OFFICE OF 

INSPECTOR GENERAL 

 

Audit Report 

Audit of the Farm Credit 

Administration’s Financial

Statements 

Fiscal Year 2018 

A‐18‐FS 

November 15, 2018 

FARM CREDIT ADMINISTRATION 
Table of Contents 

Inspector General’s Transmittal Letter of the Auditors’ Report.......................................................................................... 1 

Auditors’ Opinion Letter on the Financial Statements.......................................................................................................... 3 

For the fiscal year’s financial statements and related notes, refer to the Farm Credit Administration’s (FCA) 

Performance and Accountability Report (PAR) for that year. The PARs can be found on FCA's website.
 

 

 

 

 

 

 

 

 

 

 

 

Office of Inspector General 

1501 Farm Credit Drive Farm Credit Administration McLean, VA 22102-5090 

November 13, 2018 

The Honorable Dallas P. Tonsager, Board Chairman 

The Honorable Jeffery S. Hall, Board Member 

The Honorable Glen R. Smith, Board Member 

Farm Credit Administration 

1501 Farm Credit Drive 

McLean, Virginia 22102-5090 

Dear Board Chairman Tonsager and Board Members Hall and Smith: 

The attached report is the audit of the Farm Credit Administration’s (FCA’s or Agency’s) financial 

statements for the fiscal year (FY) ended September 30, 2018. The Office of Inspector General 

(OIG) contracted with Harper, Rains, Knight & Company, P.A., an independent public accounting 

firm, to perform the audit. 

Harper, Rains, Knight & Company issued an unmodified opinion on the Agency’s financial 

statements. In the auditors’ opinion, FCA’s financial statements present fairly, in all material 

respects, the financial position of the Agency as of the FY ended September 30, 2018, in 

accordance with accounting principles generally accepted in the United States of America (U.S.). 

Harper, Rains, Knight & Company considered FCA’s internal control over financial reporting as a 

basis for designing audit procedures that are appropriate to express an opinion on the financial 

statements. Although they did not express an opinion on the FCA’s internal control over financial 

reporting, they did not identify any deficiencies considered to be material weaknesses. 

Additionally, Harper, Rains, Knight & Company performed tests of FCA’s compliance with selected 

provisions of applicable laws and regulations that could have a direct and material effect on the 

financial statements. Although they did not express an opinion on compliance with those 

provisions, they did not identify any instances of noncompliance that would be reportable under 

U.S. generally accepted Government Auditing Standards or Office of Management and Budget 

(OMB) Bulletin 19-01, Audit Requirements for Federal Financial Statements. 

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Harper, Rains, Knight & Company was required to perform the audit in accordance with 

Government Auditing Standards and OMB Bulletin 19-01, Audit Requirements for Federal Financial 

Statements. To ensure the quality of the work performed, the OIG: 

• reviewed Harper, Rains, Knight & Company’s approach to and planning of the audit, 

• evaluated the qualifications and independence of the auditors, 

• attended key meetings with auditors and Agency officials, 

• monitored the progress of the audit, 

• examined workpapers, and 

• reviewed the audit report. 

Harper, Rains, Knight & Company is responsible for the attached auditors’ report and the 

conclusions expressed in the report. The OIG is responsible for technical and administrative 

oversight regarding the audit firm’s performance under the terms of the contract. Our review was 

not intended for us to express, and accordingly we do not express, an opinion on the Agency’s 

financial statements or conclusions on internal control over financial reporting and compliance 

with laws and regulations, including whether the Agency’s financial management systems 

substantially complied with the Federal Financial Management Improvement Act. However, our 

monitoring review disclosed no instances in which Harper, Rains, Knight & Company did not 

comply, in all material respects, with the auditing standards. 

Respectfully, 

Wendy R. Laguarda 

Inspector General 

Enclosure 

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Independent Auditors' Report 

The 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, 2018 and 2017, and the related 

statements of net cost and changes in net position, and combined 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 19-01, 

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 

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The 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, 2018 and 2017, 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, 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 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. 

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The Board and Inspector General 

Farm Credit Administration (continued) 

Other Matters (continued) 

The Statement of Board Chairman and CEO, Statement of Chief Financial Officer, 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, 2018, in accordance with U.S. generally accepted government auditing standards and OMB Bulletin 

19-01, 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 (FMFIA), 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. 

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. 

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. 

Compliance and Other Matters 

As part of obtaining reasonable assurance about whether FCA's financial statements are free form 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 19-01, 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. 

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The Board and Inspector General 

Farm Credit Administration (continued) 

Compliance and Other Matters (continued) 

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 2018 that would be reportable under 

U.S. generally accepted government auditing standards or OMB Bulletin 19-01, 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 13, 2018 

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