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System Review Report
June 26, 2013

To: Elizabeth M. Dean, Inspector General
Farm Credit Administration
Office of Inspector General

We have reviewed the system of quality control for the audit organization of the Farm Credit
Administration (FCA) Office of Inspector General (OIG) in effect for the year ended March 31,
2013. A system of quality control encompasses FCA OIG’s organizational structure and the
policies adopted and procedures established to provide reasonable assurance of conforming to
Government Auditing Standards. The elements of quality control are described in Government
Auditing Standards. FCA OIG is responsible for designing a system of quality contro] and
complying with it to provide FCA OIG with reasonable assurance of performing and reporting in
conformity with applicable professional standards in all material respects. Our responsibility is
to express an opinion on the design of the system of quality control and FCA OIG’s compliance
therewith based on our review.

Our review was conducted in accordance with Government Auditing Standards and guidelines
established by the Council of the Inspectors General on Integrity and Efficiency (CIGIE).
During our review, we interviewed FCA OIG personnel and obtained an understanding of the
nature of the FCA OIG audit organization, and the design of the FCA OIG’s system of quality
control sufficient to assess the risks implicit in its audit function. Based on our assessments, we
selected engagements and administrative files to test for conformity with professional standards
and compliance with the FCA OIG’s system of quality control. The engagements selected
represented a reasonable cross-section of the FCA OIG’s audit organization, with emphasis on
higher-risk engagements. Prior to concluding the review, we reassessed the adequacy of the
scope of the peer review procedures and met with FCA OIG’s management to discuss the results
of our review. We believe that the procedures we performed provide a reasonable basis for our
opinion.

In performing our review, we obtained an understanding of the system of quality control for the
FCA OIG’s audit organization. In addition, we tested compliance with the FCA OIG’s quality
control policies and procedures to the extent we considered appropriate. These tests covered the
application of the FCA OIG’s policies and procedures on selected engagements. Our review was
based on selected tests; therefore, it would not necessarily detect all weaknesses in the system of
quality control or all instances of noncompliance with it.

There are inherent limitations in the effectiveness of any system of quality control, and therefore
noncompliance with the system of quality control may occur and not be detected. Projection of
any evaluation of a system of quality control to future periods is subject to the risk that the


system of quality control may become inadequate because of changes in conditions, or because
the degree of compliance with the policies or procedures may deteriorate.

Enclosure 1 to this report identifies the offices of the FCA OIG that we visited and the
engagements that we reviewed.

In our opinion, the system of quality control for the audit organization of FCA OIG in effect for
the year ended March 31, 2013, has been suitably designed and complied with to provide FCA
OIG with reasonable assurance of performing and reporting in conformity with applicable
professional standards in all material respects. Federal audit organizations can receive a rating of
pass, pass with deficiencies, or fail. FCA OIG has received a peer review rating of pass.

In addition to reviewing its system of quality control to ensure adherence with Government
Auditing Standards, we applied certain limited procedures in accordance with guidance
established by the CIGIE related to FCA OIG’s monitoring of engagements performed by
Independent Public Accountants (IPA) under contract where the IPA served as the principal
auditor. It should be noted that monitoring of engagements performed by IPAs is not an audit
and therefore is not subject to the requirements of Government Auditing Standards. The purpose
of our limited procedures was to determine whether FCA OIG had controls to ensure IPAs
performed contracted work in accordance with professional standards. However, our objective
was not to express an opinion and accordingly, we do not express an opinion, on FCA OIG’s
monitoring of work performed by IPAs.

We want to thank you and your staff for their cooperation and assistance during the review.
Your actions helped us complete our review quickly.

Carol M. Bates, Inspector General

Enclosure

Architect of the Capitol | Office of Inspector General
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SCOPE AND METHODOLOGY (Enclosure 1)
Scope and Methodology

We tested compliance with the FCA OIG’s audit organization system of quality control to the
extent we considered appropriate. These tests included a review of three of the six audit reports
issued during the period April 1, 2010, through March 31, 2013, and six semiannual reporting
periods. We also reviewed the internal quality control reviews performed by FCA OIG.

In addition, we reviewed the FCA OIG’s monitoring of engagements performed by IPAs where
the IPA served as the principal auditor during the period April 1, 2010, through March 31, 2013.
During the period, FCA OIG contracted for the audit of its agency’s Fiscal Year 2010, 2011, and
2012 financial statements. FCA OIG also contracted for certain other engagements that were to
be performed in accordance with Government Auditing Standards.

We visited the McLean, VA Office of FCA OIG which is its only office.

Reviewed Engagements Performed by FCA

Report No. Report Date Report Title
A-11-01 11/17/2011 Contracting Activities
A-11-02 09/12/2011 Approval Process of Funding Corporations

Debt Issuances

Reviewed Monitoring Files of FCA OIG for Contracted Engagements

Report No. Report Date Report Title
A-12-FS 11/5/12 Audit of FCA’s Financial Statements
Fiscal Year 2012

Architect of the Capitol | Office of Inspector General
499 South Capitol Street, SW, Suite 518 | Washington, DC 20515. | 202.593.1948 | www.aoe.gov