FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT i

Table of Contents 

Message from the Secretary .................................................................................................................... ii 

About this Report ................................................................................................................................. iv 

1. Management’s Discussion and Analysis ........................................................................................... 1

Resources ....................................................................................................................................................................... 5

Performance Goals, Objectives, and Results ................................................................................................................. 7

Future Demands, Risks, Uncertainties, Events, Conditions, and Trends ..................................................................... 9

Systems, Controls and Legal Compliance ................................................................................................................... 13

2. Annual Performance Report ......................................................................................................... 21

Strategic Goal 1: Enhance International Competitiveness of American Agriculture ................................................. 21

Strategic Goal 2: Enhance the Competitiveness and Sustainability of Rural and Farm Economies .......................... 32

Strategic Goal 3: Support Increased Economic Opportunities and Improved Quality of Life In Rural America ...... 44

Strategic Goal 4: Enhance Protection and Safety of the Nation’s Agriculture and Food Supply ............................... 52

Strategic Goal 5: Improve the Nation’s Nutrition and Health .................................................................................... 61

Strategic Goal 6: Protect and Enhance the Nation’s Natural Resource Base and Environment ................................ 68

Program Evaluations of Performance Information ..................................................................................................... 80

3. Financial Statements, Notes, Supplemental and Other Accompanying Information ....................... 87

Message from the Chief Financial Officer .................................................................................................................. 87

Report of the Office of Inspector General .................................................................................................................. 88

Consolidated Financial Statements ........................................................................................................................... 109

Notes to the Consolidated Financial Statements ...................................................................................................... 114

Required Supplementary Stewardship Information .................................................................................................. 179

Required Supplementary Information ....................................................................................................................... 187

4. Other Accompanying Information .............................................................................................. 197

Appendix A—Response to Management Challenges ............................................................................................... 197

Appendix B—Improper Payment and Recovery Auditing Details ........................................................................... 206

Appendix C—Inspector General Act Amendments of 1988: Management’s Report on Audit Follow-Up ............ 225

Appendix D—Acronyms ........................................................................................................................................... 232
ii FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Message from the Secretary 

In fulfillment of its duty to the people, the President, and Congress, the U.S. Department of 

Agriculture (USDA) respectfully submits this Fiscal Year 2009 Performance and Accountability 

Report. 

The Department’s wide range of programs and responsibilities touch the lives of every 

American, every day. And as we fulfill our responsibility to serve the American people, we 

strive to answer President Obama’s call to deliver the most transparent, accountable, and 

responsive government in history. 

Through implementation of the American Recovery and Reinvestment Act of 2009, USDA funded more than 

50,000 projects to put Americans back to work and help rejuvenate the Nation's ailing economy. We provided 

grants, loans, and other support to help create economic opportunities in America’s rural communities so that they 

are self sustaining, repopulating, and thriving economically. And, we have begun the process of distributing billions 

of dollars in loans and grants to bring broadband for high speed Internet service to rural communities across the 

country. 

USDA supported farmers and ranchers across American with disaster assistance, technical advice, and marketing 

and regulatory programs. Through high-level trade meetings, we worked to expand agricultural exports in order to 

ensure the future prosperity of America’s agricultural economy. And we are working to fully enforce the Packers 

and Stockyards Act to crack down on unfair or deceptive practices and ensure a fair marketplace for livestock and 

poultry. 

I have outlined a new vision for management of our Nation’s forests with a focus on improving water resources and 

mitigating the effects of climate change. This will create jobs for folks working to conserve and restore private and 

public forests, and provide new opportunities for renewable energy generation. Adequate protection of roadless 

areas is also a critical part of my vision to preserve the character of America’s forests, which is why I am currently 

personally approving any new projects. 

In Fiscal Year 2009, USDA conducted and supported cutting edge research into nutrition, food safety, agricultural 

management, and technologies to secure America’s energy future from new domestic sources. In conjunction with 

President Obama’s Biofuels Interagency Working Group, we worked to expedite Farm Bill provisions to support 

the development of a renewable energy economy through research and funds for commercial and demonstrationscale bio-refineries. 

The Department fought hunger across the globe, working with the U.S. Department of State to outline a new 

strategy for global Agricultural development that will focus on promoting availability, and improving accessibility 

and utilization. And at home we worked to ensure healthier lives and better nutrition for America's children 

through improvements to the food provided to women and their infant children, the expansion of programs and 

public-private partnerships to encourage nutritious eating and healthy lifestyles. 

In Fiscal Year 2009, USDA utilized the $170.5 billion appropriated by Congress to accomplish the following: 

• Provided most four-person households receiving Supplemental Nutrition Assistance Program (SNAP) benefits 

an $80 monthly payment increase, cushioning the impact of the current economic downturn and generating 

local economic activity worth $1.84 for each $1.00 spent; 

• Provided nearly $3 billion in administrative assistance to States to distribute SNAP benefits to 36 million 

Americans; 
FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT iii

• Provided nearly $875 billion for building and repairing 1,828 community facilities including childcare centers, 

hospitals, medical clinics, fire and rescue stations, police stations, and community centers that will improve the 

quality of life for more than 19 million rural Americans; 

• Provided 11,000 grants and loans worth $16.6 billion to preserve rural housing in all 50 states and U.S. 

Territories to help nearly 140,000 rural Americans become homeowners; 

• Began a 12-state effort worth $320 million over 5 years to improve conservation and water quality in the 

Mississippi River Basin; 

• Helped individuals and groups apply conservation management measures to maintain or improve habitat on 

11.6 million acres of non-Federal land; 

• Provided loans and grants worth more than $112 million for 1,557 renewable energy and energy efficiency 

projects in 47 states through the Rural Energy for America Program; 

• Issued more than $2.5 billion in grants and loans to bolster rural water and wastewater infrastructure in more 

than 1,200 rural communities, expected to benefit nearly 3.4 million users; 

• Supported the hard-hit dairy and pork industries with more than $700 million in Milk Income Loss Contract 

payments and the purchase of $165 million in pork products for federal food nutrition assistance programs; 

• Facilitated a first-of-its-kind equivalency agreement between the U.S. and Canada to create greater market 

opportunities and economic growth for the organic products industry; 

• Granted a conditional license for a vaccine to reduce the prevalence of E. coli O157:H7 in feedlot cattle; and 

• Awarded disaster relief funds to rural businesses, communities, and public entities impacted by floods, 

tornadoes and other disasters. 

The Food Safety and Inspection Service (FSIS) was identified by the Government Accountability Office’s high-risk 

report in 2007, the only USDA issue area on their list. Ensuring the safety of the American food supply and 

protecting the American people from foodborne illness is a top priority for President Obama and the Department. 

I have initiated a top-to-bottom review of the FSIS food safety system with the goal of eliminating hospitalizations 

and deaths due to foodborne illnesses. Additional actions taken by FSIS in Fiscal Year 2009 include: 

• Participating in President Obama’s Food Safety Working Group to build a food safety system that will meet 

the challenges posed by the global food supply of the 21st century; 

• Beginning to conduct routine sampling of bench trim for E. coli O157:H7; 

• Building a quality public health infrastructure with data that is readily accessible to key decision-makers and 

front-line personnel; and 

• Conducting real time surveillance of high-risk shipments of meat, poultry, and egg products coming into the 

United States and vulnerability assessments focused on imports through partnerships with other Federal 

agencies. 

We are also working to transform USDA into a more productive and engaged organization. I have made civil 

rights a top priority, taking definitive action to improve the Department's record and to move USDA into a new 

era as a model employer and premier service provider. We temporarily suspended all foreclosures within the Farm 

Service Agency’s farm loan program; we began a review of program civil rights complaints to improve the complaint 

process; and I have ordered an external, independent analysis of program delivery to USDA constituents in the 

field. Additionally, I have made it clear to all employees that discrimination of any form will not be tolerated at 

USDA. 
iv FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

To improve management of the Department, strengthen integration of activities, and increase our capacity for 

accomplishing mission critical work, we replaced the Departmental Administration organization with a new USDA 

Departmental Management organization. We have implemented reforms to avoid costs to the Department of 

more than $50 million since January 2009. These cost-avoidance measures have included eliminating unnecessary 

travel and conferences, increasing administrative efficiencies, and terminating contracts that are no longer needed. 

The Department’s management team continues to oversee USDA’s assessment of internal control over its 

programs, operations, financial systems, and financial reporting. The Department’s work is consistent with the 

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

Improvement Act (FFMIA). USDA’s continuous monitoring and remediation efforts allow us to provide the 

taxpayers reasonable assurance that the content of this report is based on sound, accurate data. 

Nevertheless, continued improvement is needed to remediate existing material weaknesses and financial system 

non-compliance. To accomplish this goal, management continues to implement corrective action plan activities. 

Therefore, I provide qualified assurance that, except for the areas in need of improvement as described in the 

Management Assurances section of this report, USDA’s internal control over operations, financial systems, and 

financial reporting meet the objectives of FMFIA and FFMIA. The financial and performance information 

presented herein is complete and accurate, and in accordance with law and Office of Management and Budget 

guidance. 

We have accomplished a lot in my first months as Agriculture Secretary. However, President Obama and I have a 

broad and ambitious agenda for USDA as an ‘Every Way, Every Day’ organization. I salute USDA employees for 

their outstanding work and want to let them know that there will be much more to accomplish as we move forward. 

Finally, I want thank you for your interest in USDA. I am proud to share this information with our stakeholders, 

employees, federal partners and the American people. 

Thomas J. Vilsack

Secretary of Agriculture 

November 13, 2009 
FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT v

About this Report 

The Government Performance and Results Act of 1993 requires all Federal agencies to engage in a strategic 

planning process that directly aligns resources with results and enhances the accountability of all government 

endeavors to the American taxpayers who finance them. 

This results-oriented process includes the development and implementation of a five-year strategic plan; annual 

reporting that sets specific, measurable targets for performance at the beginning of each fiscal year; and a concrete, 

data-based assessment at year-end of the success of these endeavors. 

This Fiscal Year 2009 Performance and Accountability Report is the year-end progress report of the U.S. 

Department of Agriculture (USDA). It reviews the strategic goals and objectives the Department set for itself at 

the beginning of the fiscal year and compares initial targets to actual performance. The data used by USDA to 

measure actual performance are collected using standardized methodology that has been vetted by Federally 

employed scientists and policymakers and, ultimately, by the undersecretaries of the respective mission areas, all of 

whom attest to the completeness, reliability, and quality of the data. 

In addition to promoting accountability and enhancing the management of USDA programs, this report also helps 

illuminate the strategic allocation of resources in the future by directly linking program performance to budgetary 

decisions. 

This report strives to provide transparency to all Americans interested in the workings of their government and 

USDA’s ability to “manage for results” in performing its many vital public functions. 

USDA is working to implement provisions of the American Recovery and Reinvestment Act of 2009 (ARRA) to 

put Americans back to work and rejuvenate the Nation's ailing economy. Information on implementing ARRA at 

USDA can be found on the Internet at USDA.gov/recovery. 

MANAGEMENT’S DISCUSSION AND ANALYSIS 1

he U.S. Department of Agriculture (USDA) touches the lives of all Americans every day. More than 100,000 

employees deliver more than $170.5 billion in budgetary resources to provide public services through USDA’s 

more than 300 programs worldwide. 

Founded by President Abraham Lincoln in 1862, when more than half of the Nation’s population lived and worked 

on farms, USDA’s role has evolved with the economy. Today, USDA improves the Nation’s economy and quality 

of life by: 

• Enhancing economic opportunities for U.S. farmers and ranchers; 

• Ensuring a safe, affordable, nutritious, and accessible food supply; 

• Caring for public lands and helping people care for private lands; 

• Supporting the sound, sustainable development of rural communities; 

• Expanding global markets for agricultural and forest products and services; and 

• Working to reduce hunger and improve Americans’ health through good nutrition. 

Addressing these timeless concerns in the modern era presents its share of challenges. America’s food and fiber 

producers operate in a global, technologically advanced, rapidly diversifying, and highly competitive business 

environment driven by sophisticated consumers. 

This report provides information on USDA’s core performance measures as described in its Strategic Plan for 

FY 2005-2010. They are: 

• To enhance international competitiveness of American agriculture; 

• To enhance the competitiveness and sustainability of rural and farm economies; 

• To support increased economic opportunities and improved quality of life in rural America; 

• To enhance protection and safety of the Nation’s agriculture and food supply; 

• To improve the Nation’s nutrition and health; and 

• To protect and enhance the Nation’s natural resource base and environment. 

These six goals mirror USDA’s commitment to provide first-class service, state-of-the-art science, and consistent 

management excellence across the Department. USDA assesses and seeks to improve program performance so that 

the Department can maximize its impact. Program assessments identify how well and efficiently a program is 

working and what specific actions can be taken to improve its performance. Summary program evaluations 

conducted during fiscal year (FY) 2009 are included in this document at the end of Section 2, “Annual Performance 

Report.” 

Although change has been a constant in the evolution of the U.S. farm and food sector, the current marketplace 

emphasizes the growing importance to consumer preferences and the reach of global markets. USDA’s objectives 

reflect this. Through these objectives, USDA strives to: 

• Expand international trade for agricultural products and support international economic development; 

T

1. Management’s Discussion and 

Analysis 
2 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

• Expand domestic marketing opportunities for agricultural products and strengthen risk management, the use of 

financial tools, and the provision of sound information to help farmers and ranchers in their decision-making 

processes; 

• Further develop alternative markets for agriculture products and activities; 

• Provide financing needed to help expand job opportunities and improve housing, utilities, and infrastructure in 

rural America; 

• Enhance food safety by taking steps to reduce the prevalence of foodborne hazards from farm to table and 

safeguard agriculture from natural and intentional threats;

• Improve nutrition by providing food assistance and nutrition education and promotion; and 

• Manage and protect America’s public and private lands working cooperatively with state and local government 

and the private sector. 

Exhibit 1: Headquarters Organization (FY 2009) 

Agricultural Research 

Service

National Institute of 

Food and Agriculture

National Agricultural 

Statistics Service

National Agricultural 

Library

Economic Research 

Service

National Agricultural 

Statistics Service

National Agricultural 

Library

Economic Research 

Service

Agricultural Marketing 

Service

Animal and Plant 

Health Inspection 

Service

Grain Inspection, 

Packers and 

Stockyards 

Administration

Agricultural Marketing 

Service

Animal and Plant 

Health Inspection 

Service

Grain Inspection, 

Packers and 

Stockyards 

Administration

Under Secretary for 

Marketing and 

Regulatory Programs

Food Safety and 

Inspection 

Service

Under Secretary for 

Food Safety

Forest Service

Natural Resources 

Conservation 

Service

Under Secretary for 

Natural Resources

and Environment

Food and Nutrition 

Service

Center for Nutrition 

Policy and Promotion

Under Secretary for 

Food, Nutrition and 

Consumer Services

Farm Service 

Agency

Foreign Agricultural 

Service

Risk Management 

Agency

Under Secretary for 

Farm and Foreign 

Agricultural Services

Rural Utilities 

Service

Rural Housing 

Service

Rural BusinessCooperative Service

Under Secretary

for Rural

Development

Deputy Secretary

SECRETARY

Under Secretary for 

Research, Education 

and Economics

Assistant Secretary for 

Congressional Relations

Assistant Secretary for 

Administration

Assistant Secretary for 

Civil Rights

Assistant Secretary for 

Congressional Relations

Assistant Secretary for 

Administration

Assistant Secretary for 

Civil Rights

Chief Information

Officer

Chief Financial

Officer

Inspector

General

Executive 

Operations

Director of

Communications

General

Counsel

USDA’s FY 2009 accomplishments include: 

• Implemented provisions of ARRA (see USDA.gov/recovery) to put Americans back to work and rejuvenate the 

Nation's ailing economy; 

• Granted a conditional license for a vaccine to reduce the prevalence of E. coli O157:H7 in feedlot cattle; 

• Launched the National Institute of Food and Agriculture, which is designed to advance knowledge for 

agriculture; the environment; and human health and well-being by supporting research, education, and 

extension programs through the Land-Grant University System and other partner organizations; 

• Developed new food safety rules as part of a joint effort with the U.S. Food and Drug Administration; 

• Provided grants to preserve rural housing in 48 States and Puerto Rico; 

• Provided loan guarantees and grants for 233 renewable energy projects in 38 States under the Rural Energy for 

America Program; 

• Issued more than $1 billion in grants and loans to bolster rural water and waste disposal infrastructure; 
MANAGEMENT’S DISCUSSION AND ANALYSIS 3

• Helped 50,000 rural Americans become homeowners; 

• Facilitated a first-of-its-kind agreement between the U.S. and Canada designed to create greater market 

opportunities and economic growth for the organic products industry; 

• Awarded disaster relief funds to rural businesses and communities impacted by floods and tornadoes; 

• Provided over $3 billion in administrative assistance to States to distribute SNAP benefits; and 

• Provided nearly $1.2 billion in loans and grants for building and repairing community facilities including 

childcare centers, hospitals, medical clinics, fire and rescue stations, police stations, and community centers. 

MISSION AREAS 

To ensure that USDA’s efforts focus on meeting its real world 

objectives, the Department’s work is organized by mission 

areas, which are a collection of agencies that work together to 

achieve USDA’s aforementioned strategic goals. Descriptions 

of USDA’s seven mission areas follow. 

Natural Resources and Environment 

The Natural Resources and Environment (NRE) mission area 

ensures the health of the land through sustainable 

management. Its agencies work to prevent damage to natural 

resources and the environment, restore the resource base, and promote good land management. NRE consists of 

the Forest Service (FS) and the Natural Resources Conservation Service (NRCS). FS manages public lands in 

national forests and grasslands, which encompass 193 million acres. NRCS provides leadership in a partnership 

effort to help America's private land owners and managers conserve their soil, water, and other natural resources. 

Both Agencies work in partnership with Tribal, State, and local Governments; community-related groups; and 

other Federal agencies to protect soils, watersheds, and ecosystems. 

Farm and Foreign Agricultural Services 

The Farm and Foreign Agricultural Services (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 improve the stability and strength of the agricultural 

economic sector. The mission area is comprised of the Farm Service Agency (FSA), the Foreign Agricultural 

Service (FAS), and the Risk Management Agency (RMA). FSA administers and manages farm commodity, credit, 

conservation, disaster, and loan programs as laid out by Congress through a network of Federal, State, and county 

offices. FAS works to improve international market access for U.S. products, build new markets, improve the 

competitive position of domestic agriculture in the global marketplace, and provide food aid and technical 

assistance to other countries. RMA helps producers manage their business risks through effective, market-based 

risk management solutions. 

This mission area also includes two Government-owned corporations. The Commodity Credit Corporation (CCC) 

works to stabilize farm income to help ensure an adequate, affordable supply of food and fiber. This corporation is a 

financial mechanism by which agricultural commodity, credit, export, conservation, disaster, and emergency 

assistance is provided. The Federal Crop Insurance Corporation (FCIC) improves the economic stability of 

agriculture through a sound system of crop insurance. 

Rural Development 

The Rural Development (RD) mission area focuses on helping improve the economy and quality of life in all of 

rural America. RD provides financial programs to support such essential public facilities and services as water and 

sewer systems, housing, health clinics, emergency service facilities, and electric and telephone services. RD 

promotes economic development by providing loans to businesses through banks and community-managed lending 

Mission Statement 

USDA provides leadership on food, agriculture, 

natural resources, quality of life in rural 

America and related issues based on sound 

public policy, the best-available science, and 

efficient management. 
4 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

pools, while also helping communities participate in community empowerment programs. RD provides grants, 

loans, and loan guarantees to farmers, ranchers, and rural small businesses to develop renewable energy systems and 

make energy efficient improvements. 

Food, Nutrition, and Consumer Services 

The Food, Nutrition, and Consumer Services (FNCS) mission area works to harness the Nation's agricultural 

abundance to reduce hunger and improve health in the United States. FNCS’s agencies administer Federal 

domestic nutrition assistance programs. FNCS is comprised of the Food and Nutrition Service (FNS) and the 

Center for Nutrition Policy and Promotion (CNPP). FNS administers USDA’s fifteen Federal nutrition assistance 

programs. CNPP works to improve the health and well-being of Americans by developing and promoting dietary 

guidance that links scientific research to the nutrition needs of consumers. 

Food Safety 

The Food Safety and Inspection Service (FSIS) is the public health agency responsible for ensuring that the 

Nation’s commercial supply of meat, poultry, and egg products is safe, wholesome, and labeled and packaged 

correctly. 

Research, Education, and Economics 

The Research, Education, and Economics (REE) mission area is dedicated to the creation of a safe, sustainable, 

competitive U.S. food and fiber system, as well as the development of strong communities, families, and youth 

through integrated research, analysis, and education. REE is comprised of the Agricultural Research Service 

(ARS); the National Institute of Food and Agriculture (NIFA); the Economic Research Service (ERS); the 

National Agricultural Statistics Service (NASS); and the National Agricultural Library (NAL). 

Marketing and Regulatory Programs 

The Marketing and Regulatory Programs mission area facilitates the domestic and international marketing of U.S. 

agricultural products and ensures the health and care of animals and plants. MRP is made up of the Agricultural 

Marketing Service (AMS); the Animal and Plant Health Inspection Service (APHIS); and the Grain Inspection, 

Packers, and Stockyards Administration (GIPSA). AMS administers programs that facilitate the efficient, fair 

marketing of U.S. agricultural products, including food, fiber, and specialty crops. APHIS provides leadership in 

ensuring the health and care of animals and plants. GIPSA facilitates the marketing of livestock, poultry, meat, 

cereals, oilseeds, and related agricultural products.

DEPARTMENTAL MANAGEMENT AND OFFICES 

Department-level offices provide centralized leadership, coordination, and support for USDA’s policy and 

administrative functions. Their efforts maximize the energy and resources agencies devote to the delivery of services 

to USDA customers and stakeholders. 
MANAGEMENT’S DISCUSSION AND ANALYSIS 5

Resources 

Congressional appropriations are the primary funding source for USDA operations. FY 2009 program obligations 

totaled $170.5 billion, an increase of $32.8 billion compared to FY 2008. These are current year obligations from 

unexpired funds. They do not include prior year upward or downward obligation adjustments. The variance is due, 

in general, to enactment of ARRA and the 2008 Farm Bill (Food, Conservation, and Energy Act of 2008, Public 

Law 110-234), indemnities paid, disaster programs, and domestic nutrition programs. The variance is explained in 

the “Financial Statement Highlights” and the “Financial Statements” in this document. 

Exhibit 2: FY 2009 and 2008 USDA Program Obligations Dedicated to Strategic Goals 

USDA Program Obligations Dedicated to Strategic Goals 

FY 2009 Actual Program Obligations 

Goal 1 — Enhance International 

Competitiveness of American 

Agriculture — 1%

Goal 2 — Enhance the Competitiveness 

and Sustainability of Rural and Farm 

Economies — 19%

Goal 3 — Support Increased Economic 

Opportunities and Improved Quality of 

Life in Rural America — 3%

Goal 4 — Support Increased Economic 

Opportunities and Improved Quality of Life

in Rural America — 2%

Goal 5 — Improve the Nation's 

Nutrition and Health— 66%

Goal 6 — Protect and 

Enhance the Nation's Natural 

Resource Base and 

Environment — 9%

FY 2008 Actual Program Obligations 

Goal 1 — Enhance 

International Competitiveness 

of American Agriculture—4%

Goal 2 — Enhance the Competitiveness 

and Sustainability of Rural and Farm 

Economies—25%

Goal 4 — Enhance Protection and Safety

of the Nation's Agriculture and Food 

Goal 5 — Improve the Nation's Supply—2%

Nutrition and Health—46%

Goal 6 — Protect and Enhance 

the Nation's Natural Resource 

Base and Environment—9%

Goal 3 — Support Increased Economic

Opportunities and Improved Quality of 

Life in Rural America—14%
6 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Exhibit 3: FY 2009 and 2008 USDA Staff Years Dedicated to Strategic Goals 

USDA Staff Dedicated to Strategic Goals 

FY 2009 Actual Staff Years 

Goal 1 — Enhance International 

Competitiveness of American 

Agriculture — 1.58%

Goal 2 — Enhance the Competitiveness 

and Sustainability of Rural and Farm 

Economies— 20.78%

Goal 3 — Support Increased Economic 

Opportunities and Improved Quality of 

Life in Rural America— 6.32%

Goal 4 — Support Increased Economic 

Opportunities and Improved Quality of Life

in Rural America— 20.40%

Goal 5 — Improve the Nation's 

Nutrition and Health— 2.05%

Goal 6 — Protect and 

Enhance the Nation's Natural 

Resource Base and 

Environment — 48.88%

FY 2008 Actual Staff Years 

Goal 1 — Enhance 

International Competitiveness 

of American Agriculture — 2%

Goal 2 — Enhance the Competitiveness 

and Sustainability of Rural and Farm 

Economies— 20%

Goal 3 — Support Increased Economic 

Opportunities and Improved Quality of 

Life in Rural America— 6%

Goal 4 — Enhance Protection and Safety of the

Nation's Agriculture and Food Supply — 21%

Goal 5 — Improve the Nation's 

Nutrition and Health— 2%

Goal 6 — Protect and 

Enhance the Nation's Natural 

Resource Base and 

Environment —49%
MANAGEMENT’S DISCUSSION AND ANALYSIS 7

Performance Goals, Objectives, and Results 

Of the 41 performance goals contained in USDA’s FY 2009 and Revised FY 2008 Budget Summary and Annual 

Performance Plan, 31 were met or exceeded, 9 were unmet, and 1 was deferred. The following Performance 

Scorecard table, organized by USDA’s strategic goals and objectives, provides a summary of the Department’s 

performance results. Measures 2.2.2 and 3.2.5 each combine two measures from the Budget Summary. Additional 

analyses of these results can be found in the Performance Section of this report. 

PERFORMANCE SCORECARD FOR FY 2009 

Objectives Annual Performance Goals Result 

Strategic Goal 1: Enhance International Competitiveness of American Agriculture 

1.1 Expand and Maintain International 

Export Opportunities 

1.1.1 Dollar value of agricultural trade expanded through trade agreement 

negotiation, monitoring, and enforcement (Non-Sanitary and Phytosanitary) 

Unmet 

1.2 Support International Economic 

Development and Trade Capacity 

Building 

1.2.1 Number of countries in which substantive improvements have been made in 

national trade policy and regulatory frameworks that increase market access 

Exceeded 

1.2.2 Food Aid Targeting Effectiveness Ratio Exceeded 

1.3 Improved Sanitary and Phytosanitary 

(SPS) System to Facilitate Agricultural 

Trade 

1.3.1 Value of trade preserved annually through USDA staff interventions leading to 

resolutions of barriers created by SPS or Technical Barrier to Trade (TBT) 

measures 

Exceeded 

Strategic Goal 2: Enhance the Competitiveness and Sustainability of Rural and Farm Economies 

2.1 Expand Domestic Market Opportunities 2.1.1 Number of items designated as biobased for Federal procurement Unmet 

2.2 Increase the Efficiency of Domestic 

Agricultural Production and Marketing 

Systems 

2.2.1 Timeliness – Percent of time official reports are released on the date and time 

pre-specified to data users 

Unmet 

2.2.2 Percent of market-identified quality attributes for which USDA has provided 

standardization 

Met 

2.3 Provide Risk Management and Financial 

Tools to Farmers and Ranchers 

2.3.1 Increase the normalized value of risk protection provided to agriculture 

producers through FCIC-sponsored insurance ($ Billion) 

Met 

2.3.2 Increase percentage of eligible crops with Noninsured Crop Disaster 

Assistance Payments (NAP) coverage 

Unmet 

2.3.3. Increase percentage of beginning farmers, racial and ethnic minority farmers, 

and women farmers financed by USDA 

Met 

Strategic Goal 3: Support Increased Economic Opportunities and Improved Quality of Life in Rural America 

3.1 Expand Economic Opportunities by 

Using USDA Financial Resources to 

Leverage Private Sector Resources and 

Create Opportunities for Growth 

3.1.1 Jobs Created or Saved Met 

3.2 Improve the Quality of Life Through 

USDA Financing of Quality Housing, 

Modern Utilities, and Needed 

Community Facilities 

3.2.1 Number of borrowers/subscribers receiving new and/or improved electric 

facilities 

Exceeded 

3.2.2 Number of borrowers/subscribers receiving new or improved 

telecommunication services (Broadband) 

Unmet 

3.2.3 Number of borrowers/subscribers receiving new or improved service from 

agency funded water facility 

Exceeded 

3.2.4 Homeownership opportunities provided Exceeded 

3.2.5 Percentage of customers who are provided access to new and/or improved 

essential community facilities –

• Health facilities

• Safety facilities 

Exceeded 
8 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

PERFORMANCE SCORECARD FOR FY 2009 

Objectives Annual Performance Goals Result 

Strategic Goal 4: Enhance Protection and Safety of the Nation’s Agriculture and Food Supply 

4.1 Reduce the Incidence of Foodborne 

Illnesses Related to Meat, Poultry, and 

Egg Products in the U.S. 

4.1.1 Reduce overall public exposure to generic Salmonella from broiler carcasses 

using existing scientific standards 

Unmet 

4.1.2 Reduce the overall public exposure to Listeria monocytogenes in ready-to-eat 

products 

Met 

4.1.3 Reduce the overall public exposure to Listeria monocytogenes in post-lethality 

exposed ready-to-eat products 

Met 

4.1.4 Reduce the prevalence of E. coli O157:H7 on ground beef Unmet 

4.2 Reduce the Number and Severity of 

Agricultural Pest and Disease Outbreaks 

4.2.1 Number of significant introductions of foreign animal diseases or pests that 

spread beyond the original area of introduction and cause severe economic or 

environmental damage, or damage to the health of animals or humans 

Met 

4.2.2 Improve the capabilities of animal and plant diagnostic laboratories 

• Specific plant diseases labs are prepared to detect Met 

• Specific animal diseases labs are prepared to detect Met 

Strategic Goal 5: Improve the Nation’s Nutrition and Health 

5.1 Ensure Access to Nutritious Food 5.1.1 Participation levels for the major Federal nutrition assistance programs (millions 

per month): 

• Supplemental Nutrition Assistance Program (SNAP) Met 

• National School Lunch Program (NSLP)

• School Breakfast Program (SBP)

• Special Supplemental Nutrition Program for Women, Infants, and Children 

(WIC) 

5.2 Promote Healthier Eating Habits and 

Lifestyles 

5.2.1 Application and usage level of nutrition guidance tools (pieces of nutrition 

guidance distributed) 

Exceeded 

5.3 Improve Nutrition Assistance Program 

Management and Customer Service 

5.3.1 Increase SNAP payment accuracy rate Deferred 

Strategic Goal 6: Protect and Enhance the Nation’s Natural Resource Base and Environment 

6.1 Protect Watershed Health to Ensure 

Clean and Abundant Water 

6.1.1 Comprehensive nutrient management plans applied (number of plans) 

• Conservation Technical Assistance Exceeded 

• Environmental Quality Incentives Program Met 

6.1.2 Increase Conservation Reserve Program (CRP) acres of riparian and grass 

buffers 

Met 

6.2 Enhance Soil Quality to Maintain 

Productive Cropland Base 

6.2.1 Cropland with conservation applied to improve soil quality (millions of acres) 

• Conservation Technical Assistance Program Met 

• Environmental Quality Incentives Program Unmet 

6.3 Protect Forests and Grasslands 6.3.1 Total acres of hazardous fuel reduction treatments Exceeded 

6.3.2 Acres of Wildland Urban Interface (WUI) high-priority fuels treated to reduce 

the risk of catastrophic wildland fire 

Exceeded 

6.3.3 Acres of hazardous fuels treated outside the WUI to reduce the risk of 

catastrophic Wildland fire 

Exceeded 

6.3.4 Percentage of acres treated in the WUI that have been identified in community 

wildfire protection plans or equivalent plans 

Exceeded 

6.3.5 Percentage of total National Forest System land base for which fire risk is 

reduced through movement to a better condition class 

Unmet 

6.3.6 Grazing and forest land with conservation applied to protect and improve the 

resource base (millions of acres) 

 
MANAGEMENT’S DISCUSSION AND ANALYSIS 9

PERFORMANCE SCORECARD FOR FY 2009 

Objectives Annual Performance Goals Result 

• Conservation Technical Assistance Exceeded 

• Environmental Quality Incentives Program Exceeded 

Strategic Goal 6: Protect and Enhance the Nation’s Natural Resource Base and Environment (cont’d) 

6.4 Protect and Enhance Wildlife Habitat to 

Benefit Desired, At-Risk, and Declining 

Species 

6.4.1 Wetlands created, restored, or enhanced (acres)

• Conservation Technical Assistance 

• Wetlands Reserve Program 

• Conservation Reserve Program 

Exceeded 

Met 

Exceeded 

ACTIONS ON UNMET AND DEFERRED GOALS 

USDA continuously works to improve its performance across all of its strategic goals and objectives. Sometimes 

circumstances arise that result in the Department falling short of its goals. At other times, the Department 

consciously alters its approach in ways that enhance its service to the public, but that make a specific performance 

goal a less effective indicator of real progress. In FY 2009, USDA shifted its focus to stimulate the economy via 

ARRA. The “Annual Performance Report” section of this report offers further discussion of the Department’s 

actions on its goals. 

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

Farmers and food companies operate in highly competitive markets with constantly changing demand for high 

quality food with a variety of characteristics, including convenience, taste, and nutrition. 

Additionally, homeland security is a significant, ongoing priority for the Department. USDA is working with the 

U.S. Department of Homeland Security to help protect agriculture from intentional and accidental acts that might 

affect America’s food supply or natural resources. 

External factors that challenge USDA’s ability to achieve its desired outcomes include: 

• Weather-related hardships and other uncontrollable events domestically and abroad; 

• Domestic and foreign macroeconomic factors, including consumer purchasing power, the strength of the U.S. 

dollar, and political changes abroad that can impact domestic and global markets greatly at any time; 

• Sharp fluctuations in farm prices, interest rates, and unemployment also impact the ability of farmers, other 

rural residents, communities, and businesses to qualify for credit and manage their debts; 

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

that will influence the sustainability of rural infrastructure; 

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

diseases, such as avian influenza and bovine spongiform encephalopathy, to move quickly across national 

borders; 

• Potential exposure to hazardous substances, which may threaten human health and the environment; and the 

ability of the public and private sectors to collaborate effectively on food safety, security, and related emergency 

preparedness efforts; 

• The risk of catastrophic fire is dependent on weather, drought conditions, and the expanding number of 

communities in the wildland-urban interface; and 

• Efforts to reduce hunger and improve dietary behaviors depend on strong coordination between USDA and a 

wide array of Federal, State, and local partners. 
10 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

FINANCIAL STATEMENT HIGHLIGHTS 

Budgetary Resources 

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

Department of the Treasury. Total budgetary resources consist of the balance at the beginning of the year, 

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

resources. Total budgetary resources was $208.7 billion for FY 2009 compared to $172.7 billion in FY 2008, an 

increase of $36 billion. 

The unobligated balance brought forward including recoveries of prior year unpaid obligations decreased $213 

million, budget authority net of transfers and resources temporarily not available increased $28.9 billion and 

budgetary resources permanently not available decreased $7.3 billion. The increase in budget authority was 

primarily due to $28 billion in appropriations received from ARRA. 

Obligations Incurred And Net Outlays 

Obligations Incurred increased $31.2 billion in FY 2009. 

This increase is primarily due to a $18.9 billion increase at 

FNS for the Women, Infants and Children (WIC) and 

Supplemental Nutrition Assistance (SNAP) programs; a $5.3 

billion increase at RMA for indemnities paid; a $2.1 billion 

increase at RD for credit programs; offset by a $2.5 billion 

decrease at FSA for disaster programs. 

Net Outlays increased $25.6 billion in FY 2009, primarily in relation to the increase in obligations described above. 

BALANCE SHEET 

Condensed Balance Sheet Data 

FY 2009 FY 2008 % CHANGE 

Fund Balance with Treasury $72,334 $64,595 12% 

Accounts Receivable, Net 8,866 10,298 -14% 

Direct Loan and Loan Guarantees, Net 85,657 81,774 5% 

General Property, Plant and Equipment, Net 2,972 2,973 0% 

Other 810 733 11% 

Total Assets 170,639 160,373 6% 

Debt 84,119 77,577 8% 

Loan Guarantee Liability 1,844 1,333 38% 

Benefits Due and Payable 3,119 2,764 13% 

Other 36,642 39,298 -7% 

Total Liabilities 125,724 120,972 4% 

Unexpended Appropriations 38,302 30,783 24% 

Cumulative Results of Operations 6,613 8,618 -23% 

Total Net Position 44,915 39,401 14% 

Total Liabilities and Net Position $170,639 $160,373 6% 

2009 2008 

% 

Change 

Total Budgetary 

Resources 

$208,761 $172,749 21% 

Obligations Incurred $170,508 $139,357 22% 

Net Outlays $121,759 $96,182 27% 

Data in millions 
MANAGEMENT’S DISCUSSION AND ANALYSIS 11

AS OF SEPTEMBER 30, 2009 AND 2008 (IN MILLIONS) 

Total Assets 

Total assets increased $10.3 billion in FY 2009. This increase is primarily due to an increase in Fund Balance with 

Treasury of $7.7 billion; an increase in Direct Loan and Loan Guarantees, Net of $3.9 billion, offset by a decrease 

in accounts receivable for the Tobacco Transition Payment Program at CCC of $597 million and premiums from 

Approved Insurance Providers at RMA of $777 million. 

Direct Loan and Loan Guarantees, Net is the single largest asset on the USDA Balance Sheet. RD offers both 

direct and guaranteed loan products for rural housing and rural business infrastructure. These represent 86 percent 

of the total USDA loan programs. Loan programs administered by the FSA represent 8 percent of the total. FSA 

provides support to farmers who are temporarily unable to obtain private, commercial credit. The remaining 6 

percent represents commodity loans and credit programs administered by CCC. CCC’s loans are used to improve 

economic stability and provide an adequate supply of agricultural commodities. CCC credit programs provide 

foreign food assistance, expand foreign markets and provide domestic low-cost financing to protect farm income 

and prices. 

Total Liabilities 

Total liabilities increased $4.8 billion in FY 2009. This increase is primarily due to a $6.5 billion increase in Debt, 

offset by a decrease in other liabilities for repayments to Treasury of $941 million and $490 million at FSA and 

CCC, respectively. 

Debt represents amounts owed primarily to Treasury by CCC and RD. For CCC, the debt primarily represents 

financing to support Direct and Counter Cyclical, Crop Disaster and Loan Deficiency programs. For RD, the debt 

primarily represents financing to support Electric and Housing loan programs. 

Total Net Position 

Total net position increased $5.5 billion in FY 2009. This increase is due to an increase in unexpended 

appropriations of $7.5 billion less $2 billion in cumulative results of operations. 

NET COST OF OPERATIONS 

Condensed Statement of Net Cost 

For the Years Ended September 30, 2009 and 2008 

(in million) 

FY 2009 FY 2008 

% 

CHANGE 

Goal 1: Enhance International 

Competitiveness of American Agriculture $1,362 $2,029 -33% 

Goal 2: Enhance the Competitiveness and Sustainability of Rural 

and Farm Economies 22,116 17,159 29% 

Goal 3: Support Increased Economic Opportunities and Improved 

Quality of Life in Rural America 3,233 3,879 -17% 

Goal 4: Enhance Protection and Safety of the Nation’s Agriculture 

and Food Supply 2,612 2,439 7% 

Goal 5: Improve the Nation’s Nutrition and Health 78,757 60,132 31% 

Goal 6: Protect and Enhance the Nation’s Natural Resource Base 

and Environment 10,988 11,095 -1% 

Net Cost of Operations $119,068 $96,733 23% 
12 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Net Cost of Operations 

Net cost of operations increased $22.3 billion in FY 2009. This increase is primarily due to increased participation 

in the WIC and SNAP programs at FNS of $18.6 billion; increased Price Support and Milk Income Loss program 

payments at CCC of $1.7 billion; increased indeminities paid less underwriting gains at RMA of $1.7 billion; offset 

by a decrease in disaster program payments at FSA of $2.2 billion. 

Stewardship Investments 

Stewardship investments are substantial investments made by 

the Federal Government for the benefit of the nation but are 

not physical assets owned by the Federal Government. When 

incurred, they are treated as expenses in determining the net 

cost of operations. However, these items merit special 

treatment so that users of Federal financial reports know the 

extent of investments that are made for long-term benefit. 

Such investments are measured in terms of expenses incurred 

for non-Federal physical property, human capital, and research and development. 

Limitations of the Financial Statements 

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

the entity, pursuant to the requirements of 31 U.S.C. 3515(b). 

While the statements have been prepared from the books and records of the entity in accordance with GAAP for 

Federal entities and the formats prescribed by OMB, the statements are in addition to the financial reports used to 

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

The statements should be read with the realization that they are for a component of the U.S. Government, a 

sovereign entity. 

2009 2008 % Change

Non-Federal Physical 

Property

$87 $59 47% 

Human Capital $643 $630 2% 

Research and 

Development 

$2,202 $2,137 3% 

Data in millions 
MANAGEMENT’S DISCUSSION AND ANALYSIS 13

Systems, Controls and Legal Compliance 

Management Assurances 

STATEMENT OF ASSURANCE 

The U.S. Department of Agriculture (USDA) provides a qualified statement of assurance 

that its management has established and maintained effective management control, 

financial management systems, and internal controls over financial reporting to meet the 

objectives of Federal Managers’ Financial Integrity Act (FMFIA), with the exception of 

three material weaknesses and one financial system non-conformance. The details of the 

exceptions are provided in the FMFIA and the Federal Financial Management 

Improvement Act (FFMIA) sections of this report. 

USDA conducted an assessment of its financial management systems and internal control 

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

and regulations as of September 30, 2009, and 2) financial reporting as of June 30, 2009, which includes 

safeguarding of assets and compliance with applicable laws and regulations, in accordance with the requirements of 

Office of Management and Budget (OMB) Circular A-123, “Management’s Responsibility for Internal Control.” 

Based on the results of these evaluations, USDA has three existing material weaknesses and one system nonconformance in fiscal year 2009. 

Other than the exceptions noted in the FMFIA and FFMIA sections, financial management systems conform 

substantially with the objectives of FMFIA and the internal controls were operating effectively and 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, 2009, and 

2) financial reporting as of June 30, 2009. 

Thomas J. Vilsack

Secretary of Agriculture 

November 13, 2009 
14 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Federal Managers’ Financial Integrity Act Report on Management Control 

BACKGROUND 

The Federal Managers’ Financial Integrity Act (FMFIA) requires ongoing evaluations of internal control 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, 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. 

USDA annually evaluates its internal controls over financial reporting in accordance with OMB Circular A-123, 

“Management’s Responsibility for Internal Control,” Appendix A, “Internal Control Over Financial Reporting” 

(A-123, Appendix A). 

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

requirements of FMFIA and other laws and OMB Circulars A–123, Appendix A, and A–127, “Financial 

Management Systems.” 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 OIG and GAO, the Department’s 

management works aggressively 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. 

FY 2009 Results 

USDA has three existing material weaknesses: Information Technology, Financial Reporting – Unliquidated 

Obligations, and Financial Reporting – Credit Reform. There is one system non-conformance: Funds Control 

Management. Thus, the “Secretary’s Statement of Assurance” provides qualified assurance that USDA’s system of 

internal control complies with FMFIA objectives. The following exhibit summarizes the results reported in 

USDA’s Consolidated Financial Statements Audit Report. 

An auditor-identified deficiency for Rural Development (RD) was found relating to the assumption curves used in 

cash flow models to perform the annual reestimate calculations. While various processes are in place to ensure the 

accuracy and completeness of the assumption curves, the overall controls surrounding these processes need 

improvements to prevent errors. 
MANAGEMENT’S DISCUSSION AND ANALYSIS 15

Exhibit 4: Summary of Financial Statement Audit 

Audit Opinion Unqualified 

Restatement No 

Material Weakness 

Beginning 

Balance New Resolved Consolidated Reassessed 

Ending 

Balance 

Improvement Needed in Overall Financial 

Management 

1 1 

Improvements Needed in Information Technology 

Security and Controls 

1 1 

TOTAL MATERIAL WEAKNESSES 2 2

The following exhibit lists USDA’s material weaknesses and the financial system non-conformance as related to 

management’s assurance for FMFIA and the certification for FFMIA. 

Exhibit 5: Summary of Management Assurances 

Effectiveness of Internal Control Over Financial Reporting (FMFIA § 2) 

Statement of Assurance Qualified 

Material Weakness 

Beginning 

Balance New Resolved Consolidated Reassessed 

Ending 

Balance 

Information Technology 1 1 

Financial Reporting – Unliquidated Obligations 1 1 

Financial Reporting – Credit Reform 1 1 

TOTAL MATERIAL WEAKNESSES 3 3 

Effectiveness of Internal Control Over Operations (FMFIA § 2) 

Statement of Assurance Unqualified 

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 Qualified 

Material Weakness 

Beginning 

Balance New Resolved Consolidated Reassessed 

Ending 

Balance 

Funds Control Management 1 1 

TOTAL NON-CONFORMANCE 1 1 

Compliance with Federal Financial Management Improvement Act (FFMIA) 

Agency Auditor 

Overall Substantial Compliance No No 

1. System Requirements No No 

2. Accounting Standards No No 

3. United States Standard General Ledger at 

Transaction Level 

No No 

4. Information security policies, procedures, and 

practices 

No No 
16 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

MATERIAL WEAKNESSES 

Summary of Outstanding Material Weaknesses 

Material Weakness 

Existing 

1. USDA Information Technology Overall Estimated Completion Date FY 2012 

Internal control design and operating effectiveness deficiencies in four areas: logical access controls, configuration 

management, physical access and environmental protection, and disaster recovery. These deficiencies represent an overall 

Information Technology (IT) material weakness. 

FY 2009 Accomplishments: FY 2010 Planned Actions: 

• Began implementing whole disk encryption on portable computers; 

• Implemented a Department-wide end-point management software tool 

ensure complete and timely weakness remediation, improve client 

management, and ensure compliance with security standards; 

• Established secure coding requirements and improved application 

coding by providing a Department-wide tool to ensure compliance; 

• Improved access controls through dual-factor authentication for network 

and remote access; 

• Improved network and boundary protections through a Department 

Security Operations Center; 

• Updated regulations to meet the National Institute of Standards and 

Technology and other Federal requirements relating to change control 

processes; 

• Established an Identity and Access Management team to implement a 

Department-wide approach toward improving and automating access 

and segregation of duties controls; and 

• Conducted a policy gap analysis and revised access control and 

configuration management policies and procedures. 

• Expand encryption to include mobile media such as USB thumb 

drives by the end of the fiscal year; 

• Finalize deployment of the Department-wide end-point 

management tool; 

• Expand the Department-wide Security Operations Center 

incorporating 24/7 border protection and monitoring, end point 

compliance, and improved incident response processes; 

• Establish improved and sustainable processes and procedures for 

identity and access management; 

• Standardize the configuration management and change control 

processes through improved processes and procedures; 

• Improve the A-123 and FISMA monitoring and reporting process to 

ensure weaknesses are timely identified and corrected; and 

• Establish functional disaster recovery site for mainframe and critical 

mid-range systems. 

Material Weakness 

Existing 

2. Financial Reporting – Unliquidated 

Obligations 

Overall Estimated Completion Date FY 2010 

Lack of consistent review and follow-up on unliquidated obligations (ULO). 

FY 2009 Accomplishments: FY 2010 Planned Actions: 

• Revised Departmental guidance to require quarterly reviews and 

certifications for obligations; 

• Established ULO data mart and aging report for management review 

and monitoring; 

• Established ULO Department-wide working group to monitor open 

obligations, share best practices, and measure agency performance; 

• Completed statistical sampling of aged ULOs to identify root causes of 

invalid ones and formulate corrective actions; and 

• Monitored agency compliance with revised Departmental guidance on 

quarterly reviews and certifications for obligations. 

• Modify systems and related policies, procedures and processes to 

improve the management, review, and closeout of ULOs; 

• Conduct training on new processes to manage, review, and closeout 

ULOs; 

• Implement automated controls to deobligate invalid ULOs; and 

• Institute continuous monitoring of controls over ULOs at successive 

levels of management. 
MANAGEMENT’S DISCUSSION AND ANALYSIS 17

Material Weakness 

Existing 

3. Financial Reporting – Credit Reform Overall Estimated Completion Date FY 2010 

Controls are lacking in the credit reform quality assurance process to ensure that cash flow models, data inputs, estimates, 

and reestimates are subject to appropriate management oversight. 

FY 2009 Accomplishments: FY 2010 Planned Actions: 

CCC: 

• Established a team to review all model changes to include members of 

both the budget and the accounting disciplines. Invited OIG to all 

Configuration Control Board meetings to monitor CCC's efforts; 

• Established a timeline for all model changes to allow adequate time for 

testing and review prior to delivery to the auditors; 

• Tested all model changes/development results to ensure that model 

outputs properly capture all elements of the cash flow, not just those 

affected by change(s) in OMB’s Credit Subsidy Calculator 2 to ensure that 

those results do not produce unintended consequences; and 

• Procured a contractor for Independent Verification and Validation review 

and oversight for any newly developed models. 

USDA: 

• Reinstituted the Credit Reform Working Group to improve communication 

and address issues related to credit reform budgeting and accounting; 

and 

• Coordinated consistent application of new credit reform guidance.

*Note: CCC reported an auditor-identified weakness in controls for the credit 

reform assurance process in FY 2008. Better procedures were needed to 

ensure that cash flow models, data inputs, estimates, and reestimates were 

performed with appropriate management oversight. The material weakness 

for financial reporting - credit reform has been resolved for CCC. 

RD will: 

• Ensure that detailed second party review procedures are 

performed and documented by personnel independent of those 

preparing the assumption curves; 

• Establish process improvements for version control related to the 

curves; 

• Evaluate automation support to determine the feasibility of 

performing curve calculations systematically; 

• Enhance review procedures over the quality and accuracy of 

Cohort Sheet materials; and 

• Determine the reasonableness of the curves for reestimation 

purposes and also focus on accuracy of the calculations and 

portfolio trends. 

SUMMARY OF OUTSTANDING SYSTEM NON-CONFORMANCE 

System NonConformance 

Existing 

1. Funds Control Management Overall Estimated Completion Date FY 2012 

System improvements needed in recording obligations at the transactions level. 

FY 2009 Accomplishments: FY 2010 Planned Actions: 

• Developed functionality in the electronic Funds Management System 

(eFMS) to process funds control at the time of obligation request from 

FSA/CCC program applications; and 

• Began acquisition and planning phase of Farm Program Payment 

System/Modernize and Innovate the Delivery of Agriculture Systems 

(MIDAS). 

• Enhance the eFMS by incorporating transaction level obligations 

for the Tobacco Transition Payment Program, Direct Payments, 

and Conservation Reserve Program (CRP) Annual Rental 

programs that will check funds availability at the time of 

obligation; 

• Implement Web-based Supply Chain Management (WBSCM) to 

integrate obligation transactions for the Commodity Credit 

Corporation (CCC) Commodity Operations programs into eFMS; 

and 

• Complete planning phase and begin software and acquisition 

phase of MIDAS project.
18 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

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 substantially with: 1) Federal Financial Management System requirements; 2) applicable 

Federal accounting standards; and 3) the United States Standard General Ledger (USSGL) at the transaction level. 

Additionally, FISMA requires that there be no significant weaknesses in information security policies, procedures 

or practices to be substantially compliant with FFMIA (referred to as Section 4 in the accompanying table).

Exhibit 6: Initiatives To Be Completed 

Outstanding Initiatives to Achieve FFMIA Compliance 

Initiative 

Section of 

Non-compliance Agency 

Target Completion 

Date 

Information Technology1 Federal financial system 

requirements, and 

Information security policies, 

procedures, and/or practices. 

Multiple 9/30/2012 

Funds Control Management Federal Financial System 

requirements. 

CCC 10/31/2012 

U.S. Standard General 

Ledger at the transaction 

level, and Federal financial 

management system 

requirements. 

FS 10/1/2010 

Federal financial 

management system 

requirements, Federal 

Accounting Standards, and 

U.S. Standard General 

Ledger at the transaction 

level. 

NRCS 12/31/2009 

1 The information technology material weakness, which is reported in the Federal Managers’ Financial Integrity Act Report on Management Control, is comprised of four 

issues: logical access controls, configuration management, physical access and environmental protection, and disaster recovery.

FY 2009 RESULTS 

During FY 2009, USDA evaluated its financial management systems to assess substantial compliance with the Act. 

In assessing FFMIA compliance, the Department considered auditors opinions on component agencies’ financial 

statements, and progress made in addressing the material weaknesses identified in the FY 2008 Performance and 

Accountability Report. The Department is not compliant with Federal Financial Management System 

requirements, Federal accounting standards, and the standard general ledger at the transaction level. Additionally, 

as reported in the FMFIA section of this report, USDA continues to have weaknesses in information technology 

controls that result in non-compliance with the FISMA requirement. As part of USDA’s financial systems strategy, 

USDA agencies continue working to meet FFMIA and FISMA objectives. 

FS is working to mitigate auditor-identified deficiencies related to its systems and methodologies to comply with 

USSGL at the transaction level and Federal financial management system requirements. 
MANAGEMENT’S DISCUSSION AND ANALYSIS 19

NRCS is working to mitigate auditor-identified deficiencies. Financial management systems did not substantially 

comply with Federal financial management system requirements, the USSGL at the transaction level, and 

applicable Federal Accounting Standards for internal use software (including work in progress), undelivered orders, 

unfilled customer orders, expense accruals, and capital leases. Deficiencies were also noted regarding proper use of 

USSGL. 

Federal Financial Management System Requirements 

CCC continues to develop an integrated funds control system, the electronic Funds Management System (eFMS), 

within the FSA/CCC Core financial management system. This work includes integration with CCC’s general 

ledger system at the transaction level. eFMS will also provide management with timely information to monitor and 

control the status of budgetary resources recorded in the general ledger. 

FY 2009 accomplishments included: 

• Developed functionality in eFMS to process funds control at the time of obligation request from FSA/CCC 

program applications; and 

• Began Acquisition and Planning phase of Farm Program Payment System/Modernize and Innovate the 

Delivery of Agriculture Systems (MIDAS). 

In FY 2010, CCC will: 

• Enhance eFMS by incorporating transaction level obligations for the Tobacco Transition Payment Program, 

Direct Payments, and CRP Annual Rental programs that will check funds availability at the time of obligation; 

• Implement Web-based Supply Chain Management (WBSCM) to integrate obligation transactions for CCC 

Commodity Operations programs into eFMS; and 

• Complete Planning phase and begin Software and Acquisition phase of MIDAS. 

In FY 2011 CCC will: 

• Complete Proof of Concept and System Design for MIDAS. 

In FY 2012, CCC will: 

• Complete software modifications to program applications to send obligation transactions for CCC Farm, 

Foreign, and remaining commodity operations programs; 

• Implement Financial Management Modernization Initiative and FSA's Modernize and Innovate the Delivery 

of Agricultural Systems packages; and 

• Begin Initial Operating Capability for MIDAS. 
20 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 
ANNUAL PERFORMANCE REPORT 21

2. Annual Performance Report 

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

resources, and related issues based on sound public policy, the best available science, and efficient management. 

The Department executed this mission in fiscal year (FY) 2009 through activities such as: 

• Helping millions of low-income households and America’s children improve their health and diets via targeted 

nutrition assistance programs; 

• Engaging in activities designed to bolster healthcare in rural America; 

• Opening new international markets, and maintaining existing markets; 

• Supporting the objectives of the National School Breakfast and School Lunch Programs; 

• Providing farmers and ranchers with risk management and financial tools; 

• Working with other Federal departments to create and implement new food-safety regulations; 

• Meeting with experts from around the globe to discuss current and emerging economic opportunities; 

• Researching ways to keep gas prices down, reduce America’s dependence on oil, and reduce greenhouse gas 

emissions; 

• Providing aid to those affected by severe weather and other disasters; 

• Fighting potential pest and disease outbreaks; and 

• Working to ensure the health and protection of the environment. 

Strategic Goal 1: Enhance International Competitiveness of American Agriculture 

Expanding global markets for agricultural products will increase demand and contribute directly to economic 

stability and prosperity for America’s farmers. USDA accomplishes this through negotiation, monitoring, and 

enforcement of trade agreements. Working with producers and commodity trade associations, USDA administers 

an array of market development and export promotion programs designed to build long-term markets abroad. The 

Department helps expand trade opportunities through technical assistance and training programs. USDA also 

provides food assistance programs to developing countries. These programs are designed to provide greater food 

security which leads to greater economic stability in the recipient countries. These tools support agricultural 

development and growth in developing countries. They also help these countries participate in, and benefit from, 

international trade. USDA works to facilitate trade by adopting and promoting science-based regulatory systems 

and standards. These activities are reflected in the three objectives and four performance measures that follow. 

OBJECTIVE 1.1: EXPAND AND MAINTAIN INTERNATIONAL EXPORT OPPORTUNITIES 

T

Measure 1.1.1: Dollar value of agricultural trade preserved through trade agreement negotiation, monitoring, and enforcement 

2. Annual Performance Report 
22 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Overview 

The Department works closely with the Office of the U.S. Trade Representative to negotiate new trade agreements 

to expand access to global markets for U.S. agriculture. USDA continues to play a leadership role in negotiating the 

Doha Development Agenda under the auspices of the World Trade Organization (WTO). 

To further expand global trade, U.S. officials negotiated 

bilateral accession agreements with countries seeking WTO 

membership. In FY 2009, USDA played a critical role in 

supporting negotiations with Russia, Kazakhstan, and 

several other countries. 

The Department works to expand U.S. agricultural export opportunities by supporting regional and bilateral free 

trade agreements. USDA is awaiting congressional approval of free trade agreements with Colombia, Panama, and 

Korea. It also is closely monitoring implementation of existing free trade agreements, including the two newest 

agreements with Peru and Costa Rica. 

Analysis of Results 

USDA uses a performance measure that estimates the value of trade preserved through enforcing trade agreements, 

creating and maintaining new export opportunities, and addressing trade barriers. USDA failed to meet its targeted 

level of performance. The 2008 collapse of the Doha Round of WTO negotiations, coupled with the global 

economic climate, and delays in approval of already negotiated free trade agreements were significant factors. 

Extensively monitoring and enforcing existing trade agreements, which USDA can influence, will help the 

Department reach its 2010 targets. 

Exhibit 7: Increase U.S. Export Opportunities and Trends in Expanding and Retaining Market Access 

Annual Performance Goals, Indicators, 

and Trends 

2005 2006 2007 2008 Fiscal Year 2009 

Target Actual Result 

1.1.1 Dollar value of agricultural trade preserved 

through trade agreement negotiation, 

monitoring, and enforcement (Non-Sanitary 

and Phytosanitary) ($ millions) Baseline: 1999 

= $2,567 

$800 $14 $670 $484 $900 $368 

(estimated) 

Unmet 

Rationale for Met Range: The target for this measure is controlled by international parties. It reflects U.S. expectations for negotiating new agreements, addressing 

compliance with existing trade agreements and resolving trade access issues that arise so that domestic exports can continue. 

• Data assessment metrics to meet the target allow for an actual number in the range $810-$990. ($ millions) 

Data Assessment of Performance Measures 1.1.1 

Data for the World Trade Organization and tariff rates are projected estimates based on results posted to the performance tracking system within USDA.. 

Data for successfully retaining and assuring U.S. trade access to export markets are projected estimates based on results posted during the first three 

quarters of FY 2009. 

• Completeness of Data—Data for successfully retaining and assuring U.S. trade access to export markets are projected estimates based on results 

posted during the first three quarters of FY 2009. 

• Reliability of Data—Data are reliable and used by the Department to highlight successes in the trade-policy arena. 

• Quality of Data—USDA maintains a standardized methodology to forecast trade impacts. Calculation of trade benefits from preserving existing trade 

is fairly straightforward and easy using this standard methodology. The primary sources of trade data are Department of Homeland Security’s U.S. 

Customs and Border Protection, the Census Bureau, the USDA publication Foreign Agricultural Trade of the United States, and other databases. 

Other sources include market reports compiled by USDA and industry estimates. Since measuring expected trade benefits from broad new trade 

agreements is extremely difficult, the Department evaluates its estimates against other outside estimates when available. 

Key Outcome 

Increased Access to Global Markets for U.S. Agricultural 

Producers and Exporters 
ANNUAL PERFORMANCE REPORT 23

Challenges for the Future

The key challenge for increasing access to global markets is progress in the WTO negotiations. The conclusion of 

the Doha negotiations has been delayed due to external factors and the difficulties inherent in negotiating sensitive 

agricultural issues. Improvement in market opportunities under bilateral and regional trade agreements is 

contingent on approval and implementation of agreements by all partners. Currently, three bilateral agreements are 

pending approval by Congress and waiting implementation by Free Trade Agreement partners. Approval 

procedures may include legislative, administrative, and judicial processes. 

Selected Results in Research, Extension, and Statistics 

2008 – 2009 World Economic Crisis. The world economic crisis that began in 2008 has major consequences for U.S. 

agriculture. In a new ERS analysis, The 2008/2009 World Economic Crisis: What It Means for U.S. Agriculture, ERS discusses 

the effect of the U.S. and global economic downturn on the U.S. agricultural sector. The weakening of global demand because of 

emerging recessions and declining economic growth results in reduced export demand and lower agricultural commodity prices, 

compared with those in 2008. These, in turn, reduce U.S. farm income and place downward pressures on farm real estate values. 

So far, the overall impact on U.S. agriculture is not as severe as on the broader U.S. economy, because the record-high 

agricultural exports, prices, and farm income in 2007 and 2008 put U.S. farmers on solid financial ground. 

OBJECTIVE 1.2: SUPPORT INTERNATIONAL ECONOMIC DEVELOPMENT AND TRADE CAPACITY BUILDING 

Overview 

Global food insecurity impacts people worldwide, with 

more than one billion who go hungry. The problem is 

exacerbated by the current global economic downturn. Food 

security exists when food is available, accessible, and 

appropriately used. Food assistance alone is not enough, as 

food availability also concerns trade and increases in incountry production. The largest contributing factors to insufficient production are chronic under-investment in 

agriculture, inefficient inputs and markets, and poor governance. To address food insecurity, improvements need to 

be made in the entire value chain from farm to table. These improvements include increasing production and 

efficient inputs, reducing post-harvest losses, and supporting mechanisms that encourage local, regional, and 

international trade. Food security must be country-driven and focused at the local level. 

A major goal of USDA trade and development programs is increasing agricultural productivity and trade. Another 

goal is investing in developing countries to enhance food security, economic growth, and the supply and 

affordability of food. USDA is deploying its experts and institutional resources to help developing countries become 

economically stable and capable of supporting their populations. This is mutually beneficial. The Department’s 

trade and development programs help foreign Governments strengthen food security by adopting productivityenhancing technologies and policies. USDA programs also reconstruct the agricultural sector in war-torn, postconflict, and disaster areas; develop sustainable natural resource management systems; and strengthen agricultural 

research and extension programs. 

Agricultural development and food security are key components of the Department’s strategy for Afghanistan. In 

response, USDA has created an Afghanistan-Pakistan Fusion Cell to manage Afghan programs, policy, and 

Key Outcome 

Improved Ability in Developing Countries to Sustain 

Economic Growth and Benefit from International Trade 

Measure 1.2.1: Number of countries in which substantive improvements have been made in national trade policy 

and regulatory frameworks that increase market access 
24 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

analysis. More than 10 Departmental agencies have contributed employees as agricultural experts in Afghanistan 

since 2003 to serve on Provincial Reconstruction Teams (PRTs). These civilian-military units assist local 

agricultural communities in developing and managing agricultural reconstruction according to their own needs 

assessments. In 2007, the Department expanded these efforts to Iraq. USDA advisors traveled there to work 

directly with the Ministry of Agriculture in Baghdad and serve on PRTs. USDA has sent more than 120 experts to 

both countries for 3-to-12-month tours. Some advisors sign up for multiple tours. 

With trade a key component for bolstering food security, USDA measures the number of countries that have 

benefited from improved trade policy and regulatory frameworks. These improved systems help build the capacity 

of developing countries to grow economically and prosper from international trade. The Department implemented 

more than 150 technical assistance activities in FY 2009 to develop trade capacity and facilitate market access for 

U.S. agricultural products. These activities targeted regulatory systems in sub-Saharan Africa, the Middle East and 

North Africa, Eastern Europe, Central America, and Asia. They focused on plant and animal disease surveillance, 

diagnosis and mitigation, laboratory efficiencies, biotechnology and biosafety outreach, and maximum pesticide 

residues. USDA also studied improving sanitary and phyto-sanitary (SPS) systems to improve WTO SPS 

agreement compliance. The Department implemented capacity building projects that transfer skills in laboratory 

analysis, detection of pesticide residues, risk assessment, surveillance and diagnosis of plant and animal health 

diseases, and policy regulations. 

As examples, USDA implemented capacity building programs targeting plant disease and food safety under the 

Africa Global Competitiveness Initiative. The Department worked with the Food and Agriculture Organization of 

the United Nations to develop the East Africa Phytosanitary Information Committee (EAPIC) as the official host 

for the pest-and-disease-reporting database for the region. EAPIC’s goal is to reduce the number of pests and 

increase market access. Under the Dominican Republic-Central America-United States Free Trade Agreement, 

USDA concentrated on helping the countries of Costa Rica, the Dominican Republic, El Salvador, Guatemala, 

Honduras, Nicaragua benefit from participation in the agreement. The Department trained the countries on 

maximum pesticide residues, laboratory analysis, and plant and animal health and food safety capacity building 

activities. As a member of the Asia Pacific Economic Cooperation group, USDA contributed expertise 

to biotechnology, food safety, and food defense outreach activities. For WTO accessions, USDA specialists worked 

with Cape Verde, Ethiopia, Liberia, Sao Tome, Comoros, and the Seychelles to help those countries better 

understand the accession process, and the rights and obligations involved in organization membership. 

USDA also continued to encourage and support developing countries to participate in international regulatory and 

standard-setting organizations like Codex Alimentarius, the World Organization for Animal Health, and the 

International Plant Protection Commission. The Department has initiated an outreach program for members of 

the Codex Committee for Africa to strengthen their understanding of Codex, the importance of participating as an 

active member, and the need for informed decision making based on sound science. In addition, USDA actively 

engaged members of the Codex Committee for Latin America and the Caribbean to discuss science-based 

positions on, for example, committees on food hygiene, fats and oils, and pesticide residues. One of the major 

challenges facing U.S. agriculture is the differing pesticide maximum residue level (MRL) standards required of 

U.S. trading partners. The Department has worked to strengthen global MRL harmonization by proposing new 

standards-setting procedures and initiatives at the Codex general committee sessions. It also has initiated an 

outreach activity for African countries that encourages the understanding of MRL issues and the effects of those 

issues on trade. 

Analysis of Results 

The performance target to make substantive improvements in nine countries’ national trade policy and regulatory 

frameworks was exceeded. USDA’s pest-surveillance programs helped small-scale, women beekeepers in Swaziland 

to continue to export organic honey to South Africa without the use of irradiation. The Department’s fruit fly 
ANNUAL PERFORMANCE REPORT 25

control program helped facilitate the restoration of banana exports from Mozambique to South Africa. These 

exports are valued at more than $20 million per year. USDA also worked successfully with Namibia and Honduras 

to prepare them for Department audits on equivalency in meat processing and poultry processing, respectively. If 

the countries pass the audits, exports of those products to the United States will be permitted. Because of USDA 

training, an institute in Costa Rica conducted its first Hazard Analysis and Critical Control Point Plan Validation 

and Verification (a systematic preventive approach to food safety) for 20 local firms. Following assistance from the 

Department and the U.S. Food and Drug Administration on processed-food labeling requirements, El Salvador 

decreased the number of detentions at the border for poor labeling by 68 percent from the previous year. USDA 

technical assistance helped to significantly decrease levels of the hazardous-to-humans pesticide methamidophos in 

fresh vegetables in Guatemala. This decrease allowed the resumption of fresh-vegetable exports to the United 

States, while facilitating passage of a new law banning the pesticide’s use and sale. 

Cochran Fellowship Program training has increased market access opportunities for U.S. agricultural exports. The 

program provides U.S.-based agricultural training opportunities for senior- and mid-level specialists and 

administrators from public and private sectors concerned with agricultural trade, agribusiness development, 

management, policy, and marketing. As a result of the Cochran training opportunities, Colombia updated its 

biotechnology labeling requirements for consistency with U.S. standards. Jamaica changed its position to support 

U.S. policies and initiatives at the April 2009 Codex Committee on Pesticide Residues meeting. St. Kitts opened 

its market to U.S. beef and beef product exports. USDA’s resolution of meat and poultry trade issues with the 

Philippines resulted in a tripling of exports. The Ukraine lifted its ban on pork imports. Its lifting allowed an 

estimated $24 million in U.S. exports during 2009. 

Following a scientific capacity-building visit to the United States, the Saudi Arabian Government reversed its 

decision to ban live bovine imports from the United States. The reversal increased U.S. exports in FY 2009 by $14 

million. Scientific and policy exchanges with China resulted in that country’s willingness to work with the United 

States on setting maximum residue limits for pesticides in a new food-safety law under development. The 

exchanges also helped USDA negotiate an agreement with China that permitted the entry of 60 containers of U.S. 

poultry products being investigated by the Chinese Government. 

In the Republic of Georgia, USDA supported the creation of three Regional Veterinary Service Units that will 

serve as key nodes for a pilot animal-disease surveillance network. These units will also make way for the creation 

and launch of Georgia’s National Animal Health Plan Steering Group. With USDA assistance, Serbia successfully 

resolved issues of overlapping food safety inspection authorities between the Ministries of Agriculture and Health. 

This step was necessary for revising of its SPS checklist for WTO’s consideration of Serbia’s accession. With 

Department training, the Armenian food processing industry is meeting new food safety regulations. Armenian 

citizens also are learning about safe food-handling through a USDA-assisted consumer awareness campaign. 

Selected Results in Research, Extension, and Statistics 

International Food Security Assessment. With volatile agricultural prices, USDA’s analysis of food insecurity in developing 

countries takes on added importance. Food security in 70 developing countries is projected to deteriorate over the next decade.

Estimates indicate that the number of food-insecure people in those countries is rising. Price hikes for food and fuel, coupled with 

a slowdown in global economic growth, hinder progress. USDA estimates and projects the number of food-insecure people 

globally, regionally, and in each of the 70 developing countries studied. Food-insecure people are those consuming less than the 

nutritional target of 2,100 calories per day. The research also measures the food distribution gap (the amount of food needed to 

raise consumption of each income group to the nutritional requirement), and examines the factors that shape food security. 

Exhibit 8: Support International Trade Capacity Building 

Annual Performance Goals, Indicators, 

and Trends 

2005 2006 2007 2008 Fiscal Year 2009 

Target Actual Result 

1.2.1 Number of countries in which substantive n/a 6 13 9 8 9 Exceeded 
26 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Annual Performance Goals, Indicators, 

and Trends 

2005 2006 2007 2008 Fiscal Year 2009 

Target Actual Result 

improvements have been made in national 

trade policy and regulatory frameworks that 

increase market access 

Rationale for Met Range: The target for this measure, based on 3 years of program history, is driven by foreign Governments and parties, and U.S. reimbursable-program 

funding levels. Annual targets reflect USDA expectations for substantive improvements in national trade policy and regulatory frameworks that increase market access for 

U.S. agricultural products in developing countries. 

• Data assessment metrics to meet the target allow for an actual number in the range 5-8. 

Data Assessment of Performance Measures 6.4.1 

Data for WTO and tariff rates are projected estimates based on results posted to the performance tracking system within the USDA. Data for successfully 

retaining and assuring U.S. trade access to export markets are projected estimates based on results posted during the first three quarters of FY 2009. 

Fourth-quarter estimates were derived using the average quarterly reporting and discounting the results to reflect any large, one-time annual events not 

expected to be repeated in the final quarter. 

• Completeness of Data—Data are based on specific criteria developed for measuring intangible and qualitative outcomes and those which are 

concrete and quantifiable. 

• Reliability of Data—Data are reliable, of good quality, and used by agency officials to highlight successes in the trade capacity building arena. 

• Quality of Data—Data for successfully verifying the numbers of countries in which USDA has made significant impact in trade capacity building are 

captured from a variety of credible sources, including: 

− Reports from overseas posts and project offices, such as Global Agriculture Information Network reports and progress reports; 

− Individual activity reports as provided by USDA partner institutions; 

− Questionnaires submitted by international participants regarding training programs; 

− Reports from other USDA agencies, the U.S. Department of State, the Agency for International Development, the Office of the U.S. Trade 

Representative, and U.S. embassies; 

− Assessment of the progress of projects through interviews conducted with ministry officials and other host-country recipients on the impact of 

USDA technical assistance; 

− Written and verbal observations by program managers who regularly monitor projects in the field; 

− Internal evaluations of activities conducted by the agency and evaluations conducted by external parties; 

− Special workshops designed to elicit feedback and evaluation on “how things are working;” and 

− “Lessons learned” workshops conducted with facilitators to review what is working and what can be improved. 

Challenges for the Future 

The food-security situation has become precarious for many lower-income countries because of the current global 

economic downturn and recent volatility of food and fuel prices. Moreover, failing and post-conflict states pose one 

of today’s greatest national and international security challenges. Struggling states often attract terrorism, crime, 

trafficking, and human catastrophe. In response, USDA is sustaining and expanding its participation in the crossgovernment approach to help stabilize and reconstruct societies in transition from conflict, civil strife, or natural 

disasters. An example is USDA technical assistance to the Afghan Government that supports that country’s 

National Development Strategy and aligns with the three mandates established under the United StatesAfghanistan-Pakistan Trilateral Initiative: food security, trade, and water management. 

USDA is also building agricultural development and trade capacity building programs in priority countries in SubSaharan Africa, South Asia, and Latin America. This work is designed to focus on increasing agricultural 

productivity, while maintaining the natural resource base; improving food availability, accessibility, and utilization; 

and encouraging science-based approaches to policies, regulations, and management practices in line with 

international standards-setting bodies. By working with relevant U.S. Government agencies, land-grant 

universities, and multilateral organizations, USDA will continue to lead efforts to increase trade and reduce food 

insecurity worldwide. 
ANNUAL PERFORMANCE REPORT 27

Overview 

The United States leads the world in food aid. It provides 

more than half of total worldwide assistance in combating 

malnutrition. U.S. food-aid programs are a joint effort 

across several Federal Departments. USDA works with the 

U.S. Agency for International Development, the U.S. 

Department of State, the U.S. Office of Management and Budget, private voluntary relief and development 

organizations, and the United Nations’ World Food Program. These groups provide targeted food aid and 

assistance where it is needed most. Economic development activities aimed at market-capacity building for both 

domestic and international trade are supported through the provision of food assistance. 

USDA currently administers two food assistance grant programs: the McGovern-Dole International Food for 

Education and Child Nutrition Program (McGovern-Dole) and the Food for Progress program. McGovern-Dole 

targets school children, their mothers, and the broader school communities of developing countries. The program 

provides for the donation of U.S. agricultural commodities and associated financial and technical assistance for preschool and school-based feeding programs. It also authorizes the support of maternal, infant, and child nutrition 

programs. The program’s purpose is to support a healthy young population necessary for a stable society and a 

capable workforce. A healthy and literate workforce attracts jobs, supports a sustainable economy, and helps 

establish a secure food supply through domestic production. 

All private voluntary organizations that offer food aid through McGovern-Dole are required to conduct operational 

and results surveys. USDA monitors program activities and accomplishments to determine their effectiveness. 

Additionally, semi-annual reports from private voluntary organizations share results and challenges. 

The Food for Progress program provides for the donation of U.S. agricultural commodities to developing countries 

and emerging democracies committed to introducing and expanding free enterprise in the agricultural sector. 

Priority determination is based on the greatest need for food, as well as individual country efforts to improve food 

security and agricultural development; alleviate poverty; and promote broad-based, equitable, and sustainable 

development. 

Food assistance to needy people overseas can be provided through in-kind food aid, which is usually purchased in 

the country donating the assistance, and local and regional purchases of food overseas. Until 2008, the United 

States provided almost all of its food aid from domestic sources. The 2008 Farm Bill (Food, Conservation, and 

Energy Act of 2008, Public Law 110-234) established a pilot project for USDA to implement a local and regional 

purchase program in developing countries during 2009-2012. The Department is required to conduct four phases 

within the project. The initial study phase was completed in January 2009 when USDA submitted a study to 

Congress that described past local and regional procurement efforts by the World Food Program, private voluntary 

organizations and other donors. During the second phase the Department will develop guidelines for a pilot 

project. In FY 2010, USDA will begin implementing the pilot program and supporting local and regional purchases 

in Africa and other developing countries. In 2012, the Department plans to hire a third party to evaluate the project 

and report the findings to Congress. 

USDA is also working with the development community to create strategic frameworks for its food assistance 

programs that support agency strategic goals. The effort will provide an outline for the grant application process. It 

will also allow USDA to measure progress in meeting goals during the implementation of activities. 

Key Outcome 

Reduce Food Insecurity Worldwide 

Measure 1.2.2: Food Aid Targeting Effectiveness Ratio 
28 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Analysis of Results 

USDA exceeded its performance target. The Food Aid Targeting Effectiveness Ratio (FATER) is based on a 

USDA food security assessment. For countries with greater food insecurity, there is a larger estimated food gap. 

FATER measures the effectiveness of USDA food aid in closing the gap. The higher the FATER score, the larger 

the percentage of the estimated food gap met by USDA programmed food aid. In countries with greater food 

insecurity, the FATER value would be relatively low because of large food gaps in those countries. The FATER 

value would be higher in countries with less food insecurity, where the food gaps are smaller. A target of 35 percent 

represents a balance of food aid programming across countries with greater and lesser levels of food insecurity. 

Exhibit 9: Support Foreign Food Assistance 

Annual Performance Goals, Indicators, 

and Trends 

2005 2006 2007 2008 Fiscal Year 2009 

Target Actual Result 

1.2.2 Food Aid Targeting Effectiveness Ratio 30-35%1 30-35%1 38% 57% 36% 48.7% Exceeded 

1Measure was new in FY 2007; FY 2004-FY 2006 figures are estimates.

Rationale for Met Range: 

• Data assessment metrics to meet the target allow for an actual number in the range 30-35 percent. 

Data Assessment of Performance Measures 6.4.1 

Data on quantities and use of food aid commodities of food aid are captured through the USDA Food Assistance Division database.

• Completeness of Data— Data for successfully reporting on the effectiveness ratio are based on the annual provision and use of food aid. Total 

quantities of commodities and how these commodities are used by the beneficiary in the country of donation is compiled and analyzed by USDA. Data 

include food aid provided by the Department. 

• Reliability of Data— Data are reliable, of good quality, and used by agency officials to highlight the success and impacts of food aid programs and 

strengthen food security. 

• Quality of Data—Data for successfully verifying the quantities and use of food aid commodities in which USDA analyzes to show the effectiveness of 

food aid are captured through the USDA Food Assistance Division database. The outcome from the analysis also is further confirmed through a 

variety of credible sources, including: 

− Reports from USDA and U.S. Department of State personnel at overseas posts; 

− Program activity reports as provided by USDA partner organizations; 

− Follow-on evaluations conducted by USDA; 

− Reports from other USDA agencies, the U.S. Department of State, and the U.S. Agency for International Development; 

− On-going assessment of the progress of projects; and 

− Evaluation of activities by outside consulting firms. 

Challenges for the Future 

USDA faces similar challenges in meeting its food assistance targets as it does with maintaining or expanding 

market access. Uncertainty about World Trade Organization negotiations and the volatility in food prices and 

transportation costs are major challenges. New regulations for USDA’s food assistance programs will improve their 

effectiveness and efficiency. An independent review of program operations is expected to strengthen financial and 

management controls. Planned efforts to improve procurement and project monitoring will also help to meet future 

challenges. The Web-based Supply Chain Management Project and the Food Aid Information System will bring 

improved technology and up-to-date information to the grants process. These tools will cover the budget cycle 

through procurement, ending with closeout and evaluation of agreements. The systems will enhance the 

implementation of the new food assistance regulations published in May 2009. USDA will also create program 

efficiencies by using additional, authorized flexibilities in administering grants and procuring commodities and 

freight. 
ANNUAL PERFORMANCE REPORT 29

Selected Results in Research, Extension, and Statistics 

USDA Assists in Improving International Agricultural Statistics. USDA’s International Programs Office staff provided 

briefings or workshops for 13 groups, with 70 visitors representing the following 14 countries: Argentina, Azerbaijan, Brazil, China, 

Ghana, Japan, Kazakhstan, Russia, Serbia, South Africa, South Korea, Ukraine, Uzbekistan, and Vietnam. USDA provided 

technical assistance and training to improve agricultural statistics programs in Argentina, Armenia, China, Georgia, Madagascar, 

Mongolia, Peru, Russia, and Vietnam. The technical assistance ranged from basic survey concepts and procedures to complete 

national Census of Agriculture support. These activities promote better data and improved access to data from other countries, 

which allows U.S. analysts to better understand world supply and demand. Improved analysis supports trade and more efficient 

marketing of U.S. agricultural products. 

OBJECTIVE 1.3: IMPROVED SANITARY AND PHYTOSANITARY (SPS) SYSTEM TO FACILITATE AGRICULTURAL TRADE 

Overview 

SPS measures are those imposed by Governments to protect 

human, animal, and plant health from pests, diseases, and 

contaminants. USDA works closely with the U.S. Trade 

Representative and other agencies to pursue and enforce 

trade agreements to ensure that technical regulations and 

measures designed to enhance food safety and protect plant 

and animal health do not become barriers to trade. USDA staff working on such issues in more than 90 countries 

includes veterinarians, economists, marketing experts, plant pathologists, and others. 

USDA resolved numerous SPS and technical barriers to trade (TBTs) in FY 2009, including several that have been 

outstanding for many years. 

The largest single technical trade issue of concern to USDA for the past few years has been the normalization of 

beef trade after the market closures caused by the findings of Bovine Spongiform Encephalopathy (BSE) in the 

United States since 2003. In FY 2009, Nicaragua and St. Kitts joined the growing list of countries that now comply 

with World Organization for Animal Health (OIE) standards on beef, allowing complete market access for U.S. 

beef and beef products of all ages. Expanding access to the Japanese beef market remains a USDA priority. 

Discussions with China, Taiwan, and other trading partners also continue. OIE’s 2007 classification of the United 

States as "controlled risk" for BSE has been a cornerstone of domestic efforts at improving market access. 

Another notable long-term success was the May 2009 United States-European Union (EU) Memorandum of 

Understanding relating to the 20-year-old beef hormones dispute. The agreement will provide U.S. beef producers 

with significant additional access, at zero duty, to the EU market for high-quality beef produced from cattle not 

treated with growth-promoting hormones. Resolution of this issue required significant USDA staff intervention on 

SPS and TBT issues. 

Issues related to biotechnology require increasing attention and resources from the Department to maintain trade, 

and gain additional market access. During the third quarter of FY 2009, USDA persuaded Japan to eliminate an 8-

year-old requirement that all U.S. corn be tested for the presence of an unapproved variety of biotech corn. The 

elimination of the testing requirement is expected to save U.S. exporters $20 million annually. Meanwhile, USDA 

Key Outcome 

An Improved Global SPS System for 

Facilitating Agricultural Trade 

Measure 1.3.1: Value of trade preserved annually through USDA staff interventions leading to resolutions of 

barriers created by SPS or Technical Barrier to Trade (TBT) measures 
30 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

negotiators persuaded EU to approve some types of biotech soybeans, and Korea to approve three new biotech corn 

and soy varieties. These actions prevented the possible stoppage of $2.4 billion of U.S. exports to these markets. 

Country-by-country variation in maximum residue limits (MRLs) for pesticides threatens U.S. fruit and vegetable 

exports to many countries. During FY 2009, USDA comments on Indonesian World Trade Organization (WTO) 

notices persuaded that country to recognize and accept U.S. MRLs for fresh foods of plan origin in the absence of 

Codex MRLs. USDA also proved to Malaysia that U.S. apples comply with that country’s MRL standards. 

Additionally, the Department persuaded Taiwan to establish an MRL for a pesticide widely used in U.S. apples. 

Meanwhile, Thailand indefinitely postponed implementing a disruptive inspection procedure that would have 

required all fruit and vegetable imports to be accompanied by a certification confirming compliance with Thai 

MRLs. 

June 17, 2009, marked the signing of a United States-Canadian equivalency agreement for organic products. The 

agreement allows products certified as organic in the United States to be sold as such in Canada without 

recertification to that country’s standards. The equivalency agreement affects annual U.S. exports of organic 

products to Canada valued at more than $2 billion. Without the agreement, the U.S. industry anticipated losing 

more than half that amount during the year after the Canadian standard took effect. This anticipated loss would be 

added to ongoing additional certification and labeling costs. 

Japan and USDA agreed to a protocol for the shipment of non-fumigated U.S. cherries. The agreement made way 

for U.S. shipments to begin in time for this year’s growing season. The United States and Vietnam signed a 

protocol for the shipment of U.S. potatoes. Consumer food labeling issues with the potential to affect U.S. beef and 

processed product exports with an annual value of $464 million were resolved in India and Korea. USDA 

comments through the WTO Notification Process and with interaction at WTO committee meetings persuaded 

Israel, Brazil, and Colombia to bring alcoholic beverage standards and terminology in line with United States and 

international standards this quarter. 

In FY 2009, USDA led efforts that helped avert major interruptions in the export of meat and poultry products to 

Mexico. December 2008 negotiations with Mexico resulted in that country’s Government reinstating the eligibility 

of 130 U.S. meat and poultry processing establishments to export there. USDA negotiations also eased a Mexican 

ban on a particular type of bin in which a large percentage of U.S. meat and poultry is shipped to Mexico. In March 

2009, USDA hosted Mexican representatives on a visit to the United States-Canadian border to view inspections of 

the containers. This visit provided Mexico the opportunity to view how North American Free Trade Agreement 

partners inspect products. It resulted in Mexico limiting the restriction to frozen products. 

USDA’s work on SPS and TBT issues is felt beyond the agricultural realm. During the first quarter of FY 2009, 

EU delayed implementing a wood packaging material bark requirement. Instead, the EU agreed to accept 

international standards. This action saved exporters an estimated $1 billion on products shipped to EU on wood 

packing material. 

Analysis of Results 

The Department measures the value of trade preserved by resolving trade barriers arising from SPS and TBT 

measures imposed by foreign Governments. Trade issues and their impact on U.S. exports depend primarily on 

foreign action, sometimes in response to such domestic events as a livestock disease outbreak. Both the problems 

and the solutions are unpredictable. Resolution could come from a quick agreement with officials at the port of 

entry. Or, it could require lengthy negotiations followed by a slow regulatory or legislative process in the country in 

question. The impact of an action can range from a few thousand to billions of dollars. While USDA can establish 

priorities in advance for known constraints, unforeseen events will occur that require realigning priorities. 
ANNUAL PERFORMANCE REPORT 31

Exhibit 10: Increase U.S. Export Opportunities 

Annual Performance Goals, Indicators, 

and Trends 

2005 2006 2007 2008 Fiscal Year 2009 

Target Actual Result 

1.3.1 Value of trade preserved annually through 

USDA staff interventions leading to resolutions 

of barriers created by SPS or TBT measures 

($ millions) 

$2,000 $2,600 $2,457 $7,316 $2,000 $9,500 Exceeded 

Baseline: 1999 = $2,567

Rationale for Met Range: The target for this measure is controlled by foreign parties. It reflects U.S. expectations for addressing compliance with existing trade agreements 

and resolving trade access issues that arise so that domestic exports can continue. A met or exceeded target reflects USDA successes in addressing these barriers. An 

unmet target may conceal that USDA monitoring activities prevented noncompliance. 

• Data assessment metrics to meet the target allow for an actual number in the range $1,980-$2,420. 

Data Assessment of Performance Measures 1.3.1 

USDA uses a performance tracking system to collect and analyze actual performance data. The data are collected from the Department’s network of 

overseas offices and headquarters staff. The staff conducts trade compliance and enforcement activities, provides trade negotiation support to the U.S. 

Trade Representative. 

• Completeness of Data—Data for successfully retaining and assuring U.S. trade access to export markets are projected estimates based on results 

posted during the first three quarters of FY 2009. 

• Reliability of Data—Data are reliable and used by agency officials to highlight successes in the trade-policy arena. 

• Quality of Data—In addition to audits and internal control review of the performance tracking system, an established procedure is maintained to 

review each reported success for verification and the prevention of double counting. 

USDA’s selection of this performance measure reflects the growing importance of addressing SPS and technical 

barriers to trade in order to maintain or expand trade. As the U.S. Government continues to negotiate new 

bilateral, regional and multilateral trade agreements, the challenge will be to monitor and enforce compliance with 

both trade and technical commitments. This monitoring will ensure that U.S. agriculture receives full benefits from 

negotiated reductions in tariff rates by preventing needless SPS and technical trade barriers. 

Challenges for the Future 

Given the increasing global flow of food and agricultural products, the ability of foreign countries to develop and 

implement sound, science-based regulatory systems is vital to the long-term safety of U.S. agriculture and our food 

supply. U.S. agriculture benefits greatly from the development of transparent and science-based regulatory 

frameworks in other countries. Besides monitoring and enforcing its rights under the WTO SPS and TBT 

agreements, USDA is working to support the development and adoption of science-based international standards 

and SPS regulatory systems. These efforts are critical to the Department’s ability to bring developing countries into 

the global trading system so that they support further liberalization through multilateral trade negotiations. 
32 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Strategic Goal 2: Enhance the Competitiveness and Sustainability of Rural and Farm Economies 

Rural America is of critical importance to the Nation’s prosperity. USDA enhances the competitiveness and 

sustainability of rural and farm economies by expanding domestic market opportunities, increasing the efficiency of 

domestic agricultural production and marketing systems, and providing risk management and financial tools to 

farmers and ranchers. 

OBJECTIVE 2.1: EXPAND DOMESTIC MARKET OPPORTUNITIES 

Overview 

USDA is the lead agency in the Federal Government for the 

biobased products program, referred to as the BioPreferred 

Program. BioPreferred is comprised of two programs: a 

preferred procurement program for Federal agencies and a 

voluntary labeling program for the broad scale marketing of 

biobased products. The program is being implemented 

through a variety of means including rulemakings, education and outreach, and training of procurement personnel. 

BioPreferred promotes the procurement and use of biobased products throughout the Federal government and 

commercial sectors. The BioPreferred program offers three major benefits: 

• Climate Change Impact Reduction—The use of qualifying biobased products reduces the introduction of new fossil 

carbon into the atmosphere; 

• Energy/Environmental Security—Biobased products replace petroleum products helping to increase U.S. energy and 

environmental security and independence. Many biobased products are sustainable, renewable, and 

compostable; and 

• Economic Development—Biobased products create jobs by increasing demand for agricultural and forestry materials 

and by increasing new product development, manufacturing, and ultimately sales. 

The 2008 Farm Bill requires every Federal agency to give a procurement preference to designated items composed 

of biobased products, unless those items are not reasonably available, do not perform adequately, or are not 

reasonably priced. 

Biobased products are those determined to be composed in whole or large part of renewable domestic agricultural 

or forestry materials. Such products, often made from plant, animal, and marine substances, include items such as 

cleaners, lubricants, building materials, insulation, roof coatings, and fuel additives as well as a host of other 

sustainable industrial items that the Federal Government can use. 

USDA’s goal is to increase Federal procurement of biobased products government-wide and develop government 

and consumer markets through a voluntary labeling program. 

Through published regulations, USDA has designated a total of 33 biobased items or product categories 

representing nearly 3,000 individual products. Federal procurement requirements are in place for all 33 of the 

product categories. Approximately 2,100 companies, many of which are small businesses, currently offer more than 

14,500 biobased products. 

Key Outcome 

Increase the number of products designated under the 

BioPreferred Program 

Measure 2.1.1: Number of Items Designated as Biobased for Federal Procurement 
ANNUAL PERFORMANCE REPORT 33

USDA conducts outreach and has developed a series of BioPreferred tools, such as model contract language, to 

assist Federal agencies and the business community in the implementation of the program. 

Analysis of Results 

The performance measure was unmet. Currently, 33 items are designated as BioPreferred and receive preferred 

procurement preference. USDA missed the target of designating 42 items in FY 2009, but will reach the goal in the 

first quarter of FY 2010. Unexpected delays were encountered in the rulemaking process, but the final regulation is 

set to be published in the coming weeks. Three more rounds of designations are in the approval process, and there 

are five more planned rounds of rulemaking. 

On July 31, 2009, BioPreferred accomplished a significant program milestone with the publication of the proposed 

Voluntary Labeling rule. USDA intends to create a product label that would appear on qualifying BioPreferred 

biobased products. When final, this regulation will allow biobased product manufacturers to participate in a 

voluntary labeling program to identify biobased products on retail store shelves. 

Technical information to support each proposed rule, as well as background information on products and 

procurement training, is available at the BioPreferred Web site www.biopreferred.gov. 

Exhibit 11: Number of Items Designated as Biobased for Federal Procurement. 

Annual Performance Goals, Indicators, 

and Trends 

2005 2006 2007 2008 Fiscal Year 2009 

Target Actual Result 

2.1.1 Number of items designated as biobased for 

Federal procurement 

Deferred 6 6 33 42 33 Unmet 

Numbers signify Items published as final rule in Federal Register. Increase in FY 2008 target reflects larger number of items to be designated in the year’s series of 

rulemakings.

Rationale for Met Range: Based on a count of items for designation, the target is a number with no range. 

Data Assessment of Performance Measures 6.4.1 

The performance measure is the number of items included in final rule designations for the BioPreferred Program (formerly known as the Federal 

Biobased Preferred Procurement Program). 

• Completeness of Data—The performance data are complete and unambiguous. The performance indicator for reporting past performance is a 

straightforward counting of the number of items included in final rule designations. Projections are based on “rule designations” in process. 

• Reliability of Data—The information is reliable. There is no subjectivity or ambiguity in determining the measure’s value. 

• Quality of Data—The quality of the data are very high due to its reliability. The data for projections is more ambiguous as it incorporates “rule 

designations” in process and expected progress by multiple federal agencies in the process of designating additional rules. The performance measure 

“items” included in final rule designations does not reflect the amount of BioPreferred program work. Multiple stakeholders and federal agencies are 

involved. In addition, there are technical demands in reporting information and support of the program not reflected in the measure. 

Challenges for the Future 

USDA continues to address the challenge of marketing BioPreferred products through www.biopreferred.gov. The 

site now offers online training for procurement officials and allows buyers to easily locate biobased products in the 

online catalog. New functionality as well as more intuitive search functions and expanded site navigation have 

improved user access to BioPreferred information and products. 

USDA is developing a model procurement program for Federal agencies and continues to educate Federal agencies, 

manufacturers and vendors about the program. Through expanded outreach and education, as well as a continued 

focus on marketing, USDA will increase the purchase of biobased products throughout the Federal and consumer 

market. 
34 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

OBJECTIVE 2.2: INCREASE THE EFFICIENCY OF DOMESTIC AGRICULTURAL PRODUCTION AND MARKETING SYSTEMS 

Overview 

Fundamental to the long-term viability of an agricultural 

producer is the ability to manage an efficient and profitable 

operation. USDA activities make this possible through 

programs that develop and transfer technology, production 

practices, and business and marketing tools and information 

to producers. The programs’ offerings represent the 

centerpieces for an efficient and economically sustainable agricultural sector. To support an efficient marketing 

environment, efforts are directed toward providing the necessary infrastructure and market information to reduce 

per unit and overall production costs, and improve quality, yields, management, and marketing decisions. These 

USDA programs provide the scientific, marketing, and other assistance necessary to increase the efficiency and, 

correspondingly, the competitiveness of the agricultural producer. An economically prosperous agricultural 

production sector contributes to the Nation’s economic vitality and standard of living. Consumers benefit from 

efficiently produced and marketed agricultural products that minimize their food costs and maximize their 

consumption choices. 

USDA supports sound decision making about agriculture by providing readily available, accurate data and 

assessments. The Agricultural Statistics Board (ASB) prepares and issues official national and State forecasts and 

estimates relating to numerous agricultural subjects. ASB covers crop production, stocks of agricultural 

commodities, livestock products, dairy products, poultry products, agricultural prices, agricultural wage rates, 

chemical usage, and other related subjects. The reports calendar lists release dates and specified times for USDA’s 

national agricultural statistics reports. These reports cover more than 120 crops and 45 livestock items. All 519 of 

the agricultural statistics reports, except for 1 scheduled by ASB, were released on time to achieve a 99.8 percent 

performance level in FY 2009. 

Analysis of Results 

USDA seeks to enhance agricultural competitiveness by providing timely data, which are measured by the 

percentage of statistical reports released on time. The Department did not meet its performance target of 100 

percent for FY 2009. One report was late due to a data provider delivering incorrect data, followed by technical 

difficulties in issuing the report. 

USDA strives to release its ASB reports on time 100 percent of the time each year. It is imperative to deliver highquality, objective, relevant, timely, and accurate statistics to producers and other data users. Such statistics allow 

users to make sound decisions. Official agricultural statistics promote a level playing field in production agriculture 

with impartial information available to all at a publicized time. These data, provided throughout the year, are 

important to the commodity and agricultural markets. They help provide a fair and equitable environment. Public 

officials use the data to make informed decisions. USDA policymakers and Congress use this information to help 

build a strong sustainable farm economy. This results in a more stable food supply and more affordable food prices 

for consumers.

Key Outcome 

Agricultural Producers Who Compete Effectively 

in the Economic Market 

Measure 2.2.1: Timeliness: Percent of time official reports are released on the date and time 

pre-specified to data users 

 
ANNUAL PERFORMANCE REPORT 35

Exhibit 12: Agricultural Statistics Reports Released On Time 

Annual Performance Goals, Indicators, 

and Trends 

2005 2006 2007 2008 Fiscal Year 2009 

Target Actual Result 

2.2.1 Timeliness – Percent of time official reports are 

released on the date and time specified to data 

users 

99.8% 100% 100% 99.6% 100.0% 98.9% Unmet 

Rationale for Met Range: Based on a count of reports issued on time. The target is a number with no range. 

Data Assessment of Performance Measures 2.2.1 

Each fall, USDA publishes the Agricultural Statistics Board (ASB) calendar. The calendar lists the dates and times of all ASB reports to be issued the 

following year. It allows all data users and the public to plan ahead for important reports. Additionally, when special reports are issued during the year, a 

press release announces their release dates and times. Press releases are also used when there are planned report delays or other changes. USDA 

counts the number of paper-copy releases scheduled for release and determines how many are delivered as promised. Thus, the percent of reports 

released by the prescribed date and time is the number delivered on time multiplied by one hundred, equaling the total count of announced reports. 

USDA defines its performance as “on time” if the paper product is created, the appropriate Department official is briefed (for reports with scheduled 

briefings), and the press has access to the report. 

• Completeness of Data—The data are considered complete as of September 30, 2009. 

• Reliability of Data—The data are considered reliable. 

• Quality of Data—Agency performance information on timeliness is maintained internally at the Washington, D.C., Headquarters. USDA’s Marketing 

and Information Services Office maintains the performance data for national reports released. After the release of each report, data on timeliness are 

recorded. Quarterly reports are submitted to the Office of Budget and Program Analysis.

Challenges for the Future 

Delayed data collection from sources and unanticipated technical or other difficulties impact timeliness. Reports 

released later than indicated on the ASB release date calendar may cause data users a delay in making decisions that 

could affect their marketing efforts. USDA has many checks in place designed to limit the occurrence of delayed 

reports, resulting in a near perfect track record. 

Overview 

USDA facilitates the competitive and efficient marketing of 

agricultural products in domestic and international markets. 

The Department’s marketing support programs benefit local 

farmers and communities; small farmers and small 

businesses; agribusiness; sustainable agriculture; and 

producers, traders, and consumers of U.S. food and fiber products. Activities include: 

• Developing commodity grade and certification 

standards, and offering grade, contract, and audit 

verification services; 

• Developing organic standards and managing the 

National Organic Program (NOP); 

• Generating and disseminating market news 

information; 

• Providing technical assistance, conducting studies, 

and establishing grants aimed at improving food 

• Purchasing nutritious, quality specialty crops, 

meats, fish, and poultry products that are 

distributed by USDA nutrition assistance 

programs; 

• Monitoring and enforcing Country of Origin 

Labeling (COOL); 

• Sampling and testing commodities for pesticide 

residues and pathogens; 

• Verifying pesticide recordkeeping; and

Key Outcome 

Economically Sound Agricultural Production Sector 

Measure 2.2.2: Percent of market-identified quality attributes for which USDA has provided standardization 
36 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

marketing and distribution, including farmers, 

direct, and alternative markets; 

• Protecting producers from unfair marketing 

practices.

Setting official standards for agricultural products and regulating and monitoring them enhances the marketing and 

distribution of agricultural products. USDA establishes official U.S. standards, specifications, and marketing claim 

descriptions for cotton, dairy products, fruits, vegetables, other specialty crops, meat, poultry products, and eggs. 

These standards and descriptions, supported by official (but voluntary) verification services, facilitate sales and 

purchases of agricultural commodities. In 2009, USDA began development of catfish standards and updated 

standards for other commodities. 

Organic standards and certification are managed by the NOP. Organic agricultural production is the fastest 

growing segment of U.S. agriculture. The NOP is responsible for managing the development and interpretation of 

NOP regulations; the accreditation, auditing, and training of certifying agents; and ensuring compliance with and 

enforcement of the regulations. The regulations cut across all commodity groups and address every aspect of the 

organic industry, including: crop production; livestock production; processing; labeling; the accreditation of 

certifying agents; the certification of organic operations; the petitioning, review, and approval of materials to be 

added to the National List of Allowed and Prohibited Substances; compliance; testing; and the governing of States’ 

Organic Programs. The NOP oversees the operation and ensures the compliance of 98 domestic and foreign 

certifying agents, which certify nearly 28,000 certified organic production and processing operations worldwide. 

The NOP is a worldwide program, and participates in trade negotiations, along with the Foreign Agriculture 

Service and the Office of the U.S. Trade Representative, to establish organic equivalence with U.S. trading 

partners. During 2009, NOP established its first equivalency agreement with Canada—the largest U.S. trade 

partner and largest estimated export market for U.S. organic products. The NOP also has eight recognition 

agreements or arrangements with foreign governments which are negotiated at the program level, and which 

require regular service and monitoring. 

USDA Market News reports use U.S. standards and official marketing descriptions to describe agricultural trading. 

The Market News program improves market competitiveness and increases the efficiency of agricultural marketing 

systems by gathering and publishing price and other market data on a wide range of agricultural commodities, 

including cotton; milk and dairy products; fruits, vegetables, and other specialty crops; eggs and poultry products; 

livestock and meat; and grains. These reports make available timely, accurate, and unbiased market information that 

covers local, regional, national, and international markets. USDA continued to expand reporting on the production 

and marketing of organic commodities, which included working closely with U.S. producers and marketers of 

organic poultry and eggs, and their respective trade associations, to obtain their commitment to voluntarily provide 

organic market information. USDA increased its reporting on organic fruits and vegetables at shipping point by 

17%, at terminal market by 35%, and with shipment information by 75%. To support export marketing, Market 

News improved two international quarterly publications regarding commodity shipments and participated in 

various market news capacity building activities in the Western Hemisphere and with the Market Information 

Organization of the Americas (MIOA). 

USDA provided technical support to a wide range of interested parties—from small farmers to consumers—on a 

host of marketing initiatives that facilitate sustainable agricultural practices, local farmers and communities, and 

small farmer/small business access to new markets and business opportunities. During FY 2009, USDA launched 

the “Know Your Farmer, Know Your Food” initiative to help develop local and regional food systems and spur 

economic opportunity. The initiative helps connect children to where their food comes from and creates 

opportunities for farmers and USDA to provide and purchase more locally grown foods to schools. As part of this 

initiative, the Farmers Market Promotion Program (FMPP) awarded 86 grants totaling more than $4.5 million 

that reaching into communities across America. FMPP grants were awarded to encourage and support the viability 

of farmers markets and direct marketing projects nationwide. 
ANNUAL PERFORMANCE REPORT 37

USDA, as authorized through the Specialty Crop Block Grant Program, awarded over $57 million to the State 

departments of agriculture, the District of Columbia, and the Commonwealth of Puerto Rico. These funds were 

used to enhance the competitiveness of the specialty crop industry to support commodities that include fruits, 

vegetables, tree nuts, dried fruits, and nursery crops (including floriculture). USDA initiated a site visit program to 

evaluate the efficiency and effectiveness of the administration of grant funds and provides feedback to State 

agencies in order to assist in this administration. 

USDA procured a variety of non-price-supported commodities in order to provide nutritious food to needy 

recipients and much needed assistance to the beef, pork, poultry, seafood, and fruit and vegetable industries. A total 

of more than $439 million in foods were purchased to support agricultural producers and growers, plus another 

$468 million to meet entitlement requirements for Child Nutrition programs. As part of a pilot program, USDA 

purchased 3.3 million pounds of fresh-cut apples for limited national distribution to National School Lunch 

Program recipients. USDA also developed and published guidelines for food companies to use for developing and 

submitting child nutrition labeling quality control plans for USDA review and approval, and began design on a 

database to monitor child nutrition label program activities, including the status of quality control plans, label 

approvals, and plant reviews. 

During 2009, USDA began administering a comprehensive Country of Origin Labeling (COOL) program for all 

covered commodities. USDA published a final rule in 2009 which became effective on March 16 and expanded 

COOL to include chicken, goat, macadamia nuts, pecans, and ginseng as covered commodities and added 

provisions for labeling products of multiple origins. USDA conducted several training sessions for cooperating state 

reviewers, informational sessions for retailers and other stakeholders, and began retail compliance reviews. 

Analysis of Results 

USDA initiates a process to develop and implement standards when new ones are needed. Measuring the number 

of standards developed by the Department to meet market needs indicates how USDA is performing in its efforts 

to support a sound agricultural sector in the economy. The Department met its standards development goal by 

developing draft quality standards for catfish and catfish products in collaboration with the U.S. Department of 

Commerce and National Marine Fisheries Service. 

Exhibit 13: Percent of market-identified quality attributes for which USDA has provided standardization 

Annual Performance Goals, Indicators, 

and Trends 

2005 2006 2007 2008 Fiscal Year 2009 

Target Actual Result 

2.2.2 Percent of market-identified quality attributes 

for which USDA has provided standardization 

96% 94% 95.7% 98.0% 97.0% 97.0% Met 

Rationale for Met Range: The target is a number with no variance. Any result greater than or less than 97 percent is considered unmet or exceeded, respectively.

Data Assessment of Performance Measures 2.2.2 

The development of quality standards is a complex, multi-stage process requiring extensive review and discussion with the client industry. Thus, yearly 

milestones have been established for completing of the standards development process. For USDA, the development of a new standard requires a great 

deal of research into a wide range of activities, including: 1) a study of the product to determine the quality factors involved and the range of quality 

produced; 2) an investigation into the production practices in major producing areas, varieties or types of production, packing, processing techniques, and 

consumer-buying practices; 3) a statistical plan for sampling product; and 4) interviews with producers, packers, processors, shippers, receivers, 

consumers, and scientists. 

• Completeness of Data—Data used in conjunction with performance information are based on information reported by USDA and each Commodity 

Standards Branch: Cotton, Tobacco, Dairy, Fruits and Vegetables, Livestock and Seed, and Poultry – through the end of the third quarter of the 

reporting year, and a projection for the fourth quarter of the fiscal year based on prior-year performance. The Department also calculates the quarterly 

and annual results based on a statistical model of percentage of goal attained for standards development. 
38 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Annual Performance Goals, Indicators, 

and Trends 

2005 2006 2007 2008 Fiscal Year 2009 

Target Actual Result 

• Reliability of Data—The data are reliable because of extensive research and field testing. These tests are used to adjust the standard or specification 

until it is an accurate measure of the commodity. It is then made available for review and comment in the Federal Register by industry stakeholders, 

clients, and customers. Performance shortfalls may occur if resources are limited or if the standard under development is controversial. 

• Quality of Data—Data are projected based on industry requirements, program plans, and historical performance trends. The target information uses 

data dependent upon the baseline projections from the Department’s commodity standards programs. To the extent that any of the USDA projections 

are inaccurate, the projection of value will also be inaccurate. 

Challenges for the Future 

USDA must react quickly to changes in consumer demand, domestic and international marketing practices, and 

new technologies. 

Selected Results in Research, Extension, and Statistics 

Improving Fisheries and Preserving Jobs. USDA funded New Jersey scientists to produce the fifth generation of tetraploid 

oysters and continued selection for disease resistance and fast growth. Tetraploid oysters have been used for commercial 

production of triploids. Triploid oysters grow significantly faster than normal diploids, and have become an important product of 

the oyster culture industry. Oyster survival rates in the Delaware Bay have increased more than twofold, preserving a regional 

fishery and thousands of jobs. The restored harvest has had a direct impact on the economy of the region with a return of $40 for 

each $1 spent. 

OBJECTIVE 2.3: PROVIDE RISK MANAGEMENT AND FINANCIAL TOOLS TO FARMERS AND RANCHERS 

Overview 

USDA provides and supports cost-effective means of 

managing risk for agricultural producers. This assistance is 

designed to improve the economic stability of agriculture. It 

assesses the producers’ need and develops a variety of 

suitable risk-management tools. These tools help farmers 

and ranchers protect their livelihood in times of disasters or 

other uncontrollable conditions. USDA uses the value of risk protection to measure the effectiveness of risk 

management. The value of risk protection denotes the amount of insurance used to protect and stabilize the 

agricultural economy. 

The USDA Federal Crop Insurance Program provides an actuarially sound risk management program to reduce 

agricultural producers’ economic losses due to natural disasters. This program is available to producers solely 

through private insurance companies. These companies market and provide full service on policies upon which they 

share the risk with USDA. A Standard Reinsurance Agreement (SRA) defines the amount of risk they share. The 

SRA calls for insurance companies to deliver risk-management insurance products to eligible entities under certain 

terms and conditions. Companies are responsible for all aspects of customer service and guarantee payment of 

producer premiums to the Federal Crop Insurance Corporation (FCIC). In return, FCIC reinsures the policies and 

Key Outcome 

Economically Sound Agricultural 

Production Sector 

Measure 2.3.1: Increase the normalized value of risk protection provided to agriculture producers through FCIC-sponsored insurance 
ANNUAL PERFORMANCE REPORT 39

provides premium subsidy to producers. It also reimburses for administrative and operating expenses associated 

with the companies delivering the insurance products. 

USDA has implemented initiatives to increase awareness and service to small and limited resource farmers and 

ranchers and other under-served groups and areas. Through partnership agreements, the Department provides a 

venue for public and private agricultural organizations, land grant colleges and universities, community-based 

organizations, farmers and ranchers, and other stakeholders. USDA also partners with community-based 

organizations, and Hispanic Serving Institutions. These partnerships provide technical program assistance and riskmanagement education on strategies associated with legal, production, marketing, human resources, and labor risks. 

Analysis of Results 

USDA assesses producers’ needs and private risk-management tools. This work ensures that new, sound, and 

innovative alternatives are available to increase program participation with greater protection for producers. 

The Department is projected to exceed its target by $0.5 billion. The final actual results may vary significantly from 

this projection. The performance measure illustrates the normalized/real dollar value of FCIC coverage in force 

within the agricultural economy. FCIC promotes the economic stability of agriculture through a sound system of 

crop insurance. The measure also shows the amount of potential collateral provided to qualify for commercial loans. 

Since the 1999 crop year, the normalized value has increased by approximately $19 billion. While there are a 

number of factors that influence these figures, including market-price increases and inflation, they represent a major 

growth in the amount of the agricultural economy insured via the FCIC-sponsored insurance. During the 2008 

crop year, which covered parts of both the 2008 and 2009 fiscal years, the economic risk or liability of American 

agricultural producers was reduced by approximately $88.5 billion through Federal crop insurance coverage. 

USDA’s challenge is to expand and improve insurance coverage and other risk management solutions, particularly 

for underserved States, areas, communities, and commodities. Thus, the Department addresses the management 

and financial information technology costs associated with operating and maintaining existing program data needs. 

These systems and technologies also service new and revised products. 

USDA researches how to deliver more crop and livestock products. This research includes reviewing and approving 

private-sector insurance products reinsured by FCIC that are targeted to the needs of underserved areas and various 

specialty crops. The Department also evaluates and ensures the efficient delivery of risk-management products to 

agricultural producers. To further contribute to the producers’ ability to protect their financial stability, USDA 

provides education, outreach, and non-insurance risk management assistance initiatives and tools through 

partnerships. 44.7 $48.1 $50.7 $51.5 $51.4 

Exhibit 14: Providing Risk Management Tools to Farmers and Ranchers 

Annual Performance Goals, Indicators, 

and Trends 

2005 2006 2007 2008 Fiscal Year 2009 

Target Actual Result 

2.3.1 Increase the normalized value of risk 

protection provided to agriculture producers 

through FCIC-sponsored insurance ($ billions) 

$44.7 $48.1 $50.7 $51.5 $51.4 $51.4 Met 

Rationale for Met Range: Annual targets for this measure have consistently seen a variation of plus or minus 4.4. 

Data Assessment of Performance Measures 2.3.1 

The value of risk protection denotes the amount of insurance in effect protecting and stabilizing the agricultural economy. USDA’s value projection target 

is based on projections developed in November 2008, forecasted participation, and conditions current at that time. The baseline model uses the latest 

information from the crop insurance program and combines it with USDA baseline projections for major crops. These crops include corn, wheat, 

soybeans, sorghum, barley, rice, and cotton. In making the projections, the model holds various factors constant, such as premium rates and average 

coverage level. The model assumes that all non-major crops produce yields consistent with USDA projections for major crops. The baseline model is a 

tool for developing budget projections contained in Presidential budget requests. The budget and performance projections for the crop insurance program 
40 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Annual Performance Goals, Indicators, 

and Trends 

2005 2006 2007 2008 Fiscal Year 2009 

Target Actual Result 

depend on baseline projections from numerous USDA agencies.

• Completeness of Data—The data used in conjunction with performance information are based on actual information reported through the end of the 

third quarter. To provide the annual data, USDA projects the results for the fourth quarter of the fiscal year based on prior year performance. Analysis 

has shown that normally 99 percent of the final actual data will be reported to USDA during the first quarter of the next fiscal year. The Department 

receives the actual data from insurance companies. It then maintains data through two integrated processing systems that validate the information. 

The data then are sent through the system to generate all accounting functions. These processing systems ensure that data received are accurate, 

errors are corrected quickly, and timely monthly accounting reports are provided.

• Reliability of Data—USDA deems this information to be reliable. The insurance companies receive data from the producers and transmit them to the 

Department. Once received, USDA takes extensive steps to verify the data’s accuracy and validity. The Standard Reinsurance Agreement (SRA) also 

provides reinsured companies with disincentives for not following prescribed guidelines and procedures. While the data are deemed reliable, a recent 

audit by the Office of Inspector General found that USDA’s Risk Management Agency (RMA) information technology environment might be vulnerable 

to errors, misuse, abuse, unauthorized access, disruption of service, and willful destruction. RMA generally agreed with these findings and has made 

substantial progress in implementing the agreed to recommendations. 

• Quality of Data—Data are projected based on historical performance. The target information uses data dependent upon the baseline projections from 

numerous USDA agencies. To the extent that any of the Department’s projections are inaccurate, the projection of value will also be inaccurate. 

Challenges for the Future 

USDA’s challenge is to continue expanding and improving insurance coverage and other risk-management 

solutions, particularly for underserved States, areas, and communities. The Department needs to address the 

management and financial information technology costs associated with operating and maintaining existing 

program data needs. 

Overview 

Farmers must have access to timely and accurate 

information. Without it, they will not be able to compete in 

a rapidly growing marketplace. USDA provides farmers 

with the risk-management and financial tools needed to 

minimize risk and enhance their operations. 

The Department’s programs are designed to reduce the volatility of price and climate fluctuations. Stable 

commodity supplies and prices assure an affordable supply of food for the Nation. In response to natural disasters, 

USDA also administers emergency loan and disaster relief programs to return farms and ranches to their predisaster state as quickly as possible. The Department’s NAP provides financial assistance to producers of noninsurable crops when natural disasters cause low yields or inventory loss, or prevent planting. 

Those eligible for assistance through NAP are landowners, tenants, or sharecroppers who share in the risk of 

producing an eligible crop. Eligible crops must be non-insurable agricultural commodities for which there is no 

available crop insurance. By obtaining NAP coverage, producers are able to provide some level of assurance to 

lending institutions that USDA will assume a portion of the insurance risk. 

Key Outcome 

Economically Sound Agricultural 

Production Sector 

Measure 2.3.2: Increase the percentage of eligible crops with Noninsured Crop Disaster Assistance Payments (NAP) Coverage 
ANNUAL PERFORMANCE REPORT 41

Analysis of Results 

This measure, like the previous one, shows performance in providing a sound agricultural sector by helping mitigate 

severe losses. The 2009 data for the NAP measure is created by using proxy information from claims made on the 

2008 crop year. USDA did not meet its target for increasing the percentage of eligible crops with NAP coverage 

due to policy changes that negatively impacted the validity of data, and significant changes in commodity prices. 

Because the NAP figure depends on proxy data from several program partners, the results are dependent on 

reconciling operational parameters so that data are comparable. Targets were set based on agency practices that 

have recently been altered. 

Significant 2008 commodity price differences resulted in a negative crop value for NAP. This is not accurate as 

demonstrated by NAP participation fees and crops covered. Each increased by 14 percent and more than 34 

percent, respectively, after removal of mandated NAP fee increases during 2009. To compensate for the anomaly 

affecting the NAP formula, data inputs were adjusted to compensate for changes in operational parameters, 

resulting in a NAP eligibility figure of 6.4 percent, similar to previous years. However, with this adjustment, the 

data are still not representative of actual producer participation in NAP. 

Due to the changing policies across programs, the current NAP measure does not provide data that accurately 

reflects NAP progress and cannot be effectively used to set performance targets. A new NAP measure will need to 

be developed. Due to the eligibility requirement in the 2008 Farm Bill, NAP performance is expected to increase in 

the next fiscal year. This measure requires NAP participation and/or the purchase of crop insurance to gain 

eligibility for USDA permanent disaster programs. Permanent disaster programs include: 

• The Supplemental Revenue Assistance Payments Program; 

• The Livestock Forage Program; 

• Emergency Assistance for Livestock, Honey Bees, and Farm-Raised Fish Program; and 

• The Tree Assistance Program. 

Exhibit 15: Providing Tools to Help Farmers and Ranchers Stay Economically Viable 

Annual Performance Goals, Indicators, 

and Trends 

2005 2006 2007 2008 Fiscal Year 2009 

Target Actual Result 

2.3.2 Increase percentage of eligible crops with 

Noninsured Crop Disaster Assistance 

Payments (NAP) coverage 

12.82% 12.70% 11.76% 7.2% 23.52% 6.4% Unmet 

Estimated results as of September 30 2009 and adjusted for data anomaly. The target and threshold represents the value of crops participating in the program compared to 

the universe of the value of crops eligible to participate in the NAP program. 

Rationale for Met Range: Data assessment metrics to meet the target allow for an actual number in the range 22.52-24.52 percent. 

Data Assessment of Performance Measures 2.3.2 

• Completeness of Data—The result is based on final FY 2009 data. 

• Reliability of Data— USDA collects performance information from key program partners that it uses to manage NAP and improve performance. The 

Department conducts numerous edit checks of its source data. Its review of the data includes peer review. USDA correlates data from multiple 

partners to compile NAP. It uses a formula approved by the Office of Management and Budget. External factors which contribute to and impact the 

program’s performance data include natural disasters, crop eligibility, legislated linkage requirements, commodity price fluctuations, and policy 

changes. The 2008 Farm Bill links eligibility requirements to receive disaster benefits to NAP participation. While the participation rate may fluctuate 

from year to year, the program is on track towards meeting long-term targets. 

• Quality of Data—USDA and its partner agencies conduct data reviews for integrity and accuracy. Due to recently changing policies among program

partners which affect the comparability of data, the current NAP measure does not provide an acceptable level of quality. A new NAP measure will 

need to be developed. 

Challenges for the Future 

Because of the volatile nature of the market and the unpredictability of natural disasters, USDA regularly reviews 

NAP and other farm support programs in keeping with legislation to provide effective, customer-focused programs. 
42 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Information technology and infrastructure modernization also pose an ongoing challenge to the Department. 

Significant costs are associated with providing adequate technical assistance to support USDA programs and 

management. 

Overview 

USDA Farm Loan Programs (FLP) provides loans and loan 

guarantees to eligible farmers and ranchers. The programs 

are designed to promote, build, and sustain family farms, 

which help support a thriving agricultural economy. 

Departmental assistance is particularly important to 

minorities, women, and beginning farmers. Barriers to entering production agriculture are quite high. They include 

the initial capital investment, high land values, and increasing input costs. Beginning farmers, minorities, and 

women are particularly impacted by these barriers. Access to credit is an important tool in overcoming the barriers 

and allowing these groups to begin or maintain a farming operation.

Analysis of Results 

USDA met the target for this performance measure. The Department currently provides agricultural credit to more 

than 17 percent of the Nation’s minority, women, and beginning farmers. This credit includes direct and 

guaranteed farm ownership and operating loans. Farm ownership loans are used to purchase farm real estate, 

enlarge existing farms, construct or improve farm structures, and improve the environmental soundness of farms. 

Farm operating loans are used for normal operating expenses, equipment, machinery and livestock purchases, and 

refinancing existing debt. In FY 2009, USDA provided over 18,000 loans to the targeted groups – valued at more 

than $1.82 billion. USDA currently has 47,503 minority, women, and beginning farmers in its loan portfolio, a 7 

percent increase from FY 2008. 

USDA experienced a significant increase in demand for its farm loan programs in FY 2009. A total of 32,150 loans 

were made compared to 26,305 in FY 2008. This surge in demand is partially because of increased credit 

requirements for mortgage loans by commercial lenders. The instability in the credit market resultant from the 

housing industry has impacted the agricultural credit sector. Additionally, dramatic downturns in the dairy, hog, 

and poultry industries further increased demand for the Department’s loan programs. USDA met the increased 

demand partially because of additional funding for the Direct Operating Loan program provided through the 

American Reinvestment and Recovery Act (ARRA). USDA funded an additional 2,600 operating loans through 

ARRA funds. Nearly 64 percent of these loans were issued to minority, women, and beginning farmers. 

Key Outcome 

Greater Diversity of Agricultural Producers 

Measure 2.3.3: Increase percentage of beginning farmers, racial and ethnic minority farmers, and women farmers financed by USDA 
ANNUAL PERFORMANCE REPORT 43

Exhibit 16: Providing Tools to Help Farmers and Ranchers Stay Economically Viable 

Annual Performance Goals, Indicators, 

and Trends 

2005 2006 2007 2008 Fiscal Year 2009 

Target Actual Result 

2.3.3 Increase percentage of beginning farmers, 

racial and ethnic minority farmers, and women 

farmers financed by USDA 

15.00% 15.50% 15.9% 16.22% 17.0% 17.4% Met 

Rationale for Met Range: Data assessment metrics to meet the target allow for an actual number in the range 16.5-17.5 percent.

Data Assessment of Performance Measures 2.3.3 

FLP data reside in the Program Loan Accounting System, Guaranteed Loan System, Direct Loan System, and FLP Databases. Information obtained from 

the 2002 Census of Agriculture is also used for this performance measure. The measure is calculated by taking the total number of minority, women, and 

beginning farmers in the loan portfolio and dividing it by the number of members of those three groups listed in the 2002 Census of Agriculture with at 

least $10,000 in sale.s (This sales figure excludes hobby farms, which are not the intended market for FLPs.) 

• Completeness of Data—Data reported is final as of September 30, 2009. 

• Reliability of Data—Data are considered reliable. System enhancements and built-in edits, coupled with comprehensive internal control review 

programs help ensure data reliability and quality. While Census of Agriculture data are considered reliable, the resulting percentage reported likely 

understates the importance of USDA's service to these targeted groups. It does not account for how many of these farmers would meet USDA's test 

for credit. Given that less than 50 percent of farm operators have any debt, it is unlikely that all of the targeted farm operators identified in the census 

would meet the credit test. Despite this limitation, these data are the best available for estimating USDA's performance in reaching the targeted 

groups. 

• Quality of Data—FLP data are of high quality. Most FLP data originate from accounting systems, which are subject to OIG audit. FLP data are 

collected for multiple purposes and gathered throughout the normal lending process. Data derived from the 2002 Census of Agriculture were 

developed in FY 2006 and will be used until new performance targets are developed as part of the Department’s strategic planning process. When 

new performance targets are developed, the 2002 Census data will be replaced with data from the 2007 Census. 

Challenges for the Future 

U.S. agriculture continues to change as most farms become larger and increasingly dependent on technology. These 

changes increase the capital needed to enter farming. The costs of operating a farm continue to increase because of 

higher input costs. These factors result in significant barriers and challenges for the groups that the USDA farm 

loan programs are intended to assist. To keep pace, the Department will continue efforts to modernize the program 

delivery system, and refine and adjust program requirements to maximize opportunities for the Nation's minority, 

women, and beginning farmers. 

Selected Results in Research, Extension, and Statistics 

Helping Farmers and Ranchers Increase Profits. USDA’s Western Sustainable Agriculture Research and Education (SARE) is 

funded to help the agriculture industry become more profitable, protect natural resources/the environment, and improve the 

quality of life for producers and consumers. The number of separate SARE-impacted farms and ranches, which increased profits 

and/or reduced costs, was documented as at least 1,452, with adjacent farms and ranches totaling over 3000, impacting 

4,178,000 acres. Of these farms and ranches, 82 percent reported sustained usage of the research-based idea or practices 

tested. Finally, for the 5-year life-span of this Cooperative Agreement there was a positive economic impact of over $500 million. 
44 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Strategic Goal 3: Support Increased Economic Opportunities and Improved Quality of Life In Rural America 

OBJECTIVE 3.1: EXPAND ECONOMIC OPPORTUNITIES BY USING USDA FINANCIAL RESOURCES TO LEVERAGE PRIVATE SECTOR RESOURCES 

AND CREATE OPPORTUNITIES FOR GROWTH 

Overview 

USDA has the responsibility of coordinating Federal 

assistance to rural areas of the Nation. The Department 

strives to help rural Americans improve the quality of their 

lives. 

Each year, USDA programs create or save thousands of rural jobs, build and update rural infrastructure, and create 

or improve more than 60,000 units of quality rural housing. To multiply the impact of its programs, the 

Department works with State, local, and Tribal Governments; private and nonprofit organizations; and user-owned 

cooperatives. USDA programs are administered by the Department’s network of State and local offices. 

The Department partners with the private sector and community-based organizations to provide financial 

assistance and business planning. It also provides technical assistance to rural businesses and cooperatives, conducts 

research into rural economic issues, and provides cooperative educational materials to the public. 

USDA Business Programs help fund projects that create or preserve quality jobs and/or promote a clean rural 

environment. Its financial resources are often leveraged with those of other public and private credit source lenders 

to meet business and credit needs in under-served areas. Program recipients may include individuals, corporations, 

partnerships, cooperatives, public bodies, nonprofit corporations, Native American tribes, and private companies. 

The Department is providing capital to enable rural businesses to participate in the developing global economy. 

One of the primary programs assisting the USDA in realizing this goal is the Business and Industry (B&I) 

Guaranteed Loan Program. B&I provides capital in the form of loan guarantees to improve, develop, or finance 

businesses, and improve the economic and environmental climate in rural communities. This is achieved by 

bolstering the existing private credit structure through the guarantee of quality loans, which will provide lasting 

community benefits. In FY 2009, B&I obligated $993 million in guaranteed loans. It is estimated that the ARRA 

dollars will create or save more than 20,000 jobs for rural Americans. 

In addition to B&I, Rural Business and Cooperative Programs offer a full menu of economic development loan and 

grant options that are delivered through cooperatives, non-profit organizations, institutions of higher learning, local 

and Tribal governments, and other rural business and economic development stakeholders. These programs 

increase access to capital and business-based services for rural communities. They can also assist with 

infrastructure to support local business development. 

USDA’s Cooperative Programs help rural residents form new cooperative businesses and improve the operations of 

existing cooperatives (user-owned businesses). To accomplish this, Cooperative Programs provide technical 

assistance to cooperatives, conduct cooperative-related research, and produce educational materials that promote 

public understanding of cooperatives. 

Key Outcome 

Enhanced Capital Formation for Rural Communities 

Measure 3.1.1: Jobs Created or Saved 
ANNUAL PERFORMANCE REPORT 45

USDA’s Rural Business Enterprise Grant Program (RBEG) provides grants for rural projects that finance and 

facilitate development of small and emerging rural businesses, help fund distance learning networks, and help fund 

employment related adult education programs. RBEG received $19 million in ARRA funds. In one instance, the 

Minnesota Chippewa Tribe in rural northern Minnesota has already received an $83,149 RBEG grant to help its 

Business Development Center provide training for area businesses to expand. The grant created new jobs and 

spurred economic growth in the region. The funding also is expected to help lower chronically high unemployment 

and poverty rates among Native Americans who live in the region. So far, four Native American-owned businesses 

have been selected to use the funding to expand their operations. The Rural Business Opportunity Grant program 

(RBOG) promotes sustainable economic development in rural communities with exceptional needs. RBOG allows 

for the provision of training and technical assistance for business owners, entrepreneurs, and economic development 

officials. It also assists with economic development planning. 

Analysis of Results 

USDA has met its goals for this objective. The number of jobs created or saved is linked directly to the total 

amount of USDA business program funding, amounts obligated and disbursed to awardees, and local economic 

conditions. Annual job targets are based on historical program operations, subsidy rates and annual appropriations, 

all of which can vary annually. The job target numbers assume a level funding horizon and timely allocations of 

funds without regard to the potential impact of major natural disasters or local economic conditions. Recently, 

these factors, particularly the struggling economy, have caused a general decline in annual job numbers. The 

FY 2009 targets reflect the additional ARRA funding. Any remaining program funds will be carried over into 

FY 2010 and continue to provide benefits to rural communities in the next fiscal year. 

Exhibit 17: Strengthen Rural Businesses 

Annual Performance Goals, Indicators, 

and Trends 

2005 2006 2007 2008 Fiscal Year 2009 

Target Actual Result 

3.1.1 Jobs Created or Saved 73,328 71,715 72,710 70,476 83,083 83,083 Met 

Rationale for Met Range: Job projected data are gathered when projects are obligated in the Guaranteed Loan System (GLS) based on a formula driven by historical 

results. Final job counts are verified on closing the loan and grant. A met range of 5 percent is used. 

• Target and threshold data were recalculated midway through the fiscal year to reflect American Recovery and Investment Act of 2009 funds. 

• Data assessment metrics to meet the target allow for an actual number in the range 94,385- 99,225. 

Data Assessment of Performance Measures 3.1.1 

Business program data are collected in various systems and ways. The finance office records and reports total loan and grant obligations as of the date 

they are executed. These data are collected as part of the obligation process. USDA also uses its GLS to collect additional information to satisfy reporting 

requirements, and for management and evaluation purposes. This information includes the number of jobs projected at obligation and verified jobs 

created or saved at the transaction’s closing. Data used to determine B&I’s delinquency status are generally reported directly by lenders into GLS. For 

other programs, USDA staff reports delinquency information. 

• Completeness of Data—Business program data are considered final and complete as of September 30, 2009, unless there are any year-end closing 

adjustments. 

• Reliability of Data—Business and Industry guaranteed loan borrower financial performance is reported by many, but not all, lenders semi-annually to 

the Rural Business Cooperative Service. Grantees generally report quarterly or semi-annually. There is inconsistency in the time periods represented 

by lender reports. In lieu of a reliable, consistent, and complete data set from lenders, the Finance Office’s financial data have been found acceptable 

to the Office of Inspector General, as are State-office-verified data on the financial performance of loans. Data for jobs created or saved are obtained 

by State office staff from borrowers and lenders. They are entered into GLS at the same time obligations are recorded. These data are reliable when 

they have been updated and verified by State staff. USDA reports the computed jobs saved or created based on underlying market and financial 

feasibility projections that support loan applications. The jobs are counted only in one fiscal year, the year the loan is obligated. The delinquency rate, 

which excludes loans in bankruptcy, is based on reports supplied by lenders on the performance of each loan. 

• Quality of Data—While the percentage of States verifying third-party financial and jobs data has improved each year, further improvements are 

needed. The economic model described above should lead to these improvements. USDA is testing an economic model to show the impact of 

business programs in rural areas more accurately and completely. 
46 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Challenges for the Future 

Rural economies face challenges different from those of urban and suburban areas. These challenges include: 

• Historical dependence on local natural resources and farm commodities, subject to cyclical trends, and changing 

regulatory standards and oversight; 

• Low profit margins on local commodity sales yet strong competition from international commodities; 

• Large-scale changes in technology and related efficiency gains; and 

• Inaccessibility and low-density populations resulting in limited foot traffic for retail establishments, and limited 

discretionary budgets for business improvements, upgrades, and modernization. 

Additionally, rural areas typically have underdeveloped public services that make it difficult to attract or retain 

businesses. The lack of public funding for amenities which are common in urban areas, such as dedicated business 

parks or expanded transportation links, creates additional challenges. Education, health care, and entertainment are 

perceived to be marginally acceptable in many rural areas. 

Selected Results in Research, Extension, and Statistics 

Census of Agriculture. On February 3, 2009, USDA released the results of the 2007 Census of Agriculture. The Census of 

Agriculture, taken every five years, is a complete count of U.S. farms and ranches and the people who operate them. The Census 

looks at land use and ownership, operator characteristics, production practices, income and expenditures, and many other areas.

The Census provides the only source of uniform, comprehensive agricultural data for every county in the nation. In conducting the 

Census, USDA placed a special emphasis on outreach to traditionally under-represented populations, including small, minority, 

female, and limited resource farm operators. Working in partnership with community-based organizations nationwide, USDA 

engaged in an extensive effort to make sure the Census included all farms and ranches, regardless of size, location or type of 

operation. USDA also partnered with these groups to provide hands-on assistance and support to local producers – including 

non-English speakers – in filling out their Census forms. In addition, USDA targeted its media-outreach efforts towards 

publications and broadcast outlets that reach small, minority, and non-English-speaking producers. 

OBJECTIVE 3.2: IMPROVE THE QUALITY OF LIFE THROUGH USDA FINANCING OF QUALITY HOUSING, MODERN UTILITIES, AND NEEDED 

COMMUNITY FACILITIES 

Overview 

Decent, affordable housing is indispensable to vibrant rural 

communities. USDA Housing Programs help finance new 

or improved housing for more than 60,000 moderate-, low-, 

and very-low-income families each year. No rural 

community can thrive without adequate community 

Key Outcome 

Improved Quality of Life in Rural Areas 

Measures 3.2.1–3.2.5 

3.2.1 Number of borrowers/subscribers with new and/or improved electric facilities 

3.2.2 Number of borrowers/subscribers with new or improved telecommunication services (Broadband) 

3.2.3 Number of borrowers/subscribers with new/improved service from agency funded water facility 

3.2.4 Homeownership opportunities provided 

3.2.5 Percentage of customers who are provided access to new and/or improved essential community facilities 
ANNUAL PERFORMANCE REPORT 47

facilities. Thus, USDA Community Programs also help rural communities finance, construct, enlarge, or improve 

fire stations, libraries, hospitals and medical clinics, industrial parks, and other community facilities. 

Community Facilities Direct Loans, Loan Guarantees, and Grants are used to construct, enlarge, extend, or 

otherwise improve community facilities providing essential services in rural areas and towns. 

In FY 2009, more than $250 million was invested in 144 health care facilities serving 2.8 million rural residents. 

During the same period, 789 communities received more than $38 million to finance fire, rescue, and public safety 

facilities, equipment, and vehicles. Overall, more than 15 million rural Americans will enjoy a better quality of life 

directly attributable to the $532 million investment in essential community facilities. 

USDA’s Community Facilities (CF) Programs are designed to develop essential community facilities for public use 

in rural areas. Program management received additional ARRA funds, $1.1 billion for direct loans and $61 million 

for grants. The Department expects to have those funds all obligated by the end of FY 2010. 

Revitalization of rural communities through the recovery of the ailing housing market is essential to a healthy 

national economy. USDA’s Direct and Guaranteed Loan programs have helped to fill the void as private mortgage 

lenders pulled back from financing modest homes for low- and moderate-income families. In FY 2009, the agency 

provided record numbers of rural families with direct loans or Government guarantees for fair deals from 

participating lenders. 

Since the start of USDA Housing programs 60 years ago, more than 2.7 million families have benefited. This 

includes some 140,000 loans or guarantees for rural homes in FY 2009 totaling nearly $17.5 billion – a record 

amount. An additional 11,000 households received home repair assistance with 1-percent interest loans or grants. 

The record spending is part of the Department’s economic stimulus for rural America, which combines annual 

appropriations with ARRA funds (through FY 2010) and targeted disaster recovery funding. An additional $11.2 

billion in ARRA funding was provided for Single Family Housing Loans, and they expect to have it obligated by 

the end of FY 2010. 

The Rural Broadband program supports the expansion of broadband service in rural areas. This expansion occurs 

through financing and grants to projects that provide access to high-speed service and facilitate economic 

development in locations without sufficient access to such service. Applications come in from a diverse range of 

parties including State, local, and Tribal governments; nonprofits; industry; anchor institutions, such as libraries, 

universities, community colleges, and hospitals; public safety organizations; and other entities in rural, suburban, 

and urban areas. 

The Broadband Program received $2.5 billion in ARRA funding for up to $9 billion in program level. USDA has 

partnered with the U.S. Department of Commerce's National Telecommunications and Information 

Administration and the Federal Communications Commission to ensure that these funds will be awarded 

competitively with transparency and accountability. 

Through its water programs, USDA invested $1.5 billion to finance construction, repairs, and upgrades. While an 

infusion of 2008 Farm Bill funds may have contributed to the Department exceeding its goals, USDA has also 

marketed its water programs aggressively to rural communities. This marketing has created brand-name recognition 

for its services and financial assistance. Upgraded underwriting tools also have improved the water programs’ 

performance by helping to identify communities with greater loan potential. Additionally, the Rural Water & 

Waste Disposal program received $3.6 billion in ARRA funding for loans and grants, and expects to obligate them 

by the end of FY 2010. 

Analysis of Results 

The electric programs have fully utilized their FY 2009 loan-lending authority, and the improved electric facilities 

performance measure was exceeded. The telecommunications measure was unmet, as programs were affected by the 

2008 Farm Bill, which required modifications to the Broadband Loan Program. Revisions to the ongoing 2008 
48 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Farm Bill broadband loan program are currently under development. Permanent regulations are anticipated to be 

published in fiscal year 2010. The broadband measure was exceeded. 

The community facilities program met its goal by emphasizing health care and public safety facilities. USDA staff 

provided outreach at national, state, and regional conferences, showing its ability to provide facilities at reasonable 

rates and terms for rural Americans. 

The performance of the housing programs has far exceeded the target. The demand for the guaranteed loan 

program doubled, and the direct program increased by one-fourth this year. Additionally, home costs for the direct 

program were lower than expected. Direct and guaranteed loans have been made totaling nearly $17.5 billion – a 

record amount. USDA anticipates a growing need for increased funding in coming years as demand continues to 

spiral upwards. 

The water and environmental programs fully utilized their FY 2009 lending authority and exceeded their target 

performance measures. Projections for FY 2010 are 1.457 million borrower customers (subscribers). Water and 

waste facilities funded through ARRA are projected to serve 2.6 million borrower customers. 

Exhibit 18: Improving Rural Quality of Life Through Electric Opportunities 

Annual Performance Goals, Indicators, 

and Trends 

2005 2006 2007 2008 Fiscal Year 2009 

Target Actual Result 

3.2.1 Number of borrowers/subscribers receiving 

new and/or improved electric facilities 

(thousands) 

2,360 8,184 5,826 8,103 7,100 9,759 Exceeded 

Rationale for Met Range: Annual targets for this measure are based on historical activity and adjusted according to program level received each fiscal year. Met range 

represents a 5-percent deviation from target. 

• Data assessment metrics to meet the target allow for an actual number in the range 5,818-6,431. 

Data Assessment of Performance Measures 3.2.1 

Electric programs data are collected from various Rural Utilities Service (RUS) documents including RUS Forms 740c and 130, Borrower’s Statistical 

Profile, Information Publication 201-1 and the borrower’s loan application. 

• Completeness of Data—The data are complete and accurate, collected at the time of loan approval, and reported annually. 

• Reliability of Data—Applicants are required to report essential data to the Electric programs. These data are used to administer USDA loan funds 

and ensure loan security. The Electric Program is developing a new loan tracking and data collection system as part of the Community Program 

Application Processing – Electric Programs. 

• Quality of Data—Applications are reviewed to ensure the borrower meets the eligibility requirements for the various loans, guarantees, and grants 

offered by Electric programs. All approved applications must show feasibility from a financial standpoint and ensure loan security. Loan funds may be 

used only for the approved purposes for which the loan was made. 

Exhibit 19: Improving Rural Quality of Life Through Telecommunication Services 

Annual Performance Goals, Indicators, 

and Trends 

2005 2006 2007 2008 Fiscal Year 2009 

Target Actual Result 

3.2.2 Number of borrowers/subscribers receiving 

new or improved telecommunication services 

(Broadband) (thousands) 

232,249 297,027 356,440 775,342 370,000 187,000 Unmet 

Rationale for Met Range: Annual targets for this measure are based on historical activity and adjusted according to program level received each fiscal year. Met range 

represents a 7-percent deviation from target. 

• Data assessment metrics to meet the target allow for an actual number in the range 344,100-395,900. 

Data Assessment of Performance Measures 3.2.2 

The county data are collected from each approved loan application. Applicants identify their proposed service territories, including the number of 

subscribers to be served in the location by county. Measuring the extent to which broadband service is deployed in rural America on a county-by-county 
ANNUAL PERFORMANCE REPORT 49

Annual Performance Goals, Indicators, 

and Trends 

2005 2006 2007 2008 Fiscal Year 2009 

Target Actual Result 

basis will enable USDA to assess improved economic conditions. The data on the number of counties to be served for each loan are derived from 

applicants’ loan applications. 

• Completeness of Data—Data are complete and final. 

• Reliability of Data—While applicants are required to perform market surveys of their proposed service areas, the actual counties served may vary if 

all funds are not used or the borrower later requests a change of purpose from the original loan application. Overall, the data are reliable. 

• Quality of Data—All applications are reviewed to determine eligibility. These applications must show feasibility from financial and technical 

standpoints. Applicants must perform market surveys of their proposed service areas. The data depend on the borrower drawing down loan funds and 

constructing the system as portrayed in the applicant’s loan design. Variance may result if a borrower does not draw down all loan funds or request 

approval for a change of purpose from the original loan, resulting in differences in the number of counties served and the number specified in the plan. 

Exhibit 20: Improving Rural Quality of Life Through Water and Waste Disposal Facilities 

Annual Performance Goals, Indicators, 

and Trends 

2005 2006 2007 2008 Fiscal Year 2009 

Target Actual Result 

3.2.3 Number of borrowers/subscribers receiving 

new or improved service from agency 

funded water and/or waste facilities 

1,325,000 1,637,554 1,332,063 4,361,872 4,018,000 8,208,689 Exceeded 

Rationale for Met Range: Annual targets for this measure are based on historical activity and are adjusted according to program level received each fiscal year. ARRA 

performance goals were set based on funding provided for the program level according to historical activity. Met range represents a 5-percent deviation from target. 

• Data assessment metrics to meet the target allow for an actual number in the range 3,817,100-4,218,900. 

Data Assessment of Performance Measures 3.2.3 

The Water and Environmental Program (WEP) collects data through the Community Programs Application Processing (CPAP) system. CPAP is a nonfinancial system in which agency field staff input data about applicants, borrowers, funding, and services provided. The data obligations flow through the 

Rural Utilities Loan Servicing System to the Program Loan Accounting System and through a data server to a data warehouse. 

• Completeness of Data—CF data are complete and final. 

• Reliability of Data—USDA’s data warehouse stores historical information on Departmental programs and such non-agency data as Census 

information. Program data are downloaded to the warehouse every evening from several accounting databases. Data generally are current through 

the previous day. The warehouse provides obligations data, used to measure the number of loans, loan amounts, number of borrowers, and funds 

advanced. 

• Quality of Data—Based on CPAP information, the number of subscribers receiving new or improved water or wastewater service can be extrapolated

from the data warehouse. The WEP National Office and USDA field offices use data from CPAP, the data warehouse, and Departmental accounting 

systems to review or evaluate the financial, operational, and managerial programs of the utilities serving rural customers. 

Exhibit 21: Homeownership Opportunities Provided 

Annual Performance Goals, Indicators, 

and Trends 

2005 2006 2007 2008 Fiscal Year 2009 

Target Actual Result 

3.2.4 Homeownership opportunities provided 

• Guaranteed Loans 34,251 31,131 32,481 54,660 68,627 115,981 

• Direct Loans 11,744 11,041 10,646 9,474 11,074 11,262 Exceeded 

• Total 45,995 42,172 43,532 66,574 63,434 127,243 

Rationale for Met Range: The range of 10 percent is based on the historical variance from the target during the past several years in the number of houses sold in the 

Guaranteed and Direct Single Family Housing Loan Programs. Target and Actual include both Annual and ARRA funds. 

• First figure in each column represents guaranteed loans, the second row is direct loans, and the total is listed in the third row. 

• Excludes an (estimated) additional 13,200 hurricane supplemental/natural disaster homeownership opportunities (12,800 Guaranteed, 400 Direct). 

• Data assessment metrics to meet the target allow the actual total number in the range 75,716 - 83,686 for Direct and Guaranteed loans combined.

Data Assessment of Performance Measures 3.2.4 
50 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Annual Performance Goals, Indicators, 

and Trends 

2005 2006 2007 2008 Fiscal Year 2009 

Target Actual Result 

Homeownership data are entered in the Web-based DLOS system. This centralized server application ensures viable data collection. It tracks 

performance and can be used to forecast needs. Information is entered into UniFi and uploaded nightly into the MortgageServ system. This system 

obligates funds, establishes closed loans, administers escrow accounts, and performs other administrative function. Hyperion, a query and reporting tool, 

serves as the interface between the data warehouse and USDA staff. 

• Completeness of Data—Homeownership data are complete and final. 

• Reliability of Data—Homeownership data originate in systems used to obligate funding and are reliable. Data for initial placement of households into 

their own homes are reliable. They are linked directly to homeownership loans maintained in USDA's financial accounting systems. No adjustments 

are made for later defaults and the resulting loss of homeownership. 

• Quality of Data—Homeownership data are based on loan obligations collected in the Dedicated Loan Origination and Servicing System, and stored in 

USDA's Data Warehouse. Thus, the data on the number of households are auditable. Data represent the population served based on the available 

U.S. Census information. 

Exhibit 22: Improving Rural Quality of Life Through Community Facilities 

Annual Performance Goals, Indicators, 

and Trends 

2005 2006 2007 2008 Fiscal Year 2009 

Target Actual Result 

3.2.5 Percentage of customers who are provided 

access to new and/or improved essential 

community facilities 

• Health facilities 3.5% 3.8% 7.2% 4.8% 5.4% 5.5%

Exceeded • Safety facilities 4.1% 3.8% 6.16% 5.7% 5.0% 9.06%

Rationale for Met Range: It is a challenge to measure the range of residents served because grants may vary widely, even within a category. One grant for a fire engine, for 

example, may serve 1,000 people, whereas another grant for a similar amount for a health care project might serve 10,000. Therefore, USDA would consider its FY 2009 

goal unmet if CF serves fewer than 4.7 percent of the rural population with new health care facilities and provides new fire, rescue, and public safety facilities for less than 

2.5 percent of the rural population. The ranges include all CF program funding, including ARRA funds. 

• Data assessment metrics to meet the target allow for an actual number in the range 4.7 to 5.7 percent for health facilities and the range 2.5 to 3.5 percent for safety 

facilities. Both areas met the goals. 

Data Assessment of Performance Measures 3.2.5 

Program data are collected by means of two streams of input. The finance office records and reports total loan and grant obligations as of the date of 

obligations. These data are collected as part of the obligation process. Additionally, USDA collects information for management and evaluation purposes. 

Data on delinquency status are reported by the finance office for community facilities direct loans, and by lenders for CF guaranteed loans. 

• Completeness of Data—CF program data are complete and final. 

• Reliability of Data—CF data are entered into GLS by field staff as the program funds are obligated. They also represent the population served based 

on available U.S. Census information. Population data served by community facilities are estimates. USDA screens data annually for irregularities. 

Population estimates served by community facilities are based on engineering studies used for the design of new or expanded public utilities systems. 

The Department is developing mapping technologies to improve the determination of service areas for community facilities. 

• Quality of Data—Data are constantly monitored and any irregularities or ambiguities are questioned and resolved. Because data are derived from

actual obligations and constantly monitored, the quality of the data is ensured. 

Challenges for the Future 

The demand for increased energy efficiency and conservation poses both opportunities and challenges for USDA’s 

electric programs. Challenges include control of greenhouse gas emissions through alternative fuels and renewable 

energy, addressing state and local support for power plant projects, legal issues, and containing escalating 

construction and fuel costs. 

ARRA provided $9 billion in program level for high-speed Internet service in communities that lack sufficient 

access. There are short-term challenges to implementing USDA’s Broadband Initiative Program to distribute these 

funds and establish the appropriate monitoring and servicing of the investments. Regulations for the ongoing Farm 
ANNUAL PERFORMANCE REPORT 51

Bill broadband program must be revised and telecommunication program staff must develop and conduct outreach 

on the changes. 

More than ever, rural communities must invest in water and wastewater facilities to upgrade aging facilities, meet 

new environmental quality standards and enhance the security of their operations. As communities increase their 

investments in water utilities, they must also manage costs better and set appropriate rates to ensure system 

sustainability. A regional approach to water and waste water service delivery in some rural areas helps address rising 

costs. Underwriting and meeting funding requirements for these larger regional systems will continue to challenge 

utilities programs. 

USDA is committed to assisting the most rural of America’s communities in planning, designing, and developing 

financial packages for renovating or replacing vital facilities. These facilities, which include hospitals, schools, and 

child-care businesses, are rapidly becoming more complex and expensive. The challenge is to develop a level of 

expertise that benefits communities the most. 

USDA’s direct loans are up by nearly 25 percent. Guaranteed loans have doubled from the previous year. With few 

other affordable lending products available, demand is expected to continue to skyrocket despite continued, high 

underwriting standards and documentation requirements. Processors in local offices, which have experienced staff 

reductions in recent years, are now at the limit of their capacity. Improvements to USDA’s automation products 

will increase capacity and allow lenders, partners and remotely located employees to interface other data systems – 

increasing speed and efficiency of operations. Meanwhile, an automated “decision tool” is being developed to 

streamline the Direct Loan program. “Jump teams” of highly-qualified staff will be made available to areas with 

greatest demand. 

Another challenge for the housing program is to meet the ongoing demand for funding. Demand by lenders for 

guarantees will continue for the foreseeable future. The long-time goal of increasing access to housing for those in 

the poorest and most remote areas remains unfulfilled. Despite serving a high portion of minorities, more help is 

needed. While economic stimulation is needed to get America’s housing market growing again, USDA’s housing 

programs will continue to play a central role in providing funding and support to the many rural Americans still in 

need of decent, safe, and affordable housing. 

Selected Results in Research, Extension, and Statistics 

Status of Rural Health Care. Rural residents have higher rates of mortality, disability, and chronic disease than their urban 

counterparts. A USDA study found several factors that contribute negatively to the health status of rural residents such as lower 

socioeconomic status, smoking, weight, and exercise levels. Farmers and their families also have higher risks of workplace 

hazards. 

Impact of Baby Boom Migration on Rural America. A USDA analysis of age-specific migration during the 1990s reveals 

extensive shifts in migration patterns as Americans move through different life stages. The analysis finds a significant increase in 

migration to non-metropolitan areas as people reach their fifties and sixties, and projects a shift in migration among “baby 

boomers” toward more isolated settings. 
52 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Strategic Goal 4: Enhance Protection and Safety of the Nation’s Agriculture and Food Supply 

OBJECTIVE 4.1: REDUCE THE INCIDENCE OF FOODBORNE ILLNESSES RELATED TO MEAT, POULTRY AND EGG PRODUCTS IN THE UNITED 

STATES 

Overview 

USDA verifies and enforces Federally regulated 

establishments’ compliance with their science-based food 

safety system, the Hazard Analysis and Critical Control 

Point (HACCP) system. HACCP is designed to prevent 

the contamination or adulteration of food products. The 

establishments may have other supporting programs and must have Sanitation Standard Operating Procedures 

(SSOPs). SSOPs are written procedures that show how an establishment is meeting basic sanitation requirements 

every day. These programs represent USDA’s foundation of preventing and controlling contamination of the food 

supply during slaughter and processing. By placing the responsibility on the slaughter or processing facility to 

implement systems for preventing and controlling contamination, the Department can best use its inspection 

resources to ensure the safety of the Nation’s food supply. USDA verifies that establishments meet regulatory 

requirements, and inspects carcasses and products. 

One critical element to verifying the effectiveness of the establishments’ HACCP system and supporting programs 

is the routine sampling of product for pathogens known to cause serious human illness. These pathogens include: 

• Salmonella in broiler chickens; 

• Listeria monocytogenes in ready-to-eat products; and 

• Escherichia coli (E. coli) O157:H7 in raw ground beef. 

Consumption of food contaminated with Salmonella can cause Salmonellosis, one of the most common bacterial 

foodborne illnesses. Salmonella infections can be life-threatening, especially to those with weak immune systems, 

such as infants, the elderly, and persons with Human Immunodeficiency Virus (HIV) infection or undergoing 

chemotherapy. 

Consumption of food contaminated with Listeria monocytogenes can cause listeriosis, an uncommon but potentially 

fatal disease. While healthy people rarely contract listeriosis, it can cause high fever, severe headache, neck stiffness 

and nausea. Listeriosis can also cause miscarriages, stillbirths, and serious and sometimes fatal infections in those 

with weakened immune systems. The most susceptible are infants, the elderly, persons with HIV infection and 

those undergoing chemotherapy. 

E. coli O157:H7 are a large and diverse, potentially deadly group of bacteria that can cause bloody diarrhea, 

dehydration, and kidney failure. 

Key Outcome 

Basing Policy on Science 

Measures 4.1.1–4.1.4 

4.1.1 Reduce the overall public exposure to generic Salmonella from broiler carcasses using existing scientific 

standards 

4.1.2 Reduce the overall public exposure to Listeria monocytogenes in ready-to-eat products 

4.1.3: Reduce the overall public exposure to Listeria monocytogenes in post-lethality exposed ready-to-eat products 

4.1.4: Reduce the overall public exposure to E. coli O157:H7 in ground beef 
ANNUAL PERFORMANCE REPORT 53

On-site USDA inspection personnel collect samples and send them for testing to Department’s field-service 

laboratories based on a pre-set schedule. Sampling allows USDA to verify that establishments ensure food safety 

through HACCP, sanitation and supporting programs. The Department focuses on the percentage of positive tests 

from all establishments. It measures the industry’s performance as a whole to form the basis of USDA’s food safety 

performance measures. 

If a positive is detected at an establishment, USDA performs a series of follow-up activities. If the Department 

determines that the pathogen’s presence threatens public health and product has not been held, it works with the 

establishment in support of the product’s recall. Finally, in response to positive USDA test results for E. coli

O157:H7 and Listeria monocytogenes, the Department performs a food safety assessment (FSA) to analyze an 

establishment’s control of the pathogen. USDA also uses FSAs to determine the design and implementation of an 

establishment’s food safety system, and why contamination occurred. Additionally, the Department requires the 

establishment to develop an action plan to address any problems. 

Exhibit 23: Pathogen Reduction (Food Inspection) 

Annual Performance Goals, Indicators, 

and Trends 

2005 2006 2007 2008 Fiscal Year 2009 

Target Actual Result 

4.1.1 Reduce overall public exposure to generic 

Salmonella from broiler carcasses using 

existing scientific standards1 n/a 45% 71% 80% 85% 82.08% Unmet 

4.1.2 Reduce the overall public exposure to 

Listeria monocytogenes in ready-to-eat 

products2 0.70% 0.60% 0.31% 0.29% 0.25% 0.08% Met 

4.1.3 Reduce the overall public exposure to 

Listeria monocytogenes in post-lethality 

exposed ready-to-eat products2 0.43% 0.23% 0.41% 0.35% 0.29% 0.1% Met 

4.1.4 Reduce the overall public exposure to E.

coli O157:H7 in ground beef2 0.21% 0.40% 0.28% 0.48% 0.24% 0.36% Unmet 

1USDA measures its Salmonella performance in terms of a percentage of broiler chicken processing establishments that are in Salmonella performance Category 1. 

Establishments are placed in Category 1 if they demonstrate consistent process control in Department verification testing. 

2USDA measures its performance for Listeria monocytogenes and E. coli O157:H7 in terms of a volume-adjusted percent-positive rate for the pathogen in the Department’s 

HACCP verification testing. USDA has based its performance objectives for those pathogens on the Healthy People 2010 goals for reducing illnesses from Listeria 

monocytogenes and E. coli O157:H7. 

Volume adjusted percent positive rates are based on sampling results as of August 31, 2009. For Listeria monocytogenes, these are further adjusted by production 

category. 

Data Assessment of Performance Measures 4.1.1, 4.1.2, 4.1.3, 4.1.4 

Through consultations with its stakeholders, USDA continuously examines the Nation’s changing food safety system and practices. The Department 

articulates a long-term view in regard to its performance and the benefits to public health. USDA also monitors its performance against the Healthy People 

2010 goals for these three critical pathogens — Salmonella, Listeria monocytogenes (Lm) and E. coli O157:H7. The Department developed an attribution 

model to determine what percentage of all Salmonella, Lm, and E. coli illnesses result from USDA-regulated contaminated products. 

• Completeness of Data—Results are based upon USDA’s laboratory results analyzed as of August 31, 2009 and are the best available indication of 

the FY 2009 fourth-quarter results. Quarterly and annual data are based on sampling at a range of establishments, from very small to large. 

• Reliability of Data—The data are reliable because they are based on testing and verification from the USDA’s field service laboratories for regulated 

establishments. Each positive sample is subjected to highly specific verification testing. The primary goal of these sampling programs is to monitor 

how well each establishment is maintaining control of food safety through its HACCP, sanitation and supporting programs. USDA recognizes that its 

verification testing samples for Salmonella in raw classes of product and for Lm in ready-to-eat foods are biased in favor of being collected at 

establishments with poor process controls and/or higher volume; this likely results in overestimates in public exposure to these two pathogens. For E. 

coli O157:H7, however, this is not the case because the sample collection is not biased because our programs sample every establishment and take 

into account establishment production volume. USDA is working towards incorporating statistical design into its verification testing programs for 

Salmonella and Lm in order to have true measures of prevalence. 

• Quality of Data—The volume adjusted data show that these measures historically correlated with the Centers for Disease Control and Prevention 

foodborne illness outbreak data. 
54 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Analysis of Results 

Salmonella

USDA has made consistent progress towards meetings its performance goal of reducing overall public exposure to 

generic Salmonella from broiler chicken carcasses. The FY 2009 target was 85 percent of broiler establishments in 

Category 1 and based upon data ending August 31, 2009. Additionally, 83 percent of broiler establishments were in 

Category 1 (USDA categorizes slaughter processing establishments as Category 1, Category 2 or Category 3 based 

on their consistency in process control for Salmonella reduction. Category 1 represents the most consistent and top 

performing category). USDA has met its Healthy People 2010 goal for Salmonella broiler chickens of 0.68 cases per 

100,000 people. However, USDA did not meet its goal for the number of establishments reaching Category 1 

status as shown in Exhibit 23. With respect to the latter, USDA self-imposed a continuous improvement approach 

by placing establishments into one of three categories in order to further drive additional reductions in Salmonella

illnesses beyond those for Healthy People 2010. 

In March 2008, USDA started posting the names of broiler chicken processing establishments in Categories 2 and 

3 to its Web site monthly. While establishments from the young turkey product class also are now eligible for 

posting, because more than 90 percent of young turkey establishments are in Category 1 and none are in Category 

3, these facilities are currently not posted. Over time, USDA expects to post the establishments in Categories 2 and 

3 from other product classes monthly. As more establishments attain Category 1 status, USDA believes that fewer 

people will be exposed to Salmonella from raw classes of USDA-regulated products. Consequently, as more 

establishments gain greater control over Salmonella, the goal of reducing the number of illnesses from Salmonella

from USDA-regulated products is more likely to be achieved. 

The category system provides incentives for industry to reduce the occurrence of Salmonella in operations. The 

Department has also developed a number of different initiatives to reduce the presence of Salmonella on USDAregulated products. 

USDA schedules food safety assessments (FSAs) in poor-performing establishments to analyze an establishment’s 

control of Salmonella, and the design and implementation of an establishment’s food safety system. FSA findings 

inform regulatory decisions and are also used to devise agency policies and outreach efforts. All enforcement 

analysis and investigations officers have been trained in updated methods for conducting FSAs. 

USDA has also developed the Salmonella Initiative Program (SIP). SIP is designed to drive improvements in ongoing control of Salmonella in broiler and turkey slaughter operations on a volunteer basis. Participating 

establishments must collect samples for microbial analysis on each line during each shift on every day of production. 

These additional samples will provide the agency with key microbial data on process control. These data may be 

used to inform performance standards development in the future. 

USDA is conducting several baseline studies on raw classes of product in which the presence and numbers of 

Salmonella and other microorganisms are being assessed. For example, the Department completed a study on 

broilers in FY 2008 and one on young turkeys in FY 2009. USDA is also designing a baseline to measure 

prevalence on raw chicken parts. Finally, the market hog baseline began in FY 2009. Baseline data will be analyzed 

for trends and relationships between pathogen levels. New performance standards are intended to be derived from 

these studies. 

Finally, in terms of training, USDA has conducted five face-to-face “how-to” workshops in FY 2009 on controlling 

Salmonella. These workshops are designed to help small and very small operators reduce this pathogen in poultry 

operations. 
ANNUAL PERFORMANCE REPORT 55

Listeria monocytogenes 

USDA has met the performance goals of decreasing the percentage of all ready-to-eat (RTE) meat and poultry 

products testing positive for Listeria monocytogenes (Lm), and the percentage of post lethality exposed RTE meat 

and poultry products testing positive for Lm. The FY 2009 performance target for Lm in all RTE products was a 

volume adjusted percent positive rate of 0.25 percent. The actual performance in FY 2009 is 0.08 percent (as of 

August 31, 2009). The FY 2009 performance target for Lm in post-lethality exposed RTE products was a volume 

adjusted percent positive rate of 0.29 percent. The actual performance in FY 2009 is 0.17 percent (as of August 31, 

2009). The Department also met the Healthy People 2010 goals for human illnesses due to Lm in all RTE meat and 

poultry products. USDA also met its goal for post-lethality exposed RTE meat and poultry products. 

In FY 2009, the Department began measuring its Lm performance in terms of both the all RTE product sampling 

program and the Lm sampling program targeted at post-lethality exposed products. USDA decided to begin 

measuring its performance in terms of post-lethality exposed products. These products pose a greater risk to public 

health. The Department targets most of its Lm initiatives toward post-lethality exposed products. Thus, USDA 

decided to report both a volume adjusted percent positive rate for all RTE products and post-lethality exposed 

products in FY 2009. 

E. coli O157:H7 

USDA has not met the performance goal for E. coli O157:H7 in ground beef. The FY 2009 target was 0.24 percent 

positive while the volume adjusted percent positive rate for E. coli 0157:H7 in ground beef was 0.36 percent. 

Likewise, the Department did not meet its Healthy People 2010 goal for illnesses from E. coli 0157:H7 in ground 

beef of 0.28 cases per 100,000 people. USDA worked with the affected establishments on recalls of contaminated 

products if product testing positive was not held. As of September 21, 2009, it also conducted 182 FSAs related to 

E. coli O157:H7. 

In July, 2009, USDA implemented a new sampling program for “bench trim.” Bench trim refers to trimmings 

derived from animals not slaughtered onsite at the establishment. This product was not already sampled under the 

Department’s routine trim testing program. The program’s goal is to encourage establishments that produce this 

product to apply an anti-microbial treatment or other intervention to all beef used in this product’s production prior 

to or after its removal. Alternatively, USDA sampling may provide an incentive for producers of bench trim to 

maintain purchase specifications that require their suppliers to apply an antimicrobial or other intervention to 

address E. coli O157:H7. USDA will track the results of this program to see whether it achieves these goals or 

whether the results indicate that new policy or guidance is necessary to protect the public health. 

In July, 2009, USDA issued a directive to its inspection personnel consolidating multiple notices on USDA 

sampling and other verification activities for E. coli O157:H7, which clarifies policies and procedures, and 

implements new necessary sampling and verification procedures. By clarifying the procedures outlined in the 

directive, USDA inspection personnel should better understand their responsibilities and, thus, perform their 

sampling and verification activities more effectively. The new sampling and verification procedures should better 

protect the public’s health. The Department will track E coli O157:H7 data to assess whether the revisions in the 

directive have produced improvements in its sampling and verification procedures to better protect the public’s 

health. Additionally, inspection personnel are completing training on the Directive to ensure that they fully 

understand their duties related to sampling and verification for E. coli O157:H7. 

USDA is conducting more detailed analysis of recent FSAs concerning E. coli O157:H7. For these FSAs, USDA is 

analyzing: 

• All recent noncompliance records and enforcement actions; 

• Available USDA sampling history; 

• The establishment’s sanitation system; 

• The establishment’s microbiological testing programs; 
56 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

• The establishment’s hazard analysis and HACCP system; 

• Interventions used to address E. coli O157:H7; 

• Suppliers; and 

• How the establishment defines its lots of raw beef products. 

Based on this analysis, USDA intends to determine whether establishments that have produced E. coli O157:H7-

positive products have common or recurring deficiencies that can be addressed by 1) new or modified compliance 

guidelines for industry; 2) clarifying instructions to USDA inspection program personnel concerning sample 

collection or other USDA verification activities; or 3) developing new policy or testing to address the pathogen. 

Challenges for the Future 

USDA must continue to verify that regulated establishments’ HACCP systems and supporting programs meet 

regulatory requirements. The Department will continue to provide training and outreach activities to educate 

industry personnel and consumers. It will also identify and disseminate information on best practices. Additionally, 

USDA will develop regulations and supporting guidance for all stakeholders as new scientific and technical 

information becomes available. USDA plans to begin phased-in implementation of the Public Health Information 

System (PHIS) in October 2010. PHIS is designed to maximize the performance of food safety verification and 

sampling procedures performed by USDA inspection program personnel. The data from inspection and sample 

analyses will be automated and, through predictive analytics, more intensified inspection and enforcement can be 

initiated sooner at poor-performing establishments. Additionally, PHIS will facilitate outbreak investigations by 

linking in real time the U.S. Centers for Disease Control (CDC) PulseNet data on human outbreak information, 

and the USDA sub-typing data from VetNet. PulseNet is a national network of public health and food regulatory 

agency laboratories coordinated by CDC. VetNet is designed to investigate animal and foodborne illness outbreaks. 

This linkage will allow USDA to target its investigations more quickly toward establishments likely to be the cause 

of human illness outbreaks under investigation. 

In terms of cross-cutting training initiatives, USDA posted the content of its Web seminars to help small and very 

small operators understand how to reduce Salmonella, Listeria monocytogenes, and E. coli in their operations. This 

information can be viewed at http://www.fsis.usda.gov/news_&_events/Reg_Education_Videos/index.asp.

In March 2009, President Obama established the Food Safety Working Group (FSWG). FSWG, which is chaired 

by the Secretaries of USDA and the U.S. Department of Health and Human Services, will advise the President on 

how to upgrade food-safety laws for the 21st century. Key FSWG findings and recommendations that affect 

USDA will be addressed over the next several years in response to these recommendations. The Department is: 

• Developing more effective outreach and communication materials and tools for State/Multilateral organizations 

and consumers; 

• Strengthening its data analysis and surveillance activities, and developing risk-based approaches to target 

inspection resources and enforcement actions; 

• Enhancing its incident command system and updating its emergency operations procedures; 

• Increasing its oversight of imported foods by developing risk-based approaches to import inspection and foreign 

country audits; 

• Implementing science-based, data driven approaches to reduce the prevalence of foodborne pathogens; 

• Developing tools to more rapidly recall contaminated products from commerce; and 

• Improving its trace-back systems for food products. 
ANNUAL PERFORMANCE REPORT 57

Selected Results in Research, Extension, and Statistics 

Developing a Quick Method for Detecting E. coli O157:H7. A USDA funded food scientist, in collaboration with a researcher at 

the National Chiao Tung University in Taiwan, has found a way to detect pathogenic E. coli O157:H7 in food visually, using 

nanotechnology. The quick, easy, and affordable method developed by this team of researchers could allow consumers and 

producers to know immediately whether their food is safe to eat, because the presence of pathogenic E. coli O157:H7 causes the 

nanoparticles to change color. The implications for the industry are revolutionary. 

Detecting Melamine Residues in Food. USDA-funded researchers, collaborating with Beacon Analytical Systems, a Maine 

biotechnology company, have developed a commercial kit (EIA) for the rapid quantification of melamine residues in food. Beacon 

is currently the only manufacturer of melamine EIA kits in the world. In addition to their work on melamine contamination, USDA

funded scientists are working with Beacon on new ways to detect paralytic shellfish poison (PSP) in seafood. 

OBJECTIVE 4.2: REDUCE THE NUMBER AND SEVERITY OF AGRICULTURAL PEST AND DISEASE OUTBREAKS 

Overview 

USDA provides a secure agricultural production system for 

U.S. consumers. This is done by reducing the number and 

severity of pest and disease outbreaks by: 

• Safeguarding animal and plant resources against the 

introduction of foreign pests and diseases; 

• Detecting and quickly responding to new invasive species and emerging agricultural health situations; 

• Eradicating or managing existing agricultural pests and diseases and wildlife damage; and 

• Developing and applying more effective scientific methods. 

The Department has several programs that focus on this goal each with its own set of performance measures. As an 

indicator of success in FY 2009, one performance measure has been selected to represent the range of activities 

conducted by its programs–one that pertains to the Animal Health Monitoring and Surveillance (AHMS) 

Program. It evaluates and enhances disease control and eradication programs. AHMS monitors surveillance 

activities to detect incursions of foreign and emerging animal diseases. AHMS also monitors international disease 

trends and threats, and provides timely and accurate animal health information. This work is designed to prevent 

the introduction of foreign animal diseases. If such diseases enter the country, AHMS works to prevent their 

spread. The program seeks to minimize economic and environmental damage, and threats to the health of animals 

or humans. 

Analysis of Results 

USDA met its target related to animal disease outbreaks in FY 2009. USDA developed animal-health monitoring 

and surveillance systems to ensure success in future years. There were no significant introductions of foreign animal 

diseases or pests that spread beyond the original area of introduction and caused severe economic or environmental 

damage, or damage to the health of animals or humans. 

Key Outcome 

A Healthy Food Supply 

Measure 4.2.1: Number of significant introductions of foreign animal diseases or pests that spread beyond the 

original area of introduction and cause severe economic or environmental damage, or damage to the health of 

animals or humans 
58 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Exhibit 24: Reduce the Number and Severity of Pest and Disease Outbreaks 

Annual Performance Goals, Indicators, 

and Trends 

2005 2006 2007 2008 Fiscal Year 2009 

Target Actual Result 

4.2.1 Number of significant introductions of foreign 

animal diseases or pests that spread beyond 

the original area of introduction and cause 

severe economic or environmental damage, or 

damage to the health of animals or humans 

0 0 0 0 0 0 Met 

• Rationale for Met Range: These foreign animal diseases could have significant economic impact and animal health consequences. USDA seeks to prevent the spread 

of every single one. Data assessment metrics to meet the target is 0 introductions. No threshold can be identified when the target is 0. 

Data Assessment of Performance Measures 6.4.1 

Determining the performance result involves: (1) routine monitoring and surveillance of world animal health problems; (2) investigating reports identifying 

any new introduction of a significant foreign animal disease (FAD), testing to determine the extent of spread; and (3) evaluating the severity of the 

damage. 

• Completeness of Data—The data are complete when the scheduled testing is finished; the samples are analyzed and the quarantined animals are 

tested and released. The cutoff for the data is set at one month before the reporting date. 

• Reliability of Data—The data are considered reliable when USDA’s Deputy Administrator of Veterinary Services has reviewed and approved them. 

• Quality of Data—The issues related to collection and reporting of performance information are described above. 

Challenges for the Future 

USDA faces many challenges in its efforts to reduce the number and severity of pest and disease outbreaks. Every 

year, the flow of animals, plants, and host material from abroad increases. This growth creates new pathways into 

the country. The social and biological environment in which Federal efforts must be coordinated is becoming more 

complex every year. Agencies must stay informed about new technologies. For each of these challenges, USDA has 

developed strategies. One of the strategies is surveillance and monitoring in cooperation with States and industry. 

Another strategy is to gather and update pest and disease information world wide. When learning of a possible 

threat, the Department conducts science-based, early-detection, and rapid-response efforts. It creates and enforces 

regulations to prevent the entry and spread of invasive species. USDA also develops new networks and tools in 

collaboration with States, universities, and the private sector. 

Overview 

The National Animal Diagnostic Network and Plant 

Diagnostic Network Centers ensure timely disease 

detection. They also produce and maintain a timely, 

comprehensive catalog of pest and disease outbreak 

occurrences in a nationally accessible database. This 

database allows USDA, in collaboration with the states, to expedite initial control responses, verify the physical 

boundaries of an outbreak and initiate regional or national containment strategies should an outbreak occur. These 

two networks continue to study new diseases regularly to protect the Nation from accidental or deliberate 

introduction of diseases. 

Key Outcome 

Improve Animal and Plant Diagnostic Laboratory 

Capabilities 

Measure 4.2.2: Improve Animal and Plant Diagnostic Laboratory Capabilities 
ANNUAL PERFORMANCE REPORT 59

Exhibit 25: Ensure the Capabilities of Plant and Diagnostic Laboratories are Improved 

Annual Performance Goals, Indicators, 

and Trends 

2005 2006 2007 2008 Fiscal Year 2009 

Target Actual Result 

4.2.2 Improve the capabilities of animal and plant 

diagnostic laboratories. 

• Specific plant diseases (and insects) labs 

are prepared to detect 

5 6 7 8 9 10 Met 

• Specific animal diseases labs are prepared 

to detect 

7 8 8 9 9 10 Met 

Data Assessment of Performance Measures 4.2.2 

• Completeness of Data—The data are complete when the scheduled testing is finished; the samples are analyzed and the quarantined animals are 

tested and released. The cutoff for the data is set at one month before the reporting date. 

• Reliability of Data—The data are considered reliable when USDA’s Deputy Administrator of Veterinary Services has reviewed and approved them. 

• Quality of Data—The issues related to collection and reporting of performance information are described above. 

Analysis of Results 

The performance goal was met. Trend data show a steady increase in plant and animal diseases the networks are 

prepared to detect. 

Plant disease (and insect) detection criteria have been developed for: 

• Soybean rust; 

• Sudden oak death; 

• Ralstonia stem rot; 

• Plum pox virus; 

• Pink hibiscus mealybug; 

• Potato wart; 

• Huanglongbing (citrus greening); 

• Potato Cyst Nematode; 

• Late Blight; and 

• Beet Curly Top. 

The last two diseases were added in FY 2009. The plant laboratory network partnered with other cooperative 

extension officials to quickly and efficiently conduct a widespread outreach and detection campaign on tomato and 

potato Late Blight. This fungal disease, which triggered the great Irish potato famine of the 1840s, became a 

significant domestic problem in FY 2009. A new diagnostic test was also implemented for Beet Curly Top, a disease 

spread by insects that affects tomatoes, sugar and table beets, beans, and cucurbits. Beet Curly Top also was 

integrated into the Legume Integrated Pest Management (IPM) Pest Information Platform for Extension and 

Education (ipmPIPE). The ipmPIPE provides real-time information to disease detectors, including best practices 

for optimum scouting. 

Animal disease-detection criteria have been developed for the following nine high-consequence diseases: Foot-andMouth Disease, Exotic Newcastle Disease, Classical Swine Fever (or hog cholera), High Pathogen Avian Influenza, Low 

Pathogen Avian Influenza, Bovine Spongiform Encephalopathy, Scrapie, Chronic Wasting Disease, and Rift Valley Fever. 

Rift Valley Fever, added in FY 2008, is a fever-causing disease that affects livestock (including cattle, buffalo, sheep, 

and goats) and humans. In FY 2009, the National Animal Health Laboratory Network (NAHLN) conducted a 

reorganization based on the recommendations of an independent review panel. This reorganization was designed to 

ultimately increase the network’s capability, capacity, and efficiency. NAHLN is part of a national strategy to 

coordinate the Nation’s Federal, State, and university laboratory resources. 
60 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Challenges for the Future

Future challenges to improving laboratory capabilities include improving plant laboratory quality assurance and 

first-detector training. Plans are underway to cooperate with USDA’s Plant Protection and Quarantine Program 

and Center for Plant Health, Science, and Technology to structure a quality-assurance system consistent with the 

policies of the International Organization for Standardization (ISO). ISO is a federation of 125 national bodies 

that promotes standardization and facilitates international exchange of goods and services through the development 

of technical, scientific, and quality standards. Improved first-detector training, conducted through the cooperative 

extension system, will improve laboratory sample quality and speed initial detection of high-consequence 

pathogens. 

Selected Results in Research, Extension, and Statistics 

Using Salmonella to prevent Campylobacter Contamination. USDA funded faculty and graduate students at a veterinary 

school developed a new poultry vaccine using Salmonella to induce chicks to make antibodies to Campylobacter proteins in their 

intestines—where the infection begins. The vaccination process is simple, easy to produce and protective to the chick. The 

Salmonella lives four to five days, enough time to stimulate antibody production, and dies. The goal is to halt the contamination 

before it spreads and survives on raw chicken sold in stores. The vaccine may be available in 3 to 5 years. The vaccine's effect 

could be significant: about 8.9 billion broilers go to market annually in the U.S., with a value of $21.5 billion. 

Protecting the Honey Bee. USDA-funded researchers have teamed up with Mite Zapper (Detroit, MI) to further refine a mite 

control device for honey bee colonies. This research increases knowledge about mode of actions or effects of pests or diseases 

on honey bees to achieve better control of pests and diseases and to gain increased honey production and more effective 

pollination of agricultural crops. 

Identification of H2N3 influenza A viruses from swine in the United States. Although viruses of each of the 16 influenza A

hemagglutinin (H, the main binding site for flu viruses) subtypes are potential human pathogens, only viruses of the H1, H2, and 

H3 subtype are known to have successfully established infections in humans. H2 influenza viruses have been absent from human 

circulation since 1968, and as such pose a substantial human pandemic risk. USDA’s National Animal Disease Center (NADC) 

scientists reported this year the isolation and characterization of an avian/swine virus reassortant (two viruses that interchange 

their genes resulting in a new virus) H2N3 influenza A virus isolated from diseased swine from two farms in the United States. 

This virus contained an amino acid on the H2 protein that has been associated with increased binding affinity to the mammalian 

receptor for influenza viruses, and the H2N3 viral isolate was shown to cause disease in experimentally infected swine. In 

addition, the swine H2N3 virus was infectious and highly transmissible in swine and ferrets. These findings suggest that this H2N3 

virus has undergone some adaptation to the mammalian host and that its potential spread should be very closely monitored. 

Access to the virus for potential vaccine development is available should the H2N3 swine influenza virus re-emerge and begin to 

circulate among the U.S swine population. 
ANNUAL PERFORMANCE REPORT 61

Strategic Goal 5: Improve the Nation’s Nutrition and Health 

Nutrition is the link between agriculture and the Nation’s health. USDA made significant progress in advancing its 

nutrition and health goal in FY 2009. The Department’s leadership in Federal nutrition assistance programs made a 

healthier diet available for millions of children and low-income families. Cutting-edge nutrition promotion efforts 

of the Center for Nutrition Policy and Promotion (CNPP) harnessed interactive technologies to motivate all 

Americans to make positive dietary behavioral changes consistent with the Dietary Guidelines for Americans. CNPP 

develops and promotes dietary guidance that links scientific research to consumers’ nutrition needs. The Dietary 

Guidelines for Americans provides authoritative advice for all persons about how good dietary habits can promote 

health and reduce risk for major chronic diseases. 

Key FY 2009 accomplishments include: 

• Promoting access to the Supplemental Nutrition Assistance Program (SNAP). Formerly the Food Stamp 

Program, SNAP is the Nation’s largest nutrition assistance program. This program is at record-breaking levels 

and serves roughly 34 million people monthly. The latest information on the rate of participation among 

eligible people showed that, in 2007, 66 percent of all eligible persons participated, compared with 54 percent 

in 2001; 

• Promoting Nutrition Education by Using the MyPyramid Food Guidance System (MyPyramid). MyPyramid 

offers the American public an individualized approach to nutritional well-being and active living. This network 

of nutrition education tools, located at MyPyramid.gov, translates the Dietary Guidelines for Americans into 

understandable concepts for consumers. Users can access the site to assess and personalize their diet and 

physical activity plans. Its newest tool, MyPyramid for Preschoolers (ages 2 to 5 years old), helps parents help 

their young children eat well and be active and healthy. Consumers continue to respond enthusiastically to this 

educational approach. Thus, CNPP continues to develop new educational tools to promote nutrition education 

to specific population groups. In 2009, MyPyramid.gov and other nutrition related Web-based tools were 

accessed or used more than 3.5 billion times. This usage brought the overall total since April 2005 to 7.5 

billion; and 

• Continuing to ensure that SNAP benefits are accurately issued. The SNAP payment accuracy rate for FY 2008, 

announced in 2009, was 94.99 percent. This new record high reflects effective partnerships with State 

administering agencies. It also draws the extensive use of policy options to streamline program administration 

while improving access for working families. 

OBJECTIVE 5.1: ENSURE ACCESS TO NUTRITIOUS FOOD 

Overview 

Nutrition assistance programs represent the core of the 

Nation’s effort to improve food security and reduce and 

prevent hunger. USDA’s commitment to these programs is 

part of its goal to ensure that all eligible Americans who 

wish to participate can receive program services easily and 

with dignity and respect. The programs’ strong FY 2009 performance reflects their fundamental strengths. It also 

demonstrates the Department’s efforts to promote access and improve service to its clients in cooperation with our 

State partners. 

Key Outcome 

Reduced Hunger And Improved Nutrition 

Measure 5.1.1: Participation levels for the major Federal nutrition assistance programs 
62 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Exhibit 26: Improve Access to Nutritious Food 

Annual Performance Goals, Indicators, 

and Trends 

2005 2006 2007 2008 Fiscal Year 2009 

Target Actual Result 

5.1.1 Participation levels for the major Federal 

nutrition assistance programs (millions per 

month): 

• Supplemental Nutrition Assistance Program 

(SNAP) Avg. (Monthly) 

25.7 26.7 26.5 28.4 32.6 33.9 

Met 

• National School Lunch Program (NSLP) 

Avg.(Daily) 

29.6 30.1 30.5 30.9 31.6 31.6

• School Breakfast Program (SBP) Avg. 

(Daily) 

9.3 9.8 10.1 10.6 11.0 11.0

• Special Supplemental Nutrition Program for 

Women, Infants, and Children (WIC) 

Program (Monthly) 

8.0 8.1 8.3 8.7 9.3 9.1

FY 09 data as of June 2, 2009. 

Rationale for Met Range: Thresholds for 5.1 reflect the margin of error in forecasts of future participation. For SNAP participation, results from 2 independent assessments 

suggest that predictions of the number of SNAP participants are accurate to within plus-or-minus 7.5 percent (on average). The threshold range for the school meals and 

WIC participation levels are 5 percent and 3 percent respectively. The range reflects the pattern of variance between actual and target performance for both programs over 

the past five years.

• Data assessment metrics to meet the target allow for an actual number in the range (in millions) 31.4-36.5 for SNAP, 30.0- 33.2 for NSLP, 10.5-11.6 for SBP, and 9.0-

9.6 million for WIC. 

Data Assessment of Performance Measures 5.1.1 

Participation data are drawn from USDA administrative records. State agency reports are certified accurate and submitted to regional offices. There, they 

are reviewed for completeness and consistency. If the data are acceptable, the regional analyst posts them to the National Data Bank (NDB) Preload 

System. NDB is a holding area for data review prior to release. Otherwise, regional-office personnel reject the report and the State agency is contacted. 

Data posted by regional personnel into NDB are reviewed at USDA. If data are reasonable and consistent with previous reports, they will be downloaded 

to NDB for public release. If not, USDA works with regional offices and States to resolve problems and inconsistencies. This process of review and 

revision ensures that the data are as accurate and reliable as possible. 

• Completeness of Data—Figures for SNAP and WIC participation represent 12-month fiscal-year averages. Figures for NSLP and SBP are based on 

9-month (school year) averages. Participation data are collected and validated monthly before being declared annual data. Reported estimates are 

based on data through March 2009, as available, June 2, 2009. 

• Reliability of Data—The data are highly reliable. Participation-data reporting is used to support program financial operations. All of the data are used 

in published analyses, studies and reports. They also are used to support dialogue with and information requests from the Government Accountability 

Office (GAO), the Office of Inspector General (OIG) and the Office of Management and Budget. 

• Quality of Data—As described above, the data used to develop this measure are used widely for multiple purposes, both within and outside USDA.

The measure itself is reported in stand-alone publications as an important, high-quality indicator of program performance. 

Analysis of Results 

As program participation is voluntary, projections are based on economic and other factors that impact the likely 

behavior of eligible populations. An analysis of the most recent information available follows. 

Supplemental Nutrition Assistance Program (SNAP)—Program participation increased almost 21 percent 

between May 2008 and May 2009. USDA’s efforts to support and encourage SNAP participation included: 

• Rapidly implemented key provisions of the 2008 Farm Bill that expanded availability, and increased benefits, 

and simplified program administration; 

• Continued efforts with States to develop outreach strategies. Forty out of 53 State agencies now have formal 

outreach plans or other documented outreach activity; 

• Supported innovative State practices to promote access by simplifying the application process. Twenty-three 

states have an Internet-based application filing system. Nearly 25 states allow telephone interviews. Twentyseven states use call centers; 
ANNUAL PERFORMANCE REPORT 63

• Implemented ARRA provisions on time to increase benefits and eliminate time limits for able-bodied adults 

without children. ARRA also provided nearly $300 million in 100 percent State administrative expense funding 

to State agencies in response to the economic downturn. ARRA provisions are designed to provide a stimulus 

to the U.S. economy in the wake of the economic downturn; and 

• Provided numerous strategies to help States manage workloads as a result of increasing participation and 

decreasing State resources due to the economic downturn. 

USDA also measures the number of people eligible for the program. This process determines the rate at which 

eligible people are participating. The latest study shows that, in 2007, 66 percent of all persons eligible for SNAP 

participated. The number reflects an increase in eligible individuals greater than the increase in participants. While 

the number of participants increased 2 percent, the number of eligible participants increased by 4 percent. Also in 

2007, participants received 81 percent of all benefits available if every eligible person participated. This number 

indicates that the program is effectively reaching those most in need. 

National School Lunch Program (NSLP)—Participation levels reached 31.6 million in FY 2009. This number is a slight 

increase from FY 2008. It continues the recent trend of increases. NSLP provides nutritious meals to millions of 

children at school. More than 100,000 schools and residential child care institutions operated the program in 

FY 2009. 

School Breakfast Program (SBP)—Participation levels reached 11 million in FY 2009, continuing a trend of increases 

during the last several years. SBP makes healthy, nutritious meals available to millions of children at the start of each 

school day. More than 85,000 institutions operated the program in FY 2009. 

The Special Supplemental Nutrition Program for Women, Infants and Children (WIC)—In FY 2009, approximately 9.1 million 

participants received WIC benefits. USDA addresses the health and nutritional needs of at risk, low-income 

pregnant, breastfeeding and postpartum women, infants, and children up to 5 years of age with supplemental food 

packages, nutrition education, and health and social services referrals. 

Challenges for the Future 

Studies and analyses show that there continue to be large numbers of eligible people who do not participate in 

Federal nutrition assistance programs. Many may not be aware that they are eligible. Therefore, efforts to improve 

access to and promote awareness of these programs, and seeking improvements in policy and operations that make 

it easier to apply, are ongoing challenges. 

The quality of program delivery by third parties—hundreds of thousands of State and local Government workers 

and their cooperators—is critical USDA’s efforts to reduce hunger and improve nutrition. 

In FY 2009, the Department and its program delivery partners sustained effective access to the programs. The 

period was marked by greater-than-targeted participation in SNAP and expected levels of average monthly 

participation in NSLP, SBP, and WIC. 

Selected Results in Research, Extension, and Statistics 

Healthier Food Research. USDA-funded scientists have been advancing the knowledge of the role of black raspberries in 

cancer management. Findings from these studies suggest that a mixture of preventative agents, which berries provide, may more 

effectively prevent cancer than a single agent that targets only one or a few genes. Black raspberries have vitamins, minerals,

phenols and phytosterols, many of which individually are known to prevent cancer in animals. Freeze drying the berries 

concentrates these elements about ten times, giving a power pack of chemoprevention agents that can influence the different 

signaling pathways that are deregulated in cancer. 

Creating a New Index for Ranking Nutritional Value of Food. Through USDA National Research Initiative funding, scientists 

created a Relative Antioxidant Index (RACI) by statistically integrating the antioxidant capacity values generated using seven 

different chemical methods. The RACI was validated using 20 commonly consumed vegetables. This index provides 

standardization of information about the antioxidant content of various fruits and vegetables and is useful as a ranking tool for use 

by the food industry, scientists, and consumers. 
64 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

OBJECTIVE 5.2: PROMOTE HEALTHIER EATING HABITS AND LIFESTYLES 

Overview 

Healthy eating and physical activity practices help reduce 

the risk of death or disability from a wide range of chronic 

diet-related illnesses. USDA uses Federal nutrition policy 

and nutrition education, both for the general public and 

those served by the nutrition assistance programs, to provide 

scientifically based information about healthful diets and 

lifestyles. 

USDA and the U.S. Department of Health and Human Services co-developed the Dietary Guidelines for Americans. 

The guidelines provide advice about food choices that promote health and prevent disease. The MyPyramid food 

guidance system provides the educational tools to help Americans take the necessary “Steps to a Healthier You.” A 

range of cutting-edge information tools, many available on the Internet, offer a personalized eating plan with the 

foods and amounts that are right for a given individual. 

The Department will continue promoting diets and behaviors as a vital public-health issue. The Dietary Guidelines 

for Americans is the cornerstone of Federal nutrition guidance. USDA uses the 2005 Dietary Guidelines for Americans

and MyPyramid to advise people in on how to improve their overall health through proper nutrition. The 

Department uses partnerships and “information multipliers” – such as shopkeepers who post public service 

messages in their shops, or school teachers who teach their students about nutrition – to maximize the reach and 

impact of its interventions, both within Federal nutrition-assistance programs and with the general public. 

Analysis of Results 

USDA continued its leadership role in promoting nutrition guidance through educational tools designed to 

motivate people to live healthier. For example: 

• The Department distributed more than 3 billion pieces of nutrition guidance materials distributed via the 

Internet and print materials; 

• USDA continued its collaborative effort to increase communication of dietary and physical activity guidance 

messages. The program “Partnering with MyPyramid,” (http://www.mypyramid.gov/Challenge/index.html) 

with more than 140 members, showcases the role of various industries and others (e.g., youth groups) as 

Government partners to encourage healthier eating and physical activity behaviors among families. The 

partnership is designed to empower nutrition gatekeepers by providing easy to apply guidance for modeling a 

healthy lifestyle. It also provides information to help them make healthy food choices for themselves and their 

families where they prepare foods, work, play, and purchase foods; and 

• “MyPyramid for Preschoolers” is the newest educational tool. Located at MyPyramid.gov, it helps parents create 

a customized eating plan for their preschooler. The tool also encourages parents to explore ways to help their 

preschooler (1) grow up healthy, (2) develop healthy eating habits, (3) try new foods, (4) play actively every day, 

and (5) follow food safety rules. Sample meals and snack patterns are designed to help parents translate 

MyPyramid Plan daily amounts into individual meals and snacks. Ideas are also offered for having a preschooler 

help the food preparer in the kitchen—a good way to encourage a child to try new foods. 

Key Outcome 

Healthful Eating and Physical Activity across 

the Nation 

Measure 5.2.1: Application and usage level of nutrition guidance tools 
ANNUAL PERFORMANCE REPORT 65

Exhibit 27: Promoting Healthier eating Habits and Lifestyles 

Annual Performance Goals, Indicators, 

and Trends 

2005 2006 2007 2008 Fiscal Year 2009 

Target Actual Result 

5.2.1 Application and usage level of nutrition 

guidance tools (pieces of nutrition guidance 

distributed, in billions) 

n/a 1.5 2.6 3.2 2.5 3.5 Exceeded 

Rationale for Met Range: Thresholds reflect trends of MyPyramid.gov “hits” and print materials distributed (MyPyramid and the Dietary Guidelines for Americans). 

• Data assessment metrics to meet the target allow for an actual number in the range 2.3-2.7 billion. 

Data Assessment of Performance Measures 6.4.1 

Data on the application and usage level of nutrition guidance tools are drawn from electronic records associated with www.MyPyramid.gov, survey 

analysis and inventory records of print materials. 

• Completeness of Data—Data related to MyPyramid.gov are collected instantaneously, indicating the number of e-hits to the Web site and the 

number of registrations to the MyPyramid Tracker. For print materials, data from national headquarters represent the difference between what was 

distributed versus what remains in the inventory. 

• Reliability of Data—The data are highly reliable. The number of hits is instantaneously recorded, the online survey is continual and well-tested. The 

number of distributed print materials is tracked. Consumer satisfaction data are collected by predictive methodology of the American Customer 

Satisfaction Index (ACSI). The ACSI methodology is a measurement system that provides a rigorous scientific foundation to quantify the value of 

customer satisfaction. The survey used to test MyPyramid.gov is presented randomly during a customer’s Web session subject to strategic 

parameters that qualify respondents. It incorporates a 10-point radio button scale for greater differentiation of responses. 

• Quality of Data—The data are used to report on the success of the MyPyramid Food Guidance System. The system offers simultaneous recording of 

MyPyramid.gov usage and a thorough and continual customer-satisfaction survey. Thus, usage and customer-satisfaction levels are high-quality 

indicators of the degree to which USDA promotes and customers respond to interactive tools and print materials designed to help Americans 

personalize their diets. 

Challenges for the Future 

Crafting more effective messages and nutrition education programs to help people make better food choices 

requires understanding their current choices. There also must be an awareness of the relationships between these 

choices and their attitudes towards and knowledge of diet/health links. The data that can address this information 

gap, however, are limited. 

The ability of existing nutrition guidance and promotional materials to achieve behavior change remains 

challenging. Limited resources are available for nutrition promotion relative to other messages, products, and 

practices in the food marketplace. Physical activity and other lifestyle issues also significantly impact body weight 

and health. 

USDA tracks its annual performance in promoting healthful eating and physical activity by monitoring its annual 

distribution of nutrition education materials. Over the longer term, the Department assesses the effect of these 

efforts with its Healthy Eating Index (HEI). HEI assesses the conformance to Federal dietary guidance and is 

based on nutrition surveillance data. 
66 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Selected Results in Research, Extension, and Statistics 

Healthier Eating Habits of Low-Income Audiences Studied. With funding by USDA, researchers tested their hypothesis that 

lower-cost diets among low-income women would be higher in calories but lower in nutrients. Their tests concluded that the more

energy-dense (high-calorie) the diet, the less nutritious it is likely to be. Additionally, low-income women who ate more nutritious 

diets spent more money per calorie than those who ate less nutritious diets. The consumption of a higher energy-dense diet was 

associated with higher intakes of fat and lower intakes of calcium and vitamin A. Results of this project point out the need for 

more nutrition guidance materials for low-income audiences. 

Adherence to the 2005 Dietary Guidelines for Americans lowers risk for cardiovascular disease. USDA and the U.S. 

Department of Health and Human Services share responsibility for revising the Dietary Guidelines for Americans every five years. 

In the Framingham Heart Offspring cohort study, USDA scientists in Boston, MA found a 50% lower prevalence of metabolic 

syndrome in men and women with high adherence to the Dietary Guidelines for Americans. Metabolic syndrome, characterized by 

abdominal obesity and the inability to use insulin efficiently, is a forerunner of type 2 diabetes and increases risk for coronary 

heart disease. 

Many Americans receive inadequate amounts of vitamins A, C, and E. Using data from the “What We Eat in 

America/NHANES 2001-2002” national dietary survey, USDA scientists in Beltsville, MD found a high prevalence of inadequate 

intakes of vitamins A, E, and C for most age and gender groups in the United States. 

The U.S. Organic Sector: Emerging Issues and Policy Dimensions. The federal organic regulatory program includes a “USDA 

organic” label that has bolstered consumer assurance and helped drive a rapid expansion in sales. Domestic supply now trails 

demand for many products. The first Congressional hearing on organic agriculture was held in 2007, and stakeholders called for 

additional research and other tools to help the domestic farm sector meet burgeoning consumer demand. USDA research 

describes changes in the character of the U.S. organic sector in response to this growth, and highlights some emerging issues 

and concerns. Recent findings provide supporting analysis on issues across the organic supply chain, from structural changes in

the organic farm sector to the socioeconomic characteristics of organic consumers. 

OBJECTIVE 5.3: IMPROVE NUTRITION ASSISTANCE PROGRAM MANAGEMENT AND CUSTOMER SERVICE 

Overview 

USDA looks to ensure that nutrition-assistance programs 

serve those in need at the lowest possible costs. The 

Department also strives to offer its programs with a high 

level of customer service. Managing Federal funds for 

nutrition assistance effectively, including prevention of 

program error and fraud, is important for maintaining 

program integrity. 

Analysis of Results 

SNAP payment accuracy reached a record-high 94.99 percent in 2008, the last year for which data are available. 

The number reflects the excellent performance by State agencies in administering the program. This combined rate 

reflects 4.01 percent in overpayments and 1.00 percent in underpayments for a total of 5.01 in erroneous payments. 

Thirty-five States had a payment accuracy rate greater than 94 percent, including 15 States with rates greater than 

96 percent. 

Key Outcome 

High Level of Integrity in the Nutrition Assistance 

Programs 

Measure 5.3.1: Increase SNAP Payment Accuracy Rate 
ANNUAL PERFORMANCE REPORT 67

An enhanced Partner Web (an Intranet for State SNAP agencies) and the National Payment Accuracy Work 

Group (consisting of representatives from USDA headquarters and regional offices) have allowed the Department 

to realize consistent increases in SNAP payment accuracy. These efforts help make timely and useful payment 

accuracy-related information, tools, and best practices available across the country. 

Additionally, the Department continued to use an early detection system to target States that may be experiencing a 

higher incidence of errors based on preliminary quality control (QC) data. Actions then are taken by regional 

offices to address these situations in the individual States. 

Exhibit 28: Increase Efficiency in Food Management 

Annual Performance Goals, Indicators, 

and Trends 

2005 2006 2007 2008 Fiscal Year 2009 

Target Actual Result 

5.3.1 Increase SNAP Payment Accuracy Rate 

(Baseline: 2001 = 91.3%) 

94.1% 94.2% 94.4% 94.3% 94.99% Not 

Available 

Deferred 

FY 2009 data will be available in 2010.

Rationale for Met Range: The 95-percent confidence interval around the estimate of payment accuracy is ±.33. Data assessment metrics to meet the target allow for an 

actual number in the range 94.1-94.7 percent. 

Data Assessment of Performance Measures 5.3.1 

SNAP, formerly the Food Stamp Program, uses annual payment accuracy data from the Quality Control (QC) process to support its management. The 

data are based upon statistically valid methodology. The QC process uses a systematic random sampling of SNAP participants to determine a combined 

payment error rate for each State. The combined error rate is composed of over-issuances and under-issuances of SNAP benefits. A regression formula 

is applied to the results of the reviews to calculate official error rates. 

State agencies review selected cases monthly to determine the accuracy of the eligibility and benefit-level determination. The process includes a client 

interview and verification of all elements of eligibility and the basis of issuance. Federal reviewers validate a sample of the State’s reviews by conducting a 

re-review. The process has proven to be a sound method of calculating reliable data. 

• Completeness of Data—The most current data available for this measure are for FY 2008. The payment accuracy rate of 94.99 exceeded the 

Performance Goal/Measure target. FY 2009 performance will be deferred until next year’s report, once data on that fiscal year are available. 

• Reliability of Data—QC data is valid and accepted by State SNAP agencies as a basis for performance-incentive payments and penalties. The 

Government Accountability Office and the Office of the Inspector General also use it regularly. 

• Quality of Data—As described above, the data used to develop this measure are used widely for multiple purposes, both within and outside USDA.

The measure itself is frequently cited as an important, high-quality indicator of program performance. 

Challenges for the Future 

Some improper payment risks are inherent to the legislatively mandated program structure. This structure is 

intended and designed to be easily accessible to people in special circumstances and settings. USDA must shape its 

management approach in light of the need to make services convenient and accessible to participants. State and 

local Governments also bear direct responsibility for delivering the programs. Thus, the Department must work 

with these groups to address improper payment problems through monitoring and technical assistance. This 

approach requires adequate numbers of trained staff supported by a modernized information technology 

infrastructure to ensure full compliance with national program standards. 

Despite this strategy, two significant challenges will impact future success. Congressional action has changed the 

quality control process, lowering the risk of penalties for poor State agency performance. However, State agencies 

have, for the most part, risen to the challenge and continue to achieve a high level of payment accuracy. 

Additionally, State budgets have been and will continue to be extremely tight. This factor could hurt State 

performance in payment-accuracy. USDA will continue to provide technical assistance and support to maintain 

payment accuracy in the context of this changing program environment. 
68 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Strategic Goal 6: Protect and Enhance the Nation’s Natural Resource Base and Environment 

OBJECTIVE 6.1: PROTECT WATERSHED HEALTH TO ENSURE CLEAN AND ABUNDANT WATER 

Overview 

Healthy landscapes and efficient water usage are essential to 

ensuring clean and abundant water resources. USDA 

manages national forests and grasslands to protect 

watersheds. The Department also provides science-based 

technical assistance to land users on privately owned lands 

to help protect and enhance the Nation’s natural resources. With assistance delivered primarily through the 

Conservation Technical Assistance Program (CTA), USDA conservation experts assisted land users with 

conservation plans covering more nearly 37.6 million acres of working lands in FY 2009. These plans provide 

producers with information on soil quality, condition of their grazing lands and woodlands, irrigation water 

management, wildlife habitat needs, and measures to improve or protect soil, water and air quality. The 

Department also assisted agricultural producers with implementing water quality improvement practices on 35.2 

million acres. Much of USDA’s assistance for water quality is directed towards livestock producers to reduce the 

risk of livestock waste and nutrients entering waterways. The Department also helped producers improve their 

irrigation practices on more than 2 million acres, a significant resource issue since a third of all ground and surface 

water is used for agricultural irrigation. USDA also provides time-sensitive water supply forecasting based on snow 

survey data. 

USDA also provided producers with financial assistance to help offset the cost of installing riparian and grassland 

buffers, and other conservation practices. Major programs providing financial assistance for water resources 

included the Environmental Quality Incentives Program (EQIP) and the Conservation Reserve Program (CRP). 

EQIP is a voluntary conservation program that provides assistance to landowners and agricultural producers in a 

manner that promotes agricultural production and environmental quality as compatible goals. CRP is a voluntary 

program for agricultural landowners that allows them to receive annual rental payments and cost-share assistance to 

establish long-term, resource-conserving covers on eligible farmland. 

Analysis of Results 

USDA continues to make significant progress in protecting watershed health and ensuring clean and abundant 

water. The Department exceeded its target for CTA and met its target for EQIP by helping livestock producers 

apply comprehensive nutrient management plans (CNMPs). CNMPs are conservation systems for animal-feeding 

operations designed to ensure that the collection, storage, and utilization of animal waste are managed in ways that 

minimize the potential for environmental damage. These systems also include conservation practices implemented 

Key Outcome 

Clean and Abundant Water 

Measure 

6.1.1: Comprehensive Nutrient Management Plans applied 

• Conservation Technical Assistance 

• Environmental Quality Incentives Program 

6.1.2: Increase Conservation Reserve Program acres of riparian and grass buffers 
ANNUAL PERFORMANCE REPORT 69

for nutrient management, erosion control, and buffers to protect bodies of water. As animal agriculture has become 

more concentrated, public concern about potential environmental damage has increased. USDA focuses on helping 

producers comply with State and local regulations to minimize the potential for damage to water or air resources 

from livestock operations. EQIP performance reflects the continuing trend of producers utilizing financial 

assistance to apply CNMPs. EQIP financial assistance is used for capital-intensive, structural practices and the 

adoption of practices to improve the management of working land. 

Riparian and grass buffers intercept sediment and nutrients before they reach surface waters. To measure 

performance in achieving its strategy, USDA monitors acreage of agricultural lands to be enrolled as buffer zones in 

CRP. During the past five years, the number of acres set aside as buffer areas under the CRP program has increased 

steadily. CRP met its performance target of 2.01 million acres for the measure. For FY 2009, producers have set 

aside approximately 2.03 million acres as CRP buffer areas. In 2009, these buffers intercepted at least 300 million 

pounds of nitrogen and 65 million pounds of phosphorus before they entered surface waters. 

Exhibit 29: Healthy Watersheds, High Quality Soils, and Sustainable Ecosystems 

Annual Performance Goals, Indicators, 

and Trends 

2005 2006 2007 2008 Fiscal Year 2009 

Target Actual Result 

6.1.1 Comprehensive Nutrient Management Plans 

applied (number of plans) 

• Conservation Technical Assistance 2,421 2,269 1,911 1,745 1,300 1.485 Exceeded

• Environmental Quality Incentives Program 2,032 2,774 2,490 2,520 2,000 2,019 Met

6.1.2 Increase Conservation Reserve Program 

(CRP) acres of riparian and grass buffers 

(million acres, cummulative) 

1.75 1.86 1.95 2.001 2.01 2.03 Met 

1 Revised 7/09 due to updated enrollment data.

Rationale for Met Range:

• 6.1.1: 1) Conservation Technical Assistance. Data assessment metrics to meet the target allow for an actual number in the range 1,170 – 1,430. 

2) Environmental Quality Incentives. Data assessment metrics to meet the target allow for an actual number in the range 1,800 – 2,200. 

• 6.1.2: Data assessment metrics to meet the target allow for an actual number in the range 1.90 - 2.11 million acres. 

Data Assessment of Performance Measures 6.1.1 

• Please refer to goal 6, Objective 6.4.1. 

Data Assessment of Performance Measures 6.1.2 

The data source for this measure is the USDA National CRP Contract and Offer Data Files. 

• Completeness of Data—CRP targets and actual data are cumulative. Data are based on estimated results through September 30, 2009. The 

measure reports national acres under contract with the following types of conservation buffers: filter strips, riparian buffers, and wildlife habitat buffers 

on marginal pasture land. There are no known data limitations. 

• Reliability of Data—USDA considers the data to be reliable. CRP is authorized through FY 2012. 

• Quality of Data—While current information only provides the number of acres in these buffers, ongoing research will show models that estimate 

sediment and nutrients intercepted by these buffers. These estimates may also be used to track performance. 

The Department has directed ARRA funds to cost-effective projects that provide public safety, flood protection, 

and economic and environmental benefits. USDA has approved nearly 400 projects to acquire floodplain easements 

($145 million), invest in watershed infrastructure improvements ($145 million), and rehabilitate existing watershed 

dams ($50 million) where there is the greatest risk of infrastructure failure and threat to life and property. Benefits 

include the protection of life and property by reduced threats and damage from flooding, improved water quality, 

safe and reliable water supplies, enhanced fish and wildlife habitat, erosion control, improved quality of life through 

expanded recreational opportunities, and added community green space. Detailed information on these projects can 

be found at http://www.nrcs.usda.gov/programs/recovery/index.html#State_Recovery_Project_Fact_Sheets. USDA 

received more than 4,500 applications totaling nearly $1.8 billion. This demand necessitated a ranking process to 

ensure that eligible projects yielding the greatest public and environmental benefits were funded. 
70 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Challenges for the Future

The quality of ground and surface waters to support intended uses and the supply of these waters to meet 

expanding demand are continuing concerns. Challenges to maintaining the rate of improvement will include the 

continuing concentration of livestock operations, increased acreage cropped for ethanol and cellulosic sources of 

biomass, and the risk of increased erosion from more intense storm events. Competition for water will continue to 

increase, especially in areas with limited or variable water supply. The expansion of cropped acres to produce energy 

feedstocks also may increase agricultural demand for water. Climate change impacts also affect water quality and 

quantity. Drought and variable precipitation in many parts of the Nation could result in shortages in areas that have 

had adequate supplies in the past. 

Several provisions of the 2008 Farm Bill offer opportunities for continued efforts to ensure clean and abundant 

water. Among these are the Chesapeake Bay Watershed and Agricultural Water Enhancement Programs, and the 

reauthorization of programs for Watershed Rehabilitation, the Great Lakes Basin, and the Wetlands Reserve 

Program. 

If markets support increased production, agricultural producers may continue to plant crops on environmentally 

sensitive land rather than establishing long-term conservation covers or buffers. CRP enrollment continues to be 

influenced by high commodity prices. These prices have reduced the attractiveness of retiring cropland from 

production and enrolling it in CRP. 

USDA uses the multi-agency Conservation Effects Assessment Project (CEAP) to quantify the environmental 

benefits of conservation practices. Private landowners are cooperating with USDA in the CEAP effort. Watershedbased assessments are directed at evaluating interactions among practices and hydrology in the landscape. With 

additional knowledge of the dynamic relationship between conservation activities undertaken on individual farms 

and ranches and the resulting off-site benefits, USDA can more effectively utilize its programs. Much of this effort 

is focused on the impacts of livestock, irrigation and drainage management, and conservation practices with 

significant watershed level impacts. 

Selected Results in Research, Extension, and Statistics 

“Green Payments” in Agriculture. A recent USDA report addresses the potential advantages and disadvantages of linking 

commodity and conservation programs into a single policy tool. The research examined the distribution of income support and 

environmental gains from various scenarios, combining the income support objective of existing commodity programs and 

environmental objectives of existing USDA conservation programs. Because commodity and conservation payments tend to go to 

different producers on different types of land, scenario outcomes varied. Conservation-based payments yielded larger 

environmental gain and substantial income support, although the distribution of income support across farms differed markedly 

from that of current commodity programs. 

Surface applications of poultry litter are safe at appropriate agronomic rates. Poultry litter contains fecal bacteria, sex 

hormones, and low levels of antibiotics; therefore, it is important to determine whether poultry litter poses a risk to public health. 

USDA researchers in Athens, Georgia, conducted controlled rainfall simulations on long-term no-till and conventional tillage fields 

with poultry litter applications at rates recommended for crop production. They found no increase in the loads of fecal bacteria, 

hormones, or antibiotics in runoff to surface waters and concluded that under current guidelines there is little potential of 

contaminating surface waters with pathogens or hormones. This is important information for the poultry industry and 

environmental protection agencies because surface waters contaminated with pathogens or hormones from poultry litter are likely

an indication of mismanagement of litter applications. 

Improved water quality. Loss of nutrients from heavily fertilized fields can lead to water quality degradation in waterways. 

Nutrient contamination is a major water quality concern and its remediation a national priority. A novel approach to drainage water 

management in areas where diffuse flow is concentrated is to filter the runoff through low cost materials such as industrial 

byproducts. USDA scientists in Columbus, Ohio, have screened 55 industrial byproducts and have found five that hold promise 

for removing nitrate, phosphate, and atrazine from drainage waters. 
ANNUAL PERFORMANCE REPORT 71

OBJECTIVE 6.2: ENHANCE SOIL QUALITY TO MAINTAIN PRODUCTIVE CROPLAND BASE 

Overview 

High-quality soils support the efficient production of crops 

for food, fiber, and energy. Proper soil management 

maximizes agricultural production and improves the 

environment. In 2009, USDA conservation experts assisted 

people in writing or updating conservation plans on private 

land covering more than 11.7 million acres of working cropland. The Department helps producers install 

conservation practices and systems that meet established technical standards and specifications. USDA worked with 

producers to implement conservation practices on 14.4 million acres of cropland. The Department also provides 

financial assistance to encourage producers to adopt land treatment practices proven to provide significant public 

benefits. Financial assistance through EQIP is available to producers to install structural measures or adopt 

management practices to reduce erosion and protect cropland. The new Conservation Stewardship Program (CSP) 

provides opportunities for producers to implement higher levels of management and conservation activities to 

improve soil quality. Through 2009, CRP protected 33.7 million acres of fragile soil. The conservation cover 

provided by CRP resulted in the equivalent of 56.5 million metric tons of carbon dioxide from reduced energy and 

fertilizer usage, and carbon sequestered in soils and the conserving vegetation. 

USDA completed initial or updated mapping of soils on 37.5 million acres, including Federal lands, for the 

national soil survey. Soil surveys provide information on the capabilities and conservation-treatment needs of soils. 

The Department provides the scientific expertise to enable a uniform system of mapping and assessing soil across 

the Nation. Historically, USDA has produced soil surveys along geo-political boundaries. Current efforts are 

directed toward developing seamless national soil survey coverage. Data on carbon stocks stored in the nation’s soils 

and dynamic soil properties are being collected. This information will be used to address climate change and 

evaluate changes in soil quality under varying management conditions, so policy makers, planners and land users 

can use this information to make better land management decisions. 

Analysis of Results 

USDA met its target for helping producers apply conservation practices on cropland for CTA. It did not meet the 

target for EQIP. While the Department assisted producers with implementing conservation practices to improve or 

enhance soil quality on 4.8 million acres, the acreage served was 0.3 million acres (6 percent) of the acceptable range 

of the projected performance for this metric. 

Several factors contributed to the shortfall this year. Flooding, coupled with cool, wet spring weather conditions 

hampered conservation practice implementation during the 2009 crop season. To broaden EQIP participation 

among a greater population of farmers, ranchers, and nonindustrial private forest landowners, payment caps were 

instituted in EQIP. These caps limit the amount of financial assistance available for management practices, e.g., 

residue and tillage management. The aforementioned practices have been widely adopted throughout the 

agricultural community. The decrease in EQIP performance for this measure has been partially offset by 

Key Outcome 

Enhanced Soil Quality 

Measure 

6.2.1 Cropland with conservation applied to improve soil quality (millions of acres) 

• Conservation Technical Assistance Program 

• Environmental Quality Incentives Program 
72 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

agricultural producers implementing these widely accepted management practices without financial incentives, as 

evidenced in CTA’s soil quality performance trends in the past three years. 

Changes to USDA software delayed the approval of new EQIP contracts, associated payments, and some prior year 

contract payments. The Department created a temporary solution with protocols for determining participant 

eligibility so that payments could be processed. The synchronization of the AGI Web services is scheduled to be 

completed and available early in FY 2010. 

Exhibit 30: Enhanced Soil Quality 

Annual Performance Goals, Indicators, 

and Trends 

2005 2006 2007 2008 Fiscal Year 2009 

Target Actual Result 

6.2.1 Cropland with conservation applied to improve 

soil quality (millions of acres) 

• Conservation Technical Assistance 6.0 6.4 7.3 8.3 7.5 7.6 Met 

• Environmental Quality Incentives 2.2 3.4 5.3 5.6 5.7 4.8 Unmet 

Rationale for Met Range: These measures are designed to provide a better indicator of soil quality. They include all cropland and hay land on which USDA-assisted 

producers apply conservation measures. These measures are designed to maintain or enhance soil quality and enable the sustained production of a safe, healthy, and 

abundant food supply. 

• Conservation Technical Assistance: Data assessment metrics to meet the target allow for an actual number in the range 6.8–8.3. 

• Environmental Quality Incentives: Data assessment metrics to meet the target allow for an actual number in the range 5.1–6.3. 

Data Assessment of Performance Measures 6.2.1 

Please refer to Goal 6, Objective 6.4.1. 

Challenges for the Future 

USDA continues to evaluate the effects of short-term and long-term conservation practices on soil quality, 

including impacts on organic matter and carbon sequestration. Erosion control and increasing soil organic matter 

are necessary to enhancing soil quality. Many of the conservation practices that reduce erosion also increase the 

organic matter in the soil, resulting in increased soil carbon. There is an immediate need to collect additional field 

data to improve the assessment of national carbon stocks, validate soil carbon models, and document benefits of 

applied conservation practices. USDA will invest in developing data and analytical tools to support soil quality 

protection and will encourage market-based approaches that reduce atmospheric carbon. 

The Department will face challenges associated with soil data collection and dissemination. Economic constraints 

in partnering with other agencies and universities could reduce the number of acres mapped and the total number 

of soil surveys updated. USDA will seek to strengthen partnerships and form new ones with entities having 

common interests. It will also use technology to improve data-collection efficiency. 

Reduced CRP acreage may cause the carbon now stored in fragile soils to escape into the atmosphere. If these soils 

return to crop production without the benefit of good conservation practices, increased soil erosion could also occur. 
ANNUAL PERFORMANCE REPORT 73

Selected Results in Research, Extension, and Statistics 

Modern wheat and oat varieties are less responsive than older varieties to elevated atmospheric carbon dioxide. Plants 

need light, soil, water, nutrients, temperature, and carbon dioxide (CO2 ) for growth. One aspect of adapting agriculture to global 

change is identification of crop lines that can better take advantage of the rising concentration of atmospheric CO2. Research by 

USDA’s Crop Systems and Global Change Laboratory in Beltsville, Maryland, has shown that the yields of wheat and oat varieties 

released 100 years ago are more enhanced by projected future increases of CO2 than are the yields of modern lines. This work 

identifies resources for developing higher-yielding crops that can take advantage of atmospheric composition changes affecting 

climate. 

New soil test procedures reduce fertilizer applications. Current fertilizer rate recommendations for the heavy clay soils of 

central Texas often do not result in meaningful crop yield improvements. USDA researchers from the Grassland Soil and Water 

Research Laboratory in Temple, Texas, developed new soil testing procedures for fertilizer recommendations. Fertilizer 

recommendations based on the new soil test methods were evaluated on local producer owned farms and resulted in savings in 

fertilizer cost ranging from $2,000 to $40,000, depending on farm size, without a loss in crop yield. Wide use of the new soil 

testing procedures will reduce fertilizer use, thus resulting in greater profits for farmers and decreased impacts from excess 

fertilizer losses to the environment. 

OBJECTIVE 6.3: PROTECT FORESTS AND GRAZING LANDS 

Overview 

Climate change, severe fires, diseases, and pests have all led 

to declining forest health. Privately owned working forest 

lands are also being lost to development and fragmentation 

at an alarming pace. All of these changes have enormous 

impacts on drinking water, greenhouse gas emissions, the 

climate, local economies, and wildlife and recreational opportunities. USDA is taking an “all-lands approach” to 

addressing these challenges. Many national forests are adjacent to State and private land. More than 80 percent of 

the forest area in the United States is outside of the national forest system. Managing the Nation’s forests requires 

cooperation among a large number of stakeholders, with a focus on the whole landscape. The Department’s forest 

Key Outcome 

Sustainable Forest and Grassland Ecosystems 

Measure 

6.3.1 Total acres of hazardous fuel reduction treatments 

6.3.2 Acres of Wildland Urban Interface (WUI) high-priority fuels treated to reduce the risk of catastrophic 

Wildland fire 

6.3.3 Acres of hazardous fuels treated outside the WUI to reduce the risk of catastrophic 

 Wildland fire 

6.3.4 Percentage of acres treated in the WUI that have been identified in community wildfire protection 

plans or equivalent plans 

6.3.5 Percentage of total National Forest System land base for which fire risk is reduced through movement 

to a better condition class. 

6.3.5 Grazing and forest land with conservation applied to protect and improve the resource base 

• Conservation Technical Assistance 

• Environmental Quality Incentives 
74 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

protection performance measures focus on reducing the risks of severe wildland fire and restoring forest ecosystems. 

USDA looks to increase the extent of land under conservation management that will protect ecosystem health and 

reduce susceptibility to damage caused by drought, invasive species, and wildfire. 

USDA promotes project planning and implementation to reduce fire risk and restore forests and grasslands. It 

focuses on mechanical fuels treatment and the significant use of fire – both controlled burns and wildland fire. 

These efforts are critical to ecosystem health. Restoring forest ecosystems, particularly in fire-adapted forests, will 

make forests more resilient to climate-induced stresses and ensure that they are able to continue to provide ample, 

abundant, clean water. 

Removing excess vegetation helps decrease fire hazards. This process protects firefighters and the public. Since the 

inception of the National Fire Plan in 2001, USDA has treated more than 20 million acres to remove excess 

vegetation through a combination of hazardous fuels reduction funds and other vegetation management program 

efforts. Unplanned ignitions are also used as a tool to manage hazardous fuels where there are opportunities to do 

so safely, effectively, and with full consideration of potential risks. In 2009, management objectives were achieved 

on more than 309,750 acres using naturally ignited fires. 

USDA’s efforts to reduce the risks of wildfire are conducted in collaboration with Federal, State, Tribal, and local 

Governments, and non-Governmental organizations. The Department works with communities in fire-prone 

environments to help them take measures to successfully adapt to the presence of wildland fire. A key aspect of that 

work is collaborating with communities to develop and implement Community Wildfire Protection Plans 

(CWPPs). CWPPs identify wildland fire hazards in areas within and surrounding communities. They also identify 

high-priority hazardous fuels for treatment. Additionally, CWPPs help private citizens understand the role fire 

plays in ecosystem health, promote positive interactions with federal land managers, and create local business 

opportunities. 

Hazardous fuel reduction accomplishments in FY 2009 include: 

• Investing more than 60 percent of the dollars available for hazardous fuel treatments in the wildland urban 

interface near communities; 

• Completing LANDFIRE for all 50 States. LANDFIRE is an interagency, landscape-scale fire, ecosystem, and 

vegetation-mapping project. It helps land managers make informed project decisions to reduce high-priority 

wildland fire risks across landscapes; 

• Continuing to develop a science-based methodology to evaluate unplanned acres burned as acres moved toward 

desired conditions, when outcomes are consistent with management objectives; and 

• Continuing to implement a process to document and display fuel-treatment effectiveness where on-the-ground 

treatments have been tested by wildfire. 

Several key USDA programs contribute to management efforts that reduce fire risks, prepare communities, and 

restore forests and grasslands to sustainable conditions. The hazardous fuel reduction program is a crucial 

component of this effort. Other tools include programs to improve timber and range productivity, wildlife and fish 

habitat, forest health, and watershed quality. 

In 2009, USDA conservation experts assisted people in writing or updating conservation plans on private land 

covering 24.4 million acres of grazing and forest lands. USDA also assisted producers in applying conservation 

practices on 31.9 million acres of non-Federal grazing lands and forest. 

Analysis of Results 

USDA met or exceeded all but one of its performance goals for protecting the health of the Nation’s forests and 

grasslands against the risk of fire. USDA exceeded its 2009 CTA and EQIP targets for conservation applied to 

protect and enhance non-Federal grazing land and forest land. 
ANNUAL PERFORMANCE REPORT 75

The Department did not meet its target for measure 6.3.5. While the Department moves numerous acres to a 

better condition class each year, its ability to do so is impacted by weather, resource availability, and the number of 

treatments required. Additionally, multiple treatments often are needed to move an area toward its desired 

condition. Federal wildland fire management agencies also changed the application of fire policy to wildland fire 

incidents. This shift in policy implementation was not fully represented in the 2009 data. Future adjustments in the 

way condition class change data are collected will be needed. 

Nationwide drought conditions, community expansion into the wildland urban interface, and densely vegetated 

forests increase the chances of more unnaturally severe and damaging wildfires. The 2002 coarse scale assessment of 

wildland fuels determined that approximately 56 percent of all acres managed by USDA have missed 2 or more 

expected fire cycles. It also showed that many acres are at elevated risk from wildland fire. The finer scale data 

available from LANDFIRE are expected to show an even greater departure from expected conditions in the 

Nation’s forests and woodlands. 

To increase the effectiveness of its ongoing efforts to help people protect and enhance plant and animal 

communities, USDA is working to improve the technology for measuring conditions. The Department is also 

projecting the results of management options on grazing lands. 

Challenges for the Future 

The cost of managing wildfires and reducing hazardous fuels continues to be a challenge. The Department is 

working with Congress to ensure that it has the necessary funds to fight fires and manage forests. While using 

excess vegetation for biomass and bio-based products may lower the cost of fuel reduction and restoration 

treatments, the limited market for this material and rising transportation costs from the source to scarce processing 

facilities creates barriers to its use. Forest processing infrastructure has also been lost in recent years. Thus, the 

capacity to perform the important kinds of restoration work that must be done has significantly decreased. 

Since much of the Department’s activities on private forestland and rangeland occur in cooperation with State 

agencies, State-level budget constraints may hamper USDA efforts to meet the goal for non-Federal grazing land. 

Exhibit 31: Trends in Treatment of Hazardous Fuel, Private Forests and Grasslands 

Annual Performance Goals, Indicators, 

and Trends 

2005 2006 2007 2008 Fiscal Year 2009 

Target Actual Result 

6.3.1 Total acres of hazardous fuel reduction 

treatments 2,722,000 2,547,000 3,027,000 3,038,277 2,485,000 3,194,036 Exceeded 

6.3.2 Acres of WUI high-priority fuels treated to 

reduce the risk of catastrophic wildland 

fire* 1,658,000 1,590,000 1,654,000 1,940,978 1,739,500 1,837,686 Exceeded 

6.3.3 Acres of hazardous fuels treated outside 

the WUI to reduce the risk of catastrophic 

wildland fire* 1,064,000 957,000 1,373,000 1,097,299 745,500 1,356,350 Exceeded 

6.3.4 Percentage of acres treated in the WUI that have been identified in community 

wildfire protection plans or equivalent 

plans 

Performance 

measure not 

in existence. 

17% 

(baseline 

year) 

24.70% 36% 28% 40% Exceeded 

6.3.5 Percentage of total National Forest System land base for which fire risk is 

reduced through movement to a better 

condition class 

Performance 

measure not 

in existence. 

1.1% 

(baseline 

year) 

1.90% 2.10% 3.00% 2.37% Unmet 

6.3.6 Grazing and forest land with conservation applied to protect and improve the 

resource base, millions of acres 

• Conservation Technical Assistance 7.5 11.8 14.2 16.0 13.0 16.0 Exceeded

 
76 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Annual Performance Goals, Indicators, 

and Trends 

2005 2006 2007 2008 Fiscal Year 2009 

Target Actual Result 

• Environmental Quality Incentives 

Program 

8.0 12.2 16.5 16.9 15.0 17.2 Exceeded 

*For 2005, 2006, 2007 these data were taken from the “Healthy Forests Report,” found at 

http://www.forestsandrangelands.gov/reports/documents/healthyforests/2007/fy2007_final_healthy_forests_report_12112007.pdf. 

Rationale for Met Range: 

• 6.3.1: Data assessment metrics to meet the target allow for an actual number in the range of 2,360,750 to 2,609.250. As such, USDA exceeds the 

target for this measure. This is partially due to accomplishments achieved with American Recovery and Reinvestment Act of 2009 (ARRA) funds not 

included in the original target. Additionally, this year's fire season was less severe than in recent years. Thus, more staff were available to work on 

hazardous fuels projects because they were not fighting fires. 

• 6.3.2—Data assessment metrics to meet the target allow for an actual number in the range 1,652,525 to 1,826,475. As such, USDA exceeds the 

target for this measure. This is partially due to accomplishments achieved with ARRA funds not included in the original target. Almost 17,000 acres 

have been treated in the Wildland Urban Interface (WUI) using ARRA funds to-date. At least 35,000 acres are likely to be treated in the WUI using 

ARRA funds by the end of the fiscal year. Additionally, this year's fire season was less severe than in recent years. Thus, more staff were available to 

work on hazardous fuels projects because they were not fighting fires. 

• 6.3.3—Data assessment metrics to meet the target allow for an actual number in the range 708,225 to 782,775. As such, USDA projects that it will 

exceed the target for this measure. This is partially due to accomplishments achieved with ARRA funds not included in the original target. More than 

9,500 acres have been treated outside WUI using ARRA funds to-date. More than 19,000 acres are likely to be treated outside the WUI using ARRA 

funds by the end of the fiscal year. Additionally, this year's fire season was less severe than in recent years. Thus, more staff were available to work 

on hazardous fuels projects because they were not fighting fires.

• 6.3.4—Data assessment metrics to meet the target allow for an actual number in the range 26.6 percent to 29.4 percent. As such, USDA projects that 

it will exceed the target for this measure. This is likely at least partially due to accomplishments achieved with ARRA funds not included in the original 

target. Additionally, USDA continues to stress the importance of working with partners in helping communities plan and prepare for wildland fires. 

These alliances have likely led to increased emphasis on these types of treatments. 

• 6.3.5—Data assessment metrics to meet the target allow for an actual number in the range 2.85 percent to 3.15 percent. USDA projects that it will 

meet the target for this measure. Acres affected by wildland fire that move the landscape towards a desired condition may now be accounted for due 

to a change in the implementation guide for federal wildland fire policy. With these additional acres, in concert with those treated by prescribed fire and 

mechanical means, USDA predicts that it will move sufficient acres to Condition Class 1 to achieve this target. Condition Class 1 refers to acres in a 

condition where fire regimes are within a historical range and the risk of losing key ecosystem components is low. 

• 6.3.6—This measure was re-defined and expanded in FY 2007 to include all private grazing or forest land on which the Department assisted 

producers to apply conservation measures to maintain or improve long-term vegetative condition and protect the resource base. Lands on which 

conservation measures may be applied include grazed range, grazed forest, native and naturalized pasture, and forest. Performance data for FY 2005 

and FY 2006 have been provided to indicate prior year performance had this measure been employed at that time. 

Data Assessment of Performance Measures 6.3.1, 6.3.2, 6.3.3, 6.3.4, 6.3.5 

The data for hazardous fuels treatments are reliable, of good quality, and certified by the respective line officer. USDA wildfire and other program 

managers collected, compiled, and analyzed the data. 

• Completeness of Data— Values shown are final FY 2009 data. 

• Reliability of Data—All data for hazardous fuels were reported through the National Fire Plan Operations System. USDA and the U.S. Department of 

Interior (DOI) land-management agencies co-developed the system. Its data are collected, compiled, and analyzed by program managers, and 

certified by the respective line officer. 

• Quality of Data— Data quality has been assessed at about 90 percent for project data in all regions. The quality of these data is monitored 

continuously and being improved with focused training and policy direction on reporting requirements. Data are projected based on historical 

performance and year-to-date actual accomplishments. If information is not entered into the systems of record immediately upon completion of the 

project, the quality of the projection will be compromised. 

For 6.3.6 Data Assessment, see Goal 6, Objective 6.4.1. 
ANNUAL PERFORMANCE REPORT 77

Selected Results in Research, Extension, and Statistics 

Protecting the Upper Mid-West Forests. The Emerald Ash Borer (EAB) is an exotic invasive insect known to kill ash trees of all 

species. In states surrounding Minnesota, the emerald ash borer has already killed millions of trees. To delay EAB introduction

and spread to ash trees in Minnesota, a First Detector Program was created by USDA-funded specialists. A public information 

campaign resulted in the collection of seeds from 254 ash trees. These seeds were placed in a long-term storage facility, making 

it possible to preserve the ash gene pool for potential reintroduction of the species when more effective mechanisms have been 

introduced to manage the EAB. 

U.S. Agriculture and Forestry Greenhouse Gas Inventory Report. Periodic assessments of greenhouse gas emissions from 

the agricultural and forestry sectors are conducted and reported by USDA and the Environmental Protection Agency (EPA). 

USDA scientists at the Soil, Plant, and Nutrient Research Laboratory in Ft. Collins, Colorado, collaborated with Colorado State

University to develop the USDA “U.S. Agriculture and Forestry Greenhouse Gas Inventory Report.” Results were reviewed and 

published in the most recent EPA greenhouse gas inventory and will be used by land managers, planners, and others with an 

interest in greenhouse gas dynamics and their relationships to land use to develop policy and strategies to manage greenhouse 

gas emissions from agricultural sources. 

Grazing exclusion can increase the fire risk to sagebrush communities. Considerable controversy exists over the role of 

livestock grazing and prescribed fire to manage sagebrush steppe range land to stop the spread of cheatgrass (an invasive 

annual grass) and reduce the severity of wildfires in the Great Basin. USDA scientists in Burns, Oregon, evaluated the impacts of 

fire on sagebrush range land that had either been grazed up until the year of burning (1993) or had been excluded from grazing 

since 1937. Vegetation characteristics were measured in the 12th through 14th years after burning. Burning caused a huge 

increase in cheatgrass in the ungrazed areas, but not in the grazed areas. This long-term research provides ranchers and land 

managers with science-based information in selecting fire and grazing management practices for controlling cheatgrass. 

OBJECTIVE 6.4: PROTECT AND ENHANCE WILDLIFE HABITAT TO BENEFIT DESIRED, AT-RISK AND DECLINING SPECIES 

Overview 

USDA addresses the needs of wildlife in managing national 

forests and grasslands. USDA also provides technical and 

financial assistance to landowners and managers to improve 

habitat on private lands. On non-Federal land, USDA 

conservationists provide on-site assistance to assess the 

quality of wildlife habitat. They also develop management 

plans that consider wildlife needs for shelter, nesting areas, 

and access to water and food during critical periods. These plans are designed to sustain and enhance wildlife 

habitat. 

The Department helped individuals and groups apply conservation management to maintain or improve habitat on 

11.6 million acres of non-Federal land. The land treated included 11.1 million acres of upland wildlife habitat and 

more than 440,000 acres of wetland wildlife habitat. Several USDA programs encourage participants to enter into 

contracts to improve and restore grassland, rangeland, forest ecosystems, wetlands, and adjacent upland buffers. As 

of September 30, 2009, there were 33.7 million acres enrolled in CRP, which helps maintain and improved wildlife 

Key Outcome 

Improved Wildlife Habitat Quality While Supporting 

Desired Species and Species of Concern 

(At-Risk and Declining Species) 

Measure: 6.4.1 Wetlands Created, Restored or Enhanced 

• Conservation Technical Assistance Program 

• Wetlands Reserve Program 

• Conservation Reserve Program 
78 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

habitat. Easement acquisitions and agreements help ensure the long term viability of these habitat areas. These 

actions are designed to create productive, diverse, and resilient habitat. 

Analysis of Results 

USDA set targets for the creation, restoration or enhancement of wetlands under three USDA programs: CTA, the 

Wetlands Reserve Program (WRP) and CRP. The performance measure for wetlands includes land on which 

USDA provided technical and/or financial assistance in FY 2009. USDA exceeded its targets for CTA and met its 

targets for both WRP and CRP. 

CTA provides technical assistance supported by science-based technology and tools to help people conserve, 

maintain and improve their natural resources. On wetlands where USDA provided technical assistance through 

CTA, no financial assistance was provided by Department programs. In some cases, financial assistance may have 

been provided through non-USDA sources. 

WRP is a voluntary conservation program that offers landowners the means and opportunity to protect, restore and 

enhance wetlands on their property. WRP participants sign an easement or agreement with USDA. The 2008 

Farm Bill reauthorized WRP through 2012 and increased the overall program acreage cap to 3,041,200 acres, an 

increase of 766,200 acres. 

The CRP annual performance target of 50,000 acres enrolled in CRP was exceeded in 2009 by 31,443 acres, a 63-

percent increase over the projected number of acres. The major increase is due to the announcement of increased 

incentives for certain wetland practices. The increase is also attributed to underestimating the number of general 

signup acres reenrolled into wetland practices. Contributing to the total enrollment was the adoption of several 

initiatives, including the 100,000-acre Duck Nesting Habitat Initiative, the 500,000-acre Bottomland Hardwood 

Timber Initiative, and the 250,000-acre non-floodplain Wetland Restoration Initiative. These restored wetlands 

and buffers have increased prime wildlife habitat and water storage capacity. They have also led to a net increase in 

wetland acres on agriculture land. 

The Duck Nesting Habitat Initiative was designed to increase duck populations by an estimated 60,000 birds 

annually and to restore 100,000 wetland acres. The Bottomland Hardwood Timber Initiative was designed to 

improve flood plains through the restoration of primarily bottomland hardwood trees. The Wetland Restoration 

Initiative was designed to restore up to 250,000 acres of wetlands and playa lakes that are located outside of the 

100-year floodplain. 

USDA uses the acreage of wetlands created, restored, or enhanced as an indicator of progress toward improved 

habitat for many species. The Department is participating in cooperative efforts to quantify the results of its 

conservation practices for wildlife habitat. The results will be used to manage agricultural landscapes for 

environmental quality. 

Numerous species have benefitted from USDA’s projects. A recent study by the Fish and Wildlife Service (FWS) 

examined the effect of CRP in North Dakota, South Dakota and northeastern Montana. FWS estimated that the 

duck population grew by an average of 2 million annually between 1994 and 2004, a 30-percent increase compared 

to the same area without CRP. The program is also credited with enhancing the population of several bird species 

considered endangered. The Washington Department of Natural Resources found that a severe decline in an 

eastern Washington sage grouse population has been reversed in an area with substantial CRP enrollment. A 

Journal of Wildlife Management study credits CRP with contributing to the sharp rebound in Henslow’s Sparrow 

populations. 

Several assessments of WRP benefits are being conducted as part of the CEAP Wildlife Component. These studies 

are designed to evaluate ecological functions and ecosystem services of restored wetlands at a landscape level to help 

gage the effectiveness of programs such as WRP. Missouri and California, participants in a nine-state pilot of 

WRP in the 1990s, were the focus of two studies this year. In Missouri, researchers from the University of Missouri 
ANNUAL PERFORMANCE REPORT 79

Department of Fisheries and Wildlife Sciences noted that post restoration Habitat Suitability Indices (HSI) were 

markedly higher for most habitat types. HSI provides habitat information for evaluating impacts on fish and 

wildlife habitat resulting from water or land use changes. The HSI increase was greatest for species associated with 

emergent herbaceous wetlands. While these wetlands develop faster than forested wetlands, they are often a 

precursor of forested wetlands. California’s Central Valley has lost more than 94 percent of its wetlands. The 

California Cooperative Fish and Wildlife Research Unit at Humboldt State University is conducting a study to 

quantify the ecosystem services provided by emergent wetlands restored or enhanced under WRP. Ecological 

services such as native pollinators, biodiversity, erosion, sediment retention, floodwater storage, nitrogen and 

phosphorus retention, and carbon accumulation are being measured. 

Selected Results in Research, Extension, and Statistics 

Protecting Birds Species in Forests. The removal of forest products, namely timber, has an impact on bird species. USDA 

funded ornithologists are providing science-based management recommendations on the size, shape, and spatial distribution of 

timber harvests that will promote the continued viability of bird communities. In particular the scientists have shown that 

successional bird communities may be sensitive to patch and landscape attributes related to the size and distribution of earlysuccessional habitats, and mature-forest bird communities heavily use successional habitats during the post-breeding and postfledging periods. This research shows that use of shrubby areas by juvenile mature-forest birds (e.g., ovenbird and worm-eating

warbler) increases survival rates. 

Exhibit 32: Improved Wildlife Habitat 

Annual Performance Goals, Indicators, 

and Trends 

2005 2006 2007 2008 Fiscal Year 2009 

Target Actual Result 

6.4.1 Wetlands created, restored or enhanced 

(acres) 

• Conservation Technical Assistance 53,498 65,345 62,093 72,806 51,300 67,233 Exceeded

• Wetlands Reserve Program 180,358 181,979 149,326 128,860 100,000 106,379 Met

• Conservation Reserve Program 50,934 61,279 68,834 80,103 50,000 81,443 Exceeded

Rationale for Met Range:

• Conservation Technical Assistance: Data assessment metrics to meet the target allow for an actual number in the range 46,170 – 56,430. 

• Wetland Reserve Program: Data assessment metrics to meet the target allow for an actual number in the range 90,000 – 110,000. 

• Conservation Reserve Program: Data assessment metrics to meet the target allow for an actual number in the range 47,500 - 52,500 acres annually. 

Data Assessment of Performance Measures 6.4.1 

The chief sources of data for this performance measure are the National Conservation Planning Database (NCP), the Program Contracts Database 

(ProTracts), and the Performance Results System (PRS). The CRP data source for this measure is the FSA National CRP Contract and Offer Data Files. 

• Completeness of Data—The performance reported for these measures is based on actual data reported for FY 2009. Numerous data quality 

mechanisms within PRS ensure the completeness of each performance record entered in the system. There are no known data limitations. 

• Reliability of Data— For FY 2009, the data reported for these performance measures were calculated within PRS based on information validated and 

retrieved from the NCP and ProTracts. Conservation practices are developed in consultation with the customer and included in conservation plans 

stored in the NCP. Periodic reviews are conducted to assess the accuracy of reported data. 

• Quality of Data— Overall quality of the data is good. Field staffs, trained and skilled in conservation planning and application suited to the local 

resource conditions, report performance where the conservation is occurring. Error checking enhancements and reports within the PRS application 

maintain data quality by allowing users at local, State, and national levels to monitor data inputs. Data on the linkage of programs and conservation 

practices applied are accurate because the conservation program responsible for applying each practice is documented in the conservation plan 

developed in Toolkit. The same land unit may benefit from the application of more than one conservation practice. Where more than one program is 

used to apply practices on the same land unit, each program is credited under the performance measure. 

Challenges for the Future 

Commodity prices, economic conditions, weather, and developmental pressures can impact the ability and 

willingness of agricultural producers to restore, improve, and protect habitat areas. Producers may be less willing to 
80 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

make long-term commitments regarding the use of their land. This could impact wetland restoration of prior 

converted cropland. Due to expiring CRP contracts and favorable commodity prices, USDA projects a slight 

decrease in the program’s cumulative enrolled acreage. Some of that land could return to crop production, which 

would reduce habitat for grassland bird species. Grassland birds are declining faster than any other type of North 

American birds. 

USDA works with other agencies and private organizations to provide producers with information and other 

resources to adopt conservation measures and management practices. Many wildlife projects are supported by a 

combination of Federal, State, local, and private funds. State and local budget constraints could impact project 

implementation. 

Program Evaluations of Performance Information 

Program Title Findings and Recommendations/Actions Availability 

Guaranteed 

Farm Loan 

Programs 

Office of Inspector General 

(OIG) Report No. 03601-17-

Ch issued September 29, 

2008. Controls Over 

Guaranteed Farm Loan 

Interest Rates and Interest 

Assistance. 

Findings: OIG evaluated USDA’s Farm Service Agency’s (FSA) 

controls over the guaranteed farm loan interest rates charged by 

lenders and interest assistance provided to borrowers. The report 

found that 1) FSA did not verify that lenders complied with interest 

rate requirements; and 2) FSA needs to enhance its oversight to 

include a review of interest rates. 

Actions: FSA is enhancing its Guaranteed Loan System to allow 

the agency to monitor interest rates charged by lenders 

participating in the Guaranteed Loan program. FSA also is revising 

the program regulations to clarify and simplify lender interest rate 

requirements.

http://www.usda.gov/oig/webdocs

/03601-17-Ch.pdf

Farm Loan 

Programs 

OIG Report No. 03601-49-

Te issued June 8, 2009. 

Farm Service Agency 

Socially Disadvantaged 

Borrower Foreclosures – 

Farm Program Loans. 

Findings: OIG determined that FSA’s foreclosure and restructure 

processes were generally consistent and in conformity with 

applicable laws and regulations. It added that socially 

disadvantaged and non-socially disadvantaged borrowers were 

treated consistently when their loans were restructured or 

foreclosed. 

Actions: N/A

http://www.usda.gov/oig/webdocs

/03601-49-TE.pdf

Disaster 

Programs 

OIG Report No. 03601-

0023-KC – Report Issued 

2/2/09 

2005 Hurricane Relief 

Initiatives: 2005 Hurricane 

Livestock Indemnity 

Program and Feed 

Indemnity Program 

Finding: For future programs, FSA should 1) provide procedures 

with detailed guidance describing the required documentation for 

applicants and third-party certifiers to clearly substantiate claimed 

livestock losses; 2) specific instructions for local FSA office 

personnel to follow when applicants do not have verifiable 

evidence for establishing beginning inventory; 3) determine the 

adequacy of documentation supporting beginning and ending 

inventories for six cases in Vermillion Parish; 4) review the State 

Committee’s determination to approve the changes made to 2005 

farm program records in Plaquemines Parish; 5) seek recovery of 

any unsupported payments; and 6) review the facts and 

circumstances regarding the establishment of loss claim periods to 

ensure they correlate eligible loss periods more closely with local 

conditions related to the disaster. 

Actions: FSA will provide procedures for substantiating claimed 

livestock losses. It also will provide instructions for applicants 

without verifiable evidence for establishing beginning inventories. 

Reviews will be conducted to determine the adequacy of 

documentation supporting beginning and ending inventories for six 

http://www.usda.gov/oig/webdocs

/03601-23-KC-Redacted.pdf

 

cases in Vermillion Parish, and the State Committee’s 

determination to approve the changes made to 2005 farm program 

records in Plaquemines Parish. Addtionally, FSA will recover any 

monies determined to be overpaid and determine if loss claim 
ANNUAL PERFORMANCE REPORT 81

Program Title Findings and Recommendations/Actions Availability 

periods correlate more closely with local conditions related to the 

disaster.

Tobacco 

Transition 

Payment 

Program 

OIG Report No. 03601-

0016-AT – Report Issued 

8/3/09 

Tobacco Transition Payment 

Program –Payments to 

Producers - Closed 8/13/09 

Nothing came to OIG’s attention to indicate that the FSA national, 

selected State and county offices were not operating in 

accordance with prescribed laws, regulations, and policies and 

procedures.

http://www.usda.gov/oig/webdocs

/03601-16-AT.pdf

Perform. 

Measure Title Findings and Recommendations/Actions Availability 

4.1.1 

4.1.2 

4.1.3 

4.1.4 

Review of the Use of 

Process Control Indicators 

in the USDA Public Health 

Risk-Based Inspection 

System. Letter Report by the 

National Academy of 

Sciences (NAS)

Findings: NAS applauded USDA for its work to develop a riskbased approach to inspection. The Academy recommended that 

USDA clarify the terminology in its report. NAS also suggested that 

USDA continue to refine its approach as it moves forward. It 

advised the Department to conduct additional predictive analyses 

to look at the relationship between USDA’s proposed decision 

criteria and future establishment behavior.

Actions: USDA has revised its technical report for the public 

health decision criteria. It will make that report public in midOctober 2009. USDA also began to use its Public Health Decision 

Criteria, outlined in the report reviewed by NAS, to schedule food 

safety assessments in July 2009.

Reports are available at : 

http://www.iom.edu/CMS/3788/59

186/64582.aspx

4.1.1 

4.1.2 

4.1.3 

4.1.4 

Letter Report on the Review 

of the Food Safety and 

Inspection Service RiskBased Approach to Public 

Health Attribution by the 

National Academy of 

Sciences 

Findings: NAS supported USDA’s development of an attribution 

methodology for all of its product categories. The Academy 

suggested that USDA develop uncertainty estimates for its 

attribution estimates. In addition, NAS suggested that USDA 

explore the use of additional data from the Centers for Disease 

Control (CDC) and that it continue to develop a method for the 

incorporation of serotype information in attribution estimates. 

Actions: USDA is currently calculating uncertainty estimates for its 

attribution estimates. The Agency met with CDC about additional 

data sources and determined that no additional information was 

currently available. USDA is continuing to develop methods for 

including serotype information in its attribution work. 

Reports are available at : 

http://dels.nas.edu/dels/viewrepor

t.cgi?id=5698

5.1 Supplemental Nutrition 

Assistance Program 

Participation Rates: 2000 to 

2007 

Findings: Reports national rates of participation among eligible 

people. In 2007, 66 percent of individuals eligible for SNAP 

benefits chose to participate. The program provided 81 percent of 

the benefits that all eligible individuals could receive. The number 

suggests that SNAP is reaching the neediest eligible individuals. 

These figures represent a small decline from the previous year – 

although the number of program participants increased. This 

change can be attributed to a larger increase in the number of 

households that became eligible compared to the number of new 

participants. 

Actions: No recommendations for action. 

Available on the FNS Web site at: 

http://www.fns.usda.gov/ora/MEN

U/Published/SNAP/FILES/Partici

pation/Trends2000-2007.pdf

 

5.1 WIC Eligibles and Coverage 

- 1994 to 2007: Estimates of 

the Population of Women, 

Infants, and Children Eligible 

for WIC Benefits - 

September 2009 

Findings: This report offers updated estimates of the population 

eligible for WIC benefits from 1994 through 2007. The new series 

builds on the methodology recommended by the Committee on 

National Statistics of the National Research Council. It also more 

accurately captures changes in the breastfeeding practice of new 

mothers during their period of WIC eligibility 

Actions: No recommendations for action. 

Available on the FNS Web site at: 

http://www.fns.usda.gov/ora/MEN

U/Published/WIC/FILES/WICEligi

bles1994-2007.pdf

5.1 Direct Certification in the 

National School Lunch 

Findings: This report is the first in a series of annual reports. It 

presents information on the outcomes of direct certification for SY 

Available on the FNS Web site at: 

http://www.fns.usda.gov/ora/MEN
82 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Program Title Findings and Recommendations/Actions Availability 

Program: State 

Implementation Progress 

(Report to Congress) - 

December 2008 

2007-2008. The estimated the number of school-age SNAP 

participants was compared with the number of children directly 

certified for free school meals in each State. The ratio of these 

figures is a measure of the success of State and local systems to 

directly certify SNAP participant children.

Actions: No recommendations for action.

U/Published/CNP/FILES/DirectC

ert08.pdf

5.2 Diet Quality of American 

School-Age Children by 

School Lunch Participation 

Status: Data from the 

National Health and 

Nutrition Examination 

Survey, 1999-2004 

Findings: Uses data from the National Health and Nutrition 

Examination Survey. It assesses the nutrient intakes, diet quality, 

and food choices of program participants, income-eligible 

nonparticipants, and higher-income non-participants, broken out by 

age and gender. 

Actions: No recommendations for action. 

Available on the FNS Web site at: 

http://www.fns.usda.gov/oane/me

nu/Published/CNP/FILES/NHAN

ES-NSLP.pdf 

5.2 Diet Quality of American 

Young Children by WIC 

Participation Status: Data 

from the National Health and 

Nutrition Examination 

Survey, 1999-2004 

Findings: Uses data from the National Health and Nutrition 

Examination Survey. It assesses the nutrient intakes, diet quality, 

and food choices of program participants, income-eligible 

nonparticipants, and higher-income non-participants, broken out by 

age and gender. 

Actions: No recommendations for action. 

Available on the FNS Web site at: 

http://www.fns.usda.gov/oane/me

nu/Published/WIC/FILES/NHANE

S-WIC.pdf

5.3 Diet Quality of Americans by 

Food Stamp (SNAP) 

Participation Status: Data 

from the National Health and 

Nutrition Examination 

Survey, 1999-2004 

Findings: Uses data from the National Health and Nutrition 

Examination Survey. It assesses the nutrient intakes, diet quality, 

and food choices of program participants, income-eligible 

nonparticipants, and higher-income non-participants, broken out by 

age and gender. 

Actions: No recommendations for action 

Available on the FNS Web site at: 

http://www.fns.usda.gov/oane/me

nu/Published/SNAP/FILES/Partici

pation/NHANES-FSP.pdf

5.3 Feasibility of Assessing 

Causes of State Variation in 

Food Stamp (SNAP) 

Program Administrative 

Costs: Final Report 

Findings: Identifies the factors that contribute to large variation in 

State administrative costs. It also assesses the feasibility of 

estimating their relative contributions. 

Actions: No recommendations for action. 

Available on the FNS Web site at: 

http://www.fns.usda.gov/ora/MEN

U/Published/SNAP/FILES/Other/

sae.pdf 

5.3 Child and Adult Care Food 

Program (CACFP) – 

Assessment of Sponsor 

Tiering Determinations – 

2007 

Findings: Estimates the accuracy level of CACFP meal 

reimbursement levels (“tiering”), and related improper payments in 

2007. The level of improper payments was comparable to the 

estimates from 2005 and 2006 at about three percent of total 

CACFP meal reimbursements. 

Actions: No recommendations for action. 

Available on the FNS Web site at: 

http://www.fns.usda.gov/ora/MEN

U/Published/CNP/FILES/CACFP

Tiering07.pdf 

5.3 

Results of the Feasibility 

Study of Estimating the Risk 

of Meal Claiming Error in the 

Child and Adult Care Food 

Program (CACFP) 

Findings: The purpose of the pilot test was to determine the 

feasibility and accuracy of comparing the number of meals claimed 

with the number of children observed at the time of the sponsor’s 

monitoring visit. At issue is the risk of overpayments in the Family 

Day Care Home (FDCH) component of CACFP. The feasibility 

study indicates that the central assumption underlying this 

approach to measuring the risk of Improper Payments Information 

Act errors is invalid. 

Actions: The report contains no recommendations. 

Available on the FNS Web site at: 

http://www.fns.usda.gov/ora/MEN

U/Published/CNP/FILES/CACFP

MealClaiming.pdf 

5.3 Child and Adult Care Food 

Program (CACFP): Improper 

Payments Data Collection 

Pilot Project 

Findings: The purpose of this pilot was to test possible methods 

that could lead to valid estimations of the number of meals served 

by FDCHs. Parent recall surveys had the highest likelihood of 

yielding accurate national estimates of meals served to children. 

These surveys can produce separate estimates of over- and 

under-payments. 

Actions: Based on the experiences in the pilot study, the Parent 

Recall Method was recommended for use in estimating erroneous 

payments in a national study. 

Available on the FNS Web site at: 

http://www.fns.usda.gov/ora/MEN

U/Published/CNP/FILES/CACFPI

mpPaymentsDataCol.pdf
ANNUAL PERFORMANCE REPORT 83

Program Title Findings and Recommendations/Actions Availability 

5.3 Accuracy of LEA Processing 

of School Lunch 

Applications - Regional 

Office Review of 

Applications (RORA) 2007 

Findings: This report is the third in a series of annual reports. It 

assesses administrative error associated with the local educational 

agency’s (LEA) approval of applications for free and reduced-price 

school meals. The percent of all students with administrative errors 

in the processing of their applications for meal benefits has 

remained relatively stable during the three-year period. 

Administrative errors ranged between three and four percent. 

Actions: No recommendations for action. 

Available on the FNS Web site at: 

http://www.fns.usda.gov/ora/MEN

U/Published/CNP/FILES/rora200

7.pdf

5.3 Food and Nutrition Service 

Financial Statements for 

Fiscal Years 2008 and 2007 

Findings: OIG reviewed The Food and Nutrition Service’s (FNS) 

financial statements for Fiscal Years 2007 and 2008. FNS’ 

statements received an unqualified opinion. The agency’s core 

financial management system was found to be in substantial 

compliance with the Federal Financial Management Improvement 

Act of 1996. 

Actions: The report contains no recommendations. 

Report is available at: 

http://www.usda.gov/oig/webdocs

/27401-33-HY.pdf

5.3 Feasibility of Assessing 

Causes of State Variation in 

Food Stamp (SNAP) 

Program Administrative 

Costs: Final Report 

Findings: Identifies the factors that contribute to large variation in 

State administrative costs. It also assesses the feasibility of 

estimating their relative contributions. 

Actions: No recommendations for action. 

Report is available at:

http://www.fns.usda.gov/ora/MEN

U/Published/SNAP/FILES/Other/

sae.pdf 

6.3.1 

6.3.2 

6.3.3 

6.3.4 

6.3.5 

Government 

Accountability Office 

(GAO)-09-68 issued 

November 2008. 

Wildland Fire Management: 

Interagency Budget Tool 

Needs Further Development 

to Fully Meet Key Objectives 

Findings: GAO found that the approach the agencies – Forest 

Service (FS) and the U.S. Department of the Interior (DOI) – have 

taken hampers Fire Program Analysis (FPA) from meeting some of 

its key objectives. Specifically, GAO found that FPA has limited 

ability to project the effects of different levels of vegetationreduction treatments and firefighting strategies over time. Thus, 

agency officials lack information that could help them analyze the 

long-term impact of changes in their approach to wildland fire 

management. GAO recommends that Forest Service (FS) and DOI 

develop a strategic plan for the continued development of FPA. 

Among other things, the plan should address ways to improve 

FPA’s ability to model the effects over time of different investments 

in fuel-reduction treatments and firefighting strategies on the cost 

of suppressing wildland fires. 

Actions: FS has established a strategy that is now being 

implemented. Plans now exist for a staged deployment that allows 

for adaptive use and modification. As the system is used and 

outputs are reviewed and analyzed, system strengths and 

weaknesses are identified through established business 

processes. Additionally, an external peer review is planned to 

identify needed system improvements. A more comprehensive 

analysis of the fuel treatments and vegetative management 

aspects of FPA is also likely.

Report is available at: 

http://www.gao.gov/new.items/d0

968.pdf
84 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Perform. 

Measure Title Findings and Recommendations/Actions Availability 

6.4.1 OIG-10099-4-SFWetlands Reserve 

Program Restoration 

Compliance. Report 

issued August 2008 

Findings:

• Finding 1—NRCS incurred new obligations during the 2002 

Farm Bill period with expired funds from the 1996 Farm Bill 

period. 

• Finding 2—NRCS did not annually monitor most sampled 

easements. 

• Finding 3—Two NRCS State offices overpaid NRCS’ share of 

restoration costs for two 30-year easements. 

Actions: Recommendations 1-4 and 6-8 were closed in March, 

2009. Recommendation 5 was submitted in August, 2009 for 

closure. NRCS is awaiting decision. The agency has made 

numerous business process changes since the audit. The changes 

inlcude: 1) implementing policy regarding allowably of hunting 

structures on easements; 2) reviewing funds used to obligate 

contracts; 3) correcting deficiencies found during the review; 4) 

implementing remote sensing capabilities to assist in easement 

monitoring; and 5) implementing new easement valuation policy per 

the 2008 Farm Bill.

Report is available at 

http://www.usda.gov/oig/webdocs

/10099-4-SF.pdf

6.1.1 OIG-OIG10601-1-ATFlood Control Dam 

Rehabilitation. Report 

issued July 2009 

Findings:

• Finding 1—NRCS needs to assess and rehabilitate high hazard 

dams. 

• Finding 2—NRCS needs to update its dam inventory for 

accuracy. 

• Finding 3—NRCS did not prioritize the assessment of high 

hazard dams. 

• Finding 4—NRCS did not establish reasonable performance 

goals for the Dam Rehabilitation Program. 

Actions: NRCS agreed to develop cooperative relationships with 

State agencies that regulate dams. These Federal-State 

partnerships would ensure the rehabilitation of dams that threaten 

public safety. They also would report to Congress on any highhazard dams needing rehabilitation that are not fixed because of 

program limitations. 

Report is available at 

http://www.usda.gov/oig/webdocs

/10601-1-AT-Redacted.pdf

6.1.1, 

6.2.1 

6.3.4 

6.4.1 

OIG-10601-4-KCConservation Security 

Program. Report issued 

June 2009 

Findings: NRCS lacked management controls to effectively 

administer the Conservation Security Program (CSP). 

• Finding 1—NRCS needs to strengthen overall CSP 

management control. 

• Finding 2—Improper delineation of agricultural operations went 

undetected. 

• Finding 3—One applicant’s actions and misstatements led to the 

improper approval of two additional CSP contracts and 

jeopardized his own contract. 

• Finding 4—Tenant participation denied. 

• Finding 5—Grazing information changed by NRCS made 

applicants eligible. 

• Finding 6—Farm visits needed to confirm stewardship practices. 

• Finding 7— NRCS lacked compensating management. 

• Finding 8—ProTracts does not limit participants to one CSP 

contract. 

Actions: NRCS reached management decision on 

Recommendations 1-5, 7, 10-15, 20 and 22. Recommendations 6, 8, 

9, 16-19, 21 and 23 will be re-submitted to OIG. All existing CSP 

contracts received a comprehensive review. NRCS provided 

Report is available at 

http://www.usda.gov/oig/webdocs

/10601-4-KC-Redacted.pdf

 
ANNUAL PERFORMANCE REPORT 85

Perform. 

Measure Title Findings and Recommendations/Actions Availability 

national CSP training to inform for key agency State personnel of 

new policies and reiterate existing policy. Internal controls of field 

spot checking prior to obligation have been incorporated into agency 

business processes. Corrective actions will be taken on findings 

from the 2009 CSP review prior to making 2010 payments. NRCS 

will release a revised conservation programs manual and train all 

office staff. 

6.1.1 

6.2.1 

6.3.4 

6.4.1 

OIG-10099-6-SF-Farm 

and Ranch Lands 

Protection ProgramReview of NonGovernmental 

Organizations. Report 

issued July 2009 

Findings:

• Finding 1—NRCS Needs to improve management oversight of 

the Farm and Ranch Lands Protection Program (FRPP) and 

monitoring of non-Governmental organization’s (NGOs) 

compliance with program regulations. 

• Finding 2—NRCS needs to verify that NGOs do not use 

landowner funds to pay for their share of easements' purchase 

price. 

• Finding 3—NRCS should establish standards over NGOs' 

obtaining funds from landowners for easement-related costs. 

Actions: Management decision has been reached on all items 

except Recommendation 3. The Office of General Counsel has 

initiated court proceedings against an NGO. OIG will not accept 

management decision until court case legal issues are resolved. 

NRCS will issue a final rule and a new FRPP manual. The new 

policy will require NRCS State office staff to visit every FRPP parcel 

before a cooperative agreement is signed. The visit is designed to 

interview every landowner, inform them of FRPP regulations, 

confirm the estimated easement value, Federal contribution, entity 

contribution, landowner donation, and recommended contribution to 

stewardship funds before a cooperative agreement is signed. 

Report is available at 

http://www.usda.gov/oig/webdocs

/10099-6-SF.pdf
86 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 
ANNUAL PERFORMANCE REPORT 87

3. Financial Statements, Notes, Supplemental and Other Accompanying Information 

Message from the Chief Financial Officer 

he U.S. Department of Agriculture’s (USDA) Office of the Chief Financial Officer leads the way to fiscally 

sound, cost effective program delivery, supported by reliable financial management information and 

infrastructure. 

Highlights of USDA’s significant progress in financial management during fiscal year (FY) 2009 include: 

• Began implementation of a core financial system to replace USDA’s nine general ledger systems; 

• Completed testing for all in-scope cycles as required by OMB Circular A-123 Appendix A, “Internal Control 

over Financial Reporting.” As a result of FY 2009 testing, USDA identified 105 control deficiencies 

and corrected 16 control deficiencies from prior year’s assessments; 1359 Plans of Actions and Milestones were 

closed; 

• Reduced USDA’s inventory of open audits by 18 percent in FY 2009; 

• Reduced Improper Payments from 6.13 percent to 5.92 percent; 

• Exceeded the Departmental recovery target of $53.7 million with total improper payment recoveries of $352.8 

million reported for FY 2009; 

• Implemented a Department-wide end-point management software tool ensure complete and timely weakness 

remediation, improve client management, and ensure compliance with security standards, and implemented 

whole disk encryption on portable computers; 

• Revised guidance to require quarterly reviews and certifications for unliquidated obligations (ULO), established 

ULO data mart and aging report to manage and monitor ULOs, and completed statistical sample of aged ULOs 

to identify root causes of invalid obligations and formulate corrective actions; and 

• Reinstituted the Credit Reform Working Group to coordinate consistent application of new credit reform 

guidance, and worked with Commodity Credit Corporation to resolve the prior year auditor-identified 

weakness in controls for the credit reform assurance process. 

While we continue to make progress in financial management, we cannot yet give unqualified assurance of 

compliance with the Federal Managers’ Financial Integrity Act or the financial systems requirements of the Federal 

Financial Management Improvement Act. We will continue to focus on these efforts in the coming year. 

We are proud of our accomplishments for FY 2009 and of the hard working employees at USDA. USDA is 

committed to providing sound management of the resources under our stewardship and to communicating the 

effectiveness of our efforts to all Americans through this Performance and Accountability Report. 

T

3. Financial Statements, Notes, Supplemental 

and Other Accompanying Information 
88 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Report of the Office of Inspector General 
ANNUAL PERFORMANCE REPORT 89

U.S. Department of Agriculture 

 Office of Inspector General 

Audit Report 

U.S. Department of Agriculture’s 

Consolidated Financial Statements for 

Fiscal Years 2009 and 2008 

Audit Report 50401-67-FM 

November 2009 
90 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Report of Inspector General Table of Contents

[original OIG page numbers removed] 

Executive Summary 

Opinion on the Consolidated Financial Statements 

Internal Control Over Financial Reporting 

Compliance and Other Matters 

Responsibilities 

Findings and Recommendations 

Section 1: Material Weaknesses in Internal Control Over Financial Reporting 

Finding 1: Improvements are Needed in Overall Financial Management 

Recommendation 1 

Finding 2: Improvements are Needed in Information Technology Security and 

Controls 

Recommendation 2 

Section 2: Noncompliance with Laws and Regulations 

Finding 3: Lack of Substantial Compliance with FFMIA Requirements 

Finding 4: Transactions Were Not Always Obligated In Accordance With 

Appropriations Law 

Exhibit A: Audit Reports Related to the Fiscal Year 2009 Financial Statements 

Exhibit B: Summary of Prior Year Recommendations 

Exhibit C: Status of Prior Year Noncompliance Findings 

Exhibit D: Agency Response 
ANNUAL PERFORMANCE REPORT 91

U.S. Department of Agriculture’s Consolidated Financial Statements 

for Fiscal Years 2009 and 2008 (Audit Report 50401-67-FM) 

Executive Summary

Purpose 

Our audit objectives were to determine whether (1) the consolidated financial statements present 

fairly, in all material respects, in accordance with accounting principles generally accepted in the 

United States of America, the assets, liabilities, and net position, net costs, changes in net 

position, and budgetary resources; (2) the internal control objectives over financial reporting 

were met; (3) the Department complied with laws and regulations for those transactions and 

events that could have a direct and material effect on the consolidated financial statements; and 

(4) the information in the Performance and Accountability Report was materially consistent with 

the information in the consolidated financial statements. 

We conducted our audits at the financial offices of various U.S. Department of Agriculture 

(USDA) agencies and the Office of the Chief Financial Officer located in Washington, D.C., and 

its National Finance Center located in New Orleans, Louisiana. We also performed site visits to 

selected agencies’ field offices. 

Results in Brief 

In our opinion, the consolidated financial statements present fairly, in all material respects, the 

financial position of USDA as of September 30, 2009 and 2008, and its net costs, changes in net 

position, and budgetary resources for the years then ended, in conformity with accounting 

principles generally accepted in the United States of America. 

Our consideration of internal controls over financial reporting identified two significant 

deficiencies. Specifically, we identified weaknesses in USDA’s: 

• overall financial management; and 

• information technology (IT) security and controls. 

We believe that these two significant deficiencies are material weaknesses. 

Our consideration of compliance with laws and regulations discusses two instances of 

noncompliance relating to the Federal Financial Management Improvement Act of 1996 and 

certain aspects of appropriation law. 

Key Recommendations 

As discussed in its Federal Managers’ Financial Integrity Act of 1982 report, the Department 

has plans to address the majority of the weaknesses discussed in the report. The key 

recommendations in this report were limited to additional improvements needed in financial 

management with respect to obligations as well as required system documentation for 

selected critical financial systems. 
92 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Agency Response 

The Department concurs with the two material weaknesses and findings related to 

compliance with laws and regulations in the report. It generally agrees with the 

recommendations in the report and will develop corrective action plans with milestones to 

address the findings by December 30, 2009. 

OIG Position 

Management decision should be achievable upon our review of the plans for corrective 

action. 
ANNUAL PERFORMANCE REPORT 93

Independent Auditors’ Report 

Jon M. Holladay 

Acting Chief Financial Officer 

Office of the Chief Financial Officer 

We have audited the accompanying consolidated balance sheets of the U.S. Department of 

Agriculture (USDA) as of September 30, 2009 and 2008, and the related consolidated statements 

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

(hereinafter referred to as the “consolidated financial statements”) for the fiscal years then ended. 

The objective of our audits was to express an opinion on the fair presentation of these 

consolidated financial statements. In connection with our fiscal year 2009 audit, we also 

considered USDA’s internal controls over financial reporting and tested USDA’s compliance 

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

could have a direct and material effect on these consolidated financial statements. 

The following sections discuss our opinion on USDA’s consolidated financial statements; our 

consideration of USDA’s internal controls over financial reporting; our tests of USDA’s 

compliance with certain provisions of applicable laws, regulations, contracts, and grant 

agreements; and management’s as well as our responsibilities. 

The Findings and Recommendations Section presents the material weaknesses in internal control 

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

September 30, 2009. Exhibit A of this report presents the audit reports related to the fiscal year 

2009 statements. Exhibit B summarizes the current year status of prior year audit 

recommendations. 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. 

Opinion on the Consolidated Financial Statements

In our opinion, the consolidated financial statements present fairly, in all material respects, the 

financial position of USDA as of September 30, 2009 and 2008, and its net costs, changes in net 

position, and budgetary resources for the years then ended, in conformity with accounting 

principles generally accepted in the United States of America. 

As discussed in Notes 1 and 21 to the consolidated financial statements, USDA made certain 

reclassifications to prior year amounts to conform to the current year presentation. Specifically, 

obligations for grant funds for one reporting component of USDA were reclassified from 

“Obligations Incurred: Direct” to “Obligations Incurred: Reimbursable,” for fiscal year 2008. 

Furthermore, as discussed in Notes 1 and 10, in fiscal year 2009 the Department completed the 

implementation of Statement of Federal Financial Accounting Standards (SFFAS) 29, Heritage 

Assets and Stewardship Land, by reclassifying appropriate heritage assets and stewardship land 

information. Lastly, as discussed in Notes 1 and 29, in fiscal year 2009 the Department 

implemented SFFAS 31, Accounting for Fiduciary Activity, and no longer recognizes fiduciary 

assets on the balance sheet. 
94 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

The information in USDA’s Management’s Discussion and Analysis (MD&A), and required 

supplementary information (including stewardship information) contain a wide range of 

information, some of which is not directly related to the financial statements. This information is 

not a required part of the consolidated financial statements but is supplementary information 

required by accounting principles generally accepted in the United States of America and Office 

of Management and Budget (OMB) Circular A-136. We have applied certain limited 

procedures, consisting principally of inquiries of management regarding the methods of 

measurement and presentation of this information. However, we did not audit this information, 

and, accordingly, we express no opinion on it. As a result of such limited procedures, we believe 

that the controls over required supplementary information related to deferred maintenance are 

not sufficient to ensure the accuracy and completeness of the reported information. 

The information in the Other Accompanying Information Section is presented for purposes of 

additional analysis as required by OMB Circular A-136, and is not required as part of the 

financial statements. This information has not been subjected to auditing procedures and, 

accordingly, we express no opinion on it. 

Internal Control Over Financial Reporting

Our consideration of the internal control over financial reporting was for the limited purposes 

described in the Responsibilities Section of this report and would not necessarily identify all 

matters in the internal control over financial reporting that might be significant deficiencies. 

Significant deficiencies are deficiencies in internal control, or a combination of deficiencies, that 

adversely affect USDA’s ability to initiate, authorize, record, process, or report financial data 

reliably and in accordance with accounting principles generally accepted in the United States of 

America such that there is more than a remote likelihood that a misstatement of the financial 

statements being audited that is more than inconsequential will not be prevented or detected by 

USDA’s internal control. Material weaknesses are significant deficiencies, or combinations of 

significant deficiencies, that result in more than a remote likelihood that material misstatements 

in relation to the consolidated financial statements being audited will not be prevented or 

detected. Because of inherent limitations in any internal control, misstatements due to error or 

fraud may occur and not be detected. 

In our fiscal year 2009 audit, we noted certain matters described in this report’s findings and 

recommendations, involving the internal control over financial reporting and its operation that 

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

• overall financial management; and 

• IT security and controls. 

We believe that these two deficiencies are also material weaknesses and are discussed in our 

report in Findings and Recommendations, Section 1, Material Weaknesses in Internal Control 

over Financial Reporting. 

We did not identify any material weaknesses that were not disclosed in USDA’s Federal 

Managers’ Financial Integrity Act of 1982 (FMFIA) report. 
ANNUAL PERFORMANCE REPORT 95

Compliance and Other Matters

The results of our tests of compliance as described in the Responsibilities Section of this report, 

disclosed two instances of noncompliance with laws and regulations that are required to be 

reported under Government Auditing Standards and OMB Bulletin 07-04, as amended. 

Specifically, we reported noncompliance with certain aspects of appropriations law, as described 

in Finding 4 in the Findings and Recommendations, Section 2, Noncompliance with Laws and 

Regulations. Additionally, the results of our tests of the Federal Managers’ Financial Integrity 

Act of 1982 (FFMIA) disclosed instances, described in more detail in Finding 3 of the previously 

mentioned Section 2, where USDA’s financial management systems did not substantially comply 

with Federal financial management system requirements, applicable Federal Accounting 

Standards, and the U.S. Standard General Ledger (SGL) at the transaction level. 

Responsibilities

Management’s Responsibilities 

USDA’s management is responsible for (1) preparing the consolidated financial statements in 

conformity with accounting principles generally accepted in the United States of America, 

(2) establishing, maintaining and assessing internal control to provide reasonable assurance that 

the broad control objectives of the FMFIA are met, (3) ensuring that USDA’s financial 

management systems substantially comply with FFMIA requirements, and (4) complying with 

applicable laws and regulations. 

Auditors’ Responsibilities 

Our responsibility is to express an opinion on the fiscal years 2009 and 2008 consolidated 

financial statements of the USDA based on our audits. We conducted our audits in accordance 

with auditing standards generally accepted in the United States of America; the standards 

applicable to financial audits contained in Government Auditing Standards issued by the 

Comptroller General of the United States; and OMB Bulletin 07-04, Audit Requirements for 

Federal Financial Statements, as amended. Those standards require that we plan and perform 

the audit to obtain reasonable assurance about whether the financial statements are free of 

material misstatement. An audit includes examining, on a test basis, evidence supporting the 

amounts and disclosures in the financial statements. An audit also includes assessing the 

accounting principles used and significant estimates made by management, as well as evaluating 

the overall financial statement presentation. We believe that our audits provide a reasonable 

basis for our opinion. 

In planning and performing our audits, we considered USDA’s internal control over financial 

reporting by obtaining an understanding of the design effectiveness of internal controls, 

determining whether the internal controls had been placed in operation, assessing control risk, 

and performing tests of controls in order to determine our auditing procedures for the purpose of 

expressing our opinion on the consolidated financial statements. We limited our internal control 

testing to those controls necessary to achieve the objectives described in OMB Bulletin 07-04, as 

amended and Government Auditing Standards. We did not test all internal controls as defined by 

the FMFIA. The objective of our audit was not to provide an opinion on USDA’s internal 
96 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

control. Consequently, we do not provide an opinion on internal control over financial reporting 

nor on USDA’s assertion on internal control included in the MD&A. 

As part of obtaining reasonable assurance about whether the consolidated financial statements 

are free of material misstatement, we performed tests of USDA’s compliance with certain 

provisions of laws and regulations, contracts and agreements, and Governmentwide policy 

requirements, noncompliance with which could have a direct and material effect on the 

determination of the consolidated financial statement amounts. We also obtained reasonable 

assurance that USDA complied with certain provisions of other laws and regulations specified in 

OMB Bulletin 07-04, as amended, including requirements referred to in the FFMIA, except for 

those that, in our judgment, were clearly inconsequential. We limited our tests of compliance to 

the provisions described in the preceding sentences and did not test compliance with all laws and 

regulations applicable to USDA. However, providing an opinion on compliance with laws and 

regulations was not an objective of our audit and, accordingly, we do not express such an 

opinion. 

USDA’s response to the findings in our audit is included in its entirety in exhibit D. We did not 

audit the response and, accordingly, express no opinion on it. 

This report is intended solely for the information of the management of USDA, OMB, the U.S. 

Government Accountability Office (GAO) and the U.S. Congress, and is not intended to be, and 

should not be, used by anyone other than these specified parties. 

Phyllis K. Fong 

Inspector General 

November 16, 2009 
ANNUAL PERFORMANCE REPORT 97

Findings and Recommendations 

Section 1: Material Weaknesses in Internal Control Over Financial 

Reporting 

Finding 1: Improvements are Needed in Overall Financial 

Management

During fiscal year 2009, USDA continued to make improvements in its financial management. 

For example, exhibit B describes actions taken by the Department relating to obligations and 

reporting for loans. However, we noted areas where further improvements are needed. 

• We noted that obligations1 were not always valid because agencies did not effectively monitor, 

review, and certify unliquidated obligations (ULO). We selected a nonstatistical sample of 60 

obligations from 11 agencies for which no activity had occurred for over 2 years.2 We 

determined that 40 (67 percent) ULOs were invalid because no future expenditures were 

expected. We also found that 12 (20 percent) ULO balances were valid obligations but should 

have been paid off in prior fiscal years if properly monitored. These obligations inappropriately 

remained open, in part because USDA agencies were not submitting final payments to other 

USDA agencies and/or were not deobligating residual amounts after final payments were made. 

Additionally, we noted that when agencies did research and requested information necessary to 

close obligations, the obligee (other USDA agencies) did not always respond nor offer any 

explanation. 

We performed a review of the June 30, 2009 obligation certifications required by the 

Department. We determined that 3 of the 5 agencies selected for review inappropriately certified 

to the validity of their balances. Documentation provided to support agencies’ reviews and 

certifications showed incomplete and inaccurate reviews were performed. 

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

2009-04, Yearend Closing, dated June 17, 2009) requires an annual review of ULOs. 

Departmental Regulation (DR) 2230-1, Reviews of Unliquidated Obligations, dated April 21, 

2009, further requires quarterly reviews and certifications as to the validity of balances from 

agency Chief Financial Officers (CFO). 

Ineffective monitoring and reviewing as well as inappropriately certifying to the validity of 

obligation balances resulted in invalid obligations remaining open in the Foundation Financial 

Information System. Invalid obligations improperly restrict the availability of funding authority. 

This also increases the risk of misstating obligations as of yearend. 

In its FMFIA report for 2009, USDA continued to report a material weakness relating to the lack 

of consistent review and follow-up on ULOs. As noted in its FMFIA report, the Department has 

already taken several corrective actions, such as revising Departmental guidance and establishing 

 

1

 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. 

2

 Nonstatistical sample selected from activity as of March 31, 2009 and June 30, 2009.
98 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

a work group. The Department has several additional corrective actions planned, such as 

conducting training on new processes for managing ULOs, implementing automated controls to 

deobligate invalid ULOs, and modifying systems and procedures to improve ULO management. 

The Department estimates that all corrective actions will be completed in fiscal year 2010. 

However, our review disclosed additional oversight is needed to improve agency reviews and 

timely communication regarding requests for closing obligations. 

• In fiscal year 2009 we identified that improvements were needed in Rural Development’s 

controls over assumptions made to predict future cash flows for loans and loan guarantees 

(commonly referred to as “curve assumptions”). Specifically, we identified incorrect formulas 

and calculations, as well as inaccurate data used in the curve assumptions for various programs. 

These errors occurred because (1) a control requiring management’s validation, review, and 

approval of the development of the assumption curves was absent and (2) a designed control did 

not operate effectively. Direct loans obligated and loan guarantees committed after fiscal year 

1991 are reported in the financial statements based on the present value of the net cash flows 

estimated over the life of the loan or loan guarantee. Thus, any errors in the assumptions used in 

these calculations could cause material misstatements to the financial statements. Management 

corrected all identified errors prior to finalizing the financial statements. 

In its fiscal year 2009 FMFIA report, the Department noted that controls were lacking in the 

credit reform quality assurance process to ensure that cash flow models, data inputs, estimates, 

and reestimates are subject to appropriate management oversight. Rural Development indicated 

corrective actions would be completed by July 31, 2010. 

• We continued to identify abnormal balances3

 in the USDA fiscal yearend trial balance. For 

fiscal year 2009, we noted 15 abnormal account balances totaling about $289 million (absolute) 

at yearend. In fiscal year 2008, we reported a total abnormal balance of $1.2 billion in USDA’s 

fiscal yearend trial balance. The Department has made considerable efforts to identify and 

correct abnormal balances; however, further efforts are necessary to fully research and eliminate 

abnormal balances prior to fiscal yearend. According to the Department, the existence of an 

abnormal balance indicates that transactions or adjustments may have been posted in error. 

Abnormal balances also increase the risk that balances may be misstated on the financial 

statements. 

• In fiscal year 2009, we again attempted to perform an audit of the Natural Resources 

Conservation Service’s (NRCS) financial statements (Audit 10401-3-FM, NRCS’ Financial 

Statements for Fiscal Year 2009). NRCS was once more unable to provide sufficient evidential 

matter in support of transactions and account balances, as presented in the NRCS consolidated 

financial statements as of and for the year ended September 30, 2009, particularly with respect to 

obligations, obligations incurred including accrued expenses and undelivered orders, leases, 

internal use software, unfilled customer orders, and stewardship property, plant and equipment. 

NRCS was unable to complete corrective actions and make adjustments as necessary to these and 

other financial statement amounts, prior to the completion of its audit. 

 

3 A balance that deviates from the standard balance as defined by the Department of Treasury’s SGL. 
ANNUAL PERFORMANCE REPORT 99

Recommendation 1

Provide additional oversight to ensure agencies (1) properly monitor and review obligation 

balances (2) provide valid certifications based on complete and accurate reviews as required 

by DR 2230-001, and (3) understand the importance of responding to requests for bills or 

additional information in a timely manner. 

Finding 2: Improvements are Needed in Information Technology 

Security and Controls

We performed an independent evaluation of the Department’s IT security program and practices 

as required by the Federal Information Security Management Act of 2002 (FISMA). We also 

performed reviews of the general control structure of the Office of the Chief Information 

Officer/National Information Technology Center (OCIO/NITC) and the Office of the Chief 

Financial Officer/National Finance Center (OCFO/NFC) located in Kansas City, Missouri, and 

New Orleans, Louisiana, respectively.4

 Additionally, we reviewed required system 

documentation for a selected number of critical financial system applications. 

In fiscal year 2009, both OCIO/NITC and OCFO/NFC sustained unqualified opinions on their 

general control environments. Additionally, in fiscal year 2009, the Department fully 

implemented the Cyber Security Assessment and Management (CSAM) system. The CSAM is a 

comprehensive monitoring system which can facilitate achieving FISMA compliance. 

However, although improvements have been made in the Department’s IT security in the last 

decade, our FISMA report notes that many long-standing weaknesses remain. Since 2001, the 

Office of Inspector General (OIG) has reported material weaknesses in the design and 

effectiveness of the Department’s overall IT security program. USDA is a large and complex 

organization, which includes 29 separate agencies and staff offices, each with its own IT 

infrastructure. In order to mitigate the continuing material weaknesses, the Department needs to 

coordinate with each of its component agencies and offices to identify and prioritize the most 

significant security risks and then develop and implement a prioritized plan to systematically 

mitigate the risks using realistic goals and milestones. Once the plan is developed, the 

Department should continuously communicate with agencies to maintain their commitment to 

and progress towards implementing the needed corrective actions. Until this occurs, critical 

USDA data are exposed to an increased risk of inappropriate disclosure, modification, or 

deletion. 

The following summarizes the key matters identified during our evaluation of the Department’s 

IT security program and practices, as required by FISMA: 

• The Department should more effectively use CSAM when performing its oversight 

responsibilities to ensure agencies are compliant with Federal and Departmental guidance. Our 

review of the Department’s FISMA reportable systems documented in CSAM disclosed: (1) 53 

 

4 See exhibit A for information regarding the cited reports. 
100 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

systems did not have current certification and accreditations5 (C&A); (2) 250 systems were not 

reviewed and tested; (3) 73 systems did not have tested contingency plans; (4) 162 system 

interconnections were inaccurately reported; and (5) 12 systems were not accurately recorded as 

contractor systems (systems hosted or operated by a contractor). 

• Our review of the plan of action and milestones (POA&M)6

 process found that the Department 

did not have effective policies and procedures in place for reporting IT security deficiencies in 

CSAM. For example, we identified at least 35 instances for one agency where POA&Ms should 

have been created but were not. This occurred in part because oversight of the POA&M process 

had not been a priority within the Department. 

• We continued to find that agencies are not following the National Institute of Standards and 

Technology (NIST) and Departmental guidance when preparing C&A documentation. Agencies 

are required to submit C&A packages to the Department for an in-depth review (referred to as a 

concurrency review). We evaluated seven C&A concurrency reviews where the Department 

agreed with the agencies’ recommendations to accredit the system although the agencies’ 

documentation did not support accreditation. Additionally, when reviewing CSAM, OIG 

identified 34 systems with an expired authority to operate or interim authority to operate. 

• Our audit disclosed two agencies were not performing continuous monitoring of security 

controls in accordance with NIST guidance. Without a formal continuous monitoring plan, 

agencies cannot be certain that they are accomplishing the objectives of their security programs. 

• The Department needed to take additional actions to minimize the risk of unauthorized release 

of privacy data as required by OMB guidance. Due to the complexity and age of the legacy 

systems within USDA, the Department had not fully implemented its plan to reduce the use of 

social security numbers as identifiers. Also, because of technical issues associated with getting 

encryption data to run on USDA workstations, full disk encryption had only been implemented 

on 53 percent of the Department’s laptops. 

• Agencies were not using the security configuration checklist as required by NIST and the 

Department when deploying software covered by the NIST requirements. 

• As of September 30, 2009, USDA agencies reported that they had deployed about 90 percent 

of the required standard security settings which applied to them in accordance with Federal 

Desktop Core Configuration (FDCC) requirements. OMB required agencies with certain 

operating systems to be FDCC compliant by February 1, 2008. 

• We noted that due to the large volume of security incidents throughout the year, the 

Department did not always follow its own security review procedures. We found that only 18 of 

49 (37 per cent) of the incidents reviewed were handled in accordance with Departmental 

procedures. 

 

5 The C&A is a process mandated by OMB Circular A-130, Appendix III, “Security of Federal Automated Information Resource,” dated

November 28, 2000, that requires IT system controls to be documented, tested, and given formal authority to operate. 

6 POA&M is a tool that identifies tasks needing to be accomplished to assist agencies in identifying, assessing, prioritizing, and monitoring the progress of corrective efforts for security 

weaknesses found in programs and systems. 
ANNUAL PERFORMANCE REPORT 101

• We were unable to determine if users with significant IT responsibilities received specialized 

training as required by Federal law, NIST, and the Department. We further noted that there was 

not a consistent method for tracking mandatory security awareness training for contractors. 

• We scanned the networks of two agencies (using industry standard, commercially available 

software) to better understand the security posture of the Department. Our scans disclosed over 

20,000 vulnerabilities that were not mitigated in a timely manner. We also identified 299 critical 

settings on network devices that did not conform to NIST standards and 322 instances where 

code implemented on a website was not secure. Furthermore, our review disclosed that 1,705 

required software patches had not been installed on servers and 36,184 required patches had not 

been installed on workstations. 

Because of recommendations made in the FISMA report and planned actions by the Department, 

no recommendations are included herein to address the weaknesses discussed above. 

Additionally, for four key financial systems, we reviewed required documentation which 

supports system security as well as the ability to continue operations after a disaster. We found 

that System Security Plans (SSP) and Contingency and Disaster Recovery Plans did not fully 

comply with OCIO and NIST requirements. The areas of noncompliance had been identified in 

2007, however, corrections had not been made and POA&Ms had not been created for 

remediation. We also noted Interface listings were inconsistent and/or inaccurately documented 

in the SSPs and CSAM. Interconnection Security Agreements were outdated by at least 2 years 

as well. 

• Our review disclosed that information in the SSPs related to architectural processing diagrams, 

environmental factors, privacy, and detailed management controls was incomplete. Additionally, 

SSP documentation for one system included inaccurate location information and for one other 

system inconsistent system categorizations. We also noted that the CSAM overall system rating 

in one case was lower than indicated in the SSP. 

• Our review of Contingency and Disaster Recovery Plans disclosed that the plans did not 

contain all required information. Required information was lacking for specific notification and 

recovery procedures, full testing of restored systems, and the decision process and authority for 

deactivation of the plan. 

• We also compared SSPs to CSAM for system interconnections and noted discrepancies. 

• We obtained Interconnection Security Agreements (ISA) and found all the agreements were 

invalid because the agreements had not been updated with current signatures. Without valid 

signatures, neither USDA nor its external partner are obligated to adhere to agreed-upon 

technical and security requirements. 

The Department considers the SSP to be the foundation of the overall security process because it 

defines the system security features and controls. It further supports Capital Planning and 

Investment Control, FISMA reporting, system life cycle efforts, risk management activities, as 

well as the C&A of the system. Contingency and Disaster Recovery planning is also vitally 

important to ensure the Department will continue operating effectively and efficiently in the 

event of a major incident or disaster. An accurate accounting of all interconnected systems and 
102 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

agreed upon responsibilities for those connections supports these processes through 

consideration of additional security risks and requirements. Without all of these elements in 

place, the effectiveness of the overall security process is lessened. 

As previously discussed, the Department is in the process of addressing the weaknesses 

identified in our FISMA report. Therefore, recommendations made in this report are limited to 

those relevant to the review of documentation of selected financial system applications. 

Recommendation 2

Create a POA&M to correct deficiencies noted in both SSPs and Contingency and Disaster 

Recovery Plans, (2) revise CSAM and/or system documentation to reflect consistent and 

accurate information, and (3) institute policy and procedures to ensure review and signature 

of all parties bound by ISAs. 
ANNUAL PERFORMANCE REPORT 103

Section 2: Noncompliance with Laws and Regulations 

Finding 3: Lack of Substantial Compliance with FFMIA Requirements

FFMIA requires agencies to annually assess whether their financial management systems comply 

substantially with (1) Federal Financial Management Systems Requirements (FFMSR), (2) 

applicable Federal accounting standards, and (3) the SGL 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 2009, USDA evaluated its financial management systems to assess 

compliance with FFMIA. The Department reported that it was not substantially compliant with 

FFMSR, applicable accounting standards, SGL at the transaction level, and FISMA 

requirements. 

As noted in its MD&A, USDA plans to continue its effort to achieve compliance with the 

FFMIA and FISMA objectives. Improving Federal financial management systems is critical to 

increasing the accountability of financial program managers, providing better information for 

decision making, and increasing the efficiency and effectiveness of services provided by the 

Federal Government. 

In its FFMIA report, the Department reported noncompliance with FFMSR and FISMA for 

multiple agencies relating to logical access controls, configuration management, physical access, 

and environmental protection and disaster recovery. 

Additionally, in its FFMIA report, the Department noted noncompliances for three of its 

component agencies, described below. 

1. The Commodity Credit Corporation’s (CCC) funds control management system is not 

integrated with its financial management system. Thus, CCC is not able to comply with 

FFMSR. CCC is working towards integration and is modernizing its financial systems. 

Corrective action is scheduled for completion by October 31, 2012. 

2. The Forest Service (FS) does not comply with FFMSR and the SGL ledger at the 

transaction level. Corrective actions are scheduled for completion by October 1, 2010, 

for the SGL noncompliance. 

3. NRCS did not comply with FFMSR, Federal accounting standards, and the SGL at the 

transaction level. Corrective actions are scheduled for completion by 

December 31, 2009. 

Because of actions planned by the Department, we are making no further recommendations in 

this report. 

Finding 4: Transactions Were Not Always Obligated In Accordance 

With Appropriations Law

We noted that NRCS did not always obligate transactions in accordance with appropriations law. 

NRCS did not obligate leases, training, and various other transactions prior to payment. 
104 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

The GAO Publication GAO/OGC-92-13, Appropriations Law, defines an obligation in very 

general terms as, “an action that creates a liability or definite commitment on the part of the 

Government to make a disbursement at some later time. The obligation takes place when the 

definite commitment is made, even though the actual payment may not take place until the 

following fiscal year.” 

A recommendation was included in the NRCS’s financial statement audit report. Therefore, we 

are making no additional recommendations in this report. (We also note that this 

noncompliance, reported for the FS in our fiscal year 2008 report, no longer exists.) 
ANNUAL PERFORMANCE REPORT 105

Exhibit A: Audit Reports Related to the Fiscal Year 2009 

Financial Statements 

The following is a list of reports which are related to OIG’s audit of USDA’s fiscal year 2009 

financial statements. 

AUDIT NUMBER AUDIT TITLE RELEASE DATE 

05401-18-FM Federal Crop Insurance 

Corporation/Risk Management 

Agency’s Financial Statements for 

Fiscal Years 2009 and 2008 

November 2009 

06401-24-FM Commodity Credit Corporation’s 

Financial Statements for Fiscal Years 

2009 and 2008 

November 2009 

08401-10-FM Forest Service’s Financial Statements 

for Fiscal Years 2009 and 2008 

November 2009 

10401-3-FM Natural Resources and Conservations 

Service’s Financial Statements for 2009 

November 2009 

11401-30-FM Statement on Auditing Standards No. 

70, Report on the National Finance 

Center General Controls Review – 

Fiscal Year 2009 

September 2009 

27401-34-HY Food and Nutrition Service Financial 

Statements for Fiscal Years 

2009 and 2008 

November 2009 

50501-15-FM Fiscal Year 2009 Federal Information 

Security Management Act Report 

November 2009 

85401-17-FM Rural Development’s Financial 

Statements for Fiscal 

Years 2009 and 2008 

November 2009 

88501-13-FM Statement on Auditing Standards No. 

70, Report on the National Information 

Technology Center General Controls 

Review – Fiscal Year 2009 

September 2009 
106 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Exhibit B: Summary of Prior Year Recommendations 

Audit Report 50401-65-FM, U.S. Department of Agriculture’s Consolidated Financial 

Statements for Fiscal Years 2008 and 2007, issued November 14, 2008 

Recommendation 1

Provide additional oversight to ensure that general ledgers reflect valid obligations and that 

agencies perform the required reviews timely and effectively. 

Departmental Status

During fiscal year 2009, the Department issued revised Bulletin 2230-1, “Reviews of 

Unliquidated Obligations” requiring agencies to review and certify aged ULOs quarterly instead 

of annually as previously required. The Department established a working group to monitor 

timely reviews of obligations. In addition the Department performed an internal review of aged 

ULO’s as of March 31, 2009. 

OIG Results

This Material Weakness continues to exist, as discussed in Finding 1. 

Audit Report 50401-62-FM, U.S. Department of Agriculture’s Consolidated Financial 

Statements for Fiscal Years 2007 and 2006, issued November 15, 2007 

Recommendation 1

Implement an effective quality control review process throughout the Department for credit 

reform processes that, at a minimum, includes independent quality assurance reviews of model 

changes, data extracts, and reestimates. 

Departmental Status

During fiscal year 2009, the Department reinstituted the Credit Reform Working Group to 

improve coordination and communication amongst the three lending agencies. 

OIG Results

Material weakness remains for Rural Development, as discussed in Finding 1. 
ANNUAL PERFORMANCE REPORT 107

Exhibit C: Status of Prior Year Noncompliance Findings 

Audit Report 50401-65-FM, U.S. Department of Agriculture’s Consolidated Financial 

Statements for Fiscal Years 2008 and 2007, issued November 14, 2008

Reported Condition

On September 30, 2008, USDA formally reported an Anti-Deficiency Act (ADA) violation of 

about $18 million by the FS to the President, Congress, and OMB. In May 2007, the Office of 

General Counsel issued an opinion concluding that FS had an ADA violation. In February 2008, 

GAO issued a decision, as the request of FS, which also found that the agency violated ADA. 

Status

The Department reported no new ADAs in fiscal year 2009. 

Please note this addresses only noncompliance findings that are not discussed in Section 2 of the 

audit report. 
108 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Exhibit D: Agency Response 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 109

Consolidated Balance Sheet

As of September 30, 2009 and 2008 

(In Millions) 

2009 2008

Assets (Note 2):

Intragovernmental:

Fund Balance with Treasury (Note 3) 72,334 $ 64,595 $ 

Investments (Note 5) 165 109 

Accounts Receivable, Net (Note 6) 270 249 

Other (Note 11) 4 5 

Total Intragovernmental 72,773 64,958 

Cash and Other Monetary Assets (Note 4) 248 348 

Investments (Note 5) 3 3 

Accounts Receivable, Net (Note 6) 8,596 10,049 

Direct Loan and Loan Guarantees, Net (Note 7) 85,657 81,774 

Inventory and Related Property, Net (Note 8) 205 15 

General Property, Plant, and Equipment, Net (Note 9) 2,972 2,973 

Other (Note 11) 185 253 

Total Assets 160,373 170,639 

Stewardship PP&E (Note 10)

Liabilities (Note 12):

Intragovernmental:

Accounts Payable 5 7 

Debt (Note 13) 84,119 77,577 

Other (Note 15) 11,774 13,678 

Total Intragovernmental 95,898 91,262 

Accounts Payable 734 848 

Loan Guarantee Liability (Note 7) 1,844 1,333 

Federal Employee and Veteran Benefits 846 832 

Environmental and Disposal Liabilities (Note 14) 9 25 

Benefits Due and Payable 3,119 2,764 

Other (Notes 15 & 16) 23,274 23,908 

Total Liabilities 120,972 125,724 

Commitments and Contingencies (Note 17)

Net Position:

Unexpended Appropriations - Earmarked Funds (Note 18) 1,263 1,428 

Unexpended Appropriations - Other Funds 37,039 29,355 

Cumulative Results of Operations - Earmarked Funds (Note 18) (349) (490) 

Cumulative Results of Operations - Other Funds 6,962 9,108 

Total Net Position 39,401 44,915 

Total Liabilities and Net Position $ 160,373 170,639 $ 

Consolidated Financial Statements 

The accompanying notes are an integral part of these statements. 
110 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Consolidated Statement of Net Cost 

For the Years Ended September 30, 2009 and 2008 

(In Millions) 

2009 2008

Enhance International Competitiveness

of American Agriculture:

Gross Costs 1,779 $ 2,484 $ 

Less: Earned Revenue 417 455 

Net Costs 1,362 2,029 

Enhance the Competitiveness and Sustainability

of Rural and Farm Economies:

Gross Costs 27,986 20,995 

Less: Earned Revenue 5,870 3,836 

Net Costs 22,116 17,159 

Support Increased Economic Opportunities and 

Improved Quality of Life in Rural America:

Gross Costs 7,029 8,426 

Less: Earned Revenue 3,796 4,547 

Net Costs 3,233 3,879 

Enhance Protection and Safety of the Nation's

Agriculture and Food Supply:

Gross Costs 3,409 3,374 

Less: Earned Revenue 797 935 

Net Costs 2,612 2,439 

Improve the Nation's Nutrition and Health:

Gross Costs 78,818 60,181 

Less: Earned Revenue 61 49 

Net Costs 78,757 60,132 

Protect and Enhance the Nation's 

Natural Resource Base and Environment:

Gross Costs 11,730 12,105 

Less: Earned Revenue 742 1,010 

Net Costs 10,988 11,095 

Total Gross Costs 130,751 107,565 

Less: Total Earned Revenue 11,683 10,832 

Net Cost of Operations (Note 19) $ 96,733 119,068 $ 

The accompanying notes are an integral part of these statements. 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 111

Consolidated Statement of Changes in Net Position 

For The Year Ended September 30, 2009 

(In Millions) 

Earmarked

Funds All Other Consolidated

(Note 18) Funds Eliminations Total

Cumulative Results of Operations:

Beginning Balances (490) $ 9,108 $ - $ 8,618 $ 

 Budgetary Financing Sources:

Appropriations Used 6,986 104,227 - 111,213 

Non-exchange Revenue - 10 - 10 

Donations and Forfeitures of Cash and Equivalents 1 - - 1 

Transfers In (Out) without Reimbursement 1,639 4,592 - 6,231 

 Other Financing Sources (Non-Exchange):

Transfers In (Out) without Reimbursement (70) (492) - (562) 

Imputed Financing 48 3,785 (2,800) 1,033 

Other 48 (911) - (863) 

Total Financing Sources 8,652 111,211 (2,800) 117,063 

Net Cost of Operations (8,511) (113,357) 2,800 (119,068) 

Net Change 141 (2,146) - (2,005) 

 Cumulative Results of Operations 6,962 (349) - 6,613 

Unexpended Appropriations:

Beginning Balances 1,428 29,355 - 30,783 

 Budgetary Financing Sources:

 Appropriations Received 6,778 114,209 - 120,987 

 Appropriations Transferred In (Out) (5) 22 - 17 

 Other Adjustments 48 (2,320) - (2,272) 

 Appropriations Used (6,986) (104,227) - (111,213) 

Total Budgetary Financing Sources (165) 7,684 - 7,519 

Unexpended Appropriations 37,039 1,263 - 38,302 

Net Position $ 44,001 914 $ - $ 44,915 $ 

The accompanying notes are an integral part of these statements. 
112 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Consolidated Statement of Changes in Net Position 

For The Year Ended September 30, 2008 

(In Millions) 

Earmarked

Funds All Other Consolidated

(Note 18) Funds Eliminations Total

Cumulative Results of Operations:

Beginning Balances 789 $ 7,517 $ - $ 8,306 $ 

 Budgetary Financing Sources:

Appropriations Used 3,517 86,379 - 89,896 

Non-exchange Revenue - 19 - 19 

Donations and Forfeitures of Cash and Equivalents 1 23 - 24 

Transfers In (Out) without Reimbursement 1,247 5,291 - 6,538 

 Other Financing Sources (Non-Exchange):

Transfers In (Out) without Reimbursement (32) (359) - (391) 

Imputed Financing 46 3,429 (2,568) 907 

Other (32) 84 - 52 

Total Financing Sources 4,863 94,750 (2,568) 97,045 

Net Cost of Operations (6,142) (93,159) 2,568 (96,733) 

Net Change (1,279) 1,591 - 312 

 Cumulative Results of Operations 9,108 (490) - 8,618 

Unexpended Appropriations:

Beginning Balances 1,113 29,824 - 30,937 

 Budgetary Financing Sources:

 Appropriations Received 4,157 86,854 - 91,011 

 Appropriations Transferred In (Out) (3) 10 - 7 

 Other Adjustments (322) (954) - (1,276) 

 Appropriations Used (3,517) (86,379) - (89,896) 

Total Budgetary Financing Sources 315 (469) - (154) 

Unexpended Appropriations 29,355 1,428 - 30,783 

Net Position $ 38,463 938 $ - $ 39,401 $ 

The accompanying notes are an integral part of these statements. 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 113

Combined Statement of Budgetary Resources 

For The Years Ended September 30, 2009 And 2008 

(In Millions) 

Non-Budgetary Non-Budgetary

Credit Reform Credit Reform

Budgetary Financing Accounts Budgetary Financing Accounts

Budgetary Resources:

Unobligated balance, brought forward, October 1 28,078 $ 5,314 $ 27,756 $ 5,208 $ 

Recoveries of prior year unpaid obligations 3,934 754 4,103 1,226 

Budget Authority -

Appropriation 132,335 - 102,655 - 

Borrowing Authority 28,870 14,905 30,267 14,911 

Earned -

Collected 22,678 9,496 23,370 8,855 

Change in receivables from Federal Sources (60) - (45) (177) 

Change in unfilled customer orders -

Advances received 140 - (6) - 

Without advance from Federal Sources (47) 220 12 241 

Expenditure transfers from trust funds 1,130 - 963 - 

Nonexpenditure transfers, net, anticipated and actual (431) - (743) - 

Temporarily not available pursuant to Public Law (12) - (11) - 

Permanently not available (32,938) (5,605) (38,925) (6,911) 

Total Budgetary Resources 183,67 25,084 7 149,396 23,353 

Status of Budgetary Resources:

Obligations Incurred -

Direct 122,471 20,395 96,475 18,039 

 Reimbursable 27,642 - 24,843 - 

Unobligated Balance -

 Apportioned 13,786 2,324 7,925 2,784 

Exempt from Apportionment 873 4 1,100 5 

Unobligated balance not available 18,905 2,361 19,053 2,525 

Total Status of Budgetary Resources 183,67 25,084 7 149,396 23,353 

Change in Obligated Balances:

Obligated balance, net, brought forward October 1 25,277 20,694 25,472 18,107 

Obligations incurred 150,113 20,395 121,318 18,039 

Gross outlays (141,959) (16,818) (117,444) (14,162) 

Recoveries of prior year unpaid obligations, actual (3,934) (754) (4,103) (1,226) 

Change in uncollected payments from Federal Sources 107 (220) 33 (64) 

Obligated balance, net, end of period -

Unpaid obligations 30,836 24,414 26,616 21,590 

Uncollected customer payments from Federal Sources (1,232) (1,116) (1,339) (896) 

Obligated Balance, net, end of period 29,60 23,298 4 25,277 20,694 

Net Outlays:

Gross outlays 141,959 16,818 117,444 14,162 

Offsetting collections (23,948) (9,496) (24,327) (8,855) 

Distributed offsetting receipts (3,100) (474) (1,889) (353) 

Net Outlays 114,911 $ 6,848 $ 91,228 $ 4,954 $ 

2009 2008

The accompanying notes are an integral part of these statements. 
114 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Notes to the Consolidated Financial Statements 

As of September 30, 2009 and 2008 

(In Millions) 

NOTE 1. SIGNIFICANT ACCOUNTING POLICIES 

Organization 

The Department of Agriculture (USDA) provides a wide variety of services in the United States and around the 

world. USDA is organized into seven distinct mission areas and their agencies that execute these missions. 

Listed below are the missions and the agencies within each mission including four Government corporations: 

Farm and Foreign Agricultural Services (FFAS) 

• Farm Service Agency (FSA) 

− Commodity Credit Corporation (CCC) 

• Foreign Agricultural Service (FAS) 

• Risk Management Agency (RMA) 

− Federal Crop Insurance Corporation (FCIC) 

Food, Nutrition, and Consumer Services (FNCS) 

• Food and Nutrition Service (FNS) 

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) 

• Natural Resources Conservation Service (NRCS) 

Research, Education, and Economics (REE) 

• Agricultural Research Service (ARS) 

• Cooperative State Research, Education, and Extension Service (CSREES) 

• Economic Research Service (ERS) 

• National Agricultural Statistics Service (NASS) 

Rural Development 

• Rural Development (RD) 

− Rural Telephone Bank (RTB) – a corporation 

− Alternative Agricultural Research and Commercialization Corporation (AARC) 

With the passage of the 2006 Agriculture, Rural Development, Food and Drug Administration, and Related 

Agencies Appropriation Act, Public Law No. 109-97, the legal restriction on redeeming Government-owned Class 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 115

A stock was removed for RTB. As a result of this change, the process of liquidation and dissolution of the RTB 

began. During FY 2008, RTB was dissolved in its entirety and will no longer be a reportable entity. 

Consolidation 

The financial statements consolidate all the agencies’ results. The effects of intradepartmental activity and balances 

are eliminated, except for the Statement of Budgetary Resources that is presented on a combined basis. The 

financial statements are prepared in accordance with generally accepted accounting principles for the Federal 

Government. 

Reclassifications 

Certain reclassifications have been made to prior year amounts to conform to the current year presentation. Note 

21, Apportionment Categories of Obligations Incurred was reclassified to conform to the FY 2008 OMB 

apportionment schedule. CCC reclassified FY 2008 obligations incurred for the P.L. 480 Title II Grant Fund 

from reimbursable to direct on the Statement of Budgetary Resources. 

Use of Estimates 

The preparation of financial statements requires management to make estimates and assumptions that affect the 

amounts reported in the financial statements and accompanying notes. Actual results could differ from those 

estimates. 

Revenue and Other Financing Sources 

Revenue from exchange transactions is recognized when persuasive evidence of an arrangement exists, delivery has 

occurred or services have been rendered, sales price is fixed or determinable, and collection is reasonably assured. In 

certain cases, the prices charged by the Department are set by law or regulation, which for program and other 

reasons may not represent full cost. Prices set for products and services offered through the Department’s working 

capital funds are intended to recover the full costs incurred by these activities. Revenue from non-exchange 

transactions is recognized when a specifically identifiable, legally enforceable claim to resources arises, to the extent 

that collection is probable and the amount is reasonably estimable. Appropriations are recognized as a financing 

source when used. An imputed financing source is recognized for costs subsidized by other Government entities. 

Investments 

The Department is authorized to invest certain funds in excess of its immediate needs in Treasury securities. 

Investments in non-marketable par value Treasury securities are classified as held to maturity and are carried at cost. 

Investments in market-based Treasury securities are classified as held to maturity 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 cash-flows estimated over the life of the loan or guarantee. The difference between the outstanding 

principal of the loans and the present value of their net cash inflows is recognized as a subsidy cost allowance; the 

present value of estimated net cash outflows of the loan guarantees is recognized as a liability for loan guarantees. 

The subsidy expense for direct or guaranteed loans disbursed during the year is the present value of estimated net 

cash outflows for those loans or guarantees. A subsidy expense also is recognized for modifications made during the 

year to loans and guarantees outstanding and for reestimates made as of the end of the year to the subsidy 

allowances or loan guarantee liability for loans and guarantees outstanding. 
116 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Direct loans obligated and loan guarantees committed before fiscal 1992 are valued using the present-value method. 

Under the present-value method, the outstanding principal of direct loans is reduced by an allowance equal to the 

difference between the outstanding principal and the present value of the expected net cash flows. The liability for 

loan guarantees is the present value of expected net cash outflows due to the loan guarantees. 

Inventories and Related Property 

Inventories to be consumed in the production of goods for sale or in the provision of services for a fee are valued on 

the basis of historical cost using a first-in, first-out method. Commodities are valued at the lower of cost or net 

realizable value using a weighted average method. 

Property, Plant and Equipment 

Property, plant and equipment (PP&E) are stated at cost less accumulated depreciation. Depreciation is determined 

using the straight-line method over the estimated useful lives of the assets. Useful lives for PP&E are disclosed in 

Note 9. Capitalization thresholds for personal property and real property are $25,000 and $100,000 for internal use 

software. There are no restrictions on the use or convertibility of PP&E. 

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. 

Earmarked Funds 

In accordance with SFFAS 27, Identifying and Reporting Earmarked Funds, which became effective in FY 2006, 

the Department has reported the earmarked funds 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 other financing sources only for designated activities, benefits or purposes; (2) explicit authority for 

the earmarked fund to retain revenues and 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 other financing sources that distinguishes the earmarked fund from 

the Government’s general revenues. 

Stewardship PP&E 

SFFAS 29, Heritage Assets and Stewardship Land, reclassified all heritage assets and stewardship land information 

as basic except for condition information, which is classified as RSI. The reclassification as basic information was 

phased in per SFFAS 29. Heritage assets and stewardship land information that was previously reported in RSSI 

temporarily shifted to RSI until it moved to a note on the balance sheet as basic information. The phase-in of 

disclosure requirements being reported as basic information provided that SFFAS 29 was fully implemented for 

reporting periods beginning after September 30, 2008. See Note 10, Stewardship PP&E. 

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. 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 117

Allocation Transfers 

The Department 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. 

The Department allocates funds, as the parent, to the Department of Transportation, Department of the Interior, 

Department of Defense, Department of Housing and Urban Development, U.S. Agency for International 

Development and the Small Business Administration. The Department receives allocation transfers, as the child, 

from the Department of Labor, Department of Transportation, Department of the Interior, Economic 

Development Administration, Appalachian Regional Commission and the Delta Regional Authority. 

Inter-Entity Cost Implementation 

Beginning in FY 2009, SFFAS 30, Inter-Entity Cost Implementation became effective. This standard requires full 

implementation of the inter-entity cost provision in SFFAS 4, Managerial Cost Accounting Standards and 

Concepts. 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 

Beginning in FY 2009, SFFAS 31, Accounting for Fiduciary Activities became effective. 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. Prior period amounts presented in the basic financial statements and notes were 

not restated. See Note 29, Fiduciary Activities. 
118 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

NOTE 2. NON-ENTITY ASSETS 

Non-entity assets include proceeds from the sale of timber payable to Treasury, timber contract performance bonds, 

employer contributions and payroll taxes withheld for agencies serviced by the National Finance Center, interest, 

fines and penalties. In FY 2008, non-entity assets included property taxes and insurance for single family housing 

borrowers. 

FY 2009 FY 2008

Intragovernmental:

Fund balance with Treasury 152 $ 62 $ 

Accounts Receivable 24 23 

Subtotal Intragovernmental 176 85 

With the Public:

Cash and other monetary assets - 125 

Accounts receivable 97 127 

Subtotal With the Public 97 252 

Total non-entity assets 273 337 

Total entity assets 170,366 160,036 

Total Assets 170,639 $ 160,373 $ 

NOTE 3. FUND BALANCE WITH TREASURY 

Other Fund Types include deposit and clearing accounts. Borrowing Authority not yet Converted to Fund Balance 

represents un-obligated 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. Unprocessed Intragovernmental Payment and Collection 

(IPAC) transactions were not reported to Treasury at the end of FY 2009 because the proper Treasury Account 

Symbol was unknown which reduced Fund Balance with Treasury by $35 million. 

FY 2009 FY 2008

Fund Balances:

 Trust Funds $ 633 519 $ 

 Special Funds 16,977 17,239 

 Revolving Funds 8,003 8,338 

 General Funds 46,761 38,326 

 Other Fund Types 74 59 

Total 64,595 72,334 

Status of Fund Balance with Treasury:

Unobligated Balance:

 Available 11,814 16,987 

 Unavailable 21,577 21,266 

Obligated Balance not yet Disbursed 52,748 45,841 

Borrowing Authority not yet Converted to Fund Balance (32,803) (29,681) 

Non-Budgetary Fund Balance with Treasury 14,136 15,044 

Total $ 64,595 72,334 $ 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 119

NOTE 4. CASH AND OTHER MONETARY ASSETS 

In FY 2009 and FY 2008, cash includes Federal crop insurance escrow amounts of $154 million and $130 million 

and price support transfers in transit of $93 million and $92 million, respectively. In FY 2008, funds held in escrow 

for single family housing borrowers and certificates of deposit were $125 million and $1 million, respectively. 

FY 2009 FY 2008

Cash $ 348 248 $ 

NOTE 5. INVESTMENTS 

FY 2009 Amortized Market

Amortization (Premium) Interest Investments, Value

Method Cost Discount Receivable Net Disclosure

Intragovernmental:

Non-marketable

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

Market-based Straight Line 165 (1) 1 165 165 

Total 165 $ (1) $ 1 $ 165 $ 165 $ 

With the Public:

AARC 3 $ - $ - $ 3 $ 3 $ 

Total 3 $ - $ - $ 3 $ 3 $ 

FY 2008 Amortized Market

Amortization (Premium) Interest Investments, Value

Method Cost Discount Receivable Net Disclosure

Intragovernmental:

Non-marketable

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

Market-based Straight Line 107 1 1 109 109 

Total 107 $ 1 $ 1 $ 109 $ 109 $ 

With the Public:

AARC 3 $ - $ - $ 3 $ 3 $ 

Total 3 $ - $ - $ 3 $ 3 $ 
120 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

NOTE 6. ACCOUNTS RECEIVABLE, NET 

FY 2009

Accounts 

Receivable, 

Gross

Allowance for 

Uncollectible 

Accounts

Accounts 

Receivable, 

Net

Intragovernmental 270 $ - $ 270 $ 

With the Public 8,621 (25) 8,596 

Total 8,891 $ (25) $ 8,866 $ 

FY 2008

Accounts 

Receivable, 

Gross

Allowance for 

Uncollectible 

Accounts

Accounts 

Receivable, 

Net

Intragovernmental 249 $ - $ 249 $ 

With the Public 10,079 (30) 10,049 

Total 10,328 $ (30) $ 10,298 $ 

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 net present value. 

Direct loan obligations or loan guarantee commitments made post-1991, and the Federal Credit Reform Act of 

1990 as amended governs 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 2009 was $85,657 million compared to $81,774 million at 

the end of FY 2008. Loans exempt from the Federal Credit Reform Act of 1990 represent $414 million of the total 

compared to $643 million in FY 2008. Table 1 illustrates the overall composition of the Department’s credit 

program balance sheet portfolio by mission area and credit program for FY 2009 and FY 2008. 

During the fiscal year, the gross outstanding balance of the direct loans obligated post-1991 is adjusted by the value 

of the subsidy cost allowance held against those loans. Current year subsidy expense, modifications and reestimates 

all contribute to the change of the subsidy cost allowance throughout the year. The subsidy cost allowance moved 

from $4,661 million to $5,284 million during FY 2009, an increase of $623 million. Table 2 shows the 

reconciliation of subsidy cost allowance balances from FY 2008 to FY 2009. 

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 2009 was $977 million compared to $462 million in FY 2008. Table 3 illustrates the 

breakdown of total subsidy expense for FY 2009 and FY 2008 by program. 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 121

Direct loan volume increased from $8,758 million in FY 2008 to $9,715 million in FY 2009. Volume distribution 

between mission area and program is shown in Table 4. 

Guaranteed Loans 

Guaranteed loans are administered in coordination with conventional agricultural lenders for up to 95 percent of 

the principal loan amount. Under the guaranteed loan programs, the lender is responsible for servicing the 

borrower’s account for the life of the loan. The Department, however, is responsible for ensuring borrowers meet 

certain qualifying criteria to be eligible and monitoring the lender’s servicing activities. Borrowers interested in 

guaranteed loans must apply to a conventional lender, which then arranges for the guarantee with a Department 

agency. Estimated losses on loan and foreign credit guarantees are reported at net present value as Loan Guarantee 

Liability. Defaulted guaranteed loans are reported at net present value as Loans Receivable and Related Foreclosed 

Property, Net. 

Guaranteed loans outstanding at the end of FY 2009 were $57,367 million in outstanding principal and $51,527 

million in outstanding principal guaranteed, compared to $40,787 and $36,492 million, respectively at the end of 

FY 2008. Table 5 shows the outstanding balances by credit program. 

During the fiscal year, the value of the guaranteed loans is adjusted by the value of the loan guarantee liability held 

against those loans. Current year subsidy expense, modification and reestimates all contribute to the change of the 

loan guarantee liability through the year. The loan guarantee liability is a combination of the liability for losses on 

pre-1992 guarantees and post-1991 guarantees. Table 6 shows that total liability moved from $1,333 million to 

$1,844 million during FY 2009, an increase of $511 million. The post-1991 liability moved from $1,332 million to 

$1,843 million, an increase of $511 million. Table 7 shows the reconciliation of 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 2009 was $409 million compared to $82 million in FY 2008. Table 8 

illustrates the breakdown of total subsidy expense for FY 2009 and FY 2008 by program. 

Guaranteed loan volume increased from $11,374 million in FY 2008 to $23,126 million in FY 2009. Volume 

distribution between mission area and program is shown in Table 9. 

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. 

The Farm and Foreign Agricultural Services 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 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 
122 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

options include reamortization, restructuring, loan deferral, lowering interest rate, 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 also 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 Club). The Club is an 

internationally recognized organization under the leadership of the French Ministry of Economics and Finance. Its 

sole purpose is to assess, on a case-by-case basis, liquidity problems faced by economically disadvantaged countries. 

The general premise of the Club’s activities is to provide disadvantaged nations short-term liquidity relief to enable 

them to re-establish their credit worthiness. The 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. The 2008 Farm Bill added hay and renewable 

biomass as eligible FSFL commodities, extended the maximum loan term to 12 years and increased the maximum 

loan amount to $500,000. 

Farm and Foreign Agricultural Service 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 

Guaranteed Farm Operating 

Subsidized/Unsubsidized 

Agricultural Resource Demonstration Fund 

Bureau of Reclamation Loan Fund 

Guaranteed Farm Ownership 

Unsubsidized 

American Recovery and Reinvestment 

Fund 

General Sales Manager Guarantee Credit 

Program 

Facility Program Guarantee 

P.L. 480 Title 1 Program 

Direct Farm Storage Facility 

Direct Sugar Storage Facilities 

The Rural Development Mission Area 

Each year, RD programs create or preserve tens of thousands of rural jobs and provide or improve the quality of 

rural housing. To leverage the impact of its programs, RD is working with State, local and Indian tribal 

Governments, as well as private and not-for-profit organizations and user-owned cooperatives. 

Through its rural housing loan and grant programs, RD provides affordable housing and essential community 

facilities to rural communities. Rural housing programs help finance new or improved housing for moderate, low, 

and very low-income families each year. The programs also help rural communities finance, construct, enlarge or 

improve fire stations, libraries, hospitals and medical clinics, industrial parks, and other community facilities. 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 123

The Rural Business Program goal is to promote a dynamic business environment in rural America. RD partners 

with the private sector and community-based organizations to provide financial assistance and business planning. It 

also provides technical assistance to rural businesses and cooperatives, conducts research into rural economic issues, 

and provides cooperative educational materials to the public. 

The Rural Utilities Program helps to improve the quality of life in rural America through a variety of loan programs 

for electric energy, telecommunications, and water and environmental projects. This program leverages scarce 

Federal funds with private capital for investing in rural infrastructure, technology and development of human 

resources. 

RD programs 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 write-downs. The choice of servicing options depends on the loan program and the individual borrower. 

Rural Development List of Programs 

Rural Housing Program Rural Business Program Rural Utilities Program 

Home Ownership Direct Loans 

Home Ownership Guaranteed Loans 

Home Improvement and Repair Direct Loans 

Home Ownership and Home Improvement and 

Repair Nonprogram Loans 

Rural Housing Site Direct Loans 

Farm Labor Housing Direct Loans 

Rural Rental and Rural Cooperative Housing Loans 

Rental Housing Guaranteed Loans 

Multi-family Housing–Nonprogram–Credit Sales 

Community Facilities Direct Loans 

Community Facilities Guaranteed Loans 

Business and Industry Direct Loans 

Business and Industry Guaranteed Loans 

Intermediary Relending Program Direct 

Loans 

Rural Economic Development Direct 

Loans 

Water and Environmental Direct Loans 

Water and Environmental Guaranteed Loans 

Electric Direct Loans 

Electric Guaranteed Loans 

Telecommunications Direct Loans 

Federal Financing Bank-Telecommunications 

Guaranteed 

Distance Learning and Telemedicine Direct 

Broadband Telecommunications Services 

Discussion of Administrative Expenses, Subsidy Costs and Subsidy Rates 

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 2009 and FY 2008 are shown in Table 10. 

Reestimates, Default Analysis, and Subsidy Rates 

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. 

RD’s cash flow models are tailored for specific programs based on unique program characteristics. The models 

utilized are housing, guaranteed, Electric Underwriters, FFB modifications and a direct model that covers the 

remaining portfolio with similar characteristics. 

The annual reestimate process updates the budget assumptions with actual portfolio performance, interest rates and 

updated estimates for future loan performance. The FY 2009 reestimate process resulted in an $565 million 
124 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

increase in the post 1991 estimated cost of the direct loan portfolio and a $72 million increase in the post 1991 

estimated cost of the guaranteed loan portfolio. 

Table 3 discloses the direct loan subsidy expense including the $564 million increase due to reestimates. The 

increase was a result of a $352 million increase in RD’s programs and a $212 million increase in the FFAS 

programs. 

Table 8 discloses the loan guarantee subsidy expenses including the $72 million increase due to reestimate. The 

increase was a result of a $113 million increase in RD’s programs and a $41 million reduction in the FFAS 

programs. 

Based on sensitivity analysis conducted for each cohort or segment of a loan portfolio, the difference between the 

budgeted and actual interest for both borrower and Treasury remain the key components for the subsidy 

formulation and reestimate rates of many USDA direct programs. USDA uses the Governmentwide interest rate 

projections provided by the OMB in order to do its calculations and analysis. 

The Inter-agency Country Risk Assessment System (ICRAS) is a Federal interagency effort chaired by OMB 

under the authority of the Federal Credit Reform Act of 1990 as amended. The system provides standardized risk 

assessment and budget assumptions for all direct credits and credit guarantees provided by the Government, to 

foreign borrowers. ICRAS identification for each country is still the basis for a given country’s risk rating, but a set 

of program specific default and recovery rates by ICRAS grade has been established for each program. Domestic 

programs have always utilized program-specific default and recovery assumptions. 

Subsidy rates are used to compute each year’s subsidy expenses as disclosed above. The subsidy rates disclosed in 

Tables 11 and 12 pertain only to the FY 2009 and FY 2008 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. 

Downward Reestimate of Subsidy 

In accordance with the General Fund Receipt Account Guide, a liability for non-entity assets is accrued for 

downward reestimate of subsidy. When more subsidy was collected than is necessary to fund future net cash 

outflows, the financing fund must transfer the excess subsidy, with interest, to a designated general fund receipt 

account in the following year. 

Foreclosed Property 

Property is acquired largely through foreclosure and voluntary conveyance. Acquired properties associated with 

loans are reported at their market value at the time of acquisition. The projected future cash flows associated with 

acquired properties are used in determining the related allowance (at present value). 

As of September 30, 2009 and 2008, foreclosed property consisted of 1,082 and 800 rural single-family housing 

dwellings, with an average holding period of 15 and 17 months, respectively. As of September 30, 2009 and 2008, 

FSA-Farm Loan Program properties consist primarily of 64 and 58 farms, respectively. The average holding period 

for these properties in inventory for FY 2009 and FY 2008 was 58 and 64 months, respectively. Certain properties 

can be leased to eligible individuals. 

Non-performing Loans 

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. 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 125

Loan Modifications 

A modification is any Government action different from the baseline assumptions that affects 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. 

Multiple-family housing direct loan program modifications related to the revitalization project, which began in 

FY 2006, continued throughout FY 2009. The revitalization project is used to rehabilitate ailing housing 

developments. In this program, RD determines whether the development owner should be offered a financial 

restructuring plan and what type of incentives, if any, should be offered to the owner to rehabilitate an ailing 

housing development and to provide affordable rents for tenants. 

In FY 2009, loan extension modifications were granted for three borrowers in the FFB electric program. The 

maturity dates were extended up to 20 years on selected advances. Interest rates on the advances did not change. 

At the time of the modification, the liquidating fund was paid off and the advances were moved to the financing 

fund. The post-modification cash flows were discounted at the first quarter net present value discount factor from 

the FY 2009 President’s Budget relative to the effective date of the loan extension modifications. 

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. 

Interest Credit 

Approximately $18,100 million and $17,700 million of Rural Housing Service (RHS) unpaid loan principal as of 

September 30, 2009, and 2008 were receiving interest credit, respectively. If those loans receiving interest credit had 

accrued interest at the full-unreduced rate, interest income would have been approximately $967 million and $947 

million higher for FY 2009 and FY 2008, respectively. 

Restructured Loans 

At the end of FY 2009 and FY 2008, the RD portfolio contained approximately 71,400 and 73,300 restructured 

loans with an outstanding unpaid principal balance of $2,400 million. At the end of FY 2009 and FY 2008, the 

farm loan portfolio contained approximately 20,500 and 20,000 restructured loans with an outstanding unpaid 

principal balance of $1,126 million and $1,100 million, respectively. Direct credit and credit guarantee principal 

receivables in the food aid and export programs under rescheduling agreements as of September 30, 2009 and 2008, 

were $2,887 million and $3,100 million, respectively. 
126 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Table 1. Direct Loan and Loan Guarantees, Net 

FY 2009 Loans Present Value of Assets

Direct Loans Receivable, Interest Foreclosed Value Related to

Gross Receivable Property Allowance Loans

Obligated Pre-1992

Farm 1 $ 83 ,219 $ 14 $ $ 1 (43) $ ,273

Export - - - - - Food Aid 4 48 ,470 - 3 (1,408) ,110

Housing 83 9,984 33 5 (4,667) ,433

Electric 6 1 ,877 - 5 (1,675) ,203

Telecommunications 706 2 - 664 (44) Water and Environmental 1 12 ,224 - 1 (142) ,094

Business and Industry - - - - - Economic Development 34 - - 18 (16) Pre-1992 Total 24 229 ,514 47 16 (7,995) ,795

Obligated Post-1991

Farm 6 169 ,057 5 5 (500) ,731

Export - - - - - Food Aid 1 20 ,615 - 1 (518) ,117

Housing 103 18,301 46 16 (2,410) ,040

Electric 33 32 ,119 - 32 (652) ,499

Telecommunications 3 2 ,409 - 43 3 ,454

Water and Environmental 9 94 ,218 - 8 (728) ,584

Business and Industry 30 - (1) 19 (10) Economic Development 543 2 - 371 (174) Post-1991 Total 72 421 ,292 51 67 (4,949) ,815

Total Direct Loan Program Receivables 96 650 ,806 98 84 (12,944) ,610

Defaulted Guarantee Loans

Pre-1992

Farm 1 - - - 1 Export 135 1 - 54 (82) Food Aid - - - - - Housing - - - - - Electric - - - - - Telecommunications - - - - - Water and Environmental - - - - - Business and Industry - 4 - - 4 Economic Development - - - - - Pre-1992 Total 140 1 - 59 (82) 

Post-1991

Farm 54 - - 2 (52) Export 619 7 - 423 (203) Food Aid - - - - - Housing - 98 - 33 (65) Electric - - - - - Telecommunications - - - - - Water and Environmental - - - - - Business and Industry 3 127 - 116 (14) Economic Development - - - - - Post-1991 Total 898 10 - 574 (334) Total Defaulted Guarantee Loans 1 11 ,038 - 633 (416) 

Loans Exempt from Credit Reform Act:

Commodity Loans 414 3 - 414 (3) Other Foreign Receivables - - - - - Total Loans Exempt 414 3 - 414 (3) 

Total Direct Loan and Loan Guarantees, Net 85,657 $ 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 127

Table 1. Direct Loan and Loan Guarantees, Net (cont’d) 

FY 2008 Loans Present Value of Assets

Direct Loans Receivable, Interest Foreclosed Value Related to

Gross Receivable Property Allowance Loans

Obligated Pre-1992

Farm 1 $ 96 ,406 $ 12 $ $ 1 (59) $ ,455

Export - - - - - Food Aid 4 121 ,813 - 2 (1,949) ,985

Housing 111 10,462 33 5 (4,880) ,726

Electric 8 5 ,273 - 6 (1,689) ,589

Telecommunications 896 2 - 844 (54) Water and Environmental 1 14 ,328 - 1 (159) ,183

Business and Industry - - - - - Economic Development 38 - - 21 (17) Pre-1992 Total 27 349 ,216 45 18 (8,807) ,803

Obligated Post-1991

Farm 5 159 ,203 3 224 5 ,589

Export - - - - - Food Aid 1 79 ,837 - 881 (1,035) Housing 98 17,044 34 14 (2,387) ,789

Electric 29 28 ,216 - 28 (336) ,908

Telecommunications 3 2 ,151 - 187 3 ,340

Water and Environmental 8 87 ,583 - 7 (829) ,841

Business and Industry - 35 - 10 (25) Economic Development 530 2 - 357 (175) Post-1991 Total 65 455 ,599 37 61 (4,376) ,715

Total Direct Loan Program Receivables 92 804 ,815 82 80 (13,183) ,518

Defaulted Guarantee Loans

Pre-1992

Farm 1 - - - (1) Export 136 1 - 47 (90) Food Aid - - - - - Housing - - - - - Electric - - - - - Telecommunications - - - - - Water and Environmental - - - - - Business and Industry - 3 - - 3 Economic Development - - - - - Pre-1992 Total 140 1 - 50 (91) 

Post-1991

Farm 58 - - 2 (56) Export 615 7 - 437 (185) Food Aid - - - - - Housing - 61 - 28 (33) Electric - - - - - Telecommunications - - - - - Water and Environmental - - - - - Business and Industry 3 103 - 96 (10) Economic Development - - - - - Post-1991 Total 837 10 - 563 (284) Total Defaulted Guarantee Loans 977 11 - 613 (375) 

Loans Exempt from Credit Reform Act:

Commodity Loans 630 13 - - 643 Other Foreign Receivables - - - - - Total Loans Exempt 630 13 - - 643 

Total Direct Loan and Loan Guarantees, Net 81 $ ,774
128 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Table 2. Schedule for Reconciling Subsidy Cost Allowance Balances (Post-1991) Direct Loans 

FY 2009 FY 2008

Beginning balance of the subsidy cost allowance 4,661 $ 4,346 $ 

Add: Subsidy expense for direct loans disbursed during the year by component

Interest rate differential costs 73 (60) 

Default costs (net of recoveries) 253 211 

Fees and other collections (1) (2) 

Other subsidy costs 226 79 

Total subsidy expense prior to adjustments and reestimates 404 375 

Adjustments

Loan modifications 4 9 

Fees received 36 39 

Loans written off (242) (335) 

Subsidy allowance amortization (264) (309) 

Other 368 206 

Total subsidy cost allowance before reestimates 4,720 4,578 

Add or subtract subsidy reestimates by component

Interest rate reestimate 383 637 

Technical/default reestimate 181 (554) 

Total reestimates 83 564 

Ending balance of the subsidy cost allowance 5,284 $ 4,661 $ 

130

FY 2008 PERFORMANCE AND AC COUNTABILITY REPORT 

Table 3. Subsidy Expense for Direct Loans by Program and Component 

FY 2009

Interest Fees and Other Subtotal Total Interest Rate Technical 

Differential Defaults Collections Other Subsidy Modifications Reestimates Reestimates 

Direct Loan Programs

Farm 2 $ 160 $ - $ 1 $ 163 $ - $ 204 $ 424 $ 

Export - - - - - - - - 

Food Aid - - - - - 19 (244) (172) 

Housing 24 75 (1) 85 183 6 (41) 129 Electric (45) 13 - (4) (36) (16) 600 (324) Telecommunications (1) 4 - - 3 - 29 120 

Water and Environmental 75 1 - (3) 73 - (164) 19 

Business and Industry - - - - - - (6) (5) 

Economic Development 18 - - - 18 - 5 (10) 

Total Direct Loan Subsidy Expense 73 $ 253 $ (1) $ 79 $ 404 $ 9 $ 383 $ 181 $ 

.

FY 2008

Interest Fees and Other Subtotal Total Interest Rate Technical 

Differential Defaults Collections Other Subsidy Modifications Reestimates Reestimates 

Direct Loan Programs

Farm (18) $ 130 $ - $ (9) $ 103 $ - $ - $ (550) $ 

Export - - - - - - - - 

Food Aid 9 2 - - 11 - (180) (163) 

Housing (123) 66 (1) 245 187 4 184 (51) 

Electric (32) 11 - (6) (27) - 335 155 

Telecommunications (1) 1 - - - - 211 (19) Water and Environmental 86 1 - (4) 83 - 94 63 Business and Industry - - - - - - - - 

Economic Development 19 - - (1) 18 - (7) 11 

Total Direct Loan Subsidy Expense (60) $ 211 $ (1) $ 225 $ 375 $ 4 $ 637 $ (554) $ 

.
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 131 = 

Table 4. Total Amount of Direct Loans Disbursed (Post-1991) 

FY 2009 FY 2008

Direct Loan Programs

Farm 1,823 $ 1,317 $ 

Export - - 

Food Aid - 20 

Housing 1,971 1,750 

Electric 4,462 4,047 

Telecommunications 565 551 

Water and Environmental 842 1,017 

Business and Industry - - 

Economic Development 52 56 

Total Direct Loans Disbursed 9,715 $ 8,758 $ 
132

FY 2008 PERFORMANCE AND AC COUNTABILITY REPORT 

Table 5. Guaranteed Loans Outstanding 

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

FY 2009 Outstanding Principal, Outstanding Principal, Outstanding Principal, Outstanding Principal, Outstanding Principal, 

Face Value Face Value Face Value Guaranteed Guaranteed 

Loan Guarantee Programs

Farm $ 32 $ 10,675 $ 10,707 $ 29 $ 9,598 Export - 7,039 7,039 - 6,898 Food Aid - - - - - 

Housing 4 34,781 34,785 3 31,293 Electric 161 210 371 161 210 Telecommunications - - - - - Water and Environmental - 69 69 - 60 Business and Industry 13 4,383 4,396 8 3,267 Economic Development - - - - - 

Total Guarantees Disbursed $ 210 $ 57,157 $ 57,367 $ 201 $ 51,326 

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

FY 2008 Outstanding Principal, Outstanding Principal, Outstanding Principal, Outstanding Principal, Outstanding Principal, 

Face Value Face Value Face Value Guaranteed Guaranteed 

Loan Guarantee Programs

Farm $ 43 $ 10,081 $ 10,124 $ 38 $ 9,061 Export - 3,918 3,918 - 3,829 Food Aid - - - - - 

Housing 5 22,514 22,519 4 20,270 Electric 174 214 388 174 214 Telecommunications - - - - - Water and Environmental - 68 68 - 59 Business and Industry 14 3,756 3,770 10 2,833 Economic Development - - - - - 

Total Guarantees Disbursed $ 236 $ 40,551 $ 40,787 $ 226 $ 36,266 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 133 = 

Table 6. Liability for Loan Guarantees (Present Value Method for Pre-1992 Guarantees) 

FY 2009

Liabilities for 

Losses on Pre1992 

Guarantees 

Present Value

Liabilities for Loan 

Guarantees on 

Post-1991 

Guarantees 

Present Value

Total Liabilities for 

Loan Guarantees

Loan Guarantee Programs

Farm - $ 170 $ 170 $ 

Export - 221 221 

Food Aid - - - 

Housing - 1,102 1,102 

Electric - - - 

Telecommunications - - - 

Water and Environmental - (1) (1) 

Business and Industry 1 351 352 

Economic Development - - - 

Total Liability for Loan Guarantees 1 $ 1,843 $ 1,844 $ 

FY 2008

Liabilities for 

Losses on Pre1992 

Guarantees 

Present Value

Liabilities for Loan 

Guarantees on 

Post-1991 

Guarantees 

Present Value

Total Liabilities for 

Loan Guarantees

Loan Guarantee Programs

Farm - $ 114 $ 114 $ 

Export - 162 162 

Food Aid - - - 

Housing - 766 766 

Electric - - - 

Telecommunications - - - 

Water and Environmental - - - 

Business and Industry 1 290 291 

Economic Development - - - 

Total Liability for Loan Guarantees 1 $ 1,332 $ 1,333 $ 
134 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Table 7. Schedule for Reconciling Loan Guarantee Liability 

FY 2009 FY 2008

Beginning balance of the loan guarantee liability 1,332 $ 1,255 $ 

Add:Subsidy expense for guaranteed loans disbursed during the year by component

Interest supplement costs 25 29 

Default costs (net of recoveries) 661 418 

Fees and other collections (349) (209) 

Other subsidy costs - - 

Total of the above subsidy expense components 337 238 

Adjustments

Loan guarantee modifications - (90) 

Fees received 169 344 

Interest supplements paid 15 5 

Claim payments to lenders (144) (90) 

Interest accumulation on the liability balance 48 99 

Other (109) (152) 

Ending balance of the subsidy cost allowance before reestimates 1,770 1,487 

Add or subtract subsidy reestimates by component:

Interest rate reestimate 34 (45) 

Technical/default reestimate 117 (189) 

Total of the above reestimate components 72 (155) 

Ending balance of the loan guarantee liability 1,842 $ 1,332 $ 
135

FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT

Table 8. Subsidy Expense for Loan Guarantees by Program and Component 

FY 2009

Interest Fees and Other Total Interest Rate Technical 

Loan Guarantee Programs Supplement Defaults Collections Other Subtotal Modifications Reestimates Reestimates 

Farm 17 $ 63 $ (25) $ - $ 55 $ - $ 5 $ (10) $ Export - 76 (22) - 54 - (45) 9 

Food Aid - - - - - - - - 

Housing 8 445 (267) - 186 - (15) 72 

Electric - - - - - - - - 

Telecommunications - - - - - - - - 

Water and Environmental - - - - - - (1) 1 Business and Industry - 77 (35) - 42 - 11 45 Economic Development - - - - - - - - 

Total Loan Guarantee Subsidy Expense $ 25 $ 661 $ (349) $ - $ 337 $ - $ (45) $ 117 

FY 2008

Interest Fees and Other Total Interest Rate Technical 

Loan Guarantee Programs Supplement Defaults Collections Other Subtotal Modifications Reestimates Reestimates 

Farm 15 $ 49 $ (18) $ - $ 46 $ - $ 3 $ (52) $ 

Export - 58 (10) - 48 - (5) (38) Food Aid - - - - - - - - 

Housing 14 228 (146) - 96 - (1) (10) Electric - - - - - - - - 

Telecommunications - - - - - - - - 

Water and Environmental - - - - - - - - 

Business and Industry - 83 (35) - 48 - 37 (90) 

Economic Development - - - - - - - - 

Total Loan Guarantee Subsidy Expense $ 29 $ 418 $ (209) $ - $ 238 $ - $ 34 $ (190) 
136 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Table 9. Guaranteed Loans Disbursed 

Principal, 

Face Value 

Disbursed

Principal, 

Guaranteed 

Disbursed

Principal, Face 

Value 

Disbursed

Principal, 

Guaranteed 

Disbursed

Loan Guarantee Programs

Farm 2,594 $ 2,332 $ 2,163 $ 1,944 $ 

Export 5,250 5,145 1,907 1,909 

Food Aid - - - - 

Housing 14,165 12,745 6,484 5,832 

Electric - - - - 

Telecommunications - - - - 

Water and Environmental 5 4 40 33 

Business and Industry 1,112 865 780 609 

Economic Development - - - - 

Total Guaranteed Loans Disbursed 23,126 $ 21,091 $ 11,374 $ 10,327 $ 

FY 2009 FY 2008

Table 10. Administrative Expenses 

FY 2009 FY 2008

Direct Loan Programs 594 $ 537 $ 

Guaranteed Loan Programs 375 293 

Total Administrative Expenses 969 $ 830 $ 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 137 == 

Table 11. Subsidy Rates for Direct Loans (percentage) 

FY 2009 Interest 

Differential Defaults

Fees and 

Other 

Collections Other Total

Direct Loan Programs

Farm Ownership 4.37 1.70 - 0.28 6.35 

Farm Operating (1.26) 13.05 - (0.01) 11.78 

Indian Tribe Land Acquisition 0.06 6.23 - - 6.29 

Emergency Disaster 4.09 10.64 - (0.51) 14.22 

Boll Weevil Eradication (1.65) 0.17 - 0.92 (0.56) 

Farm Storage Facility Loan Program (0.82) 7.20 (0.14) - 6.24 

Sugar Storage Facility Loan Program (1.72) 0.64 - - (1.08) 

Water and Waste Disposal Loans 13.41 1.64 - (0.43) 14.62 

Distance Learning and Telemedicine Loans - 2.48 - (0.02) 2.46 

Broadband Treasury Loans - 3.65 - 0.25 3.90 

Electric Hardship Loans (2.55) 0.99 - (0.81) (2.37) 

FFB Electric Loans (2.97) 0.70 - - (2.27) 

Telecommunication Hardship Loans (2.86) 1.02 - 0.07 (1.77) 

FFB Telecommunications Loans (1.47) 0.80 - (0.27) (0.94) 

Treasury Telecommunication Loans 0.04 0.23 - (0.06) 0.21 

Community Facility Loans 1.27 4.77 - (0.32) 5.72 

Single-Family Housing Credit Sales 7.77 (10.36) - - (2.59) 

Multi-Family Housing Credit Sales 8.74 27.43 - (0.05) 36.12 

Section 502 Single-Family Housing 5.07 1.64 - - 6.71 

Section 504 Housing Repair 27.69 0.98 - (1.80) 26.87 

Section 515 Multi-Family Housing 39.73 1.58 - (0.14) 41.17 

Section 523 Self-Help Housing 1.65 - - - 1.65 

Section 524 Site Development (2.77) 0.93 - - (1.84) 

Section 514 Farm Labor Housing 40.98 9.50 - (8.35) 42.13 

Multi-Family Housing Relending Program 44.98 - - - 44.98 

Multi-Family Housing Revitalization Seconds 72.78 12.72 - - 85.50 

Multi-Family Housing Revitalization Zero 59.59 1.00 - - 60.59 

Intermediary Relending Program 42.09 0.40 - (0.64) 41.85 

Rural Economic Development Loans 21.49 0.21 - (0.81) 20.89 

Rural Microenterprise Loans 32.95 1.80 - (0.72) 34.03 
138 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

FY 2008 Interest 

Differential Defaults

Fees and 

Other 

Collections Other Total

Direct Loan Programs

Farm Ownership (6.72) 11.00 - 0.17 4.45 

Farm Operating (1.11) 13.94 - (0.14) 12.69 

Indian Tribe Land Acquisition 2.83 0.31 - - 3.14 

Emergency Disaster 6.72 5.24 - (0.82) 11.14 

Boll Weevil Eradication (2.00) 1.45 - 0.28 (0.27) 

Farm Storage Facility Loan Program 0.02 1.10 (0.11) - 1.01 

Sugar Storage Facility Loan Program 0.36 0.62 - - 0.98 

Water and Waste Disposal Loans 7.03 0.09 - (0.31) 6.81 

Distance Learning and Telemedicine Loans - 2.15 - (0.01) 2.14 

Broadband Treasury Loans - 2.17 - (0.02) 2.15 

Electric Hardship Loans (0.03) 0.96 - (0.81) 0.12 

FFB Electric Loans (1.37) 0.67 - - (0.70) 

Telecommunication Hardship Loans (0.96) 1.00 - 0.04 0.08 

FFB Telecommunications Loans (0.01) 0.85 - (0.22) 0.62 

Treasury Telecommunication Loans - 0.64 - 0.03 0.67 

Community Facility Loans 5.40 0.73 - (0.58) 5.55 

Single-Family Housing Credit Sales 7.85 (15.38) - 6.38 (1.15) 

Multi-Family Housing Credit Sales 5.41 (17.41) - 49.15 37.15 

Section 502 Single-Family Housing 5.73 (13.44) - 17.09 9.38 

Section 504 Housing Repair 29.14 0.94 - (1.81) 28.27 

Section 515 Multi-Family Housing (17.92) 1.13 - 59.39 42.60 

Section 523 Self-Help Housing 2.84 - - - 2.84 

Section 524 Site Development (1.71) 0.92 - - (0.79) 

Section 514 Farm Labor Housing 44.45 8.93 - (10.11) 43.27 

Multi-Family Housing Relending Program 46.39 - - - 46.39 

Intermediary Relending Program 43.53 - - (0.64) 42.89 

Rural Economic Development Loans 23.15 0.21 - (0.77) 22.59 

Table 12. Subsidy Rates for Loan Guarantees (percentage) 

FY 2009 Interest 

Differential Defaults

Fees and 

Other 

Collections Other Total

Guaranteed Loan Programs

CCC Export Loan Guarantees Program - 5.97 (1.06) - 4.91 

Farm Operating—Unsubsidized - 3.49 (1.00) - 2.49 

Farm Operating—Subsidized 11.22 2.57 - - 13.79 

Farm Ownership—Unsubsidized - 1.33 (1.00) - 0.33 

Water and Waste Disposal Loans - - (0.82) - (0.82) 

Community Facility Loans - 3.95 (0.87) - 3.08 

Section 502 Single-Family Housing Purchase - 3.27 (2.00) - 1.27 

Section 502 Single-Family Housing Refinance - 1.48 (0.50) - 0.98 

Guaranteed 538 Multi-Family Housing 22.33 0.57 (7.22) - 15.68 

Business and Industry Loans - 7.80 (3.44) - 4.36 

North American Development Bank Loans - 13.51 (3.15) - 10.36 

Renewable Energy Loans - 11.25 (1.55) - 9.70 

Section 9003 Loans - 36.78 (5.85) 2.46 33.39 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 139 == 

FY 2008 Interest

Fees and

Other

Differential Defaults Collections Other Total

Guaranteed Loan Programs

CCC Export Loan Guarantee Program - 7.08 - (4.74) 2.34 

Farm Operating—Unsubsidized - 3.32 (0.90) - 2.42 

Farm Operating—Subsidized 11.05 2.29 - - 13.34 

Farm Ownership—Unsubsidized - 1.28 - (0.88) 0.40 

Water and Waste Disposal Loans - - (0.82) - (0.82) 

Community Facility Loans - 4.54 - (0.86) 3.68 

Section 502 Single-Family Housing Purchase - 3.20 (2.00) - 1.20 

Section 502 Single-Family Housing Refinance - 1.31 - (0.50) 0.81 

538 Multi-Family Housing-Subsidized 16.91 0.42 - (7.94) 9.39 

Business and Industry Loans - 7.33 (3.01) - 4.32 

NAD Bank Loans - 10.84 - (3.14) 7.70 

Renewable Energy - 11.97 (2.28) - 9.69 

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. Commodity loan 

forfeitures during the fiscal years ended September 30, 2009 and 2008 were $47 million and $8 million, 

respectively. 
140 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Inventories - $ - $ 

Commodities: Volume 

(in millions) Amount

Volume 

(in millions) Amount

Corn (In Bushels):

On hand at the beginning of the year - - 1 2 

Acquired during the year 2 11 3 25 

Disposed of during the year

Sales - - (2) - 

Donations (2) (9) (3) (25)

Other - - (1) (2)

On hand at the end of the year - - - - 

Wheat (In Bushels):

On hand at the beginning of the year - - 39 144 

Acquired during the year 32 217 29 295 

Disposed of during the year

Sales (25) (176) (56) (124)

Donations (7) (44) (6) (295)

Other - 3 (6) (20)

On hand at the end of the year - - - - 

Nonfat Dry Milk (In Pounds):

On hand at the beginning of the year - - 14 13 

Acquired during the year 270 220 - - 

Disposed of during the year

Sales (1) (1) (1) (1)

Donations (23) (27) (11) (11)

Other (22) (8) (2) (1)

On hand at the end of the year 224 184 - - 

Other:

On hand at the beginning of the year 15 25 

Acquired during the year 3,653 879 

Disposed of during the year

Sales (2,625) (1)

Donations (1,031) (888)

Other 10 - 

On hand at the end of the year 22 15 

Allowance for losses - (1) 

Total Commodities 205 15 

Total Inventory and Related Property, Net 205 $ 15 $ 

FY 2009 FY 2008
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 141 == 

NOTE 9. GENERAL PROPERTY, PLANT, AND EQUIPMENT, NET 

FY 2009 Useful Net

Life Accumulated Book

Category (Years) Cost Depreciation Value

Land and Land Rights 76 $ - $ 76 $ 

Improvements to Land 10 - 50 707 (611) 96 

Construction-in-Progress 983 - 983 

Buildings, Improvements and Renovations 15 - 30 1,991 (1,269) 722 

Other Structures and Facilities 15 - 50 1,776 (1,346) 430 

Equipment 5 - 20 1,661 (1,330) 331 

Assets Under Capital Lease 3 - 20 76 (42) 34 

Leasehold Improvements 10 66 (44) 22 

Internal-Use Software 5 - 8 579 (441) 138 

Internal-Use Software in Development 137 (1) 136 

Other General Property, Plant and Equipment 5 - 15 4 - 4 

Total $ (5,084) 8,056 $ 2,972 $ 

FY 2008 Useful Net

Life Accumulated Book

Category (Years) Cost Depreciation Value

Land and Land Rights 76 $ - $ 76 $ 

Improvements to Land 10 - 50 697 (588) 109 

Construction-in-Progress 982 - 982 

Buildings, Improvements and Renovations 15 - 30 1,936 (1,214) 722 

Other Structures and Facilities 15 - 50 1,728 (1,296) 432 

Equipment 5 - 20 1,650 (1,325) 325 

Assets Under Capital Lease 3 - 20 143 (78) 65 

Leasehold Improvements 10 66 (42) 24 

Internal-Use Software 5 - 8 560 (376) 184 

Internal-Use Software in Development 51 (1) 50 

Other General Property, Plant and Equipment 5 - 15 4 - 4 

Total $ (4,920) 7,893 $ 2,973 $ 

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 however, 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 multiuse 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, for example 

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 Forest Service-managed sites, and non Forest Service- 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 
142 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

quality land management under the sustainable multiple-use management concept to deliver the necessary products 

and services that are essential for enhancing natural resource stewardship and to meet the diverse needs of people. 

Heritage Asset categories can include the following: 

• Priority Heritage Assets (PHA): Heritage assets of distinct public value that are, or should be, actively 

maintained, and meet one or more of the following criteria: 

− The property is recognized through an official designation; such as a listing on the National Register of 

Historic Places, State register, etc. 

− The property is recognized through prior investment in preservation, interpretation, and use. Any 

improvement to a PHA that meets real property designation criteria is now considered as real property. 

− The property is recognized in an agency-approved management plan. 

− The property exhibits critical deferred maintenance needs, and those needs have been documented. 

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. This would include 

materials donated to the FS; artifact or archival materials collected from a single site, FS administrative unit, or 

event; or any combination thereof. 

Research Centers—ARS conducts research at 36 research centers nationwide to develop and transfer solutions to 

agricultural problems of high national priority and provides information access and dissemination to ensure highquality, 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. NRCS owns one research center, the Tucson Plant 

Material Center (TPMC). 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. Research centers 

are considered heritage assets because one or more buildings or structures at these centers is on the National 

Register of Historic Places or have been identified as eligible for inclusion on the National Register. 

Library Collections—The National Agricultural Library (NAL) as a whole is the largest collection of materials devoted 

to agriculture in the world. The collections are in constant use to support the research activities of USDA, 

departmental operations and to answer citizen inquiries. NAL houses and provides access to millions of books and 

periodicals. The overwhelming number of these items were published more than 25 years ago and almost all of 

them are out-of-print and unavailable for purchase. By statute, NAL is the primary depository of publications and 

information concerning the research and other activities of USDA. Included in the collection are government 

documents and many items that are unique and irreplaceable. NAL collects, preserves and provides access to 

manuscripts, rare books, photographs, posters, oral histories and other unique materials. Collection concentrations 

include the fields of agriculture, horticulture, entomology, poultry sciences, botany, natural history and agricultural 

history. Although focused primarily on American agriculture and related sciences, NAL holds numerous items of 

international origin. 

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 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. Although not technically 

additions—they already existed on NFS lands—they do represent an increased management responsibility 

commensurate with the spirit of “additions.” 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 143 == 

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 units 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 its renewable resources. Other areas include areas administered by the FS that are not included in 

one of the above groups. 

Conservation Easements—NRCS’s objective in administering the conservation easement programs are to provide 

landowners financial and technical assistance in return for maintaining and improving high quality productive soils, 

clean and abundant water, healthy plant and animals communities, clean air , an adequate energy supply, and 

working farm and ranch land. NRCS’s objective in managing, monitoring and enforcing the terms and conditions 

of the easement deed is to ensure that the taxpayers investments are properly used in accordance with the intent of 

the program, to ensure that the agency is a good steward of the land and to be a good neighbor to adjacent 

landowners. The uses for the land are identified under each program. Withdrawals from the program are not 

allowed. Stewardship resources involve a substantial investment by the NRCS for long-term benefits for the 

American public to help people help the land. The purchase of easements is to restore or enhance wetlands, protect 

farmland, restore and protect grassland, restore and protect forest ecosystems, and to restore, protect, maintain and 

enhance the functions of the floodplain. 

Acquisition and Withdrawal of Stewardship Lands—The Land and Water Conservation Fund (L&WCF) Land Acquisition 

Program acquires land for the FS 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. 
144 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

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 (LMPs) 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 2009 Additions Withdrawals FY 2008

Heritage Assets

National Forests 155 - - 155

National Grasslands 20 - - 20

Other Sites 135 113 - 22

Research Centers 37 - - 37

Library Collections 1 - - 1

Total 348 113 - 235

Stewardship Land

National Forests 155 - - 155

National Grasslands 20 - - 20

Research and Experimental Areas 3 - - 3

National Preserves and Other Areas 3 - - 3

Conservation Easements 10,834 403 - 10,431

Total 11,015 403 - 10,612

NOTE 11. OTHER ASSETS 

In FY 2009 and FY 2008, other assets include investments in trust for loan asset sales of $35 million and $35 

million, respectively. 

FY 2009 FY 2008

Intragovernmental:

Advances to Others 4 $ 5 $ 

With the Public:

Advances to Others 148 216 

Prepayments - - 

Other Assets 37 37 

Total Other Assets 189 $ 258 $ 

NOTE 12. LIABILITIES NOT COVERED BY BUDGETARY RESOURCES 

In FY 2009 and FY 2008, other intragovernmental liabilities not covered by budgetary resources include accruals 

for Federal Employee Compensation Act (FECA) of $169 million and $164 million, contract disputes claims 

payable to Treasury’s Judgment Fund of $18 million and $17 million, deposit funds and clearing accounts of $38 

million and $4 million, and custodial of $4 million and $5 million, respectively. 

In FY 2009 and FY 2008, other liabilities with the public not covered by budgetary resources include, Tobacco 

Transition Payment Program of $4,705 million and $5,302 million, future funded indemnity costs of $339 million 

and $2,145 million, accruals for rental payments under the Conservation Reserve Program (CRP) of $1,735 million 

and $1,776 million, unfunded leave of $629 million and $616 million, Payments to States $443 million and $531 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 145 == 

million, contingent liabilities of $20 million and $29 million, and deposit funds and clearing accounts of $17 

million and $12 million, respectively. 

FY 2009 FY 2008

Intragovernmental:

Other 229 $ 190 $ 

Subtotal Intragovernmental 229 190 

With the Public:

Federal employee and veterans' benefits 846 832 

Environmental and disposal liabilities 9 18 

Other 7,887 10,410 

Subtotal With the Public 8,742 11,260 

Total liabilities not covered by budgetary resources 8,971 11,450 

Total liabilities covered by budgetary resources 116,753 109,522 

Total Liabilities 125,724 $ 120,972 $ 

NOTE 13. DEBT 

FY 2009 Beginning 

Balance Net Borrowing

Ending 

Balance

Intragovernmental

Debt to the Treasury 51,201 $ 4,427 $ 55,628 $ 

Debt to the Federal Financing Bank 26,376 2,115 28,491 

Total Intragovernmental 77,577 6,542 84,119 

Agency Debt:

Held by the Public - - - 

Total Debt 77,577 $ 6,542 $ 84,119 $ 

FY 2008 Beginning 

Balance Net Borrowing

Ending 

Balance

Intragovernmental

Debt to the Treasury 49,197 $ 2,004 $ 51,201 $ 

Debt to the Federal Financing Bank 25,904 472 26,376 

Total Intragovernmental 75,101 2,476 77,577 

Agency Debt:

Held by the Public - - - 

Total Debt 75,101 $ 2,476 $ 77,577 $ 
146 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

NOTE 14. ENVIRONMENTAL AND DISPOSAL LIABILITIES 

The Department 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 2009, 

the FS and CCC estimate the liability for total cleanup costs for sites known to contain hazardous waste to be $1 

million and $8 million respectively, $18 million for FS and $7 million for CCC in FY 2008, based on actual 

cleanup costs at similar sites. These estimates will change as new sites are discovered, remedy standards change and 

new technology is introduced. 

NOTE 15. OTHER LIABILITIES 

In FY 2009, other liabilities with the public include estimated losses on crop insurance claims of $2,865 million, 

estimated underwriting gains on crop insurance of $2,194 million, crop insurance premium subsidy deficiency 

reserve of $839 million, Payments to States of $443 million, estimated program delivery cost to reinsurer of $13 

million, loans paid in advance for multi-family housing of $9 million, undistributed credits for insured loans of $4 

million, credit reform programs of $7 million, and purchaser road credits of $1 million. 

In FY 2008, other liabilities with the public include estimated losses on crop insurance claims of $3,881 million, 

estimated underwriting gains on crop insurance of $2,491 million, crop insurance premium subsidy deficiency 

reserve of $887 million, Payments to States of $531 million, estimated program delivery cost to reinsurer of $31 

million, loans paid in advance for multi-family housing of $9 million, undistributed credits for insured loans of $2 

million, credit reform programs of $10 million, and purchaser road credits of $1 million. 

FY 2009 Non-Current Current Total

Intragovernmental:

Other Accrued Liabilities 18 $ 31 $ 49 $ 

Employer Contributions and Payroll Taxes - 86 86 

Unfunded FECA Liability - 169 169 

Other Unfunded Employment Related Liability - 17 17 

Advances from Others - 37 37 

Liability for Deposit Funds, Clearing Accounts - 9 9 

Liability for Subsidy Related to Undisbursed Loans - 564 564 

Resources Payable to Treasury - 10,799 10,799 

Custodial Liability - 44 44 

Subtotal Intragovernmental 18 11,756 11,774 

With the Public:

Other Accrued Liabilities - 13,930 13,930 

Accrued Funded Payroll and Leave - 239 239 

Unfunded Leave - 629 629 

Advances from Others - 51 51 

Deferred Credits - 613 613 

Liability for Deposit Funds, Clearing Accounts - 127 127 

Contingent Liabilities 16 1,254 1,270 

Capital Lease Liability 25 15 40 

Custodial Liability - (1) (1) 

Other Liabilities 21 6,355 6,376 

Subtotal With the Public 62 23,212 23,274 

Total Other Liabilities 80 $ 34,968 $ 35,048 $ 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 147 == 

FY 2008 Non-Current Current Total

Intragovernmental:

Other Accrued Liabilities 17 $ 126 $ 143 $ 

Employer Contributions and Payroll Taxes - 75 75 

Unfunded FECA Liability - 164 164 

Advances from Others - 12 12 

Liability for Deposit Funds, Clearing Accounts - (15) (15) 

Liability for Subsidy Related to Undisbursed Loans - 525 525 

Resources Payable to Treasury - 12,702 12,702 

Custodial Liability - 72 72 

Other Liabilities - - - 

Subtotal Intragovernmental 17 13,661 13,678 

With the Public:

Other Accrued Liabilities - 14,070 14,070 

Accrued Funded Payroll and Leave - 201 201 

Unfunded Leave - 616 616 

Advances from Others - 52 52 

Deferred Credits - 645 645 

Liability for Deposit Funds, Clearing Accounts - 285 285 

Contingent Liabilities 14 115 129 

Capital Lease Liability 28 37 65 

Custodial Liability - 2 2 

Other Liabilities 20 7,823 7,843 

Subtotal With the Public 62 23,846 23,908 

Total Other Liabilities 79 $ 37,507 $ 37,586 $ 
148 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

NOTE 16. LEASES 

USDA activities based in the Washington D.C. area are located in General Services Administration (GSA) leased 

facilities, and USDA owned buildings. The USDA Headquarter 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 $63.4 million. 

This agreement is still in effect and as a result, USDA activities located in the Headquarter complex are not billed 

for rental costs. 

FY 2009

Capital Leases:

Summary of Assets Under Capital Leases

Land and Building 76 $ 

Machinery and Equipment - 

Accumulated Amortization (42)

Future Payments Due:

Land & Buildings Machinery & 

Equipment Other Totals

Fiscal Year

2010 14 - - 14 

2011 13 - - 13 

2012 12 - - 12 

2013 11 - - 11 

2014 11 - - 11 

After 5 Years 44 - - 44 

Total Future Lease Payments 105 - - 105 

Less: Imputed Interest 44 - - 44 

Less: Executory Costs 21 - - 21 

Less: Lease Renewal Options - - - - 

Net Capital Lease Liability 40 - - $ 40 

Lease liabilities covered by budgetary resources 40 

Operating Leases:

Future Payments Due:

Fiscal Year Land & Buildings Machinery & 

Equipment Other Totals

2010 117 1 - 118 

2011 1 104 1 106 

2012 - 93 1 94 

2013 - 82 1 83 

2014 76 - 1 77 

After 5 Years 462 - 2 464 

Total Future Lease Payments 934 $ 2 $ 6 $ 942 $ 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 149 == 

FY 2008

Capital Leases:

Summary of Assets Under Capital Leases

Land and Building 142 $ 

Machinery and Equipment 1 

Accumulated Amortization (78)

Future Payments Due:

Land & Buildings Machinery & 

Equipment Other Totals

Fiscal Year

2009 22 - - 22 

2010 20 - - 20 

2011 19 - - 19 

2012 16 - - 16 

2013 13 - - 13 

After 5 Years 57 - - 57 

Total Future Lease Payments 147 - - 147 

Less: Imputed Interest 48 - - 48 

Less: Executory Costs 19 - - 19 

Less: Lease Renewal Options 15 - - 15 

Net Capital Lease Liability 65 - - $ 65 

Lease liabilities covered by budgetary resources 65 

Operating Leases:

Future Payments Due:

Fiscal Year Land & Buildings Machinery & 

Equipment Other Totals

2009 106 1 - 107 

2010 94 1 - 95 

2011 84 - - 84 

2012 73 - - 73 

2013 63 - - 63 

After 5 Years 426 - - 426 

Total Future Lease Payments 846 $ 2 $ - $ 848 $ 

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, $1,270 million and $129 million has been accrued in the financial statements as of September 30, 2009 

and 2008, respectively. 

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 $47 million to $241 million as of September 30, 2009, 

compared to $50 million to $260 million as of September 30, 2008. 

CRP rental payments are estimated to be $1,800 million annually through FY 2016. Commitments to extend loan 

guarantees are estimated to be $6,066 million and $3,846 million in FY 2009 and FY 2008, respectively. 

NOTE 18. EARMARKED FUNDS 

Earmarked funds 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 
150 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

statute to be used for designated activities, benefits or purposes and must be accounted for separately from the 

Government’s general revenues. 

Financial information for all significant earmarked funds follows the descriptions of each fund’s purpose shown 

below. 

Risk Management Agency 

Federal Crop Insurance Corporation Fund (FCIC) 

Resources for the FCIC Fund includes funds collected from the public for insurance premiums and other insurance 

related fees that are used with appropriations from Congress and unobligated balances from previous years to fund 

the Federal Crop Insurance Program. Funds are available under 7 U.S.C. 1501-1519. 

Agricultural Marketing Service 

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 

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 their 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 

Cooperative Work 

Cooperative contributions are deposited for disbursement in compliance with the terms and provisions of the 

agreement between the cooperator and the Forest Service. Cooperators include timber purchasers, not-for-profit 

organizations, and local hunting and fishing clubs. The governing authorities are the Cooperative Funds Act of 

June 30, 1914 (16 U.S.C. 498), and the Knutson-Vandenberg Act. 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 151 == 

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 25.0 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. The Secure Rural Schools and Community SelfDetermination Act of 2000 (P.L. 106-393) as amended by § 601 of The Emergency Economic Stabilization Act of 

2008, (H.R. 1424) (P.L. 110-343), provides stabilized education and road maintenance funding through 

predictable payments to counties, job creation in those counties, and other opportunities associated with the 

restoration, maintenance, and stewardship of Federal lands. 

Timber Salvage Sales 

The Timber Salvage Sale Fund was established to facilitate the timely removal of timber damaged by fire, wind, 

insects, disease, or other events. Amounts collected from the sale of salvaged timber are used on other qualifying 

salvage sales to cover the cost of preparing and administering the sales. The Timber Salvage Sales program is 

authorized by 16 USC 472(a). 

State, 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 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 Federal Lands Recreation Enhancement Act (FLREA) (Public Law 108-447) sets forth provisions for 

collection of recreation fees and retention of special recreation permit fees by the FS. The FS deposits 85 percent 

of special use permit revenues from these authorizations into the National Forest Fund.
152 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Restoration of Forest Lands and Improvements 

The Restoration of Forest Lands and Improvements Acts (16 U.S.C. 579(c)) provides that 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 moneys 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.

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.

Cooperative State Research Education and Extension Service 

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. 

Farm Service Agency

Agricultural Disaster Relief Trust Fund 

The Agricultural Disaster Relief Trust Fund shall make amounts available for the purpose of expenditures to meet 

the obligations of the United States incurred under section 901 or section 531 of the Federal Crop Insurance Act. 

The trust fund will be used to make payments to farmers and ranchers under five disaster assistance programs: (1) 

Supplemental Revenue Assistance Payments (SURE) Program, (2) Livestock Feed Program (LFP), (3) Livestock 

Indemnity Program (LIP), (4) Tree Assistance Program (TAP), and (5) Emergency Assistance for Livestock, 

Honey Bees, and Farm-Raised Fish Program (ELAP). The fund has appropriated an amount equivalent to 3.08 

percent of the amounts received in the general fund of the Treasury of the United States during fiscal years 2008 

through 2011 attributable to the duties collected on articles entered, or withdrawn from warehouse, for 

consumption under the Harmonized Tariff Schedule of the United States. 

Other 

Financial information is summarized for all other earmarked funds with total assets less than $50 million listed 

below. 

Agricultural Marketing Service 

Perishable Agricultural Commodities Act 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 153 == 

Wool Research, Development and Promotion Trust Fund 

Animal Plant Health Inspection Service 

Miscellaneous Contributed Funds 

Forest Service 

Roads and Trails for States, National Forest Fund 

Reforestation Trust Fund 

Payments to Counties, National Grasslands 

Timber Sales Pipeline Restoration Fund 

Operation and Maintenance of Forest Service Quarters 

Timber Roads, Purchaser Elections 

Expenses, Brush Disposal 

Range Betterment Fund 

Acquisition of Lands for National Forests, Special Acts 

Construction of Facilities or Land Acquisition 

Recreation Fees for Collection Costs 

Payment to Minnesota (Cook, Lake and Saint Louis Counties) 

Licensee Program 

Tongass Timber Supply Fund 

Resource Management Timber Receipts 

Quinault Special Management Area 

MNP Rental Fee Account 

Midewin National Tallgrass Prairie Restoration Fund 

Land Between the Lakes Management Fund 

Administration of Rights-of-Way and Other Land Uses Fund 

Valles Caldera Fund 

Hardwood Technology Transfer and Applied Research Fund 

Stewardship Contracting Product Sales 

Mount Saint Helens Highway 

Gifts, Donations and Bequests for Forest and Rangeland Research 

Land Between the Lakes Trust Fund 

Gifts and Bequests 

Natural Resources Conservation Service 

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 
154 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Gifts and Bequests 

Grain Inspection, Packers and Stockyards Administration 

Inspection and Weighing Services 

Food Safety and Inspection Service 

Expenses and Refunds, Inspection of Farm Products 

Office of the Inspector General 

Inspector General Assets Forfeiture, Department of Justice 

Inspector General Assets Forfeiture, Department of Treasury 

National Agricultural Statistics Service 

Miscellaneous Contributed Funds 

Economic Research Service 

Miscellaneous Contributed Funds 

Departmental Offices 

Gifts and Bequests 
155

FY 2008 PERFORMANCE AND AC COUNTABILITY REPORT 

Earmarked Funds

RMA AMS AMS APHIS FS FS FS 

Balance Sheet As of September 30, 2009

Federal Crop 

Insurance 

Corporation Fund

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

T

12X4085 12X5209 12X8015 12X5161 12X8028 12X5004 12X5201 

Fund Balance with Treasury 1,218 $ 427 $ 61 $ 79 $ 388 $ 23 $ 150 $ 

$ 

Investments - - 40 - - - - Other Assets 2,981 253 17 127 22 49 3 Total Assets 4,199 680 118 206 410 72 153 Other Liabilities 6,776 3 64 77 51 1 425 Total Liabilities 6,776 3 64 77 51 1 425 Unexpended Appropriations 897 302 - - - - - Cumulative Results of Operations (3,474) 375 54 129 359 71 (272) Total Liabilities and Net Position 4,199 680 118 206 410 72 153 

Statement of Net Cost For the PeriodEnded September 30, 2009Gross program costs 10,060 1,017 183 230 126 59 400 Less Earned Revenue 2,878 1 148 486 91 - 163 Net Cost of Operations 7,182 1,016 35 (256) 35 59 237 Statement of Changes in Net PositionFor the period Ended September 30, 2009Net Position Beginning of Period (2,210) 680 53 220 263 80 (35) Non-Exchange Revenue 6,815 1,013 1 (347) 131 50 - Other Financing Sources - - 35 - - - - Net Cost of Operations (7,182) (1,016) (35) 256 (35) (59) (237) Change in net Position (367) (3) 1 (91) 96 (9) (237) 

Net Position End of Period (2,577) $ 677 $ 54 $ 129 $ 359 $ 71 $ (272) $ 

$ 
156

FY 2008 PERFORMANCE AND AC COUNTABILITY REPORT 

Earmarked Funds

FS FS FS FS CSREES FSA

Balance Sheet As of September 30, 2009

State, Private, 

and International 

Forestry, Land 

and Water 

Conservation 

Fund

Recreation Fee 

Demonstration 

Program

Restoration of 

Forest Lands and 

Improvements

Acquisition of 

Lands to 

Complete Land 

Exchanges

Native American 

Institutions 

Endowment Fund

Agricultural 

Disaster Relief 

Trust Fund Other 

12X5367 12X5268 12X5215 12X5216 12X5205 12X5531

Fund Balance with Treasury 106 $ 129 $ 150 $ 43 $ 20 $ 1,533 $ 314 $ 

$ 

Investments - - - - 105 - 10 

Other Assets 6 4 26 33 - - 32 

Total Assets 112 133 176 76 125 1,533 356 

Other Liabilities 32 5 1 1 - 2 51 

Total Liabilities 32 5 1 1 - 2 51 

Unexpended Appropriations - - - - 60 - 4 

Cumulative Results of Operations 80 128 175 75 65 1,531 301 

Total Liabilities and Net Position 112 133 176 76 125 1,533 356 

Statement of Net Cost For the PeriodEnded September 30, 2009Gross program costs 76 86 10 8 3 5 219 

Less Earned Revenue - 67 30 9 4 - 106 

Net Cost of Operations 76 19 (20) (1) (1) 5 113 

Statement of Changes in Net PositionFor the period Ended September 30, 2009Net Position Beginning of Period 107 147 154 74 112 833 394 

Non-Exchange Revenue 49 - 1 - 12 703 33 

Other Financing Sources - - - - - - (9) 

Net Cost of Operations (76) (19) 20 1 1 (5) (113) 

Change in net Position (27) (19) 21 1 13 698 (89) 

Net Position End of Period 80 $ 128 $ 175 $ 75 $ 125 $ 1,531 $ 305 $ 

$ 
157

FY 2008 PERFORMANCE AND AC COUNTABILITY REPORT 

Earmarked Funds

RMA AMS AMS APHIS FS FS FS 

Balance Sheet As of September 30, 2008

Federal Crop 

Insurance 

Corporation Fund

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

Timbe

S

12X4085 12X5209 12X8015 12X5161 12X8028 12X5004 12X5201 12

Fund Balance with Treasury 2,364 $ 362 $ 95 $ 153 $ 296 $ 32 $ 96 $ 

$ 

Investments - - - - - - - 

 

Other Assets 3,744 329 18 148 21 49 3 

 

Total Assets 6,108 691 113 301 317 81 99 

 

Other Liabilities 8,318 11 60 81 54 1 134 

 

Total Liabilities 8,318 11 60 81 54 1 134 

 

Unexpended Appropriations 944 302 - 130 - - - 

 

Cumulative Results of Operations (3,154) 378 53 90 263 80 (35) 

 

Total Liabilities and Net Position 6,108 691 113 301 317 81 99 

 

Statement of Net Cost For the PeriodEnded September 30, 2008Gross program costs 7,081 717 185 199 139 40 169 

 

Less Earned Revenue 1,440 1 155 607 105 - 59 

 

Net Cost of Operations 5,641 716 30 (408) 34 40 110 

 

Statement of Changes in Net PositionFor the period Ended September 30, 2008Net Position Beginning of Period (393) 854 25 132 301 66 75 

 

Non-Exchange Revenue 3,824 542 25 (320) (4) 54 - 

 

Other Financing Sources - - 33 - - - - 

 

Net Cost of Operations (5,641) (716) (30) 408 (34) (40) (110) 

 

Change in net Position (1,817) (174) 28 88 (38) 14 (110) 

 

Net Position End of Period (2,210) $ 680 $ 53 $ 220 $ 263 $ 80 $ (35) $ 

$ 
158

FY 2008 PERFORMANCE AND AC COUNTABILITY REPORT 

Earmarked Funds

FS FS FS FS CSREES FSA

Balance Sheet As of September 30, 2008

Recreation Fee 

Demonstration 

Program

National Forest 

Fund Receipts

Restoration of 

Forest Lands and 

Improvements

Acquisition of 

Lands to 

Complete Land 

Exchanges

Native American 

Institutions 

Endowment Fund

Agricultural 

Disaster Relief 

Trust Fund Other 

12X5268 125008 12X5215 12X5216 12X5205 12X5531

Fund Balance with Treasury 147 $ 74 $ 113 $ 51 $ 11 $ 833 $ 315 $ 

$ 

Investments - - - - 101 - 10 

Other Assets 4 6 41 23 - - 33 

Total Assets 151 80 154 74 112 833 358 

Other Liabilities 4 - - - - - 44 

Total Liabilities 4 - - - - - 44 

Unexpended Appropriations - - - - 48 - 3 

Cumulative Results of Operations 147 80 154 74 64 833 311 

Total Liabilities and Net Position 151 80 154 74 112 833 358 

Statement of Net Cost For the PeriodEnded September 30, 2008Gross program costs 65 - 5 10 2 - 237 

Less Earned Revenue 61 34 108 20 4 - 167 

Net Cost of Operations 4 (34) (103) (10) (2) - 70 

Statement of Changes in Net PositionFor the period Ended September 30, 2008Net Position Beginning of Period 151 48 51 64 98 - 257 

Non-Exchange Revenue - - - - 12 833 60 

Other Financing Sources - (2) - - - - 67 

Net Cost of Operations (4) 34 103 10 2 - (70) 

Change in net Position (4) 32 103 10 14 833 57 

Net Position End of Period 147 $ 80 $ 154 $ 74 $ 112 $ 833 $ 314 $ 

$ 
159

FY 2008 PERFORMANCE AND AC COUNTABILITY REPORT 

NOTE 19. SUBORGANIZATION PROGRAM COSTS/PROGRAM COSTS BY SEGMENT 

FY 2009

Intragovernmental With the Public Intragovernmental With the Public Intragovernmental 

Enhance International Competitiveness andthe Sustainability of Rural and Farm Economies:Gross Costs - $ - $ 136 $ 1,612 $ 104 $ Less: Earned Revenue - - 192 112 130 Net Costs - - (56) 1,500 (26) Enhance the Competitiveness and Sustainabilityof Rural and Farm Economies:Gross Costs 1,007 2,200 1,095 11,757 - Less: Earned Revenue 244 249 2 2,361 - Net Costs 763 1,951 1,093 9,396 - Support Increased Economic Opportunities andImproved Quality of Life in Rural America:Gross Costs - - - - - Less: Earned Revenue - - - - - Net Costs - - - - - Enhance Protection and Safety of the Nation'sAgriculture and Food Supply: - - - - - Gross Costs - - - - - Less: Earned Revenue - - - - - Net CostsImprove the Nation's Nutrition and Health:Gross Costs - - - - - Less: Earned Revenue - - - - - 

Net Costs - - - - - 

Protect and Enhance the Nation's Natural ResourceBase and Environment:Gross Costs - - 399 1,825 - 

Less: Earned Revenue - - - 1 - 

Net Costs - - 399 1,824 - 

Total Gross Costs 2,200 1,007 1,630 15,194 104 Less: Total Earned Revenue 249 244 194 2,474 130 Net Cost of Operations $ 1,951 763 $ 1,436 $ 12,720 $ (26) $ 

FSA CCC FAS
160

FY 2008 PERFORMANCE AND AC COUNTABILITY REPORT 

FY 2009

Intragovernmental With the Public Intragovernmental With the Public Intragovernmenta

Enhance International Competitiveness andthe Sustainability of Rural and Farm Economies:Gross Costs - $ - $ - $ - $ 

$ 

Less: Earned Revenue - - - - 

 

Net Costs - - - - 

 

Enhance the Competitiveness and Sustainabilityof Rural and Farm Economies:Gross Costs 67 10,082 - - 

 

Less: Earned Revenue - 2,878 - - 

 

Net Costs 67 7,204 - - 

 

Support Increased Economic Opportunities andImproved Quality of Life in Rural America:Gross Costs - - - - 

 

Less: Earned Revenue - - - - 

 

Net Costs - - - - 

 

Enhance Protection and Safety of the Nation'sAgriculture and Food Supply: - - - - 35

 

Gross Costs - - - - 

 

Less: Earned Revenue - - - - 35

 

Net CostsImprove the Nation's Nutrition and Health:Gross Costs - - 1,097 78,332 

 

Less: Earned Revenue - - 2 40 

 

Net Costs - - 1,095 78,292 

 

Protect and Enhance the Nation's Natural ResourceBase and Environment:Gross Costs - - - - 

 

Less: Earned Revenue - - - - 

 

Net Costs - - - - 

 

Total Gross Costs 10,082 67 1,097 78,332 35

 

Less: Total Earned Revenue 2,878 - 2 40 

 

Net Cost of Operations $ 7,204 67 $ 1,095 $ 78,292 $ 35

$ 

RMA FNS 
161

FY 2008 PERFORMANCE AND AC COUNTABILITY REPORT 

FY 2009

Intragovernmental With the Public Intragovernmental With the Public Intragovernmenta

Enhance International Competitiveness andthe Sustainability of Rural and Farm Economies:Gross Costs - $ - $ - $ - $ 

$ 

Less: Earned Revenue - - - - 

 

Net Costs - - - - 

 

Enhance the Competitiveness and Sustainabilityof Rural and Farm Economies:Gross Costs 140 1,210 - - 

 

Less: Earned Revenue 2 190 - - 

 

Net Costs 138 1,020 - - 

 

Support Increased Economic Opportunities andImproved Quality of Life in Rural America:Gross Costs - - - - 

 

Less: Earned Revenue - - - - 

 

Net Costs - - - - 

 

Enhance Protection and Safety of the Nation'sAgriculture and Food Supply: - - 387 1,021 

 

Gross Costs - - 31 584 

 

Less: Earned Revenue - - 356 437 

 

Net CostsImprove the Nation's Nutrition and Health:Gross Costs - - - - 

 

Less: Earned Revenue - - - - 

 

Net Costs - - - - 

 

Protect and Enhance the Nation's Natural ResourceBase and Environment:Gross Costs - - - - 

 

Less: Earned Revenue - - - - 

 

Net Costs - - - - 

 

Total Gross Costs 1,210 140 387 1,021 3

 

Less: Total Earned Revenue 190 2 31 584 

 

Net Cost of Operations $ 1,020 138 $ 356 $ 437 $ 3

$ 

AMS APHIS G
162

FY 2008 PERFORMANCE AND AC COUNTABILITY REPORT 

FY 2009

Intragovernmental With the Public Intragovernmental With the Public Intragovernmenta

Enhance International Competitiveness andthe Sustainability of Rural and Farm Economies:Gross Costs - $ - $ - $ - $ 

$ 

Less: Earned Revenue - - - - 

 

Net Costs - - - - 

 

Enhance the Competitiveness and Sustainabilityof Rural and Farm Economies:Gross Costs - - - - 10

 

Less: Earned Revenue - - - - 3

 

Net Costs - - - - 7

 

Support Increased Economic Opportunities andImproved Quality of Life in Rural America:Gross Costs - - - - 

 

Less: Earned Revenue - - - - 

 

Net Costs - - - - 

 

Enhance Protection and Safety of the Nation'sAgriculture and Food Supply: - - - - 10

 

Gross Costs - - - - 3

 

Less: Earned Revenue - - - - 6

 

Net CostsImprove the Nation's Nutrition and Health:Gross Costs - - - - 2

 

Less: Earned Revenue - - - - 

 

Net Costs - - - - 

 

Protect and Enhance the Nation's Natural ResourceBase and Environment:Gross Costs 1,251 5,338 549 2,426 5

 

Less: Earned Revenue 128 551 95 10 

 

Net Costs 1,123 4,787 454 2,416 3

 

Total Gross Costs 5,338 1,251 549 2,426 28

 

Less: Total Earned Revenue 551 128 95 10 8

 

Net Cost of Operations $ 4,787 1,123 $ 454 $ 2,416 $ 19

$ 

FS NRCS 
163

FY 2008 PERFORMANCE AND AC COUNTABILITY REPORT 

FY 2009

Intragovernmental With the Public Intragovernmental With the Public Intragovernmenta

Enhance International Competitiveness andthe Sustainability of Rural and Farm Economies:Gross Costs - $ 6 $ 7 $ 10 $ 

$ 

Less: Earned Revenue - - - - 

 

Net Costs - 6 7 10 

 

Enhance the Competitiveness and Sustainabilityof Rural and Farm Economies:Gross Costs 14 416 15 21 4

 

Less: Earned Revenue 17 - - - 

 

Net Costs (3) 416 15 21 2

 

Support Increased Economic Opportunities andImproved Quality of Life in Rural America:Gross Costs 6 198 3 4 

 

Less: Earned Revenue 8 - - - 

 

Net Costs (2) 198 3 4 

 

Enhance Protection and Safety of the Nation'sAgriculture and Food Supply: 7 220 2 2 

 

Gross Costs 9 - - - 

 

Less: Earned Revenue (2) 220 2 2 

 

Net CostsImprove the Nation's Nutrition and Health:Gross Costs 5 148 10 14 

 

Less: Earned Revenue 6 - - - 

 

Net Costs (1) 148 10 14 

 

Protect and Enhance the Nation's Natural ResourceBase and Environment:Gross Costs 6 194 4 5 

 

Less: Earned Revenue 8 - - - 

 

Net Costs (2) 194 4 5 

 

Total Gross Costs 1,182 38 41 56 5

 

Less: Total Earned Revenue - 48 - - 2

 

Net Cost of Operations $ 1,182 (10) $ 41 $ 56 $ 3

$ 

CSREES ERS N
164

FY 2008 PERFORMANCE AND AC COUNTABILITY REPORT 

FY 2009

Intragovernmental With the Public Intragovernmental With the Public Intragovernmenta

Enhance International Competitiveness andthe Sustainability of Rural and Farm Economies:Gross Costs - $ - $ 14 $ 22 $ 27

$ 

Less: Earned Revenue - - 21 - 34

 

Net Costs - - (7) 22 (6

 

Enhance the Competitiveness and Sustainabilityof Rural and Farm Economies:Gross Costs - - 125 209 2,62

 

Less: Earned Revenue - - 196 2 50

 

Net Costs - - (71) 207 2,1

 

Support Increased Economic Opportunities andImproved Quality of Life in Rural America:Gross Costs 4,069 2,707 63 107 4,15

 

Less: Earned Revenue 471 3,320 100 1 58

 

Net Costs 3,598 (613) (37) 106 3,57

 

Enhance Protection and Safety of the Nation'sAgriculture and Food Supply: - - 107 178 95

 

Gross Costs - - 167 2 24

 

Less: Earned Revenue - - (60) 176 7

 

Net CostsImprove the Nation's Nutrition and Health:Gross Costs - - 59 99 1,19

 

Less: Earned Revenue - - 93 1 10

 

Net Costs - - (34) 98 1,08

 

Protect and Enhance the Nation's Natural ResourceBase and Environment:Gross Costs - - 114 189 2,38

 

Less: Earned Revenue - - 177 2 42

 

Net Costs - - (63) 187 1,95

 

Total Gross Costs 2,707 4,069 482 804 11,58

 

Less: Total Earned Revenue 3,320 471 754 8 2,2

 

Net Cost of Operations $ (613) 3,598 $ (272) $ 796 $ 9,37

$ 

RD DO T
165

FY 2008 PERFORMANCE AND AC COUNTABILITY REPORT 

FY 2009 Intradepartmental

Eliminations GRAND TOTAL

Enhance International Competitiveness andthe Sustainability of Rural and Farm Economies:Gross Costs (452) $ 1,779 $ 

Less: Earned Revenue (56) 417Net Costs (396) 1,362Enhance the Competitiveness and Sustainabilityof Rural and Farm Economies:Gross Costs (1,081) 27,986Less: Earned Revenue (359) 5,870Net Costs (722) 22,116Support Increased Economic Opportunities andImproved Quality of Life in Rural America:Gross Costs (172) 7,029Less: Earned Revenue (110) 3,796Net Costs (62) 3,233Enhance Protection and Safety of the Nation'sAgriculture and Food Supply: (242) 3,409Gross Costs (185) 797Less: Earned Revenue (57) 2,612Net CostsImprove the Nation's Nutrition and Health:Gross Costs (1,052) 78,818Less: Earned Revenue (91) 61Net Costs (961) 78,757Protect and Enhance the Nation's Natural ResourceBase and Environment:Gross Costs (860) 11,730Less: Earned Revenue (259) 742Net Costs (601) 10,988Total Gross Costs 130,751 (3,859)Less: Total Earned Revenue 11,683 (1,060)Net Cost of Operations $ 119,068 (2,799) $ 
166

FY 2008 PERFORMANCE AND AC COUNTABILITY REPORT 

FY 2008

Intragovernmental With the Public Intragovernmental With the Public Intragovernmenta

Enhance International Competitiveness andthe Sustainability of Rural and Farm Economies:Gross Costs - $ - $ 176 $ 1,892 $ 9

$ 

Less: Earned Revenue - - 71 347 9

 

Net Costs - - 105 1,545 

 

Enhance the Competitiveness and Sustainabilityof Rural and Farm Economies:Gross Costs 953 3,434 1,339 7,254 

 

Less: Earned Revenue 213 578 16 1,394 

 

Net Costs 740 2,856 1,323 5,860 

 

Support Increased Economic Opportunities andImproved Quality of Life in Rural America:Gross Costs - - - - 

 

Less: Earned Revenue - - - - 

 

Net Costs - - - - 

 

Enhance Protection and Safety of the Nation'sAgriculture and Food Supply: - - - - 

 

Gross Costs - - - - 

 

Less: Earned Revenue - - - - 

 

Net CostsImprove the Nation's Nutrition and Health:Gross Costs - - - - 

 

Less: Earned Revenue - - - - 

 

Net Costs - - - - 

 

Protect and Enhance the Nation's Natural ResourceBase and Environment:Gross Costs - - 236 1,889 

 

Less: Earned Revenue - - - 2 

 

Net Costs - - 236 1,887 

 

Total Gross Costs 3,434 953 1,751 11,035 9

 

Less: Total Earned Revenue 578 213 87 1,743 9

 

Net Cost of Operations $ 2,856 740 $ 1,664 $ 9,292 $ 

$ 

FSA CCC 
167

FY 2008 PERFORMANCE AND AC COUNTABILITY REPORT 

FY 2008

Intragovernmental With the Public Intragovernmental With the Public Intragovernmenta

Enhance International Competitiveness andthe Sustainability of Rural and Farm Economies:Gross Costs - $ - $ - $ - $ 

$ 

Less: Earned Revenue - - - - 

 

Net Costs - - - - 

 

Enhance the Competitiveness and Sustainabilityof Rural and Farm Economies:Gross Costs 53 7,124 - - 

 

Less: Earned Revenue - 1,440 - - 

 

Net Costs 53 5,684 - - 

 

Support Increased Economic Opportunities andImproved Quality of Life in Rural America:Gross Costs - - - - 

 

Less: Earned Revenue - - - - 

 

Net Costs - - - - 

 

Enhance Protection and Safety of the Nation'sAgriculture and Food Supply: - - - - 34

 

Gross Costs - - - - 

 

Less: Earned Revenue - - - - 33

 

Net CostsImprove the Nation's Nutrition and Health:Gross Costs - - 815 59,735 

 

Less: Earned Revenue - - 1 27 

 

Net Costs - - 814 59,708 

 

Protect and Enhance the Nation's Natural ResourceBase and Environment:Gross Costs - - - - 

 

Less: Earned Revenue - - - - 

 

Net Costs - - - - 

 

Total Gross Costs 7,124 53 815 59,735 34

 

Less: Total Earned Revenue 1,440 - 1 27 

 

Net Cost of Operations $ 5,684 53 $ 814 $ 59,708 $ 33

$ 

RMA FNS 
168

FY 2008 PERFORMANCE AND AC COUNTABILITY REPORT 

FY 2008

Intragovernmental With the Public Intragovernmental With the Public Intragovernmenta

Enhance International Competitiveness andthe Sustainability of Rural and Farm Economies:Gross Costs - $ - $ - $ - $ 1

$ 

Less: Earned Revenue - - - - 

 

Net Costs - - - - 1

 

Enhance the Competitiveness and Sustainabilityof Rural and Farm Economies:Gross Costs 122 934 - - 1

 

Less: Earned Revenue 7 212 - - 

 

Net Costs 115 722 - - 1

 

Support Increased Economic Opportunities andImproved Quality of Life in Rural America:Gross Costs - - - - 

 

Less: Earned Revenue - - - - 

 

Net Costs - - - - 

 

Enhance Protection and Safety of the Nation'sAgriculture and Food Supply: - - 361 1,094 

 

Gross Costs - - 28 703 

 

Less: Earned Revenue - - 333 391 

 

Net CostsImprove the Nation's Nutrition and Health:Gross Costs - - - - 

 

Less: Earned Revenue - - - - 

 

Net Costs - - - - 

 

Protect and Enhance the Nation's Natural ResourceBase and Environment:Gross Costs - - - - 

 

Less: Earned Revenue - - - - 

 

Net Costs - - - - 

 

Total Gross Costs 934 122 361 1,094 3

 

Less: Total Earned Revenue 212 7 28 703 

 

Net Cost of Operations $ 722 115 $ 333 $ 391 $ 3

$ 

AMS APHIS G
169

FY 2008 PERFORMANCE AND AC COUNTABILITY REPORT 

FY 2008

Intragovernmental With the Public Intragovernmental With the Public Intragovernmenta

Enhance International Competitiveness andthe Sustainability of Rural and Farm Economies:Gross Costs - $ - $ - $ - $ 

$ 

Less: Earned Revenue - - - - 

 

Net Costs - - - - 

 

Enhance the Competitiveness and Sustainabilityof Rural and Farm Economies:Gross Costs - - - - 10

 

Less: Earned Revenue - - - - 2

 

Net Costs - - - - 7

 

Support Increased Economic Opportunities andImproved Quality of Life in Rural America:Gross Costs - - - - 

 

Less: Earned Revenue - - - - 

 

Net Costs - - - - 

 

Enhance Protection and Safety of the Nation'sAgriculture and Food Supply: - - - - 10

 

Gross Costs - - - - 2

 

Less: Earned Revenue - - - - 7

 

Net CostsImprove the Nation's Nutrition and Health:Gross Costs - - - - 2

 

Less: Earned Revenue - - - - 

 

Net Costs - - - - 1

 

Protect and Enhance the Nation's Natural ResourceBase and Environment:Gross Costs 1,223 5,487 562 2,615 5

 

Less: Earned Revenue 250 616 74 73 1

 

Net Costs 973 4,871 488 2,542 4

 

Total Gross Costs 5,487 1,223 562 2,615 28

 

Less: Total Earned Revenue 616 250 74 73 7

 

Net Cost of Operations $ 4,871 973 $ 488 $ 2,542 $ 20

$ 

FS NRCS 
170

FY 2008 PERFORMANCE AND AC COUNTABILITY REPORT 

FY 2008

Intragovernmental With the Public Intragovernmental With the Public Intragovernmenta

Enhance International Competitiveness andthe Sustainability of Rural and Farm Economies:Gross Costs - $ 5 $ 8 $ 10 $ 

$ 

Less: Earned Revenue - - - - 

 

Net Costs - 5 8 10 

 

Enhance the Competitiveness and Sustainabilityof Rural and Farm Economies:Gross Costs 13 306 16 20 4

 

Less: Earned Revenue 16 - 1 - 

 

Net Costs (3) 306 15 20 3

 

Support Increased Economic Opportunities andImproved Quality of Life in Rural America:Gross Costs 6 142 3 4 2

 

Less: Earned Revenue 7 - - - 

 

Net Costs (1) 142 3 4 1

 

Enhance Protection and Safety of the Nation'sAgriculture and Food Supply: 7 163 2 2 

 

Gross Costs 9 - - - 

 

Less: Earned Revenue (2) 163 2 2 

 

Net CostsImprove the Nation's Nutrition and Health:Gross Costs 5 108 9 12 

 

Less: Earned Revenue 6 - - - 

 

Net Costs (1) 108 9 12 

 

Protect and Enhance the Nation's Natural ResourceBase and Environment:Gross Costs 6 140 4 6 

 

Less: Earned Revenue 7 - - - 

 

Net Costs (1) 140 4 6 

 

Total Gross Costs 864 37 42 54 6

 

Less: Total Earned Revenue - 45 1 - 1

 

Net Cost of Operations $ 864 (8) $ 41 $ 54 $ 5

$ 

CSREES ERS N
171

FY 2008 PERFORMANCE AND AC COUNTABILITY REPORT 

FY 2008

Intragovernmental With the Public Intragovernmental With the Public Intragovernmenta

Enhance International Competitiveness andthe Sustainability of Rural and Farm Economies:Gross Costs - $ - $ 12 $ 20 $ 30

$ 

Less: Earned Revenue - - 18 - 18

 

Net Costs - - (6) 20 11

 

Enhance the Competitiveness and Sustainabilityof Rural and Farm Economies:Gross Costs - - 125 210 2,78

 

Less: Earned Revenue - - 187 2 47

 

Net Costs - - (62) 208 2,31

 

Support Increased Economic Opportunities andImproved Quality of Life in Rural America:Gross Costs 3,858 4,358 67 111 3,95

 

Less: Earned Revenue 360 4,183 99 1 47

 

Net Costs 3,498 175 (32) 110 3,48

 

Enhance Protection and Safety of the Nation'sAgriculture and Food Supply: - - 107 179 91

 

Gross Costs - - 160 2 22

 

Less: Earned Revenue - - (53) 177 69

 

Net CostsImprove the Nation's Nutrition and Health:Gross Costs - - 61 103 91

 

Less: Earned Revenue - - 92 1 10

 

Net Costs - - (31) 102 80

 

Protect and Enhance the Nation's Natural ResourceBase and Environment:Gross Costs - - 111 184 2,20

 

Less: Earned Revenue - - 165 2 51

 

Net Costs - - (54) 182 1,68

 

Total Gross Costs 4,358 3,858 483 807 11,07

 

Less: Total Earned Revenue 4,183 360 721 8 1,97

 

Net Cost of Operations $ 175 3,498 $ (238) $ 799 $ 9,09

$ 

RD DO T
172

FY 2008 PERFORMANCE AND AC COUNTABILITY REPORT 

FY 2008 Intradepartmental

Eliminations GRAND TOTAL

Enhance International Competitiveness andthe Sustainability of Rural and Farm Economies:Gross Costs (94) $ 2,484 $ 

Less: Earned Revenue (100) 455Net Costs 6 2,029Enhance the Competitiveness and Sustainabilityof Rural and Farm Economies:Gross Costs (1,606) 20,995Less: Earned Revenue (307) 3,836Net Costs (1,299) 17,159Support Increased Economic Opportunities andImproved Quality of Life in Rural America:Gross Costs (189) 8,426Less: Earned Revenue (109) 4,547Net Costs (80) 3,879Enhance Protection and Safety of the Nation'sAgriculture and Food Supply: (235) 3,374Gross Costs (170) 935Less: Earned Revenue (65) 2,439Net CostsImprove the Nation's Nutrition and Health:Gross Costs (773) 60,181Less: Earned Revenue (86) 49Net Costs (687) 60,132Protect and Enhance the Nation's Natural ResourceBase and Environment:Gross Costs (644) 12,105Less: Earned Revenue (201) 1,010Net Costs (443) 11,095Total Gross Costs 107,565 (3,541)Less: Total Earned Revenue 10,832 (973)Net Cost of Operations $ 96,733 (2,568) $ 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 173 == 

NOTE 20. COST OF STEWARDSHIP PP&E 

The acquisition cost of stewardship land in FY 2009 and FY 2008 was $168 million and $228 million, respectively. 

NOTE 21. APPORTIONMENT CATEGORIES OF OBLIGATIONS INCURRED 

FY 2009

Direct Reimbursable Total

Apportionment by Fiscal Quarter 38,698 $ 2,310 $ 41,008 $ 

Apportionment for Special Activities 103,216 25,331 128,547 

Exempt from Apportionment 952 1 953 

Total Obligations Incurred 142,866 $ 27,642 $ 170,508 $ 

FY 2008

Direct Reimbursable Total

Apportionment by Fiscal Quarter 34 $ 2 ,940 $ 37 ,482 $ ,422

Apportionment for Special Activities 78,820 22,360 101,180 

Exempt from Apportionment 754 1 755 

Total Obligations Incurred 114,514 $ 24,843 $ 139,357 $ 

NOTE 22. AVAILABLE BORROWING AUTHORITY, END OF PERIOD 

Available borrowing authority at September 30, 2009 and 2008 was $32,508 million and $29,439 million, 

respectively. 

NOTE 23. TERMS OF BORROWING AUTHORITY USED 

The Secretary of Agriculture has the authority to make and issue notes to the Secretary of Treasury for the purpose 

of discharging obligations for RD’s insurance funds and CCC’s nonreimbursed realized losses and debt related to 

foreign assistance programs. The permanent indefinite borrowing authority includes both interest bearing and 

non–interest bearing notes. These notes are drawn upon daily when disbursements exceed deposits. Notes payable 

under the permanent indefinite borrowing authority have a term of one year. On January 1 of each year, USDA 

refinances its outstanding borrowings, including accrued interest, at the January borrowing rate. 

In addition, USDA has permanent indefinite borrowing authority for the foreign assistance and export credit 

programs to finance disbursements on post-credit reform, direct credit obligations, and credit guarantees. In 

accordance with the Federal Credit Reform Act of 1990 as amended, USDA borrows from Treasury on October 1, 

for the entire fiscal year, based on annual estimates of the difference between the amount appropriated (subsidy) and 

the amount to be disbursed to the borrower. Repayment under this agreement may be, in whole or in part, prior to 

maturity by paying the principal amount of the borrowings plus accrued interest to the date of repayment. Interest is 

paid on these borrowings based on weighted average interest rates for the cohort, to which the borrowings are 

associated. Interest is earned on the daily balance of uninvested funds in the credit reform financing funds 

maintained at Treasury. The interest income is used to reduce interest expense on the underlying borrowings. 

USDA has authority to borrow from the Federal Financing Bank (FFB) in the form of Certificates of Beneficial 

Ownership (CBO) or loans executed directly between the borrower and FFB with an unconditional USDA 

repayment guarantee. CBO’s outstanding with the FFB are generally secured by unpaid loan principal balances. 

CBO’s outstanding are related to pre-credit reform loans and no longer are used for program financing. 
174 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

FFB’s CBO’s 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 

CBO’s, 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 24. PERMANENT INDEFINITE APPROPRIATIONS 

USDA has permanent indefinite appropriations available to fund 1) subsidy costs incurred under credit reform 

programs, 2) certain costs of the crop insurance program, (3) certain commodity program costs and 4) certain costs 

associated with FS programs. 

The permanent indefinite appropriations for credit reform are mainly available to finance any disbursements 

incurred under the liquidating accounts. These appropriations become available pursuant to standing provisions of 

law without further action by Congress after transmittal of the Budget for the year involved. They are treated as 

permanent the first year they become available, as well as in succeeding years. However, they are not stated as 

specific amounts but are determined by specified variable factors, such as cash needs for liquidating accounts, and 

information about the actual performance of a cohort or estimated changes in future cash flows of the cohort in the 

program accounts. 

The permanent indefinite appropriation for the crop insurance program is used to cover premium subsidy, delivery 

expenses, losses in excess of premiums and research and delivery costs. 

The permanent indefinite appropriation for commodity program costs is used to encourage the exportation of 

agricultural commodities and products, to encourage domestic consumption of agricultural products by diverting 

them, and to reestablish farmers’ purchasing power by making payments in connection with the normal production 

of any agricultural commodity for domestic consumption. 

The permanent indefinite appropriation for FS programs is used to fund Recreation Fee Collection Costs, Brush 

Disposal, License programs, Smokey Bear and Woodsy Owl, Restoration of Forest Lands and Improvements, 

Roads and Trails for States, National Forest Fund, Timber Roads, Purchaser Elections, Timber Salvage Sales and 

Operations, and Maintenance of Quarters. Each of these permanent indefinite appropriations is funded by receipts 

made available by law, and is available until expended. 

NOTE 25. LEGAL ARRANGEMENTS AFFECTING USE OF UNOBLIGATED BALANCES 

Unobligated budget authority is the difference between the obligated balance and the total unexpended balance. It 

represents that portion of the unexpended balance unencumbered by recorded obligations. Appropriations are 

provided on an annual, multi-year, and no-year basis. An appropriation expires on the last day of its period of 

availability and is no longer available for new obligations. Unobligated balances retain their fiscal-year identity in an 

expired account for an additional five fiscal years. The unobligated balance remains available to make legitimate 

obligation adjustments, i.e., to record previously unrecorded obligations and to make upward adjustments in 

previously underestimated obligations for five years. At the end of the fifth year, the authority is canceled. 

Thereafter, the authority is not available for any purpose. 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 175 == 

Any information about legal arrangements affecting the use of the unobligated balance of budget authority is 

specifically stated by program and fiscal year in the appropriation language or in the alternative provisions section at 

the end of the appropriations act. 

NOTE 26. DIFFERENCES BETWEEN THE STATEMENT OF BUDGETARY RESOURCES AND THE BUDGET OF THE UNITED STATES GOVERNMENT 

The differences between the FY 2008 Statement of Budgetary Resources and the FY 2008 actual numbers 

presented in the FY 2010 Budget of the United States Government (Budget) are summarized below. 

The Budget excludes expired accounts that are no longer available for new obligations. Adjustments were made 

subsequent to the Budget submission as follows: 

CCC zeroed out the balance in its Export Guarantee Program, Negative Subsidies account for FACTS II 

reporting. 

The Budget includes the Milk Market Orders Assessment Fund since employees of the Milk Market 

Administrators participate in the Federal retirement system, though these funds are not available for use by the 

Department. 

Other items are mainly due to rounding. 

A comparison between the FY 2009 Statement of Budgetary Resources and the FY 2009 actual numbers presented 

in the FY 2011 Budget cannot be performed as the FY 2011 Budget is not yet available. The FY 2011 Budget is 

expected to be published in February 2010 and will be available from the Government Printing Office. 

FY 2008

Budgetary 

Resources

Obligations 

incurred

Distributed 

offsetting 

receipts Net Outlays

Combined Statement of Budgetary Resources $ 172,749 $ 139,357 $ 2,242 $ 98,424

Reconciling items:

 Expired accounts (14,146) (1,625) - - 

 CCC export guarantee program negative subsidies (91) (91) 91 - 

 Milk Market Orders Fund 51 51 - - 

 Other (23) 2 5 (2) 

Budget of the United States Government $ 137,694 158,540 $ 2,240 $ 98,520 $ 

NOTE 27. UNDELIVERED ORDERS AT THE END OF THE PERIOD 

Budgetary resources obligated for undelivered orders as of September 30, 2009 and 2008 was $44,332 million and 

$37,794 million, respectively. 
176 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

NOTE 28. INCIDENTAL CUSTODIAL COLLECTIONS 

Custodial collections represent 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 2009 FY 2008

Sources of Collections:

Miscellaneous $ 83 86 $ 

Total Cash Collections 83 86 

Accrual Adjustments - (4) 

Total Custodial Revenue 82 83 

Disposition of Collections:

Transferred to Others:

Treasury (15) (85) 

( Increase )/Decrease in Amounts Yet to be Transferred 3 (68) 

Net Custodial Activity $ - - $ 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 177 == 

NOTE 29. 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, payments to insurance agencies and taxing authorities. 

Schedule of Fiduciary Activity

For the year ended September 30, 2009

Rural Housing

Insurance

Fund

Fiduciary net assets, beginning of year 95 $ 

 Fiduciary revenues - 

 Contributions 433 

 Investment earnings - 

 Gain (Loss) on disposition of investments, net - 

 Administrative and other expenses - 

 Disbursements to and on behalf of beneficiaries (431) 

Increases/(Decrease) in fiduciary net assets 2 

Fiduciary net assets, end of year 97 $ 

Fiduciary Net Assets

As of September 30, 2009

Rural Housing 

Insurance

Fund

Fiduciary Assets

 Cash and cash equivalents 8 $ 

 Investments 89 

 Other assets - 

Fiduciary Liabilities

 Less: Liabilities - 

Total Fiduciary Net Assets 97 $ 

NOTE 30. 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 
178 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

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 which are not components of the net cost of operations; and (3) the net cost of operations may contain 

components which do not use or generate resources in the current period. 

2009 2008

Resources Used to Finance Activities:

Budgetary Resources Obligated -

Obligations Incurred $ 139,357 170,508 $ 

Less: Spending authority from offsetting collections and recoveries 38,245 38,542 

Obligations net of offsetting collections and recoveries 132,263 100,815 

Less: Distributed Offsetting receipts 2,242 3,574 

Net Obligations 98,573 128,689 

Other Resources -

Transfers in(out) without reimbursement (562) (391) 

Imputed financing from costs absorbed by others 1,033 907 

Other 52 (863) 

Net other resources used to finance activities (392) 568 

Total resources used to finance activities 99,141 128,297 

Resources Used to Finance Items not Part of the Net Cost of Operations:

Change in undelivered orders (1,926) (6,538) 

Resources that fund expenses recognized in prior periods (4,692) (144) 

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 13,145 13,357 

Change in Unfilled Customer Orders 77 286 

Decrease in exchange revenue receivable from public 6,697 7,625 

Other 1,024 2,111 

Resources that finance the acquisition of assets (26,597) (24,997) 

Other resources or adjustments to net obligated resources that do not affect net cost of operations 359 (194) 

Total resources used to finance items not part of the net cost of operations (15,229) (5,178) 

Total resources used to finance the net cost of operations 93,963 113,068 

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 25 12 

Increase in environmental and disposal liability - - 

Upward/Downward reestimates of credit subsidy expense 1,928 608 

Increase in exchange revenue receivable from the public - - 

Other 1,633 997 

Total components of Net Cost of Operations that will require or generate

 resources in future periods 2,266 2,937 

Components not Requiring or Generating Resources -

Depreciation and amortization 408 223 

Revaluation of assets or liabilities (134) 27 

Other Components not Requiring or Generating Resources:

Bad Debt Expense (753) (1,226) 

Cost of Goods Sold 1,047 2,803 

Other (64) 1,236 

Total components of Net Cost of Operations that will not require or generate resources 3,063 504 

Total components of Net Cost of Operations that will not require or generate

 resources in the current period 2,770 6,000 

Net Cost of Operations $ 96,733 119,068 $ 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 179 == 

Required Supplementary Stewardship Information 

STEWARDSHIP INVESTMENTS (UNAUDITED) 

FY 2009 FY 2008 FY 2007 FY 2006 FY 2005

Expense Expense Expense Expense Expense

Non-Federal Physical Property:

Food and Nutrition Service

Supplemental Nutrition Assistance Program 55 $ 32 $ 20 $ 21 $ 22 $ 

Special Supplemental Nutrition Program 15 10 15 12 17 

Cooperative State Research, Education, and Extension Service

Extension 1890 Facilities Program 17 17 17 17 17 

Total Non-Federal Property $ 59 87 $ 52 $ 50 $ 56 $ 

Human Capital:

Cooperative State Research, Education, and Extension Service

Higher Education and Extension Programs 547 $ 521 $ 524 $ 525 $ 507 $ 

Food and Nutrition Service

Supplemental Nutrition Assistance Program 19 36 51 66 49 

Agricultural Research Service

National Agricultural Library 23 22 22 22 21 

Risk Management Agency

Risk Management Education 6 10 11 10 10 

Natural Resources Conservation Service

Technical Service Providers 47 37 42 53 48 

Agricultural Conservation Enrollees/Seniors 1 4 3 4 - 

Total Human Capital $ 630 643 $ 653 $ 680 $ 635 $ 

Research and Development:

Agricultural Research Service

Human Nutrition 85 85 86 85 84 

Collaborative Research Program 3 4 3 7 6 

Product Quality/Value Added 108 105 106 107 105 

Livestock Production 86 85 85 85 84 

Crop Production 204 201 202 201 197 

Food Safety 106 104 105 105 103 

Livestock Protection 83 82 83 90 78 

Crop Protection 201 196 198 199 193 

Environmental Stewardship 225 223 224 223 219 

Cooperative State Research, Education, and Extension Service

Land-grant University System 691 663 661 661 645 

Forest Service 323 304 261 318 295 

Economic Research Service

Economic and Social Science 79 77 75 75 74 

National Agricultural Statistics Service

Statistical 8 8 6 5 5 

Total Research and Development $ 2,137 2,202 $ 2,095 $ 2,161 $ 2,088 $ 

Non-Federal Physical Property 

Food and Nutrition Service 

FNS’ non-Federal physical property consists of computer systems and other equipment obtained by State and local 

governments for the purpose of administering the Supplemental Nutrition Assistance Program (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. 

Cooperative State Research, Education and Extension Service 

The Extension 1890 facilities program supports the renovation of existing buildings and the construction of new 

facilities that permit faculty, students, and communities to benefit fully from the partnership between USDA and 

the historically African-American land-grant universities. 
180 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Human Capital 

Cooperative State Research, Education and Extension Service 

The Higher Education programs include graduate fellowship grants, competitive challenge grants, Secondary/2-

year Post Secondary 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 Native Hawaiian Serving institutions program, a resident instruction grant program 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. CSREES also supports extension-related work at 1862 and 1890 land-grant 

institutions throughout the country through formula and competitive programs. CSREES supported the Outreach 

and Assistance for Disadvantaged Farmers Program for the first time in fiscal 2003. The purpose is to enhance the 

ability of minority and small farmers and ranchers to operate farming or ranching enterprises independently to 

assure adequate income and maintain reasonable lifestyles. 

Food and Nutrition Service 

FNS’ human capital consists of employment and training (E&T) for the 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 955,329 work registrants subject to the 3 - month SNAP participant limit and 1,706,182 work 

registrants not subject to the limit in either job-search, job-training, job-workfare, education, or work experience. 

Agricultural Research Service 

As the Nation’s primary source for agricultural information, the National Agricultural Library (NAL) has a mission 

to increase the availability and utilization of agricultural information for researchers, educators, policymakers, 

consumers of agricultural products, and the public. The NAL is one of the world’s largest and most accessible 

agricultural research libraries and plays a vital role in supporting research, education, and applied agriculture. 

The NAL was created as the departmental library for USDA in 1862 and became a national library in 1962. One of 

four national libraries of the U.S. (with the Library of Congress, the National Library of Medicine, and the 

National Library of Education), it is also the coordinator for a national network of State land-grant and USDA 

field libraries. In its international role, the NAL serves as the U.S. center for the international agricultural 

information system, coordinating and sharing resources and enhancing global access to agricultural data. The NAL 

collection of over 3.5 million items and its leadership role in information services and technology applications 

combine to make it the foremost agricultural library in the world. 

Risk Management Agency 

In response to the Secretary’s 1996 Risk Management Education (RME) initiative, and as mandated by the Federal 

Agricultural Improvement and Reform Act of 1996, the FCIC has formed new partnerships with the CSREES, 

the Commodity Futures Trading Commission, the USDA National Office of Outreach, Economic Research 

Service, and private industry to leverage the federal government’s funding of its RME program by using both public 

and private organizations to help educate their members in agricultural risk management. The RME effort was 

launched in 1997 with a Risk Management Education Summit that raised awareness of the tools and resources 

needed by farmers and ranchers to manage their risks. RMA has built on this foundation since 2003 by expanding 

State and Regional education partnerships; encouraging the development of information and technology decision 

aids; supporting the National Future Farmers of America (FFA) foundation with an annual essay contest; 

facilitating local training workshops; and supporting Cooperative Agreements with Educational and outreach 

organizations. 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 181 == 

During fiscal years 2009 and 2008, the RME worked toward the goals by funding risk management sessions, most 

of which targeted producers directly. The number of producers reached through these sessions is approximately 

20,000 and 49,000 in fiscal years 2009 and 2008, respectively. Additionally, some training sessions helped those 

who work with producers, such as lenders, agricultural educators, and crop insurance agents, better understand 

those areas of risk management with which they may be unfamiliar. Total RME obligations incurred by the FCIC 

were approximately $6 million for fiscal year 2009 and $10 million for fiscal year 2008. The following table 

summarizes the RME initiatives since fiscal year 2005: 

(dollars in millions) 2009 2008 2007 2006 2005 

RME Obligations $ 6 10 11 10 9.4 

Number of producers attending RME sessions 20,000 49,000 49,000 48,000 47,000 

One of the directives of the Agricultural Risk Protection Act (ARPA) is to step up the FCIC’s educational and 

outreach efforts in certain areas of the country that have been historically underserved by the Federal crop insurance 

program. The Secretary determined that fifteen states met the underserved criteria. These states are Maine, 

Massachusetts, Connecticut, Wyoming, New Jersey, New York, Delaware, Nevada, Pennsylvania, Vermont, 

Maryland, Utah, Rhode Island, New Hampshire, and West Virginia. 

Natural Resources Conservation Service 

The Agency’s investment in human capital is expensed each year and is primarily for education and training 

programs intended to (1) increase or maintain national economic productive capacity and (2) produce outputs and 

outcomes that provide evidence of maintaining or increasing national productive capacity. 

As the Nation’s conservation agenda continues to become more complex, the need for technical information and 

advice will increasingly exceed the capacity of the Federal workforce to respond timely. NRCS is expanding the 

capacity of its workforce through three strategies: 

1. Relying on the non-Federal entities to provide technical assistance to participants in NRCS conservation 

programs. Under authority of the 2002 Farm Bill, NRCS established processes to certify individual 

Technical Service Providers (TSP’s) and to enter into agreements with governmental and nongovernmental entities to provide services. In FY 2009 NRCS signed agreements or renewed the 

certification of 423 individual TSP’s and 21 businesses. There are now more than 1,100 individual TSP’s 

and 88 businesses certified and available to help program participants apply conservation. Since passage of 

the 2002 Farm Bill, NRCS has obligated over $300 million to acquire TSP technical service. Web-based 

orientations and proficiency statements have been developed to help ensure that TSP’s have the necessary 

technical competencies to carry out NRCS’ programs. 

2. Acquiring the services of experienced workers on a temporary basis. NRCS is acquiring the expertise of 

older workers through the Agricultural Conservation Enrollees/Seniors (ACES) project conducted in 

partnership with the National Older Worker Career Center. This project evolved from and complements 

the TSP initiative to leverage conservation technical assistance capacity and help landowners meet 

conservation goals. NRCS has filled 300 ACES positions across the country, including 260 at the field 

level. 

3. Using the time, talent, and energy of volunteers. Since the organization of local conservation districts in 

the 1930’s, people have volunteered their time and talent to help get conservation on the land. In 1981, 

using new authority enacted by Congress, NRCS established the National Volunteer Program. In 1985, 

that program became the Earth Team. 
182 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Research and Development 

Agricultural Research Service 

The 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. ARS’ programs are aligned under the Department’s new priorities as follows: 

Department Priority 1: Rural Communities Create Wealth So They Are Self-Sustaining, Repopulating, and Thriving Economically 

Product Quality/Value Added—Many agricultural products are marketed as low value commodities and harvested 

commodities often suffer losses due to spoilage or damage during shipping, storage, and handling. Healthy foods 

are often not convenient and/or are not widely accepted by many consumers. Biobased product represent small 

fraction of the market for industrial products and their performance is often uncertain. Biofuels and some biobased 

products are not yet economically competitive with petroleum-based products. 

ARS has active research programs directed toward: 1) improving the efficiency and reducing the cost for the 

conversion of agricultural products into biobased products and biofuels; 2) developing new and improved products 

to help establish them in domestic and foreign markets; and 3) providing higher quality, healthy foods that satisfy 

consumer needs in the United States and abroad. 

National Agricultural Library—The Library, the world’s largest library serving agriculture, delivered more than 93 

million direct customer service transactions in FY 2009, a 5 per cent increase over FY 2008. NAL, with partners in 

the Land-Grant University and agricultural information service communities, has initiated development of a 

national digital library for agriculture. Specific efforts are directed toward achieving two goals: 1) continuing to 

meet the needs of NAL customers, and 2) implementing a national digital library for agriculture. 

Buildings and Facilities—ARS has over 100 laboratories, primarily located throughout the United States. ARS’ 

facilities programs are designed to meet the needs of its scientists and support personnel to accomplish the agency’s 

mission. 

Department Priority 2: National Forest and Private Working Lands Are Conserved, Restored, and Made More Resilient to Climate Change 

and Are Managed to Enhance Water Resources 

Environmental Stewardship—ARS’ research programs in environmental stewardship support scientists at seventy 

locations. Emphasis is given to developing technologies and systems that support profitable production and 

enhance the Nation’s vast renewable natural resource base. 

ARS 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’ air resources research is developing 

measurements, prediction, and control technologies for emissions of greenhouse gases, particulate matter, 

ammonia, hydrogen sulfide, and volatile organic compounds affecting air quality and land-surface climate 

interactions. The agency is a leader in developing measurement and modeling techniques for 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 are also important components of ARS’ research program. 

ARS’ grazing and range land research includes 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. ARS is currently developing improved grass and forage legume 

germplasm for livestock, conservation, bioenergy, and bioproduct systems as well as grazing-based livestock systems 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 183 == 

that reduce risk and increase profitability. In addition, the agency is developing whole system management 

strategies to reduce production costs and risks. 

Department Priority 3: America Leads the World in Sustainable Crop Production and Biotech Crop Exports

Livestock Production—ARS’ livestock production program is directed toward: 1) safeguarding and utilizing animal 

genetic resources, associated genetic and genomic databases, and bioinformatics tools; 2) developing a basic 

understanding of the physiology of livestock and poultry; and 3) developing information, tools, and technologies 

that can be used to improve animal production systems. 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. 

Current areas of emphasis include increasing efficiency of nutrient utilization; increasing animal well-being and 

reducing stress in production systems; increasing reproductive rates and breeding animal longevity; developing and 

evaluating non-traditional production systems (e.g., organic, natural); and evaluating and conserving animal genetic 

resources. 

Crop Production—ARS’ crop production program focuses on developing and improving ways to reduce crop losses 

while protecting and ensuring a safe and affordable food supply. The research program concentrates on effective 

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 bioinformatics databases that facilitate selection of varieties 

and/or germplasm with significantly improved traits. 

Current 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. ARS 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 strengthen prevention techniques, aid in detection/identification of 

invasives, and increase control through management tactics which restore habitats and biological diversity. 

Livestock Protection—ARS’ animal health 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. 

The research program has ten strategic objectives: 1) establish ARS’ laboratories into a fluid, highly effective 

research network to maximize use of core competencies and resources; 2) access specialized high containment 

facilities to study zoonotic and emerging diseases; 3) develop an integrated animal and microbial genomics research 

program; 4) establish centers of excellence in animal immunology; 5) launch a biotherapeutic discovery program 

providing alternatives to animal drugs; 6) build a technology driven vaccine and diagnostic discovery research 

program; 7) develop core competencies in field epidemiology and predictive biology; 8) develop internationally 

recognized expert collaborative research laboratories; 9) establish a best in class training center for our Nation’s 

veterinarians and scientists; and 10) develop a model technology transfer program to achieve the full impact of 

ARS’ research discoveries. 

ARS’ current animal research program includes eight core components: 1) biodefense research, 2) animal genomics 

and immunology, 3) zoonotic diseases, 4) respiratory diseases, 5) reproductive and neonatal diseases, 6) enteric 

diseases, 7) parasitic diseases, and 8) transmissible spongiform encephalopathies. 

Crop Protection—ARS research on crop protection is directed toward epidemiological investigations 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. 
184 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Currently, ARS’ research priorities include: 1) identification of genes that convey virulence traits in pathogens and 

pests; 2) factors that modulate infectivity, gene functions, and mechanisms; 3) genetic profiles that provide specified 

levels of disease and insect resistance under field conditions, and 4) mechanisms that facilitate 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. 

Department Priority 4: America’s Children and the World’s Children Have Access to Safe, Nutritious, and Balanced Meals 

Food Safety—Assuring that the United States has the highest levels of affordable, safe food requires that the food 

system be protected at each stage from production through processing and consumption from pathogens, toxins, 

and chemical contaminants that cause diseases in humans. The U.S. food supply is very diverse, extensive, easily 

accessible, and thus vulnerable to the introduction of biological and chemical contaminants through natural 

processes, intentional means, or by global commerce. 

ARS’ current food safety research 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 toxin producing and/or 

pathogenic bacteria and fungi, parasites, chemical contaminants, and plant toxins. ARS’ research activities involve 

a high degree of cooperation and collaboration both within the USDA-REE agencies as well as with USDA’s Food 

Safety and Inspection Service and the Animal and Plant Health Inspection Service, and with other entities, 

including the Food and Drug Administration, the Centers for Disease Control, the Department of Homeland 

Security, and the Environmental Protection Agency. ARS 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, that is, regulatory agencies, industry, and commodity and consumer organizations in detecting, 

identifying, and controlling foodborne diseases that affect human health. 

Human Nutrition—Maintenance of health throughout the lifespan along with prevention of obesity and chronic 

diseases via food-based recommendations are the major emphasis of ARS’ human nutrition research program. 

These health related goals are based on the knowledge that deficiency diseases are no longer the most important 

public health concerns. 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. ARS’ research programs also actively study bioactive 

components of foods that have no known requirement but have health promotion activities. 

Four specific areas of research are currently emphasized: 1) nutrition monitoring and the food supply, e.g., a 

national diet survey and the food composition databank; 2) dietary guidance for health promotion and disease 

prevention, i.e., specific foods, nutrients, and dietary patterns that maintain health and prevent diseases; 3) 

prevention of obesity and related diseases, including research as to why so few of the population do not follow the 

Dietary Guidelines for Americans; and 4) life stage nutrition and metabolism, in order to better define the role of 

nutrition in pregnancy, growth of children, and for healthier aging. 

Cooperative State Research, Education, and Extension Service Program 

CSREES 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. CSREES administers 

grants and formula payments to State institutions to supplement State and local funding for agriculture research. 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 185 == 

Forest Service 

Forest Service R&D has an integrated portfolio that supports achievement of the agency’s strategic goals with an 

emphasis in seven strategic program areas: 

Wildland Fire and Fuels 

Wildland Fire and Fuels R&D provides managers the knowledge and tools to reduce the negative impacts of fire 

and enhance the beneficial effects of fire, as a natural process, and 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 environment; social and economic aspects of fire; evaluation of integrated management strategies and 

disturbance interactions at multiple scales; and application of fire research to address management problems. 

Invasive Species 

Invasive Species R&D provides the scientific information, methods, and technology to reduce or eliminate the 

introduction, spread, and impact of invasive species, and to restore or improve the functionality of ecosystems 

affected by invasives species. 

Research focuses on plants, animals, fish, insects, diseases, invertebrates, and other species not native to an 

ecosystem whose introduction is likely to cause economic or environmental harm. 

Water, Air, and Soil 

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 wildlife fire and smoke, and through 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 from an ecosystem 

perspective. 

Wildlife and Fish 

Wildlife and Fish R&D relies upon interdisciplinary research to inform policy initiatives affecting wildlife and fish 

habitat on private and public lands, and the recovery of threatened or endangered species. 

Scientists investigate the complex interactions among species, ecosystem dynamics and processes, land use and 

management, and any emerging broadscale threats, including global climate change, loss of open space, invasive 

species, and disease. 

Resource Management and Use 

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 

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 decisionmaking; and sustaining ecosystems affected by recreational use. 
186 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Inventory and Monitoring 

The Inventory and Monitoring R&D provides the resource data, analysis, and tools needed to monitor forest 

ecosystems at greatest risk from 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 2009 accomplishments include the following: 

• 57 new interagency agreements and contracts 

• 12 interagency agreements and contracts continued 

• 2,294 articles published in journals 

• 886 articles published in all other publications 

• 3 patents granted 

Economic Research Service 

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 

Statistical research and service is conducted to improve the statistical methods and related technologies used in 

developing U.S. agricultural statistics. The highest priority of the research agenda is to aid the NASS estimation 

program through development of better estimators at lower cost and with less respondent burden. This means 

greater efficiency in sampling and data collection coupled with higher quality data upon which to base the official 

estimates. In addition, products for data users are being improved using technologies such as remote sensing and 

geographic information systems. Continued service to users will be increasingly dependent upon methodological 

and technological efficiencies. 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 187 == 

Required Supplementary Information 

DEFERRED MAINTENANCE (UNAUDITED) 

Deferred maintenance is maintenance that was scheduled to be performed but was delayed until a future period. 

Deferred maintenance represents a cost that the Federal Government has elected not to fund and, therefore, the 

costs are not reflected in the financial statements. 

Maintenance is defined to include preventive maintenance, normal repairs, replacement of parts and structural 

components, and other activities needed to preserve the asset so that it continues to provide acceptable service and 

achieve its expected life. Maintenance excludes activities aimed at expanding the capacity of an asset or otherwise 

upgrading it to service needs different from, or significantly greater than, those originally intended. 
188 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Forest Service 

FY 2009 Cost to Return to 

Acceptable Condition

Cost of Critical 

Maintenance

Cost of Non-critical 

Maintenance

Asset Class

Bridges 156 $ 29 $ 127 $ 

Buildings 1,023 144 879 

Dam 29 10 19 

Minor Constructed Features 107 - 107 

Fence 298 298 - 

Handling Facility 22 22 - 

Heritage 25 9 16 

Road 3,178 318 2,860 

Trail Bridge 11 4 7 

Wastewater 40 24 16 

Water 118 67 51 

Wildlife, Fish, TES 6 4 2 

Trails 294 5 289 

General Forest Area - - - 

Total Forest Service 5,307 $ 934 $ 4,373 $ 

FY 2008 Cost to Return to 

Acceptable Condition

Cost of Critical 

Maintenance

Cost of Non-critical 

Maintenance

Asset Class

Bridges 133 $ 28 $ 105 $ 

Buildings 712 117 595 

Dam 24 9 15 

Minor Constructed Features 102 - 102 

Fence 301 301 - 

Handling Facility 23 23 - 

Heritage 16 5 11 

Road 3,400 782 2,618 

Trail Bridge 10 3 7 

Wastewater 35 20 15 

Water 103 60 43 

Wildlife, Fish, TES 7 5 2 

Trails 279 7 272 

General Forest Area - - - 

Total Forest Service 5,145 $ 1,360 $ 3,785 $ 

Deferred maintenance is reported for general Property, Plant, and Equipment (PP&E), heritage assets, and 

stewardship land. It is also reported separately for critical and noncritical amounts of maintenance needed to return 

each class of asset to its acceptable operating condition. Critical maintenance is defined as a serious threat to public 

health or safety, a natural resource, or the ability to carry out the mission of the organization. Noncritical 

maintenance is defined as a potential risk to the public or employee safety or health (e.g., compliance with codes, 

standards, or regulations) and potential adverse consequences to natural resources or mission accomplishment. 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 189 == 

The Forest Service began reporting deferred maintenance in 2000. Estimates of deferred maintenance for all major 

classes of PP&E, heritage assets, and stewardship assets are based on condition surveys. The agency has completed 

two rounds of condition surveys providing a comprehensive national assessment of Forest Service property. 

For roads, deferred maintenance is determined from surveys of an annual random sample of a sufficient number of 

roads to achieve estimates of 95-percent accuracy and 95-percent confidence. Validation of this process is ongoing. 

Deferred maintenance needs for all other asset groups are determined from surveys of all individual assets on a 

revolving schedule where the interval between visits does not exceed 5 years. 

No deferred maintenance exists for fleet vehicles as they are managed through the agency’s working capital fund 

(WCF). Each fleet vehicle is maintained according to schedule. The cost of maintaining the remaining classes of 

equipment is expensed. 

The overall condition of major asset classes range from poor to good depending on the location, age, and type of 

property. The standards for acceptable operating condition for various classes of general PP&E, stewardship, and 

heritage assets are as follows. 

Conditions of roads and bridges within the National Forest System (NFS) road system are measured by various 

standards: 

1. Federal Highway Administration regulations for the Federal Highway Safety Act; 

2. Best management practices for the nonpoint source provisions of the Clean Water Act from 

Environmental Protection Agency and States; 

3. Road management objectives developed through the National Forest Management Act forest planning 

process; and 

4. Forest Service directives—Forest Service Manual (FSM) 7730, Operation and Maintenance (August 25, 

2005, amendment was superseded with October 1, 2008, revision); Forest Service Handbook (FSH) 

7709.56a, Road Preconstruction, and FSH 7709.56b, Transportation Structures Handbook. 

Dams shall be 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 shall comply with the National Life Safety Code, the Forest Service Health and Safety Handbook, and 

the Occupational Safety Health Administration as determined by condition surveys. These requirements are found 

in FSM 7310, Buildings and Related Facilities, revised November 19, 2004. The condition of administrative 

facilities ranges from poor to good, with approximately 37 percent needing major repairs or renovations; 

approximately 14 percent in fair condition; and 49 percent of the facilities in good condition. 

The agency is currently developing an integrated strategy to realign our administrative facility infrastructure to meet 

current organizational structure and to reduce the maintenance liability for unneeded buildings, free up land for use 

by local communities and private enterprise, and provide added funds for infrastructure maintenance and 

development. Forest Service anticipates maximum benefits from a combination of appropriations, facility 

conveyance receipts, and decommissioning of unneeded facilities. 

Recreation facilities include developed recreation sites, general forest areas, campgrounds, trailheads, trails, water 

and wastewater systems, interpretive facilities, and visitor centers. These components are included in several asset 

classes of the deferred maintenance exhibit. All developed sites are managed in accordance with Federal laws and 

regulations (Code of Federal Regulations (CFR) 36). 
190 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

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 were established as 

Meaningful Measures for health and cleanliness, settings, safety and security, responsiveness, and the condition of 

the facility. 

The condition assessment for range structures (fences and stock handling facilities) is based on (1) a determination 

by knowledgeable range specialists or other district personnel of whether the structure would perform the originally 

intended function, and (2) a determination through the use of a protocol system to assess conditions based on age. 

A long-standing range methodology is used to gather this data. 

Heritage assets include archaeological sites that require determinations of National Register of Historic Places 

status, National Historic Landmarks, and significant historic properties. Some heritage assets may have historical 

significance, but their primary function in the agency is as visitation or recreation sites and, therefore, may not fall 

under the management responsibility of the heritage program. 

Trails and trail bridges 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. 

Deferred maintenance of structures for wildlife, fish, and threatened and endangered species is determined by field 

biologists using their professional judgment. The deferred maintenance is considered critical if resource damage or 

species endangerment would likely occur if maintenance were deferred much longer. 

Condition of Heritage Assets and Stewardship Lands 

The Statement of Federal Financial Accounting Standard No. 29, Heritage Assets and Stewardship Lands, 

reclassified information on heritage and stewardship land assets from “supplementary” to “basic.” This change 

moves the acquisitions and withdrawals of these assets to the financial notes, accompanying the financial 

statements. The condition information for these assets remains supplementary. 

Heritage Assets 

Heritage professionals are responsible for documenting and maintaining cultural resource condition assessments to 

standard. Periodic monitoring and condition assessments are the basis for applying protective measures and 

treatments to vulnerable, deteriorating, or threatened cultural resources. The condition of heritage assets depends 

on the type of asset and varies from poor to fair. 

Stewardship Land 

The condition of NFS lands varies by purpose and location. The Forest Service monitors the condition of its 

stewardship lands based on information compiled by two national inventory and monitoring programs—Forest 

Inventory and Analysis (FIA) and Forest Health Monitoring (FHM). 

Although most of the estimated 193 million acres of stewardship lands continue to produce valuable benefits – 

clean air and water, habitat for wildlife, and products for human use – significant portions are at risk to pest 

outbreaks or catastrophic fires. 

There are 25 million acres of NFS forest lands at risk to future mortality from insects and diseases, based on the 

2006 publication of Mapping Risk from Forest Insects and Diseases. Invasive species of insects, diseases, and plants 

continue to affect our native ecosystems by causing mortality to, or displacement of, native vegetation. 

The projected accomplishments on NFS lands include treatment of 42,337 acres for invasives and 57,058 for native 

pests. These numbers should be considered preliminary, with final amounts of acres treated for invasives and native 

pests on NFS lands available at www.fs.fed.us in February 2010. 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 191 == 

Agricultural Research Service 

FY 2009 FY 2008

Asset Class

Buildings 258 $ 241 $ 

Structures 19 36 

Heritage 89 80 

Total Agricultural Research Service 366 $ 357 $ 

Deferred Maintenance (DM) includes work needed to meet laws, regulations, codes and other legal direction as 

long as the original intent or purpose of the fixed asset is not changed. Also includes work performed to bring an 

asset up to present environmental standards or correction of safety problems. Critical DM is DM that is identified 

for critical systems including HVAC, electrical, roofing, and plumbing tasks. Non-critical DM is all other systems. 

DM is reported for buildings, structures and heritage assets. 

Executive Order (EO) 13327 requires all Federal agencies to assess the condition of their facilities and plan for 

their full life cycle management. The Condition Index (CI) is a general measure of the constructed asset’s 

condition at a specific point in time. It is calculated as the ration of repair needs, or DM, to plant replacement 

value (PRV). PRV can be calculated systematically and without much effort. The condition of the constructed 

asset is a more difficult figure to determine. A repair need is the amount necessary to ensure a constructed asset is 

restored to a condition substantially equivalent to the originally intended and designed capacity, efficiency or 

capability. Ideally, with enough money and time, repair needs would be determined for each asset by inspection, 

evaluation of the repairs required, and consistent estimating of the repairs throughout ARS. ARS does not have 

available manpower in-house to complete this type of inspection and estimating, nor the funding to contract. ARS 

looked at approaches to model ARS assets and evaluate the results for management purposes. 

Whitestone Research is a company that estimates DM based on the age of the facility, geographic location, typical 

major components and size of the structure. Whitestone first inspected a sample of representative buildings from 

29 ARS sites (roughly 48 percent of the total inventory) and used parametric models to estimate DM and PRV. 

These results were generalized to the entire population of ARS facilities. Assuming a PRV of $3.6 billion, the CI 

ratio (1 - $DM/PRV) is 92 percent, an outcome commonly classified as “adequate.” 
192

FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT

STATEMENT OF BUDGETARY RESOURCES (UNAUDITED) 

FY 2009 FSA CCC FAS RMA FNS FSIS AMS APH

Non-Budgetary Non-Budgetary

Financing Financing

Budgetary Accounts Budgetary Accounts Budgetary Budgetary Budgetary Budgetary Budgetary Budge

Budgetary Resources:Unobligated balance, brought forward, October 1: 2,215 $ 869 $ 2,098 $ 2,516 $ 382 $ 2,057 $ 14,258 $ 29 $ 433 $ 

$ 

Recoveries of prior year unpaid obligations 55 72 181 10 170 4 507 1,441 15 

Budget Authority:

Appropriation 2,733 - 15,444 - 331 6,843 75,647 982 8,227 1,

Borrowing Authority - 2,937 28,870 340 - - - - - 

Earned -

Collected 728 1,628 11,722 553 102 4,211 84 146 58 

Change in receivables from Federal Sources (3) - (89) - 42 - - (15) - 

Change in unfilled customer orders -

Advances received - - 154 - - - - - - 

Without advance from Federal Sources 1 23 - (18) (13) - - 3 - 

Expenditure transfers from trust funds - - 1,130 - - - - - - 

Nonexpenditure transfers, net, anticipated and actual 51 - (2,241) - 102 1 6,590 - (6,616) (

Temporarily not available pursuant to Public Law - - - - - - - - - 

Permanently not available (321) (524) (27,444) (1,583) (75) (2) (2,119) (9) (295) 

Total Budgetary Resources 5,459 5,005 29,825 1,818 1,041 13,114 94,967 2,577 1,822 1,

Status of Budgetary Resources:Obligations Incurred:

Direct 2,317 3,279 3,573 847 529 12,113 79,454 2,419 1,274 1,

Reimbursable 450 - 24,232 - 144 - 42 126 51 

Unobligated Balance:

Apportioned 2,523 628 329 363 89 996 1,520 12 33 

Exempt from Apportionment - - 841 4 - - - - 32 

Unobligated balance not available 169 1,098 850 604 279 5 13,951 20 432 

Total Status of Budgetary Resources 5,459 5,005 29,825 1,818 1,041 13,114 94,967 2,577 1,822 1,

Change in Obligated Balances:Obligated balance, net, brought forward October 1 497 330 7,646 6 20 456 4,288 162 122 

Obligations incurred 2,767 3,279 27,805 847 673 12,113 79,496 2,545 1,325 1,

Gross outlays (2,618) (3,036) (26,050) (879) (423) (12,173) (77,928) (1,108) (1,265) (1,

Recoveries of prior year unpaid obligations, actual (55) (72) (181) (10) (170) (4) (507) (1,441) (15) (

Change in uncollected payments from Federal Sources 2 (23) 89 18 (29) - - 12 - 

Obligated balance, net, end of period -

Unpaid obligations 606 514 9,541 159 187 392 5,347 186 170 

Uncollected customer payments from Federal Sources (12) (35) (233) (177) (116) - - (17) (2) 

Obligated balance, net, end of period 594 479 9,308 (18) 71 392 5,347 169 168 

Net Outlays:

Gross outlays 2,618 3,036 26,050 879 423 12,173 77,928 1,108 1,265 1,

Offsetting collections (729) (1,628) (13,006) (553) (103) (4,211) (84) (146) (58) (

Distributed offsetting receipts (951) - - (474) (1) - - (11) (155) 

Net Outlays 938 $ 1,408 $ 13,044 $ (148) $ 319 $ 7,962 $ 77,844 $ 951 $ 1,052 $ 1,

$ 
193

FY 2008 PERFORMANCE AND AC COUNTABILITY REPORT 

FY 2009 GIPSA FS NRCS ARS CSREES ERS NASS RD DO 

Non-Budgetary 

Financing 

Budgetary Budgetary Budgetary Budgetary Budgetary Budgetary Budgetary Budgetary Accounts Budgetary 

Budgetary Resources:Unobligated balance, brought forward, October 1: 14 $ 2,170 $ 1,793 $ 241 $ 127 $ 4 $ 4 $ 1,827 $ 1,929 $ 58 $ 

Recoveries of prior year unpaid obligations 6 38 572 111 446 4 6 153 672 57 

Budget Authority:

Appropriation 40 7,107 1,308 1,387 1,270 80 152 8,847 - 543 

Borrowing Authority - - - - - - - - 11,628 - 

Earned -

Collected 42 535 108 105 46 - 24 3,846 7,315 816 

Change in receivables from Federal Sources - (23) (6) - (2) - - 4 - 24 

Change in unfilled customer orders -

Advance received - 2 4 - (18) - - - - (2) 

Without advance from Federal Sources - (51) 17 (6) 11 1 - - 215 (10) 

Expenditure transfers from trust funds - - - - - - - - - - 

Nonexpenditure transfers, net, anticipated and actual - - 1,612 3 160 - - 204 - 3 

Temporarily not available pursuant to Public Law - - - - (12) - - - - - 

Permanently not available (1) (5) (1) (6) (5) (1) (2) (2,636) (3,498) (7) 

Total Budgetary Resources 101 9,773 5,407 1,835 2,023 88 184 12,245 18,261 1,482 

Status of Budgetary Resources:Obligations Incurred:

Direct 46 6,544 3,540 1,300 1,717 81 153 5,780 16,269 532 

Reimbursable 42 482 99 112 102 1 24 555 - 844 

Unobligated Balance:

Apportioned 8 2,031 794 399 202 1 5 4,423 1,333 154 

Exempt from Apportionment - - - - - - - - - - 

Unobligated balance not available 5 716 974 24 2 5 2 1,487 659 (48) 

Total Status of Budgetary Resources 101 9,773 5,407 1,835 2,023 88 184 12,245 18,261 1,482 

Change in Obligated Balances:Obligated balance, net, brought forward October 1 6 1,707 3,006 340 1,489 29 20 4,916 20,358 182 

Obligations incurred net 88 7,026 3,639 1,412 1,819 82 177 6,335 16,269 1,376 

Gross outlays (83) (6,480) (2,836) (1,306) (1,223) (80) (169) (5,580) (12,903) (1,348) 

Recoveries of prior year unpaid obligations, actual (6) (38) (572) (111) (446) (4) (6) (153) (672) (57) 

Change in uncollected payments from Federal Sources - 74 (11) 6 (9) (1) - (4) (215) (14) 

Obligated balance, net, end of period

Unpaid obligations 11 2,641 3,322 432 1,716 27 25 5,527 23,741 319 

Uncollected customer payments from Federal Sources (5) (351) (97) (90) (86) (1) (3) (11) (904) (181) 

Obligated Balance, net, end of period 6 2,290 3,225 342 1,630 26 22 5,516 22,837 138 

Net Outlays:

Gross outlays 83 6,480 2,836 1,306 1,223 80 169 5,580 12,903 1,348 

Offsetting collections (42) (536) (111) (105) (29) - (24) (3,846) (7,315) (814) 

Distributed offsetting receipts - (574) 1 (23) (5) - - (1,310) - (56) 

Net Outlays 41 $ 5,370 $ 2,726 $ 1,178 $ 1,189 $ 80 $ 145 $ 424 $ 5,588 $ 478 $ 
194

FY 2008 PERFORMANCE AND ACCOUNTABILITY REPORT

FY 2008 FSA CCC FAS RMA FNS FSIS AMS APH

Non-Budgetary Non-Budgetary

Financing Financing

Budgetary Accounts Budgetary Accounts Budgetary Budgetary Budgetary Budgetary Budgetary Budge

Budgetary Resources:Unobligated balance, brought forward, October 1: 3,165 $ 1,820 $ 1,604 $ 2,139 $ 387 $ 2,262 $ 14,891 $ 57 $ 603 $ 

$ 

Recoveries of prior year unpaid obligations 40 81 1,246 27 96 2 637 1,074 14 

Budget Authority:

Appropriation 3,410 - 16,154 - 261 4,222 53,836 940 7,844 1,

Borrowing Authority - 1,897 30,267 302 - - - - - 

Earned -

Collected 791 1,499 13,812 1,250 141 2,068 85 150 110 

Change in receivables from Federal Sources (3) - 10 (177) (42) - - 5 - 

Change in unfilled customer orders -

Advances received - - 3 - - - - - - 

Without advance from Federal Sources (1) (1) - 194 22 - - - - 

Expenditure transfers from trust funds - - 959 - - - - - - 

Nonexpenditure transfers, net, anticipated and actual - - (2,620) - 2 1 6,277 (2) (6,296) (

Temporarily not available pursuant to Public Law - - - - - - - - - 

Permanently not available (365) (2,323) (33,375) (350) (35) (1) (838) (19) (687) 

Total Budgetary Resources 7,037 2,973 28,060 3,385 832 8,554 74,888 2,205 1,588 1,

Status of Budgetary Resources:Obligations Incurred:

Direct 4,413 2,104 4,258 869 325 6,497 60,602 2,008 1,096 1,

Reimbursable 409 - 21,704 - 125 - 28 168 59 

Unobligated Balance:

Apportioned 1,092 65 276 1,662 12 2,053 974 8 92 

Exempt from Apportionment - - 811 5 - - - - 289 

Unobligated balance not available 1,123 804 1,011 849 370 4 13,284 21 52 

Total Status of Budgetary Resources 7,037 2,973 28,060 3,385 832 8,554 74,888 2,205 1,588 1,

Change in Obligated Balances:Obligated balance, net, brought forward October 1 215 432 7,734 (53) 11 180 4,154 137 112 

Obligations incurred 4,822 2,104 25,962 869 450 6,497 60,630 2,176 1,155 1,

Gross outlays (4,504) (2,127) (24,797) (766) (365) (6,219) (59,859) (1,072) (1,132) (1,

Recoveries of prior year unpaid obligations, actual (40) (81) (1,246) (27) (96) (2) (637) (1,074) (14) (

Change in uncollected payments from Federal Sources 5 1 (10) (17) 20 - - (5) - 

Obligated balance, net, end of period -

Unpaid obligations 512 343 7,968 200 106 456 4,288 190 124 

Uncollected customer payments from Federal Sources (15) (13) (322) (194) (86) - - (28) (2) 

Obligated balance, net, end of period 497 330 7,646 6 20 456 4,288 162 122 

Net Outlays:

Gross outlays 4,504 2,127 24,797 766 365 6,219 59,859 1,072 1,132 1,

Offsetting collections (791) (1,499) (14,773) (1,249) (141) (2,068) (85) (150) (111) 

Distributed offsetting receipts (581) - - (353) (1) - (1) (13) (185) 

Net Outlays 3,132 $ 628 $ 10,024 $ (836) $ 223 $ 4,151 $ 59,773 $ 909 $ 836 $ 1,

$ 
195

FY 2008 PERFORMANCE AND AC COUNTABILITY REPORT 

FY 2008 GIPSA FS NRCS ARS CSREES ERS NASS RD 

Non-Budgetary 

Financing 

Budgetary Budgetary Budgetary Budgetary Budgetary Budgetary Budgetary Budgetary Accounts B

Budgetary Resources:Unobligated balance, brought forward, October 1: 13 $ 1,672 $ 1,047 $ 210 $ 126 $ 3 $ 5 $ 1,182 $ 1,249 $ 

$ 

Recoveries of prior year unpaid obligations 4 78 491 56 33 2 1 171 1,118 

 

Budget Authority:

Appropriation 39 6,309 1,434 1,202 1,211 78 165 3,669 - 

 

Borrowing Authority - - - - - - - - 12,712 

 

Earned -

Collected 46 561 148 81 38 1 19 4,374 6,106 

 

Change in receivables from Federal Sources (1) 38 (9) 3 3 - (3) (21) - 

 

Change in unfilled customer orders -

Advances received - (7) (3) (1) 17 - - - - 

 

Without advance from Federal Sources - 3 27 16 (3) - - - 48 

 

Expenditure transfers from trust funds - 4 - - - - - - - 

 

Nonexpenditure transfers, net, anticipated and actual - (2) 1,956 4 35 1 1 120 - 

 

Temporarily not available pursuant to Public Law - - - - (11) - - - - 

 

Permanently not available (3) (71) (7) (17) (17) (2) (2) (3,455) (4,238) 

 

Total Budgetary Resources 98 8,585 5,084 1,554 1,432 83 186 6,040 16,995 

 

Status of Budgetary Resources:Obligations Incurred:

Direct 42 6,055 3,174 1,212 1,245 78 166 3,701 15,066 

 

Reimbursable 42 360 117 101 60 1 16 512 - 

 

Unobligated Balance:

Apportioned 7 982 517 216 123 1 2 1,234 1,057 

 

Exempt from Apportionment - - - - - - - - - 

 

Unobligated balance not available 7 1,188 1,276 25 4 3 2 593 872 

 

Total Status of Budgetary Resources 98 8,585 5,084 1,554 1,432 83 186 6,040 16,995 

 

Change in Obligated Balances:Obligated balance, net, brought forward October 1 4 1,859 3,176 478 1,411 31 14 5,381 17,728 

 

Obligations incurred 84 6,415 3,291 1,313 1,305 79 182 4,213 15,066 

 

Gross outlays (78) (6,448) (2,951) (1,376) (1,193) (79) (179) (4,528) (11,269) 

 

Recoveries of prior year unpaid obligations, actual (4) (78) (491) (56) (33) (2) (1) (171) (1,118) 

 

Change in uncollected payments from Federal Sources - (41) (18) (19) - - 3 21 (48) 

 

Obligated balance, net, end of period -

Unpaid obligations 11 2,132 3,092 436 1,566 29 23 4,924 21,047 

 

Uncollected customer payments from Federal Sources (5) (425) (86) (96) (77) - (3) (8) (689) 

 

Obligated balance, net, end of period 6 1,707 3,006 340 1,489 29 20 4,916 20,358 

 

Net Outlays:

Gross outlays 78 6,448 2,951 1,376 1,193 79 179 4,528 11,269 

 

Offsetting collections (47) (558) (145) (81) (55) (1) (19) (4,374) (6,107) 

 

Distributed offsetting receipts - (514) 3 (23) (4) - (1) (494) - 

 

Net Outlays 31 $ 5,376 $ 2,809 $ 1,272 $ 1,134 $ 78 $ 159 $ (340) $ 5,162 $ 

$ 
196 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

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 $8,930 million and $9,859 million as of September 30, 2009 and 2008, 

respectively. 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 197

4. Other Accompanying Information 

Appendix A—Response to Management Challenges 

The U.S. Department of Agriculture’s (USDA) Office of Inspector General (OIG) report concerning the 

Department’s most significant management challenges can be found on the Internet at: 

• http://www.usda.gov/oig/webdocs/MgmtChallenges2009.pdf . The OIG report also includes emerging issues 

that could become a Departmental challenge in upcoming years. The challenges herein and the emerging issues 

may hinder USDA’s mission and program delivery to its customers and constituents. To mitigate these 

challenges, USDA management provides accomplishments for the current fiscal year and/or planned actions for 

the upcoming one. The Department is reporting on 10 management challenges for FY 2009, 1 more than last 

year’s report. OIG did not remove any of the previous year’s challenges; however, sub-elements/issues reported 

under Challenge 4 (Homeland Security) and Challenge 8 (Food Safety) were either revised or removed this 

year. The following table summarizes those challenges that changed from FY 2008 to FY 2009. 

FY 2008 Management Challenges FY 2009 Changes 

(Challenge #4) 

Issue—Implement commodity inventory systems that provide critical 

homeland security features and complete security clearances for 

employees involved in commodity inventory management activities 

and risk assessments. 

(Challenge #4) 

Issue Revised — Implement commodity inventory systems that provide critical 

homeland security features. 

(Challenge #8) 

Issue—Develop a process to accumulate, review, and analyze all 

data available to assess the adequacy of food safety systems. 

Issue Removed by OIG 

(Challenge #8) 

Issue—Continue to develop and implement a strategy for hiring and 

training inspectors. 

Issue Revised — Continue to develop and implement a strategy for training 

inspectors. 

The following table includes fiscal year (FY) 2009 accomplishments, FY 2010 planned actions, and ongoing 

activities to address the Department’s challenges. 

USDA’s Management Challenges 

1) Interagency Communications, Coordination, and Program Integration Need Improvement. 

• Integrate the information management systems used to implement the crop insurance, conservation, and farm programs; 

• Increase organizational communication and understanding among the agencies that administer the farm, crop insurance, and conservation programs; 

and 

• Increase communication and coordination on issues related to agricultural inspection policies and procedures.

Fiscal Year 2009 Accomplishments 

4. Other Accompanying Information
198 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

− Natural Resources Conservation Services (NRCS) initiated review testing, security scans, and the development of user roles for the Lean Six 

Sigma Grants Process; 

− Risk Management Agency (RMA) and Farm Service Agency (FSA) held weekly meetings to identify needs, manage project priorities, and 

review progress; 

− RMA issued an online users guide on Comprehensive Information Management System (CIMS) applications. It provides CIMS users efficient 

access to a central source of information and web report instructions. The user guide emphasizes that the user must safequard the Personally 

Identifiable Information contained in the CIMS reports; 

− CIMS reports were designed and made available to Approved Insurance Providers (AIPs), showing producer entity and acreage differences; 

− FSA formed State and county office user groups to provide them with access to CIMS. The FSA User Group began reviewing applications and 

providing recommendations and input to CIMS; 

− RMA, FSA, and NRCS met to coordinate issues and opportunities common to the conservation agencies. They also discussed program 

financial assistance eligibility, the Service Center Information Management System, and the Federal Financial Accountability and Transparency 

Act; 

− Implemented a new Conservation Security Program (CSP) rule to require the utilization of FSA farm records for program eligibility; and 

− MIDAS is the FSA’s initiative to “Modernize and Innovate the Delivery of Agricultural Systems.” FSA has collaborated and coordinated with the 

Department to begin identifying shared data elements, systems interfaces, and program integration. 

Planned Actions for Fiscal Year 2010 

− Continue developing a single acreage reporting process to reduce duplicate reporting requirements for producers for common elements; 

− Continue with weekly meetings to set project objectives and priorities, and control CIMS maintenance and enhancements; 

− Issue user policy for CIMS Applications; 

− Provide CIMS access to the more than 12,000 FSA county and state office workers; 

− Establish requirements for RMA Reinsured Policy Acceptance Systems to use CIMS data to verify new producers reported to the agency; 

− Continue testing reports showing discrepancies between FSA and RMA data; 

− Continue developing the Lean Six Sigma Grants Process to better integrate the management of grants and financial assistance programs. 

This process will include cost share, easements, stewardship, emergency landscapes, and traditional grants; 

− Meet weekly to coordinate issues and opportunities common to the conservation agencies and related to program financial assistance 

eligibility, the Service Center Information Management System and the Federal Financial Accountability and Transparency Act; 

− Continue implementing CSP policy; and 

− Acquire a System Integrator and an Independent Validation and Verification contract for MIDAS. 

2) Implementation of Strong, Integrated Internal Control Systems Still Needed. 

• Develop Rural Housing Service controls over administering disaster housing assistance programs to ensure aid is provided to the needy and avoid 

benefits duplication. 

Fiscal Year 2009 Accomplishments 

− Established and published multifamily housing procedures to monitor assistance in response to a disaster; and 

− Implemented single-family housing procedures to require applicant certification of other emergency benefits, and consultation with the Office 

of the General Counsel on using newly appropriated disaster funds. 

Planned Actions for Fiscal Year 2010 

− Seek assistance from the U.S. Department of Homeland Security’s Federal Emergency Management Agency to develop matching 

agreements to compare disaster assistance and procedures. The agreement would set policy to monitor, deliver, and control assistance in 

disasters related to housing. 

• Strengthen quality control and perform required reconciliation of producer/policy holder data in the Federal Crop Insurance Program. 

Fiscal Year 2009 Accomplishments 

− Reviewed selected RMA approved insurance providers operations to determine their compliance with the quality control guidelines listed in 

the Standard Reinsurance Agreement and associated appendix. 

Planned Actions for Fiscal Year 2010 

− Continue reviewing selected approved insurance providers operations to determine compliance with quality control guidelines listed in the 

Standard Reinsurance Agreement and associated appendix; and 

− Continue implementing CIMS and integrating it into RMA’s and FSA’s business processes to allow for duplicate data to be identified and 

addressed at the time of producer reporting. 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 199

• Prepare complete, accurate financial statements without extensive manual procedures and adjustments.

Fiscal Year 2009 Accomplishments 

NRCS: 

− Issued interim guidance covering reimbursable agreements that addressed the proper classification, recording, and liquidation of unfilled 

customer orders; 

− Provided training on reimbursable agreements; 

− Issued guidance on personal and real property balances, and physical and real property inventories; 

− Instituted a process to ensure the Fund Balance with Treasury reconciliation is performed; financial statements are accurate, reliable, and 

complete; and the management review of monthly statements for fleet card purchases occurs; 

− Hired additional accounting staff experienced in financial statement preparation and reporting; 

− Conducted financial reviews to ensure compliance with policies and procedures to identify corrective actions and the need for additional 

guidance or training; and 

− Obtained U.S. Standard General Ledger compliant posting models to appropriately record transactions without reclassification. 

Planned Actions for Fiscal Year 2010 

NRCS will: 

− Seek a contractor to assist in remediating its audit issues; 

− Include interim policy in national instructions; 

− Remediate financial audit issues including: 

o Open obligations; 

o Accruals; 

o Capital leases; 

o Internal Use Software; 

o Unfilled Customer Orders; 

o Easement reporting; 

o Deferred maintenance reporting; and 

o Proper presentation of the Statement of Net Cost. 

− Prepare for conversion to the USDA Financial Management Modernization Initiative (FMMI) financial system on October 1, 2010; 

− Issue financial policies and procedures; and 

− Complete comprehensive training for financial and non-financial employees at all organization levels. 

• Improve Forest Service’s (FS) and NRCS’s internal controls and management accountability to effectively manage resources, measure progress 

towards goals and objectives, and accurately report accomplishments. 

Fiscal Year 2009 Accomplishments 

− FS completed corrective action on remaining audit recommendations on performance reporting;

− Performed an annual systems assessment of all FS financial/mixed financial systems; 

− FS implemented controls to monitor and ensure adequate firefighter training and developed preseason language assessments/certifications; 

− NRCS reviewed existing CSP contracts; 

− Conducted national CSP training for NRCS personnel on new and existing policies; 

− NRCS headquarters personnel visited 20 states to review and ensure compliance with the open obligation review; 

− NRCS implemented USDA’s new travel system that obligates funds at the time travel is approved; 

− NRCS issued accrual policy to strengthen existing procedures and ensure accruals were properly recorded, and trained staff on how to review 

and properly record accruals; 

− NRCS reviewed and ensured appropriate segregation of duties, and established guidelines and procedures for the periodic review of 

Collaborative Software Development Laboratory project roles; and 

− NRCS revised the Web Based Total Cost Accounting System (WebTCAS) Risk Assessment to account for all National Institute of Standards 

and Technology Special Publication (NIST SP) 800-30 control areas, and the WebTCAS System Security Plan to account for all NIST SP 800-18 

control areas. 

Planned Actions for Fiscal Year 2010 

− FS will review performance accountability within various regions and continue implementing corrective actions identified through the Office of 

Management and Budget Circular A-123, “Management’s Responsibility for Internal Control,” Appendix A, “Internal Control over Financial 

Reporting” (A-123) process and OIG/GAO audits; 

− Assess all FS financial/mixed financial systems; 

− Conduct annual internal control risk assessment throughout FS and develop plans to address identified risks; 

− FS will improve monitoring and management of critical firefighter positions; 

− NRCS will implement corrective actions on findings from the 2009 CSP review prior to making 2010 payments; 
200 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

− Release a revised NRCS Conservation Programs Manual, and train all office staff;

− NRCS will develop a tracking system for technical assistance requests in the Chesapeake Bay, and expedite the development and 

implementation of outcome-based performance measurements for evaluating the effectiveness of conservation efforts and programs; and 

− NRCS will develop an overall strategy for the dam rehabilitation program. The strategy includes plans to work with State regulatory agencies 

to assess and rehabilitate high hazard dams. 

• Capitalize on FSA compliance activities to improve program integrity.

Fiscal Year 2009 Accomplishments 

− FSA established a compliance process that calls for annual reviews and analyses. 

Planned Actions for Fiscal Year 2010 

− Continue to analyze results from compliance reviews to identify any program weaknesses and revise procedures to address them. 

3) Continuing Improvements Needed in Information Technology (IT) Security. 

• Emphasize security program planning and management oversight and monitoring.

Fiscal Year 2009 Accomplishments 

− Completed a Departmental Security Program Plan/Strategic Plan; 

− Evaluated current and implemented refined Departmental security performance metrics; 

− Established the Agriculture Security Operations Center for centralized incident management and network intrusion/incident monitoring; 

− Continued leveraging the Cyber Security Assessment and Management System (CSAM) as a security program compliance tool and document 

repository; 

− Coordinated and monitored agency/Department compliance with new program requirements; 

− Initiated Program Reviews for Information Security Management Assistance (PRISMA); 

− Implemented ongoing Plans of Actions and Milestones (POA&M) closure validation reviews; 

− Began developing a Cyber and Privacy Policy and Oversight (CPPO) tactical plan; and 

− Trained agencies on CSAM and PRISMA reviews. 

Planned Actions for Fiscal Year 2010 

− Continue leveraging CSAM to manage IT security program compliance and oversight; 

− Continue using Security Metrics and PRISMA reviews to measure agency compliance with Security Program Requirements; and 

− Implement the CPPO tactical plan to improve USDA’s performance on the Federal Information Security Management Act (FISMA) scorecard. 

• Establish an internal control program throughout the systems’ life cycle.

Fiscal Year 2009 Accomplishments 

− Reviewed existing cyber security Departmental manuals, and revised and reissued several as regulations; 

− Issued standard operating procedures to document repeatable program oversight processes; 

− Integrated A-123 and NIST SP 800-53 Common/Core controls for increased efficiency in controls testing activities; 

− Developed and implemented PRISMA review program; and 

− Completed incident handling compliance review for all incidents from October 2008 through February 2009. 

Planned Actions for Fiscal Year 2010 

− Conduct nine PRISMA reviews. 

• Identify, test, and mitigate IT security vulnerabilities (risk assessments).

Fiscal Year 2009 Accomplishments 

− Review selected POA&M closure documentation to validate/verify corrective actions; 

− Continued Certification and Accreditation (C&A) concurrency review program; 

− Completed corrective action on OIG audit on wireless security; and 

− Continued using the FISMA scorecard to monitor agencies’ compliance with security program requirements. 

Planned Actions for Fiscal Year 2010 

− Complete reviewing system security plans and assessing common and high-risk vulnerabilities; and 

− Develop mitigation strategies to resolve the highest risk Department vulnerabilities. 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 201

• Improve access controls. 

Fiscal Year 2009 Accomplishments 

− Improved access control by upgrading existing firewalls and enforcing remote access controls for Animal and Plant Health Inspection Service 

(APHIS) systems; 

− Revised Departmental regulation on access control; 

− Issued requirements for full review of privileged accounts; and 

− Reviewed POA&M documentation for access control vulnerabilities to verify mitigation actions are being implemented. 

Planned Actions for Fiscal Year 2010 

− Develop tactical plan for review of all user access profiles/accounts;

− Continue FY09 initiatives for integrated access management (IAM and HSPD-12) encompassing physical and logical controls, encryption, and 

auditing; and 

− Implement updated policies, procedures, and technologies. 

• Implement appropriate application and system software change control.

Fiscal Year 2009 Accomplishments 

− Validated agency change management processes during C&A concurrency reviews; and

− Implemented enterprise-wide security solutions for configuration management information in support of incident management. 

Planned Actions for Fiscal Year 2010 

− Continue program oversight activities focusing on change/configuration management. 

• Develop disaster contingency (service continuity) plans.

Fiscal Year 2009 Accomplishments 

− Drafted a Departmental regulation for contingency planning;

− Validated all agency disaster recovery plans; 

− Continuity of Operations (COOP) plans were migrated from the Living Disaster Recovery Planning System to CSAM; 

− Continued monitoring completion of COOP testing by USDA agencies; and 

− Completed revising templates for contingency testing. 

Planned Actions for Fiscal Year 2010 

− Verify that agencies develop and test disaster recovery plans for all systems; and 

− Continue Departmental initiatives to establish and fund alternate ‘hot sites’ for Service Center Agencies. 

4) Departmental Efforts and Initiatives in Homeland Security Need to be Maintained. 

• Implement commodity inventory systems that provide critical homeland security features and complete security clearances for employees involved in 

commodity inventory management activities and risk assessments. 

Fiscal Year 2009 Accomplishments 

− Continued to ensure clearances were obtained for current FSA employees.

Planned Actions for Fiscal Year 2010 

− Continue implementing the Web-based supply chain management system.

• Continue to strengthen controls over select agents and toxins.

Fiscal Year 2009 Accomplishments 

− Implemented an annual Compliance Inspection Program for all USDA registered entities. 

• Continue efforts to coordinate with the U.S. Department of Homeland Security in implementing effective control systems to ensure the safety and 

security of agricultural products entering the country. 

Planned Actions for Fiscal Year 2010 

− Develop and implement guidance for the electronic reporting of refused-entry data. 
202 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

• Continue to strengthen ability to respond to avian influenza outbreaks.

Fiscal Year 2009 Accomplishments 

− Continued implementing Animal and Plant Health Inspection Service’s (APHIS) strategic plan to include detailed goals, objectives, and 

activities for addressing avian influenza from FY 2009 to FY 2012; 

− APHIS finalized cooperative agreements with Iowa State University to produce a manual which will detail the live bird marketing system; and 

− Completed risk assessments for pasteurized liquid eggs. 

Planned Actions for Fiscal Year 2010

− Issue manual which will detail the live bird marketing system to include specific biosecurity measures. These measures would allow APHIS to 

prevent or mitigate the spread of high consequence diseases, respond to highly contagious diseases, including cleaning and disinfection 

protocols, and develop a continuity of business planning for an outbreak; 

− Continue to revise the outbreak surveillance response for Highly Pathogenic avian influenza (HPAI), including surveillance in the live bird 

market system and other off-farm surveillance; 

− Continue to develop an APHIS animal disease incident planning system. The system would provide a framework for existing documents, such 

as emergency management guidelines and disease-specific response plans (HPAI and foot-and-mouth disease); and 

− Complete risks assessments on nest run eggs, and washed and sanitized eggs. 

• Strengthen controls over live animal imports. 

Fiscal Year 2009 Accomplishments 

− Collected data monthly on Canadian cattle import discrepancies and implement resolution, as needed; and 

− Implemented instructions which provided details on how APHIS will communicate with the Canadian Services Agency. 

Planned Actions for Fiscal Year 2010 

− Continue to collect data monthly on Canadian cattle import discrepancies and implement resolution, as needed. 

5) Material Weaknesses Continue to Persist in Civil Rights Control Structure and Environment. 

• Develop a plan to process complaints timely and effectively.

Fiscal Year 2009 Accomplishments 

− Developed an automated intake report for pending complaints; 

− Established formal procedures for the prompt resolution of complaints not processed timely; 

− Developed automated adjudication reports for pending complaints; 

− Reassessed performance standards for specialists in the Employment Complaints Division to include the timely completion of assigned cases; 

− Required contract agreements for investigations to include a standard provision for timely and quality services; 

− Effective July 13, 2009, the Secretary announced his strategy to resolve all open Equal Employment Opportunity (EEO) complaints in the 

Department through the use of Alternative Dispute Resolution (ADR). The Secretary charged each Under and Assistant Secretary with the 

responsibility of resolving all open EEO complaints by way of a Departmental “Complaint Resolution Initiative” over a 60-day period. The 

initiative authorizes use and application of the full range of remedies available “without a finding of discrimination or admission of wrongdoing 

(no fault) in all administrative and Federal court processes”; and 

− As part of Secretary Vilsack’s Civil Rights initiative, a Departmental EEO Task Force was established consisting of all agency Resolving 

Officials (ROs) and employees designated to serve with them. Since June 26, 2009, the Employment Complaint Division and the Complaints 

Resolution and Prevention Center (CRPC), now the Early Resolution and Conciliation Division (ERC), have conducted three orientation/training 

sessions to advise ROs and Tasks Force members of their roles and the use of ADR as a resolution tool. 

Planned Actions for Fiscal Year 2010 

− Request the Equal Employment Opportunity Commission to conduct training and provide technical assistance with investigations and 

processing of complaints. 

• Ensure integrity of complaint data in the system. 

Fiscal Year 2009 Accomplishments 

− Finalized formal plan for business rules; 

− Created audit procedures for reviewing sample cases for data integrity; 

− Created automated quality control tool; and 

− Audited sample cases. 

•
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 203

• Develop procedures to control and monitor case file documentation and organization.

Fiscal Year 2009 Accomplishments 

− Posted vacancy announcement for records manager. 

Planned Actions for Fiscal Year 2010 

− Develop comprehensive records management procedures for EEO case files; 

− Implement procedures for transferring and safeguarding documents part of an EEO complaint file; and 

− Obtain the services of an external contractor to inventory and review EEO case files, and establish record retention procedures. 

6) USDA Needs to Develop a Proactive, Integrated Strategy to Assist American Producers to Meet the Global Trade Challenge. 

• Continue to strengthen genetically engineered organism field testing controls to prevent inadvertent genetic mixing with agricultural crops for export.

Fiscal Year 2009 Accomplishments 

− Drafted standards and guidelines for the APHIS Biotechnology Quality Management System (BQMS); and 

− Published the BQMS Pilot Project Draft Audit Standards in the Federal Register for public comment. 

Planned Actions for Fiscal Year 2010 

− Review Federal Register comments on BQMS draft audit standards; and 

− Expand the BQMS pilot project to 10 participants. 

• Develop a global market strategy.

Planned Actions for Fiscal Year 2010 

− Expand outreach activities to key countries; 

− Incorporate the Country Strategy Statements (CSS) into the Foreign Agricultural Service (FAS) Mission Strategic Planning process; and 

− Redefine the CSS development process to incorporate regional and global perspective encompassing USDA interests in individual countries 

and regions. 

• Strengthen trade promotion operations. 

Planned Actions for Fiscal Year 2010 

− Analyze and reassess market development programs by coordinating industry trade partners’ program initiatives with USDA functional area 

efforts; 

− Continue developing new program management software and ongoing efforts to streamline program administration; 

− Further develop evaluation criteria and processes to demonstrate the effectiveness of market development program administration and 

funding allocations; and 

− Conduct annual review/reassessment of FAS outreach effort. 

7) Better Forest Service (FS) Management and Community Action Needed to Improve the Health of the National Forests and Reduce the Cost 

of Fighting Fires. 

• Develop methods to improve forest health; and 

• Establish criteria to reduce the threat of wildland fires. 

Fiscal Year 2009 Accomplishments 

− Developed national guidance for the regions to use in assessing the risks from wildfires; 

− Monitored the effectiveness of hazardous fuel treatments and restoration projects; 

− Partnered with States and counties to develop and deliver fire prevention ordinances for use in planning and zoning in wildland urban interface 

areas; and 

− Conducted large fire cost reviews. 

Planned Actions for Fiscal Year 2010 

− Continue to conduct large fire cost reviews and implement corrective actions, as applicable; 

− Monitor the effectiveness of hazardous fuel treatments and restoration projects; 

− Obtain clarification from the Office of the General Counsel on FS’ and States’ protection responsibilities in the wildland urban interface and 

other private properties threatened by wildfires; if State is responsible, provide direction and begin negotiation of WUI protection 
204 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

responsibilities in large fire suppression management in WUI; 

− Partner with States and counties to develop and deliver fire prevention ordinances to use in planning and zoning in wildland urban interface 

areas; and. 

− Direct physical resources to effectively address the changing environment of forest health and the expanding WUI. 

8) Improved Controls Needed for Food Safety Inspection Systems. 

• Develop a time-phased plan to complete assessments of establishment food safety systems control plans and production processes, including a 

review program that includes periodic reassessment; 

• Develop a process to accumulate, review, and analyze all data available to assess the adequacy of food safety system; and 

• Improve the accuracy of data available in the systems. 

Fiscal Year 2009 Accomplishments 

− Analyzed data to determine the best way to assess an establishment’s ability to control risk; 

− Developed a project management plan to assert appropriate control using American National Scientific Institute earned value management 

standards to measure and control costs and schedule; 

− Issued Food Safety and Inspection Service (FSIS) Directive 5100.1, Revision 2, “Enforcement, Investigations, and Analysis Officer 

Comprehensive Food Safety Assessment Methodology;” 

− Developed a risk-based approach to prioritize food safety assessments; 

− Met monthly to prioritize analytical and reporting needs. Business requirements were developed, including recommendations on reports that 

district analysts should be generating; 

− Programmed tracking system for monitoring the completion of In-Plant Performance System (IPPS) assessments. These assessments allow 

users to generate reports displaying lists of individuals who have outstanding IPPS reviews; 

− Updated the AssuranceNet Users Guide to provide additional guidance to supervisors reviewing IPPS assessments; and 

− Maintained data and information systems infrastructure adequate to support inspection activities. 

Planned Actions for Fiscal Year 2010 

− Test the electronic food safety assessments. As data are collected, they will be evaluated and analyzed. FSIS will examine relevant time 

windows prior to establishing its exact use in estimating risk; 

− Implement a modernization effort to continue to improve the security, quality, and sustainability of the system infrastructure (ongoing); 

− Continue to utilize the Enterprise Architecture Blueprint to document, assess, and improve the lines of agency business processes, and 

ensure they are properly aligned to the system’s capabilities and needs; and 

− Continue to utilize the Public Health Information Consolidation Projects and the Public Health Data Communication Infrastructure Systems to 

plan, track, and better report on IT operational and development activities. 

• Complete corrective actions on prior recommendations. 

Fiscal Year 2009 Accomplishments 

− Implemented a tracking system for audit recommendations that notifies FSIS program managers monthly about their obligations to respond to 

and take final action on OIG recommendations. The system is used to track results and produce a variety of reports. 

• Continue to develop and implement a strategy for hiring and training inspectors.

Fiscal Year 2009 Accomplishments 

− Trained public health veterinarians to conduct food safety assessments. 

Planned Actions for Fiscal Year 2010 

− Conduct a review of the effectiveness of its training programs;

− Conduct surveys of inspection program personnel and their supervisors following training to verify that inspectors are performing key job 

duties as instructed; and 

− Develop refresher training to reinforce inspection duties.
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 205

9) Implementation of Renewable Energy Programs at USDA 

• Develop and implement a viable and comprehensive renewable energy strategy for USDA agencies and programs. 

Fiscal Year 2009 Accomplishments 

− USDA agencies cross referenced energy loans, grants, and guarantees against the existing systems to avoid funding duplication;

− Issued guidance to agency personnel who track and report energy activities; 

− Identified renewable energy activities and programs of USDA; 

− Revised the reporting format to collect funding information for renewable energy activities; and 

− Developed and implemented a USDA Energy Matrix to address audit recommendations. 

Planned Actions for Fiscal Year 2010 

− Inter-agency working group will submit recommendations for a renewable energy strategy to the USDA Energy Council;

− USDA will continue to work towards a consolidated database of all Department renewable energy projects. USDA will expand the Energy 

Matrix to include links to agency databases of renewable energy projects; and 

− Continue to correct action items identified through audits. 

10) Implementation of the American Recovery and Reinvestment Act of 2009 (ARRA) 

• Provide timely and effective oversight of ARRA monies expended by USDA programs.

Fiscal Year 2009 Accomplishments 

− Appointed the Deputy Chief of Staff as Senior Accountable Official for ARRA; 

− Established Department of Agriculture Recovery Team (DART) to ensure appropriate coordination of the program funds to USDA under 

ARRA; 

− Held periodic DART meetings to provide forum for agencies to identify best practices, share lessons learned, and resolve implementation 

issues; 

− Monitored compliance and program eligibility for existing USDA programs that received additional funding under the ARRA; 

− Collected data from financial systems and IT performance management and monitoring systems to ensure accountability and transparency of 

ARRA funds; 

− Provided funding reports on a quarterly basis or as required by Government-wide ARRA reporting guidance;

− Established USDA and agency Web sites to report on USDA’s success with ARRA-related matters; 

− Created a geo-spatial map that allows the public to research and review ARRA projects; and 

− USDA agencies developed risk mitigation plans for all ARRA-funded activities. 

Planned Actions for Fiscal Year 2010 

− USDA agencies will continue to implement corrective actions to close OIG audit recommendations related to ARRA-funded programs; and 

− DART and USDA program managers will continue to monitor and prepare reports on ARRA funds to ensure program accountability and 

transparency. 
206 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Appendix B—Improper Payment and Recovery Auditing Details 

Since 2000, agencies have reported efforts to reduce erroneous payments through the Office of Management and 

Budget’s (OMB) Circular A-11, “Preparation, Submission, and Execution of the Budget”. Under the Improper 

Payments Information Act (IPIA), executive agencies must identify any of its programs that may be susceptible to 

significant improper payments, estimate the annual amount of improper payments and submit those estimates to 

Congress. Section 831 of the Defense Authorization Act requires recovery auditing. In this process, agencies 

entering into contracts worth more than $500 million in a fiscal year (FY) must execute a cost effective program for 

identifying errors made in paying contractors and for recovering amounts erroneously paid to the contractors. On 

August 10, 2006, government-wide guidance was consolidated into OMB Circular A-123, “Management's 

Responsibility for Internal Control, Appendix C, Requirements for Effective Measurement and Remediation of 

Improper Payments.” Under this guidance, the U.S. Department of Agriculture (USDA) has 5 programs required 

to report under Section 57 of OMB Circular A-11 and has identified an additional 11 programs at risk of 

significant improper payments through the risk assessment process. 

Accomplishments this year include: 

• Measuring programs at risk of significant improper payments; 

• Developing corrective action plans to reduce improper payments and establishing both reduction and recovery 

targets (where appropriate) for the programs at risk of significant improper payments; 

• Completing risk assessments for all low risk programs; and 

• Complying with reporting standards. 

USDA’s improper payment rate of 5.92% for FY 2009, is an improvement over the 6.13% rate reported for 

FY 2008. The estimated improper payments amount of $4.3 billion for FY 2009 is a slight increase from the $4.1 

billion for FY 2008. This increase is due to the FY 2009 measured outlays of $72.4 billion being a larger volume 

than the $67.4 billion in measured outlays for FY 2008. The FY 2009 results demonstrate that improper payment 

error rates are being reduced and progress is being made: 

• Nine USDA high risk programs reported improper payment error rates below their FY 2008 error rate; 

• Seven USDA high risk programs, representing 63% of USDA’s total reportable outlays, reported error rates 

below their reduction targets in FY 2009. This exceeded USDA’s goal of achieving reduction targets for 50% or 

more of the agency’s total reportable outlays; 

• Forest Service’s (FS) Wildland Fire Suppression Management Program error rate of 0.00% was below its 

reduction target of 0.02%, and below its FY 2008 error rate of 0.02%; 

• Natural Resources Conservation Service’s (NRCS) Farm Security and Rural Investment Act programs error rate 

of 0.03% was below its reduction target of 0.30%; 

• Rural Development’s (RD) Rental Assistance Program error rate of 2.06% was below its reduction target of 

3.90%, and below its FY 2008 error rate of 3.95%; 

• Farm Service Agency’s (FSA) Conservation Reserve Program error rate of 0.72% was below its reduction target 

of 1.20%, and below its FY 2008 error rate of 1.25%; 

• FSA’s Miscellaneous Disaster Programs error rate of 0.90% was below its reduction target of 3.00%, and below 

its FY 2008 error rate of 3.13%; 

• FSA’s Direct and Counter Cyclical Program error rate of 0.42% was below its reduction target of 0.65%, and 

below its FY 2008 error rate of 0.70%; 

• FSA’s Noninsured Assistance Program error rate of 14.18% was below its FY 2008 error rate of 14.67%; 

• Food and Nutrition Service’s (FNS) Supplemental Nutrition Assistance Program (SNAP) error rate of 5.01% 

was below its reduction target of 5.64%, and below its FY 2008 error rate of 5.64%. The SNAP error rate is a 

historic low for the program and is the 5th year in a row that the SNAP error rate has been below 6%, long 

considered the standard for recognition in the program; 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 207

• FNS’ National School Lunch Program error rate of 16.44% was below its FY 2008 error rate of 16.55%; and 

• FNS’ School Breakfast Program error rate of 24.62% was below its FY 2008 error rate of 25.02%. 

The root causes of improper payments are summarized into the categories of verification, authentication and 

administrative. Verification errors relate to verifying recipient information such as earnings, income, assets, work 

status, etc. Authentication errors relate to authenticating the accuracy of qualifying for program specific 

requirements, criteria or conditions. Administrative errors relate to the accuracy of the entry, classification, or 

processing of information associated with applications, supporting documents, or payments. 

For FY 2009, the root causes of USDA improper payments were categorized as: 

• 62 % attributable to verification error; 

• 34 % attributable to authentication error; and 

• 4 % attributable to administrative error. 

USDA establishes improper payment recovery targets for high risk programs, where appropriate, and actively 

collects recoveries. USDA’s total improper payment recoveries of $352.8 million reported for FY 2009 exceeded the 

Departmental recovery target of $53.7 million. In addition, USDA continues the recovery auditing program for 

contract payments made by eight agencies. Since 2005, USDA agencies have recovered $1.2 million in contact 

payments identified for recovery. 

USDA’s goal is to continue to achieve OMB’s targets for success in FY 2010. This goal is based upon USDA’s 

previous accomplishments, planned corrective actions in progress, and established improper payment reduction and 

recovery targets. 

OMB provided a reporting template for IPIA in OMB Circular A-136, “Financial Reporting Requirements.” The 

template requires responses to specific issues. USDA’s response to these issues follows. 

The Office of the Chief Financial Officer (OCFO) issued detailed guidance for the risk assessment process 

including templates and performs extensive reviews of drafts. Programs with larger outlays were required to perform 

more detailed assessments than smaller programs. For USDA’s largest programs, the risk assessment process 

required the following: 

• Amount of improper payments needed to meet the reporting standards; 

• Description of the program including purpose and basic eligibility requirements; 

• Definition of improper payments specific to the program; 

• Program vulnerabilities linked to improper payments; 

• Internal controls designed to offset the program vulnerabilities; 

• Internal controls testing for selected programs; 

• Listing of significant reviews and audits; 

• Final determination of risk level; 

• Planned future enhancements (optional); and 

• Description of how improper payments are recovered (optional). 

I. Describe your agency’s risk assessments, performed subsequent to compiling your full program 

inventory. 

List the risk-susceptible programs identified through your risk assessments. 
208 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

USDA has identified the following 16 programs as susceptible to significant improper payments. 

Selection Methodology Agency Program 

Section 57 of OMB Circular 

A-11 

Farm Service Agency (FSA), Commodity 

Credit Corporation (CCC) 

Marketing Assistance Loan Program (MAL)

Food Nutrition Service (FNS) Supplemental Nutrition Assistance Program (SNAP)

National School Lunch Program (NSLP) 

School Breakfast Programs (SBP) 

Special Supplemental Nutrition Program for Woman, Infants and 

Children (WIC)

USDA Identified as Susceptible 

to Significant Improper 

Payments 

FSA, CCC Milk Income Loss Contract (MILC) Program 

Loan Deficiency Payments (LDP) 

Direct and Counter-Cyclical Payments (LCP) 

Conservation Reserve Program (CRP) 

Miscellaneous Disaster Programs (MDP) 

Noninsured Assistance Program (NAP) 

Food Nutrition Service (FNS) Child and Adult Care Food Program (CACFP)

Forest Service (FS) Wildland Fire Suppression Management (WFSM)

Rural Development (RD) Rental Assistance Program (RAP)

Risk Management Agency (RMA) Federal Crop Insurance Corporation (FCIC) Program Fund

Natural Resources Conservation Service 

(NRCS)

Farm Security and Rural Investment Act programs (FSRIP) 

Agency Program Sampling Process 

FSA/CCC Marketing Assistance Loan 

Program (MAL)

• A statistical sample of high risk programs is conducted by the FSA County Office Review Program 

(CORP) under the direction of the Operations Review and Analysis Staff (ORAS); 

• Testing is conducted using statistically sound samples drawn from the total population of program 

payments made from October 2007 through August 2008. A professional statistician, under contract to 

FSA, is used to design the sampling approach, define the sample size and identify the sample items. 

Sample size is chosen to achieve a 90 percent two-sided confidence level; 

• Once the universe of the program is determined for the target fiscal year, a stratified two-stage 

sampling approach is used. County offices (COFs) making payments for the target program are 

selected in the first stage and individual payments made or contracts reviewed by COFs are selected 

in the second stage; and 

• That sample list of individual contracts or payments is provided to the members of the CORP staff 

covering the respective States. The CORP staff visits each of the COFs shown on the list and reviews 

the individual contracts or payments identified in the statistically sound sample. The CORP reviewers 

use a list of program division provided criteria that is drawn from legal and program administrative 

guidance. Findings of non-adherence to the criteria related to the individual contracts or payments in 

the sample will identify potential improper payments made. The results of that review are summarized 

and submitted to the CORP national office staff to be analyzed by the contractor statistician. That 

contractor determines the rate of improper payments based on the data provided by the CORP staff 

that visited the COFs and completed the actual review of documents.

 

II. Describe the statistical sampling process conducted to estimate the improper payment rate for each 

program identified. 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 209

Agency Program Sampling Process 

FNS Supplemental Nutrition 

Assistance Program (SNAP)

Statistical Sampling

Each month, States select a statistically random sample of cases from a universe of all households 

receiving SNAP benefits for that given month. Most States draw the samples using a constant sampling 

interval. There are some States which employ simple random and/or stratified sampling techniques. 

Required annual sample sizes range from 300 for State agencies with small SNAP populations to more than 

1,000 for larger States. The average is approximately 950 per State. States are required to complete at 

least 98 percent of selected cases deemed to be part of the desired SNAP universe. Federal sub-samples 

are selected systematically by FNS from each State’s completed reviews. These sample sizes range from 

150 to 400 per State. 

Error Rate Calculation 

The National payment error rate is calculated using a multi-step process: 

• Each State agency conducts quality control (QC) reviews of the monthly sample of cases. The QC 

review measures the accuracy of eligibility and benefit determinations for each sampled case against 

SNAP standards. State agencies are required to report to FNS the findings for each case selected for 

review; 

• FNS then sub-samples completed State QC reviews and re-reviews selected individual case findings 

for accuracy. Based on this sub-sample, FNS determines each State agency’s official error rate using 

a regression formula; and 

• The national payment error rate then is computed by averaging the error rate of the active cases for 

each State weighted by the amount of issuance in the State. 

FNS National School Lunch 

Program (NSLP)

• USDA conducts studies approximately every five years to assess the level of error in program 

payments because detailed information on the circumstances of the NSLP and SBP participating 

households are not collected administratively. The November 2007 – NSLP/SBP Access, 

Participation, Eligibility and Certification (APEC) Study – makes use of a national probability sample of 

school food authorities (SFAs), schools, certified students and their households, and households that 

applied and were denied for program benefits in School Year 2005-06; 

• A stratified random sample of 78 unique public SFAs was selected in the first stage of sampling. 

Stratification variables included geographic region, prevalence of schools having a SBP and those 

using Provision 2/3, and a poverty indicator. For SFAs that do not have Provision 2/3 schools, three 

schools, on average, were selected for inclusion in the studying the second stage of sampling. 

Schools were stratified into two groups: 1) elementary schools and 2) middle- and high-schools. The 

school sample included both public and private schools. A total of 264 schools participated in the study 

(216 non-Provision 2/3 schools, 24 Provision 2/3 schools in their base year, and 24 Provision 2/3 

schools not in their base year). For the third stage of sampling, samples of households were selected 

in 240 of these schools to yield completed interviews for about 3,000 students certified for free and 

reduced-price meals and 400 denied applicant households; 

• The sample of approved and denied applicant households was augmented by sampling of applications 

from Provision 2/3 schools in which household surveys were not conducted. Application reviews of 

about 6,800 students approved for free and reduced-price meals and over 1,000 denied applicants 

were conducted to estimate the case error rate due to administrative error; 

• Data on counting and claiming errors were collected in all schools selected for application reviews. On 

randomly selected school days, field staff observed approximately 100 lunch transactions at each of 

the 245 schools participating in the NSLP as well as 50 breakfast transactions at each of the 218 

schools participating in the SBP. Cashier error was estimated using information from these meal 

transactions. Data on school-recorded daily meal totals across all points of sale, aggregated meal 

counts reported to the district, and total meals submitted to the State agency for reimbursement were 

examined to determine claiming errors; and 

• To update the erroneous payment rate estimates in NSLP without having to conduct another full round 

of primary data collection, a series of econometric models were developed that captured the 

relationship between characteristics of the districts that participated in the APEC study and their 

estimated rates of certification error. Estimated coefficients from these models were used in 

conjunction with updated values of district characteristics obtained from the School Food Authorities 

Verification Summary Reports to predict certification error. Certification error rates were then 

translated into amounts and rates of erroneous payments in each district. Aggregating the district level 

estimates produced a national measure of predicted erroneous payments. 

 
210 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Agency Program Sampling Process 

FNS School Breakfast Program 

(SBP) 

The statistical sampling process for this program is similar to NSLP. See the NSLP description. 

FNS Special Supplemental 

Nutrition Program for 

Women, Infants and 

Children (WIC) 

FNS plans to continue periodic examinations of WIC vendor and certification error: 

• Vendor Error — The 2005 vendor error study employed a nationally representative probability sample 

of WIC vendors. A two-stage clustered design was developed to facilitate over-sampling of WIC-only 

stores. Current lists of authorized WIC vendors were collected from the 45 States plus the District of 

Columbia that use retail vendors from delivery of benefits. These lists were used to establish the retail 

vendors for delivery of benefits. These lists were used to establish the national sample frame of 

vendors active during the study period. Geographic Information System software was used to form 

365 primary sampling units (PSU) in contiguous counties. Most PSUs had at least 80 vendors. The 

study selected 100 PSUs using probability non-replacement sampling with probabilities proportional to 

the size of the PSU. About 16 vendors and 4 reserve vendors were selected from each of the 100 

PSUs. The final sample size (unweighted) was 1,768 vendors. The study compared the purchase 

price paid by the compliance buyer with i) observed shelf prices and ii) the purchase amount the 

vendor reported to the State in order to yield estimates of overcharge and undercharge; and 

• Certification Error — The 1998 WIC Income Verification Study was designed to provide information 

on the characteristics of a nationally representative sample of WIC participants in the contiguous 

United States, certified for WIC during Spring 1998. The sample was based on a multi-stage sample 

design, with 50 geographic PSUs selected at the first stage, 79 local WIC agencies selected at the 

second stage, and 178 WIC service sites selected at the third stage. WIC participants were randomly 

sampled for the study at the 178 WIC service sites as they appeared for WIC certification. In-person 

interviews were completed with 3,114 WIC participants at the 178 WIC service sites. The estimate of 

improper payments comes from a follow-up in-home survey that was conducted with approximately 

one out of every three persons selected for the in-person interviews. The in-home survey was 

designed to verify income information through review of household income documents. In-home 

interviews were completed with 931 respondents. 

FNS Child and Adult Care Food 

Program (CACFP)

The national estimate of erroneous payments for the sponsor error component is based on a nationally 

representative sample of sponsor files for 660 Family Day Care Homes (FDCH) in 60 distinct sponsors in 14 

States. The tiering status of FDCHs was first verified by determining their school area eligibility (at least 50 

percent of students were approved for free/reduced-price meals and Census Block Group area eligibility (at 

least 50 percent of children at or below 185 percent of the Federal Poverty Guidelines)) for Tier I and Tier II 

status. A sponsor of an FDCH not verified through area eligibility was contacted to secure additional 

documentation in support of the FDCH’s tiering status, such as income and categorical eligibility.

FSA Milk Income Loss Contract 

Program (MILC) 

MILC was not measured since the FY 2008 outlays significantly decreased to $2 million. Measuring the 

program was not cost justifiable. The FY 2009 outlays will be measured and reported in FY 2010. 

FSA Loan Deficiency Payments 

(LDP) 

LDP was not measured since the FY 2008 outlays significantly decreased to $6 million. Measuring the 

program was not cost justifiable. The FY 2009 outlays will be measured and reported in FY 2010. 

FSA Direct and Counter-Cyclical 

Payments (DCP) 

See the process described in the MAL discussion. The same process was used for this program.

FSA Conservation Reserve 

Program (CRP) 

See the process described in the MAL discussion. The same process was used for this program.

FSA Miscellaneous Disaster 

Programs (MDP) 

See the process described in the MAL discussion. The same process was used for this program.

FSA Noninsured Assistance 

Program (NAP) 

See the process described in the MAL discussion. The same process was used for this program.

FS Wildland Fire Suppression 

Management (WFSM)

WFSM employs monetary unit sampling. Transactions coded to the Wildland Fire Suppression Fund are 

systematically analyzed and reviewed. 

Two samples were selected by systematic random sampling with probability proportional to size (dollar 

amount). Sample size determination was based on total transaction amounts through 6/30/2008 for sample 

one. The second sample size determination was based on total transaction amounts from 7/01/2008 

through 9/30/2008. Due to the seasonality of the final amounts, the first nine months were sampled as a 

higher dollar rate (conservative rate) than the last three months. The final three months were sampled at the 

dollar rate for the entire balance. 

To ensure the validity of the sample design, sample sizes, and measurement methodology, a professional 

statistician from the University of New Mexico was consulted. The sample was selected using a 90% 

confidence level, with a precision range of 2.5%. Software used for sample selection was SAS 9.1 for 

Windows. 

 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 211

Agency Program Sampling Process 

RD Rental Assistance Program 

(RAP)

RD reviewed the sampling plan developed by the U.S. Department of Housing and Urban Development for 

its studies. RD statisticians prepared a similar plan for this report. This report is based on a review of 

tenants receiving rental assistance (RA) during FY 2008. The sampling plan consisted of 666 RA payments 

from a universe of 3,373,862 or .019 percent. The methodology produced a sample with a 99-percent 

confidence level. This year, the audit unit from the Centralized Servicing Center (CSC) conducted the study 

rather than the RD field staff that were used in previous years. The study required CSC to evaluate tenant 

files and income calculations. 

The FY 2008 universe of rental assistance payments was 3,373,862. The only parameter used to determine 

the eligible universe was the RA payment. No other data element, such as location, size of property, 

number of units and availability of other rental assistance (such as Section 8) was a consideration. The 

statisticians were provided a data extract from the Multi-Family Housing Information System. The extract 

contained a list of all tenants receiving RA during FY 2008. The data included month of payment, project 

name, project identifier (case number/project number) and tenant name and unit number. From the data 

extract, the statisticians selected the sample by a systematic sample technique. 

Once the sample was identified, a letter was sent to the borrower/management agents that explained the 

process, provided the list of tenant payments to be reviewed and provided a list of documents that needed 

to be provided to the Centralized Servicing Center (CSC) for review. The data received from the 

borrower/management agent was used to compare Agency records. The study required CSC to complete 

the survey for the selected tenant payments. There was to be no substitution of the selected payment and, if 

the management agent was unable to submit the file, the payment would be considered improper. The 

survey results for this year are lower than prior years. This is attributable to the aggressive implementation 

of Multi-Family Housing’s corrective action plan and a concerted effort of focused training by both the 

Agency and the Industry groups.

RMA Federal Crop Insurance 

Corporation Program Fund 

(FCIC)

RMA drew 900 random 2005, 2006 and 2007 crop year indemnities to review during 2006, 2007 and 2008. 

For FY 2009 reporting, RMA sampled and reviewed the 2008 crop year, using those results to replace the 

2005 crop year results. This allowed RMA to maintain a running average error rate for the three most recent 

crop years. RMA will repeat this process for three years to compile 900 random indemnity reviews and build 

a database that will be used to identify the RMA program-error rate and identify any discernable trends. 

Samples are drawn by the compliance staff which oversees the compliance review data base and is 

responsible for data quality control. Limited resources make it impractical to conduct a statistically valid 

program review each year. Despite these limits, in combination with the National Operations Reviews 

conducted by RMA compliance personnel, these random reviews of paid indemnities should provide the 

program with sufficient data to establish an acceptable error rate for the purposes of the IPIA.

NRCS Farm Security and Rural 

Investment Act programs 

(FSRIP)

NRCS determined the universe size of payments for all the programs by using all transactions for FY 2008 

entered into the accounting system against general ledger account 4902 and Treasury Symbols 12_1004. 

Transaction codes were identified and extracted which represented payments against the individual 

program fund codes to create a universe of payments for each individual program. 

Based upon last year’s results and conversations with the individual Program Managers, NRCS projected 

the anticipated rate of occurrence. This would be the error rate from the previous years sampling factoring in 

any substantial changes made which mitigates improper payment risk found in prior IPIA efforts, external 

and internal audits or reviews. 

NRCS estimated the precision range, i.e., the upper and lower bounds around the estimated rate of 

occurrence as 5.00% (+/- 2.50%) based upon conversations with the Program Managers. OMB guidance 

recommended a 90% confidence level. However, NRCS used a more rigorous confidence level of 95% for 

the sample since accounting and financial applications typically use that confidence level. Based upon the 

four variables above (universe size, anticipated occurrence rate, precision range, and confidence level), we 

calculated the necessary sample size. 

Using a random number generator, NRCS selected payments for the sample. For program payments made 

through ProTracts system, payment amounts were aggregated by payment document number. ProTracts 

produced a payment transaction for each component of a payment request. This resulted in testing of the 

entire payment instead of a portion and simplifies the research required. 

A complete copy of the contract file was requested from the field office. The field office was required to 

verify highly erodible land/wetland conservation compliance and obtain adjusted gross income compliance 

documentation from the participant. Headquarters financial management (FMD) personnel audited the 

contract information against the program’s business process using a standard template developed for each 

individual program. The template ensured consistency in the reviews and incorporated tests for known 

causes of improper payments, issues identified by the Program Managers and internal controls 

implemented as a result of prior internal and external audits and reviews. 
212 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Agency Program Corrective Actions Planned 

FSA/CCC Marketing Assistance 

Loan program (MAL) 

MAL improper payments were primarily attributable to administrative errors. 

The most significant causes for payments being identified as improper were as follows: 

• A lien search was not conducted before loan disbursement; 

• An acceptable acreage report is not on file at time of review; and 

• Lien waiver was not obtained before loan disbursement. 

Actions taken or that will be taken to reduce the weaknesses identified are as follows: 

a. Broad Scope Actions Taken: 

• FSA has committed to reducing improper payments and program weaknesses that contribute to improper 

payments; 

• FSA has taken actions to correct its deficiencies in many areas and has incorporated the priority of reducing 

improper payments into its strategic planning documents; and 

• Compliance reviews and spot-checks are required to ensure the accuracy of payments and integrity of FSA 

programs. Annually, based on a statistical sampling method, producers nationwide are selected for 

compliance review and spot-check. COFs are required to complete spot-checks and reviews for the various 

programs and activities in which the selected producers participate for the year, and record the results of 

these reviews in the National Compliance Review database. This reporting mechanism allows the National 

office to monitor the overall integrity of each program being implemented. 

b. Actions Already Taken that Impact All Causes of Improper Payments Identified: 

• Provided training on improper payments to field personnel and educate them on the importance of control 

procedures as well as the potential risks of noncompliance. Training was delivered through various means 

including in person and via Ag Learn, and is being followed up with communications and job aid to help 

facilitate compliance controls; 

• Integrated the employee’s individual performance results related to reducing improper payments into his/her 

annual performance rating; 

• Utilized program specific checklists for COF employees to use before payment. County Executive Directors 

and District Directors review the completed checklists to help identify apparent internal control deficiencies 

and address additional training needs to reduce future errors; 

• Contacted State office (SO) managers where the majority of improper payments were identified, according 

to the statistical sample, to determine possible training and/or job aids the SO and COF staff may need to 

assist in facilitating compliance to controls; 

• Issued a notice for each program for the FY 2008 National CORP review of improper payments, providing 

detailed findings discovered during the FY 2008 statistical sample including established policy and 

procedure references for each finding; 

• Issued various National notices to SOs and COFs re-enforcing current program policies and procedures; 

and 

• Conducted a 2008 National Farm Bill training conference that included a specific presentation pertained to 

necessary internal control procedures and action expected upon issuance of National CORP review notices 

pertaining to improper payments. PowerPoint presentations of each of the respective training sessions were 

posted to the FSA intranet for immediate reference for SOs and COFs to utilize in conducting subsequent 

training sessions for all the applicable FSA employees within a respective state. 

c. Actions That Will be Taken that Impact All Causes of Improper Payments Identified: 

• Provide a notice to SOs and COFs providing the detail findings discovered during the FY 2009 program 

specific statistical sample including established policy and procedure references for each finding; 

• Reinforce current program policies regarding program compliance through the issuance of National notices 

to SOs and COFs personnel; and 

• Review existing policy and procedures to determine program compliance inefficiencies and eliminate 

inadequate program compliance controls. 

 

III. Describe the Corrective Action Plans for reducing the estimated rate of improper payments. Include 

in this discussion what is seen as the cause of errors and the corresponding steps necessary to 

prevent future occurrences. If efforts are already underway, and/or have been ongoing for some 

length of time, it is appropriate to include that information in this section. 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 213

Agency Program Corrective Actions Planned 

FNS Supplemental Nutrition 

Assistance Program 

(SNAP) 

SNAP improper payments were primarily attributable to verification and authentication errors. 

Causes of improper payments 

An improper payment occurs when a participating household is certified for too many or too few benefits 

compared to the level for which they are eligible. This can result from incomplete or inaccurate reporting of 

income and/or assets by participants at the time of certification. It also can occur from changes subsequent to 

certification or errors in determining eligibility or benefits by caseworkers. Eligibility worker delays in action or 

inaction taken on client reported changes also can cause of improper payments. 

An analysis of the FY 2007 completed statistical sample revealed that approximately 71.18 percent of all 

variances occurred before or at the most recent certification/recertification. Additionally, 59.44 percent of the 

errors were State agency caused. About half of the errors (49.18 percent) were income related and caused by 

client misreporting or the agency misapplying the reported income. Misreporting or misapplying deductions was 

the second largest source of errors at 31.06 percent. The analysis of the FY 2008 data is scheduled for release in 

early 2010. 

Steps that are (or will be) taken to address specific findings in the last statistical sample

Program regulations require State agencies to analyze data to develop corrective action plans to reduce or 

eliminate program deficiencies. A State with a high error rate must develop a quality control (QC) corrective 

action plan to address deficiencies revealed through an analysis of its own QC data. A State with an excessive 

error rate will be required to invest a specified amount (depending on its error rate and size) designated 

specifically to correct and lower its error rate. The State also will face further fiscal penalties if it fails to lower its 

error rate in a future fiscal year. 

Steps that are (or will be) taken to improve the overall control environment and improper payments

FNS, through its regional offices, works directly with States to impart the importance of payment accuracy and 

correct payments to State leadership. The agency also helps those leaders develop effective corrective action 

strategies to reduce payment errors. Regional offices provide many forms of technical assistance to States, such 

as: 

• Analyzing data; 

• Reviewing and monitoring corrective action plans; 

• Developing strategies for error reduction and corrective action; 

• Participating on boards and in work groups; and 

• Hosting, attending and supporting payment accuracy conferences. 

FNS administers a State Exchange Program that provides funds to States to facilitate travel for obtaining, 

observing and sharing information on best practices and effective techniques for error reduction. Coalitions have 

been formed among States to promote partnerships, information exchange and collaborative efforts. These 

efforts address mutual concerns and support development of effective corrective action. 

FNS National School Lunch 

Program (NSLP) 

NSLP improper payments were primarily attributable to verification and authentication errors. 

FNS has worked closely with OMB, Congress, the States, schools, and advocacy partners for two decades to 

gain a better understanding of erroneous payments, and to develop and implement initiatives to address them. 

Strengthened the Certification Process through Legislative Program Reauthorization 

FNS worked with Congress to develop the Child Nutrition and WIC Reauthorization Act of 2004 (CNR) to enact 

program changes that address school meals certification problems. The act strengthened the certification 

process by: 

• Requiring SNAP direct certification for free meals in all school districts, and continuing authority for optional 

direct certification using data from the Temporary Assistance for Needy Families and the Food Distribution 

Program on Indian Reservations; 

• Simplifying the certification process by requiring a single application for all eligible children in a household; 

• Requiring eligibility determinations to be in effect for the entire school year; 

• Modifying verification requirements, and adding authority for optional direct verification of children’s 

eligibility; 

• Requiring State agencies to conduct additional administrative reviews of school districts with higher rates of 

error; 

• Expanding authority for the use of public records for verification of applications; 

• Requiring increased efforts to obtain household response to application verification requests; and 

• Requiring districts with high rates of non-response to verification to target subsequent year verification 

activity toward error-prone applications. 

FNS is engaged in continuing efforts to fully implement all the provisions of the CNR designed to improve 

program accountability. 

 
214 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Agency Program Corrective Actions Planned 

Improved State and Federal Oversight and Technical Assistance 

FNS conducted the following to improve oversight and technical assistance: 

• Since 2004, required annual training for schools on certification and accountability issues; 

• Secured funding from Congress in 2004 for FNS technical assistance to help State and local partners reduce 

administrative errors and improve program integrity; 

• Provided ongoing guidance and training materials to State agencies to improve monitoring of schools; 

• In addition to providing ongoing guidance and training materials to States on the School Meals Initiative (SMI) 

since 1995, provided in-person technical assistance to over 30 State agencies between 2005 and 2008 to 

improve compliance with program nutrition and meal planning standards, leading to improved accuracy of 

reimbursable meal-counting; 

• Issued a revised Eligibility Manual which contains information on determining students’ eligibility for free and 

reduced price meals under 7 CFR Parts 210 and 220, the National School Lunch Program (NSLP) (including 

after school snacks and commodity schools) and the School Breakfast Program (SBP); 

• Trained more than 500 State and federal reviewers on the Coordinated Review Effort (CRE) process and 

forms to ensure that performance standards related to meal counting and claiming and serving reimbursable 

meals are met. In addition, new CRE forms and Instructions were posted to the FNS web site along with the 

training materials that were used in the CRE training sessions. Also, the CRE Guidance, which was 

developed in the early 1990s is being updated to include current procedures to be utilized during CRE 

Reviews. State agencies are implementing the CRE procedures that were identified during the training 

sessions for the 2008-2009 school year; 

• Pursuant to the CNR, FNS released applications for the fourth round of Direct Certification/Verification grant 

funding in FY 2008. These grants are available to State agencies to assist in the implementation of 

mandatory direct certification, direct verification and other provisions of CNR related to determining eligibility 

to receive benefits in the NSLP and SBP. Child Nutrition and SNAP State agencies are eligible to apply for 

funds. CNR provided $9 million for this purpose. A series of grants were awarded in FY 2006-08; with an 

approximately $2.5 million in FY 2009; and 

• FNS annually releases a solicitation for funding to State agencies for Administrative Reviews and Training 

grants. This funding is available to perform administrative reviews and training of selected local educational 

agencies identified by the States as having demonstrated a high level of, or high risk for, administrative error 

in the NSLP. $4 million was set aside in FY 2005 and for each fiscal year thereafter. 

Expanded National Data Collection and Analysis to Inform Policy 

FNS conducted the following to collect and disseminate program data: 

• Initiated an annual measure of administrative errors in the certification process in school year 2004-2005; 

• As early as the 1990s, tested alternative approaches to the existing school meals certification and verification 

processes to assess their impact on accuracy and program access; 

• Highlighted the results of the data collections at numerous briefings with State and Federal partners and 

Congressional staff; 

• Published the APEC study, which provides the first comprehensive national estimate of erroneous school 

meal payments for IPIA reporting. Additionally we are working on developing an appropriate approach to 

improving the deficiencies noted in the APEC study; and 

• Published the third annual report, “Accuracy of School Food Authorities’ (SFA) Processing of School Lunch 

Applications – Regional Office Review of Applications” in May 2008. Covering the year 2007, the publication 

is part of a series of annual reports assessing administrative errors associated with SFAs approval of 

applications for free and reduced-price school meals. 

Additional Action Planned 

FNS proposes to expand training, technical assistance, and other efforts to reduce payment errors that result 

from operational problems. Planned efforts include: 

• Implementing improvements in data reporting systems, and have launched an improved we-based system for 

States to report the results of verification activity. We anticipate that this reporting mechanism will improve 

the accuracy and timeliness of this data. In addition, we have been actively emphasizing to States the 

importance of using this and other data sources, such as the CRE Data Report (FNS-640) to identify and 

target corrective action;

• Continuing the APEC study, which would enable FNS to estimate and measure changes in erroneous 

payments over time, and would help inform FNS, Congress, the States, and advocacy partners on the 

development of additional guidance, training, and policy options. For the past two decades, research and 

evaluation conducted by FNS has suggested that there are potentially significant risks for payment errors in 

the school meal programs. During that time, FNS worked closely with Congress, State agencies, school food 

authorities, advocacy partners and others to assess and find ways to reduce erroneous payments in the 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 215

Agency Program Corrective Actions Planned 

programs. Now that FNS has a nationally-representative estimate, it is expanding its efforts and focusing on 

reducing erroneous payments in the programs; and 

• Working with the National Food Service Management Institute to provide web-based training to States and 

Schools on certification and other issues. 

FNS School Breakfast 

Program (SBP) 

SBP improper payments were primarily attributable to authentication and verification errors. 

The corrective actions planned for this program are similar to NSLP. See the NSLP description. 

FNS Special Supplemental 

Nutrition Program for 

Women, Infants and 

Children (WIC) 

WIC improper payments were primarily attributable to verification and authentication errors. 

• Vendor Error:

The Child Nutrition Act was amended in 1996 to require the disqualification of WIC vendors who had been 

disqualified by the SNAP, and was amended in 1998 to require permanent disqualification of vendors who 

had been convicted of trafficking and illegal sales. The WIC/FSP Vendor Disqualification Final Rule 

implemented these requirements and also mandated three-year disqualifications for overcharging and 

charging for food not received. The WIC Food Delivery Final Rule mandated nationwide standards for 

vendor authorization, training, and monitoring. FNS will annually estimate and report improper payments to 

vendors based on information on vendor investigations routinely conducted by the State WIC Agencies and 

reported to FNS. 

• Certification Error: 

FNS plans to continue periodic examinations of certification error in the WIC Program. The Child Nutrition 

Act was amended in 1998 to require income documentation for WIC Program applicants in all States. The 

Final WIC Policy Memorandum #99-4, “Strengthening Integrity in the WIC Certification Process”, the WIC 

Certification Integrity Interim Rule and the WIC Certification Integrity Final Rule implemented this 

requirement. The WIC Food Delivery Final Rule mandated one-year disqualifications for the most serious 

participant violations, including dual participation and misrepresentation of income. The WIC Miscellaneous 

Final Rule required State agencies to prevent conflicts of interest such as clinic staff certifying themselves, 

close friends, or relatives, and also required State agencies to maintain information on participant and 

employee fraud and abuse. 

FNS will measure the level of improper payments due to certification error for FY 2009 payments, with the 

initial improper payment amount and error rate available in March 2011. 

FNS Child and Adult Care 

Food Program 

(CACFP) 

CACFP improper payments were primarily attributable to verification errors. 

CACFP has three distinct parts: Child Care Centers, Adult Day Care Facilities, and Family Day Care Homes 

(FDCH). Overall program funding is provided to state agencies which provide funds to sponsoring organizations 

to pay for claims for reimbursable meals served at provider sites. Sites can be as large as an institution or as 

small as a household. Each part of CACFP has its own reimbursement structure. 

Payments and claim information are transferred among FNS, State agencies, program sponsors and program 

sites; each such 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. 

The original plan was to develop a program-wide study which would examine reimbursements for meals served 

and develop program error measurements that complied with the requirements of the IPIA. Because of the 

complexities of the program, FNS estimated that it would cost $20 million to measure improper payments at the 

precision required by IPIA. This amount has not been provided. 

In lieu of funding for a program-wide measurement, FNS has identified the FDCH component of this program as 

potentially high risk. FDCHs participate in CACFP through public or private nonprofit sponsoring organizations. 

FDCH improper payments are most likely caused by sponsor error in determining a participating home’s 

reimbursement tier (tiering error) or by FDCH error in reporting the number of meals which are eligible for 

reimbursement (claiming error). 

Two activities are underway which provide information on improper payments in the FDCH component of 

CACFP. A third activity was pilot tested during FY2007. 

• Child Care Assessment Project (CCAP)—In the Spring of 2004, FNS began the CCAP. This project was 

designed to measure the effectiveness of efforts to improve the integrity of CACFP family day care homes 

and provide information from a broadly representative national sample of sponsors and providers. Over a 

four year period, FNS is conducting comprehensive on-site assessments of a sample of participating family 

day care home sponsors. These assessments are designed to analyze the effectiveness of FNS regulatory 

and policy initiatives on program performance. They will also offer insights on the control points in the 

claiming and reimbursement process that most frequently cause or contribute to improper payments. This 
216 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Agency Program Corrective Actions Planned 

information will also help to support the effort to develop measurement strategies to estimate CACFP 

erroneous payments pursuant to IPIA. Data collection for this activity has been completed and the final 

results will be reported in FY 2010. 

• Tiering Error—FNS has developed an annual sponsor tiering error measure and tested it. CACFP 

sponsors are responsible for determining whether family day care homes receive meal reimbursement at 

the higher rate (Tier 1) or lower rate (Tier 2). For FY 2008, the third annual data collection was conducted to 

determine a nationally representative sponsor tiering determination error rate. 

• Claiming Error—FNS has identified two potential methods of estimating the risk of claiming error: 

− State data approach: Use data from State monitoring visits of FDCHs. 

− Sponsor data approach: Federal staff select a random sample of sponsoring organizations and from each 

use a random selection of the sponsor’s monitoring visits of FDCHs. 

Both approaches compare the number of participants observed during a monitoring visit to the average number 

of meals claimed for reimbursement for the meal or snack closest to the time of the visit. FNS pilot tested both 

approaches in conjunction with the CCAP reviews. FNS concluded that comparing meal claims to a sponsor’s 

report of the number of children observed during a monitoring visit does not provide a reliable estimate of family 

home day care meal claiming error. 

FNS has contracted with Mathematica Policy Research, Inc. to evaluate the feasibility of three different data 

collection methods for validating FDCH meal reimbursement claims. The pretest found that parent recalls hold 

promise for validating whether meals claimed for children of interviewed parents are erroneous. A plan is being 

developed to further evaluate the use of parent-recall interviews in validating sponsor submitted meal claims for 

FDCHs. 

FSA Milk Income Loss 

Contract Program 

(MILC) 

MILC was not measured since the FY 2008 outlays significantly decreased to $2 million. The FY 2009 outlays will 

be measured with planned corrective actions reported in FY 2010. 

FSA Loan Deficiency 

Payments (LDP) 

LDP was not measured since the FY 2008 outlays significantly decreased to $6 million. The FY 2009 

outlays will be measured with planned corrective actions reported in FY 2010. 

FSA Direct and CounterCyclical Payments 

(DCP) 

DCP improper payments were primarily attributable to administrative errors. 

The most significant cause for payments being identified as improper are as follows: 

• Paperwork error pertaining to whether an acreage report was on file to account for all cropland for the farm 

participating in DCP. 

For DCP corrective actions, see the MAL section. The same corrective actions apply to this program. 

FSA Conservation Reserve 

Program (CRP) 

CRP improper payments were primarily attributable to administrative errors. 

The most significant causes for payments being identified as improper is: 

• Payment amount is incorrect for calculated cost-share assistance (non-paperwork error) with an error rate 

of 1.24%; and 

• Revised CRP-1 contract errors (non-paperwork error) with an error rate of .31%. The original CRP-1 was on 

file, but the errors were associated with a revised CRP-1. 

For CRP corrective actions, see the MAL section. The same corrective actions apply to this program. 

FSA Miscellaneous 

Disaster Programs 

(MDP) 

MDP improper payments were primarily attributable to administrative errors. 

Each fiscal year’s payment data represents different disaster response programs based on authorities provided 

by legislation passed by Congress. Of the eight disaster programs included in the statistical sample, none are 

permanent programs. 

The most significant causes for payments being identified as improper are as follows: 

• Crop Disaster Programs – Calculated payment amount is incorrect (non-paperwork error) - .41%; and 

• Livestock Disaster Programs – Feed loss value is incorrect (non-paperwork error) - .36% 

For MDP corrective actions, see the MAL section. The same corrective actions apply to this program. 

FSA Noninsured Assistance 

Program (NAP) 

NAP improper payments were primarily attributable to administrative errors. 

The most significant causes for payments being identified as improper are as follows: 

• Application for payment filed late (paperwork error) – 6.82% error rate; 

• Incorrect total production used to calculate the NAP payment (non-paperwork error) – 2.35% error rate; 

• Notice of loss filed late (paperwork error) – 1.96% error rate; 

• Unit yield is not properly calculated (non-paperwork error) – 1.96% error rate; and 

• Incorrect crop acreage used to calculate payment (non-paperwork error) – 1.12% error rate. 

For NAP corrective actions, see the MAL section. The same corrective actions apply to this program. 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 217

Agency Program Corrective Actions Planned 

FS Wildland Fire 

Suppression 

Management (WFSM) 

FS corrective actions have significantly reduced the potential for errors resulting in the WFSM program reporting 

a zero improper payment error rate. These actions include improved controls with regard to review processes, 

centralization of accounting functions, improved communications, and follow-up prior to payment authorization.

RD Rental Assistance 

Program (RAP) 

RAP improper payments were primarily attributable to administrative errors. 

Root cause of improper payment errors included: 

• Insufficient file documentation; and 

• Borrower/agent calculation errors and number transposition. 

Corrective actions include: 

• Established a working group with the property management business partners and the Agency to continue 

providing educational opportunities for the industry regarding the importance of the IPIA process and the 

types of errors that were identified. Timeframe – May 30, 2009. 

• Implement a new management agent performance assessment review that will reduce management fees 

paid to noncompliant management agents. If performance decreases, there will be a concurrent decrease 

in thebase management fee allowed for that year. Errors made on tenant certifications will be one of six 

criteria used for determining reduction in management fees paid. Timeframe – September 30, 2010; and 

• Continue to pursue access to the Department of Health and Human Services New Hires database and the 

Department of Housing and Urban Development’s Enterprise Income Verification System to be shared with 

State Offices and management agents. Ongoing.

RMA Federal Crop 

Insurance Corporation 

Program Fund (FCIC) 

FCIC improper payments were primarily attributable to verification errors. 

RMA completed the fourth year of the three-year review cycle established to determine the improper payment 

rate for the Federal Crop Insurance Program. The strategy for identifying and controlling the error rate includes 

identifying error trends and policy concerns and correct them, however, as with the first 900 policies reviewed, 

there are still no definitive trends in the 900 polices completed in 2008. No underlying policy or underwriting 

issues have become apparent. This is in part due to the diversity of crops being reviewed and suggests it may be 

several cycles before RMA may amass sufficient numbers of samples on any particular crop to draw meaningful 

comparisons in the errors identified. 

RMA continues to expand its strategic data acquisition and analysis efforts by incorporating additional remote 

sensing and geospatial analyses to its data warehousing and data mining initiative. The data warehouse was 

extended to include the compilation of detailed geospatial NEXRAD radar and rainfall data. The application of 

these data and analysis tools were then increased to include underwriting and program integrity issues 

throughout the program. Data mining activities continue to show significant cost avoidance savings each year by 

 

identifying and spot checking the crop insurance program most anomalous participants based on their history of 

filing claims. Additionally, RMA and FSA continue to work on completing the Comprehensive Information 

Management System. This project is designed to identify common and unique producer and crop information 

reported to both agencies; develop services to access the information; aid in information reconciliation; and 

reduce the reporting burdens of farmers, ranchers, producers, RMA, FSA, and crop insurance providers. 

When RMA negotiated and executed the new Standard Reinsurance Agreement (SRA) starting in 2005, it 

emphasized improved quality controls and enhanced penalties that together should encourage participating 

companies who sell and service Federal crop insurance policies to improve their improper payments rate. Based 

on the passage of the 2008 Farm Bill, RMA will have another opportunity beginning with the 2011 reinsurance 

year to further adjust and improve SRA holder quality control requirements. 

NRCS Farm Security and 

Rural Investment Act 

programs (FSRI) 

FSRI improper payments were primarily attributable to verification errors. 

The improper payments discovered were final payments on conservation contracts. In December 2008, NRCS 

performed a 100% open obligation review. NRCS performs a quarterly review of open obligations in accordance 

with Department Regulation 2300-001, “USDA Travel Card Regulation.” Checklists are developed to be 

completed during the reviews. NRCS will add specific questions to the checklist to address the missing 

documentation issues found during our IPIA testing.

IV. Based on the Rate(s) Obtained in Step III, Set Annual Improvement Targets through FY 2012. 

Improper Payment Reduction Outlook FY 2008 – FY 2012 
218 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Below is a summary level table for all high risk programs outlining improper payment rates for the last two years 

and future reduction targets. When a number cannot be provided, an explanation is provided in the notes below. 

Amounts represent when the sampling results are reported. USDA programs report results the year following 

sampling activity. For example, results reported during FY 2009 represent measures of FY 2008 outlays and 

program activity. 

Improper Payment Sampling Results (millions) 

Program 

Results 

Reported in FY 2008 

Results 

Reported in FY 2009 

Outlays IP% IP$ Outlays IP% IP$ 

Marketing Assistance Loan Program, FSA/CCC [Note #3] 4,981 1.76% 92 4,935 2.56% 85

Supplemental Nutrition Assistance Program, FNS 30,373 5.64% 1,713 34,611 5.01% 1,733

National School Lunch Program, FNS [Note #1] 

Total Program 

Certification Error 

Counting/Claiming Error 

8,756 

8,756 

8,756 

16.55% 

9.67% 

6.88% 

1,449 

847 

602 

9,436 

9,436 

9,436 

16.44% 

9.56% 

6.88% 

1,551 

902 

649 

School Breakfast Program, FNS {Note #1] 

Total Program 

Certification Error 

Counting/Claiming Error 

2,150 

2,150 

2,150 

25.02% 

9.23% 

15.79% 

538 

198 

339 

2,273 

2,273 

2,273 

24.62% 

8.83% 

15.79% 

560 

201 

359 

Women, Infants and Children, FNS [Note #2] 

Total Program 

Certification Error Component 

Vendor Error Component 

3,950 

3,950 

3,950 

N/A 

N/A 

0.87% 

N/A 

N/A 

34 

4,483 

4,483 

4,483 

N/A 

N/A 

1.27% 

N/A 

N/A 

57 

Child and Adult Care Food Program, FNS [Note #2] 

Total Program 

FDC Homes – Tiering Decisions 

FDC Homes – Meal Claims 

2,311

728 

728 

N/A

1.56% 

N/A 

N/A

11 

N/A 

2,214 

713 

713 

N/A

2.07% 

N/A 

N/A

15 

N/A 

Milk Income Loss Contract Program, FSA [Note #5] 155 0.21% 0.3 2 N/A N/A

Loan Deficiency Payments, FSA [Note #5] 134 0.60% 0.8 6 N/A N/A

Direct and Counter-Cyclical Payments, FSA [Note #3] 7,144 0.70% 47 4,948 0.42% 20

Conservation Reserve Program, FSA [Note #3] 1,888 1.25% 24 1,876 0.72% 11

Miscellaneous Disaster Programs, FSA [Note #3] 154 3.13% 5 2,245 0.90% 19

Noninsured Assistance Program, FSA [Note #3] 126 14.67% 18 67 14.20% 8

Wildland Fire Suppression Management, FS 1,370 0.02% 0.2 1,016 0.00% 0.0

Rental Assistance Program, RD 887 3.95% 35 887 2.06% 18

Federal Crop Insurance Corporation Program Fund, RMA [Note #4] 3,508 4.70% 165 3,545 5.79% 205

Farm Security and Rural Investment Act programs, NRCS 1,138 0.00% 0.0 1,320 0.03% 0.0

USDA Total 67,442 6.13% 4,132 72,363 5.92% 4,283

Detailed Breakout of Improper Payment Reported in FY 2009

Total 

Payments 

$ in millions IP % 

OverPayments

% 

UnderPayments 

% 

Other 

% 

Incorrect 

Disbursement 

% 

Incomplete 

Paperwork 

% 

Marketing Assistance Loan 

Program, FSA/CCC 

[Note #3] 

4,935 2.56% 2.56% 0.00% N/A 0.16% 2.40% 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 219

Detailed Breakout of Improper Payment Reported in FY 2009

Total 

Payments 

$ in millions IP % 

OverPayments

% 

UnderPayments 

% 

Other 

% 

Incorrect 

Disbursement 

% 

Incomplete 

Paperwork 

% 

Supplemental Nutrition 

Assistance Program, FNS 

34,611 5.01% 4.01% 1.00% N/A 5.01% N/A 

National School Lunch 

Program, FNS 9,436 16.44% 12.47% 3.96% N/A 16.44% N/A 

School Breakfast Program, FNS 2,273 24.62% 21.28% 3.35% N/A 24.62% N/A 

Women, Infants and Children, 

FNS 4,483 1.27% 0.81% 0.46% N/A 1.27% N/A 

Child and Adult Care Food 

Program, FNS 713 2.07% 1.87% 0.20% N/A 2.07% N/A 

Milk Income Loss Contract 

Program, FSA [Note #5] 2 N/A N/A N/A N/A N/A N/A 

Loan Deficiency Payments, FSA 

[Note #5] 6 N/A N/A N/A N/A N/A N/A 

Direct and Counter-Cyclical 

Payments, FSA [Note #3] 4,948 0.42% 0.40% 0.02% N/A 0.17% 0.32% 

Conservation Reserve Program, 

FSA [Note #3] 1,876 0.72% 0.71% 0.01% N/A 0.44% 0.38% 

Miscellaneous Disaster 

Programs, FSA [Note #3] 2,245 0.90% 0.65% 0.25% N/A 0.84% 0.11% 

Noninsured Assistance 

Program, FSA [Note #3] 67 14.20% 13.01% 1. 17% N/A 6.40% 9.30% 

Wildland Fire Suppression 

Management, FS 1,016 0.00% 0.00% 0.00% N/A 0.00% 0.00% 

Rental Assistance Program, RD 887 2.06% 2.06% 0.0% N/A 0.63% 1.43% 

Federal Crop Insurance 

Corporation Program Fund, 

RMA 

3,545 5.79% 5.78% 0.01% N/A 5.79% 0.00% 

Farm Security and Rural 

Investment Program, NRCS 1,320 0.03% 0.03% 0.00% N/A 0.00% 0.03% 

USDA Total 72,363 5.92% 4.78% 1.14% 0.00% 5.47% 0.45% 

Improper Payment Reduction Outlook ($ in millions)

Program 

FY 2010 Reporting FY 2011 Reporting FY 2012 Reporting 

Outlays IP% IP$ Outlays IP% IP$ Outlays IP% IP$ 

Marketing Assistance Loan Program, 

FSA/CCC 8,824 1.55% 137 8,824 1.45% 128 8,824 1.45% 128 

Supplemental Nutrition Assistance 

Program, FNS [Note #6] 35,189 5.60% 1,971 35,483 5.40% 1,916 35,483 5.30% 1,881 

National School Lunch Program, FNS 10,215 15.63% 1,597 10,941 15.19% 1,662 11,370 14.76% 1,678 

School Breakfast Program, FNS 2,589 23.42% 606 2,823 22.66% 640 2,959 21.92% 649 

Women, Infants and Children, FNS 4,901 0.77% 38 5,265 0.72% 38 5,376 0.67% 36 

Child and Adult Care Food Program, FNS 758 1.46% 11 799 1.41% 11 816 1.36% 11 

Milk Income Loss Contract Program, FSA 600 0.21% 1 282 0.21% 1 282 0.21% 1 

Loan Deficiency Payments, FSA 152 0.60% 1 151 0.60% 1 151 0.60% 1 
220 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Improper Payment Reduction Outlook ($ in millions)

Program 

FY 2010 Reporting FY 2011 Reporting FY 2012 Reporting 

Outlays IP% IP$ Outlays IP% IP$ Outlays IP% IP$ 

Direct and Counter-Cyclical Payments, 

FSA 5,985 0.41% 25 5,859 0.40% 23 4,282 0.39% 17 

Conservation Reserve Program, FSA 1,852 0.71% 13 1,764 0.70% 12 1,841 0.69% 13 

Miscellaneous Disaster Programs, FSA 1,643 0.89% 15 1,284 0.88% 11 1,205 0.87% 10 

Noninsured Assistance Program, FSA 275 9.22% 25 275 5.90% 16 275 2.50% 7 

Wildland Fire Suppression Management, 

FS 2,090 0.02% 0.4 2,300 0.02% 0.5 2,400 0.02% 0.5 

Rental Assistance Program, RD 961 2.05% 20 999 2.04% 20 1,030 2.03% 21 

Federal Crop Insurance Corporation 

Program Fund, RMA 8,550 4.50% 385 6,000 4.40% 264 6,000 4.30% 258 

Farm Security and Rural Investment, NRCS 1,790 0.20% 4 2,172 0.15% 3 2,688 0.10% 3 

Note #1: Does not adjust for interaction between the different sources of certification error and counting/claiming 

error. Improper Payment Rates (School Year 2007/08) times SBP outlays (FY 2008). 

Note #2: WIC and CACFP tests components of their total program. WIC currently tests and reports on the vendor 

error component of the payment process. The WIC certification error component information should be available 

by March 2011. CACFP currently tests and reports on the FDCH tiering decision component of the payment 

process. FNS continues to evaluate the measure processes for the CACFP meal claim component and has not set a 

date for measurement and reporting. 

Note #3: The FY 2009 estimated improper payment dollar amounts for MAL, DCP, CRP, MDP, and NAP reflect 

variances from the relationship between the improper payment percentage and the outlays amount. These variances 

result from the complex, multi-stage statistical sampling methodology developed by the contract statistician in 

calculating the independent projections of the dollars/percentages in error. The variances are not an attribute 

measurement, but rather a complex ratio estimate weighted with respect to the payments within their applicable 

county stratification. They reflect the variability within the payment data and occur with a 90% confidence level. 

The MAL, DCP, CRP, MDP, and NAP universe of payments for the FY 2009 reporting cycle was October 2007 

through August 2008. The measurement period was adjusted in order to meet an earlier report timeframe. The 

FY 2010 reporting cycle measurement period will be September 2008 through August 2009. 

Note #4: RMA uses a three year running average to calculate the improper payment error rate. This is the fourth 

year RMA has used this process to measure the improper payment error rate. 

Note #5: FSA did not measure MILC and LDP for the FY 2009 IPIA review and reporting cycle since sampling 

was not cost effective due to the very low outlay amounts ($2 million for MILC and $6 million for LDP). FSA will 

measure MILC and LDP and report the results for the FY 2010 IPIA review cycle. 

Note #6: The presented SNAP improper payment targets are being evaluated by USDA and OMB. These targets 

may be revised in OMB’s annual report “Improving the Accuracy and Integrity of Federal Payments” provided to 

Congress in January 2010. 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 221

USDA continued its recovery audit program with eight agencies in FY 2009. All agencies used independent 

recovery audit firms working on contingency. 

Steps taken to reduce future errors include strengthening internal controls by providing information related to all 

recovered monies and the underlying transactions to management. The most successful method of identifying funds 

to be recovered has been the review of vendor statements. Most amounts identified during FY 2009 were due to the 

vendor statements reviews of FY 2008 payments. 

FY 2009 Recovery Auditing Results ($ in Million) 

Agency 

Component 

Amount 

Subject to 

Review for 

FY 2009 

Reporting 

Actual 

Amount 

Reviewed 

and 

Reported 

FY 2009 

Amounts 

Identified 

for 

Recovery 

FY 2009 

Amounts 

Recovered 

Prior Years 

Amounts 

Identified for 

Recovery 

Prior Years 

Amounts 

Recovered 

Cumulative 

(Current & 

Prior Years) 

Amounts 

Identified for 

Recovery 

Cumulative 

(Current & 

Prior Years) 

Amounts 

Recovered 

Forest Service 1,906.069 1,906.069 0.002 0.002 .682 0.682 .684 0.684 

Natural 

Resources 

Conservation 

Service 

693.067 693.067 0.000 0.000 0.026 0.026 0.026 0.026 

Agricultural 

Research 

Service 

461.173 461.173 0.059 0.059 0.000 0.000 0.059 0.059 

Animal Plant 

Health 

Inspection 

Service* 

428.645 428.645 0.021 0.021 0.374 0.374 0.395 0.395 

Farm Service 

Agency 94.819 94.819 0.000 0.000 0.047 0.047 0.047 0.047 

Food Safety 

and Inspection 

Service 

33.550 33.550 0.000 0.000 0.000 0.000 0.000 0.000 

Rural 

Development 110.314 110.314 0.000 0.000 0.000 0.000 0.000 0.000 

Agricultural 

Marketing 

Service 

47.995 47.995 0.000 0.000 0.002 0.002 0.002 0.002 

All Others 1,154.138 0.000 N/A N/A N/A N/A N/A N/A 

USDA Total 4,929.77 3,775.632 0.082 0.082 1.131 1.131 1.213 1.213 

V. Discussion of your Agency’s Recovery Auditing effort, if applicable, including any contract types 

excluded from review and the justification for doing so; actions taken to recoup improper payments, 

and the business changes and internal controls instituted and/or strengthened to prevent 

 further occurrences. 

In addition, complete the table below. 
222 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

FSA 

The following are steps taken to ensure agency managers are held accountable for reducing and recovering improper 

payments: 

• 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 Directors Performance Plan, element 5 titled “Program Management”; 

• National and State Office (STO) managers are held accountable for ensuring that program policies and 

procedures are provided to the STO and 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. FSA employees’ performance elements are directly related to FSA’s 

Strategic Plan; 

• COF employees, including the County Executive Director, are responsible for making payments to producers 

and following all administrative steps in doing so. Employees will be evaluated on program delivery and their 

compliance with regulations, policies, and procedures through their performance plans; 

• Deputy Administrator of Field Operations will facilitate meetings with the program areas to discuss any 

additional action necessary for senior management to address accountability; 

• Employees at all levels of the Agency will be held accountable for efficient and accurate delivery of all FSA 

programs; and 

• FSA’s strategic Plan for 2005-2011 established a performance measure to help ensure payments are accurate and 

complete. The performance measure, “Maintain or increase the percentage of proper payments is identified in 

FSA’s crosscutting management objective “Strategically Managing Human Capital.” 

FNS 

An agency priority is to improve stewardship of Federal funds. Within this priority are specific goals applicable to 

programs at high risk for erroneous payments. The goal for the SNAP, WIC, and CACFP is to reduce the error 

rates by continued management improvements. The goal of the NSLP and SBP is to improve the accuracy of 

school administration processes that certify children for school meals. The agency goals and priorities are 

incorporated into each manager’s performance plan. 

FS 

The FS Albuquerque Service Center management team is held accountable by performance metrics that include 

compliance with the IPIA. Additionally, the agency chief financial officer will provide disbursement performance 

information to the agency head as part of the performance appraisals for senior leadership. 

RD 

RD State Offices with improper payment errors must develop a corrective action plan. The plan will include 

procedures to train field staff, borrowers and property manager in appropriate required documentation and followup with tenants and income-verifiers. 

VI. Describe the steps the agency has taken and plans to take (including time line) to ensure that 

agency managers (including the agency head) are held accountable for reducing and recovering 

improper payments. 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 223

RMA 

RMA revised its strategic plan to provide results to enhance accountability. It also has established procedures to 

ensure RMA management takes future corrective actions to address program vulnerabilities. Additionally, every 

employee’s performance plan agreement has contained a position-corresponding strategic objective element since 

FY 2005. 

NRCS 

NRCS incorporated IPIA goals and objectives in the performance standards for all senior executive service 

positions. These also have been included in the regional assistant chiefs and state conservationist performance plans. 

While USDA is creating information systems and infrastructure to reduce improper payments, especially for 

programs susceptible to significant risk, efforts in some programs are constrained by limited resources. USDA has 

worked closely with OMB to develop action plans that focus available resources on the most critical needs with 

regard to improper payment measurement and risk reduction. 

FSA/CCC 

The Department of Agriculture Reorganization Act of 1994, Section 281 provides that “[E]ach 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 statue commonly is referred to the “Finality Rule.” 

FNS 

Recent Child Nutrition reauthorization legislation, while it did include some changes requested by the 

Administration to improve accountability, limited USDA’s ability to act in this area because of concerns about 

potential barriers to participation. In many instances, the mandated goal of providing easy access to benefits must 

be balanced against the goal of reducing improper and erroneous payments. In addition, program administration is 

highly decentralized involving a myriad of governmental and non-governmental organizations. There are 

approximately 100,000 school meals locations at which benefits are provided. Many of these benefit providers 

VIII. Describe any statutory or regulatory barriers which may limit the agencies’ corrective actions in 

reducing improper payments and actions taken by the agency to mitigate the barriers’ effects. 

VII A. Describe whether the agency has the information systems and other infrastructure it needs to 

reduce improper payments to the levels the agency has targeted. 

VII B. If the agency does not have such systems and infrastructure, describe the resources the 

agency requested in its FY 2009 budget submission to Congress to obtain the 

necessary information systems and infrastructure. 
224 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

simply do not have the capacity to develop robust accountability processes. For these reasons, any approach to 

reducing school meals improper payments must:

• Improve accuracy without compromising access for low-income families. A process that keeps eligible children from 

participating would undermine the program; 

• Not unduly increase burden on schools. Many schools consider the program burdensome now; adding burden could 

discourage schools from participating; 

• Be cost-effective. Improving accuracy is potentially resource-intensive; policymakers must not create a process that 

increases net program costs; and 

• 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. As these needs contribute to the problem, a solution may also require new 

commitments from those users. 

RD 

The RD program does not have the statutory authority similar to the Department of Housing and Urban 

Development to gain access to data from the Department of Health and Human Services, Internal Revenue 

Service, Social Security Administration, and the Department of Labor to be shared with field offices and 

management agents. 

NRCS 

Verification of eligibility will be an ongoing challenge for NRCS. It would be advantageous for NRCS to 

determine adjusted gross income eligibility on current and future Farm Security and Rural Investment Act 

programs (Farm Bill) participants by coordinating with the Internal Revenue Service (IRS). For long term contracts 

the IRS requirement for participants to maintain tax records expires prior to the expiration of the Farm Bill 

contracts, limiting the ability to independently verify eligibility. 

USDA has no additional comments. 

IX. Additional comments, if any, on overall agency efforts, specific programs, best practices, or common 

challenges as a result of IPIA implementation. 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 225

Appendix C—Inspector General Act Amendments of 1988: Management’s Report on Audit Follow-Up 

BACKGROUND 

The Office of Inspector General (OIG) audits USDA’s programs, systems, and operations. OIG then recommends 

improvements to management based on its findings. U.S. Department of Agriculture (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, management decision is achieved for that 

recommendation.

Audit follow-up ensures that prompt and responsive action is taken. USDA’s Office of the Chief Financial Officer 

(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 it for sufficiency and determines if final action is completed. 

FY 2009 Results 

USDA agencies closed 60 audits in fiscal year 

(FY) 2009. OIG and USDA agencies reached 

management decision on 31 audits during the year. 

One audit is in appeal status. As shown in 

Exhibit 33, the Department reduced its inventory 

of open audits in FY 2009 by 18 percent in 

FY 2009. 

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. Reports 

on resolved audits must include the elements listed 

in the accompanying bullets: 

• Beginning and ending balances for the number 

of audit reports and dollar value of disallowed 

costs and funds to be put to better use (see definitions below); 

• The number of new management decisions reached;

• The disposition of audits with final action (see definition below);

• Resolved audits that remain open 1 year or more past the management decision date require an additional 

reporting element; and

• The date issued, dollar value, and an explanation of why final action has not been taken. 

Exhibit 33: Decrease in Total Open Audit Inventory 

Note: The FY 2008 ending balance was revised from 150 to 156 to include 6 audits that were 

transmitted from the Office of Inspector General after the reporting period. These adjustments 

are also reflected in the beginning balances for audits with disallowed costs and funds to be 

put to better use shown in Exhibit 35 and Exhibit 37. 
226 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Exhibit 34: Audit Follow-Up Definitions 

Term Definition 

Disallowed Cost An incurred cost questioned by OIG that management has agreed should not be chargeable to the Government. 

Final Action To complete all actions that management has agreed will address the audit findings and recommendations. 

Funds To Be Put 

to Better Use 

An OIG recommendation that funds could be used more efficiently if management completes the recommendation, including: 

• Reductions in outlays or other savings; 

• De-obligation of funds from programs or operation or withdrawal of subsidy costs on loans, guarantees, or bonds; and 

• Implementing recommended improvements for grants or contracts, or unnecessary expenditures noted in pre-award reviews 

of contract 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 (DC) and Funds to Be Put to Better Use (FTBU)1 

Exhibit 35: Inventory of Audits with Disallowed Costs7 Exhibit 36: Distribution of Adjustments to Disallowed Costs 

Audits with Disallowed Costs # of Audits Amount ($) Category Amount ($)

Beginning of the Period 44 76,090,844 Legal Decision 1,687,842 

Plus: New Management Decisions 8 4,827,523 Agency Appeals 86,080

Total Audits Pending Collection of 

Disallowed Costs 

52 80,918,367 Write-Offs 1,136,425

Adjustments 3,337,765 Agency Documentation 805,324 

Revised Subtotal 77,580,602 Agency Discovery -377,906 

Less: Final Actions (Recoveries)* 11 4,156,479 Total $3,337,765

 

Audits with DC Requiring Final Action 

at the End of the Period 

41 $73,424,123

*Recoveries do not include $14,185 interest collected. 

Exhibit 37: Inventory of Audits with Funds To Be Put to Better Use1 

Audits with Funds to be Put to Better Use 

# of 

Audits Amount ($) 

Beginning of the Period 19 471,061,054 

Plus: New Management Decisions 3 144,519,851 

Total Audits Pending 22 615,580,905 

Less: Final Actions 9 113,030,766 

Audits with FTBU Requiring Final Action at the 

End of the Period 

13 502,550,139 

Disposition of Funds to Be Put to Better Use: 

FTBU Implemented 41,992,447 

FTBU Not Implemented 71,038,319 

Total FTBU Amounts for Final Action 

Audits $113,030,766 

 

7

 Exhibit 35 and Exhibit 37 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 35 and Exhibit 37 does not equal the total resolved audit inventory balance in Exhibit 33. 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 227

Of the 60 audits that achieved final action during the fiscal year, 11 contained Disallowed Costs (DC). The 

number of DC audits remaining in the inventory at the end of the fiscal year is 41 with a monetary value of 

$73,424,123. 

For audits with disallowed costs that achieved final action in FY 2009, OIG and management agreed to collect 

$7,494,244. Adjustments were made totaling $3,337,765 (45 percent of the total) because of: 1) legal decisions; 

2) agency appeals; 3) write-offs; 4) USDA agencies’ ability to provide sufficient documentation to substantiate 

disallowed costs; and 5) agency discovery. Management recovered the remaining $4,156,479. 

Final action occurred on 9 audits that involved FTBU amounts. The number of FTBU audits remaining in the 

inventory to date is 13 with a monetary value of $502,550,139. 

Decrease in the Number of Audits Open One or More Years Past the Management Decision Date 

The numbers of audits open 1 or more years without final action in 

FY 2008 decreased from 109 to 73 audits, a 33 percent decrease. 

During the year, an additional 25 audits turned one year past 

Management Decision Date (MDD) for a balance of 98 audits. 

USDA agencies continue to pursue compensating controls that 

address many of the underlying issues identified in these older 

audits.

Agencies have completed all planned corrective actions on 22 

audits that are pending collection of associated disallowed costs. 

Eight audits were scheduled for completion by 

September 30, 2009, but final action documentation was not 

evaluated during this reporting period. Audits without final action 1 year or more past the MDD and behind 

schedule are listed individually in the table that follows. They are categorized by the reason final action has not 

occurred. More detailed information on audits on schedule and audits under collection is available from OCFO. 

Exhibit 38: Distribution of Audits Open One Year or More Past the Management Decision Date 

Audits On Schedule Audits Behind Schedule Audits Under Collection 

Agency No. DC ($) FTBU ($) No. DC ($) FTBU ($) No. DC ($) FTBU ($) 

Totals 5 144,923 0 71 31,069,486 431,340,480 22 39,420,666 640,135 

Management’s Report on Audit Follow-Up 

Exhibit 39: Audits Open One Year or More Past the Management Decision Date and Behind Schedule 

Audits 

Date 

Issued 

Revised 

Completion 

Date Audit Title

Monetary Amount 

DC$ FTBU$ 

(34) Pending issuance of policy/guidance and legislation 

02601-1-CH 9/30/05 12/31/09 Agricultural Research Service Adequacy of Controls to 

Prevent the Improper Transfer of Sensitive Technology 

- - 

03601-11-AT 11/17/05 12/30/09 Farm Service Agency Minority Participation in Farm 

Service Agency’s Programs 

- - 

04004-3-AT 6/26/03 12/31/09 Rural Development, Rural Housing Service, Rural Rental 

Housing Program, Tenant Income Verification – 

Gainesville, Florida 

$134,639 $3,183,305 

 

Audits one Year or More Past MDD # of Audits 

Beginning of the period 109 

Less: FY 2008 audits closed 35 

 Audit in appeal 

Subtotal FY 2008 Audits one year or more 

past MD 

1 

73 

Plus: Audits that turned one year 

during FY 2009 

25 

End of the Period 98 
228 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Audits 

Date 

Issued 

Revised 

Completion 

Date Audit Title

Monetary Amount 

DC$ FTBU$ 

04099-339-AT 3/23/05 12/31/09 Rural Development, Rural Housing Service Subsidy 

Payment Accuracy in Multi-Family Housing Program 

- - 

06401-22-FM 11/13/07 10/31/09 Commodity Credit Corporation’s Financial Statements for 

FY 2007 and 2006 

- - 

08001-1-AT 4/19/07 12/31/09 Forest Service Implementation of the Capital Improvement 

Program 

- - 

08401-8-FM 11/15/07 3/31/10 Forest Service Financial Statements for FY 2007 and 2006 - - 

08601-30-SF 3/31/03 10/30/09 Forest Service Review of Security Over 

Explosives/Munitions/Magazines Located Within the 

National Forest System 

- - 

08601-38-SF 9/23/04 12/31/09 Forest Service Firefighting Safety Program - - 

08601-44-SF 12/7/06 3/31/10 Forest Service Large Fire Suppression Cost - - 

08601-45-SF 8/8/06 10/31/09 Forest Service Follow-up Review of FS Security Over 

Explosives/Munitions Magazines Located within the 

National Forest System 

- - 

08601-48-SF 2/5/08 3/31/10 Forest Service Air Safety Program - - 

08601-50-SF 9/28/07 12/31/09 Forest Service Stewardship Contracts - $467,326 

08601-51-SF 8/5/08 3/31/10 Forest Service Controls over Documenting and Reporting 

Its Hurricane Relief Expenditures to FEMA 

- $116,827,492 

09601-4-TE 9/30/05 12/31/09 Rural Development, Rural Utilities Service Broadband 

Grant and Loan Programs 

$25,614,279 $308,063,204 

10099-10-KC 9/30/03 3/31/10 Natural Resources Conservation Service Protection of 

Federal Assets 

- - 

24501-1-FM 11/24/04 10/31/10 Food Safety and Inspection Service Application Controls - 

Performance Based Inspection Service System 

- - 

24601-1-CH 6/21/00 3/31/10 Food Safety and Inspection Service Laboratory Testing of 

Meat and Poultry Products 

- - 

27099-34-SF 8/17/07 6/30/10 Food and Nutrition Service Summer Food Service Program 

California and Nevada 

$53,635 - 

27501-2-HY 3/31/08 9/30/09 Food and Nutrition Service Application Control Review of 

the Food and Nutrition Service’s Store Tracking and 

Redemption System II 

- - 

27601-3-CH 3/22/96 9/30/09 Food and Nutrition Service Food Stamp Program—

Disqualified Recipient System – Alexandria, Virginia 

- - 

27601-35-CH 7/14/06 3/31/10 Food and Nutrition Service Child and Adult Care Food 

Program, Supper Meals Served in Schools 

- - 

33601-2-AT 6/23/05 9/30/09 Animal and Plant Health Inspection Service Evaluation of 

the Implementation of the Select Agents or Toxins 

Regulations (Phase 1) 

- - 

33601-3-CH 2/20/03 3/31/10 Animal and Plant Health Inspection Service Safeguards to 

Prevent Entry of Prohibited Pests and Diseases into the 

United States 

- - 

34099-2-AT 9/14/01 10/1/09 Rural Development Rural Business-Cooperative Service

Business and Industry Loan Program, OMNIVEST 

Resources, Inc. – Fort Gaines, Georgia 

$4,052,351 - 

34601-15-TE 9/30/03 10/30/09 Rural Development, Rural Business-Cooperative Service 

National Report on the Business and Industry Loan 

Program 

- - 

 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 229

Audits 

Date 

Issued 

Revised 

Completion 

Date Audit Title

Monetary Amount 

DC$ FTBU$ 

50099-13-AT 3/29/02 12/31/09 Departmental Administration Oversight and Security of 

Biological Agents at Laboratories Operated by the United 

States Department of Agriculture 

- -

50601-2-HY 9/9/05 12/31/09 Departmental Administration Review of Oversight of 

Federal Employee’s Compensation Act Operations within 

the U.S. Department of Agriculture 

- - 

50601-8-TE 1/28/05 9/30/09 Animal and Plant Health Inspection Service Controls Over 

Issuance of Genetically Engineered Organism Release 

Permits 

- - 

50601-9-AT 3/24/04 12/31/09 Departmental Administration Controls Over Chemical and 

Radioactive Materials at U.S. Department of Agriculture 

Facilities 

- - 

50601-10-AT 3/8/04 12/31/09 Homeland Security Follow-up Report on the Security of 

Biological Agents at U.S. Department of Agriculture 

Laboratories 

- - 

50801-12-AT 9/9/02 3/31/10 Departmental Adminstration Management of Hazardous 

Materials Management Funds 

- $1,813,809 

60601-4-HY 5/14/07 12/30/09 Office of the Assistant Secretary for Civil Rights Review of 

the U.S. Department of Agriculture’s Accountability for 

Actions Taken on Civil Rights Complaints 

- - 

60801-4-HQ 3/10/00 12/30/09 Office of the Assistant Secretary for Civil Rights Status of 

the Implementation of Recommendations Made in Prior 

Evaluations of Program Complaints 

- - 

(1) Pending conclusion of investigation, negotiation or administrative appeal 

04801-3-KC 3/31/99 12/31/09 Rural Development, Rural Housing Service – Rural Rental 

Housing Program Bosley Management, Incorporated – 

Sheridan, Wyoming 

$146,690 $85,516 

(14) Pending completion of IT system security weaknesses, systems development, implementation, or enhancement

04601-14-CH 3/20/07 10/31/09 Rural Development, Rural Housing Service Improper 

Payments - Monitoring the Progress of Corrective Action 

for High-Risk Programs in Rural Housing Service 

- - 

04801-6-KC 12/18/00 10/31/09 Rural Development, Rural Housing Service Rural Rental 

Housing Program Insurance Expenses, Phase I 

$1,029,999 $9,000

06401-17-FM 11/5/04 12/30/12 Commodity Credit Corporation’s Financial Statements for 

Fiscal Years 2004 and 2003 

- - 

08601-2-HY 12/22/06 3/31/10 Forest Service Follow up on Recommendations Made on 

the Maintenance of Forest Service Infrastructure 

- - 

08601-40-SF 7/6/05 12/31/09 Forest Service Emergency Equipment Rental Agreements - - 

08601-41-SF 1/13/06 3/31/10 Forest Service Collaborative Ventures and Partnerships 

with Non-Federal Entities 

$37,890 - 

11099-44-FM 12/14/06 10/31/09 Departmental Administration Purchase Card Management 

System Controls Need Strengthening 

- - 

24601-3-CH 9/30/04 10/31/10 Food Safety and Inspection Service Use of Food Safety 

Information Systems 

- - 

24601-7-HY 9/28/06 10/31/10 Food Safety and Inspection Service Issues Impacting the 

Development of Risk-Based Inspection at Meat and Poultry 

Processing Establishments 

- - 

24601-8-CH 8/23/07 10/31/10 Food Safety and Inspection Service Egg Products 

Processing Inspection 

 
230 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Audits 

Date 

Issued 

Revised 

Completion 

Date Audit Title

Monetary Amount 

DC$ FTBU$ 

33501-1-CH 3/31/05 12/31/09 Animal and Plant Health Inspection Service Review of 

Application Controls for the Import Tracking System 

- - 

33601-1-HY 2/14/05 10/31/10 Food Safety and Inspection Service Oversight of the 

Importation of Beef Products from Canada 

- - 

50601-10-HQ 7/24/06 3/31/10 Natural Resources Conservation Service Chesapeake Bay 

Restoration Agricultural Impacts on Water Quality 

- - 

50601-10-KC 1/25/06 10/31/10 Food Safety and Inspection Service Controls Over BSE 

Sampling, Specified Risk Materials and Advanced Meat 

Recovery Products - Phase III and Animal and Plant Health 

Inspection Service Bovine Spongiform Encephalopathy 

(BSE) Surveillance Program – Phase II 

- - 

(11) Pending results of internal monitoring or program review

05099-109-KC 1/27/05 12/31/10 Risk Management Agency Renegotiation of the Standard 

Reinsurance Agreement - -

05600-1-TE 9/28/89 9/30/10 Risk Management Agency Crop Year 1988 Insurance 

Contracts with Claims - -

06401-4-KC 2/26/02 12/30/09 Commodity Credit Corporation’s Financial Statements for 

FY 2001 - $19,586

33601-7-CH 8/14/07 12/31/09 Animal and Plant Health Inspection Service Review of 

Customs and Border Protection Inspection Activities - -

34601-4-AT 1/10/03 10/31/09 Rural Development, Rural Business-Cooperative Service 

Lender Servicing of Business and Industry Guaranteed 

Loans in Georgia

- - 

50401-62-FM 11/15/07 10/31/09 Office of the Chief Financial Officer USDA’s Consolidated 

Financial Statements for Fiscal Years 2007 and 2006 - - 

50601-9-CH 9/28/06 9/30/09 Animal and Plant Health Inspection Service Control Over 

the Bovine Tuberculosis Eradication Program - -

50601-13-CH 8/14/08 10/31/09 Rural Development Implementation of Renewable Energy 

Programs in USDA - - 

60016-1-HY 9/8/05 12/30/09 Office of the Assistant Secretary for Civil Rights Follow up 

on Prior Recommendations for Civil Rights Program and 

Employment Complaints

- - 

60801-1-HQ 9/30/98 12/30/09 Office of the Assistant Secretary for Civil Rights Evaluation 

of the Office of Civil Right’s Efforts to Reduce the Backlog 

of Program Complaints 

- - 

60801-2-HQ 3/24/99 12/30/09 Office of the Assistant Secretary for Civil Rights Evaluation 

of the Office of Civil Rights Efforts to Implement Civil 

Rights Settlements 

- - 

(1) Conclusion of external action

50601-6-TE 3/04/04 12/30/09 Agricultural Research Service Controls Over Plant Variety 

Protection and Germplasm Storage 

- - 

(1) Pending results of request for change in management decision

05099-18-KC 6/1/04 9/30/09 Risk Management Agency Management and Security of 

Information Technology Resources 

- -

(1) Pending Office of General Counsel (OGC) or OIG advice 

04601-15-CH 3/30/07 12/31/09 Rural Development, Rural Housing Service, Controls over 

Single Family Housing Funds Provided for Hurricane Relief 

Efforts 

- $388,842

(8) Pending administrative action

06401-15-FM 12/26/02 12/30/12 Commodity Credit Corporation’s Financial Statements for 

FY 2002 

- -

06401-20-FM 11/9/05 12/30/12 Commodity Credit Corporation’s Financial Statements for 

FY 2005 and 2004 

- -

 
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 231

Audits 

Date 

Issued 

Revised 

Completion 

Date Audit Title

Monetary Amount 

DC$ FTBU$ 

06401-21-FM 11/13/06 9/30/09 Commodity Credit Corporation’s Financial Statements for 

FY 2006 and 2005 

- -

08401-4-FM 11/10/04 10/30/09 Forest Service’s Financial Statements for FY 2004 and 

2003 

- - 

08401-6-FM 11/24/06 10/31/09 Forest Service’s Financial Statements for FY 2005 and 

2004 

- - 

08601-42-SF 3/14/06 10/31/09 Forest Service Firefighting Contract Crews - - 

13001-3-TE 8/16/04 3/31/10 Cooperative State Research, Education, and Extension 

Service Implementation of Agricultural Research, 

Extension and Education Reform Act of 1998 

$3 $482,400

50099-11-HY 03/31/05 9/30/09 Research Education and Economics Implementation of 

Federal Research Misconduct Policy in the U.S. 

Department of Agriculture 

- -

Total Number Audits (71 ) Total $31,069,486 $431,340,480 
232 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Appendix D—Acronyms 

A 

ACIO—Associate Chief Information Officer 

ACSI—American Customer Satisfaction Index 

AGI—Adjusted Gross Income 

AHMS—Animal Health Monitoring and Surveillance 

AI—Avian influenza

AIP—Approved Insurance Provider 

ANSI—American National Scientific Institute 

APHIS—Animal and Plant Health Inspection Service 

AQIM—Agricultural Quarantine Inspection Monitoring 

ARPA—Agricultural Risk Protection Act of 2000 

ARRA—American Recovery and Reinvestment Act of 2009 

ASB—Agricultural Statistics Board 

ASCR—Assistant Secretary for Civil Rights 

B 

B&I—Business and Industry 

BQMS—Biotechnology Quality Management System 

BSE—Bovine Spongiform Encephalopathy

C 

C&A—Certification and Accreditation 

CACFP—Child and Adult Care Food Program 

CBP—Customs and Border Protection 

CCC—Commodity Credit Corporation 

CDC—United States Centers for Disease Control 

CDP—Crop Disaster Program 

CEAP—Conservation Effects Assessment Project 

CF—Community Facilities 

CFP—Cochrane Fellowship Program 

CFR—Code of Federal Regulations 

CIMS—Comprehensive Information Management System 

CNMP—Comprehensive Nutrient Management Plan 

CNPP—Center for Nutrition Policy and Promotion 

COOL—County of Origin Labeling 

COOP—Continuity of Operations 

CPAP—Community Programs and Application Processing 

CPPO—Cyber and Privacy Policy and Oversight 

CR—Civil Rights 

CRES—Civil Rights Enterprise System 

CRP—Conservation Reserve Program 

CSAM—Cyber Security Assessment 

CSP—Conservation Security Program 

CSP—Conservation Stewardship Program 

CSS—Country Strategic Statement 

CTA—Conservation Technical Assistance Program 

CWPP—Community Wildfire Protection Plans

D 

DAR—Data At Rest 

DART—Department of Agriculture Recovery Team 

DHS—The United States Department of Homeland Security 

DOI—The United States Department of Interior

E 

EAPIC—East Africa Phytosanitary Information Committee 

EEO—Equal Employment Opportunity 

EERA—Emergency Equipment Rental Agreements 

eFMS—Electronic Funds Management System 

EQIP—Environmental Quality Incentives Program 

EU—European Union

F 

FAD—Foreign Animal Disease 

FAS—Foreign Agricultural Service 

FATER—Food Aid Targeting Effectiveness Ratio 

FCIC—Federal Crop Insurance Corporation 

FDCH—Family Day Care Home 

FEMA—Federal Emergency Management Agency 

FFMIA—Federal Financial Management Improvement Act 

FISMA—The Federal Information Security Management Act

FLP—Farm Loan Programs 

FMFIA—The Federal Managers’ Financial Integrity Act 

FMPP—Farmers Market Promotion Program
FINANCIAL STATEMENTS, NOTES, SUPPLEMENTAL AND OTHER ACCOMPANYING INFORMATION 233

FNS—Food and Nutrition Service 

FPA—Fire Program Analysis 

FRPP—Farm and Ranch Lands Protection Program 

FS—Forest Service 

FSA—Farm Service Agency

FSA—Food Safety Assessment 

FSIS—Food Safety Inspection Service 

FSWG—Food Safety Working Group 

FWS—U.S. Fish and Wildlife Service 

FY—Fiscal Year

G 

GAO—Government Accountability Office 

GE—Genetically Engineered 

GEO—Genetically Engineered Organisms 

GLS—Guaranteed Loan System

H 

HACCP—Hazard Analysis and Critical Control Point 

HEI—Healthy Eating Index 

HIP—Hurricane Indemnity Program 

HIS—Habitat Suitability Indices 

HPAI—Highly Pathogenic Avian Influenza 

HSC—Homeland Security Counsel 

HSO—[USDA] Homeland Security Office 

HUD—United States Department of Housing and Urban 

Development

I 

IPIA—Improper Payments Information Act of 2002 

IPM—Integrated Pest Management 

ipmPIPE—integrated pest management Pest Information Platform 

for Extension and Education 

IPPS—In-Plant Performance System 

ISO—The International Organization of Standardization 

IT—Information Technology

L 

LEA—Local Education Agency LM—Listeria monocytogenes

M 

MOU—Memorandum of Understanding MRL—Maximum Residue Level

N 

NAHLN—The National Animal Health Laboratory Network 

NAP—Noninsured Crop Disaster Assistance Payment 

NAS—National Academy of Sciences 

NCFD—National Computer Forensic Division 

NCP—National Conservation Planning Database 

NDB—National Data Bank 

NGO—Non-Governmental Organization 

NOP—National Organic Program 

NOSB—National Organic Standards Board 

NPDN—National Plant Diagnostic Network 

NRCS—Natural Resources Conservation Services 

NSLP—National School Lunch Program

O 

OCFO—Office of the Chief Financial Officer 

OCIO—Office of the Chief Information Officer 

OGC—Office of the General Counsel 

OIE—World Organization for Animal Health 

OIG—The Office of Inspector General 

OMB—The United States Office of Management and Budget

P 

PAR—Performance and Accountability Report 

PBIS—Performance-Based Inspection System 

PEIS—Program Evaluation and Improvement Staff 

PHDCIS—Public Health Data Communication Infrastructure 

Systems 

PHICP—Public Health Information Consolidation Projects 

PHIS—Public Health Information System 

PII—Personally Identifiable Information 

POA&M—Plans of Actions and Milestones 

PRISMA—Program Reviews for Information Security 

Management Assistance 

ProTracts—Program Contracts Database 

PRS—Performance Results System 

PRT—Provincial Reconstruction Team
234 FY 2009 PERFORMANCE AND AC COUNTABILITY REPORT 

Q 

QC—Quality Control

R 

RBEG—Rural Business Enterprise Grant 

RBOG—Rural Business Opportunity Grant 

RD—Rural Development 

Recovery Act—American Reinvestment and Recovery Act of 

2009 

Response Plan—National Avian Influenza Preparedness and 

Response Plan 

RHS—Rural Housing Service 

RMA—Risk Management Agency 

RORA—Regional Office Review of Applications 

RTE—Ready-to-Eat

S 

SBP—School Breakfast Program 

SIP—Salmonella Initiative Program 

SNAP—Supplemental Nutrition Assistance Program 

SPPA—Strategic Partnership Program Agroterrorism Initiative 

SPS—Sanitary and Phytosanitary 

SRA—Standard Reinsurance Agreement 

SSOP—Sanitation Standard Operating Procedure 

SURE—Supplemental Revenue Assistance Payments (Program) 

SWCD—Soil and Water Conservation District

T 

T&E—Transportation and Exportation 

TBT—Technical Barriers to Trade 

TRQ—Tariff-Rate Quota

U 

ULO—Unliquidated Obligations 

USDA—The United States Department of Agriculture 

USTR—The Office of the U.S. Trade Representative 

V 

VS—Veterinary Services

W 

WBSCM—Web-based Supply Chain Management 

WebTCAS—Web Based Total Cost Accounting System 

WEP—Water and Environment Program 

WFU—Wildland Fire Use 

WIC—Special Supplemental Nutrition Program for Women, 

Infants, and Children 

WRP—Wetland Reserve Program 

WTO—World Trade Organization 

WUI—Wildland Urban Interface