization 

Demo Program: 514/516 Loans/Grants & 

515 Loans 

22. RHS Rural Community Development 

Initiative Grants 

23. RHS Rural Rental Housing Loans 

(Section 515 Direct Rural Rental 

Housing Loans) 

24. RUS Broadband Telecom Loans 

— Treasury Rate 

25. RUS Community Connect Grants 

26. RUS Congressional Earmarked Funds 

27. RUS Electric Loan Programs (Catalog of 

Federal Domestic Assistance [CFDA] 

10.850)- Direct Treasury Rate [Note #8] 

28. RUS Electric Loan Programs (CFDA 

10.850) — FFB Guaranteed 

29. RUS Grants- Other Electric — Telecom. 

WEP 

30. RUS Public Television Digital Transition 

Grants 

31. RUS Revolving Loan Fund Program

32. RUS Rural Telecommunications Hardship 

Loans — Direct Telecom Loans 

33. RUS Rural Telecommunications Loans 

— Federal Financing Bank (FFB) 

Telecom Loans 

34. RUS Rural Telecommunications Loans 

— Treasury Telecom Loans 

35. RUS Rural Utilities Electric Program 

— Direct 5 percent 

36. RUS Rural Utilities Electric Program 

— Municipal Rate [Note #8] 

37. RUS Water and Waste Disposal Systems 

Loans and Grants Section 306C

38. RUS Water and Waste Disposal Systems 

for Rural Communities — Grant 

39. RUS Water and Waste Disposal Systems 

for Rural Communities — Loans [Note #2] 

40. RUS Water and Waste Guaranteed Loans 

Programs and Activities with Less Than One 

Million in FY 2016 Expenditures 

1. CCC Dairy Domestic Donations 

2. CCC Export 416 Ocean Transportation 

[Note #8] 

3. CCC Export Guarantee Program Level 

[Note #8] 

4. CCC Feedstock Flexibility Program 

5. CCC Supplemental Revenue Assistance 

Payments Program [Note #8] 

6. CCC Sugar Purchase Program 

7. CCC Tobacco Transition Payment 

Program [Note #8] 

8. CCC Trade Adjustment Assistance 

Program 

9. FSA Hurricane Sandy — Emergency 

Conservation Program 

10. FSA Reforestation Pilot Program 
USDA Agency Financial Report | 2017 

197

11. FS Hurricane Sandy — Capital 

Improvement and Maintenance 

12. FS Hurricane Sandy — Emergency 

Forest Restoration Program 

13. RUS Delta Regional Authority Grants 

— Water & Waste Projects 

14. RUS Electric Loan Programs (CFDA 

10.850) — Direct Treasury Rate [Note #8] 

15. RUS Rural Energy Savings Program 

16. RUS Rural Utilities Electric Program 

—Municipal Rate [Note #8] 
SECTION III | Other Information 

198

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 2017 AFR Recapture reporting period [Note #4], USDA recovered $614.55 million out of the identified $616.58 million through 

methods outside of Recapture Audit Programs (see Table 17.1 for additional breakout). The following table provides detailed information 

regarding the recoveries collected through official payment recapture audits. 

TABLE 17: Overpayment Recaptures with Recapture Audit Programs ($ in Millions) 

Overpayments Recaptured through Payment Recapture Audits ($in Millions) [Note #4]

Program or 

Activity 

Contracts Grants Loans Other Total 

Amount Identified Amount Recaptured CY Recapture Rate CY + 1 Recapture Rate Target CY + 2 Recapture Rate Target Amount Identified Amount Recaptured CY Recapture Rate CY + 1 Recapture Rate Target CY + 2 Recapture Rate Target Amount Identified Amount Recaptured CY Recapture Rate CY + 1 Recapture Rate Target CY + 2 Recapture Rate Target Amount Identified Amount Recaptured CY Recapture Rate CY + 1 Recapture Rate Target CY + 2 Recapture Rate Target Amount Identified Amount Recaptured 

Supplier Credit 

Recovery Audit 

Program 

[Note #5]

$0.28 $0.28 

100%100%100%

$0.00 $0.00 

0.00% 0.00% 0.00% 

$0.00 $0.00 

0.00% 0.00% 0.00% 

$0.00 $0.00 

0.00% 0.00% 0.00% 

$0.28 $0.28 

APHIS Internal 

Program 

$0.00 $0.00 

0.00% 0.00% 0.00% 

$0.18 $0.18 

100%100%100%

$0.00 $0.00 

0.00% 0.00% 0.00% 

$0.00 $0.00 

0.00% 0.00% 0.00% 

$0.18 $0.18 

FSA/CCC Internal 

Program 

[Note #9] 

$0.00 $0.00 

0.00% 0.00% 0.00% 

$0.00 $0.00 

0.00% 0.00% 0.00% 

$155.15 $157.41 

101.46% 

96.00% 97.00% 

$65.08 $60.67 

93.22% 94.00% 95.00% 

$220.23 $218.08 
USDA Agency Financial Report | 2017 

199

Overpayments Recaptured through Payment Recapture Audits ($in Millions) [Note #4]

Program or 

Activity 

Contracts Grants Loans Other Total 

Amount Identified Amount Recaptured CY Recapture Rate CY + 1 Recapture Rate Target CY + 2 Recapture Rate Target Amount Identified Amount Recaptured CY Recapture Rate CY + 1 Recapture Rate Target CY + 2 Recapture Rate Target Amount Identified Amount Recaptured CY Recapture Rate CY + 1 Recapture Rate Target CY + 2 Recapture Rate Target Amount Identified Amount Recaptured CY Recapture Rate CY + 1 Recapture Rate Target CY + 2 Recapture Rate Target Amount Identified Amount Recaptured 

NIFA Internal 

Program 

$0.00 $0.00 

0.00% 0.00% 0.00% 

$19.69 $11.10

56.37% 58.00% 60.00% 

$0.00 $0.00 

0.00% 0.00% 0.00% 

$0.00 $0.00 

0.00% 0.00% 0.00% 

$19.69 $11.10 

RD Internal 

Programs 

$0.00 $0.00 

0.00% 0.00% 0.00% 

$2.44 $1.97 

80.74% 

0.00% 0.00% 

$3.89 $3.76 

96.66% 91.00% 92.00% 

$0.00 $0.00 

0.00% 0.00% 0.00% 

$6.33 $5.73 

RMA-Federal Crop 

Insurance 

Corporation 

[Note #6] 

$0.00 $0.00 

0.00% 0.00% 0.00% 

$0.00 $0.00 

0.00% 0.00% 0.00% 

$0.00 $0.00 

0.00% 0.00% 0.00% 

$4.59 

$10.16 

221.35% 

100%100%

$4.59 

$10.16 

TOTAL 

$0.28 $0.28 

100.00% 100.00% 100.00% 

$22.31 $13.25 

59.39% 58.00% 60.00% 

$159.04 $161.17 

101.34% 

96.00% 97.00% 

$69.67 $70.83 

101.66% 100.00% 100.00% 

$251.30 $245.53 
SECTION III | Other Information 

200

TABLE 17.1: Overpayment Recaptures Outside of Recapture Audit Programs ($ in Millions) 

[NOTE #4] 

Program or 

Activity Amount Identified Amount Recaptured Recapture Rate 

AMS $0.05 $0.05 100.00% 

APHIS $0.20 $0.20 100.00% 

DA $0.00 $0.00 N/A 

FAS $0.01 $0.01 100.00% 

FNS $558.80 $558.80 100.00% 

FS $2.27 $2.15 94.71% 

FSA $45.09 $47.28 104.86% 

FSIS $0.00 $0.00 N/A 

GIPSA $0.00 $0.00 N/A 

NAD/OCR/OAO $0.00 $0.00 N/A 

NRCS $3.81 $0.78 20.47% 

OCFO/OBPA/OCIO $0.00 $0.00 N/A 

OGC $0.00 $0.00 N/A 

OIG $0.60 $0.00 0.00% 

OSEC/OCE $0.00 $0.00 N/A 

RBS $0.00 $0.11 N/A 

REE $4.55 $4.71 103.52% 

RHS $1.20 $0.46 38.33% 

RMA $0.00 $0.00 N/A 

RUS $0.00 $0.00 N/A 

Total $616.58 614.55 99.67% 
USDA Agency Financial Report | 2017 

201

TABLE 18: Disposition of Funds Recaptured Through Payment Recapture Audit Programs ($ in Millions) 

Program or 

Activity 

Amount 

Recovered 

Type of 

Payment 

Agency 

Expenses to 

Administer 

the Program 

Payment 

Recapture 

Auditor 

Fees 

Financial 

Management 

Improvement 

Activities 

Original 

Purpose To OIG 

Returned 

to 

Treasury 

Other 

Justification 

for “Other” 

Amounts 

Supplier Credit 

Recovery Audit 

Program 

[Note #5] 

$0.28 Contracts $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.28 

Funds in 

"Other" 

Column have 

not been 

distributed 

APHIS Internal 

Program $0.18 Grants $0.00 $0.00 $0.00 $0.00 $0.00 $0.18 $0.00 N/A 

FSA CCC 

Internal 

Program 

$218.08 Loans 

Other $0.00 $0.00 $0.00 $0.36 $0.00 $217.72 $0.00 N/A 

NIFA Internal 

Program $11.10 Grants $0.00 $0.00 $0.00 $0.00 $0.00 $11.10 $0.00 N/A 

RD Internal 

Program $5.73 Loans Grants $0.00 $0.00 $0.00 $0.00 $0.00 $4.45 $1.28 

Funds in 

"Other" 

Column have 

not been 

distributed 

RMA-Federal 

Crop Insurance 

Corporation 

10.16 Other $0.00 $0.00 $0.00 $10.16 $0.00 $0.00 $0.00 N/A 

Total $245.53 N/A $0.00 $0.00 $0.00 $10.52 $0.00 $233.45 $1.56 

See 

justifications 

above. 
SECTION III | Other Information 

202

TABLE 19: Aging of Outstanding Overpayments Identified in the Payment Recapture Audits ($ in Millions) 

Program or Activity Type of 

Payment 

Amount 

Outstanding 

(0–6 months) 

Amount 

Outstanding 

(6 months to 1 year) 

Amount 

Outstanding 

(over 1 year) 

Amount 

determined 

to not be 

collectable 

Justification for 

amounts determined 

not to be collectable 

Supplier Credit Recovery 

Audit Program N/A $0.00 $0.00 $0.00 0.00 N/A 

APHIS Internal Program N/A $0.00 $0.00 $0.00 $0.00 N/A 

FSA/CCC Internal 

Program 

Loans/ 

Other $6.26 $1.60 $0.00 $0.07 

Write offs due to finality 

rule, relief granted, 

deceased debtor, and 

small balances. 

NIFA Internal Program N/A $0.00 $0.00 $0.00 $0.00 N/A 

RD Internal Program 

Loans 

Grants 

$1.35 $0.84 $4.50 $0.00 N/A 

RMA-Federal Crop 

Insurance Corporation Other $0.97 $0.35 $4.64 $0.00 N/A 

TOTAL [Note #7] N/A $8.58 $2.79 $9.14 $0.07 See justification above. 

Note #1: The Food for Progress Program and RD Voucher Program (Section 542) are participating in both the Supplier Credit Recovery 

Audit Program and in their respective agencies’ Internal Program. 

Note #2: The RUS Water and Waste Disposal Systems for Rural Communities — Loans is participating in the Supplier Credit Recovery 

Audit Program and is covered under RD’s waiver (waiver mentioned in Note #3). 

Note #3: OMB was notified of FNS’ determination in October 2016. FNS determined that they would be unable to conduct an official 

payment recapture audit on its programs because States make payments to FNS program recipients. RD’s and FSIS’

justifications were provided in the FY 2016 AFR. 
USDA Agency Financial Report | 2017 

203

Note #4: The FY 2017 AFR Recapture Reporting Period consists of 4th Qtr FY 2016, 1st Qtr FY 2017, 2nd Qtr FY 2017, and 3rd Qtr 

FY 2017. 

Note #5: The Supplier Credit Recovery Audit’s reporting timeframe is August 1, 2016, through July 31, 2017. 

Note #6: RMA Recapture Rate percentages are occasionally greater than 100 percent; because the amount collected sometimes include 

amounts identified in previous years.

Note #7: USDA has a total of $20.51 million dollars in amounts outstanding (i.e., 8.10 percent of the overpayments identified through 

payment recapture audits). USDA has a total of $0.07 million dollars in amounts determined to not be collectable 

(i.e. 0.03 percent of the overpayments identified through payment recapture audits). 

Note #8: These programs or activities had less than $1 million in FY 2016 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 IPERA threshold. 

Note #9: Table 17 FSA CCC Internal Programs Loans Receivables Identified ($155.15) includes all receivables established in FY 2017. 

Collections ($157.41) and included all collection, made in FY 2017, which includes collection made on establishments from 

prior years. 
SECTION III | Other Information 

204

ADDITIONAL COMMENTS: 

COMPLIANCE WITH IPERA 

REQUIREMENTS 

The Office of Inspector General (OIG) 

conducts a compliance review of the 

Improper Payments Elimination and 

Recovery Act (IPERA) requirements 

annually. Compliance reviews evaluate 

adherence to 6 primary IPERA Requirements: 

1. Published an Agency Financial Report 

(AFR) or Performance and Accountability 

Report (PAR) for the most recent fiscal 

year and posted that report and any 

accompanying materials required by the 

Office of Management and Budget 

(OMB) on the agency Web site; 

2. Conducted a program-specific risk 

assessment for each program or activity 

that conforms with Section 3321 note of 

Title 31 U.S.C. (if required); 

3. Published improper payment estimates 

for all programs and activities identified 

as susceptible to significant improper 

payments under its risk assessment 

(if required); 

4. Published programmatic corrective action 

plans in the AFR or PAR (if required); 

5. Published, and is meeting, annual 

reduction targets for each program 

assessed to be at risk and estimated for 

improper payments (if required and 

applicable); and 

6. Reported 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 AFR or PAR. 

OIG’s USDA IPERA Compliance Review for 

FY 2016, dated May 2017, found that USDA 

agencies did not fully comply with three of 

six IPERA requirements. It appears that 

USDA will be non-compliant with three of 

the six IPERA requirements for FY 2017. 

They are: 

1. Failure to publish IP estimates for all 

high-risk programs: FNS SNAP and 

CACFP. 

2. Failure to publish and meet annual 

reduction targets: FSA NAP; and FNS 

NSLP, SBP, and WIC. 

3. Failure to achieve an IP rate under 

10 percent: FNS NSLP and SBP. 

OIG will conduct the FY 2017 USDA’s 

IPERA Compliance Review and publish a 

report in FY 2018.

Programs that are non-compliant with IPERA 

for one fiscal year must submit a plan to the 

Senate Committee on Homeland Security and 

Governmental Affairs, the House Committee 

on Oversight and Government Reform, and the 

OMB, describing the actions that the agency 

will take to become compliant. For programs 

that are non-compliant for 2 consecutive fiscal 

years, the Director of OMB will review the 

program and determine if additional funding 

would help the agency come to compliance. If 

the Director of OMB determines that 

additional funding would help the agency 

become compliant, the agency shall obligate an 

amount of additional funding determined by 

the Director of OMB to intensify compliance 

efforts. For programs that are non-compliant 

for 3 consecutive fiscal years, the agency will 

submit to Congress a reauthorization proposal 

for each discretionary program or proposed 

statutory changes necessary to bring the 

program into compliance. 

Information on the findings, 

accomplishments, and planned actions are 

included in Section 1: Management’s 

Discussion and Analysis, Compliance with 

Laws and Regulations. 
USDA Agency Financial Report | 2017 

205

Status of USDA Programs Non-compliant with 

IPERA 

The following program is projected to be noncompliant with IPERA for one year: 

The Farm Service Agency (FSA) Non-insured 

Crop Assistance Program (NAP) was not in 

compliance because the actual results 

exceeded error rate targets. 

The following program is projected to be noncompliant with IPERA for 3 years: 

Food and Nutrition Service (FNS) 

Supplemental Nutrition Assistance Program 

(SNAP). 

SNAP was not in compliance in FY 2015 

because the actual results exceeded error rate 

targets, and in FY 2016 and FY 2017, due to 

not publishing an improper error rate. 

The following programs are projected to be 

non-compliant with IPERA for 4 or more 

years: 

• FNS National School Lunch Program 

(NSLP) because the error rate was over 

10 percent; 

• FNS National School Breakfast Program 

(SBP) because the error rate was over 

10 percent; 

• FNS Special Supplemental Nutrition 

Program; Women, Infants, and Children 

(WIC) was not compliant because the actual 

results exceeded error rate targets; and 

• FNS Child and Adult Care Food Program 

(CACFP) was considered not in 

compliance, because an improper 

payment rate was not published. 

VI. AGENCY REDUCTION OF 

IMPROPER PAYMENTS WITH 

THE DO NOT PAY INITIATIVE 

USDA continued to expand its use of the 

Do Not Pay (DNP) portal in FY 2017 by 

onboarding new users within Rural 

Development (RD), the Risk Management 

Agency (RMA), and the National Finance 

Center. USDA has incorporated the DNP 

databases in the following ways: 

1. The death records maintained by the 

Commissioner of Social Security are 

checked extensively for FSA, the 

Commodity Credit Corporation (CCC), 

and RMA awards outside of the DNP 

portal. Several additional programs use 

this database in pre-award activities in 

the DNP portal. All USDA payments 

made through the U.S. Department of the 

Treasury (Treasury) are checked against 

this database on a post-payment basis. 

2. The General Services Administration’s 

System for Award Management (SAM) 

database is checked at pre-award for 

most contracts, grants, cooperative 

agreements and insurance programs. 

All USDA payments made through 

Treasury are checked against this 

database on a post payment basis. 

3. The Credit Alert System or Credit Alert 

Interactive Voice Response System of 

the Department of Housing and Urban 

Development (CAIVRS) is used by 

USDA loan programs at time of award. 

RD signed a memorandum of 

understanding with Treasury and updated 

its system of records notice. RD began 

transmitting its CAIVRS data to Treasury 

in June 2017. 
SECTION III | Other Information 

206

4. RD is using the Debt Check Database of 

the Treasury (Debt Check) for the 

majority of pre-award verifications. 

5. USDA is using the List of Excluded 

Individuals/Entities (LEIE) of the Office 

of Inspector General of the U.S. 

Department of Health and Human 

Services for pre-award for some loans, 

grants, and contracts. 

6. USDA is not currently using the Prisoner 

Update Processing System of the Social 

Security Administration (PUPS) but is 

evaluating programs that have the legal 

authority to use and benefit from this 

database. State officials in the food and 

nutrition programs are required to use 

prisoner data when making awards. 

USDA’s use of these databases is through 

Treasury’s DNP portal and directly from the 

database providers. Pre-award checks for 

contracts and grants are still performed 

directly through the SAM system rather than 

through the DNP portal by most USDA 

agencies. However, RD utilizes the DNP 

portal for single searches for pre-award 

checks. USDA has not been able to complete 

the computer matching agreements needed to 

convert these eligibility verification checks to 

the DNP portal. The primary reason for this is 

USDA’s extensive use of system interfaces in 

their business processes. USDA’s partners are 

using death records, SAM, and CAIVRS 

directly from the source agencies because 

there is not yet a streamlined process for 

non-federal employees to use the portal 

without extensive fees or background checks. 

USDA’s guaranteed loan programs have their 

partner banks verify eligibility through an 

automated interface with the U.S. Department 

of Housing and Urban Development CAIVRS 

system. Currently, the DNP portal only offers 

CAIVRS through online single search. 

USDA uses two databases not listed in the 

Improper Payments Elimination and 

Recovery Improvement Act (IPERIA) to 

further prevent improper payments. 

1. The Federal Awardee Performance and 

Integrity Information System (FAPIIS) is 

used before making some high-dollar 

awards. 

2. FNS’ system of disqualified recipients is 

used to check SNAP program 

participants. 

Treasury’s post payment review has allowed 

USDA to identify and correct issues with long 

term contracts and awards. Improved internal 

controls are now in place to update payment 

records with USDA’s long-term business 

partners as ownership changes. Utilizing 

Treasury’s post-payment adjudication process 

allowed the Natural Resources Conservation 

Service (NRCS) to detect a payment to a 

deceased individual. The payment itself was 

legitimate; however, it needed to be made to 

the estate rather than to the deceased 

individual. 
USDA Agency Financial Report | 2017 

207

Fraud Reduction Report 

OVERVIEW 

As required by Office of Management and 

Budget (OMB) Circular No. A-123, the U.S. 

Department of Agriculture (USDA) is in the 

process of implementing a DepartmentalLevel Enterprise Risk Management (ERM) 

program that effectively identifies risks; 

assesses, analyzes, and prioritizes those risks; 

and formulates and documents the risks. To 

date, a number of USDA agencies have 

implemented ERM. The implementation of 

ERM has helped agencies to better identify 

risk and vulnerabilities and appropriately take 

action to reduce and prevent fraud. As the 

Department continues to implement the 

requirement of OMB Circular A-123, the 

Department will use agency best practices to 

identify and minimize risks and 

vulnerabilities to prevent fraud. Outlined 

below are specific actions the Department is 

taking to integrate fraud risk prevention and 

monitoring into the management of internal 

controls. 

RISK ASSESSMENT: 

The A-123 Appendix A, Assessment of 

Internal Control over Financial Reporting, 

annual risk assessment incorporates specific 

internal and external fraud risk questions in 

the “Inherent Risk Considerations” section. 

The questions allow the respondent to rate the 

risk of the agency’s process as either highly 

susceptible, susceptible, or not susceptible to 

fraud. The overall risk rating is dependent on 

the agency’s responses, tallied along with 

other risk responses to determine the level and 

frequency of testing. 

Additionally, as a requirement of the 

Statement on Auditing Standards (SAS) 

No. 122, Clarification and Recodification, 

specifically Audit (AU) Section 240, 

Consideration of Fraud in a Financial 

Statement Audit, the Office of the Chief 

Financial Officer (OCFO) disseminates and 

consolidates responses to a fraud 

questionnaire among USDA’s financial 

community. 

TECHNOLOGY: 

The A-123 Appendix A annual assessment 

includes 15 automated, continuously 

monitored financial controls. The controls are 

configured in the USDA financial system to 

detect potential fraud/misuse. Configuration 

changes are immediately reported as 

exceptions to responsible control owners and 

first line supervisors, and the Internal 

Controls Division has the ability to run realtime system reports to further monitor 

exceptions. An oversight workflow is 

established where the OCFO’s Internal Audit 

and Compliance Group is responsible for 

assigning remediation tasks to correct any 

exception issues. Reports are available to be 

communicated to the USDA agencies at any 

time. 

ENTITY LEVEL CONTROLS: 

USDA agencies and staff offices are required 

to complete an annual Entity Level Control 

(ELC) assessment. The ELC assessment was 

recently updated to comply with the most 

current Government Accountability Office 

(GAO) — Standards for Internal Control in 

the Federal Government (“Green Book”). 

The assessment includes GAO Principle 8, 

which assesses fraud risk. Attributes include: 

types of fraud, fraud risk factors, and 
SECTION III | Other Information 

208

responses to fraud risks. Objectives include: 

identifying fraud risks based on fraud risk 

factors; assessing identified fraud risks for 

significance; and properly responding to 

identified fraud risks. 

ACCESS CONTROLS: 

The USDA consolidated financial systems’ 

access controls are managed through the 

Governance Risk and Compliance (GRC) 

Access Control module. Access controls are 

configured such that conflicting accounting 

roles are prohibited, unless there is an 

immediate need that is fully documented, 

mitigated, and supported by compensating 

controls. There is a standard process for the 

review and approval of mitigating controls to 

ensure that control strategies are properly 

documented and carried out by the requesting 

agency. 

SEGREGATION OF DUTY (SOD): 

USDA’s consolidated financial system is 

configured such that conflicting roles are 

prohibited, which ensures proper segregation 

of duty (SOD). Those who initiate a 

transaction in the financial system are not 

allowed to also approve that same transaction. 

There are also financially significant, agency 

specific SOD controls that are documented 

and tested annually during the A-123, 

Appendix A assessment. The strict 

prohibition of conflicting roles reduces the 

risk of fraud. 

ADDITIONAL FRAUD RISK 

INTEGRATION EFFORTS: 

OCFO has awarded a support contract to 

Grant Thornton to assist us in identifying 

more specific fraud risk control objectives to 

be assessed annually for those business 

processes at highest risk for fraud, as they 

relate to financial reporting. 

Agency Transactional Control Objectives to Reduce Fraud Risk: 

*Subset of full A-123, Appendix A Control Library 

Process Objective Risk 

Accounts Receivable 

Invoices are complete, 

accurate, and appropriately 

represent the fees 

due/services provided. 

Invoices generated are not 

complete and accurate, and 

do not appropriately 

represent the fees 

due/services provided. 

Awards Contracts 

Contracts are awarded to 

eligible vendors (includes Do 

Not Pay verification). 

Contracts are awarded to 

inactive vendors or vendor 

record not found in the 

financial system (includes Do 

Not Pay verification).

Charge Card Issuance 

Employees assigned as 

Approving Officials for 

purchase card transactions 

are authorized. 

Employees assigned as 

Approving Officials for 

purchase card transactions 

are not authorized. 
USDA Agency Financial Report | 2017 

209

Process Objective Risk 

Collections 

Cash receipts are protected 

before they are deposited. 

Cash receipts are not 

protected before they are 

deposited, which may result in 

fraudulent activity. 

Credit Extension 

Direct loan obligations 

recorded in the general ledger 

are valid, pertain to the 

purpose of the appropriation, 

and are supported by 

documentation. 

Direct loan obligations 

recorded in the general ledger 

are not valid, do not pertain to 

the purpose of the 

appropriation, and are not 

supported by documentation. 

Daily Escrow Processing 

Loss Claims are paid to valid 

insurance companies in 

compliance with collateral 

arrangements included in 

reinsurance agreement. 

Loss Claims may be paid 

without appropriate risk 

coverage for Agency. 

Disbursements 

Disbursements are valid and 

supported by sufficient and 

relevant documentation. 

Disbursements are not valid 

and supported by sufficient 

and relevant documentation. 

Grant Awards and 

Modifications 

Grants are awarded to eligible 

recipients (includes Do Not 

Pay verification). 

Grants are awarded to 

ineligible recipients (includes 

Do Not Pay verification). 

Loss Claims Loss Claims are for valid policy 

reinsurance year. 

Unauthorized or incomplete 

Loss Claims may be paid. 

Monitoring — Charge Card 

Cycle 

Duties are adequately 

segregated. 

Users are able to perform 

incompatible duties. 

Monitoring — Fleet Card 

Fleet card transactions adhere 

to Federal laws and 

regulations within the terms 

of the fleet card agreement. 

Fleet card transactions do not 

adhere to Federal laws and 

regulations within the terms 

of the fleet card agreement. 

Monitoring — Purchase Card 

Purchase card transactions 

adhere to Federal laws and 

regulations within the terms 

of the purchase card 

agreement. 

Purchase card transactions do 

not adhere to Federal laws 

and regulations within the 

terms of the purchase card 

agreement. 

Monitoring — Travel Card 

Travel card transactions 

adhere to Federal laws and 

regulations within the terms 

of the purchase card 

agreement. 

Travel card transactions do 

not adhere to Federal laws 

and regulations within the 

terms of the purchase card 

agreement. 
SECTION III | Other Information 

210

Process Objective Risk 

Payments — Farm Support 

Recorded obligations and 

payments for the Commodity 

Credit Corporation (CCC) farm 

support programs are valid 

(made to only eligible 

farms/producers) and are 

approved/ authorized by 

management. 

Recorded obligations and 

payments for CCC farm 

support programs are not 

valid (made to ineligible 

farms/producers) and/or are 

not approved/authorized by 

management. 

Payroll Processing 

Amounts recorded in the 

general ledger for payroll are 

accurate, valid, and properly 

supported by sufficient and 

relevant documentation. 

Amounts recorded in the 

general ledger for payroll are 

not accurate, valid, and 

properly supported by 

sufficient and relevant 

documentation. 

Relocation Allowance 

Claims for relocation expenses 

are timely reviewed for 

completeness and accuracy in 

accordance to agency 

directives and Federal Travel 

Regulation (FTR) 

requirements. 

Claims for relocation expenses 

are not timely reviewed for 

completeness and accuracy in 

accordance with agency 

directives and FTR 

requirements. 
USDA Agency Financial Report | 2017 

211

Inspector General Act Amendments of 1988: 

Management’s Report on Audit Follow Up

BACKGROUND 

The Inspector General Act Amendments of 

1988 (Public Law [P.L.] 100-504), require 

that each agency head submit semi-annual 

reports to Congress on the actions taken in 

response to the Office of Inspector General 

(OIG) audit, evaluation, and inspection 

reports. Consistent with the Reports 

Consolidation Act of 2000 (P.L. 106-531), 

the U.S. Department of Agriculture’s (USDA) 

Office of the Chief Financial Officer (OCFO) 

consolidates and annualizes the required 

semi-annual Inspector General Act 

Amendments’ reporting elements for 

inclusion in the annual Agency Financial 

Report (AFR). 

OIG audits USDA’s programs, systems, and 

operations. It then recommends improvements 

to management based on its findings. USDA 

management may agree or disagree with the 

audit’s findings or recommendations. An 

agreement is reached during the managementdecision 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 

(as of June 30, 2017)

USDA agencies closed 32* audits during 

fiscal year (FY) 2017. As of June 30, 2017, 

OIG and USDA agencies reached 

management decisions on 20 audits. As 

shown in the following exhibit, the 

Department’s inventory of open audits 

decreased in FY 2017 by 10 percent from 

96 to 86. 

*This number includes one interim audit 

report issued by the Office of the Inspector 

General during the period. Interim reports are 

issued to agencies to identify and remediate 

deficiencies in a short period of time. 
SECTION III | Other Information 

212

EXHIBIT 10: Open Audit Inventory 

0

20

40

60

80

100

120

140

160

FY2013 FY2014 FY2015 FY2016 FY2017

106

91 97 96

86

Note: The FY 2016 ending balance was revised from 87 to 96 to include: (1) ten audits 

transmitted from the OIG during the period August 1, 2016, to September 30, 2016, and 

(2) one audit that was included in the FY 2016 balance in error. 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 12 and Exhibit 14. 

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 

bullets below (see Exhibit 11 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; 

• Resolved audits that remain open 1 year 

or more past the management decision 

date and require an additional reporting 

element; and 

• The date issued, dollar value, and an 

explanation of why final action has not 

been taken. 
USDA Agency Financial Report | 2017 

213

EXHIBIT 11: Audit Follow-Up Definitions 

Term Definition 

Disallowed Cost 

(DC)

An incurred cost questioned by the Office of Inspector General (OIG) that 

management has agreed should not be chargeable to the Government. 

Final Action Actions that management has taken to address the audit findings and 

recommendations.

Funds to Be Put to 

Better Use (FTBU) 

An OIG recommendation that funds could be used more efficiently if 

management completes the recommendation, including: 

▪ Reductions in outlays or other savings; 

▪ Deobligation of funds from programs or operations, or the 

withdrawal of subsidy costs on loans, guarantees, or bonds; and 

▪ Implementation of recommended improvements for grants or 

contracts, or unnecessary expenditures noted in pre-award 

reviews of contracts or grant agreements. 

Management 

Decision 

Agreement between management and OIG on corrective action needed 

to address audit findings and recommendations. 

BEGINNING AND ENDING INVENTORY FOR AUDITS WITH 

DISALLOWED COSTS AND FUNDS TO BE PUT TO BETTER USE 

Of the 32 audits that achieved final action during the fiscal year, 5 contained DC. The number of 

DC audits remaining in the inventory at the end of the fiscal year is 24, with a monetary value of 

$48,089,948. See Exhibit 12 below. 

EXHIBIT 12: Inventory of Audits with Disallowed Costs 

Audits with Disallowed Costs (DC) # of Audits Amount ($) 

Beginning of the Period (October 1, 2016) 26 $103,962,217

Plus: New Management Decisions 3 $3,589,368 

Total Audits Pending Collection of DC 29 $107,551,585

Less: Adjustments (see Exhibit 13) ($50,743,105)

Revised Subtotal $56,808,480 

Less: Final Actions (Recoveries) 5 $8,718,532 

Audits with DC Requiring Final Action at the 

End of the Period (June 30, 2017) 24 $48,089,948 

Exhibit 12 and Exhibit 14 include only those open audits with DC and FTBU, respectively. 

Additionally, some audits contain both DC and FTBU amounts. For these reasons, the number of 

audits shown as the ending balances in Exhibit 12 and Exhibit 14 does not equal the total 

resolved audit inventory balance in Exhibit 10. The Beginning balance in Exhibit 12 was 
SECTION III | Other Information 

214

adjusted to include four audits with DC that were transmitted from OIG during the period 

August 1 to September 30, 2016. 

As shown in Exhibit 12 above, for DC audits that achieved final action in FY 2017, OIG and 

management agreed to collect $59,461,637 ($50,743,105 + $8,718,532). Adjustments were made 

totaling $50,743,105 (85 percent of the total) for the following reasons: (1) Appeals; (2) Agency 

Discovery; (3) Documentation; (4) Legal Decision; (5) Other Changes; (6) Payment 

Owed/Made; and (7) Write-off. Management recovered the remaining $8,718,532. 

EXHIBIT 13: Distribution of Adjustments to Disallowed Cost 

Category Amount ($) 

Appeals $158,487 

Agency Discovery $18,863 

Documentation $3,710,383 

Legal Decision $119,104 

Other Changes $3,100,000 

Payment Owed/Made $43,516,842 

Write-off $119,426 

Total $50,743,105 

Final action occurred on seven audits that involved FTBU amounts. The number of FTBU audits 

remaining in the inventory to date is eight, with a monetary value of $184,328,911 (see Exhibit 14).

EXHIBIT 14: Inventory of Audits with Funds to Be Put to Better Use (FTBU) 

*Includes a Natural Resource Conservation Service (NRCS) audit report (10601-0004-KC) with 

FTBU associated with recommendations not identified in the audit report. 

Audits with FTBU # of Audits Amount ($) 

Beginning of the Period (October 1, 2016) 14 $756,509,456 

Plus: New Management Decisions 1 $111,399,656 

Total Audits Pending 15* $867,909,112 

Less: Final Actions 7* $683,580,201 

Audits with FTBU Requiring Final Action at the End 

of the Period (June 30, 2017) 8 $184,328,911 

Disposition of FTBU: 

 FTBU Implemented $683,580,201 

 FTBU Not Implemented $0

 Total FTBU Amounts for Final Action Audits $683,580,201 

The Beginning balance in Exhibit 14 was adjusted to include one audit with FTBU that was 

transmitted from OIG during the period August 1 to September 30, 2016. 
USDA Agency Financial Report | 2017 

215

The number of audits open one or more years without final action in FY 2017 increased from 

62 to 65 audits, or a 5-percent increase. The 65 audits include 18 audits that reached one year 

past the management decision date during FY 2017. USDA agencies continue to pursue 

remediation and/or compensating controls to address many of the underlying issues identified in 

these older audits. 

EXHIBIT 15: Increase in the Number of Audits Open One or More Years Past the Management 

Decision Date (MDD) 

Audits 1 Year or More Past MDD # of Audits 

Beginning of the period 62** 

Less: Audits closed 15

Subtotal FY 2017 audits 1 year or more past MDD 47

Plus: Audits that reached 1 year past MDD during FY 2017 18

Ending balance as of September 30, 2017 65

**The beginning balance was adjusted to include six audits that turned one year past the 

management decision date during the period August 1 to September 30, 2016. 

Agencies have completed planned corrective actions, with the exception of associated DC, on 

11 audits (see Exhibit 16 below). 

EXHIBIT 16: Distribution of Audits Open 1 Year or More Past the Management Decision Date 

(MDD) 

Audits on Schedule Audits Behind Schedule Audits Under Collection 

No. DC ($) FTBU ($) No. DC ($) FTBU ($) No. DC ($) FTBU ($) 

1 $0 $0 53 $2,221,300 $7,259,731 11 $42,279,280 $65,690,453 
SECTION III | Other Information 

216

MANAGEMENT’S REPORT ON AUDIT FOLLOW UP 

Audits without final action 1 year or more past MDD, and behind schedule (excluding collections) are listed individually in Exhibit 17. 

The audits are categorized by agency and reason why final action has not occurred. More detailed information on audits on schedule, and 

audits under collection, is available from OCFO. 

EXHIBIT 17: Audits Open One Year or More Past the MDD, and Behind Schedule 

AGRICULTURAL MARKETING SERVICE (AMS) 

Audits Date Issued Revised 

Completion Date Audit Title 

Monetary Amount 

Reason Pending DC ($) FTBU ($) 

01601-0002-32 07/15/2013 03/31/2018 National Organic Program —

Organic Milk Operations 

$0 $0 Issuance of Policy Guidance 

and/or Legislation 

AMS Subtotal (1) $0 $0 

ANIMAL AND PLANT HEALTH INSPECTION SERVICE (APHIS) 

Audits Date Issued Revised 

Completion Date Audit Title 

Monetary Amount 

Reason Pending DC ($) FTBU ($) 

33601-0001-41 12/09/2014 03/30/2018 Oversight of Research Facilities $0 $420,299 Issuance of Policy Guidance 

and/or Legislation 

50601-0001-32 09/22/2015 10/31/2017 Controls Over APHIS’ Introduction of 

Genetically Engineered Organism $0 $0 Pending Administrative Action

50601-0004-31 03/30/2016 10/31/2017 USDA’s Response to Antibiotic 

Resistance $0 $0 Pending Administrative Action 

50601-0008-TE 01/28/2005 03/30/2018 

Controls over APHIS’ Issuance of 

Genetically Engineered Organisms 

Release Permits 

$0 $0 Issuance of Policy Guidance 

and/or Legislation 

APHIS Subtotal (4) $0 $420,299 
USDA Agency Financial Report | 2017 

217

AGRICULTURAL RESEARCH SERVICE (ARS) 

Audits Date Issued Revised 

Completion Date Audit Title 

Monetary Amount 

Reason Pending DC ($) FTBU ($) 

50601-0001-12 03/23/2016 12/31/2017 

Research, Education, and Economics 

Compliance with Contractor Past 

Performance Reporting 

Requirements 

$0 $0 Pending Administrative 

Action 

50601-0006-TE 03/04/2004 12/31/2017 ARS’ Controls Over Plant Variety 

Protection and Germplasm Storage $0 $0 Issuance of Policy Guidance and Legislation 

50601-0010-AT 03/8/2004 12/31/2017 

ARS’ Follow Up Report on the 

Security of Biological Agents at 

U.S. Department of Agriculture 

Laboratories 

$0 $0 Issuance of Policy Guidance 

and Legislation 

ARS Subtotal (3) $0 $0 

COMMODITY CREDIT CORPORATION (CCC) 

Audits Date Issued Revised 

Completion Date Audit Title 

Monetary Amount 

Reason Pending DC ($) FTBU ($) 

06401-0005-11 02/12/2016 09/30/2018 CCC’s Financial Statements for 

FY 2015 and 2014 $0 $0 Issuance of Policy Guidance and/or Legislation 

06401-0020-FM 11/09/2005 09/30/2018 CCC’s Financial Statements for 

FY 2005 and 2004 $0 $0 Pending Administrative Action 

CCC Subtotal (2) $0 $0 
SECTION III | Other Information 

218

FOREIGN AGRICULTURAL SERVICE (FAS) 

Audits Date Issued Revised 

Completion Date Audit Title 

Monetary Amount 

Reason Pending DC ($) FTBU ($) 

07601-0001-22 03/31/2014 12/31/2017 Private Voluntary Organization 

Grant Fund Accountability $242,676 $8,481 Pending administrative Action 

50601-0001-22 03/28/2013 6/30/2018 

Effectiveness of FAS’ Recent Efforts 

to Implement Measurable Strategies 

Aligned to the Department’s Trade 

Promotion and Policy Goals 

$0 $0 Issuance of Policy Guidance 

and/or Legislation 

50601-0002-16 02/06/2014 6/30/2018 Section 632(a) Transfer of Funds 

from USAID to USDA for Afghanistan $0 $0 Issuance of Policy Guidance and/or Legislation 

FAS Subtotal (3) $242,676 $8,481 

FOOD AND NUTRITION SERVICE (FNS) 

Audits Date Issued Revised 

Completion Date Audit Title 

Monetary Amount

Reason Pending DC ($) FTBU ($) 

27002-0011-13 09/28/2012 12/31/2017 

Analysis of FNS’ Supplemental 

Nutrition Assistance Program Fraud 

Prevention and Detection Efforts 

$0 $0 Pending 

Administrative Action 

27004-0001-22 09/25/2014 12/31/2017 

State Agencies’ Food Costs For the 

Food and Nutrition Service’s Special 

Supplemental Nutrition Program For 

Women, Infants, and Children 

$0 $0 Pending 

Administrative Action 

27099-0049-TE 09/04/2007 6/30/2018 

Disaster Food Stamp Program for 

Hurricanes Katrina and Rita in 

Louisiana, Mississippi, and Texas 

$0 $0

Issuance of Policy 

Guidance and/or 

Legislation 
USDA Agency Financial Report | 2017 

219

Audits Date Issued Revised 

Completion Date Audit Title 

Monetary Amount

Reason Pending DC ($) FTBU ($) 

27601-0001-10 07/26/2016 11/30/2017 

Compliance with SNAP Certification 

of Eligible Households 

Requirements 

$0 $0

IT System 

Implementation 

and/or Enhancement 

27601-0001-23 01/03/2013 10/31/2017 

National School Lunch ProgramFood Service Management 

Company Contracts 

$0 $0 Pending 

Administrative Action 

27601-0001-31 07/31/2013 6/30/2018 

Controls for Authorizing 

Supplemental Nutrition Assistance 

Program Retailers 

$0 $6,700,000 

Issuance of Policy 

Guidance and/or 

Legislation 

27601-0002-31 09/29/2016 10/15/2017 

FNS Controls over SNAP Benefits for 

Able-Bodied Adults Without 

Dependents

$0 $0 Pending 

Administrative Action 

27601-0002-41 09/23/2015 6/30/2018 FNS Quality Control Process for 

SNAP Error Rate $0 $0 Pending Administrative Action 

27601-0003-10 09/27/2016 10/31/2017 New Mexico SNAP Determination of 

Eligibility $9,784 $0 Pending Administrative Action 

27601-0006-10 09/13/2016 10/31/2017 

Missouri’s Compliance with SNAP 

Certification of Eligible Households 

Requirements

$0 $0 Pending 

Administrative Action 

50601-0014-AT 08/16/2010 10/31/2017 

Effectiveness and Enforcement of 

Suspension and Debarment 

Regulations 

$0 $0 Pending 

Administrative Action 

FNS Subtotal (11) $9,784 $6,700,000 
SECTION III | Other Information 

220

FARM SERVICE AGENCY (FSA) 

Audits Date Issued Revised 

Completion Date Audit Title 

Monetary Amount

Reason Pending DC ($) FTBU ($) 

03501-0001-12 05/26/2015 12/31/2017 

Review of Farm Service Agency’s 

Initiative to Modernize and Innovate 

the Delivery of Agricultural Systems 

(MIDAS)

$0 $0

IT System 

Implementation 

and/or Enhancements 

03601-0001-22 07/31/2014 09/30/2018 Compliance Activities $0 $0

Issuance of Policy 

Guidance and/or 

Legislation 

03601-0002-22 07/31/2014 12/30/2017 Economic Adjustment Assistance to 

Users of Upland Cotton $1,518,068 $0 Pending Administrative Action 

03601-0018-CH 08/10/2010 12/30/2017 Farm Loan Security $0 $0

IT System 

Implementation 

and/or Enhancements 

03702-0001-32 12/10/2014 10/01/2018 Farm Service Agency Livestock 

Forage Program $208,374 $0

IT System 

Implementation 

and/or Enhancements 

FSA Subtotal (5) $1,726,442 $0 
USDA Agency Financial Report | 2017 

221

FOOD SAFETY AND INSPECTION SERVICE (FSIS) 

Audits Date Issued Revised 

Completion Date Audit Title 

Monetary Amount

Reason Pending DC ($) FTBU ($) 

24601-0001-23 08/18/2015 12/31/2018 

Implementation of the Public Health 

Information System for Domestic 

Inspection 

$0 $0 Issuance of Policy and/ 

or guidance 

24601-0004-31 07/29/2015 09/30/2017 FSIS Ground Turkey Inspection and 

Safety Protocols $0 $0 Issuance of Policy and/or guidance 

50601-0006-HY 07/15/2009 6/30/2018 

Assessment of USDA’s Controls to 

Ensure Compliance with Beef Export 

Requirements 

$0 $0

IT System 

Implementation 

and/or Enhancements 

FSIS Subtotal (3) $0 $0 

NATURAL RESOURCES CONSERVATION SERVICE (NRCS) 

Audits Date Issued Revised 

Completion Date Audit Title 

Monetary Amount

Reason Pending DC ($) FTBU ($) 

10601-0002-31 07/30/2014 11/30/2017 NRCS Conservation Easement 

Compliance $0 $0 Issuance of Policy and/or Guidance 

50024-0009-11 05/13/2016 09/30/2017 

USDA Fiscal Year 2015 Compliance 

with Improper Payments 

Requirements 

$0 $0 Pending 

Administrative Action 

NRCS Subtotal (2) $0 $0 
SECTION III | Other Information 

222

OFFICE OF THE CHIEF INFORMATION OFFICER (OCIO) 

Audits Date Issued Revised 

Completion Date Audit Title 

Monetary Amount 

Reason Pending DC ($) FTBU ($) 

50501-0001-IT 08/15/2011 06/30/2018 

USDA’s Management and 

Security Over Wireless Handheld 

Devices 

$0 $0 Pending Administrative 

Action 

50501-0002-12 11/15/2011 09/30/2018 

Fiscal Year 2011 Federal 

Information Security 

Management Act 

$0 $0 Issuance of Policy and/or 

Guidance 

50501-0002-IT 11/15/2010 06/30/2018 

USDA FY 2010 Federal 

Information Security 

Management Act 

$0 $0 Issuance of Policy and/or 

Guidance 

50501-0015-FM 11/18/2009 01/01/2018 

OCIO FY 2009 Federal 

Information Security 

Management Act 

$0 $0 Issuance of Policy and or 

Guidance 

50501-0003-12 11/15/2012 09/30/2019 

USDA, Office of the Chief 

Information Officer, Fiscal Year 

2012 Federal Information 

Security Management Act 

$0 $0 Issuance of Policy and/or 

Guidance 

50501-0004-12 11/26/2013 06/30/2018 

USDA, Office of the Chief 

Information Officer, Fiscal Year 

2013 Federal Information 

Security Management Act 

$0 $0 Issuance of Policy and/or 

Guidance 

50501-0005-12 09/26/2014 09/30/2017 

CIGIE Cloud Computing Initiative 

— Status of cloud — computing 

Environment Within The USDA 

$0 $0 Pending Administrative 

Action 

50501-0006-12 11/12/2014 06/30/2018 

USDA, Office of The Chief 

Financial Officer, Fiscal Year 2014 

Federal Information Security 

Management Act 

$0 $0 Issuance of Policy and/or 

Guidance 
USDA Agency Financial Report | 2017 

223

Audits Date Issued Revised 

Completion Date Audit Title 

Monetary Amount 

Reason Pending DC ($) FTBU ($) 

50501-0008-12 11/07/2015 09/30/2018 

Office of the Chief Information 

Officer, FY 2015 Federal 

Information Security 

Modernization Act 

$0 $0 Issuance of Policy and/or 

Guidance 

88401-0001-12 08/02/2012 06/30/2018 

OCIO’s FY’s 2010 and 2011 

Funding Received for Security 

Enhancements 

$0 $0 Pending Administrative 

Action 

88501-0002-12 07/17/2014 09/30/2017 

Management and Security over 

USDA’s Universal 

Telecommunications Network 

$120,635 $0 Pending Administrative 

Action 

OCIO Subtotal (11) $120,635 $0 

RURAL DEVELOPMENT (RD) 

Audits Date Issued Revised 

Completion Date Audit Title 

Monetary Amount

Reason Pending DC ($) FTBU ($) 

04601-0001-31 07/18/2014 10/31/2017 

Single Family Housing Direct 

Loan Servicing and Payment 

Subsidy Recapture 

$34,338 $0 Pending Administrative 

Action 

04601-0018-CH 09/27/2012 12/31/2017 

Rural Rental Housing 

Program Maintenance Costs 

and Inspection Procedures 

$0 $0

Issuance of Policy 

Guidance and/or 

Legislation 

340001-0001-21 08/08/2016 09/30/2017 Rural Energy for America 

Program $2,906 $0 Pending Administrative Action 

34601-0006-AT 06/25/2010 09/30/2017 

Rural Business-Cooperative 

Service’s Intermediary 

Relending Program 

$0 $0 Pending Administrative 

Action 
SECTION III | Other Information 

224

Audits Date Issued Revised 

Completion Date Audit Title 

Monetary Amount

Reason Pending DC ($) FTBU ($) 

04901-0001-13 09/24/2015 09/30/2017 

Review of Rural Rental 

Housing’s Tenant and Owner 

Data Using Data Analytics 

$27,719 $0

IT System 

Implementation and/or 

Enhancements 

85401-0005-11 11/12/2015 9/30/2018 

Rural Development Financial 

Statement for FY 2015 and 

2014

$0 $0 Pending Administrative 

Action 

04601-0002-31 03/28/2016 09/30/2017 

Rural Development Single 

Family Housing Direct Loan 

Program Credit Reporting 

$0 $130,951 Pending Administrative 

Action 

50601-0002-21 03/31/2016 09/30/2017 

Hispanic and Women 

Farmers and Ranchers Claim 

Resolution Process 

$0 $0 Pending Administrative 

Action 

34601-0001-31 03/25/2014 09/30/2017 

Rural Business —

Cooperative Service Grant 

Programs — Duplication 

$56,800 $0 Pending Administrative 

action 

RD Subtotal (9) $121,763 $130,951 

Total Number 

Audits (53) Total $2,221,300 $7,259,731 
USDA Agency Financial Report | 2017 

225

Reduce the Footprint 

The USDA successfully implemented the OMB policy “Reduce the Footprint” formally known 

as “Freeze the Footprint” as an initiative to maintain its office and warehouse square footage 

baselines at the FY 2012 levels, through 2015. Beginning in FY 2016, the policy shifted to an 

emphasis on disposal of excess real property held by the Federal Government, thus making the 

overall Federal real estate asset portfolio more efficient. CFO Act entities are required to define 

annual targets to reduce their total square footage of domestic office and warehouse inventories 

in comparison to the revised FY 2015 “Reduce the Footprint” baseline, as compiled by the 

General Services Administration (GSA).

EXHIBIT 18: REDUCE THE FOOTPRINT BASELINE COMPARISON 

Square Footage (SF) (In Millions) 

Fiscal Year 2015 Baseline 2016 Change (2015–2016) 

32.62 32.20 -1.31% 

EXHIBIT 19: Reporting of Operations and Maintenance Costs—Owned Facilities and Structures 

Operations and Maintenance (O&M) Costs (In Millions) 

Fiscal Year 2015 Baseline 2016 Change (2015–2016) 

$602.30 $603.24 +$0.16 

More information about Federal Real 

Property can be found in the Federal Real 

Property Profile Summary Report Library. 

USDA issued an Agriculture Property 

Management Regulation Advisory (AGPMR 

No. 15-05) providing policy guidance and 

procedures for the Reduce the Footprint OMB 

space initiative. Since FY 2012, Departments 

have been projecting their five-year office and 

warehouse requirements. The Department has 

set forth processes and procedures to manage 

space needs at or below the FY 2015 baseline, 

represented in the figures above. 

USDA continues to support footprint 

reductions by identifying opportunities for 

disposal, consolidation, and increased 

utilization of real property. The Department 

issued an updated AGPMR Advisory 

(No 16-01) “Space Utilization Rate Policy,” 

clarifying the existing 150 square foot per 

person office utilization rate policy. These 

continuing actions represent USDA’s 

commitment to strategically managing and 

utilizing its space to achieve the highest return 

for the taxpayer. 
SECTION III | Other Information 

226

Civil Monetary Penalties 

USDA maintains regulations regarding civil monetary policies at Title 7 of the Code of Federal Regulations § 3.91. The Department is 

currently in the process of reviewing and updating the penalties in accordance with the Civil Monetary Penalties Inflation Act of 2015. 

The updated final rulemaking is expected to be sent to the Federal Register in November 2017. The table below briefly describes the 

penalty, under which authority, and anticipated current penalty amount. 

EXHIBIT 20: Civil Monetary Penalties 

Penalty (Name of Penalty) Authority (Statute) Date of Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Improper recordkeeping first time 

offense; pesticides 

Federal Insecticide, Fungicide, and 

Rodenticide Act, 7 U.S.C. 136i-1(d) 

4/7/2010 $905 

Improper recordkeeping subsequent 

offense; pesticides 

Federal Insecticide, Fungicide, and 

Rodenticide Act, 7 U.S.C. 136i-1(d) 

4/7/2010 $1,759 

Violation of the unfair conduct rule Perishable Agricultural Commodities 

Act, codified at 7 U.S.C. 499b(5) 

4/7/2010 $4,928 

Willful violation of the licensing 

requirements 

Perishable Agricultural Commodities 

Act, codified at 7 U.S.C. 499c(a) 

4/7/2010 $1,573 plus $393 per day for as long as 

offense occurs. 

Unwillful violation of the licensing 

requirements 

Perishable Agricultural Commodities 

Act, codified at 7 U.S.C. 499c(a) 

4/7/2010 $393 for each non-willful offense 

Violative transaction Perishable Agricultural Commodities 

Act, codified at 7 U.S.C. 499h(e) 

4/7/2010 $3,145 

Violation Export Apple Act, 7 U.S.C. 586 4/7/2010 $144-$14,372 

Violation Export Grape and Plum Act, codified 

at 7 U.S.C. 596 

4/7/2010 $275-$27,500 
USDA Agency Financial Report | 2017 

227

Penalty (Name of Penalty) Authority (Statute) Date of Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Violation of an order issued by the 

Secretary 

Agricultural Adjustment Act, 

reenacted with amendments by the 

Agricultural Marketing Agreement 

Act of 1937, codified at 7 U.S.C. 

608c(14)(B) 

4/7/2010 $2,750 

Failure to file certain reports Agricultural Adjustment Act, 

reenacted by the Agricultural 

Marketing Agreement Act of 1937, 

codified at 7 U.S.C. 610(c) 

4/7/2010 $275 

Violation of a seed program Federal Seed Act, codified at 7 U.S.C. 

1596(b) 

4/7/2010 $94-$1,875 

Failure to collect any assessment or 

fee for violation 

Cotton Research and Promotion Act, 

codified at 7.U.S.C. 2112(b) 

4/7/2010 $2,750 

Failure to obey a cease and desist 

order, or for deceptive marketing 

Plant Variety Protection Act, codified 

at 7 U.S.C. 2568(b) 

4/7/2010 $808-$16,169 

Failure to pay, collect, or remit any 

assessment or fee for a violation of a 

program 

Potato Research and Promotion Act, 

codified at 7 U.S.C. 2621(b)(1) 

4/7/2010 $1,232-$12,319 

Failure to obey a cease and desist 

order

Potato Research and Promotion Act, 

codified at 7 U.S.C. 2621(b)(3) 

4/7/2010 $1,232 

Failure to pay, collect, or remit any 

assessment or fee, or for a violation 

of a program 

Egg Research and Consumer 

Information Act, codified at 7 U.S.C.

2714(b)(1) 

4/7/2010 $1,425-$14,253 
SECTION III | Other Information 

228

Penalty (Name of Penalty) Authority (Statute) Date of Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Failure to obey a cease and desist 

order

Egg Research and Consumer 

Information Act, codified at 7 U.S.C. 

2714(b)(3) 

4/7/2010 $1,425-$14,253 

Failure to remit any assessment or 

fee, or for a violation of a program 

Beef Research and Information Act, 

codified at 7 U.S.C. 2908(a)(2) 

4/7/2010 $11,119 

Failure to remit any assessment or for 

a violation of a program regarding 

wheat and wheat foods research 

Wheat and Wheat Foods Research 

and Nutrition Education, 7 U.S.C. 

3410(b) 

4/7/2010 $2,750 

Failure to pay, collect, or remit any 

assessment or fee, or for a violation 

of a program 

Floral Research and Consumer 

Information Act, codified at 7 U.S.C. 

4314(b)(1) 

4/7/2010 $1,294-12,941 

Failure to obey a cease and desist 

order

Floral Research and Consumer 

Information Act, codified at 7 U.S.C. 

4314(b)(3) 

4/7/2010 $1,294 

Violation of an order Dairy Promotion Program, codified 

at 7 U.S.C. 4510(b) 

4/7/2010 $2,393 

Failure to pay, collect, or remit any 

assessment or fee, or for a violation 

Honey Research, Promotion, and 

Consumer Information Act, codified 

at 7 U.S.C. 4610(b)(1) 

4/7/2010 $737-$7,370 

Failure to obey a cease and desist 

order

Honey Research, Promotion, and 

Consumer Information Act, codified 

at 7 U.S.C. 4610(b)(3)

4/7/2010 $737 

Violation of a program Pork Promotion, Research, and 

Consumer Information Act of 1985, 

codified at 7 U.S.C. 4815(b)(1)(A)(i) 

4/7/2010 $2,224 
USDA Agency Financial Report | 2017 

229

Penalty (Name of Penalty) Authority (Statute) Date of Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Failure to obey a cease and desist 

order 

Pork Promotion, Research, and 

Consumer Information Act of 1985, 

codified at 7 U.S.C. 4815(b)(3)(A) 

4/7/2010 $1,112 

Failure to pay, collect, or remit any 

assessment or fee, or for a violation 

of a program 

Watermelon Research and 

Promotion Act, codified at 7 U.S.C. 

4910(b)(1) 

4/7/2010 $1,112-$11,119 

Failure to obey a cease and desist 

order

Watermelon Research and 

Promotion Act, codified at 7 U.S.C. 

4910(b)(3) 

4/7/2010 $1,112 

Failure to pay, collect, or remit any 

assessment or fee, or for a violation 

of a program 

Pecan Promotion and Research Act 

of 1990, codified at 7 U.S.C. 

6009(c)(1) 

4/7/2010 $1,811-$18,107 

Failure to obey a cease and desist 

order

Pecan Promotion and Research Act 

of 1990, codified at 7 U.S.C. 6009(e) 

4/7/2010 $1,811 

Failure to pay, collect, or remit any 

assessment or fee, or for a violation 

of a program 

Mushroom Promotion, Research, 

and Consumer Information Act of 

1990, codified at 7 U.S.C. 6107(c)(1) 

4/7/2010 $880-$8,797 

Failure to obey a cease and desist 

order

Mushroom Promotion, Research, 

and Consumer Information Act of 

1990, codified at 7 U.S.C. 6107(e) 

4/7/2010 $880 

Failure to pay, collect, or remit any 

assessment or fee, or for a violation 

of a program 

Lime Research, Promotion, and 

Consumer Information Act of 1990, 

codified at 7 U.S.C. 6207(c)(1) 

4/7/2010 $880-$8,797
SECTION III | Other Information 

230

Penalty (Name of Penalty) Authority (Statute) Date of Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Failure to obey a cease and desist 

order

Lime Research, Promotion, and 

Consumer Information Act of 1990, 

codified at 7 U.S.C. 6207(e) 

4/7/2010 $880 

Failure to pay, collect, or remit any 

assessment or fee, or for a violation 

of a program 

 Soybean Promotion, Research, and 

Consumer Information Act, codified 

at 7 U.S.C. 6307(c)(1)(A) 

4/7/2010 $1,811 

Failure to obey a cease and desist 

order 

Soybean Promotion, Research, and 

Consumer Information Act, codified 

at 7 U.S.C. 6307(e) 

4/7/2010 $9,054 

Failure to pay, collect, or remit any 

assessment or fee, or for an unwillful 

violation of a program 

Fluid Milk Promotion Act of 1990, 

codified at 7 U.S.C. 6411(c)(1)(A) and 

7 U.S.C. 6411(c)(1)(B) 

4/7/2010 $880-$8,797 

Failure to pay, collect, or remit any 

assessment or fee, or for a willful 

violation of a program 

Fluid Milk Promotion Act of 1990, 

codified at 7 U.S.C. 6411(c)(1)(A) and 

7 U.S.C. 6411(c)(1)(B) 

4/7/2010 $17,593-$175,931 

Failure to obey a cease and desist 

order

Fluid Milk Promotion Act of 1990, 

codified at 7 U.S.C. 6411(e) 

4/7/2010 $9,054 

Knowingly labeling or selling a 

product as organic except in 

accordance with the Organic Foods 

Production Act of 1990 

Organic Foods Production Act of 

1990, codified at 7 U.S.C. 6519(a) 

4/7/2010 $17,593 

Failure to pay, collect, or remit any 

assessment or fee, or for a violation 

of a program 

Fresh Cut Flowers and Fresh Cut 

Greens Promotion and Information 

Act of 1993, codified at 7 U.S.C. 

6808(c)(1)(A)(i) 

4/7/2010 $803-$8,295 
USDA Agency Financial Report | 2017 

231

Penalty (Name of Penalty) Authority (Statute) Date of Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Failure to obey a cease and desist 

order

Fresh Cut Flowers and Fresh Cut 

Greens Promotion and Information 

Act of 1993, codified at 7 U.S.C. 

6808(e)(1) 

4/7/2010 $8,295 

Violation of a program Sheep Promotion, Research, and 

Information Act of 1994, codified at 

7 U.S.C. 7107(c)(1)(A) 

4/7/2010 $1,617 

Failure to obey a cease and desist 

order

Sheep Promotion, Research, and 

Information Act of 1994, codified at 

7 U.S.C. 7107(e) 

4/7/2010 $808 

Violation of an order or regulation 

issued under the Commodity 

Promotion, Research, and 

Information Act of 1996 

Commodity Promotion, Research, 

and Information Act of 1996, 

codified at 7 U.S.C. 7419(c)(1) 

4/7/2010 $1,527–$15,270 for each violation 

Failure to obey a cease and desist 

order

Commodity Promotion, Research, 

and Information Act of 1996, 

codified at 7 U.S.C. 7419(e) 

4/7/2010 $1,527-$15,270 for each day the 

violation occurs 

Violation of an order or regulation 

issued under the Canola and 

Rapeseed Research, Promotion, and 

Consumer Information Act, codified 

at 7 U.S.C. 7448(c)(1)(A)(i) 

Canola and Rapeseed Research, 

Promotion, and Consumer 

Information Act, codified at 7 U.S.C. 

7448(c)(1)(A)(i) 

4/7/2010 $1,527 for each violation 

Failure to obey a cease and desist 

order

Canola and Rapeseed Research, 

Promotion, and Consumer 

Information Act, codified at 7 U.S.C. 

7448(e) 

4/7/2010 $7,635 for each day the violation occurs 
SECTION III | Other Information 

232

Penalty (Name of Penalty) Authority (Statute) Date of Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Violation of an order or regulation 

issued under the National Kiwifruit 

Research, Promotion, and Consumer 

Information Act, codified at 7 U.S.C. 

7468(c)(1) 

National Kiwifruit Research, 

Promotion, and Consumer 

Information Act, codified at 7 U.S.C. 

7468(c)(1) 

4/7/2010 $764-$7,635 

Failure to obey a cease and desist 

order

National Kiwifruit Research, 

Promotion, and Consumer 

Information Act, codified at 7 U.S.C. 

7468(e) 

4/7/2010 $764 for each day the violation occurs 

Violation of an order or regulation 

under the Popcorn Promotion, 

Research, and Consumer Information 

Act, codified at 7 U.S.C. 7487(a) 

Popcorn Promotion, Research, and 

Consumer Information Act, codified 

at 7 U.S.C. 7487(a) 

4/7/2010 $1,527 for each violation 

Certain violations Egg Products Inspection Act, codified 

at 21 U.S.C. 1041(c)(1)(A) 

4/7/2010 $8,797 for each violation 

Violation of an order or regulation 

issued under the Hass Avocado 

Promotion, Research, and 

Information Act of 2000, codified at 

7 U.S.C. 7807(c)(1)(A)(i) 

Hass Avocado Promotion, Research, 

and Information Act of 2000, 

codified at 7 U.S.C. 7807(c)(1)(A)(i) 

4/7/2010 $1,389–$13,893 for each violation 

Failure to obey a cease and desist 

order

Hass Avocado Promotion, Research, 

and Information Act of 2000, 

codified at 7 U.S.C. 7807(e)(1) 

4/7/2010 $13,893 for each offense 

Violation of certain provisions of the 

Livestock Mandatory Reporting Act of 

1999, codified at 7 U.S.C. 1636b(a)(1) 

Livestock Mandatory Reporting Act 

of 1999, codified a 7 U.S.C. 

1636b(a)(1) 

4/7/2010 $14,372 for each violation 
USDA Agency Financial Report | 2017 

233

Penalty (Name of Penalty) Authority (Statute) Date of Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Failure to obey a cease and desist 

order

Livestock Mandatory Reporting Act 

of 1999, codified at 7 U.S.C. 

1636b(g)(3) 

4/7/2010 $14,372 for each violation 

Failure to obey an order of the 

Secretary issued pursuant to the 

Dairy Product Mandatory Reporting 

program, codified at 7 U.S.C. 

1637b(c)(4)(D)(iii) 

Dairy Product Mandatory Reporting 

program, codified at 7 U.S.C. 

1637b(c)(4)(D)(iii)

4/7/2010 $13,893 for each offense 

Willful violation of the Country of 

Origin Labeling program by a retailer 

or person engaged in the business of 

supplying a covered commodity to a 

retailer 

Country of Origin Labeling Program, 

7 U.S.C. 1638b(b)(2) 

4/7/2010 $1,116 for each violation 

Violations of the Dairy Research 

Program, codified at 7 U.S.C. 4535 

and 4510(b) 

Dairy Research Program, codified at 

7 U.S.C. 4535 and 4510(b) 

4/7/2010 $2,393 for each violation 

Violation of the imported seed 

provisions of the Federal Seed Act, 

codified at 7 U.S.C. 1596(b) 

Federal Seed Act, codified at 7 U.S.C. 

1596(b) 

4/7/2010 $94-$1,875 

Violation of the Animal Welfare Act, 

codified at 7 U.S.C. 2149(b) 

Animal Welfare Act, codified at 

7 U.S.C. 2149(b) 

4/7/2010 $11,162, and knowing failure to obey a 

cease and desist order has a civil penalty 

of $1,674 

Any person that causes harm to, or 

interferes with, an animal used for 

the purposes of official inspection by 

the Department 

Civil Penalties (Department of 

Agriculture), 7 U.S.C. 2279e(a) 

4/7/2010 $13,893 
SECTION III | Other Information 

234

Penalty (Name of Penalty) Authority (Statute) Date of Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Penalty for a violation of the Swine 

Health Protection Act, codified at 

7 U.S.C. 3805(a) 

Swine Health Protection Act, 

codified at 7 U.S.C. 3805(a) 

4/7/2010 $27,500 

Any person that violates the Plant 

Protection Act (PPA), or that forges, 

counterfeits, or, without authority 

from the Secretary, uses, alters, 

defaces, or destroys any certificate, 

permit, or other document provided 

for in the PPA 

Plant Protection Act, 7 U.S.C. 

7734(b)(1) 

4/7/2010 $69,463/individual (except that the civil 

penalty may not exceed $1,389 in the 

case of an initial violation of the PPA by 

an individual moving regulated articles 

not for monetary gain), $347,133/any 

other person, $558,078 violations 

adjudicated in a single proceeding if not 

a willful violation, $1,116,156 violations 

adjudicated in a single proceeding if a 

willful violation; or twice the gross gain 

or gross loss for any violation, forgery, 

counterfeiting, unauthorized use, 

defacing, or destruction of a certificate, 

permit, or other document provided for 

in the PPA that results in the person 

deriving pecuniary gain or causing 

pecuniary loss to another. 
USDA Agency Financial Report | 2017 

235

Penalty (Name of Penalty) Authority (Statute) Date of Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Any person [except as provided in 

7 U.S.C. 8309(d)] that violates the 

Animal Health Protection Act (AHPA), 

or that forges, counterfeits, or, 

without authority from the Secretary, 

uses, alters, defaces, or destroys any 

certificate, permit, or other 

document provided under the AHPA 

Animal Health Protection Act, 

7 U.S.C. 8313(b)(1) 

4/7/2010 $66,666 in the case of any individual 

(except that the civil penalty may not 

exceed $1,333 in the case of an initial 

violation of the AHPA by an individual 

moving regulated articles not for 

monetary gain), $333,328 in the case of 

any other person for each violation, 

$558,078 for all violations adjudicated in 

a single proceeding if the violations do 

not include a willful violation, $1,116,156 

for all violations adjudicated in a single 

proceeding if the violations include a 

willful violation; or twice the gross gain 

or gross loss for any violation, forgery, 

counterfeiting, unauthorized use, 

defacing, or destruction of a certificate, 

permit, or other document provided 

under the AHPA that results in the 

person’s deriving pecuniary gain or 

causing pecuniary loss to another 

person. 

Any person that violates certain 

regulations under the Agricultural 

Bioterrorism Protection Act of 2002 

regarding transfers of listed agents 

and toxins or possession and use of 

listed agents and toxins. 

Bioterrorism Protection Act of 2002, 

codified at 15 U.S.C. 8401 (i)(1) 

4/7/2010 $333,328 in the case of an individual and 

$666,656 in the case of any other 

person. 
SECTION III | Other Information 

236

Penalty (Name of Penalty) Authority (Statute) Date of Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Violation of the Horse Protection Act, 

codified at 15 U.S.C. 1825(b)(1) 

Horse Protection Act, codified at 

15 U.S.C. 1825(b)(1)

4/7/2010 $5,500 

Failure to obey Horse Protection Act 

disqualification, codified at 15 U.S.C. 

1825(c) 

Horse Protection Act, codified at 

15 U.S.C. 1825(c) 

4/7/2010 $10,750 

Knowingly violating or, if in the 

business as an importer or exporter, 

violating, with respect to terrestrial 

plants, any provision of the 

Endangered Species Act of 1973, any 

permit or certificate issued 

thereunder, or any regulation issued 

pursuant to section 9(a)(1)(A) 

through (F), (a)(2)(A) through (D), (c), 

(d) (other than regulations relating to 

recordkeeping or filing reports), (f), or 

(g) of the Endangered Species Act of 

1973 (16 U.S.C. 1538(a)(1)(A) through 

(F), (a)(2)(A) through (D), (c), (d), (f), 

and (g)), as set forth at 16 U.S.C. 

1540(a) 

Endangered Species Act of 1973, 

(16 U.S.C. 1538(a)(1)(A) through (F), 

(a)(2)(A) through (D), (c), (d), (f), and 

(g)), as set forth at 16 U.S.C. 1540(a) 

4/7/2010 $50,277 

Knowingly violating or, if in the 

business as an importer or exporter, 

violating, with respect to terrestrial 

plants, any other regulation under 

the Endangered Species Act of 1973, 

as set forth at 16 U.S.C. 1540(a) 

Endangered Species Act of 1973, as 

set forth at 16 U.S.C. 1540(a) 

4/7/2010 $24,133 
USDA Agency Financial Report | 2017 

237

Penalty (Name of Penalty) Authority (Statute) Date of Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Violation, with respect to terrestrial 

plants, of the Endangered Species Act 

of 1973, or any regulation, permit, or 

certificate issued thereunder, as set 

forth at 16 U.S.C. 1540(a) 

Endangered Species Act of 1973, as 

set forth at 16 U.S.C. 1540(a) 

4/7/2010 $1,801 

Knowingly and willfully violating 

49 U.S.C. 80502 with respect to the 

transportation of animals by any rail 

carrier, express carrier, or common 

carrier (except by air or water); a 

receiver, trustee, or lessee of one of 

those carriers; or an owner or master 

of a vessel 

28 Hour Law, 49 U.S.C. 80502(d) 4/7/2010 $162-$808 

Violating a provision of the Food and 

Nutrition Act of 2008 (Act), or a 

regulation under the Act, by a retail 

food store or wholesale food concern 

Food and Nutrition Act of 2008 (Act), 

or a regulation under the Act, 

codified at 7 U.S.C. 2021(a) and (c) 

4/7/2010 $111,606 

Trafficking in food coupons Food and Nutrition Act of 2008 (Act), 

codified at 7 U.S.C. 2021(b)(3)(B) 

4/7/2010 $40,221–$72,428 

Sale of firearms, ammunitions, 

explosives, or controlled substances 

for coupons

Food and Nutrition Act of 2008 (Act), 

codified at 7 U.S.C. 2021(b)(3)(c) 

4/7/2010 $36,214–$72,428 
SECTION III | Other Information 

238

Penalty (Name of Penalty) Authority (Statute) Date of Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Any entity that submits a bid to 

supply infant formula to carry out the 

Special Supplemental Nutrition 

Program for Women, Infants, and 

Children and discloses the amount of 

the bid, rebate, or discount practices 

in advance of the bid opening, or for 

any entity that makes a statement 

prior to the opening of bids for the 

purpose of influencing a bid 

Child Nutrition Act of 1966, as 

amended by Sec. 204 of the Child 

Nutrition Act of 1992, P.L. 1102-

512., 42 U.S.C. 1786(h)(8)(H)(i) 

4/7/2010 $170,472,030 

Vendor convicted of trafficking in 

food instruments 

Child Nutrition Act of 1966, as 

amended by Sec. 203 (p)(1) of the 

William F Goodling Child Nutrition 

Reauthorization Act of 1998, 

P.L. 105-336., 42 U.S.C. 

1786(o)(1)(A) and 42 U.S.C. 

1786(o)(4)(B) 

4/7/2010 $14,740–$58,958 

Vendor convicted of selling firearms, 

ammunition, explosives, or controlled 

substances in exchange for food 

instruments

Child Nutrition Act of 1966, as 

amended by Sec. 203 (p)(1) of the 

William F Goodling Child Nutrition 

Reauthorization Act of 1998, 

P.L. 105-336., 2 U.S.C. 1786(o)(1)(B) 

and 42 U.S.C. 1786(o)(4)(B) 

4/7/2010 $14,740–$58,958 

Certain violations under the Egg 

Products Inspection Act 

Egg Products Inspection Act, codified 

at 21 U.S.C. 1041(c)(1)(A) 

4/7/2010 $8,797 for each violation 

Failure to timely file certain reports, 

codified at 21 U.S.C. 467d 

Poultry Products Inspection Act, 

21 U.S.C. 467d 

4/7/2010 $275 per day for each day the report is 

not filed 
USDA Agency Financial Report | 2017 

239

Penalty (Name of Penalty) Authority (Statute) Date of Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Failure to timely file certain reports, 

codified at 21 U.S.C. 677

Federal Meat Inspection Act, 

21 U.S.C. 677 

4/7/2010 $275 per day for each day the report is 

not filed 

Failure to timely file certain reports, 

codified at 21 U.S.C. 678

Egg Products Inspection Act, 

21 U.S.C. 1051 

4/7/2010 $275 per day for each day the report is 

not filed 

Willful disregard of the prohibition 

against the export of unprocessed 

timber originating from Federal lands 

Forest Resources Conservation & 

Shortage Relief Act of 1990, as 

amended, 16 U.S.C. 620d(c)(1)(A) 

4/7/2010 $905,353 

Violation in disregard of the Forest 

Resources Conservation and Shortage 

Relief Act or the regulations that 

implement such Act 

Forest Resources Conservation & 

Shortage Relief Act of 1990, as 

amended, 16 U.S.C. 620d(c)(2)(A)(i) 

4/7/2010 $135,803 

Person that should have known that 

an action was a violation of the Forest 

Resources Conservation and Shortage 

Relief Act or the regulations that 

implement such Act 

Forest Resources Conservation and 

Shortage Relief Act or the 

regulations that implement such Act, 

16 U.S.C. 620d(c)(2)(A)(ii) 

4/7/2010 $90,535 

Willful violation of the Forest 

Resources Conservation and Shortage 

Relief Act or the regulations that 

implement such Act 

Forest Resources Conservation and 

Shortage Relief Act or the 

regulations that implement such Act, 

codified at 16 U.S.C. 620d(c)(2)(A)(iii) 

4/7/2010 $905,353 

Violation involving protections of 

caves 

Federal Cave Resources Protection 

Act of 1988; P.L. 100-691; 102 Stat. 

4546, 16 U.S.C. 4307(a)(2) 

4/7/2010 $19,787 

Packer or swine contractor violation The Packers and Stockyards Act, 

1921, as amended, 7 U.S.C. 193(b) 

4/7/2010 $27,500 
SECTION III | Other Information 

240

Penalty (Name of Penalty) Authority (Statute) Date of Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Livestock market agency or dealer 

failure to register 

Packers and Stockyards Act of 1921, 

7 U.S.C. 203

4/7/2010 $1,875 

Livestock market agency or dealer 

failure to register 

Packers and Stockyards Act of 1921, 

7 U.S.C. 203

4/7/2010 $94 each day the violation continues 

Operating without filing, or in 

violation of, a stockyard rate 

schedule, or of a regulation or order 

of the Secretary made thereunder 

Packers and Stockyards Act of 1921, 

7 U.S.C. 207(g) 

4/7/2010 $1,876 

Operating without filing, or in 

violation of, a stockyard rate 

schedule, or of a regulation or order 

of the Secretary made thereunder 

Packers and Stockyards Act of 1921, 

7 U.S.C. 207(g) 

4/7/2010 $94 each day the violation continues 

A stockyard owner, livestock market 

agency, and dealer violation 

Packers and Stockyards Act of 1921, 

7 U.S.C. 213(b) 

4/7/2010 $27,500 

Stockyard owner, livestock market 

agency, and dealer compliance order 

Packers and Stockyards Act of 1921, 

7 U.S.C. 215(a) 

4/7/2010 $1,875 

Failure to file required reports 15 U.S.C. 50 4/7/2010 $2,393 

Live poultry dealer violations Packers and Stockyards Act of 1921, 

7 U.S.C. 228b-2(b)

4/7/2010 $80,000 

Refusal of inspection and weighing 

services violation 

7 U.S.C. 86(c) 4/7/2010 $268,750 
USDA Agency Financial Report | 2017 

241

Penalty (Name of Penalty) Authority (Statute) Date of Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Any person who willfully and 

intentionally provides any false or 

inaccurate information to the Federal 

Crop Insurance Corporation or to an 

approved insurance provider with 

respect to any insurance plan or 

policy that is offered under the 

authority of the Federal Crop 

Insurance Act 

Federal Crop Insurance Act, codified 

at 7 U.S.C. 1506(n)(1)(A) 

4/7/2010 $11,744 

Any person who willfully and 

intentionally provides any false or 

inaccurate information to the Federal 

Crop Insurance Corporation or to an 

approved insurance provider with 

respect to any insurance plan or 

policy that is offered under the 

authority of the Federal Crop 

Insurance Act, or who fails to comply 

with a requirement of the Federal 

Crop Insurance Corporation 

Federal Crop Insurance Act, codified 

at 7 U.S.C. 1515(h)(3)(A) 

4/7/2010 $11,744 

Violation of section 536 of Title V of 

the Housing Act of 1949 

Section 536 of Title V of the Housing 

Act of 1949, codified at 42 U.S.C. 

1490p(e)(2) 

4/7/2010 $192,459/individual and $1,924,589 in 

the case of an applicant other than an 

individual 

Equity skimming Section 543(a) of the Housing Act of 

1949, codified at 42 U.S.C. 

1490s(a)(2) 

4/7/2010 $34,731 
SECTION III | Other Information 

242

Penalty (Name of Penalty) Authority (Statute) Date of Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Violation of regulations or 

agreements made in accordance with 

Title V of the Housing Act of 1949 by 

submitting false information, 

submitting false certifications, failing 

to timely submit information, failing 

to maintain real property in good 

repair and condition, failing to 

provide acceptable management for 

a project, or failing to comply with 

applicable civil rights statutes and 

regulations 

Section 543b of the Housing Act of 

1949, codified at 42 U.S.C. 

1490s(b)(3)(A) 

4/7/2010 $69,463 

Failure to comply with certain 

provisions of the U.S. Warehouse Act 

U.S. Warehouse Act, codified at 

7 U.S.C. 254

4/7/2010 $34,731 

Willful failure or refusal to furnish 

information, or willful furnishing of 

false information under section 156 

of the Federal Agricultural 

Improvement and Reform Act of 1996 

Section 156 of the Federal 

Agricultural Improvement and 

Reform Act of 1996, codified at 

7 U.S.C. 7272(g)(5). 

4/7/2010 $15,270 

Willful failure or refusal to furnish 

information, or willful furnishing of 

false data by a processor, refiner, or 

importer of sugar, syrup, and 

molasses 

Section 156 of the Federal 

Agriculture Improvement and 

Reform Act of 1996, codified at 

7 U.S.C. 7272(g)(5)

4/7/2010 $15,270 

Filing a false acreage report that 

exceeds tolerance 

Federal Agriculture Improvement 

and Reform Act of 1996, Section 

156, codified at 7 U.S.C. 7272(g)(5) 

4/7/2010 $15,270 for each violation 
USDA Agency Financial Report | 2017 

243

Penalty (Name of Penalty) Authority (Statute) Date of Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Knowingly violating any regulation of 

the Secretary of the Commodity 

Credit Corporation pertaining to 

flexible marketing allotments for 

sugar 

Section 359h(b) of the Agricultural 

Adjustment Act of 1938 codified at 

7 U.S.C. 1359hh(b) 

4/7/2010 $11,162 

Knowing violation of regulations 

promulgated by the Secretary 

pertaining to cotton insect 

eradication 

Section 104(d) of the Agricultural Act 

of 1949 codified at 7 U.S.C. 1444a(d) 

4/7/2010 $13,750 

Making, presenting, submitting, or 

causing to be made, presented, or 

submitted, a false, fictitious, or 

fraudulent claim 

Program Fraud Civil Remedies Act of 

1986, codified at 31 U.S.C. 

3802(a)(1) 

4/7/2010 $10,958 

Making, presenting, submitting, or 

causing to be made, presented, or 

submitted, a false, fictitious, or 

fraudulent written statement 

Program Fraud Civil Remedies Act of 

1986, codified at 31 U.S.C. 

3802(a)(2) 

4/7/2010 $10,958 

Violation of 7 U.S.C. 87b regarding 

grain inspection 

Grain Standards Act, 7 U.S.C. 86c 4/7/2010 $268,750 

Violation of Act by registrant Federal Insecticide, Fungicide, and 

Rodenticide Act, 7 U.S.C. 136l(a)(1) 

4/7/2010 $8,797 

Violation of Act by private applicator 

with delivery 

Federal Insecticide, Fungicide, and 

Rodenticide Act, 7 U.S.C. 136l(a)(2) 

4/7/2010 $1,759 

Violation of Act by private applicator 

without delivery first offense 

Federal Insecticide, Fungicide, and 

Rodenticide Act, 7 U.S.C. 136l(a)(2) 

4/7/2010 $880 
SECTION III | Other Information 

244

Penalty (Name of Penalty) Authority (Statute) Date of Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

Violation of Act by private applicator 

without delivery subsequent offense 

Federal Insecticide, Fungicide, and 

Rodenticide Act,7 U.S.C. 136l(a)(2) 

4/7/2010 $1,759 

Improper Record Keeping, First 

Offense 

Federal Insecticide, Fungicide, and 

Rodenticide Act, 7 U.S.C. 136l(a)(2) 

4/7/2010 $905 

Improper Record Keeping, 

Subsequent Offense 

Federal Insecticide, Fungicide, and 

Rodenticide Act, 7 U.S.C. 136l(a)(2) 

4/7/2010 $1,759 

Violation of any of the slaughter 

horse transportation regulations in 

9 CFR part 88 

Commercial Transportation of 

Equine for Slaughter Act, 7 U.S.C. 

1901 note 

4/7/2010 $7,635 

Harming or interfering with any 

animal used by USDA or DHS for 

inspections 

7 U.S.C. 2279e(a) 4/7/2010 $13,893 

An initial violation of the Act or its 

accompanying regulations, or any 

forgery, counterfeiting, or 

unauthorized use, alteration, 

destruction, or defacing of any 

certificate, permit, or other 

document provided for in the Act by 

an individual moving regulated 

articles not for monetary gain 

Plant Protection Act, 7 U.S.C. 

7734(b)(1) 

4/7/2010 $1,389 
USDA Agency Financial Report | 2017 

245 

Penalty (Name of Penalty) Authority (Statute) Date of Current 

Adjustment 

Anticipated Current Penalty Level 

($ Amount) 

An initial violation of the Act or its 

accompanying regulations (except 

those provisions and regulations 

governing veterinary accreditation), 

or any forgery, counterfeiting, or 

unauthorized use, alteration, 

destruction, or defacing of any 

certificate, permit, or other 

document provided for in the Act by 

an individual moving regulated 

articles not for monetary gain 

Animal Health Protection Act, 

7 U.S.C. 8313(b)(1) 

4/7/2010 $1,333 

Federal Trade Commission Act, 

15 U.S.C. 50

4/7/2010 $94 

Failure of any person, partnership, or 

corporation to file any required 

annual or special report within the 

time required and to continue said 

failure for 30 days after notice of 

default 

Federal Trade Commission Act, 

15 U.S.C. 50

4/7/2010 $2,393 
SECTION III | Other Information 

246

Grant Oversight & New Efficiency (GONE) Act 

CATEGORY 2–3 YEARS >3–5 YEARS >5 YEARS 

Number of Grants/Cooperative 

Agreements with Zero Dollar 

Balances 

176 226 306

Number of Grants/Cooperative 

Agreements with Undisbursed 

Balances 

255 1284 280

Total Amount of Undisbursed 

Balances $ 21,096,732 $ 16,593,495 $ 5,661,935 

CHALLENGES 

Many of the Cooperator’s payments are 

processed through Federal Trading Partner 

(FTP) Payment Management Systems 

(PMS). The Cooperators do not provide 

timely Cash Transaction Reports, or 

complete drawdowns in PMS. These delays 

prevent the United States Department of 

Agriculture (USDA) from reconciling the 

Department’s Core Financial System, which 

is required before closeout can transpire. 

Furthermore, grantees are failing to submit 

the required financial report (revised Federal 

Financial Report, SF-425) when the grant 

account statements do not reconcile. 

Additionally, USDA has had staffing 

changes, due to retirements and 

reassignments, which result in delays to 

approve and review final performance 

reports. Priorities have been in processing 

new agreements which limits the amount of 

time the staff has to devote to agreement 

closeout. 

CORRECTIVE ACTIONS 

Authorized Departmental Officers are 

working closely with Cooperators to insure 

that they are submitting reports in a timely 

manner and completing drawdowns. The 

Department has begun using Interns and 

Contractors to assist in the closeout process 

of agreements. Agency Awards 

Management Divisions (AMD) are notifying 

and working closely with Program Division 

Directors on attempts to obtain approvals to 

closeout agreements. In one USDA agency, 

if a grantee fails to provide a revised SF-425 

within 160 days after the award end date, at 

the request of the AMD specialist, the 

awards will be administratively closed 

according to closeout policies and 

procedures. Another agency recognizes that 

closing out these agreements is a priority, 

and the Budget and Financial Management 

community is working with the grants and 

agreements specialists to obtain regular 

status updates on the efforts being made to 

close out grants and cooperative agreements.
USDA Agency Financial Report | 2017 

247

Abbreviations & Acronyms

A

AARC—Alternative Agricultural Research and 

Commercialization Corporation 

ACRSI—Acreage Crop Reporting 

Streamlining Initiative 

ADA—Antideficiency Act 

AGA—Association of Government 

Accountants 

AgNIC—Agriculture Network Information 

Collaborative 

AIP—Approved Insurance Providers 

AR—Administrative Review 

AFR—Agency Financial Report 

AGPMR—Agriculture Property Management 

Regulation 

AMS—Agricultural Marketing Service 

APEC—Access, Participation, Eligibility, 

and Certification

APHIS—Animal and Plant Health Inspection 

Service 

APR—Annual Performance Report 

AQI—Agricultural Quarantine Inspection 

AR—Administrative Review 

ARS—Agricultural Research Service 

ASOC—Agriculture Security Operations Center 

AU—Audit 

B

BARC—Beltsville Agricultural Research 

Center 

BDO—Barter Delivery Obligation 

BOC—Budget Object Classification 

BPM—Business Portfolio Manual 

BPR—Business Process Reengineering 

BSF—Budget Status of Funds 

C

C&A—Certification and Accreditation 

CACFP—Child and Adult Care Food Program 

CAIVRS—Credit Alert Interactive Voice 

Response System 

CAP—Corrective Action Plan 

CAP—Cross Agency Priority 

CBO—Certificates of Beneficial Ownership 

CCC—Commodity Credit Corporation 

CCE—Commodity Certificate Exchange 

CDC—Centers for Disease and Control 

Prevention 

CDM—Continuous Diagnostics and Monitoring 

CED—County Executive Director 

CEP—Community Eligibility Provision 

CFR—Code of Federal Regulations 

CIM—Capital Improvement and Maintenance 

CIO—Chief Information Officer

CIP—Continuous Improvement Plan 

CN—Child Nutrition 

CNPP—Center for Nutrition Policy and 

Promotion 

CoC—Cushion of Credit 
ABBREVIATIONS—ACRONYMS 

248

COF—County Office 

COF—County Operated Facility 

COOP—Continuity of Operations 

CORE—Core Accounting System 

COTS—Commercial Off the Shelf 

CRM—Certified Reference Material 

CRP—Conservation Reserve Program 

CTA—Conservation Technical Assistance 

CY—Current Year 

D

DATA—Digital Accountability and 

Transparency Act of 2014 

DC—Disallowed Costs 

DHS—U.S. Department of Homeland Security 

DM—Departmental Manager 

DM&R—Deferred Maintenance & Repairs 

DNP—Do Not Pay 

E

E&T—Employment and Training 

ECP—Emergency Conservation Program 

EECLP—Energy Efficiency and Conservation 

Loan Program 

EEI—Energy Efficiency Improvement 

EEO—Equal Employment Opportunity 

EFG—ezFedGrants 

eFMS—Electronic Funds Management System 

EFRP—Emergency Forest Restoration 

ELC—Entity Level Control 

EP—Electric Program 

EPA—Environmental Protection Agency

EPD—Easement Programs Division 

EQIP—Environmental Quality Incentives 

Program 

ERM—Enterprise Risk Management 

ERP—Enterprise Resource Planning 

ERS—Economic Research Service 

EWPP—Emergency Watershed Protection 

Program 

F 

FAPIIS—Federal Awardee Performance and 

Integrity Information System 

FAS—Foreign Agricultural Service 

FBWT—Fund Balance with Treasury 

FCIC—Federal Crop Insurance Corporation 

FDA—Food and Drug Administration 

FDCH—Family Day Care Homes 

FEB—Federal Executive Board 

FECA—Federal Employee Compensation Act 

FFAS—Farm and Foreign Agricultural Services 

FFATA—Federal Funding Accountability and 

Transparency Act 

FFB—Federal Financing Bank 

FFMIA—Federal Financial Management 

Improvement Act 

FFMS—Federal Financial Management System 

FISMA—Federal Information Security 

Management Act 

FM—Financial Management 

FMD—Financial Management Division 

FMFIA—Federal Managers’ Financial 

Integrity Act 

FMMI—Financial Management 

Modernization Initiative 

FMS—Financial Management Services 

FNS—Food and Nutrition Service 
USDA Agency Financial Report | 2017 

249

FS—Forest Service 

FSA—Farm Service Agency 

FSDW—Financial Statement Data Warehouse 

FSFL—Farm and Sugar Storage Facilities 

FSH—Forest Service Handbook 

FSIS—Food Safety and Inspection Service 

FNCS—Food, Nutrition and Consumer Services 

FSM—Forest Service Manual

FSRIP— Farm Security and Rural Investment 

Act Programs

FSRS—Federal Funding Accountability and 

Transparency Act sub award Reporting 

System 

FSSP—Federal Shared Service Provider 

FTBU—Funds To Be Put to Better Use 

FY—Fiscal Year 

G

G&A—Grants and Agreements 

GAO—Government Accountability Office 

GIPSA—Grain Inspection, Packers and 

Stockyards Administration 

GMS—Global Market Strategy 

GONE—Grant Oversight and New Efficiency 

Act 

GP—General Provision 

GPRA—Government Performance and 

Results Act of 1993 

GRC—Governance Risk and Compliance

GSA—General Services Administration 

H

HANA—High Performance Analytic 

Appliance 

HSPD—Homeland Security Presidential 

Directive 

I

IAS—Integrated Acquisition System 

IDD—Interface Design Document 

IPERA—Improper Payments Elimination and 

Recovery Act of 2010 

IPERIA—Improper Payments Elimination and 

Recovery Improvement Act of 2012 

IPIA—Improper Payments Information Act 

of 2002 

IT—Information Technology 

L 

L&WCF—Land and Water Conservation Fund 

LDP—Loan Deficiency Payment

LEIE—List of Excluded Individuals/Entities 

LIV—Livestock Indemnity Program 

LFP—Livestock Forage Disaster Program 

M 

MDD—Management Decision Date 

MFH—Multi-Family Housing 

ME—Management Evaluation 

MOU—Memorandum of Understanding 

MRP—Marketing and Regulatory Programs

MWRO—Midwest Regional Office 
ABBREVIATIONS—ACRONYMS 

250

N 

NAD—National Appeals Division 

NAL—National Agricultural Library 

NAP—Noninsured Assistance Program 

NAP—Noninsured Crop Disaster Assistance 

Program 

NASS—National Agricultural Statistics Service 

NFC—National Finance Center 

NFS—National Forest System 

NIFA—National Institute of Food and 

Agriculture 

NRCS—Natural Resources Conservation 

Service 

NRE—Natural Resources and Environment 

NRHP—National Register of Historic Places 

NSLP—National School Lunch Program 

NTE—Not-to-Exceed

O 

OAO—Office of Advocacy and Outreach 

OCFO—Office of the Chief Financial Officer

OCIO—Office of the Chief Information Officer 

ODJFS—Ohio Department of Job and Family 

Services 

OFIT—Office of Financial Innovation and 

Transformation 

OGC— Office of the General Counsel 

OHSEC—Office of Homeland Security and 

Emergency Coordination 

OIG—Office of Inspector General 

OMB—Office of Management and Budget 

OPPM—Office of Procurement and Property 

Management 

P 

PAR—Performance and Accountability Report 

PHA—Priority Heritage Assets 

PIV—Personal Identity Verification 

POA&Ms—Plan of Action Milestones 

PP&E—Property, Plant, and Equipment 

PTIGs—Process Technology Improvement 

Grants

PY—Previous Year 

Q 

QC—Quality Control 

R 

RAP—Rental Assistance Program 

RBS—Rural Business and Cooperative Service 

RC&D—Resource Conservation and 

Development 

RCO—Regional Compliance Office 

RD—Rural Development 

REAP—Rural Energy for America Program 

REE—Research, Education, and Economics 

RHIF—Rural Housing Insurance Fund 

RHS—Rural Housing Service 

RMA—Risk Management Agency 

RME—Risk Management Education 

RUS—Rural Utilities Service 
USDA Agency Financial Report | 2017 

251

S 

SA—State Agency 

SAM—System for Award Management 

SAP— Systems, Applications, and Products 

SBP—School Breakfast Program 

SBR—Statement of Budgetary Resources 

SDA—Socially Disadvantaged Farmers 

SFA—School Food Authority

SFFAS—Statement of Federal Financial 

Accounting Standards 

SNAP—Supplemental Nutrition Assistance 

Program 

SOP—Standard Operating Procedure 

SPA—Special Program Area 

STARS—Store Tracking and Redemption 

System 

STO—State Office

SURE—Supplemental Revenue Assistance 

Payments 

T

TARGET—Technology Accessible Resources 

Give Employment 

TB—Technical Bulletin 

TDD—Telecommunication Device for the Deaf 

TFAA—Trade and Agricultural Affairs 

TPMC—Tucson Plant Materials Center 

U 

UDOs—Undelivered Orders 

USAID—U.S. Agency for International 

Development 

USDA—U.S. Department of Agriculture 

USSGL—U.S. Standard General Ledger 

USSM—Unified Shared Services Management 

UTN—Universal Telecommunications Network 

W

WEP—Water and Environmental Program WIC—Special Supplemental Program for 

Women, Infants, and Children