Performance and Accountability Report

Fiscal Year 2020

Farm Credit Administration

Regulator of the Farm Credit System
Mission

The Farm Credit Administration ensures 

that Farm Credit System institutions and 

Farmer Mac are safe, sound, and dependable 

sources of credit and related services for 

all creditworthy and eligible persons in 

agriculture and rural America.
FCA Performance and Accountability Report — 2020 | 1

Contents

Statement of Board Chairman and CEO 4

Management’s Discussion and Analysis 6

FCA at a Glance 7

FCA history 7

FCA funding and governance 7

FCSIC 7

FCA offices 8

Highlights of FCA’s Performance Goals and Results   

Goal 1 Highlights 12

Goal 2 Highlights 12

Goal 3 Highlights  .

Resources to achieve our strategic goals 13

Analyses and Highlights of FCA’s Financial Statements 15

Financial Highlights 15

Program costs and revenues   

Limitations of financial statements 22

Forward-looking analysis 22

Analysis of FCA’s Systems, Controls, and Legal Compliance 23

Strategy for FCA’s financial management system 23

Federal Managers’ Financial Integrity Act  .

Management control program  .

Prompt Payment Act 24

Debt Collection Improvement Act 24

Improper payments 24

Digital Accountability and Transparency Act 24

Inspector General Act 24

Summary of OIG audit, inspection, and evaluation activities 25

Statement of Assurance  .

Program Performance 28

FCA Performance Report 29

Data validation and verification   

Goals 30
2 | FCA Performance and Accountability Report — 2020

Financial Section   

Statement of Chief Financial Officer 47

Transmittal Letter of Auditor’s Report 48

Independent Auditor’s Report 50

Financial Statements   

Balance sheets 55

Statements of net cost 56

Statements of changes in net position 57

Statements of budgetary resources 58

Notes to the financial statements 59

Other Information 70

Letter from Inspector General on FCA’s Management Challenges 71

Management’s Response to Challenges Identified by FCA’s Inspector General . 

Summary of Financial Statement Audit and Management Assurances 82

Payment Integrity Information Act Reporting 83

Civil Monetary Penalty Adjustment for Inflation 86

Additional Information  .

Tables Appearing in Report

Table 1. FY 2020 performance budget versus program costs 14

Table 2. Composition of assets . 

Table 3. Composition of liabilities 16

Table 4. Agency budget  .

Table 5. Funds used by major budget category 18

Table 6. Funds used based on congressional limitation 18

Table 7a. Goal 1 — Performance measures and results for public mission   

Table 7b. Goal 2 — Performance measures and results for safety and soundness 43

Table 7c. Goal 3 — Performance measures and results for workforce management 45

Table 8. Summary of financial statement audit  .

Table 9. Summary of management assurances 82

Table 10. Annual inflation adjustments of civil monetary penalties 86
FCA Performance and Accountability Report — 2020 | 3

List of Figures Appearing in Report

Figure 1: FCA organizational chart as of September 2020   

Figure 2. Percentage of FY 2020 gross costs by agency goal  .

Figure 3. Percentage of FY 2020 gross revenue by agency goal 20

Figure 4. FY 2020 sources of revenue 21

List of acronyms appearing in report

CAMELS capital, assets, management, earnings, liquidity, and sensitivity

CARES Coronavirus Aid, Relief, and Economic Security Act

CEO Chief Executive Officer

COO Chief Operating Officer

COVID-19 coronavirus disease 2019

CSRS Civil Service Retirement System

DATA Digital Accountability and Transparency Act

EEO Equal Employment Opportunity 

Farmer Mac Federal Agricultural Mortgage Corporation

FCA Farm Credit Administration

FCS Farm Credit System

FCSIC Farm Credit System Insurance Corporation

FCSBA Farm Credit System Building Association

FERS Federal Employees Retirement System

FFMIA Federal Financial Management Improvement Act

FMFIA Federal Managers’ Financial Integrity Act

FIRS Financial Institution Rating System

FY fiscal year

GAAP generally accepted accounting principles

GAO Government Accountability Office

GSE government-sponsored enterprise

IM informational memorandum

IT information technology

Libor London Interbank Offered Rate

NCB National Consumer Cooperative Bank

ODAE Office of Data Analytics and Economics

OE Office of Examination

OIG Office of Inspector General

OIT Office of Information Technology

OMB U.S. Office of Management and Budget

OPM U.S. Office of Personnel Management

OSMO Office of Secondary Market Oversight

PPP Paycheck Protection Program 

SFFAS Statements of Federal Financial Accounting Standards

USDA United States Department of Agriculture

YBS young, beginning, and small (farmers and ranchers)
4 | FCA Performance and Accountability Report — 2020

Statement of Board Chairman and CEO 

November 12, 2020

As board chairman and CEO of the Farm Credit Administration, I invite you to review our Performance 

and Accountability Report for Fiscal Year 2020. Most of the report covers our activities from Oct. 1, 2019, 

to Sept. 30, 2020. However, the reporting period for two of the three goals in our Program Performance 

section begins on July 1, 2019, and ends on June 30, 2020, because the Sept. 30 results are not yet available 

for those goals when this report is due. 

In March of this year, shortly after President Trump declared a national emergency because of the 

COVID-19 pandemic, we directed most of our workforce to telework from home or an approved alternate 

work location to reduce their chance of exposure. We also restricted business travel and in-person training to protect both our own staff and the staff of the institutions we regulate. 

Despite the pivot to mandatory telework and the restriction of business travel and in-person training 

during the second half of the fiscal year, we achieved the goals outlined in our strategic plan and met or 

exceeded almost all performance targets. In addition, our financial statements received an unmodified 

opinion from an independent auditor. Based on the results of our internal evaluations, I can provide 

reasonable assurance that the financial and performance information in this report is complete and reliable. We also have no material weaknesses in our internal controls.

FCA is the arm’s length regulator of the Farm Credit System (System) and the Federal Agricultural 

Mortgage Corporation (Farmer Mac). Our mission is to ensure that System institutions and Farmer Mac 

are safe, sound, and dependable sources of credit and related services for all creditworthy and eligible 

persons in agriculture and rural America.

The System holds 42.6% of the nation’s total farm business debt, so it plays a vital role in the health of the 

nation’s agricultural economy. And Farmer Mac, which provides a secondary market for agricultural real 

estate mortgages and rural cooperative loans, enhances the ability of lenders to offer competitive financing to rural borrowers and farmland investors.

Both the System and Farmer Mac are well capitalized and remain financially safe and sound. Together, 

the Farm Credit System banks and associations held $385 billion in assets as of June 30, 2020, up 9.1% 

from the year before. Farmer Mac had a net worth of $824 million as of that date, up 6.5% from the year 

before.

Over the past fiscal year, we worked to protect the financial soundness of the System and Farmer Mac 

and to ensure that they continue to fulfill their missions to serve agriculture and rural America. Here are 

some of the ways we accomplished these goals during the reporting period from July 1, 2019, to June 30, 

2020: 

• Examined System institutions and Farmer Mac in accordance with statutory requirements

• Prepared 53 formal reports of examination and 29 interim activity letters

• Issued final rules on the criteria for reinstating nonaccrual loans and on margin and capital requirements for covered swap entities
FCA Performance and Accountability Report — 2020 | 5

• Issued an interim final rule to give covered swap entities an additional year to implement initial margin requirements because of the COVID-19 pandemic

• Issued proposed rules governing the amortization limits on certain loans, district financial reporting, 

the eligibility of investments made by the System’s associations, and the implementation of the methodology for current expected credit losses for allowances

• Requested public comment on interagency questions and answers on flood insurance

• Continued to study the loan syndicate market

• Analyzed and reported on the System’s service to young, beginning, and small farmers and ranchers, 

as well as economic conditions in agriculture and the Farm Credit System

• Issued guidance to System institutions on such topics as the following: 

— Ensuring critical infrastructure services and functions during the pandemic

— Managing challenges associated with the COVID-19 pandemic 

— Making loans under the Paycheck Protection Program 

— Issuing loans when the National Flood Insurance Program is unavailable

— Financing hemp

— Servicing loans to borrowers affected by significant weather events

• Issued guidance to Farmer Mac on working with its lending and servicing partners to provide flexibility and assistance to borrowers experiencing financial challenges due to the COVID-19 pandemic, and 

on working with these partners on the reporting of troubled debt restructuring, borrower rights, and 

nonaccrual determinations for borrowers affected by COVID-19

• Responded to 33 borrower inquiries and complaints

Also, our efforts to strengthen employee engagement continue to yield results. In 2019, we were ranked 

number two among small agencies in the Partnership for Public Services’ Best Places to Work in the 

Federal Government, and first in the subcategory for diversity and inclusion. We do not yet know our 

ranking for 2020 because of the delay in the release of the Federal Employee Viewpoint Survey, but we 

anticipate strong results for this year as well. 

So despite a year of unprecedented challenges, I’m pleased to report that we had a successful year in FY 

2020, thanks to the hard work and dedication of our staff. I look forward to continued success in FY 2021 

and beyond.

Glen R. Smith 

Board Chairman and CEO
6 | FCA Performance and Accountability Report — 2020

Management’s 

Discussion and Analysis

This section provides an overview of the Farm Credit Administration 

and our mission. It highlights information on FCA’s performance, 

financial results, systems and controls, compliance with laws and 

regulations, and an assessment of future challenges and plans.
FCA Performance and Accountability Report — 2020 | 7

FCA at a Glance

The Farm Credit Administration is an independent agency in the executive branch of the U.S. 

government. We are responsible for regulating 

and supervising the Farm Credit System (its banks, 

associations, and related entities) and the Federal 

Agricultural Mortgage Corporation (Farmer Mac).

The System is a nationwide network of borrowerowned financial institutions that provide credit to 

farmers, ranchers, residents of rural communities, 

agricultural and rural utility cooperatives, and 

other eligible borrowers.

FCA is responsible for ensuring that the System remains a dependable source of credit for agriculture 

and rural America. We do this in two specific ways:

• We ensure that System institutions, including 

Farmer Mac, operate safely and soundly and 

comply with applicable laws and regulations.

• We issue policies and regulations governing 

how System institutions conduct their business 

and interact with borrowers.

FCA history

An executive order by President Franklin D. 

Roosevelt in 1933 placed all existing agricultural 

credit organizations under the supervision of a 

new agency, the Farm Credit Administration. FCA 

was independent until 1939, when it became part 

of the U.S. Department of Agriculture (USDA), but 

became an independent agency again under the 

Farm Credit Act of 1953. This act created a federal 

Farm Credit Board with 13 members (one from 

each of the 12 farm credit districts and one appointed by the Secretary of Agriculture) to develop 

policy for FCA. Farmer-borrowers now had a voice 

at the national level.

FCA also played a pivotal role in the federal credit 

union movement, when in 1934 it was given responsibility for chartering, examining, and supervising 

all federal credit unions. Before this oversight 

was turned over to the Federal Deposit Insurance 

Corporation in 1942, FCA had chartered and examined annually more than 4,000 credit unions.

FCA derives its current powers and authorities 

from the Farm Credit Act of 1971, as amended 

(12 U.S.C. 2001 – 2279cc). This act gave the banks 

and associations more flexibility in lending to 

production agriculture and authorized lending to 

commercial fishermen and rural homeowners. In 

1980, the law was amended to encourage lending 

to young, beginning, and small farmers. The U.S. 

Senate Committee on Agriculture, Nutrition, and 

Forestry and the U.S. House of Representatives 

Committee on Agriculture oversee FCA and the 

Farm Credit System.

FCA funding and governance

FCA does not receive a federal appropriation. We 

maintain a revolving fund financed primarily by 

assessments from the institutions we regulate. 

Other sources of income for the revolving fund 

are interest earned on investments with the U.S. 

Treasury and reimbursements for services we provide to federal agencies and others.

FCA’s policy, regulatory agenda, and supervisory 

and examination activities are established by a 

full-time, three-person board whose members are 

appointed by the president of the United States 

with the advice and consent of the Senate. 

Board members serve a six-year term and may 

remain on the board until a successor is appointed. 

The president designates one member as chairman 

of the board, who serves in that capacity until the 

end of his or her own term. The chairman also 

serves as our chief executive officer.

FCSIC

FCA board members also serve as the board of 

directors for the Farm Credit System Insurance 

Corporation (FCSIC), which is a separate 
8 | FCA Performance and Accountability Report — 2020

independent agency. FCSIC was established by the 

Agricultural Credit Act of 1987 in the wake of the 

agricultural credit crisis of the 1980s. The purpose 

of FCSIC is to protect investors in Systemwide 

debt securities by insuring the timely payment of 

principal and interest on certain System notes, 

bonds, and other obligations purchased by investors. FCSIC does so by maintaining the Farm Credit 

Insurance Fund, a reserve that represents the equity of FCSIC.

FCA offices

Our headquarters and one field office are in 

McLean, Virginia. We also have field offices in 

Bloomington, Minnesota; Dallas, Texas; Denver, 

Colorado; and Sacramento, California.

As of Sept. 30, 2020, FCA had 312 full- and 5 parttime employees. These employees work in the 

following offices, with the majority serving in the 

Office of Examination.

The FCA board manages, administers, and establishes policies for FCA. The board approves the 

policies, regulations, charters, and examination 

and enforcement activities that ensure a strong 

FCS. The board also provides for the examination 

and supervision of the FCS, including Farmer Mac, 

and oversees the activities of the FCS Building 

Association, which acquires, manages, and maintains FCA headquarters and field office facilities. 

Glen R. Smith is the board chairman.

The chairman of the FCA board serves as the chief 

executive officer (CEO). The CEO enforces the 

rules, regulations, and orders of the FCA board. He 

or she directs the implementation of policies and 

regulations adopted by the FCA board. The Office 

of the Chief Executive Officer plans, organizes, 

directs, coordinates, and controls our day-to-day 

operations and leads the agency’s efforts to achieve 

and manage a diverse workforce. Glen R. Smith is 

the CEO.

The chief operating officer (COO) has broad 

responsibility for planning, directing, and controlling the operations of the Offices of Agency 

Services, Examination, Regulatory Policy, Data 

Analytics and Economics, Information Technology, 

Chief Financial Officer, and General Counsel in 

accordance with the operating philosophy and 

policies of the FCA board. He or she supervises 

and provides policy direction to the executive staff 

responsible for managing these offices. The COO 

oversees and coordinates the development and 

implementation of the agencywide strategic, operating, and budget plans and activities. The COO 

also coordinates the resolution of internal policy, 

personnel, and program issues with agency executive leadership and the FCA board.

The Office of Agency Services manages and 

delivers human capital and administrative 

services for the agency. The office consists of 

three service delivery teams: Human Resources 

Division, Operations Division, and Learning and 

Organizational Change Team. Services provided include strategic human capital management, staffing and placement, job evaluation, compensation 

and benefits, payroll administration, performance 

management, awards, employee relations, employee training and development, property management, personnel security, continuity of operations 

and emergency preparedness, supply services, and 

mail service.

The Office of the Chief Financial Officer supports 

FCA’s operations by providing financial management policy advice, reporting the agency’s financial results, and facilitating the agency’s strategic 

planning efforts. The office manages the agency’s 

compliance with federal financial management 

requirements. It also reports on the accuracy and 

propriety of transactions, the extent to which 

assets are accounted for and safeguarded, and the 

adequacy of internal controls to detect and prevent 

material financial misstatements. It oversees the 

agency’s budget, the investments committee, the 

FCS assessments, and the agency’s purchasing, 

credit card, and travel/relocation programs. It also 

facilitates the agency’s risk management and internal control efforts to help ensure operational and 

fiscal effectiveness and efficiency.

The Office of Congressional and Public Affairs

serves as the agency’s principal point of contact for 

Congress, the media, other government agencies, 

FCS institutions, employees, System borrowers, 

and the public. The office develops and monitors 

legislation pertinent to FCA and the FCS, serves 

as the agency’s congressional liaison, facilitates 
FCA Performance and Accountability Report — 2020 | 9

intergovernmental relations, and prepares testimony for the chairman and other board members. 

It also provides information to external audiences 

through news releases, fact sheets, reports, videos, 

and other publications. The office cultivates relationships with media representatives who report 

on matters related to agriculture and rural credit, 

and it manages the content of the FCA website and 

social media channels. It also organizes special 

meetings, briefings for international visitors, and 

field hearings.

The Office of Data Analytics and Economics

evaluates strategic risks to the System and agency 

using data, analytics, economic trends, and other 

risk factors. Its staff members serve as stewards for 

agency data and provide information to the board 

and management for objective, evidence-based 

decision-making across FCA. The office facilitates 

an agencywide strategy for analytics and collaborates on business intelligence tools and the development of models to meet the strategic needs of 

the agency.

The Office of Examination is responsible for 

examining and supervising each FCS institution 

in accordance with the Farm Credit Act and applicable regulations. The office develops oversight 

plans; conducts examinations; monitors the 

System’s condition and current and emerging 

risks to the System; and develops supervisory 

strategies to ensure that the FCS operates in a safe 

and sound manner, complies with the law and 

regulations, and fulfills its public policy purpose. 

For more information about the role of the Office 

of Examination, go to www.fca.gov/bank-oversight/

guidance and click board policy statements to read 

our “Examination Philosophy” (FCA-PS-53).

The Office of General Counsel provides the FCA 

board and staff with legal counsel as well as guidance on the Farm Credit Act and general corporate, 

personnel, ethics, and administrative matters. 

The office supports the agency’s development and 

promulgation of regulations, enforcement of applicable laws and regulations, and implementation of 

conservatorships and receiverships. It represents 

and advises the agency on civil litigation. It also 

serves as the liaison to the Federal Register, administers the agency’s ethics program, and handles 

Freedom of Information Act requests.

The Office of Information Technology supports 

the information, solutions, and IT infrastructure 

that empower FCA to fulfill its mission. It is a respected partner in fulfilling FCA’s mission through 

innovative solutions. The office is responsible for 

protecting agency technology assets, planning and 

controlling information technology investments, 

leading change to improve the efficiency and effectiveness of agency operations, and maintaining 

compliance with IT regulatory mandates. It is 

responsible for continuing to leverage FCA’s investment in technology by collaborating across agency 

offices to identify and re-engineer business applications, data systems, and processes.

The Office of Inspector General provides independent and objective oversight of agency programs 

and operations through audits, inspections, evaluations, investigations, and the review of proposed 

legislation and regulations. The office promotes 

economy and efficiency within FCA and seeks 

to prevent and detect fraud, waste, abuse, and 

mismanagement in the agency’s programs and 

operations.

The Office of Regulatory Policy manages policy 

and regulation development activities that ensure 

the safety and soundness of the FCS and support 

the System’s mission. Policy and regulation development activities include the analysis of policy 

and strategic risks to the System on the basis of 

economic trends and other risk factors. The office 

also evaluates all regulatory and statutory prior 

approvals for System institutions on behalf of the 

FCA board, including chartering and other corporate approvals as well as funding approvals.

The Office of Secondary Market Oversight provides for the examination, regulation, and supervision of Farmer Mac to ensure its safety and soundness and the accomplishment of its public policy 

purpose as authorized by Congress. It also ensures 

that Farmer Mac complies with applicable laws 

and regulations, and it manages FCA’s enforcement 

activities with respect to Farmer Mac.

The secretary to the board serves as the parliamentarian for the board and keeps permanent 

and complete records of the acts and proceedings 

of the board. He or she ensures that the board 

complies with statutory, regulatory, and internal 
10 | FCA Performance and Accountability Report — 2020

operation reporting requirements. The secretary 

to the board also serves as secretary to the Farm 

Credit System Insurance Corporation board. In addition, he or she serves as the Sunshine Act official 

for the FCA board.

The Office of Equal Employment Opportunity and 

Inclusion manages and directs the diversity, inclusion, and equal employment opportunity (EEO) 

program for FCA and FCSIC. The office serves 

as the chief liaison with the Equal Employment 

Opportunity Commission and the Office of 

Personnel Management on all EEO, diversity, and 

inclusion issues. The office provides counsel and 

leadership to agency management to carry out its 

continuing policy and program of nondiscrimination, affirmative action, and diversity.

The designated agency ethics official is designated by the FCA chairman to administer the provisions of title I of the Ethics in Government Act of 

1978, as amended, to coordinate and manage FCA’s 

ethics program and to provide liaison to the Office 

of Government Ethics with regard to all aspects of 

FCA’s ethics program.
FCA Performance and Accountability Report — 2020 | 11

Figure 1: FCA organizational chart as of September 2020

For an accessible version of this chart, go to 

www.fca.gov/about/fca-organizational-chart

FCA Board

Glen R. Smith, 

Chairman

Jeffery S. Hall, 

Member

⸺ Office of the Board 

Chairman and Chief 

Executive Officer 

Glen R. Smith 

⸺ Office of Inspector 

General 

Wendy R. Laguarda

⸺ Office of the Chief Operating Officer

S. Robert Coleman

⸺ Office of Secondary Market Oversight*

Laurie A. Rea

⸺ Office of Congressional and Public 

Affairs 

Michael A. Stokke

⸺ Designated Agency Ethics Official 

Jane Virga

⸺ Equal Employment and Inclusion 

Director 

Thais Burlew

⸺ Secretary to the Board 

Dale L. Aultman

⸺ Office of the Chief 

Financial Officer

Stephen G. Smith

⸺ Office of Agency Services

Vonda Bell

⸺ Office of Examination

Roger Paulsen

⸺ Office of Information 

Technology

Jerald Golley

⸺ Office of Regulatory 

Policy

David Grahn

⸺ Office of General 

Counsel†

Charles R. Rawls

⸺ Office of Data Analytics 

and Economics 

Jeremy D’Antoni

The headquarters of the Farm Credit Administration, located in McLean, Virginia.

* Reports to the board for policy and to the CEO 

for administration.

† Maintains a confidential advisory relationship with 

each of the board members.
12 | FCA Performance and Accountability Report — 2020

Highlights of FCA’s Performance Goals 

and Results 

1 CAMELS is a rating of capital, assets, management, earnings, liquidity, and sensitivity.

FCA’s mission is to ensure that Farm Credit System 

institutions and Farmer Mac are safe, sound, and 

dependable sources of credit and related services 

for all creditworthy and eligible persons in agriculture and rural America.

In our Strategic Plan for Fiscal Years 2018 – 2023, 

we identified three goals we must meet to fulfill 

our mission. For each goal, we identified strategies 

and actions to achieve the goal, as well as a set of 

performance measures to monitor our progress in 

meeting the goal.

Our Performance Report (page 29) shows that 

we met the goals identified in our strategic plan 

and met or exceeded most of the performance 

measures for which there are data to measure performance. The following is a summary analysis of 

our performance in reaching our goals.

Goal 1 Highlights 

Public mission: Ensure that the FCS and Farmer 

Mac fulfill their public missions for agriculture 

and rural areas.

There are nine strategies and six performance 

measures established for goal 1 in the strategic 

plan (see table 7a). The six performance measures 

are as follows:

1. Percentage of FCS institutions providing products and services that serve creditworthy and 

eligible persons and perform outreach to enhance diversity and inclusion. (Target: ≥90%)

2. Whether Farmer Mac’s business plan contains 

strategies to promote and encourage the inclusion of all qualified loans, including loans to 

small farms and family farmers, in its secondary market programs, and whether its business 

activities further its mission to provide a source 

of long-term credit and liquidity for qualifying 

loans. (Target: Yes)

3. Percentage of direct-lender institutions with 

satisfactory consumer and borrower rights 

compliance. (Target: ≥90%)

4. Percentage of direct-lender institutions with 

young, beginning, and small (YBS) programs 

for farmers and ranchers that are in compliance with YBS regulations. (Target: ≥90%)

5. Whether the majority of objectives listed in the 

preamble of each final rule were met on the 

two-year anniversary of the rule’s effective or 

implementation date. (Target: Yes)

6. Percentage of prerulemaking projects and proposed rules on which FCA requested input from 

persons outside of FCA. (Target: 100%)

We achieved or exceeded our targets for all six 

measures associated with goal 1.

Goal 2 Highlights 

Safety and soundness: Evaluate risk and 

provide timely and proactive oversight to 

ensure the safety and soundness of the System 

and Farmer Mac.

There are six strategies and six performance measures for goal 2 (see table 7b). The performance 

measures are as follows:

1. Percentage of System assets in institutions with 

composite CAMELS1 ratings of 1 or 2. (Target: 

≥90%)

2. Percentage of requirements in supervisory 

agreements with which FCS institutions have at 
FCA Performance and Accountability Report — 2020 | 13

least substantially complied within 18 months 

of execution of the agreements. (Target: ≥80%)

3. Percentage of institutions complying with 

regulatory capital ratio requirements. (Target: 

≥90%)

4. Whether the Office of Secondary Market 

Oversight’s examination and oversight plan 

and activities effectively identify emerging 

risks, and whether appropriate supervisory 

and corrective actions have been taken to effect 

change when needed. (Target: Yes)

5. Percentage of institutions with satisfactory audit and review programs, including institutions 

with acceptable corrective action plans. (Target: 

100%)

6. Whether five or more reports and dashboards 

were created that use data collected from the 

Farm Credit System to assess risk in the System. 

(Target: Yes)

We achieved or exceeded the targets for four of 

the six measures associated with goal 2. During 

this reporting period, performance measure 2 was 

not applicable because we did not have any supervisory agreements in place with FCS institutions. 

For performance measure 5, we missed our target 

of 100% because one institution’s corrective action 

plan did not adequately address a weakness at the 

end of the reporting period. We have continued to 

follow up with the institution.

Goal 3 Highlights

Workforce management: Cultivate an 

environment that fosters a well-trained, 

motivated, and diverse staff while providing an 

effective plan for leadership succession.

There are four strategies and two performance 

measures for goal 3 (see table 7c). The performance measures are as follows:

1. Whether, as part of its recruiting efforts for 

entry-level examiners, FCA has ensured that 

at least 25% of its outreach efforts target applicants with a disability or who are members of a 

minority group. (Target: Yes)

2. Whether we have maintained or improved our 

score from last year in the annual employee 

satisfaction survey. (Target: Yes)

We achieved the targets for the first measure associated with goal 3. For the second measure, we 

could not calculate our employee engagement index score because the Federal Employee Viewpoint 

Survey for 2020 was not released by the Office of 

Personnel Management until Sept. 24, and the 

results will not be available until January 2021. 

Resources to achieve our strategic goals

The performance goals, as outlined in the strategic 

plan, provide a framework for the development of 

the annual budget request and the performance 

measures and targets. We formulate and execute 

our budget by allocating resources according to the 

agency goals. We assess and measure our overall 

effectiveness in fulfilling our mission through the 

resulting analysis of the performance measures. 

When we formulate and execute our budget, we 

allocate dollars as follows:

• Goal 1 — Public mission

• Goal 2 — Safety and soundness

• Goal 3 — Other activity

Goals 1 and 2 above align with the goals as noted 

in the performance report. Goal 3, however, 

differs between the performance report and the 

performance budget and execution. Costs for the 

workforce management goal in the strategic plan 

are an inherent part of our ability to fulfill our 

primary agency goals of public mission and safety 

and soundness. In the performance budget and 

in our execution of the budget, we use the other 

activity goal to track reimbursable activity separate 

from other agency primary mission costs. Table 1

displays the proportion of our budget allocated to 

each goal and the proportion of the costs associated with each goal. 
14 | FCA Performance and Accountability Report — 2020

Table 1. FY 2020 performance budget versus 

program costs

Agency programs % of total 

performance budget

% of total 

program costs

Public mission 21.6% 24.3%

Safety and soundness 76.4% 74.7%

Other activity 2.0% 1.0%

Total 100.0% 100.0%

During FY 2020, we had a higher proportion of program costs for public mission than anticipated in 

our budget. This was primarily due to our additional regulatory efforts to address issues in the System 

related to the COVID-19 pandemic. The percentage 

of costs related to our safety and soundness goal 

were lower than budgeted partly because we 

restricted agency travel as part of our COVID-19 

strategy to keep our employees safe.

For specifics on the agency resources expended 

in support of our agency goals, please refer to the 

Program costs and revenues section on page 19.

For more information about our performance 

results, see the performance results tables on page 

41 to 45.
FCA Performance and Accountability Report — 2020 | 15

Analyses and Highlights of FCA’s 

Financial Statements

Financial Highlights

Financial operation of FCA

We pay for planned administrative expenses from 

a revolving fund, which is funded primarily by 

assessments received from Farm Credit System 

institutions, including the Federal Agricultural 

Mortgage Corporation (Farmer Mac) and the 

System’s service corporations.

We calculate the assessments using a formula 

established by FCA regulation. The FCA board approves our budget, and Congress usually imposes a 

limitation on the dollar amount of obligations that 

we may incur in a given fiscal year.

In addition to assessments, we receive funds from 

two other sources:

• Reimbursable services: We are reimbursed for 

the cost of examining the National Consumer 

Cooperative Bank and for performing services for the Farm Credit System Insurance 

Corporation and the U.S. Department of 

Agriculture (USDA).

• Interest earned: We earn interest on investments with the U.S. Department of the Treasury. 

We use interest earned on investments to build 

and maintain an agency reserve. The reserve 

ensures that we can effectively and efficiently 

respond to unexpected, unbudgeted expenses 

without needing to increase assessments.

The following sections highlight our financial condition for FYs 2020 and 2019. Our financial statements are provided on page 54 to page 69.

Activity in response to COVID-19 

Beginning March 16, the agency directed most 

of its workforce to telework from home or an 

alternate work location because of the COVID-19 

pandemic. It also suspended all on-site examinations and restricted business travel and in-person 

training. The telework period has been extended 

several times because of ongoing health and safety 

concerns; however, staff have been allowed to return to the office on a limited and voluntary basis.

We issued a news release on March 17 encouraging System institutions to work with System 

borrowers whose operations have been affected 

by COVID-19 and outlining the measures taken to 

prevent its spread. The agency also offered temporary relief from certain regulatory and reporting 

requirements to System institutions affected by the 

pandemic. 

During FY 2020, we did not experience any significant financial impact as a result of COVID-19. We 

also did not receive any budgetary resources under 

any of the COVID-19 supplemental appropriations 

or other acts. Any expenses related to COVID-19 

were nominal and immaterial to our overall costs.

FCA’s assets, liabilities, and net position

As shown in table 2, our total assets (the resources 

we own) for FY 2020 are composed of the following:

• Fund balance with Treasury (10.3%)

• Investments (84.6%)

• Accounts receivable and prepayments (0.7%)

• Property and equipment (4.4%)

During FY 2020, total assets increased by 

$3,116,602, or 8.3%, from amounts reported in FY 

2019.

As of Sept. 30, 2020, the agency held $4,204,180 in 

cash (fund balance with Treasury). While we invest 

all excess cash in U.S. Treasury securities, the 

timing of when cash is collected affects the ending 
16 | FCA Performance and Accountability Report — 2020

balance. The increase in our cash balance relative 

to 2019 was due to a higher influx of funds collected on Sept. 30 after the cutoff time for investing. 

Cash collected after the investment cutoff for the 

day remains as an available cash balance and is 

invested the following day. The collections on Sept. 

30 were prepaid assessments (that is, assessments 

due on Oct. 1 but received on or before Sept. 30) 

from several FCS institutions.

Property and equipment assets increased in 2020 

primarily because the agency added new laptops 

to the capitalized asset inventory. Depreciation expense on the current set of capitalized equipment 

offset the increase in property and equipment due 

to the new laptops.

Our investment portfolio, which accounts for the 

largest portion of our total assets, decreased by 

only $142,532 in FY 2020, thus remaining relatively 

flat compared with that of FY 2019. We purchased 

$16,668,733 in U.S. Treasury securities during 

fiscal year 2020, using an investment strategy that 

enables us to both maintain a steady cash flow for 

agency operations and earn interest to build the 

agency reserve. We hold the reserve funds in contingency to address specific, onetime, unforeseen 

events without increasing assessments at a time 

that may be financially difficult for System institutions. Our policy is to maintain a reserve balance 

that covers approximately two months of operating 

expenses. Section 5.15 of the Farm Credit Act of 

1971, as amended, (12 U.S.C. 2250) allows FCA to 

maintain a necessary reserve. The interest reserve 

makes up roughly 42% of our total investment 

portfolio. The remaining balance in the interest 

portfolio is our unobligated balance net of our cash 

balance at Sept. 30, 2020.

Table 2. Composition of assets

Assets FY 2020 FY 2019 % Change

Fund balance with Treasury $4,204,180 $1,388,463 202.8%

Investments 34,471,697 34,614,229 (0.4%)

Accounts receivable and prepayments 261,233 447,803 (41.7%)

Property and equipment 1,803,072 1,173,085 53.7%

Total $40,740,182 $37,623,580 8.3%

Table 3. Composition of liabilities

Liabilities FY 2020 FY 2019 % Change

Accounts payable $517,512 $764,605 (32.3%)

Accrued liabilities (payroll and benefits) 8,192,979 7,659,548 7.0%

Employer contributions and taxes payable 1,291,653 1,094,009 18.1%

Workers’ compensation (funded and unfunded) 1,511,590 1,630,984 (7.3%)

Deferred revenue 6,331,840 5,572,620 13.6%

Total Liabilities $17,845,574 $16,721,766 6.7%
FCA Performance and Accountability Report — 2020 | 17

Our liabilities, as shown in table 3, consist of the 

following:

• Accounts payable (2.9%)

• Payroll and benefits (45.9%)

• Employer contributions and taxes payable 

(7.2%)

• Workers’ compensation (8.5%)

• Deferred revenue (35.5%)

Like total assets, our total liabilities (what we owe 

to the public and other government agencies) 

increased. Driven primarily by the increase in 

deferred revenue and accrued liabilities, overall 

liabilities increased by $1,123,808 or 6.7% from 

2019 to 2020.

Deferred revenue — assessments received from 

FCS institutions that are not due until Oct. 1 — 

increased by $759,220 relative to 2019. This was 

due to a higher number of institutions paying their 

assessment before Oct. 1 this year. At the beginning of each fiscal year we reclassify any prepaid 

assessments as revenue earned in October of the 

new year.

Accrued liabilities increased by $533,431 as of Sept. 

30, 2020 compared with those as of Sept. 30, 2019. 

This increase is primarily the result of a higher 

year-end payroll accrual in 2020. We record a liability (an accrual) for payroll expenses not posted in 

the financial system as of Sept. 30 each year. Based 

on the timing of the pay periods and when payroll 

is posted, the year-end accrual could include extra 

days in the calculation. For 2020, the year-end payroll accrual included two more days than the 2019 

accrual. 

Our accounts payable decreased by $247,093 this 

year. The amount of our 2020 year-end liabilities 

for services received but not paid was lower than 

that of 2019.

Our net position, which represents the cumulative results of operations since the agency began, 

increased by $1,992,794, or 9.5%, during FY 2020. 

The net position increased primarily because of 

the decrease in the net cost of operations (see 

the Program Costs and Revenues section). For a 

breakdown of the net position, see the statement 

of changes in net position on page 57.

FCA’s status of funds

Our budget represents our plan for achieving our 

mission and strategic goals while operating as effectively and efficiently as possible. Table 4 shows 

our board-approved budget amounts for FYs 2020 

and 2019. The overall FY 2020 budget increased by 

3.0% over the 2019 budget.

In FY 2020, we continued to carry out our mission, 

program goals, and objectives within the available 

budget. Our board-approved budget for FY 2020 

was $77.6 million and the congressional limitation 

on our spending was $77.0 million. The FY 2019 

congressional limitation was $74.6 million. The 

congressional limitation is the spending limit 

imposed by Congress on the non-reimbursable 

portion of our budget for the year. It limits the 

Table 4. Agency budget

Budget funding sources FY 2020 FY 2019 Difference

Assessments (current year)* $76,000,000 $72,700,000 $3,300,000

Assessments (carryover from prior years) 1,000,000 1,900,000 $(900,000)

Reimbursable activity 630,000 760,000 $(130,000)

Total $77,630,000 $75,360,000 $2,270,000

* Assessments for FY 2020 were reduced by $3 million in the fourth quarter.
18 | FCA Performance and Accountability Report — 2020

amount of assessments that we may use to pay for 

administrative expenses. The limitation includes 

assessment amounts for the current year as well as 

assessment carryover from prior years.

As table 5 shows, the funds used in 2020 decreased 

by $1,141,085 over 2019. The largest factor in this 

decrease was a result of reduced travel in the 

second half of the fiscal year. Due to the COVID-19 

pandemic, we restricted agency travel for the safety of our staff and System staff.

The assessment funds we used in 2020 amounted 

to 95.0% of our congressional limitation in 2020 

(see table 6). We reduced the FY 2020 assessments 

in the 4th quarter by $3.0 million. Personnel 

compensation and benefits continue to account 

for the most significant use of funds at FCA, representing approximately 86.2% of total funds used in 

2020. Salary and benefits increased by $1,044,965 

in FY 2020, which is a smaller increase than in 

years past. We had more employees depart or 

retire in 2020 than in 2019.

Contractual services increased by 3.7% over last 

year and represented approximately 8.9% of the 

total funds used in 2020. The increase in contractual services was from actions to address agency 

needs for security, data analytics, examiner training, and temporary gaps in staffing. Funds used for 

property and equipment decreased by $708,036; 

Table 5. Funds used by major budget category

Budget category FY 2020 FY 2019 % Change

Personnel compensation and benefits $63,406,743 $62,361,778 1.7%

Travel and transportation 1,076,845 2,907,216 (63.0%)

Contractual services 6,550,001 6,314,604 3.7%

Property and equipment 465,321 1,173,357 (60.3%)

Other 2,024,967 1,908,007 6.1%

Total* $73,523,877 $74,664,962 (1.5%)

* The total funds used include reimbursable activity that is not subject to the congressional limitation.

Table 6. Funds used based on congressional limitation

Funds used category 2020 Funds used Congressional 

limitation

Percentage used

Assessment funds used* $73,119,944 $77,000,000 95.0%

* Includes amounts used from the assessed amounts for the year and assessment carryover amounts 

used to fund the budget.
FCA Performance and Accountability Report — 2020 | 19

this decrease reflects the planned acquisition of 

new laptops for the agency in 2019. The new laptops were rolled out to agency staff during FY 2020 

and added to our capitalized asset inventory. 

Program costs and revenues

This section describes our program costs and revenues for the fiscal years ended Sept. 30, 2020, and 

Sept. 30, 2019. Please read this section in conjunction with the statements of net cost. Because this 

section focuses on the cost of operations, some of 

the data provided here may differ from data provided in other sections of this report that are based 

on budgetary accounting.

Another difference when assessing our program 

costs relative to our performance goals and measures is the analysis of goal 3. For purposes of the 

strategic plan and the performance goals, goal 3 is 

related to workforce management. Costs to address 

workforce management are intrinsic to our main 

goals of public mission and safety and soundness 

and are captured as part of those goals. Goal 3 for 

purposes of the performance budget and costs is 

related to our reimbursable activity. We track these 

costs separately from the rest of our agency mission costs noted in goals 1 and 2.

We achieve our strategic goals and manage our 

costs with sound business planning and effective 

resource management. The net cost of our programs totaled $4,093,119 for the 12 months ended 

Sept. 30, 2020, compared with $6,744,924 for the 

same period the previous year. While earned revenue remained virtually unchanged, a decrease in 

gross costs in 2020 resulted in a lower net cost — a 

decrease in net cost of $2,651,805 from 2019.

The total cost of our programs for FY 2020 is 

$78,216,033, compared with $80,918,903 for FY 

2019. This represents a decrease of $2,702,870, or 

3.3%, from 2019. Figure 2 shows the breakdown 

of FY 2020 gross costs for each of our goals. Most 

of our costs support our mission and program 

goals. The decrease in total costs is primarily due 

to decreases in travel because of COVID-19 travel 

restrictions. 

Employee salaries and benefits represent our 

greatest overall cost. For 2020, employee compensation totaled $65,397,706, or 83.6%, of total cost. 

Though the size of our staff increased in 2020, 

Figure 2. Percentage of FY 2020 gross costs by agency goal

Other 1.0% 

Safety & 

soundness 

Public mission 74.7%

24.3% 
20 | FCA Performance and Accountability Report — 2020

employee compensation decreased slightly with 

decreases in costs for imputed employee benefits 

and the attrition of higher salaried personnel. We 

recruit and train staff to fill vacancies in accordance with our employment and diversity strategies to meet operational challenges such as the 

COVID-19 pandemic and evolving risks in the FCS, 

including Farmer Mac. We periodically perform 

compensation studies to comply with the Financial 

Institution Reform, Recovery, and Enforcement Act 

of 1989, which requires us to keep our salaries and 

benefits comparable with the salaries and benefits 

of other federal financial institution regulators.

Keeping compensation competitive helps us continue to fulfill our mission to provide the FCS, including Farmer Mac, with effective regulation and 

oversight.

Figure 3 shows the breakdown of FY 2020 gross 

revenue allocated to each of our goals. Earned revenue for 2020 totaled $74,122,914, down $51,065, or 

.1%, from 2019. Earned revenue for 2020 remained 

relatively static compared with that of 2019. We 

reduced assessments by $3.0 million in FY 2020, 

which resulted in similar assessment totals for 2020 

and 2019 — a difference of only $300,000.

Figure 4 shows the breakdown of our three sources 

of revenue — assessments, interest on investments, 

and reimbursable activity. As one would expect, 

most of our revenue is derived from assessments 

(98.5%). Those revenues are used to fulfill our primary goals of carrying out our public mission and 

ensuring the safety and soundness of the System.

Public mission program

We invest significant resources in our policymaking, regulatory, and corporate activity functions 

to ensure that the FCS, including Farmer Mac, 

fulfills its public mission as mandated by Congress. 

During FY 2020, we continued to ensure the safe 

and sound flow of funds to U.S. agriculture and 

rural areas by providing regulation, policy, and 

guidance for the FCS and Farmer Mac.

Costs for our public mission program include the 

review of borrower complaints. In accordance with 

the Farm Credit Act, we also review and approve 

FCS institutions’ mergers to enable institutions to 

structure themselves to best serve their customers. 

During FY 2020, we also took additional policy 

and regulatory actions to address issues in the 

System that stemmed from the ongoing COVID-19 

pandemic. 

Figure 3. Percentage of FY 2020 gross revenue by agency goal

Other 0.7% 

Public mission

24.4% 

Safety & 

soundness 

74.9%
FCA Performance and Accountability Report — 2020 | 21

Figure 4. FY 2020 sources of revenue

Reimbursable

0.7% 

Interest 0.8% 

Assessments

98.5% 

For the fiscal year ended Sept. 30, 2020, the program cost for our public mission was $19,014,091, 

representing a decrease of $1,458,089, or 7.1%, 

from the same period the previous year. The decrease is primarily from a decrease in program 

staff because of personnel work reassignments and 

attrition. The cost for the public mission program 

represents 24.3% of our total costs for 2020.

Safety and soundness program

Costs associated with the agency’s examination 

and supervision activities make up the largest portion of our expenditures at the program level. In 

2020, the cost of the safety and soundness program 

decreased primarily because of decreases in travel 

and contract services for professional training 

resulting from our response to the COVID-19 pandemic. Despite the decrease in travel, we still rose 

to the challenge of fulfilling our safety and soundness goal and addressing growing risk in the FCS 

from a decline in the U.S. agricultural economy.

We invest heavily in the recruitment and training of examination staff through our Examiner 

Commissioning Program. These recruiting and 

training efforts are necessary to meet human 

resource needs and to offset the impact of unplanned employee attrition and the large number 

of retirements expected within the next few years. 

These actions have enabled us to maintain our 

level of supervision of the FCS while our entire 

staff worked remotely during the second half of 

the fiscal year. During FY 2020, we met our goals 

and performance targets to ensure the safety and 

soundness of the System while at the same time 

ensuring the safety of our staff and the staff of the 

FCS and Farmer Mac during the ongoing COVID-19 

pandemic. 

Program cost for the examination and supervision 

of the FCS and Farmer Mac decreased $1,020,685 

to $58,420,531. Safety and soundness represents 

74.7% of our total costs in 2020.

Other activity

“Other activity” includes examining and overseeing the National Consumer Cooperative Bank and 

performing reimbursable services for USDA and 

the Farm Credit System Insurance Corporation. We 

performed fewer reimbursable services this year 

than last year. Costs associated with this category 

decreased by $224,096 from 2019 to $781,411. The 

costs for providing reimbursable services remain 

relatively low compared with the total costs for our 

public mission and safety and soundness goals. 
22 | FCA Performance and Accountability Report — 2020

Other activity represented approximately 1.0% of 

our total costs in 2020.

Earned revenue for other activity totaled $504,831 

for 2020, compared with $668,273 for 2019. Like 

costs, revenue for other activity also decreased as 

a result of the decreased reimbursable work performed in 2020.

Limitations of financial statements

As required by 31 U.S.C. 3515(b), we have prepared 

the principal financial statements to report the 

financial position and results of our operations. We 

have prepared these statements from our books 

and records in accordance with U.S. generally 

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

Management and Budget. Reports used to monitor 

and control budgetary resources are prepared from 

the same records. 

As you read these statements, please keep in 

mind that they are for a component of the U.S. 

government.

Forward-looking analysis

In FY 2020, we have focused on three main priorities: monitoring credit risk; improving service to 

young, beginning, and small (YBS) farmers and 

ranchers; and improving the timeliness and efficiency of our regulatory activities. These continue 

to be our priorities during the fall of 2020, so we 

can ensure the Farm Credit System is safe and 

sound. 

To keep our staff, as well as the staff at System 

institutions, safe during the COVID-19 pandemic 

we shifted to conducting most of our examination 

activities remotely this year and will continue to 

do so in the coming year until public health conditions improve. Besides monitoring the effects of 

COVID-19 on the farm economy and farm lenders, 

we will continue to closely monitor the effects that 

wildfires, storms, drought, low commodity prices, 

and other challenges are having on credit quality.

We have worked with System institutions both to 

improve the quality of current reporting on YBS 

data and to enhance reporting on YBS lending for 

the future. We are working to make the collection 

of YBS data more automated and consistent. The 

past year’s progress in improving data quality will 

support our other two YBS goals — to share best 

practices across the System and to evaluate the 

growth and performance of YBS programs over the 

long term. In addition, we recently began working 

with USDA’s Farm Service Agency to find specific 

ways for agricultural lenders to better leverage 

USDA resources for YBS producers.

We’re pleased to report significant progress in the 

timeliness and efficiency of our regulatory activities in recent months despite the regulatory pause 

we had in place until July 10 to address COVID-19 

concerns. Beginning in the summer of 2020, we resumed some of our regulatory activities and issued 

four final rules (on swap margins, amortization, 

investment eligibility, and financial reporting) and 

a proposed rule on the capital framework. We are 

continuing the regulatory pause for the final rule 

on outside directors until the end of the calendar 

year to allow more time to consider recently received comments. For 2021, we will continue work 

on a variety of regulations, including regulations 

involving governance and capital issues consistent with the Unified Agenda of Regulatory and 

Deregulatory Actions published by the Office of 

Management and Budget.

To help the System manage the challenges associated with COVID-19, we issued an informational 

memorandum in April 2020, followed by half a 

dozen supplements. We acted decisively and quickly to provide extensive guidance to the System 

regarding the Paycheck Protection Program, and 

we continue to monitor legislative action to extend 

relief to qualified borrowers. As the COVID-19 

crisis evolves, we will provide additional informational memorandum supplements to guide System 

institutions, as appropriate.

FCA has also been a leader among federal financial 

regulators in providing guidance to lenders on 

financing hemp production. In February 2020, we 

issued an informational memorandum that outlined several factors institutions should consider 

when extending loans to hemp producers and 

processors. We will continue to monitor the hemp 

industry and provide guidance to System institutions in FY 2021.
FCA Performance and Accountability Report — 2020 | 23

Analysis of FCA’s Systems, Controls, and 

Legal Compliance

Strategy for FCA’s financial management 

system

We partner with the Department of the Treasury’s 

Bureau of the Fiscal Service to provide FCA with 

several financial management services. This 

shared-services approach helps us maximize efficiency while maintaining a high standard of financial management and accountability.

This partnership gives us access to core financial 

systems without our having to maintain the necessary technical and systems architectures. Our 

partnership with the Fiscal Service has also improved our data reliability, which is a requirement 

of Office of Management and Budget (OMB) M-15-

12, Increasing Transparency of Federal Spending 

by Making Federal Spending Data Accessible, 

Searchable, and Reliable.

Through our partnership with the Fiscal Service, 

we use Oracle Federal Financials as our financial 

system of record. Oracle Federal Financials is a 

commercial, off-the-shelf software package, which 

is certified under the Joint Financial Management 

Improvement Program to meet federal government accounting requirements. This web-based 

software integrates our key activities, such as 

e-payroll, e-travel, purchase card activity, and federal investments.

Although we perform all procurement activities 

in-house, we partner with the Fiscal Service for 

procurement system services and support. The 

procurement system is fully integrated with Oracle 

Federal Financials. This integration enables us to 

check our funds in real time and to commit and 

obligate funds as transactions are approved.

By working with the Fiscal Service, we comply 

with the OMB Financial Management Line of 

Business initiative, which encourages agencies 

to improve the cost, quality, and performance of 

financial management systems by using shared 

services. The partnership also helps us address 

the President’s Management Agenda cross-agency 

priority goal for sharing quality services.

Federal Managers’ Financial Integrity Act

The Federal Managers’ Financial Integrity Act 

(FMFIA) requires federal agencies to establish and 

maintain a system of internal control to achieve 

the objectives of effective and efficient operations, 

reliable financial reporting, and compliance with 

applicable laws and regulations. 

The management control objectives under the 

FMFIA are to reasonably ensure the following:

• Obligations and costs comply with applicable 

laws.

• Funds, property, and other assets are safeguarded against waste, loss, unauthorized use, or 

misappropriations. 

• Revenues and expenditures applicable to agency 

operations are properly recorded and accounted 

for to permit the preparation of accounts and 

reliable financial and statistical reports and to 

maintain accountability over the assets. 

Agencies must evaluate and report on the effectiveness of their internal controls and assess whether 

their financial management systems comply with 

requirements outlined in section 4 of the FMFIA.

Through our financial management system strategy, management control program, and compliance 

with applicable laws and regulations, we ensure 

our compliance with the FMFIA.

Management control program

We have established management controls to meet 

the objectives of section 2 and section 4 of the 

FMFIA. Our system of internal control conforms 
24 | FCA Performance and Accountability Report — 2020

with the Government Accountability Office’s 

Standards for Internal Control in the Federal 

Government (Green Book). 

Our internal controls are designed to provide reasonable assurance that transactions are properly 

recorded, processed, and summarized to permit 

the preparation of financial statements and that 

assets are safeguarded.

Our program offices are responsible for implementing and maintaining effective risk-management practices and internal controls to ensure 

(1) alignment of strategic goals with the agency’s 

mission, (2) effective and efficient operations, (3) 

reliable reporting, and (4) compliance with applicable laws and regulations. 

We conduct risk-based internal control assessments in accordance with OMB Circular A-123, 

Management’s Responsibility for Enterprise Risk 

Management and Internal Control, and all applicable appendices. Based on the results of the assessments, we have reasonable assurance that controls 

over operations, reporting, and compliance with 

laws and regulations are designed and operating 

effectively. 

In addition, our independent financial statement 

auditor reported that we maintained effective 

internal control over financial reporting and compliance with applicable laws and regulations. The 

auditor did not report any material weaknesses or 

significant deficiencies. 

Prompt Payment Act

We follow the Prompt Payment Act guidelines, 

which call for vendors generally to be paid 30 days 

after receipt of a valid invoice for goods and services ordered and delivered.

During FY 2020, we paid on time 99.9% of the 

2,448 invoices subject to the Prompt Payment Act. 

Payments are made by electronic funds transfer 

through the Secure Payment System.

Debt Collection Improvement Act

The Debt Collection Improvement Act of 1996 prescribes standards for carrying out federal agency 

collection actions and for referring an agency’s 

uncollectible debts to the proper federal agency for 

collection and litigation. The act has no material 

effect on us because we operate with virtually no 

delinquent debt.

This act was amended by the Digital Accountability 

and Transparency Act of 2014 (DATA Act) to require that debts outstanding for more than 120 

days be transferred to the Treasury Department 

for collection under the Treasury Offset Program. 

We currently have one debt being serviced by the 

Treasury Department. 

Improper payments

The Payment Integrity Information Act of 2019, 

issued on March 2, 2020, requires executive branch 

agencies to identify programs and activities that 

may be susceptible to significant improper payments, conduct risk assessments to determine risk 

factors that are likely to contribute to a susceptibility to significant improper payments, estimate 

annual improper payment amounts in the susceptible program(s), and report on actions to recover 

improper payments. 

Additional information on our improper payment activities are reported under “Payment 

Integrity Information Act Reporting” in the “Other 

Information” section of this report. 

Digital Accountability and Transparency 

Act 

The DATA Act was enacted to increase accountability and transparency in federal spending and 

expand the requirements of the Federal Funding 

Accountability and Transparency Act of 2006. Since 

our agency does not receive federal tax dollars, 

OMB has determined that FCA is not subject to the 

reporting requirements of the DATA Act. 

Inspector General Act

The Inspector General Act of 1978, as amended, 

requires inspectors general to report semiannually 

to their agency heads and to Congress. The semiannual reports prepared by FCA’s Office of Inspector 
FCA Performance and Accountability Report — 2020 | 25

General (OIG) describe its audits, inspections, 

evaluations, investigations, and other oversight 

activities.

The FCA OIG posts all audit, inspection, and evaluation reports on its website within three days of 

final submission to the FCA board. These reports 

are also posted on Oversight.gov, which contains 

OIG reports from across the federal government.

Below is a summary of the recommendations in 

these reports, as well as our progress in taking corrective action. 

Summary of OIG audit, inspection, and 

evaluation activities

The OIG issued 4 audit, inspection, or evaluation 

reports during FY 2020, resulting in 14 new recommendations. At the beginning of this fiscal 

year, 11 recommendations remained open from 

prior years. Over the course of FY 2020, 16 of 

those 25 recommendations were closed. As of 

Sept. 30, 9 remained open (including 4 from a 

prior fiscal year.) The reports are available on 

the FCA OIG’s website at www.fca.gov/about/

inspector-general-plans-and-reports.

• Oct. 30, 2019: The OIG issued a report on the 

evaluation of the agency’s compliance with the 

Federal Information Security Modernization 

Act for FY 2019. The report contained two 

recommendations.

• Nov. 13, 2019: The OIG issued a report on the 

audit of FCA’s financial statements and other 

reporting required by Government Auditing 

Standards for FY 2019. The audit produced no 

recommendations.

• March 12, 2020: The OIG issued the audit report, Farm Credit Administration’s Criminal 

Referral Process. The audit resulted in seven 

recommendations.

• July 29, 2020: The OIG issued the inspection 

report, FCA’s Implementation Efforts for 

the 2017 – 2018 Fairness and Inclusiveness 

Assessment. The inspection resulted in five 

recommendations.

Summary of OIG recommendations

Open recommendations 

as of Oct. 1, 2019 . 

New recommendations 

during FY 2020 . 

Recommendations closed 

during FY 2020 . 

Open recommendations 

as of Sept. 30, 2020 

Recommendations open 

more than one year 

OIG survey of FCS institutions regarding the 

agency’s examination function

The OIG normally conducts a quarterly survey of 

FCS institutions on our examination function and 

examiners. The OIG issues semiannual reports 

and a fiscal year summary report to the FCA chief 

examiner and the FCA board. 

Because of COVID-19, the Farm Credit 

Administration has reduced examination activity. 

The OIG decided to pause the quarterly survey 

process in April 2020 given that FCS institutions 

are working under unusual circumstances caused 

by the pandemic. We notified the chief executive 

officers of all FCS institutions that the OIG remains 

available to confidentially discuss issues or concerns they may have with an FCA examination. 

FCA’s compliance with improper payments 

reporting requirements for FY 2019

The OIG determined that FCA complied with improper payment reporting requirements applicable 

to the agency for FY 2019. In accordance with the 

Improper Payments Information Act of 2002, as 

amended, and implementing guidance, the OIG 

issued the conclusions to the FCA board and required oversight bodies on May 15, 2020.
26 | FCA Performance and Accountability Report — 2020

Statement of Assurance

The Farm Credit Administration’s management is responsible for managing risks and maintaining effective internal control and financial management systems that meet the objectives of sections 2 and 4 of the 

Federal Managers’ Financial Integrity Act (FMFIA).

FCA has considered risk management practices in the design of internal controls and in the assessment 

of their effectiveness. We conducted our assessment of risk and internal controls in accordance with 

OMB Circular A-123, Management’s Responsibility for Enterprise Risk Management and Internal Control. 

Based on the results of this assessment, we can provide reasonable assurance that the internal controls 

over financial reporting and operational and compliance objectives were operating effectively as of Sept. 

30, 2020. No material weaknesses were found in the design or operation of the internal controls.

As part of our evaluation process, we considered the results of extensive testing and assessment across 

the organization, as well as independent audits, to provide our unmodified statement of assurance. 

Glen R. Smith

Chairman and Chief Executive Officer 

FARM CREDIT ADMINISTRATION

September 30, 2020
FCA Performance and Accountability Report — 2020 | 27
28 | FCA Performance and Accountability Report — 2020

Program 

Performance

This section discusses FCA’s performance in achieving the 

goals and strategic objectives identified in the agency’s 

Strategic Plan for Fiscal Years 2018 – 2023. This section also 

details the actions we are taking to achieve our goals and the 

targets we are using to measure our success. 

We use the June 30 end date for reporting on operational 

performance measures because the information statements 

for the fourth quarter arrive after the November submission 

deadline for this report. However, for Goal 3 — Performance 

measures and results for workforce management — we report 

the results for the federal fiscal year, as of Sept. 30, 2020. 
FCA Performance and Accountability Report — 2020 | 29

FCA Performance Report

FCA’s mission is to ensure that System institutions 

and Farmer Mac are safe, sound, and dependable 

sources of credit and related services for all creditworthy and eligible persons in agriculture and 

rural America.

We fulfill our mission by (1) issuing regulations 

and implementing public policy and (2) identifying 

risk and taking corrective action. The FCA board 

has adopted three strategic goals:

• Ensure that the FCS and Farmer Mac fulfill their 

public missions for agriculture and rural areas.

• Evaluate risk and provide timely and proactive 

oversight to ensure the safety and soundness of 

the System and Farmer Mac.

• Cultivate an environment that fosters a welltrained, motivated, and diverse staff while 

providing an effective plan for leadership 

succession.

Our Strategic Plan for Fiscal Years 2018 – 2023 

contains a desired outcome for each goal, as well 

as 19 strategies we are using to meet these goals. In 

addition, we have 14 performance measures with 

associated targets to measure our success in meeting our goals.

The strategic plan addresses the changing environment facing agriculture: commodity and input 

price volatility; sustainability, environmental, food 

safety, and animal welfare issues; fluctuating interest rates and land values; diversity; and pressure to 

reduce subsidies and support payments in the 2018 

Farm Bill.

The plan focuses on helping the agency operate 

effectively and efficiently; minimizing costs for FCS 

borrowers and Farmer Mac customers; and helping ensure a safe, sound, and dependable source of 

credit and financially related services for agriculture and rural America.

Data validation and verification

FCA ensures the completeness, reliability, and 

quality of all reported information included in this 

report through validation of performance data and 

other information contained in this section. These 

efforts primarily entail regular internal agency 

processes for ensuring accurate data generation, 

entry, and reporting; data integrity; and independent peer review. 

FCA’s data validation and verification include the 

following:

• Use of applied measurement techniques to identify sources, validate data, and generate meaningful information

• Identification and implementation of authoritative sources, calculations, and standards

• Use of automated data collection systems and 

reporting whenever available

• Use of automated data checking procedures in 

addition to manual verification

• Analysis of data and identification of possible 

discrepancies for resolution

• Implementation of controls such as restricting 

permissible values, flagging outliers for review, 

and doing visual checks of results in development stages of dashboards and reports before 

deployment

• Reviews by data owners and data users

• Consolidation and deployment of enterprise 

tools for standardized reporting

• Independent quality assurance reviews before 

reports are issued

• Review and discussion of performance results 

with the executive leadership team
30 | FCA Performance and Accountability Report — 2020

Goals

As our performance results show, we succeeded 

in meeting the three strategic goals described 

below. Summary tables that follow the goals outline our performance measures and results. Each 

goal reflects our mission of ensuring that Farm 

Credit System institutions and Farmer Mac are 

safe, sound, and dependable sources of credit and 

related services for all creditworthy and eligible 

persons in agriculture and rural America. The performance measures and targets were established 

in the FCA Strategic Plan Fiscal Years 2018 – 2023.

Goal 1 — Ensure that the FCS and Farmer Mac 

fulfill their public missions for agriculture and 

rural areas.

In our Strategic Plan for Fiscal Years 2018 – 2023, 

we established this goal to meet the credit and 

related financial service needs of agricultural 

producers as the agricultural industry changes. 

Agricultural production and processing methods 

are evolving and becoming more integrated. The 

demographics of farmers and agricultural producers are gradually changing. The varieties and types 

of food and fiber production continue to grow. 

Trends, such as heightened demand for locally 

grown and specialty foods, and the growth in urban agriculture, are creating additional options for 

persons interested in becoming farmers, ranchers, 

and agricultural suppliers and distributors. 

The purpose of goal 1 is to maximize the ability of 

the FCS and Farmer Mac to fulfill their purposes 

and meet their public missions as defined by 

Congress in the Farm Credit Act of 1971, as amended. We established nine strategies to accomplish 

this goal, and we defined six performance measures to evaluate our progress and success. 

Goal 1, Strategy 1: Ensure that the capital rules for 

the FCS and Farmer Mac are consistent with standards for the financial service industry and preserve 

their financial strength and stability so they can 

meet the credit needs of eligible borrowers.

The FCA board adopted a final rule in March 2016 

that revised our capital rules for FCS banks and 

associations and provides clearly defined capital 

standards that are both consistent with Basel III 

and appropriate for the farmer-owned cooperative 

Farm Credit System. (A 2009 international regulatory accord, Basel III introduced a set of reforms to 

mitigate risk in the international banking sector.)

In FY 2017, we updated our Financial Institution 

Rating System benchmarks for capital and our 

examination guidance and examiner training 

to ensure that FCS institutions implement the 

capital rules properly. We also issued an informational memorandum to the System titled 

“Implementation of the Tier 1/Tier 2 Capital 

Framework.” (Tier 1 and tier 2 are categories of 

capital that banks are required to hold. Tier 1 is 

considered higher quality because of its stability 

and availability to absorb losses compared with 

tier 2 capital.)

In FY 2016, we issued the capital planning rule 

requiring an annual assessment of Farmer Mac’s 

capital plan, including capital adequacy modeling 

and stress testing methodologies.

In FY 2019, we issued guidance on Farmer Mac’s 

interest rate risk management. The guidance 

makes clear the board of directors’ ultimate responsibility for governance of interest rate risk and 

management’s role in the design and execution of 

measurement systems for interest rate risk. 

Goal 1, Strategy 2: Within the framework of the 

Farm Credit Act, develop and update policies and 

regulations as appropriate so that the System, 

including Farmer Mac, can continue to effectively 

serve its members as conditions in agriculture and 

rural America change.

The following actions are examples of ways we 

have used this strategy in FY 2020:

• Issued guidance to the System about its role 

in ensuring critical infrastructure services 

and functions during the coronavirus disease 

(COVID-19) pandemic

• Issued guidance to the System on managing 

challenges associated with the COVID-19 

pandemic

• Issued guidance to the System on the Paycheck 

Protection Program 
FCA Performance and Accountability Report — 2020 | 31

• Issued guidance to Farmer Mac on working with 

its lending and servicing partners to provide 

flexibility and assistance to borrowers experiencing financial challenges due to the COVID-19 

pandemic 

• Issued guidance to Farmer Mac on working with 

its lending and servicing partners on the reporting of troubled debt restructuring, borrower 

rights, and nonaccrual determinations for borrowers affected by COVID-19

• Approved a final rule governing the criteria for 

reinstating nonaccrual loans 

• Approved a final rule governing eligibility criteria for outside directors

• Approved a proposed rule and subsequent final 

rule governing the margin and capital requirements for regulations for covered swap entities 

• Issued an interim final rule to give covered swap 

entities an additional year to implement initial 

margin requirements because of the COVID-19 

pandemic 

• Issued a proposed rule governing the tier 1/tier 

2 capital framework

• Issued a proposed rule governing the amortization limits on certain loans

• Issued a proposed rule governing district financial reporting

• Issued a proposed rule governing the eligibility of investments made by the System’s 

associations

• Issued a proposed rule governing the implementation of the methodology for current expected 

credit losses for allowances

• Issued a notice and request for comment on 

interagency questions and answers on flood 

insurance 

• Continued to study the loan syndication market

• Issued guidance to the System on assessing 

whether financing hemp fits into their lending 

strategies

• Issued guidance to System institutions affected 

by unusual and significant weather events, 

which covers the impact of these events on servicing distressed loans 

As part of every rulemaking project, we consider 

ways to reduce the burden of existing rules and to 

minimize the regulatory burden of the rule being 

proposed. Also, we regularly solicit public comments on regulations that are unnecessary, unduly 

burdensome, or not based on law; our most recent 

solicitation was in May 2017. 

We routinely provide guidance to System institutions to protect their safety and soundness and to 

help them manage risk. This guidance facilitates 

the flow of funds to agriculture and rural areas by 

providing System institutions with sound practices 

to follow in developing and implementing lending 

programs. We also provide guidance related to 

internal controls and information technology. 

Ultimately, our guidance helps institutions manage 

loan and funding programs more efficiently. 

Farmer Mac continues to enhance its relationships 

with its loan sellers, servicers, and other business 

partners by holding informational forums, providing updates to its formal servicing guidelines, and 

performing internal credit reviews. And our Office 

of Secondary Market Oversight evaluates Farmer 

Mac’s efforts to enhance these relationships.

We support advances in Farmer Mac’s product 

offerings within the bounds of safety and soundness and the provisions of the Farm Credit Act. 

Our communication, examination reports, and 

off-site monitoring of Farmer Mac provide timely 

guidance to management on the possible risks associated with new products and policies. Over the 

reporting period, we provided Farmer Mac with 

guidance on regulatory compliance issues, policy 

direction, and questions regarding new products 

and services.

In addition, we continue to advance regulatory 

rulemaking projects on topics related to capital 

and margin, and liquidity reserve requirements. 

We are also working to enhance our data management and collection and to update other areas of 

supervisory guidance.
32 | FCA Performance and Accountability Report — 2020

Goal 1, Strategy 3: Emphasize the public purpose 

and mission-related responsibilities of the agricultural government-sponsored enterprises (GSEs) 

to serve all of agriculture and rural America. This 

includes innovative programs for serving the credit 

and related service needs of young, beginning, and 

small (YBS) farmers, ranchers, and producers and 

harvesters of aquatic products.

FCA examiners evaluate the operating and strategic plans and the credit delivery programs of 

System institutions. We also evaluate System 

outreach efforts and best practices for serving the 

credit and related service needs of all creditworthy, 

eligible customers.

In addition, our examiners evaluate each institution’s YBS farmer and rancher program relative to 

the demographics of its chartered territory. These 

evaluations help examiners identify trends in lending to YBS farmers and ranchers and assess the 

System’s efforts to provide financial and business 

management assistance and outreach to YBS farmers and ranchers.

When evaluating YBS programs, we continue to 

assess the extent to which FCS institutions use loan 

guarantee programs. We encourage System institutions to work with federal and state agencies that 

offer such programs. For example, we encourage 

institutions to meet the requirements to qualify for 

the USDA Farm Service Agency’s “preferred lender” status.

Not only can loan guarantees help institutions 

manage risk, they also help borrowers obtain the 

funding they need. We encourage System institutions to use loan guarantees to make loans to 

YBS borrowers with limited financial capacity and 

to existing borrowers with temporary financial 

difficulties.

We validate compliance with YBS laws and regulations through our risk-based oversight and 

examination processes. All the YBS programs we 

evaluated during the reporting period were in 

compliance with YBS regulations. Each year, we 

survey FCS associations regarding their YBS programs. With the information received, we prepare 

a YBS annual report that we publish in our Annual 

Report on the Farm Credit System.

FCA regulations require each direct-lender System 

institution to include in its operating and strategic 

business plan a marketing plan with strategies for 

providing the institution’s products and services 

to all creditworthy and eligible persons. With one 

exception, all FCS institutions had adequate marketing plans to provide products and services to 

all creditworthy and eligible persons. The one institution without an adequate marketing plan was 

evaluating various strategic options.

In addition, each institution must report annually 

to its board of directors on the progress it has 

made in this area. We review these reports and 

evaluate the System’s progress in meeting this 

requirement. As part of our examination activities, 

we also review institution annual reports and encourage institutions to include a discussion of how 

they are meeting their mission.

We evaluate the extent to which Farmer Mac has 

accomplished its mission as well. Farmer Mac’s 

customer base includes financial institutions and 

other lenders that seek a secondary market for 

their agricultural, rural housing, and rural utility 

cooperative loans. We evaluate Farmer Mac’s performance in reaching out to all potential customers and in creating easy access to its services.

Farmer Mac submits an annual mission report to 

FCA. This report includes data on Farmer Mac’s 

participation in federal guarantee programs, the 

geographic distribution of Farmer Mac’s program business, the proportion of fixed- versus 

variable-rate loan volume, and activity related to 

rural utilities. In addition, the report highlights 

activity related to small and family farms, which 

Farmer Mac is required by statute to promote and 

encourage. These reporting requirements encourage Farmer Mac’s business development staff to 

focus on the credit needs of small and family farms 

when working with its lender customers.

Goal 1, Strategy 4: Encourage the System to provide products and services to all creditworthy and 

eligible potential borrowers and to promote outreach to enhance diversity and inclusion.

Our examinations assess the System’s efforts to 

provide financial or business management assistance and outreach to all creditworthy, eligible 
FCA Performance and Accountability Report — 2020 | 33

customers, including YBS farmers and ranchers. 

The System continues to implement programs 

to meet the needs of YBS producers and other 

borrowers.

The business plan of each direct-lender institution 

must include strategies and actions to market the 

institution’s products and services to all eligible 

and creditworthy persons, with specific outreach 

toward diversity and inclusion within each market segment. We evaluate the System’s progress 

in meeting this requirement. We have updated 

our examination guidance and communications 

with the System to clearly convey our minimum 

expectations regarding business plans, including 

our expectations regarding diversity and inclusion 

requirements.

In addition, we review borrower inquiries and 

complaints about the lending process and investigate any allegations of discrimination. During the 

reporting period from July 1, 2019, through June 

30, 2020, we responded to 33 borrower inquiries. 

Our investigations did not discover any pattern or 

practice of deliberate discrimination or an unwillingness of FCS institutions to serve eligible customers within their chartered territories. We also 

found that System institutions continued to comply 

with equal credit opportunity and equal housing 

laws. However, our examinations did identify three 

institutions with weaknesses in complying with 

federal lending and borrower rights regulations. In 

all three cases, we are in the process of verifying 

the appropriateness of corrective actions taken by 

institution management to address the weaknesses. 

We are also concerned about the needs of farmers 

with disabilities and farmer veterans. In previous 

years, we have held presentations on these topics 

to raise awareness among our staff about the challenges these individuals face. In 2016, members of 

our staff met with the USDA undersecretary to discuss ways to better meet the credit needs of farmer 

veterans.

To ensure that Farmer Mac meets its responsibility 

to promote and encourage the inclusion of small 

and family farms in its programs, we have developed certain reporting requirements. We also provide Farmer Mac with feedback on various issues, 

including loan eligibility on prospective new lines 

of business.

Farmer Mac continues to work to make its programs accessible to all market participants, including those involved in rural utilities and federal 

agricultural loan guarantee programs. It seeks to 

ensure equitable treatment of all potential borrowers and the lenders that serve them. 

During examinations, we review loans purchased 

and guaranteed by Farmer Mac to ensure that their 

underwriting, loan-approval standards, and servicing are appropriate and consistent with established 

guidance. Further, Farmer Mac’s annual mission 

report includes a section covering its financing 

of small and family farmers and rural utility 

cooperatives.

FCA Bookletter (BL-066) “Providing Credit to 

Farmers and Ranchers Operating in Local/Regional 

Food Systems” encourages System associations to 

meet the credit and related service needs of farmers who market their agricultural products through 

local and regional food systems. It explains that 

System associations have authority to finance 

local-food farmers and certain farm-related businesses under existing statutes and regulations and 

under prior FCA guidance. The bookletter also provides guidance on how the regulations on System 

strategic business planning and senior officer compensation apply to financing local-food farmers 

(including those operating in urban areas).

Goal 1, Strategy 5: Encourage diversity on the 

boards and in the workforce of System institutions.

Our oversight and examination programs include 

risk-based evaluation of each institution’s human 

capital planning, director elections, and nominating committees. Examination guidance and 

procedures consider any significant changes in 

bylaws, policies, control systems, staffing, board 

membership, board involvement, election processes, or issues related to standards of conduct. As 

part of our review of the nominating committee’s 

processes and practices, we evaluate the committee’s outreach efforts to expand diversity on the 

board. In 2018 we updated examination guidance 

on this topic.
34 | FCA Performance and Accountability Report — 2020

As part of the review of human capital management, we may evaluate conditions such as staff 

turnover levels or changes in key personnel (actual 

or upcoming), depth of management, changes 

in compensation and benefit programs or levels, 

involvement of the compensation committee, and 

extent of operational weaknesses cited in audit, 

review, and examination reports that could be connected to human capital issues.

Goal 1, Strategy 6: Consistent with the Farm Credit 

Act, enable the agricultural GSEs to structure 

themselves to best serve their members and rural 

America.

FCA analyzes and approves periodic requests by 

institutions to restructure or offer new programs 

designed to better serve their customers. 

During the year, FCA approved the merger of subsidiaries for an association affiliated with CoBank, 

ACB, and the creation of a service corporation in 

the AgriBank district.

At fiscal year-end 2020, the System had 68 associations (67 agricultural credit associations and 1 

federal land credit association).

Goal 1, Strategy 7: Encourage System institutions 

to be conscious of the reputation risk associated 

with their lending and investments decisions.

We issue guidance on business planning, capital 

management, portfolio risk management, debt 

issuance, secondary liquidity sources, and related 

topics. We also work with FCS-wide committees 

and groups to discuss challenges, opportunities, 

and best practices in these areas. Further, we 

assess System institutions’ use of programs undertaken jointly with other financial service providers. 

Through our supervisory and enforcement activities, we require institutions to develop plans to 

address any potential reputation risks associated 

with their lending and investment decisions.

Goal 1, Strategy 8: Promote public trust in FCA’s 

regulatory framework for the System and Farmer 

Mac by developing policy guidance that supports 

mission achievement, financial stability, and 

transparency.

We promote public trust and investor confidence 

by helping ensure that the System and Farmer Mac 

meet their missions to serve agriculture and rural 

America. See strategies 2 and 3 for a discussion 

of some of the ways we have helped them achieve 

their missions.

We provide guidance to System institutions to help 

them better understand their lending authorities 

and, therefore, to more appropriately market 

their products and services to prospective eligible customers. We also publish our semiannual 

Regulatory Projects Plan on our website to notify 

the public of upcoming regulatory actions so that 

the public may participate in the regulatory process. Our e-government program allows the public 

to make comments in electronic format and to 

review comments from others on our website.

We further support public trust and investor 

confidence by reviewing borrower inquiries and 

complaints about the loan-granting process and 

by investigating any allegations of discrimination. 

See strategy 4 above for more information about 

borrower inquiries and complaints.

Farmer Mac, too, has increased its focus on its 

public mission. Its year-end annual report and 

Form 10-K filing now include numerous references 

to its public mission, including a discussion of 

how pursuing its mission may contribute to lower 

returns to stockholders. Farmer Mac actively oversees its sellers/servicers, ensuring that loans sold 

into the secondary market meet its underwriting 

standards and that processes are in place to detect 

fraud and operational errors.

The guidance we have provided has had a positive 

impact on Farmer Mac’s public disclosures related 

to its mission, and we will continue to encourage Farmer Mac to regularly disclose its mission 

accomplishments.

In addition, the FCA board adopted the policy statement titled “Oversight of the Federal 

Agricultural Mortgage Corporation” in FY 2020 to 
FCA Performance and Accountability Report — 2020 | 35

document the strategy and direction for the agency’s oversight of Farmer Mac.

Goal 1, Strategy 9: Encourage full participation of 

stakeholders in the development and review of regulatory and policy proposals as appropriate.

We encourage stakeholders to provide input on 

regulatory proposals before we issue rules. We 

publish our semiannual Regulatory Projects Plan 

on our website to notify the public of upcoming 

regulatory actions. In addition, our e-government 

program allows the public to make comments in 

electronic format and to review comments from 

others on our website.

Where practicable, we solicit input from stakeholders before we publish rules for comment. In 

some cases, we use advance notices of proposed 

rulemaking to obtain input. In almost all cases, we 

publish our proposed rules with comment periods 

of at least 60 days. For regulatory proposals that relate to the System’s GSE mission, we also reach out 

to nontraditional commenters for their input.

Goal 2 — Evaluate risk and provide timely and 

proactive oversight to ensure the safety and 

soundness of the System and Farmer Mac.

In our Strategic Plan for Fiscal Years 2018 – 2023, 

we included this goal to ensure that FCA, the 

System, and Farmer Mac can manage data to 

operate effectively. As the System continues to consolidate and institutions become larger and more 

sophisticated, our ability to effectively examine 

and monitor risk becomes even more critical. 

To accomplish goal 2, we examine and supervise 

each System institution and Farmer Mac. We have 

six strategies to accomplish this goal and six performance measures to evaluate our success.

Goal 2, Strategy 1: Seek early FCA board input on 

policy and regulatory issues. Ensure that the board 

has timely and comprehensive information to be 

fully informed and able to respond appropriately.

The FCA board provides early input on regulatory and policy projects. For regulatory projects, 

the board provides input before and during the 

development and approval of the semiannual 

Regulatory Projects Plan, which outlines our regulatory agenda. For policy projects, the board also 

provides early input; a policy project may produce 

a guidance document, or it may eventually become 

a regulatory project.

After we’ve started a regulatory or policy project, 

board involvement continues to be crucial. We obtain board input regarding the initial issues paper, 

and we provide board briefings and monthly progress reports throughout the project.

The Office of Examination and the Office of 

Secondary Market Oversight report important 

issues at least monthly or as needed to the FCA 

board, and they deliver reports to the board each 

quarter on the condition of the System and Farmer 

Mac.

Goal 2, Strategy 2: Maintain strong and frequent 

two-way communication with stakeholders on issues of risk and safety and soundness.

FCA management and staff participate regularly in 

FCS meetings and conferences to answer questions 

related to regulatory and FCS operational issues. 

We also use these opportunities to reinforce our 

expectations regarding these issues and to discuss 

new regulatory direction. FCA staff members also 

participate in agencywide workgroups and FCSwide committees and groups to discuss challenges, 

opportunities, and best practices.

Our approach to oversight and examination involves meeting with institution boards and audit 

committees on risk issues, interim examination 

activities, and corrective actions. Through direct 

interaction with System institutions, we hear 

about emerging issues and acquire a systemic view 

of issues warranting regulatory attention. Our 

oversight and examination approach also involves 

timely written communication through interim 

activity letters and examination reports. We also 

regularly communicate with FCS management on 

upcoming examination practices that may affect 

their institutions.

Annually, we issue an informational memorandum on our National Oversight Plan in which we 

identify risk topics that we will emphasize in our 
36 | FCA Performance and Accountability Report — 2020

examination and oversight of System institutions. 

Likewise, we issue an annual informational memorandum to Farmer Mac identifying the focus 

areas of the current examination cycle. These 

informational memorandums provide perspective 

on our concerns and priorities. When needed, we 

use the supervisory and enforcement process to 

require institutions to take certain action. In addition, we review borrower inquiries and complaints 

about the lending process and investigate any 

allegations.

Goal 2, Strategy 3: Continue proactive oversight of 

institution-specific and systemic risks.

We proactively identify and evaluate emerging issues that create Systemwide risk and allocate oversight and examination resources based on that risk 

in accordance with board policy statement 53. FCA 

continues to prioritize oversight activities according to risk, and we develop individualized oversight 

and examination plans for each institution. A key 

element to this approach is the national oversight 

planning process, which guides our efforts to ensure the safety and soundness of the System. We 

manage and update this process on a regular basis. 

We strive to provide timely guidance related to how 

examinations are conducted and emerging risks.

Through examinations, we routinely evaluate 

the operations and risk management practices of 

System institutions, and we share our conclusions 

and recommendations with System boards of 

directors. We determine whether FCS institutions 

have internal control systems and processes to 

manage their operations and loan portfolios, and 

whether direct-lender institutions maintain systems that allow them to properly assess the loans 

and risk exposures in their portfolios. With one 

exception, all institutions had adequate internal 

control programs or adequate corrective actions 

in place in FY 2020. In the case of the exception, 

the institution’s corrective action plan did not adequately address a weakness. We have continued to 

follow up with the institution. 

Overall, we have found that FCS institutions have 

adequate lending systems in place and that they 

continue to enhance these systems. The FCS uses a 

two-dimensional risk rating system, consisting of 

a 14-point scale to measure each borrower’s probability of default and a set of ratings to measure the 

borrower’s loss given default. The FCS enhances 

this system through periodic refinements, and we 

closely evaluate those refinements. The System 

also performs database querying and stress testing. We consider the following elements when we 

examine loan portfolios:

• Management of risk concentrations

• Loan underwriting

• Collateral risk management

• Portfolio planning and analysis

• Credit administration

• Risk identification

Goal 2, Strategy 4: Effectively remediate weakened 

institutions.

We use a risk-based supervisory and enforcement 

program to respond differentially to the risks and 

particular oversight needs of FCS institutions. If 

we discover unacceptable risks, we take action 

to ensure that the identified risks are mitigated 

appropriately. Corrective actions include reducing 

risk exposures; increasing capital and enhancing 

earnings, which improve an institution’s ability to 

bear risk; and strengthening risk management.

We use a three-tiered supervision program: normal 

supervision, special supervision, and enforcement 

actions. Institutions under normal supervision 

are performing in a safe and sound manner and 

operating in compliance with applicable laws and 

regulations. These institutions are able to correct 

identified weaknesses in the normal course of 

business.

For those institutions displaying more serious or 

protracted weaknesses, we shift from normal to 

special supervision, and our examination oversight 

increases accordingly. Under special supervision, 

we give an institution clear and firm regulatory 

guidance to address weaknesses, and we allow the 

institution time to correct the problems.
FCA Performance and Accountability Report — 2020 | 37

If informal supervisory approaches have not been 

or are not likely to be successful, we use our formal 

enforcement authorities. We may take an enforcement action for several reasons:

• A situation threatens an institution’s financial 

stability.

• An institution has a safety and soundness problem or has violated a law or regulation.

• An institution’s board is unable or unwilling to 

correct problems we have identified.

• Our enforcement authorities include the following powers:

• To enter into formal agreements

• To issue cease-and-desist orders

• To levy civil money penalties

• To suspend or remove officers, directors, and 

other persons

If we take an enforcement action, the FCS institution must operate under the requirements of the 

action and report back to our agency on its progress in fulfilling the requirements. Our examiners 

oversee the institution’s performance to ensure 

compliance with the enforcement action. As of 

June 30, 2020, there were no formal enforcement 

actions in place.

Goal 2, Strategy 5: Ensure that technology, information management, and cybersecurity awareness 

are priorities at FCA and in the FCS.

Through the FCS Loan Database Project, we built 

an enterprise system for the dependable collection 

and storage of data for examination activities and 

systemic risk analysis. The loan database provides 

a robust dataset for analyzing institution loan 

portfolios and facilitating the loan review activities of the Office of Examination. It also supports 

Systemwide risk analysis. 

We previously established uniform instructions 

for the timely and reliable reporting of accounts. 

We also worked with the System to improve data 

quality, systems, and analysis capabilities. This 

improvement effort included adding the ability to 

identify shared assets and systemically significant 

customers by incorporating into the dataset both 

the System shared-asset and customer numbers 

and the attribution data on the largest System 

customers. 

We deployed an agency-level data mart/data cube 

environment, which is a centralized data warehouse for transactional and indicative data provided by each financial institution in the Farm Credit 

System.

In 2020, we continued to improve our examination 

processes by using technology more effectively: 

• We implemented new business intelligence 

tools and analysis applications for examiners 

to leverage the agency’s various information 

sources, including the data mart, for analytical 

purposes.

• We continued enhancements to the EDGe Loan 

Workpaper, a web-based application that accesses the FCS Loans2 database.

• We continued improvements to the FCS Loan 

Database. 

• We continued developing and integrating new 

management reports and examination tools as 

part of the EDGe project.

• We continued improving connectivity to System 

institutions through videoconferencing, teleconferencing, and electronic access to loan files.

We continually evaluate whether institutions are 

maintaining systems to analyze their portfolio risk 

and borrower profiles. We review their processes 

and tools for analyzing sensitivity and stress. In 

December 2018, we issued a System memorandum 

on cybersecurity risks titled “Use of Personal Email 

and Cybersecurity Concerns.”

Goal 2, Strategy 6: Ensure that strong governance, 

standards of conduct, and ethical behavior are part 

of the organizational culture of the FCS.

We evaluate the compliance of System institutions 

with governance regulations and their adherence 

to cooperative principles. We evaluate each institution’s standards of conduct, ethics, and organizational culture. We share our conclusions and 
38 | FCA Performance and Accountability Report — 2020

recommendations with System boards of directors. 

As discussed under goal 2, strategy 4, we use a 

three-tiered supervision program to ensure that 

institutions take appropriate measures to mitigate 

any risks our examiners identify.

In May 2018, we issued a proposed rule that would 

require FCS institutions to develop a standards of 

conduct program based on certain core principles. 

It would also require each institution to adopt a 

code of ethics and to develop strategies and a system of internal controls to promote institutional 

and individual accountability for ethical conduct. 

We are in the process of developing a final rule. 

Goal 3 — Cultivate an environment that 

fosters a well-trained, motivated, and diverse 

staff while providing an effective plan for 

leadership succession.

In our Strategic Plan for Fiscal Years 2018 – 2023, 

we established this goal so that we can be an 

effective organization with the right number of 

people with the right skills, experiences, and competencies. The purpose of goal 3 is to ensure that 

FCA maintains a workforce that can carry out its 

mission. 

We have four strategies to accomplish goal 3 and 

two performance measures to evaluate our success. The data cited for this goal are for the federal 

fiscal year ended Sept. 30, 2020.

Goal 3, Strategy 1: Maintain a highly skilled and 

diverse workforce to meet FCA’s current and future 

regulatory development, risk analysis, examination, 

and supervision needs.

Our success as an agency depends on our people 

and the effective use of technology. We will continue to invest in hiring, developing, and retaining 

a talented, diverse workforce and to provide employees with the tools and support they need to be 

effective. We strive to keep our work environment 

positive, innovative, diverse, and family friendly, 

and we encourage teamwork and high productivity.

We have emphasized diversity in our recruiting, 

training, policies and procedures, and management/employee performance standards. We have 

made good use of the Schedule A, Persons with 

Disabilities, hiring authority. As a result, the diversity of our workforce is growing. According 

to FCA’s FY 2020 employment data, 20.2% of our 

workforce have disabilities (and serious health 

issues), and 4.6% of our workforce have targeted 

disabilities or conditions that can create significant 

barriers to employment. These results surpass the 

goal set in the Equal Employment Opportunity 

Commission’s final rule, which directs federal 

agencies to aim for 12% of its workforce to be 

people with disabilities and 2% to be people with 

targeted disabilities. 

By continually assessing human capital needs, 

we have established appropriate human capital 

requirements, and we have used our human capital 

assessments to develop, enhance, and redirect 

training and development programs. We have upgraded our information technology infrastructure 

to improve our ability to work; collaborate; gather 

information; and review, approve, and store work 

products. As a result, our workforce has become 

more effective and efficient as demonstrated by 

our exemplary performance during the pandemic.

To ensure we are able to continue to attract and 

retain a diverse, highly skilled workforce, we are 

doing the following:

Continuing to assess staffing needs, discontinuing 

functions no longer required, offering development options to those affected by the discontinuation of those functions, and identifying new 

staffing requirements

Fostering transparency and inclusiveness in the 

selection process, including plans to use selection 

panels and behavioral interviews

• Updating policies and procedures to foster consistency in approach and to leverage organizational best practices 

• Enhancing the onboarding process

• Implementing a leadership readiness program 

to provide aspiring leaders the necessary skills 

and experiences to lead 

• Expanding team-based developmental learning 

to build knowledge across offices and providing 
FCA Performance and Accountability Report — 2020 | 39

experiential learning opportunities to broaden 

and deepen the expertise of staff

• Maximizing flexibility in the work-life balance, 

leveraging lessons learned from the agency’s 

response to the pandemic

• Offering additional opportunities for staff to engage with senior leaders

• Administering periodic “pulse surveys” to assess 

staff perceptions on organizational initiatives in 

a timely fashion

Through our examiner commissioning program, 

we are building a diverse cadre of highly motivated 

examiners, ensuring they have the knowledge, 

skills, and talents necessary to accomplish the 

agency’s mission. The program helps examiners 

develop their skills in FCA’s primary areas of oversight — credit, finance, and operations, as well as 

examination management.

We also invest in the development of our commissioned examiners through human capital 

planning, examiner career development, and 

specialty programs. The specialty programs enable 

examiners to gain technical expertise and encourage them to pursue professional development and 

certification.

Goal 3, Strategy 2: Facilitate the development of 

the skills our workforce needs to evaluate FCS risk 

and provide timely and proactive oversight.

In 2020, FCA continued to devote significant resources to training new employees through our 

examiner commissioning program. In addition, 

we increased our focus on helping midcareer staff 

develop their skills. For example, we took the following measures:

• Trained examination staff in the technical and 

soft skills they need

• Provided opportunities for commissioned examiners to develop their careers further by completing specialist programs (for credit, finance, 

operations, and examination management) to 

ensure they have the expertise and credibility to 

carry out our mission

• Helped our examiners maintain their readiness to administer elevated supervision when 

necessary

• Ensured that all our examiners understand our 

risk supervision approaches and how to implement them

Goal 3, Strategy 3: Ensure adequate succession 

planning and knowledge transfer to ensure that 

future FCA leadership and staff possess the knowledge and skills required to be an effective arm’s 

length regulator.

We have updated our examiner career development program to help us replace retiring managers 

and supervisors by developing the leadership, 

management, and supervisory skills of our examiners. Our strategy is to develop a pool of candidates who could become successful supervisors 

and managers, including director of the Office of 

Examination. We recognize that retirements also 

create opportunities for diversity and inclusion in 

management.

We use the following methods to develop our next 

group of program managers and leaders:

• Creating leadership positions for program and 

portfolio managers

• Providing selected candidates with formal leadership training, on-the-job training, and opportunities to participate in other projects

• Helping staff build skillsets by providing developmental assignments, such as serving as 

examiners-in-charge of complex institutions, 

completing special projects, and participating in 

Office of Examination specialist programs

• Providing internal rotational assignments between divisions in our Office of Examination

• Offering opportunities for Office of Examination 

employees to work in other FCA offices

To transfer knowledge from more tenured examiners to the new generation of examination staff, we 

use developmental initiatives. Our ongoing project 

to update the FCA Examination Manual also provides opportunities for knowledge transfer. 
40 | FCA Performance and Accountability Report — 2020

Goal 3, Strategy 4: Encourage a workplace culture 

that motivates staff to be engaged, embraces diversity in all its forms, and promotes strong ethical 

behavior.

According to the Federal Employee Viewpoint 

Survey, FCA’s employee engagement index increased by one percentage point in 2019, from 78% 

to 79%. We do not have an employee engagement 

index for 2020 because the survey was not released 

by the Office of Personnel Management until 

Sept. 24, and the results will not be available until 

January 2021. Since 2017, FCA has been ranked by 

the Partnership for Public Service as one of the 

top five best places to work among small federal 

agencies. We promote engagement in various 

ways, such as providing training and development 

opportunities for employees to build their skills 

and advance their careers.

We also strengthen engagement by having an 

inclusive workplace. For example, our Special 

Emphasis Programs, such as the Federal Women’s 

Program Committee, Blacks in Government, and 

HOLA-FCA (Hispanic Organization for Leadership 

and Advancement), sponsor regular presentations 

on issues affecting women and minority groups. 

And each year we have a Diversity Day on which 

we celebrate the diverse cultures represented in 

our workplace.

We also strive to increase workforce diversity. We 

target at least 25% of our recruiting efforts toward 

potential applicants who have a disability or who 

are members of a minority group. For example, 

during each recruiting season, we attend career 

fairs at historically Black colleges and universities and schools with a high rate of minority 

enrollment.

And as a financial banking regulator, we emphasize ethical conduct among all employees. In 2011, 

our board adopted a policy statement on ethics, 

independence, and our role as an arm’s length regulator. This document states the following:

• The FCA board will continue to hold itself to the 

highest standards of ethical conduct in recognition that its commitment and adherence to the 

agency ethics program sets the standard for the 

commitment and conduct of agency staff.

• FCA board members and employees must remain mindful of their duty to make independent 

determinations on matters being considered by 

the agency.

• As the arm’s length regulator of the Farm Credit 

System, FCA is committed to carrying out its 

work without any undue influence, favoritism, 

or special access.

Our ethics program performs the following 

functions:

• Oversees financial disclosure reporting (that 

is, the completion of public, confidential, and 

certification forms) of covered FCA and FCSIC 

employees

• Provides ethics counseling to FCA and FCSIC 

employees

• Provides ethics training to all covered FCA and 

FCSIC employees annually, as well as to new 

employees during orientation

• Provides a liaison to coordinate with other government agencies regarding ethics issues

• Helps develop regulations and policies related 

to ethics
FCA Performance and Accountability Report — 2020 | 41

Table 7a. Goal 1 — Performance measures and results for public mission

July 1, 2019, to June 30, 2020

Measure 1: Percentage of FCS institutions providing 

products and services that serve creditworthy and eligible persons and perform 

outreach to enhance diversity and inclusion.

Results: Ninety-nine percent of FCS institutions had 

satisfactory operating and strategic plans for providing 

products and services to all creditworthy and eligible 

persons. One institution did not meet this standard 

because it had an inadequate marketing plan. We continued to follow up with the institution as it evaluated 

strategic options.

2016 

Target

2016 

Results

2017 

Target

2017 

Results

2018 

Target

2018 

Results

2019 

Target

2019 

Results

2020 

Target

2020 

Results

Results vs. 

target

≥90% 100% ≥90% 100% ≥90% 100% ≥90% 100% ≥90% 99%

Measure 2: Whether Farmer Mac’s business plan contains 

strategies to promote and encourage the 

inclusion of all qualified loans, including 

loans to small farms and family farmers, in its 

secondary market programs, and whether its 

business activities further its mission to provide a source of long-term credit and liquidity 

for qualifying loans.

Results: Farmer Mac’s business plan contains adequate 

strategies to promote and encourage the inclusion of all 

qualified loans, including small and family farm loans, 

in its secondary market programs. Its business activities 

further its mission to provide a source of long-term credit 

and liquidity. Farmer Mac submits an annual mission 

report to FCA, highlighting activity related to small and 

family farms. In addition, FCA draws conclusions on 

mission achievement in Farmer Mac’s annual Report of 

Examination.

2016 

Target

2016 

Results

2017 

Target

2017 

Results

2018 

Target

2018 

Results

2019 

Target

2019 

Results

2020 

Target

2020 

Results

Results vs. 

target

Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

Measure 3: Percentage of direct-lender institutions with 

satisfactory consumer and borrower rights 

compliance.

Results: Ninety-six percent of direct-lender institutions 

have satisfactory consumer and borrower rights compliance. Three institutions did not meet this standard because of weaknesses in compliance with federal lending 

and borrower rights regulations. In all three cases, we are 

verifying the appropriateness of corrective actions the 

institutions have taken to address the weaknesses.

2016 

Target

2016 

Results

2017 

Target

2017 

Results

2018 

Target

2018 

Results

2019 

Target

2019 

Results

2020 

Target

2020 

Results

Results vs. 

target

≥90% 95% ≥90% 100% ≥90% 97.3% ≥90% 95% ≥90% 96%

The following defines the symbols and abbreviations used to describe targets in the Performance Measures and Results tables: ≥ is 

greater than or equal to; N/A indicates either that the measure is not applicable or that FCA’s performance could not be measured; 

indicates we exceeded the FY 2020 target; indicates we achieved the FY 2020 target; indicates we did not meet the FY 2020 target.

Notes: In April 2018, the FCA board adopted the FCA Strategic Plan for FYs 2018 – 2023. The performance measures in the new plan 

remain substantially the same as the measures in the previous plan.
42 | FCA Performance and Accountability Report — 2020

Measure 4: Percentage of direct-lender institutions with 

YBS programs that are in compliance with 

YBS regulations.

Results: All direct-lender institutions with YBS programs 

are in compliance with YBS regulations.

2016 

Target

2016 

Results

2017 

Target

2017 

Results

2018 

Target

2018 

Results

2019 

Target

2019 

Results

2020 

Target

2020 

Results

Results vs. 

target

≥90% 100% ≥90% 100% ≥90% 100% ≥90% 100% ≥90% 100%

Measure 5: Whether the majority of objectives listed in 

the preamble of each final rule were met on 

the two-year anniversary of the rule’s effective or implementation date.

Results: There were two rules that met the reporting 

requirement. In both cases, a majority of the objectives 

listed in the preambles of the final rules were met on the 

two-year anniversary of the implementation dates.

2016 

Target

2016 

Results

2017 

Target

2017 

Results

2018 

Target

2018 

Results

2019 

Target

2019 

Results

2020 

Target

2020 

Results

Results vs. 

target

N/A N/A Yes Yes Yes Yes Yes Yes Yes Yes

Measure 6: Percentage of pre–rulemaking projects and 

proposed rules on which FCA requested input 

from persons outside of FCA. (This measure 

considers all the pre-rulemaking projects and 

proposed rules that were listed as completed 

on FCA’s Unified Agenda Abstracts for the 

reporting period.)

Results: There were six pre-rulemaking projects or proposed rules that met the reporting requirement; we did 

request input on these projects or rules from persons 

outside of FCA.

2016 

Target

2016 

Results

2017 

Target

2017 

Results

2018 

Target

2018 

Results

2019 

Target

2019 

Results

2020 

Target

2020 

Results

Results vs. 

target

100% N/A 100% 89% 100% 100% 100% 100% 100% 100%

The following defines the symbols and abbreviations used to describe targets in the Performance Measures and Results tables: ≥ is 

greater than or equal to; N/A indicates either that the measure is not applicable or that FCA’s performance could not be measured; 

indicates we exceeded the FY 2020 target; indicates we achieved the FY 2020 target; indicates we did not meet the FY 2020 target.

Notes: In April 2018, the FCA board adopted the FCA Strategic Plan for FYs 2018 – 2023. The performance measures in the new plan 

remain substantially the same as the measures in the previous plan.
FCA Performance and Accountability Report — 2020 | 43

Table 7b. Goal 2 — Performance measures and results for safety and soundness 

July 1, 2019, to June 30, 2020

1 CAMELS is a rating of capital, assets, management, earnings, liquidity, and sensitivity.

Measure 1: Percentage of System assets in institutions 

with composite CAMELS1 ratings of 1 or 2.

Results: Ninety-nine percent of System assets are in institutions with composite CAMELS ratings of 1 or 2.

2016 

Target

2016 

Results

2017 

Target

2017 

Results

2018 

Target

2018 

Results

2019 

Target

2019 

Results

2020 

Target

2020 

Results

Results vs. 

target

≥90% 99.7% ≥90% 99.6% ≥90% 98.6% ≥90% 98% ≥90% 99%

Measure 2: Percentage of requirements in supervisory 

agreements with which FCS institutions have 

at least substantially complied within 18 

months of execution of the agreements.

Results: The agency does not have any supervisory 

agreements in place with FCS institutions.

2016 

Target

2016 

Results

2017 

Target

2017 

Results

2018 

Target

2018 

Results

2019 

Target

2019 

Results

2020 

Target

2020 

Results

Results vs. 

target

≥80% 91% ≥80% N/A ≥80% N/A ≥80% N/A ≥80% N/A N/A

Measure 3: Percentage of institutions complying with 

regulatory capital ratio requirements.

Results: All institutions complied with regulatory capital 

ratio requirements.

2016 

Target

2016 

Results

2017 

Target

2017 

Results

2018 

Target

2018 

Results

2019 

Target

2019 

Results

2020 

Target

2020 

Results

Results vs. 

target

≥90% 100% ≥90% 100% ≥90% 100% ≥90% 100% ≥90% 100%

Measure 4: Whether the Office of Secondary Market 

Oversight’s examination and oversight plan 

and activities effectively identify emerging 

risks, and whether appropriate supervisory 

and corrective actions have been taken to 

effect change when needed.

Results: OSMO’s examination and oversight plan effectively identifies risk. In addition, an annual informational 

memorandum identifies specific areas of emphasis during 

the examination cycle. We evaluate actions taken to address matters requiring attention (MRAs) on an ongoing 

basis and summarize progress in the Report of Examination. Supervisory actions taken strengthened operations, 

and efforts to address MRAs were satisfactory.

2016 

Target

2016 

Results

2017 

Target

2017 

Results

2018 

Target

2018 

Results

2019 

Target

2019 

Results

2020 

Target

2020 

Results

Results vs. 

target

Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

The following defines the symbols and abbreviations used to describe targets in the Performance Measures and Results tables: ≥ is 

greater than or equal to; N/A indicates either that the measure is not applicable or that FCA’s performance could not be measured; 

indicates we exceeded the FY 2020 target; indicates we achieved the FY 2020 target; indicates we did not meet the FY 2020 target.

Notes: In April 2018, the FCA board adopted the FCA Strategic Plan for FYs 2018 – 2023. The performance measures in the new plan 

remain substantially the same as the measures in the previous plan. Also, for the purposes of this table, "all institutions" is defined as 

System banks, associations, and the Farm Credit Leasing Services Corporation.
44 | FCA Performance and Accountability Report — 2020

Measure 5: Percentage of institutions with satisfactory 

audit and review programs, including institutions with acceptable corrective action plans.

2 This measure was added to the strategic plan the following year.

Results: All institutions but one had satisfactory audit 

and review programs, including institutions with acceptable corrective action plans. In the case of the exception, 

the institution’s corrective action plan did not adequately 

address a weakness. We have continued to follow up 

with the institution.

2016 

Target

2016 

Results

2017 

Target

2017 

Results

2018 

Target

2018 

Results

2019 

Target

2019 

Results

2020 

Target

2020 

Results

Results vs. 

target

100% 100% 100% 99% 100% 95.9% 100% 97% 100% 99%

Measure 6: Whether five or more reports and dashboards 

were created that use data collected from 

the Farm Credit System to assess risk in the 

System.

Results: The agency exceeded this goal. Numerous 

tracking and analysis reports and dashboards related to 

mergers, shared assets, portfolios, and others were created to better spot trends and identify risks.

2016 

Target

2016 

Results

2017 

Target

2017 

Results

2018 

Target

2018 

Results

2019 

Target

2019 

Results

2020 

Target

2020 

Results

Results vs. 

target

N/A2 N/A Yes Yes Yes Yes Yes Yes Yes Yes

The following defines the symbols and abbreviations used to describe targets in the Performance Measures and Results tables: ≥ is 

greater than or equal to; N/A indicates either that the measure is not applicable or that FCA’s performance could not be measured; 

indicates we exceeded the FY 2020 target; indicates we achieved the FY 2020 target; indicates we did not meet the FY 2020 target.

Notes: In April 2018, the FCA board adopted the FCA Strategic Plan for FYs 2018 – 2023. The performance measures in the new plan 

remain substantially the same as the measures in the previous plan. Also, for the purposes of this table, "all institutions" is defined as 

System banks, associations, and the Farm Credit Leasing Services Corporation.
FCA Performance and Accountability Report — 2020 | 45

Table 7c. Goal 3 — Performance measures and results for workforce management 

Oct. 1, 2019, to Sept. 30, 2020

3 This measure was added to the strategic plan the following year.

4 This measure was added to the strategic plan the following year.

Measure 1: Whether, as part of its recruiting efforts for 

entry- level examiners, FCA has ensured that 

at least 25% of its outreach efforts target applicants with a disability or who are members 

of a minority group.

Results: At least 25% of our outreach efforts targeted 

potential applicants who have a disability or who are 

members of a minority group.

2016 

Target

2016 

Results

2017 

Target

2017 

Results

2018 

Target

2018 

Results

2019 

Target

2019 

Results

2020 

Target

2020 

Results

Results vs. 

target

N/A3 N/A Yes Yes Yes Yes Yes Yes Yes Yes

Measure 2: Whether we have maintained or improved 

our score from last year in the annual employee satisfaction survey.

Results: There are no results for fiscal year 2020 because 

OPM delayed the release of the Federal Employee Viewpoint Survey until Sept. 24. The results will not be available until January 2021.

2016 

Target

2016 

Results

2017 

Target

2017 

Results

2018 

Target

2018 

Results

2019 

Target

2019 

Results

2020 

Target

2020 

Results

Results vs. 

target

N/A4 N/A ≥72% 75% Yes Yes Yes Yes N/A N/A N/A

The following defines the symbols and abbreviations used to describe targets in the Performance Measures and Results tables: ≥ is 

greater than or equal to; N/A indicates either that the measure is not applicable or that FCA’s performance could not be measured; 

indicates we exceeded the FY 2020 target; indicates we achieved the FY 2020 target; indicates we did not meet the FY 2020 target.

Notes: In April 2018, the FCA board adopted the FCA Strategic Plan for FYs 2018 – 2023. The performance measures in the new plan remain substantially the same as the measures in the previous plan.
46 | FCA Performance and Accountability Report — 2020

Financial Section

In this section, we present our independent auditors’ report 

and our financial statements and notes. We prepared these 

statements and accompanying notes in compliance with 

U.S. generally accepted accounting principles for the federal 

government and OMB Circular A-136, Financial Reporting 

Requirements.
FCA Performance and Accountability Report — 2020 | 47

Statement of Chief Financial Officer

November 12, 2020

I am pleased to present the Farm Credit Administration’s 2020 financial statements and the auditor’s report on the financial position of the agency as of the fiscal year ended September 30, 2020. The audit was 

conducted by an independent public accounting firm contracted with the Office of Inspector General. 

Our agency received an unmodified audit opinion on our financial statements for the 27th consecutive 

year. The auditors concluded that FCA’s financial statements are presented fairly, in all material respects, 

and in accordance with U.S. generally accepted accounting principles.

As part of the financial audit, the auditors assessed our internal controls over financial reporting and 

compliance with selected provisions of applicable laws, regulations, and contracts that are material to 

the financial statements. No material weaknesses or significant deficiencies were reported.

During fiscal year 2020, our leadership and staff remained committed to sound financial management 

practices while supporting and ensuring the safety of our employees as well as the ongoing safety and 

soundness of the Farm Credit System institutions through the unprecedented COVID-19 pandemic.

Our investments in technology had prepared us for the transition to telework for all FCA employees in 

March 2020. We continued to operate effectively and efficiently during the second half of fiscal year 2020, 

while complying with federal guidelines and state mandates regarding the evolving pandemic.

To protect the safety and health of our employees, we suspended all travel for institution examinations in 

March 2020. Our examiners continued to monitor and evaluate risk in the Farm Credit System remotely. 

With lower operating expenses, we reduced the assessment amount to the Farm Credit System institutions to further support the agriculture community.

With statewide stay-at-home mandates in place, many employees canceled or postponed their scheduled 

leave, which resulted in a significant increase in our leave liability. We actively monitored our leave accrued and reallocated funds accordingly to address the unanticipated increase in our leave liability. 

During the pandemic, we have continued to make significant investments in employee recruitment and 

retention consistent with our strategic human capital plans. We have also made additional investments in 

training and development opportunities for our employees. 

We will continue to operate in a safe and sound manner and ensure agency resources are used appropriately throughout the COVID-19 health crisis. We will continue to comply with federal guidance to support 

our employees and the Farm Credit System. Our top priority continues to be our core mission: ensuring 

that the Farm Credit System meets the needs of our nation’s farmers, ranchers, and rural communities.

I would like to thank all the FCA financial personnel, as well as the staff from other offices who worked 

with them, for their conscientious management of agency resources. Our shared commitment to ensuring accountability and transparency in the execution of our fiduciary duties is the foundation of our 

strong stewardship and ability to deliver reliable financial information to our stakeholders.

Sincerely,

Stephen G. Smith

Chief Financial Officer
48 | FCA Performance and Accountability Report — 2020

Transmittal Letter of Auditor’s Report

1501 Farm Credit Drive, McLean, VA 22102 703-883-4030 www.fca.gov/about/inspector-general

November 12, 2020

The Honorable Glen R. Smith, Board Chairman and Chief Executive Officer

The Honorable Jeffery S. Hall, Board Member

Farm Credit Administration

1501 Farm Credit Drive

McLean, VA 22102-5090

Dear Chairman Smith and Board Member Hall:

We contracted with the independent public accounting firm Harper, Rains, Knight & Company 

P.A. (HRK) to audit the financial statements of the Farm Credit Administration (FCA) as of and for 

the fiscal years ended September 30, 2020 and 2019 and to provide a report on internal control 

over financial reporting and compliance with laws and other matters. The contract required that 

the audit be performed in accordance with Government Auditing Standards, Office of Management 

and Budget audit guidance, and the U.S. Government Accountability Office/Council of the 

Inspectors General on Integrity and Efficiency’s Financial Audit Manual.

In its audit of FCA, HRK reported:

• the financial statements were fairly presented, in all material respects, in accordance with 

U.S. generally accepted accounting principles;

• no material weaknesses in internal control over financial reporting and compliance with 

laws and other matters; and

• no reportable noncompliance with provisions of laws tested or other matters.

In connection with the contract, we reviewed HRK’s report and related documentation and 

inquired of its representatives. Our review, as differentiated from an audit of the financial 

statements in accordance with U.S. generally accepted government auditing standards, was not 

intended to enable us to express, and we do not express, opinions on FCA’s financial statements 

or conclusions about the effectiveness of internal control over financial reporting, or on 

compliance with laws and other matters. HRK is responsible for the attached auditor’s report dated 

November 10, 2020, and the conclusions expressed therein. However, our review disclosed no 

instances where HRK did not comply, in all material respects, with Government Auditing Standards.
FCA Performance and Accountability Report — 2020 | 49

1501 Farm Credit Drive, McLean, VA 22102 703-883-4030 www.fca.gov/about/inspector-general

Respectfully,

Sonya K. Cerne 

Assistant Inspector General for Audits, Inspections, and Evaluations

cc: Wendy R. Laguarda

Inspector General

Enclosure
50 | FCA Performance and Accountability Report — 2020

Independent Auditor’s Report

Independent Auditors' Report

FCA Board and Inspector General

Farm Credit Administration

Report on the Financial Statements

We have audited the accompanying financial statements of the Farm Credit Administration (FCA). FCA's 

financial statements comprise the balance sheets as of September 30, 2020 and 2019, and the related 

statements of net cost and changes in net position, and statements of budgetary resources, for the fiscal 

years then ended; and the related notes to the financial statements. 

Management's Responsibility

FCA's management is responsible for (1) the preparation and fair presentation of these financial statements 

in accordance with accounting principles generally accepted in the United States of America; (2) 

preparing, measuring, and presenting the Required Supplementary Information (RSI) in accordance with 

accounting principles generally accepted in the United States of America; (3) preparing and presenting 

other information included in documents containing the audited financial statements and auditors' report, 

and ensuring the consistency of that information with the audited financial statements and the RSI; and 

(4) maintaining effective internal control over financial reporting, including the design, implementation, 

and maintenance of internal control relevant to the preparation and fair presentation of financial statements 

that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements 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 Office of Management and Budget (OMB) Bulletin 19-03, 

Audit Requirements for Federal Financial Statements. Those standards and OMB require that we plan and 

perform the audit to obtain reasonable assurance about whether the financial statements are free from 

material misstatement. We are also responsible for applying certain limited procedures to RSI and other 

information included with the financial statements.

An audit of financial statements involves performing procedures to obtain audit evidence about the 

amounts and disclosures in the financial statements. The procedures selected depend on the auditors'

judgment, including the auditors' assessment of the risks of material misstatement of the financial 

statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal 
FCA Performance and Accountability Report — 2020 | 51

The FCA Board and Inspector General

Farm Credit Administration (continued)

Auditors' Responsibility (continued)

control relevant to the entity's preparation and fair presentation of the financial statements in order to 

design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an 

opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An 

audit of financial statements also involves evaluating the appropriateness of the accounting policies used 

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

the overall presentation of the financial statements. Our audits also included performing such other 

procedures as we considered necessary in the circumstances.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for 

our audit opinion.

Opinion on the Financial Statements

In our opinion, FCA's financial statements present fairly, in all material respects, FCA's financial position 

as of September 30, 2020 and 2019, and its net cost of operations, changes in net position, and budgetary 

resources for the fiscal years then ended, in accordance with accounting principles generally accepted in 

the United States of America.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America issued by the Federal 

Accounting Standards Advisory Board (FASAB) require that the information in the Management's 

Discussion and Analysis be presented to supplement the financial statements. Such information, although 

not a part of the financial statements, is required by FASAB who considers this information to be an 

essential part of financial reporting for placing the financial statements in appropriate operational, 

economic, or historical context. We have applied certain limited procedures to the RSI in accordance with 

auditing standards generally accepted in the United States of America, which consisted of inquiries of 

management about the methods of preparing the RSI and comparing the information for consistency with 

management's responses to the auditors' inquiries, the financial statements, and other knowledge we 

obtained during the audit of the financial statements, in order to report omissions or material departures 

from FASAB guidelines, if any, identified by these limited procedures. We did not audit, and we do not 

express an opinion or provide any assurance on the RSI because the limited procedures we applied do not 

provide sufficient evidence to express an opinion or provide any assurance.

Other Information

Our audit was conducted for the purpose of forming an opinion on FCA's financial statements. The 

information in the Statement of Board Chairman and CEO, Statement of Chief Financial Officer, FCA 

Performance Report, and Other Information section contains a wide range of information, some of which 

is not directly related to the financial statements. This information is presented for purposes of additional
52 | FCA Performance and Accountability Report — 2020

The FCA Board and Inspector General

Farm Credit Administration (continued)

Other Information (continued)

analysis and is not a required part of the financial statements or the RSI. We read the other information 

included with the financial statements in order to identify material inconsistencies, if any, with the audited 

financial statements.

The Statement of Board Chairman and CEO, Statement of Chief Financial Officer, Program Performance, 

and Other Information section has not been subjected to the auditing procedures applied in the audit of 

the financial statements, and accordingly, we do not express an opinion or provide any assurance on it.

Other Reporting Required by Government Auditing Standards

Internal Control over Financial Reporting

In planning and performing our audit of FCA's financial statements as of and for the year ended 

September 30, 2020, in accordance with U.S. generally accepted government auditing standards and OMB 

Bulletin 19-03, Audit Requirements for Federal Financial Statements, we considered the entity's internal 

control over financial reporting as a basis for designing audit procedures that are appropriate in the 

circumstances for the purpose of expressing our opinion on the financial statements, but not for the 

purpose of expressing an opinion on the effectiveness of the entity's internal control over financial 

reporting. Accordingly, we do not express an opinion on the entity's internal control over financial 

reporting. We did not consider all internal controls relevant to operating objectives as broadly established 

by the Federal Managers' Financial Integrity Act of 1982, such as those controls relevant to preparing 

performance information and ensuring efficient operations. We are required to report all deficiencies that 

are considered to be significant deficiencies or material weaknesses.

A deficiency in internal control exists when the design or operation of a control does not allow 

management or employees, in the normal course of performing their assigned functions, to prevent, or 

detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination 

of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement 

of the entity's financial statements will not be prevented or detected and corrected on a timely basis. A 

significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe 

than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over financial reporting was for the limited purpose described in the 

preceding paragraph and was not designed to identify all deficiencies in internal control over financial 

reporting that might be material weaknesses or significant deficiencies, and therefore, material weaknesses 

or significant deficiencies may exist that were not identified. Given these limitations, during our audit, we 

did not identify any deficiencies in internal control over financial reporting that we consider to be material 

weaknesses. However, material weaknesses may exist that have not been identified.
FCA Performance and Accountability Report — 2020 | 53

The FCA Board and Inspector General

Farm Credit Administration (continued)

Compliance and Other Matters

As part of obtaining reasonable assurance about whether FCA's financial statements are free from material 

misstatement, we performed tests of its compliance with selected provisions of applicable laws, 

regulations, contracts, and grant agreements, noncompliance with which would have a direct and material 

effect on the financial statements. We performed our tests of compliance in accordance with U.S. generally 

accepted government auditing standards and OMB Bulletin 19-03, Audit Requirements for Federal 

Financial Statements. We caution that noncompliance may occur and not be detected by these tests.

Management is responsible for complying with laws, regulations, contracts, and grant agreements 

applicable to the entity.

Our responsibility is to test compliance with selected provisions of applicable laws, regulations, contracts, 

and grant agreements applicable to the entity that have a direct effect on the determination of material 

amounts and disclosures in the entity's financial statements and perform certain other limited procedures. 

Accordingly, we did not test compliance with all laws, regulations, contracts, and grant agreements 

applicable to FCA.

Our tests for compliance with selected provisions of applicable laws, regulations, contracts, and grant 

agreements disclosed no instances of noncompliance for fiscal year 2020 that would be reportable under 

U.S. generally accepted government auditing standards or OMB Bulletin 19-03, Audit Requirements for 

Federal Financial Statements. However, the objective of our tests was not to provide an opinion on 

compliance with laws, regulations, contracts, and grant agreements applicable to FCA. Accordingly, we 

do not express such an opinion.

Purpose of the Other Reporting Required by Government Auditing Standards

The purpose of the communication described in the Other Reporting Required by Government Auditing 

Standards section is solely to describe the scope of our testing of internal control and compliance and the 

result of that testing, and not to provide an opinion on the effectiveness of FCA's internal control or 

compliance. These reports are an integral part of an audit performed in accordance with U.S. generally 

accepted government auditing standards in considering the entity's internal control and compliance. 

Accordingly, this communication is not suitable for any other purpose.

November 10, 2020
54 | FCA Performance and Accountability Report — 2020

Financial Statements

We have prepared the accompanying financial statements in accordance with U.S. generally accepted accounting principles and with the Office of Management and Budget Circular A-136, as amended. For comparison purposes, we present our financial statements and notes for FY 2020 and FY 2019. All amounts 

are in whole dollars. Our financial statements include the following:

• Balance sheets, which show our assets, our liabilities, and our net position (assets minus liabilities).

• Statements of net cost, which show our net cost of operations. We calculate our net costs by subtracting from our gross costs any revenue we earn. We break the statement of net cost into three program 

components: public mission, safety and soundness, and other activity.

• Statements of changes in net position, which show the changes in our net position over the two-year 

period ending Sept. 30, 2020.

• Statements of budgetary resources, which show our resources, the status of our resources, and the 

outlay of resources during the fiscal year.

• Notes to the financial statements, which clarify and provide additional detail regarding the amounts in 

the financial statements.

Not all the statements mentioned in Circular A-136 apply to our agency. For this reason, we do not include a statement of custodial activity, a statement of social insurance, or a statement of changes in social 

insurance amounts.
FCA Performance and Accountability Report — 2020 | 55

Balance sheets

As of Sept. 30, 2020 and 2019 

(In dollars)

Balance sheet 

categories

Line item description 2020 2019

Assets Intragovernmental

Fund balance with Treasury (note 2) $4,204,180 $1,388,463

Investments (note 3) 34,471,697 34,614,229

Accounts receivable (note 4) 31,007 7,516

Prepaid expenses 2,396 0

Total intragovernmental 38,709,280 36,010,208

Accounts receivable (note 4) 13,009 150,342

General property, equipment, and software, net 

(note 5)

1,803,072 1,173,085

Prepaid expenses 214,821 289,945

Total assets $40,740,182 $37,623,580

Liabilities Intragovernmental

Accounts payable $132,622 $37,859

Accrued post-employment compensation 30,231 35,914

Employer contributions and payroll taxes payable 695,654 549,182

Other (note 7) 0 132

Total intragovernmental 858,507 623,087

Accounts payable 384,890 726,614

Actuarial workers’ compensation liability (note 6) 1,481,359 1,595,070

Accrued payroll and benefits 8,192,979 7,659,548

Employer contributions and payroll taxes payable 595,999 544,827

Deferred revenue 6,331,840 5,572,620

Total liabilities (note 6) $17,845,574 $16,721,766

Net position Cumulative results of operations $22,894,608 $20,901,814

Total net position 22,894,608 20,901,814

Total liabilities and net position $40,740,182 $37,623,580

The accompanying notes are an integral part of these statements.
56 | FCA Performance and Accountability Report — 2020

Statements of net cost

For the years ended Sept. 30, 2020 and 2019 

(In dollars)

Agency programs Program costs 2020 2019

Public mission Gross costs $19,014,091 $20,472,180

Less: Earned revenue (18,082,433) (18,833,677)

Net program cost $931,658 $1,638,503

Safety and soundness Gross costs $58,420,531 $59,441,216

Less: Earned revenue (55,535,650) (54,672,029)

Net program cost $2,884,881 $4,769,187

Other activity Gross costs $781,411 $1,005,507

Less: Earned revenue (504,831) (668,273)

Net program cost $276,580 $337,234

Net cost of operations (note 8 and note 13) $4,093,119 $6,744,924

The accompanying notes are an integral part of these statements.
FCA Performance and Accountability Report — 2020 | 57

Statements of changes in net position

For the years ended Sept. 30, 2020 and 2019 

(In dollars)

Cumulative results of operations 2020 2019

Beginning balances $20,901,814 $20,523,940

Other financing 

sources 

(Non-exchange)

Imputed financing sources

Federal employee benefits (note 9) 2,435,913 3,472,798

Rent (note 9) 3,650,000 3,650,000

Total financing sources 6,085,913 7,122,798

Net cost of operations (4,093,119) (6,744,924)

Net change 1,992,794 377,874

Cumulative results of operations $22,894,608 $20,901,814

Net position $22,894,608 $20,901,814

The accompanying notes are an integral part of these statements.
58 | FCA Performance and Accountability Report — 2020

Statements of budgetary resources

For the years ended Sept. 30, 2020 and 2019 

(In dollars)

Statement of budgetary 

resources categories

Line item description 2020 2019

Budgetary resources Unobligated balance from prior year budget 

authority, net

$21,427,515 $21,951,094

Spending authority from offsetting collections 74,878,764 73,430,739

Total budgetary resources (note 11) $96,306,279 $95,381,833

Status of budgetary 

resources

New obligations and upward adjustments 

(total)

$73,181,829 $73,954,318

Unobligated balance, end of year

Exempt from apportionment, unexpired 

accounts

16,792,610 15,854,895

Exempt from apportionment, not available 6,331,840 5,572,620

Unobligated balance, end of year (total) 23,124,450 21,427,515

Total budgetary resources (note 11) $96,306,279 $95,381,833

Outlays, net Outlays, net (total) (2,630,675) (264,710)

Agency outlays, net (note 13) $(2,630,675) $(264,710)

The accompanying notes are an integral part of these statements.
FCA Performance and Accountability Report — 2020 | 59

Notes to the financial statements

Note 1. Significant accounting policies

A. Reporting entity — We are an independent agency in the executive branch of the U.S. government. We 

are responsible for regulating and supervising the Farm Credit System (its banks, associations, and 

related entities) and the Federal Agricultural Mortgage Corporation (Farmer Mac). Specifically, we are 

empowered to ensure safe and sound operations of all System institutions. Initially created by an executive order of the president in 1933, FCA now derives its power and authority from the Farm Credit Act 

of 1971, as amended. The act requires us to periodically examine System institutions. Policymaking 

for FCA is vested in a full-time, three-person board whose members are appointed by the president 

with the advice and consent of the Senate. 

While FCA’s board members also serve as the board of directors for the Farm Credit System Insurance 

Corporation (FCSIC), FCSIC is a separate independent agency from the Farm Credit Administration. 

FCSIC was established by the Agricultural Credit Act of 1987 in the wake of the agricultural credit crisis of the 1980s. The purpose of FCSIC is to protect investors in Systemwide debt securities by insuring 

the timely payment of principal and interest on obligations issued by FCS banks. FCSIC does so by 

maintaining the Farm Credit Insurance Fund, a reserve that represents the equity of FCSIC. 

B. Basis of accounting and presentation — The financial statements have been prepared in accordance 

with OMB Circular No. A-136, as amended. In addition, the financial statements have been prepared 

on an accrual basis from our books and records in accordance with generally accepted accounting 

principles and the Statements of Federal Financial Accounting Standards (SFFAS) prescribed by the 

Federal Accounting Standards Advisory Board, the official body for setting accounting standards 

for the federal government. Under the accrual method, revenues are recognized when earned, and 

expenses are recognized when goods or services are received, without regard to receipt of funds or 

payment of cash. FCA is not subject to apportionment. Budgetary accounting has been applied to facilitate compliance with legal constraints and control over the use of funds.

C. Fund balance with Treasury — We maintain a revolving, no-year account with the U.S. Treasury 

through which cash receipts and disbursements are processed. We do not receive appropriated funds. 

See note 2.

D. Investments — The Farm Credit Act gives us the authority to invest in public debt securities with 

maturities suitable to our needs. We invest solely in U.S. Treasury securities, which are normally held 

to maturity and carried at cost. Investments are adjusted for unamortized premiums or discounts. 

Premiums and discounts are amortized and interest is accrued using the level-yield, scientific method 

of effective interest amortization over the term of the respective issues. We use interest earned on 

investments to build and maintain an agency reserve, which allows us to respond effectively and efficiently to unexpected, unbudgeted expenses without increasing assessments. See note 3.

E. Accounts receivable — Accounts receivable are composed of 

• reimbursements for FCA administrative expenses according to agreements with other federal entities,

• assessments from institutions in accordance with the Farm Credit Act and FCA regulations, and

• amounts owed FCA that are generated through the normal course of business with employees and 

vendors.
60 | FCA Performance and Accountability Report — 2020

Amounts due from federal agencies are considered fully collectible. An allowance for uncollectible 

amounts receivable from the public is established when we have determined that the collection is unlikely to occur after considering the debtor’s ability to pay.

The Office of the Chief Financial Officer, in conjunction with the agency’s accounting service provider, 

the Bureau of the Fiscal Service, reviews the agency’s accounts receivable on a regular basis. We have 

determined that all accounts receivable as of Sept. 30, 2020, are fully collectible. See note 4.

F. Advances and prepaid expenses — Payments made before the receipt of goods and services are recorded as advances or prepaid expenses at the time of prepayment and are recognized as expenses 

when the goods and services are received. This process helps to minimize large dollar fluctuations 

in cost and provides for the recognition of cost based on use. When the prepayment amount has 

minimal impact on cost, it is more cost-effective to expense the advance or prepayment at the time of 

payment. We establish advances for prepaid maintenance agreements over $20,000 and for prepaid 

training exceeding $15,000.

G. General property, equipment, and software — Property (including vehicles), equipment, and software 

are recorded at cost, net of an allowance for accumulated depreciation. Repairs and maintenance 

costs are expensed as incurred. We capitalize all property and equipment with itemized costs of 

$50,000 or more and a useful life of two years or more. We also capitalize groups of items that individually are under $50,000 but together meet the bulk purchase criteria of $500,000 or more. We capitalize software when its costs exceed $250,000 and when the software has a useful life of two years or 

more. We use the straight-line method of depreciation with half-year convention to allocate the cost of 

capitalized property, equipment, or software over its estimated useful life. See note 5.

H.Accounts payable — Accounts payable consist of amounts owed to other federal agencies and the 

public. We strive to make payments in a timely manner in accordance with the Prompt Payment Act. 

If payments are late, we pay interest penalties.

I. Liabilities — Liabilities may or may not be covered by budgetary or other resources. All our liabilities 

are covered by budgetary resources except for the actuarial workers’ compensation liability (see note 

6). Intragovernmental liabilities are claims against us by other federal agencies.

J. Inter-entity costs — Goods and services are received from other entities at no cost or at a cost less 

than full cost to the providing entity. Consistent with accounting standards, certain costs of the providing entity that are not fully reimbursed by FCA are recognized as imputed cost on the statement of 

net cost and are offset by imputed revenue on the statement of changes in net position. FCA’s inter-entity costs that are reported as imputed costs include federal employee benefits and rent. See note 9.

K. Annual, sick, and other leave — Annual leave, compensatory leave, credit hours, and some other 

types of leave are accrued as a funded liability when earned, with an offsetting reduction for leave 

taken. The accrued leave liability for each of these types of leave is calculated using current pay rates. 

Sick leave and other types of nonvested leave are expensed as the leave is taken. Our methodology 

for calculating the leave liability includes the cost of benefits associated with the compensation. 

This ensures that our estimated liability for leave reflects the current composition of our staff; most 

of our employees are under the Federal Employees Retirement System instead of the Civil Service 

Retirement System.

L. Assessments — A substantial portion of our revenues is based on direct assessments billed to the 

System institutions we regulate or examine. We also recognize revenues based on examination 

services provided by the Office of Examination. We use a formula established in our regulations to 
FCA Performance and Accountability Report — 2020 | 61

calculate assessments. We base each institution’s assessment, in part, on its average risk-adjusted assets and its overall financial health.

M.Deferred revenue — Any funds received before the beginning of the new fiscal year are considered 

unearned revenue and are reported as deferred revenue on the balance sheet. These amounts are also 

reported as “exempt from apportionment, not available” on the statement of budgetary resources.

N. Use of estimates — We have made certain estimates and assumptions when reporting assets, liabilities, revenue, and expenses; we have also made estimates and assumptions in the note disclosures. 

Actual results could differ from these estimates. Some estimates include year-end accruals and accrued workers compensation.

O. Financial data — All amounts presented in this report are in whole dollars.

P. Reclassifications — Certain amounts presented in the prior years have been reclassified to conform 

to the current period financial statement presentation. These reclassifications have no effect on previously reported net position or budgetary resources.

Q. Classified activities — Accounting standards require all reporting entities to disclose that accounting 

standards allow certain presentations and disclosures to be modified, if needed, to prevent the disclosure of classified information. FCA does not have any classified activities. 

Note 2. Fund balance with Treasury

Line item description 2020 2019

Status of fund balance with Treasury

Unobligated balance

Available $16,792,610 $15,854,895

Unavailable 6,331,840 5,572,620

Obligated balance not yet disbursed 15,227,056 14,293,317

Subtotal — Status of fund balance 38,351,506 35,720,832

Funds invested with Treasury, net of unamortized discount (34,147,326) (34,332,369)

Total fund balance with Treasury $4,204,180 $1,388,463

The fund balance with Treasury is an asset account that shows our available cash. The balance in the 

account increases as we collect funds and decreases as we disburse funds. The status of our fund balance with Treasury may be classified as unobligated available, unobligated unavailable, or obligated. 

Unobligated available amounts represent funds available for incurring new obligations. The unobligated 

unavailable amounts include funds not yet available for use and represent the amount of new fiscal year 

assessments received before Oct. 1. These unavailable amounts are also classified as deferred revenue on 

the balance sheet. Amounts noted as “obligated balance not yet disbursed” represent amounts designated 

for payment of goods and services received and not yet paid.

Unobligated balances noted above agree with unobligated balances reported on the Statement of 

Budgetary Resources.
62 | FCA Performance and Accountability Report — 2020

All our funds invested with Treasury are in U.S. Treasury securities.

Note 3. Investments

Amounts for 2020 balance sheet reporting

Intragovernmental 

securities Cost

Amortized 

(premium) 

discount

Investments, 

net

Interest 

receivable

9/30/20 

Investment 

balance

Market value 

disclosure

Nonmarketable: 

market-based

$34,329,817 $40,783 $34,370,600 $101,097 $34,471,697 $34,585,814

Amounts for 2019 balance sheet reporting

Intragovernmental 

securities

Cost Amortized 

(premium) 

discount

Investments, 

net

Interest 

receivable

9/30/19 

Investment 

balance

Market value 

disclosure

Nonmarketable: 

market-based

$34,345,472 $178,865 $34,524,337 $89,892 $34,614,229 $34,611,584

Premiums and discounts are amortized, and interest is accrued using the level-yield, scientific method 

of effective interest amortization over the term of the respective issues. Interest revenue on investments 

was $617,438 and $805,339 for FYs 2020 and 2019, respectively.

Note 4. Accounts receivable

Description 2020 2019

Intragovernmental

Reimbursements for services provided $31,007 $7,516

Subtotal 31,007 7,516

With the public

Reimbursements for services provided 12,300 146,536

Expenditure refunds 709 3,806

Subtotal 13,009 150,342

Total accounts receivable $44,016 $157,858

The intragovernmental receivables represent reimbursable services provided to USDA and FCSIC but 

unbilled as of Sept. 30. Receivables for services provided to the public represent uncollected amounts 

related to the cost of examining the National Consumer Cooperative Bank.

We do not have any uncollectible accounts receivable and therefore do not display any estimate for allowance for uncollectible accounts.
FCA Performance and Accountability Report — 2020 | 63

Note 5. General property, equipment, and software

As of Sept. 30, 2020

Type of asset Estimated 

useful life

Depreciation 

method

Acquisition 

value

Accumulated/Amortized 

depreciation

Book value

Equipment 3 years Straight line $1,641,722 $(876,603) $765,119

Equipment 5 years Straight line 498,326 (339,262) 159,064

Equipment 10 years Straight line 305,304 (167,440) 137,864

Internal use 

software

5 years Straight line 1,270,813 (779,016) 491,797

Software in 

development

249,228 0 249,228

Total $3,965,393 $(2,162,321) $1,803,072

As of Sept. 30, 2019

Type of asset Estimated 

useful life

Depreciation 

method

Acquisition 

value

Accumulated/Amortized 

depreciation

Book value

Equipment 3 years Straight line $723,580 $(723,580) $0

Equipment 5 years Straight line 498,326 (239,595) 258,731

Equipment 10 years Straight line 305,304 (136,910) 168,394

Internal use 

software

5 years Straight line 1,270,813 (524,853) 745,960

Total $2,798,023 $(1,624,938) $1,173,085

Capitalization thresholds for property and equipment are $50,000 per individual asset and $500,000 for bulk purchase of equipment. Capitalized internal use software is capitalized when costs exceed $250,000.
64 | FCA Performance and Accountability Report — 2020

Note 6. Liabilities not covered by budgetary resources (actuarial workers’ compensation liability)

We record an unfunded liability (liability not covered by budgetary resources) for the actuarial liability under the 

Federal Employees’ Compensation Act (FECA). The actuarial FECA liability is the estimated liability for future 

benefit payments and is recorded as a component of federal employee benefits. The actuarial liability estimate 

for benefits under FECA includes the expected liability for costs associated with death, disability, and medical 

care for approved compensation cases. The estimate also includes costs associated with incurred but unreported 

claims.

The Department of Labor estimates future workers’ compensation liability for specified entities that are preparing statements under the Chief Financial Officers Act and the Government Management Reform Act. Because we 

are not one of the entities for which the Department of Labor provides individual estimates on a routine basis, we 

calculated our estimated FECA actuarial liability amount by using the Department of Labor’s FY 2020 model.

Liability description 2020 2019

Federal Employees’ Compensation Act actuarial liability $1,481,359 $1,595,070

Total liabilities not covered by budgetary resources 1,481,359 1,595,070

Total liabilities covered by budgetary resources 16,364,215 15,126,696

Total liabilities $17,845,574 $16,721,766

Note 7. Other liabilities

The other liabilities represented on the balance sheet for FY 2019 are custodial liabilities, which were amounts to 

be collected on behalf of the General Fund of the U.S. Government. The amounts we show on our balance sheet 

for 2019 were from interest and penalties levied on outstanding accounts receivable.
FCA Performance and Accountability Report — 2020 | 65

Note 8. Suborganization program costs

The following tables provide a detailed breakout of the statement of net cost for each of the fiscal years 

ended 2020 and 2019. We display our cost and earned revenue amounts by office within each program.

For the year ended Sept. 30, 2020

Agency 

programs

Program costs Office of 

Examination

Office of 

Regulatory 

Policy

Office of 

Secondary 

Market 

Oversight

Other 

offices

Total

Public 

mission

Gross costs $425,969 $5,224,056 $418,921 $12,945,145 $19,014,091

Less: Earned 

revenue

(405,721) (4,975,737) (369,980) (12,330,995) (18,082,433)

Net program cost 20,248 248,319 48,941 614,150 931,658

Safety and 

soundness

Gross costs 36,805,731 607,834 1,502,976 19,503,990 58,420,531

Less: Earned 

revenue

(35,038,185) (577,690) (1,335,685) (18,584,090) (55,535,650)

Net program cost 1,767,546 30,144 167,291 919,900 2,884,881

Other 

activity

Gross costs 181,268 86,778 535 512,830 781,411

Less: Earned 

revenue

(117,107) (56,063) (347) (331,314) (504,831)

Net program cost 64,161 30,715 188 181,516 276,580

Net cost of operations $1,851,955 $309,178 $216,420 $1,715,566 $4,093,119

For the year ended Sept. 30, 2019

Agency 

programs

Program costs Office of 

Examination

Office of 

Regulatory 

Policy

Office of 

Secondary 

Market 

Oversight

Other 

offices

Total

Public 

mission

Gross costs $755,454 $5,668,326 $564,309 $13,484,091 $20,472,180

Less: Earned 

revenue

(698,625) (5,243,131) (422,580) (12,469,341) (18,833,677)

Net program cost 56,829 425,195 141,729 1,014,750 1,638,503

Safety and 

soundness

Gross costs 38,989,922 1,257,124 1,519,556 17,674,614 59,441,216

Less: Earned 

revenue

(36,004,004) (1,157,338) (1,131,808) (16,378,879) (54,672,029)

Net program cost 2,985,918 99,786 387,748 1,295,735 4,769,187

Other 

activity

Gross costs 311,999 122,189 2,047 569,272 1,005,507

Less: Earned 

revenue

(207,358) (81,208) (1,361) (378,346) (668,273)

Net program cost 104,641 40,981 686 190,926 337,234

Net cost of operations $3,147,388 $565,962 $530,163 $2,501,411 $6,744,924
66 | FCA Performance and Accountability Report — 2020

Note 9. Inter-entity costs

Federal employee benefits

Benefit description 2020 2019

Imputed pension costs $251,324 $1,445,263

Other imputed retirement 

benefits

2,184,589 2,027,535

Total $2,435,913 $3,472,798

We report the amount of our pension expense and other retirement benefits in accordance with SFFAS 

No. 5, Accounting for Liabilities of the Federal Government. These expenses are treated as an imputed 

expense, which is recognized when amounts remitted to OPM are less than the full cost to the government. Corresponding amounts of imputed revenue are recorded to offset the imputed cost.

Pension expenses — Our employees are covered under the Civil Service Retirement System (CSRS) and 

the Federal Employees Retirement System (FERS) to which we make contributions according to plan 

requirements. CSRS and FERS are multiemployer plans. We do not maintain or report information about 

the assets of the plan, nor do we report actuarial data for accumulated plan benefits. The reporting of 

such amounts is the responsibility of OPM.

Other retirement benefit expenses — We also recognize an expense for the cost of providing health 

benefits and life insurance to our employees after they retire. OPM provides the factors used to calculate 

these costs.

Rent

FCA office description 2020 2019

Leased field offices $1,308,035 $1,380,013

FCA headquarters 2,341,965 2,269,987

Total $3,650,000 $3,650,000

In accordance with the Farm Credit Act, we occupy buildings owned and leased by the Farm Credit 

System Building Association (FCSBA). Our administrative headquarters building and land are in McLean, 

Virginia. In addition, the FCSBA leases office space for field offices on our behalf at various locations 

throughout the United States. Rent is provided at no cost to us. Our imputed rent expense is an estimate based on the FCSBA’s estimated budget for 2020. In accordance with SFFAS No. 4, Managerial Cost 

Accounting Concepts and Standards for the Federal Government, the rent expense and the associated 

imputed revenue are recorded as a nonmonetary transaction.
FCA Performance and Accountability Report — 2020 | 67

Note 10. Undelivered orders at the end of the period

As of Sept. 30, 2020, budgetary resources obligated for undelivered orders were as follows:

Type of undelivered orders Federal Nonfederal Total

Paid undelivered orders $2,396 $214,822 $217,218

Unpaid undelivered orders 371,847 5,359,200 5,731,047

Total undelivered orders $374,243 $5,574,022 $5,948,265

As of Sept. 30, 2019, budgetary resources obligated for undelivered orders were as follows:

Type of undelivered orders Federal Nonfederal Total

Paid undelivered orders $0 $289,945 $289,945

Unpaid undelivered orders 468,338 4,877,209 5,345,547

Total undelivered orders $468,338 $5,167,154 $5,635,492

Note 11. Explanation of differences between the Statement of Budgetary Resources and the 

budget of the U.S. government

SFFAS 7 requires the reporting of material differences between amounts reported in the Statement of 

Budgetary Resources and the actual amounts reported in the Budget of the United States Government.

There are no material differences between the amounts reported in the FY 2019 Statement of Budgetary 

Resources and the FY 2019 actual amounts reported in the FY 2021 Budget of the United States 

Government. The FY 2022 Budget of the United States is not yet available to compare the FY 2020 actual 

amounts to the FY 2020 Statement of Budgetary Resources. The budget is expected to be available in 

February 2021 at https://www.whitehouse.gov/omb/budget/.

Note 12. Incidental custodial collections

Our custodial collections include receipts to cover the costs of fulfilling Freedom of Information Act requests; they also include other receipts, such as interest and penalties. During the fiscal year, we include 

these collections in the Fund Balance with Treasury. However, since these collections are immaterial 

to the financial statements and incidental to our mission, we do not provide a Statement of Custodial 

Activity. Custodial collections totaled $199 for the period ended Sept. 30, 2020, and $215 for Sept. 30, 2019. 

The funds collected in FY 2020 were transferred to the Department of the Treasury at the end of FY 2020.

Note 13. Reconciliation of net cost to net outlays

As prescribed by SFFAS 53, Budget and Accrual Reconciliation, this note explains the relationship between our net outlays on a budgetary basis and the net cost of operations during the reporting period. It 

is a reconciliation between budgetary and financial accounting information. 

Budgetary and financial accounting information differ. Budgetary accounting is used for planning and 

control purposes and relates to both the receipt and use of cash. Because financial accounting is intended 
68 | FCA Performance and Accountability Report — 2020

to provide a picture of the government’s financial operations and financial position, it presents information on an accrual basis. The accrual basis includes information about costs arising from consuming 

assets and incurring liabilities. The analyses in the tables below illustrate this reconciliation by listing the 

key differences between net cost and net outlays.

For the year ended Sept. 30, 2020

Reconciling items Intragovernmental With the public Total

Net Operating Cost $19,645,808 $(15,552,689) $4,093,119

Components of net operating cost that are not part of budgetary outlays

Property, plant, and equipment 

depreciation 0 (537,382) (537,382)

Increase/(decrease) in assets

Accounts receivable 34,696 (137,202) (102,506)

Other assets 2,396 (75,123) (72,727)

Investments 31,306 0 31,306

(Increase)/decrease in liabilities not affecting budgetary outlays

Accounts payable (94,763) 341,724 246,961

Salaries and benefits (140,788) (582,516) (723,304)

Other liabilities 0 (647,597) (647,597)

Other financing sources

Federal employee retirement benefit 

costs (2,435,913) 0 (2,435,913)

Other imputed finance (3,650,000) 0 (3,650,000)

Total components of net operating cost that 

are not part of budgetary outlays (6,253,066) (1,638,096) (7,891,162)

Components of budgetary outlays that are not part of net operating cost 

Acquisition of capital assets 0 1,167,368 1,167,368

Other 0 0 0

Total components of budgetary outlays that 

are not part of net operating cost 0 1,167,368 1,167,368

Net outlays (calculated total) $13,392,742 $(16,023,417) $(2,630,675)

Related amounts on the Statement of Budgetary Resources

Outlays, gross (2,630,675)

Outlays, net $(2,630,675)
FCA Performance and Accountability Report — 2020 | 69

For the year ended Sept. 30, 2019

Reconciling items Intragovernmental With the public Total

Net Operating Cost $19,573,348 $(12,828,424) $6,744,924

Components of net operating cost that are not part of budgetary outlays

Property, plant, and equipment 

depreciation 0 (498,528) (498,528)

Increase/(decrease) in assets

Accounts receivable 1,953 65,933 67,886

Other assets 0 22,238 22,238

Investments 109,710 0 109,710

(Increase)/decrease in liabilities not affecting budgetary outlays

Accounts payable 11,566 584,051 595,617

Salaries and benefits (67,542) (430,533) (498,075)

Other liabilities (23) 250,066 250,043

Other financing sources

Federal employee retirement benefit costs (3,472,798) 0 (3,472,798)

Other imputed finance (3,650,000) 0 (3,650,000)

Total components of net operating cost that 

are not part of budgetary outlays (7,067,134) (6,773) (7,073,907)

Components of budgetary outlays that are not part of net operating cost 

Acquisition of capital assets 0 64,273 64,273

Other 238 (238) 0

Total components of budgetary outlays that 

are not part of net operating cost 238 64,035 64,273

Net outlays (calculated total) $12,506,452 $(12,771,162) $(264,710)

Related amounts on the Statement of Budgetary Resources

Outlays, gross (264,710)

Outlays, net $(264,710)

Note 14. COVID-19 activity

We did not use any significant amount of our budgetary resources to prevent, prepare for, or respond 

to COVID-19. We also did not receive any budgetary resources under any of the COVID-19 supplemental 

appropriations or other acts. 
70 | FCA Performance and Accountability Report — 2020

Other Information

This section includes the following additional reporting required 

by the Office of Management and Budget:

• A summary of the management challenges identified by our inspector general, which includes a description of each challenge 

along with an assessment of the agency’s actions to address 

those challenges

• Our response to the inspector general’s assessment

• A summary of our financial statement audit and management 

assurances

• Our actions to address Payment Integrity Act requirements

• An update on our annual adjustment on civil monetary penalties
FCA Performance and Accountability Report — 2020 | 71

Letter from Inspector General on FCA’s 

Management Challenges

October 9, 2020

The Honorable Glen R. Smith, Chairman and Chief Executive Officer

The Honorable Jeffery S. Hall, Board Member

Farm Credit Administration

1501 Farm Credit Drive 

McLean, Virginia 22102-5090

Dear Chairman Smith and Board Member Hall:

As part of the Farm Credit Administration’s (FCA or Agency) annual Performance and 

Accountability Report, the Reports Consolidation Act of 2000 requires Inspectors General to 

provide a summary perspective on the most serious management and performance challenges 

facing the Agency. We solicited the FCA Board and management for thoughts on this issue and 

identified the following top five management challenges:

1. Examination and Supervision Program

2. Information Technology

3. Data Quality and Analysis

4. Human Capital

5. Secondary Market Oversight

This year we incorporated challenges posed by the COVID-19 pandemic into each of the above 

challenges, as appropriate. 

We appreciate the continued, ongoing support of Agency leadership. We will continue to work 

with you in addressing these and other challenges faced by the Agency in achieving FCA’s 

mission. If you have any questions, please call me at (703) 883-4234.

Sincerely,

Wendy R. Laguarda

Inspector General
72 | FCA Performance and Accountability Report — 2020

Management Challenges

Farm Credit Administration

Office of Inspector General

October 9, 2020
FCA Performance and Accountability Report — 2020 | 73

1 | P a g e 

MANAGEMENT CHALLENGES

As part of the Farm Credit Administration’s (FCA or Agency) annual Performance and Accountability Report, 

the Reports Consolidation Act of 2000 requires Inspectors General to provide a summary perspective on the 

most serious management and performance challenges facing the Agency. These challenges reflect ongoing 

vulnerabilities identified by the Office of Inspector General (OIG) over recent years as well as new and emerging 

issues that the FCA faces. The chart below summarizes the top management challenges. The pages following 

the chart provide more depth regarding each challenge and the Agency’s progress in addressing them.

•Identifying and addressing risks in the Farm Credit System through effective 

examination and supervision to ensure it remains safe and sound.

Examination and Supervision Program

•Leveraging investments in information technology while maintaining a secure 

environment and mobile workforce.

Information Technology

•Obtaining consistent and quality data vital to the Farm Credit Administration's mission. 

Data Quality and Analysis

•Maintaining a safe, well-trained, and sustainable workforce while facing challenges in 

retirement eligibilities, workforce retention, and diversity.

Human Capital

•Providing effective and impartial oversight of the Federal Agricultural Mortgage 

Corporation through the Farm Credit Administration's Office of Secondary Market 

Oversight. 

Secondary Market Oversight
74 | FCA Performance and Accountability Report — 2020

2 | P a g e 

CHALLENGE ONE: EXAMINATION AND SUPERVISION PROGRAM

A significant challenge for FCA lies in identifying and addressing risks in the Farm Credit System (FCS or 

System) through effective examination and supervision to ensure the System remains safe and sound.

Although the System remains financially sound, it continues to be impacted by changing risk conditions. This 

year, the COVID-19 pandemic has had a swift and substantial impact on the global economy. Disruptions to 

employees, markets, transportation, and other factors have yielded significant volatility and uncertainty,

creating new and increased risks in the System. In addition to the pandemic, this year has brought significant 

natural disasters, which increase stress to borrowers in affected areas. These unprecedented challenges require 

FCS institutions to be increasingly proactive and responsive to risks in the System. Working with borrowers 

and adapting to increasing risks, while maintaining financial capacity, will further increase the complexity of 

the System.

FCA’s examination and supervision program will face new challenges to align with evolving threats, risks, and 

conditions. As a result of the COVID-19 pandemic, FCA directed most of its workforce to telework, suspended 

onsite examinations, and restricted business travel and in-person training. Within this new environment, FCA 

will need to continue its risk-based approach to oversight of the System. The Agency will require more 

sophisticated risk evaluation techniques to align with emerging risk factors and identify and deter 

consequences with the greatest potential impact. Effective oversight will require using new technologies and 

developing new skill sets within the Agency to adapt to challenges, such as the challenges the System faces 

with the London Interbank Offered Rate (LIBOR) phase out. The control environment must also adapt to 

address increasing expectations associated with internal controls.

More serious or persistent weaknesses require additional oversight activities. FCA must respond and intervene, 

when necessary, to protect the System. Effective examination and supervision require prompt identification of 

unacceptable risks. Both internal and external factors can cause significant changes in condition in a short 

period of time. Corrective actions and follow-up are critical to preventing the escalation of issues that impact 

safety and soundness. The Agency must be agile to monitor and prevent such conditions to protect the 

System.

Agency Progress

FCA continuously works to address the challenges of its examination and supervision roles and responsibilities. 

The Office of Examination (OE) has issued Informational Memoranda (IM) with guidance for institutions.

The Agency issued an IM titled, Guidance for System Institutions Affected by the COVID-19 Pandemic (May 4, 

2020), which addressed working with borrowers; meeting capital and liquidity requirements; complying with 

financial reporting requirements; and managing operational and other issues. The guidance also included 

supplements addressing troubled debt restructurings; 2020 annual meeting and election activities; flood 

insurance requirements; consumer financial protection; regulatory capital requirements for Paycheck 

Protection Program (PPP) loans and PPP loans pledged to the PPP Liquidity Facility; and electronic delivery of 

borrower rights notices. OE issued an IM on the Coronavirus Aid, Relief, and Economic Security Act (CARES 

Act) requirements that may impact institutions, CARES Act Requirements and COVID-19 Related Compliance 

Guidance from the Consumer Financial Protection Bureau (May 14, 2020). The Office of Regulatory Policy issued 

an IM, Guidance on the Paycheck Protection Program for Small Businesses Affected by the COVID-19 Pandemic

(July 14, 2020) with guidance on the PPP, which authorized forgivable loans to small businesses to support 

payroll and certain other needs during the COVID-19 pandemic.
FCA Performance and Accountability Report — 2020 | 75

3 | P a g e 

On January 9, 2020, the Agency issued a Bookletter, Interest Rate Risk Management, to provide clarification 

and guidance to System institutions on an effective interest rate risk management framework.

Each year, OE identifies National Oversight Plan risk topics that are emphasized in ongoing examinations and 

oversight activities. OE identified three risk topics for fiscal year 2020: risk identification in stressed industries 

and institutions’ lending controls; board governance over internal controls, with a focus on the internal audit 

program; and cybersecurity and emerging information technology-related threats.

Relevant OIG Work

FCA’s OIG completed an audit on FCA’s criminal referral process. The objective of the audit was to determine 

whether FCA’s criminal referral and follow-up process is effective and efficient. FCA established regulations on 

criminal referral requirements and had processes in place to enable examination staff to access criminal referral 

information. However, we identified opportunities to improve the overall effectiveness and efficiency of 

collecting, storing, and analyzing criminal referrals. We made seven recommendations to the Agency to 

improve the criminal referral process. In response to our recommendations the Agency agreed to:

• Update policies and procedures; 

• Complete a Privacy Impact Assessment and update the System of Records Notice for criminal referrals;

• Review and update processes for criminal referral reviews;

• Minimize the storage and visibility of Personally Identifiable Information in criminal referrals;

• Determine whether additional resources are needed to educate the System on criminal referral 

activities and trends;

• Add potential loss and insider information fields to the criminal referral listing; and

• Evaluate and identify ways to enhance the capture of criminal referral data and the presentation of 

related statistics.

The OIG also plans to address other challenges faced by the examination and supervision program, including 

a review of the Agency’s examination staff scheduling and rotation, OE recruiting, and the similar entity lending 

oversight process.

CHALLENGE TWO: INFORMATION TECHNOLOGY

A significant management challenge for FCA is the ability to leverage investments in information technology 

(IT) while maintaining a secure environment.

Cybersecurity threats and vulnerabilities present significant challenges across the federal government. These 

challenges require an IT security program that is responsive, agile, and forward-looking. The prevalence of 

cybersecurity threats and risks have been highlighted by security incidents and data breaches across the public 

and private sectors. Because FCA relies on various IT systems, security challenges can directly impact the 

Agency’s ability to achieve its mission. As such, FCA must continuously identify and respond to complex IT 

risks to effectively manage this challenge area.

Given the current COVID-19 pandemic and national emergency, FCA has its staff working remotely full-time.

While the FCA staff is telework-ready and has responded to the challenge of transition, additional resources 

are required from the IT staff to support the telework environment. Further, working remotely exposes 

potential vulnerabilities that may go beyond the Agency’s control. The new working environment adds a new 

layer to the Agency’s IT services given the resources and support needed for a secure environment while 
76 | FCA Performance and Accountability Report — 2020

4 | P a g e 

keeping the health and safety of FCA staff the upmost priority.

It is imperative that FCA has the necessary tools and staff to operate efficiently and effectively. At the same 

time, the Agency must be prudent and responsible with its spending. To stay current and address the Agency’s 

IT requirements, FCA needs well-trained personnel that can successfully maintain IT systems and integrate 

new tools to improve operations. This challenge becomes increasingly difficult as new IT requirements are 

developed and implemented across federal systems.

Agency Progress

FCA continues to invest in various IT tools to increase efficiency and effectiveness. In addition, FCA’s 

information security program continues to mature as it continuously identifies areas to strengthen and 

improve security. FCA has also updated several important policies and procedures to document new processes 

and overall responsibilities. Updates include the IT Security and Privacy Policy, the Information Security 

Continuous Monitoring Strategy, and multiple office directives on items such as privacy and security. OIT also 

continues to work on developing the privacy program.

Over the last few years, the Office of Information Technology (OIT) has also supplemented its staff. FCA hired

a privacy officer to address privacy requirements, including compliance with the Privacy Act. Several other

positions within OIT have been filled, including a new Enterprise Data Management Team Lead, Information 

Security Specialists, and other IT Specialists.

Relevant OIG Work

The OIG performs an annual evaluation of FCA’s compliance with the Federal Information Security 

Modernization Act of 2014. Looking ahead, the OIG will continue to focus on OIT operations and 

implementation of IT systems.

CHALLENGE THREE: DATA QUALITY AND ANALYSIS

A significant management challenge for FCA exists in the collection and use of data.

Obtaining timely, consistent, and quality data is vital to FCA’s mission of ensuring that the System remains a 

dependable source of credit for agriculture and rural America. Such data allows FCA to better monitor the 

System’s condition and identify current and emerging risks, including the impacts of the COVID-19 pandemic. 

In doing so, FCA enhances the development of a risk-based examination agenda and the promulgation of 

evidence-based regulations, policies, and guidance.

Collecting useful data from the System is no simple task, as varying practices and technical capabilities among 

its 70-plus institutions can result in inconsistencies that inhibit robust data analysis. In imposing reporting 

requirements, the Agency must consider the resulting burdens to System institutions while ensuring that data 

is collected and maintained in a manner comporting with legal requirements and that sensitive information is 

safeguarded against unauthorized access or use. By identifying the gaps and critical data necessary to 

efficiently and effectively perform its mission, the Agency can better ensure the safety and soundness of the 

System.

Agency Progress

The Agency’s Strategic Plan recognizes and underscores the importance of effective data analysis to oversight 
FCA Performance and Accountability Report — 2020 | 77

5 | P a g e 

of the FCS. In November 2019, in recognition of the importance of data analytics and with a view to the 

requirements of the Foundations for Evidence-Based Policymaking Act of 2018 (Evidence Act), the FCA Board 

established a new Office of Data Analytics and Economics (ODAE) to be headed by the Agency’s Chief Data 

Officer. The ODAE will, among other things, serve as a steward for Agency data and provide information to 

support objective, evidence-based decisionmaking Agency-wide.

In further implementation of the Evidence Act, FCA created the Data Advisory Group as a forum for addressing 

data management standards, priorities, policies, and practices. Headed by the Chief Data Officer and 

composed of various Agency leaders, the Data Advisory Group is tasked with leading implementation of 

Agency-wide processes and standards, and with addressing common issues affecting FCA data programs and 

resources. The Agency has also formed a Data Users’ Group to focus on the technical implementation and 

management of core Agency datasets.

In the interest of improving its data analytics, FCA has made investments in related IT and continues to develop 

and implement analytical and examination tools that will enhance its ability to perform systemic risk and data 

analysis. FCA also continues to work with the System to prioritize the most critical data fields for the overall 

improvement of data quality and consistency.

Relevant OIG Work

Recent OIG reviews relevant to this subject include a 2019 audit on the Agency’s implementation of stress 

testing guidance and use of data and analytical and examination tools; a 2016 audit on FCA’s oversight of 

young, beginning, and small farmer and rancher programs; and a 2016 audit on FCA’s risk project. Going 

forward, the OIG will continue monitoring the Agency’s progress in obtaining and analyzing data.

CHALLENGE FOUR: HUMAN CAPITAL

A significant management challenge for FCA is maintaining a safe, well-trained, sustainable workforce while 

facing challenges in retirement eligibilities, succession planning and training, and diversity.

Employees are FCA’s most valuable asset and the safety and well-being of FCA’s workforce is brought to the 

forefront during the COVID-19 pandemic. The Agency’s success depends greatly on its ability to recruit, retain, 

and develop a capable workforce, and keep its workforce safe during challenging times such as the current 

pandemic. Because FCA is a relatively small agency with nationwide responsibilities, changes in the workforce—

such as the retirement of management and senior employees—must be accounted and planned for to avoid 

undue disruption to Agency functions.

The need for succession and human capital planning was highlighted in the past year by the retirement of 

multiple senior Agency leaders. Planning ensures that institutional knowledge and experience are passed on, 

and the Agency is less dependent on specific individuals. 

Workforce training and developing takes a significant investment of resources, but the use of several tools can 

ensure that FCA maintains a vital, experienced staff. For example, data analytics can help the Agency identify 

training gaps. Job sharing, rotational details, and micro-assignment opportunities can be used to promote 

career development. Mentoring programs can prepare employees for management positions.

Diversity is another important aspect of human capital. A diverse staff brings different perspectives to problemsolving, enriching the Agency’s ability to regulate and supervise the System. The Agency must continually assess 
78 | FCA Performance and Accountability Report — 2020

6 | P a g e 

and deploy strategies to reach its goals for diversity and inclusion. It can do this by using various tools that 

identify and reduce potential barriers to diversity and inclusion, enhance outreach, evaluate the Agency’s 

recruitment data, and heighten awareness through programs that support diversity and inclusion.

Agency Progress

FCA mandated telework for most of its workforce on March 16, 2020, and quickly pivoted to accomplishing its 

mission through the use of technology and telework protocols. FCA’s Emergency Response Team, composed of 

the FCA Board and senior managers, meets regularly and continually monitors COVID-19 case trends, local 

school status, and government status at the Federal, state and local levels for its McLean, Virginia headquarters 

and four field offices in various parts of the United States. The Agency implemented several programs to 

promote employee safety and wellness during the pandemic, including a weather and safety leave program and 

an annual leave payout and restoration program. The Office of Agency Services created pulse surveys to gauge 

employee feedback on a variety of issues, including the Agency’s response to the COVID-19 pandemic. 

FCA developed a strategic framework to safely return its employees to the workplace, including continuing 

maximum telework flexibility for employees who are members, or are caring for dependents who are members, 

of a high-risk population, or who have childcare or transportation needs; conducting contactless temperature 

checks at all office locations; ensuring that employees wear a face covering and practice social distancing while 

in the office; and continuing building cleaning services and ensuring there are sufficient supplies (including hand 

soap and sanitizer) to support reopening FCA offices. 

The Agency’s Strategic Plan evidences a commitment to maintaining a diverse and capable workforce. Strategic 

objectives address maintaining a skilled, motivated workforce; ensuring adequate succession planning and 

knowledge transfer; and encouraging an engaged, diverse, and ethical workforce. FCA measures its success 

towards human capital goals based on employee outreach efforts and the results of the annual employee 

satisfaction surveys. The Agency also provides benefits and employee programs to attract and maintain a 

talented diverse workforce, including a Student Loan Repayment Program. FCA’s learning office also provides 

numerous online and in-person training resources to support technical skills, work/life balance, and managerial 

competencies.

Relevant OIG Work

The OIG has performed several reviews that have touched upon the subject of human capital in recent years, 

including an inspection of FCA’s implementation efforts for its 2017-2018 Fairness and Inclusiveness Assessment 

and an audit concerning the effectiveness of FCA’s process of obtaining background investigations for 

contractor personnel. Other reviews include a benchmarking evaluation comparing the structure and 

organization of FCA’s Office of Examination with comparable offices of other financial regulatory agencies, an 

inspection of FCA’s travel compensation program, and an audit of the Agency’s human capital planning. OIG 

plans to conduct an evaluation of the effectiveness of Agency programs in response to the COVID-19 pandemic.

CHALLENGE FIVE: SECONDARY MARKET OVERSIGHT

A significant management challenge for FCA is to ensure that it effectively and impartially regulates the Federal 

Agricultural Mortgage Corporation (Farmer Mac) through the Office of Secondary Market Oversight (OSMO).

Farmer Mac is a stockholder-owned, federally-chartered corporation. Farmer Mac was established by the 

federal government in 1988 to provide a secondary market for credit by increasing access to, and reducing 
FCA Performance and Accountability Report — 2020 | 79

7 | P a g e 

the cost of, capital to American agriculture and rural communities. Although Farmer Mac is part of the FCS, its 

secondary market mission is unique among FCS institutions. Farmer Mac’s customer base includes commercial 

and community banks, insurance companies, non-bank lenders, agricultural funds, rural utilities, and other FCS 

institutions. 

OSMO examines, regulates, and supervises the activities of Farmer Mac to ensure its safety and soundness 

and the accomplishment of its public policy purpose as authorized by Congress. OSMO also ensures that 

Farmer Mac complies with applicable laws and regulations, and it manages FCA’s enforcement activities with 

respect to Farmer Mac. Under the Farm Credit Act of 1971, as amended (Act), the OSMO Director reports 

directly to the FCA Board rather than the Chief Operating Officer. The Act also provides that the supervision 

of the powers, functions, and duties of Farmer Mac is performed, to the extent practicable, by personnel who 

are not responsible for the supervision of the banks and associations of the FCS. To fulfill its duties, OSMO 

uses examiners who also examine FCS banks and associations. Therefore, OSMO is challenged to ensure that 

it fulfills the oversight role free of conflicts of interest or undue influence from those also responsible for the 

supervision and regulation of the FCS banks and associations.

OSMO conducts the oversight and examination activities with a relatively small staff (4 employees with 

additional rotational staff), while balancing resources sourced from FCA’s OE, which is responsible for 

supervision of FCS banks and associations. OSMO staff must have the necessary knowledge, skills, and training 

to understand the unique and complex mission, secondary market activities, and business model and 

capitalization of Farmer Mac. Further, because Farmer Mac is a publicly-traded company, OSMO staff must 

understand the market forces and reputational risks that can potentially affect Farmer Mac’s safety and 

soundness. Other changing areas, such as the LIBOR phase out, will continue to increase the complexity of 

Farmer Mac. Advancements in data gathering, technology, and analytics that aid OSMO with risk 

measurement, management, and assessment, coupled with appropriate specialized training, can enhance 

FCA’s ability to oversee Farmer Mac as it grows in scale and complexity. This will be particularly important in 

an environment that may present more challenges to farmers, ranchers, rural communities and their lenders.

As the complexity of Farmer Mac increases, OSMO will need to ensure it maintains appropriate readiness to 

evaluate safety and soundness. To achieve its mission, OSMO may require increased resources and technical 

skills, which will present additional challenges for the Agency.

Farmer Mac has experienced many changes in its organizational structure, which includes new members of its 

executive management team that result in disruptions in Farmer Mac operations. OSMO’s oversight role is 

made more difficult in ensuring the continued safety and soundness of Farmer Mac in the face of its large 

board representing diverse interests and the changes to its executive management.

In addition, the COVID-19 global pandemic provides an additional challenge to OSMO and Farmer Mac 

leadership given the needs of employees, safety concerns, and forward-looking business models. The 

pandemic presents an ever-changing environment that requires flexibility and agility in business. For OSMO, 

the COVID-19 pandemic increases the need for highly qualified examiners and analysts to maintain vigilant 

oversight during these unprecedented and volatile times.

Agency Progress

OSMO provides guidance and implements regulatory and other changes related to Farmer Mac. These 

changes are made in addition to OSMO’s supervision and safety and soundness reviews of Farmer Mac. All 

FCA employees, including OSMO staff, were able to quickly transition to full-time telework status in March 

2020 in response to the COVID-19 pandemic. 
80 | FCA Performance and Accountability Report — 2020

8 | P a g e 

In anticipation of resource needs during the 2021 and 2022 examination cycle, OSMO added rotational staff. 

OSMO reports that its consulting arrangements can also provide highly qualified resources needed during the 

pandemic. 

The FCA Board adopted Policy Statement 35 in January 2020, which provides the general strategy and direction 

of OSMO for the examination, regulation, and supervision of Farmer Mac. Policy Statement 35 also established 

OSMO reporting requirements to the FCA Board, including an annual oversight and examination plan and any 

proposed or amended regulations. OSMO also issued an IM outlining the 2020 examination focus areas as:

capital, asset quality, management, earnings, liquidity, and sensitivity to interest rate risk.

As a result of the COVID-19 pandemic and national emergency, OSMO created and issued guidance 

documents to Farmer Mac. On March 24, 2020, OSMO issued a memorandum that encouraged Farmer Mac 

to prudently work with its lending and servicing partners to provide flexibility and assistance to borrowers 

experiencing financial challenges due to COVID-19. OSMO also developed an IM that specifically addressed 

Farmer Mac’s position as a secondary market provider working with servicing partners to administer its Farm 

and Ranch portfolio.

In addition, OSMO enhanced its oversight of Farmer Mac through additional reporting requirements to ensure 

potential risks were monitored and identified. Since the COVID-19 outbreak was declared a national 

emergency, OSMO established daily reporting requirements for funding, liquidity, and investments and 

developed the weekly funding and market reports. Weekly reporting requirements of loan servicing actions 

related to COVID-19 were also established.

Relevant OIG Work

In 2018, the OIG completed an audit to assess staffing arrangements and the reporting process for OSMO. 

Our review included recommendations to improve OSMO’s processes and increase transparency. The OIG

plans to review other aspects of OSMO in future years.
FCA Performance and Accountability Report — 2020 | 81

Management’s Response to Challenges 

Identified by FCA’s Inspector General

November 9, 2020

Ms. Wendy Laguarda

Inspector General

Farm Credit Administration

1501 Farm Credit Drive

McLean, VA 22102-5090

Dear Ms. Laguarda:

We concur with your assessment of the management challenges described in your Oct. 9 letter. 

We value your recommendations in addressing these challenges and appreciate your summary of 

our continuing progress.

As you noted in your letter, the COVID-19 pandemic added complexities to these challenges, 

but we continue to operate effectively and efficiently, and the Farm Credit System remains 

financially sound. We are focused on our continuity of operations during this onging health crisis 

to accomplish our agency mission while ensuring the safety of all employees. 

During FY 2020, we held regular risk committee meetings to assess, coordinate, and lead the 

agency’s risk management efforts. Following the declaration of COVID-19 as a pandemic on March 

11, 2020, our emergency response team has met more than a dozen times to review public health 

data and extend mandatory telework accordingly. 

Throughout this fiscal year, we continued to enhance the quality of our data and data systems 

through our new Office of Data Analytics and Economics, which was created in November 2019. 

During the pandemic, this office has analyzed data regarding the impacts of COVID-19 on the 

farm economy and Farm Credit System. It has also provided our senior leadership team with the 

latest COVID-19 data at the national and regional levels. 

The health and safety of our employees will continue to be our top priority, along with our mission 

to protect the safety and soundness of the Farm Credit System. Thank you for providing this 

analysis. We look forward to working with you in the year ahead.

Sincerely,

Glen R. Smith

Board Chairman and CEO
82 | FCA Performance and Accountability Report — 2020

Summary of Financial Statement Audit and 

Management Assurances

FCA has no reported material weakness, and we are in conformance with the Federal Managers’ 

Financial Integrity Act (FMFIA).

Table 8. Summary of financial statement audit

Audit opinion: Unmodified

Restatement: No

Material 

weaknesses

Beginning 

balance

New Resolved Consolidated Ending balance

Total material 

weaknesses

0 0 0 0 0

Table 9. Summary of management assurances

Effectiveness of internal control over financial reporting (FMFIA § 2) 

Statement of assurance: Unmodified

Material 

weaknesses

Beginning 

balance

New Resolved Consolidated Reassessed Ending 

balance

Total material 

weaknesses

0 0 0 0 0 0

Effectiveness of internal control over operations (FMFIA § 2) 

Statement of assurance: Unmodified

Material 

weaknesses

Beginning 

balance

New Resolved Consolidated Reassessed Ending 

balance

Total material 

weaknesses

0 0 0 0 0 0

Conformance with federal financial management system requirements (FMFIA § 4)

Statement of assurance: Federal systems conform

Nonconformances Beginning 

balance

New Resolved Consolidated Reassessed Ending 

balance

Total 

nonconformance

0 0 0 0 0 0

Compliance with Federal Financial Management Improvement Act (FFMIA § 803[a])

We are not required to report under this act. 
FCA Performance and Accountability Report — 2020 | 83

Payment Integrity Information Act Reporting

Background

The Payment Integrity Information Act of 2019 repealed the following legislation while retaining and 

consolidating certain reporting requirements:

• Improper Payments Information Act of 2002

• Improper Payments Elimination and Recovery Act of 2010

• Improper Payments Elimination and Recovery Improvement Act of 2012

• Fraud Reduction and Data Analytics Act of 2015

The new Payment Integrity Information Act continues to require agencies to report annual improper 

payment estimates for OMB-designated high-priority programs and programs that are susceptible to 

significant improper payments. A program is high priority if it has $2 billion in estimated improper 

payments. A program is deemed susceptible to significant improper payments if its improper payments 

amount to more than $10 million and more than 1.5% of all payments made under that program, or if the 

program has more than $100 million in estimated improper payments. 

Detailed information on improper payments for the U.S. government is available online at www.paymentaccuracy.gov. FCA data are not included on this website because we do not have any programs that were 

designated by OMB as high priority, and our risk assessments did not identify any programs or activities 

that were susceptible to significant improper payments. Thus, we are not required to perform any statistically valid estimates of improper payments or report on root cause identification, corrective actions, or 

reduction targets.

Risk assessments

In accordance with legislative requirements and OMB guidance, we conduct risk assessments at least 

once every three years to identify programs that may have a significant risk of improper payments. We 

perform our assessments on contract payments, purchase cards, travel cards, claims and vouchers, and 

payroll. Based on our last risk assessment for the period ended Sept. 30, 2017, we determined that our 

programs and activities are low risk and are not susceptible to significant improper payments. We will 

complete the next assessment during the first quarter of FY 2021 for the period ended Sept. 30, 2020.

Actions to recover improper payments

The Payment Integrity Information Act requires agencies to conduct payment recovery audits for 

each program and activity that expends $1 million or more annually if conducting the audits would be 

cost-effective.

We have determined that a recovery audit is not cost-effective for our agency because of the low risk 

for our programs. The benefits of any recovered amounts would not exceed the cost of a recovery audit 

program. As required by OMB A-123, Appendix C, we have notified both OMB and our inspector general of our determination that a recovery audit is not cost-effective for FCA. OMB concurred with our 

assessment. 
84 | FCA Performance and Accountability Report — 2020

The Department of the Treasury’s Bureau of the Fiscal Service, our service provider, has internal control 

procedures to ensure that payments are made properly. One such procedure is the post-payment audit 

in which the Bureau of the Fiscal Service reviews a random sample of 10% of invoices processed each 

month. In addition, the invoice approvers at our agency review payments before they are processed to 

ensure payments are appropriate. We also work closely with the Bureau of the Fiscal Service so that payroll and charge card payments are reviewed and monitored to ensure payments are complete, accurate, 

and timely. Additionally, we perform routine operational reviews and oversight to help identify improper 

payments.

For FY 2020, we identified improper payments amounting to $5,153, or 0.01% of total outlays for the year. 

The improper payments were a combination of travel and vendor overpayments. We have collected all 

overpayments. 

Actions taken to address auditor recovery recommendations

On May 15, 2020, our inspector general published her annual report on whether FCA complied with 

reporting requirements for improper payments. The report concluded that we were in compliance and 

there were no recommendations.

Do Not Pay initiative

The U.S. Department of the Treasury’s Do Not Pay system is the legislatively mandated and OMBdesignated source of centralized data and analytic services to help agencies verify eligibility and identify 

and prevent potential fraud, waste, and abuse associated with improper payments. We work closely with 

the Bureau of the Fiscal Service to ensure that all payments are proper and paid to valid vendors. The 

Bureau of the Fiscal Service continually monitors the vendor file in the financial system and cross-checks 

it against the various Do Not Pay databases. This process serves both the prepayment and the pre-award 

review requirement to ensure that only eligible recipients are paid. To date, we have not had any vendors 

with a match to the Do Not Pay databases.

Fraud reduction report

The Payment Integrity Information Act of 2019 requires agencies to use a risk-based approach to design 

and implement financial and administrative control activities to mitigate identified fraud risk and improper payments. We maintain effective processes and internal control systems to detect and prevent 

potential fraud. Whether an act is in fact fraud is a determination made through the judicial or other 

adjudicative system and is beyond management’s professional responsibility for assessing the likelihood 

and impact of fraud risk.1

In accordance with guidance from OMB Circular A-123, Management’s Responsibility for Enterprise Risk 

Management and Internal Control, and the fraud risk principle in the Standards for Internal Control in the 

federal government published by the Government Accountability Office (GAO), we have implemented 

preventative and detective controls to identify and mitigate the risks of potential fraud and improper payments in the following areas: 

• Employee payments (including payroll)

• Contract/vendor payments, purchase cards

• Travel charge cards

1 Government Accountability Office. (2014). Standards for Internal Control in the Federal Government. (GAO 

Publication No. 14-704G). Washington, D.C.: U.S. Government Printing Office.
FCA Performance and Accountability Report — 2020 | 85

• Travel expense reimbursement

• Claims/vouchers

• Access, use, or release of sensitive agency data 

We evaluate the design and operating effectiveness of our internal controls in accordance with our annual Management Control Plan. Additionally, we conduct a biennial assessment of our system of internal 

controls in accordance with the principles described in GAO’s Standards for Internal Control in the 

Federal Government.

Through our internal assessments, we monitor and evaluate financial and administrative controls to 

ensure that our offices are preventing, detecting, and responding to potential fraud. We assess whether 

appropriate segregations of duties are established to mitigate potential fraud. We also assess whether appropriate reconciliations and internal reviews are conducted to identify potential fraud and/or improper 

payments. 

No instances of fraud in our programs have surfaced through management’s internal identification and 

reporting mechanisms or from internal and external auditors.
86 | FCA Performance and Accountability Report — 2020

Civil Monetary Penalty Adjustment for 

Inflation

Under the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, agencies must 

make annual inflation adjustments to civil monetary penalties and report on these adjustments. Table 10 

below shows the adjustments FCA has made this year.

Table 10. Annual inflation adjustments of civil monetary penalties 

Statutory 

authority

Reason for 

penalty

Year 

enacted

Latest year of 

adjustment 

(via statute or 

regulation)

Current 

penalty (dollar 

amount)

Location 

for penalty 

update details

Section 5.32(a) of 

the Farm Credit 

Act of 1971, as 

amended

Violation of a 

final order

1985 2020 $2,404 85 FR 6023

Section 5.32(a) of 

the Farm Credit 

Act of 1971, as 

amended

Violation of 

the act or 

regulation

1985 2020 $1,071 85 FR 6023

Section 102(f) of 

the Flood Disaster 

Protection Act of 

1973

Pattern or 

practice of 

committing 

violations of 

the National 

Flood 

Insurance 

Program

1994 2020 $2,226 85 FR 6023
FCA Performance and Accountability Report — 2020 | 87

Additional Information

Copies of this report are available on the Farm 

Credit Administration’s website at www.fca.gov/

about/reports-publications.

To request print copies of this report or earlier 

editions, please contact the Office of Congressional 

and Public Affairs at the email address or mailing 

address provided below. You may also call 703-883-

4056 to request a copy.

We would like to hear from you! What did 

you think of our FY 2020 Performance and 

Accountability Report? Did we present information 

in a way you could use? How can we improve our 

report in the future? Any feedback you have time to 

provide would be most appreciated. Please email 

your comments to info-line@fca.gov.

Or send written comments to the following 

address:

Office of Congressional and Public Affairs

Farm Credit Administration

1501 Farm Credit Drive

McLean, VA 22102-5090

Thank you!

 

The Federal Farm Credit Banks Funding 

Corporation, with the support of the System 

banks, prepares the financial press releases 

and the System’s annual and quarterly information statements, which contain the System’s 

combined financial statements. Copies are 

available on the Funding Corporation’s website 

at www.farmcredit-ffcb.com or from 

Federal Farm Credit Banks Funding 

Corporation

10 Exchange Place

Suite 1401

Jersey City, NJ 07302

Telephone: 201-200-8000

The Farm Credit System Insurance Corporation

publishes an annual report. Copies are available on 

FCSIC’s website at www.fcsic.gov or from

Farm Credit System Insurance Corporation

1501 Farm Credit Drive

McLean, VA 22102

Telephone: 703-883-4380

In addition, FCS banks and associations are required by regulation to prepare annual and quarterly financial reports. Copies of these documents 

are available for public inspection at FCA headquarters in McLean, Virginia.
Office of Congressional and Public Affairs

Copies are available from

1120/100

Copies are available from

Office of Congressional and Public Affairs

Farm Credit Administration

1501 Farm Credit Drive

McLean, VA 22102-5090

703-883-4056

www.fca.gov-