Credit Administration 

Office of Inspector General 

FARM CREDIT 

ADMINISTRATION 

OFFICE OF 

INSPECTOR GENERAL 

SURVEY REPORT 

Survey of 

Farm Credit System 

Institutions Regarding the 

Agency’s Examination Function 

Second through Fourth Quarters 

Fiscal Year 2021 

(January 1 - September 30, 2021) 

and Summary Report for 

Fiscal Year 2021 

Issued January 21, 2022 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Survey of Farm Credit System Institutions 

Regarding the Agency's Examination Function 

Fiscal Vear 2021 

Second-Fourth Quarters Report 

(January 1, 2021 - September 30, 2021) 

Executive Summary 

Each fiscal year (FY) quarter, the Farm Credit Administration (FCA) 

Office of Examination (OE) identifies several Farm Credit System (FCS) 

institutions that can provide meaningful survey responses for that

period. The Office of Inspector General (OIG) provides a survey report 

semiannually with two quarters of survey responses. In April 2020, the 

Office of Inspector General (OIG) suspended the survey due to the

onset of the COVID-19 pandemic in accordance with FCA’s more 

limited examination activity at that time. The OIG resumed the survey

for the second quarter of FY 2021. This report includes the response

data for the second through fourth quarters FY 2021. 

The OE identified 39 FCS institutions to survey for the second through

fourth quarters of FY 2021 (January 1 – September 30, 2021). The OIG

sent surveys to those institutions and 29 institutions completed the 

survey (a 74% response rate). 

Average numerical ratings and total average numerical ratings for

survey statements 1-10 are shown in the table below. A “1” reflects a 

positive rating and a “5” reflects a negative rating. 

Average Numerical Ratings 

FY21 

Quarter 

Average Numerical

Rating Range 

Total Average

Numerical Rating 

4th 1.4 – 1.9 1.6 

3rd 1.7 – 2.1 1.9 

2nd 1.2 – 2.0 1.6 

Comments with any perceived negative feedback are listed separately 

for survey statements 1-10 and 13. We note that many of the negative 

comments appeared to be from smaller-sized institutions. Also, many 

negative comments concerned the impact of remote examinations on 

the efficiency of the process. 

The FCS institutions asked to 

respond to the survey are those 

institutions that: 

1. Received a Report of 

Examination during the FY 

quarters; or 

2. Had significant examination 

activity and interface with OE

during the same period. 

The survey asks respondents to 

rate ten survey statements as: 

Completely Agree 1 

Agree 2 

Neither Agree nor Disagree 3 

Disagree 4 

Completely Disagree 5 

Does Not Apply 6 

The survey contains 13 statements, 

two of which are newly added to 

address the effectiveness and 

efficiency of communications for 

examinations conducted remotely

due to the pandemic. 
TABLE OF CONTENTS 

ACRONYMS and ABBREVIATIONS _____________________________________________1 

BACKGROUND AND METHODOLOGY __________________________________________1 

SURVEY RESULTS __________________________________________________________2 

EXAMINATION PROCESS ________________________________________________________________________2 

Statement #1__________________________________________________________________________________2 

Statement #2__________________________________________________________________________________4 

Statement #3__________________________________________________________________________________5 

Statement #4__________________________________________________________________________________7 

COMMUNICATIONS_____________________________________________________________________________8 

Statement #5__________________________________________________________________________________8 

Statement #6________________________________________________________________________________ 10 

Statement #7________________________________________________________________________________ 11 

Statement #8________________________________________________________________________________ 12 

Statement #9________________________________________________________________________________ 14 

Statement #10 ______________________________________________________________________________ 15 

GENERAL QUESTIONS _________________________________________________________________________ 16 

Statement #11 ______________________________________________________________________________ 16 

Statement #12 ______________________________________________________________________________ 18 

Statement #13 ______________________________________________________________________________ 19 

Request for OIG Contact ____________________________________________________________________ 21 

FISCAL YEAR 2021 SUMMARY REPORT _______________________________________22 
ACRONYMS and ABBREVIATIONS 

EIC Examiner in Charge 

FCA Farm Credit Administration 

FCS Farm Credit System 

FIRS Financial Institution Rating System 

FY Fiscal Year 

IIA Institute of Internal Auditors 

MRA Matters Requiring Attention 

OE Office of Examination 

OIG Office of Inspector General 

ROE Report of Examination 

BACKGROUND AND METHODOLOGY 

Each fiscal year (FY) quarter, except as noted in the Executive Summary, the Office of Examination 

(OE) identifies several Farm Credit System (FCS) institutions that can provide meaningful survey 

responses for that period. The criteria for including an FCS institution in the survey are: 

1. The institution received a Report of Examination during the FY quarter; or

2. There was significant examination activity and interface with an institution during the same

period.

The Office of Inspector General (OIG) generally provides a survey report semiannually for two 

quarters of survey responses for the periods extending from October 1 through March 31 and 

April 1 through September 30. This report includes the response data for the second, third and 

fourth quarters of FY 2021. 

The survey asks respondents to rate eight survey statements from “1” (Completely Agree) to “5”

(Completely Disagree), or “6” if the statement does not apply. The rating choices are: 

Completely Agree 1 

Agree 2 

Neither Agree nor Disagree 3 

Disagree 4 

Completely Disagree 5 

Does Not Apply* 6 

1 
*We do not include ratings of “6” in rating averages because a “6” will skew the numerical average

negatively even though the statement is not applicable to the institution.

We provide the current FY quarter’s average numerical rating for survey statements 1-10 and, for

comparison, the prior two FYs’ data (FY 2018 and FY 2019 for this report). 

Survey statements 1-4 pertain to the examination process generally and statements 5-10 pertain 

specifically to communications during the examination. Statements 11-13 solicit narrative 

feedback on the examination process. Respondents may submit comments for each of the 13 

survey statements. 

The report includes narrative responses verbatim, except any information identifying the 

institution or examiners has been removed. Additionally, spelling and punctuation errors have 

been corrected and some acronyms or abbreviations have been spelled out. Any bracketed text 

is for the purpose of removing information that identifies an institution or an examiner or 

providing clarification to a response. Comments with perceived negative feedback are listed 

separately for survey statements 1-10 and 13. 

At the end of the survey we ask whether the respondent would like the OIG to contact the 

institution confidentially to discuss the submitted responses. 

SURVEY RESULTS 

EXAMINATION PROCESS 

Statement #1 

The scope of examination activities was focused on areas of risk to the institution and

appropriate for the size, complexity, and risk profile of the institution. 

Average Numerical Ratings by FY Quarter 

First Second Third Fourth FY 

FY Quarter Quarter Quarter Quarter Average 

2021 N/A 1.9 1.8 1.7 1.8 

2019 1.7 2.3 2.0 1.8 2.0 

2018 1.8 1.9 1.7 1.7 1.8 

Comments: 

• The scope and depth were appropriate for the size, complexity, and risk profile of our

company. The examiners showed thoughtful awareness of the scope and complexity of

our organization.

• Scope of examination activities were appropriate for the institution's size, complexity, and

risk profile.

• The exam team was focused on current risks.

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• Overall, the areas reviewed by the examiners were appropriate and relevant to

management.

• Audit areas were consistent with the Examination Focus Areas provided by FCA.

• Scope was appropriate and relevant.

• The scope of examination activities appeared to be comprehensive and appropriately

considered the risks within and facing the organization. Our institution has made a

considerable investment to develop and maintain a strong control environment which was

appropriately considered by the FCA as part of their examination activities. Additionally,

the examiners continue to increase their leverage of the work performed by our

institution’s 2nd and 3rd lines of defense to better understand risks within the organization

and the underlying control environments prior to developing their review plans and during

their onsite review activities resulting in effective and efficient examination activities.

• Based on discussions, the key risk areas were addressed.

Comments perceived with negative feedback: 

• While the areas covered were appropriate, some of the examination activities were not

tailored to the risk profile of the institution. At times, it seemed that the risk profile for all

institutions was determined to be the same, not allowing for variability among the

institutions. We have also heard feedback from our district institutions that this is an area

of concern and that the size, complexity, and risk profile of the institution is not always

taken into account when determining the scope of the examination areas for institutions.

• It is noted that there has been an evolved regulatory expectation in a number of areas -

as a result, what constitutes “risk to the institution appropriate for the size" has changed

significantly over the past few exam cycles. It can be difficult now to have an intuition

regarding what constitutes “appropriate for the size and complexity of the institution.”

• Ours is a very small institution and sometimes the examination does not reflect that fact.

• The examination focused on the risk of independence in an audit coordinator and given

the fact we are hiring independent qualified outside auditors for the [Internal Operations

Review] IOR, [Internal Control over Financial Reporting] ICFR, and [Internal Credit Review]

ICR, along with the oversight from our Discount Bank, and [PricewaterhouseCoopers] we

do not feel the identified risk to the institution is appropriate given the size and complexity

of our institution.

• The scope appeared to be the same as for larger institutions. We are not aware of any

variations due to size or complexity. We do feel this would be a good practice.

• It’s difficult at times and costly to staff to the degree to cover emerging regulatory needs.

• The most recent examination generally focused on material safety and soundness issues

and other areas appropriate for the size and complexity of our institution. As in past

responses, we continue to be concerned about the breadth of resources outside of

regulations and regulatory guidance used in the examination. In addition, being evaluated

on guidance prior to publishing or making available to institutions does not seem

appropriate.

• Strongly disagree that examination activities were appropriate for the size of our

institution. While we do not disagree that there was room for improvement, expectations

3 
 

 

 

 

 

around the institutions Model Risk Management and audit coverage were on par with 

regional commercial banks that are 5-10 times the size of our institution. We feel the 

expectation for an institution our size is held to by FCA makes for a competitive 

disadvantage in comparison to local banks of the same size. 

Statement #2 

Examiners appropriately applied laws, regulations, and other regulatory criteria to 

examination findings and conclusions. 

Average Numerical Ratings by FY Quarter 

First Second Third Fourth FY 

FY Quarter Quarter Quarter Quarter Average 

2021 N/A 1.7 1.9 1.5 1.7 

2019 1.8 2.1 2.1 1.6 1.9 

2018 1.8 2.0 1.9 1.5 1.8 

Comments: 

• The examiners clearly communicated the applicability and context of laws, regulations, and

other regulatory criteria with regards to findings and conclusions.

• Examiners appropriately applied laws, regulations, and other criteria to noted findings and

documented conclusions.

• The exam team was very knowledgeable of current laws, regulations and other regulatory

criteria and applied them as appropriate. The team was also committed to working with

us to determine a solution for findings that was appropriate for our size institution. This

sometimes included an action plan that would allow for implementation of a period of

time.

• Agree. At times we have historically experienced some examiners jumping to conclusions

and not taking enough time to listen and understand. This does not include our current

EIC. Honestly, we have a much better relationship and communication effectiveness with

our existing EIC.

• We appreciate that the examination team asks thoughtful questions and encourages

discussion especially in the area of allowance, liquidity and capital to confirm alignment of

understanding.

• Our regulators are well versed in regulations and are good to share their regulatory

guidance.

Comments perceived with negative feedback: 

• While examiners appropriately applied laws and regulations, the reference to "other

regulatory criteria" was applied very broadly. Examination guidance includes prescriptive

practices, which outside parties would characterize as industry best practices, but are

applied by examiners as expected business practices. This practice can result in

expectations that create operational burdens without providing commensurate risk

mitigation. This is of particular concern because guidance that is included in examination

4 
 

 

 

 

 

 

 

 

 

manuals is not subject to the same input and comment period as other regulatory

guidance. In addition, our institutions have had similar experiences with their 

examinations. 

• Agree. However, management believes there is an opportunity for the FCA to reassess

their application of regulatory criteria regarding the assignment of the [Financial

Institution Rating System] (FIRS) management ratings. Also, examiners did not consistently

understand or communicate the underlying purpose and objectives for regulations being

examined against. Examining against the plain language of regulatory text without full

understanding of the desired outcome can result in citation of regulatory violations that

are detrimental to a System institution meeting its mission in a safe and sound manner.

While regulations are written with good intentions, reasonable interpretations of

regulations must be allowed for the System to continue to meet its mission in a constantly

evolving marketplace.

• The examiners applied examination manual guidance that was issued during the course of

our examination to their findings.

• Although FCA examiners generally applied laws and regulations appropriately, we had one

circumstance where the mention of audit standards [Institute of Internal Auditors] (IIA) in

an internal document was broadly applied across the functional area. This blanket

approach was a concerning application of the standard (i.e., all facets of IIA guidance were

deemed acknowledged and applied to the audit function by mention of the IIA standard).

However, we do not disagree with the general application of the IIA standard or recent

FCA examination guidance that references specific IIA standards.

• The examiners stepped outside of regulatory guidance in various areas. First and foremost,

it was inappropriate to suggest to board members who they should vote for as chairman

of the board. Further, we feel it is a stretch to dictate changes through MRAs when those

items are not regulatory requirements – such as how to document minutes, institution risk

tolerance, etc.

Statement #3 

The matters requiring attention and any supervisory agreement with FCA assisted the board

and management in addressing the risks of the institution. 

Average Numerical Rating s by FY Quarter 

First Second Third Fourth FY 

FY Quarter Quarter Quarter Quarter Average 

2021 N/A 2.0 1.7 1.7 1.8 

2019 2.0 2.4 2.4 1.9 2.2 

2018 2.6 2.1 1.9 1.6 2.1 

Comments: 

• The examiners engaged appropriately with management during the examination to

understand the organization and gain an understanding of risk from that perspective. The

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examiners also provided the Board with a review of all matters requiring attention and an 

opinion on management's plan to address the issues. 

• The MRAs from the previous examination were beneficial for the board and management

is responding to these items addressed risks for our institution and drove improvements

to be made timely. The MRA issued for this examination period will address an open risk

area.

• FCA facilitated considerable dialog around matters requiring action and worked to assure

agreement on the issues identified.

• The FCA appropriately interacted with various board members throughout the course of

the examination cycle as they deemed necessary to support the individual reviews and

when they presented their results to the Board. We viewed the current year examination

results as very favorable and felt that the related discussions were valuable in the

development of our understanding of the related risks. Examination results confirmed

closure of prior year MRAs. Additionally, FCA acknowledged that management has

appropriately responded to two MRAs identified outside of the normal statutory

examination process of which management has taken appropriate and timely actions to

address.

• The FCA did not identify any matters requiring attention in their last final report. The

institution is not operating under a supervisory agreement.

• Informative discussion that assists in board oversight.

Comments perceived with negative feedback: 

• MRAs that were shared in the most recent examination were process improvement

opportunities and did not address risks at the institution. The examination, and

corresponding MRAs focused on the expectation of a specific form of a process, rather

than focusing on whether or not the institution had adequately addressed the related risks.

This response is aligned to the comment in question 2, noting that sometimes examiners

did not appear to accept deviation from practices outlined in the examination manual,

even when risk exposure was very limited.

• We agree with this statement overall, however the urgency sometimes attached to MRAs

require the institution at times to assign limited resources to items with a priority that is

not aligned to how much risk that matter may be contributing to the current risk

environment.

• Since FCA does not distinguish between low, moderate, or high risk, some MRAs that did

not address a risk to the institution were still issued as an MRA instead of a

“recommendation" for improvement. Overall, MRAs provide insight to management and

the board in risk areas of the institution.

• The matters requiring attention were properly identified but we do not feel posed a risk

to the institution.

• Most MRAs are helpful to draw attention where needed and improve upon. At times minor

MRAs garner the same attention and resources at levels that involve a more serious

infraction. This can be confusing for directors.

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• Most of the MRAs were technical in nature that were not material to risk. FCA's approach

to listing all findings as MRAs overstates risk.

• In general, the matters requiring attention were appropriate and beneficial, however, we

experienced matters requiring attention based on typographical errors, which was not

helpful in addressing risks to the institution.

• I disagree with this statement. Discussion addressing the risk associated with matters

requiring attention happened with management for most (not all) of the findings; however,

that opportunity was not given to the board.

Statement #4 

The examiners were professional and efficiently conducted examination activities. 

Average Numerical Ratings by FY Quarter 

First Second Third Fourth FY 

FY Quarter Quarter Quarter Quarter Average 

2021 N/A 1.2 2.0 1.4 1.5 

2019 1.6 1.5 1.8 1.3 1.6 

2018 1.5 2.1 1.3 1.4 1.6 

Comments: 

• [Name removed] and the examination staff were always very accommodating when

scheduling meetings with our staff. They also demonstrated professionalism with meeting

preparation to ensure specific content was covered and the length of meetings remained

within the allotted timelines.

• The examiners were professional, stayed on task, and provided meaningful feedback.

• The examination team was professional in their communications with our institution

personnel. Though there was a change in our EIC shortly prior to the start of the

examination they were able to get up to speed relatively quickly and not reduce

efficiencies too significantly.

• Examiners were professional and open to dialog. Remote meetings using WebEx were

effective.

• EIC and the entire FCA team were professional at all times during the examination. They

were very responsive to management questions and concerns. A pleasure to work with the

FCA examiners.

• The examination team acted in a very professional manner.

• An excellent, professional and collegial approach by the team in the unusual environment

of Covid. [Name removed]'s leadership was helpful and well-focused. Good job by all.

• The regulators we deal with are a professional and helpful group.

• FCA staff were very professional and productive. Additionally, the FCA deployed skilled

resources with a breadth of backgrounds (credit, technology, operations risk, assurance,

management, etc.) that were able to effectively and efficiently evaluate the risks within the

organization.

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• Examination staff provided questions and agendas ahead of scheduled meetings which

helped facilitate productive discussion. Examiners were professional and courteous.

Comments perceived with negative feedback: 

• All staff were very professional; however, the audit did not feel efficient due to the overall

length of the exam.

• In general, the examination team was organized and efficient in making its document

requests of the institution’s management. We observed that although the institution

provided documents to the FCA through the portal, many times duplicate requests were

made by the FCA staff.

• Our most recent examination began [date removed] 2021, with the loan review, and

concluded [date removed] 2021, when the final report was issued. During these four

months, there was an excessive amount of back and forth written and oral questions that

we felt were unnecessary. We think both our written and verbal communications were

clear, concise, and adequately addressed the questions. This was especially troublesome

to the staff since we have had the same EIC for the past couple of years. We have

experienced the same issue in previous reviews and quarterly updates since being

assigned this EIC.

• Examiners were very professional. The review time frame was [three months] [dates

removed]. There were numerous spontaneous calls and video conferences during the time

frame. Ongoing previously supplied documents to the FCA portal many times must be

submitted again during the examination. It would appear that this process could be

refined.

• Examination activities took too long, part of the issue was the exam was completed remote

due to Covid, which extended the timeline for the exam activities.

• Examiners were mostly professional until final exit conference with the board, where the

EIC’s overall tone was demeaning to a board of successful businessmen. Efficiency could

use improvement. It is noted the review was completely remote, and likely the examiners’

first time to do a review remotely. That said, in comparison to all internal reviews, and even

FCA Horizontal Examination, which were also done remotely, the examination was overall

less efficient.

COMMUNICATIONS 

Statement #5 

Communications between the Office of Examination staff and the institution were clear, 

accurate, and timely. 

8 

Average Numerical Ratings by FY Quarter 

First Second Third Fourth FY 

FY Quarter Quarter Quarter Quarter Average 

2021 N/A 1.7 2.0 1.7 1.8 

2019 1.6 2.3 1.9 2.0 2.0 

2018 1.8 2.1 1.5 1.6 1.8 
 

 

 

 

 

 

 

 

 

Comments: 

• [Name removed] and the examination staff were very effective communicators. They also

welcomed our questions during the review, and promptly responded to any of our

questions that required follow-up.

• The Office of Examination was clear, accurate, and timely in all its efforts, and highly

professional.

• The examination team provided clear communications to our institution via emails and

follow-up calls.

• The exam team allowed ample opportunity for the institution staff to ask clarifying

questions and provided answers that allowed the institution to clearly understand all

communications.

• Overall, communication with the EIC and the examiners was good. A suggestion would be

to set up brief “touchpoint" calls during the examination to keep the communication

flowing and to allow for the examiners to provide a status update and give management

the opportunity to ask questions that sometimes are difficult to convey in an email.

• Generally, yes.

• The exam staff were excellent to communicate at every level and event.

• Management felt process went well.

• We appreciate the open discussion and engagement between FCA examination staff and

institution staff on questions and issues that arose during the course of the examination

process. EIC [name removed] and supervisory examiner [name removed] managed the

examination professionally and ensured clarity of understanding.

Comments perceived with negative feedback: 

• See 4a above: Our most recent examination began [date removed] 2021, with the loan

review, and concluded [date removed] 2021, when the final report was issued. During these

four months, there was an excessive amount of back and forth written and oral questions

that we felt were unnecessary. We think both our written and verbal communications were

clear, concise, and adequately addressed the questions. This was especially troublesome

to the staff since we have had the same EIC for the past couple of years. We have

experienced the same issue in previous reviews and quarterly updates since being

assigned this EIC.

• On occasions, some communications were not entirely timely.

• All the staff were great to communicate with. Would not consider the 3 month time frame

to be timely.

• I agree with this statement, with one exception. (One item made it onto the matters

requiring attention that had no discussion during the examination and was only briefly

mentioned in one of the final calls. During that call it was addressed that the comment

would just be a recommendation, not a matter requiring attention). I would like to note

that overall, [name removed] did a commendable job in ensuring communication was

clear. [They] made it regular practice to repeat back a summarized version of

management’s responses, allowed management to respond to the summaries, and would

ask additional questions to clarify, if needed.

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• Multiple members of our leadership team have scheduled recurring monthly update calls

with the FCA examiners to ensure the flow of information is clear, accurate and timely.

These timely communications have proved to be very effective. The quarterly meetings

with executive management allow for timely updates to the FCA regarding organization

matters and for the FCA to provide the leadership updates on ongoing examination

activities and other agency topics noteworthy of discussion.

However, there was an opportunity for enhanced communications regarding potential

concerns with two accounts reviewed and criticized during the asset examination. This did

not allow us to fully support our position through discussion and resulted in some

incorrect citations of the regulations and Act regarding authorities in their communication

of examination conclusions. We have not observed this behavior in the past.

Statement #6 

Examination communications included the appropriate amount and type of information to

help the board and audit committee fulfill their oversight responsibilities. 

Average Numerical Ratings by FY Quarter 

First Second Third Fourth FY 

FY Quarter Quarter Quarter Quarter Average 

2021 N/A 1.4 1.8 1.4 1.5 

2019 1.8 2.0 1.9 2.0 1.9 

2018 1.8 1.9 1.7 1.9 1.8 

Comments: 

• Examination communications were appropriate in both the amount and type of

information provided. These communications helped the board and audit committee fulfill

their oversight responsibilities.

• Communications via close-out call conversations, the examination report (which contained

recommendations and an MRA), and virtual discussions with the Audit Committee and

Board were clear and contained information that will help the Board and Audit Committee

fulfill their responsibilities as risk areas were identified as needing improvements.

• The board and audit committee were also given the opportunity to participate at the start

of, during, and the conclusion of the examination. The presentation of the exam report to

the board was in a manner that was appropriate and informative.

• Yes, we believe FCA is genuinely interested in the Audit Committee's growth,

understanding, expertise and maturity. We appreciate the suggestions and counsel in this

area.

• Generally, yes.

• The majority of the communication occurred between FCA staff and management. The

exam team delivered the final exam report to the Board and fielded questions from the

directors which was appreciated.

• The EIC and Senior [examiner] were excellent and provided tools necessary to help us grow

and improve.

10 
 

 

 

 

 

 

 

 

• The FCA provided complete and detailed communications in the form of ongoing verbal

updates, close-out meetings with the various management teams, a formal readout of

results with executive management, presentation of examination results to the Board, and

through the written final Report of Examination.

• Very helpful and productive, entrance and exit meetings.

• Tied in well.

Comments perceived with negative feedback: 

• Communications during the exam are generally considered adequate and appropriate.

Beginning with the last exam cycle, FCA no longer provides an opportunity for

management to review the report before it is published. We believe this review should be

reinstated to avoid errors and misinterpretation.

• I mostly agree with this statement; however, additional clarity could have been provided

in some instances.

Statement #7 

Examiners fairly considered the views and responses of the board and management in

formulating conclusions and matters requiring attention. 

Average Numerical Ratings by FY Quarter 

First Second Third Fourth FY 

FY Quarter Quarter Quarter Quarter Average 

2021 N/A 1.7 1.8 1.5 1.7 

2019 1.5 1.9 2.3 1.7 1.9 

2018 1.9 2.2 1.7 1.6 1.9 

Comments: 

• The examiners were exceptionally professional. The examiners fairly considered the views

and responses of the Board and management in formatting conclusions and matters

requiring attention.

• The examination team communicated with institution staff via email and phone calls and

took into consideration responses given to inquiries and considered any additional

evidence submitted. They took time to listen to our team and to understand our processes

to determine if a recommendation or MRA would be needed for an area.

• The examination team and leadership were open to dialogue on all matters including

MRAs.

• Examiners took into consideration clarifications and circumstances explained by

management during the examination. When conversations took place, examiners were

open to management views, especially as conclusions were being formulated. FCA was

open to clarifying information which resulted in several MRAs being dropped and modified

to reflect accurate operational risk.

• The FCA examination team was good at encouraging discussion and listening to detail and

explanation.

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• Management was provided the opportunity to review and comment on the draft exam

report.

• The exam team were good to listen and provide timely responses.

• Good discussion.

Comments perceived with negative feedback: 

• As noted in questions 2 and 3, sometimes examiners appeared to be requiring a specific

way that the institution would address a risk area, without consideration for the specific

risk factors, organizational structure, or overall approach to risk mitigation. The examiners

would not always acknowledge that a different approach could adequately address the

risks identified. Related MRAs reflected prescriptive guidance as outlined in the

examination manual. In most instances, we were able to accommodate the change and

recommendation, but this could change in future cases.

• Maybe from a purely perception point of view, the findings or matters requiring attention

were communicated in a somewhat harsh or devoid of context.

• There did not seem to be any consideration given to the size of our institution in the items

we responded to. It seemed these items were non-negotiable.

• The Board of Directors had minimal views or responses for the examiners to consider in

formulating their conclusions and recommendations. However, conversations held

between examiners and certain board members throughout the examination were

effective. The exam team and Examiner in Charge had significant discussions with

management and appropriately considered their views before finalizing recommendations

during the statutory examination. However, as addressed under question #5 above,

communication regarding conclusions on two accounts during the asset examination were

not consistent with our past experience.

• Agree, except for issues noted around application of the IIA standard in question 2 and

typographical errors noted in question 3.

• Neither agree nor disagree for the review overall. It was examiner specific. Some were very

fair, had great discussion with us around the topic at hand, would do additional research

and revisit the discussion. Others appeared to have no interest in management’s

responses.

Statement #8 

FCS-wide guidance from the Office of Examination was proactive and helpful. 

12 

Average Numerical Ratings by FY Quarter 

First Second Third Fourth FY 

FY Quarter Quarter Quarter Quarter Average 

2021 N/A 1.8 2.0 1.9 1.9 

2019 1.9 2.4 2.1 2.0 2.1 

2018 1.9 2.0 2.0 1.7 1.9 
 

 

 

 

 

 

 

Comments: 

• The company appreciates all guidance from the Office of Examination. FCS-wide guidance

has helped ensure that we continue the appropriate path in accordance with FCA concerns,

intent and perspectives.

• FCA guidance from the Office of Examination was proactive and helpful. In general, other

FCA guidance also is helpful in identifying recommended best practices. While it was not

an issue in the most recent examination, in the past some examiners have at times treated

guidance as mandatory, which should be avoided.

• I agree and appreciate the disclosure of focus areas for the coming year. The timing of the

announcement can be burdensome if the institution is in the middle of the review when

the new focus areas are released, especially when the new focus areas are a result of some

issue or situation that has arisen somewhere else in the system. However, the examination

team has made efforts to recognize timing challenges.

• FCS-wide guidance from the Office of Examination in the form of the annual National

Oversight Plan, various information memorandums, and other non-formal communication

are all very helpful in the understanding of direction and requirements.

• Agree.

Comments perceived with negative feedback: 

• We observe some changes to messages and areas of emphasis based on the FCA board

disposition and experiences. Not saying this is unwarranted. However, long-term

implications and sustainability should be considered.

• Prior to the examination there was no communication with OE, however the FCA Exam

Manual is thorough and provides appropriate guidance. One finding was based on an

Informational Memorandum (December 13, 2018), which was not available on the FCA's

website.

• Can be a bit overwhelming with the volume.

• Most of the MRAs resulted from guidance issued after the examination started. As a result,

the institution did not have the opportunity to be proactive.

• In general, we would agree that guidance from the Office of Examination is helpful,

however, recently the guidance on model risk management seems to be an overreach and

requires smaller institutions to meet expectations that are not required by other regulators

of similar sized organizations ([Federal Deposit Insurance Corporation] FDIC, as an

example).

• Generally the guidance was helpful; however, as noted above we do not believe the

examination should be based on guidance that has not been previously provided.

13 
 

 

 

Statement #9 

Communications with FCA examination staff were effective for those examinations that 

were conducted entirely remotely. 

Average Numerical Ratings by FY Quarter 

First Second Third Fourth FY 

FY Quarter Quarter Quarter Quarter Average 

2021 N/A 1.3 2.0 1.6 1.6 

2019 Not applicable – new question 

2018 Not applicable – new question 

Comments: 

• FCA examination staff were clear, effective, and timely in their communications. Remote

communications were handled exceptionally well.

• Communications remained effective for our examination even though the examination

was conducted fully remotely. Conversations were able to take place either through email

or phone calls to complete the exam.

• Examination staff were well prepared and shared information in advance as warranted.

This made the remote discussions more effective.

• Yes, the remote aspect of the review went well. Onsite may provide some additional

opportunities for impromptu dialog. However, overall the remote examination activities

are very successful. We would recommend a combination of onsite and remote

examination activities going forward post pandemic.

• Remote work has helped our staff better manage the time we spend with examination

team members.

• The exam team was very effective in utilizing technology to conduct meetings with

management.

• No issues.

• Management did not note any issues regarding the completion of the exam via fully

remote FCA procedures. The use of technology (WebEx, etc.) supported an effective

examination and should be considered for future reviews.

• We appreciate the effective communication between FCA examination staff and institution

staff during the remote examination process. FCA examination staff held mini-close out

sessions for each section of the examination which facilitated good discussion and

engagement on issues surrounding the various examination areas.

Comments perceived with negative feedback: 

• The communication issues discussed in number 4a above were also experienced before

the pandemic: Our most recent examination began [date removed] 2021, with the loan

review, and concluded [date removed] 2021, when the final report was issued. During these

four months, there was an excessive amount of back and forth written and oral questions

that we felt were unnecessary. We think both our written and verbal communications were

clear, concise, and adequately addressed the questions. This was especially troublesome

14 
 

 

 

 

 

 

to the staff since we have had the same EIC for the past couple of years. We have 

experienced the same issue in previous reviews and quarterly updates since being

assigned this EIC. 

• Worked well. FCA's video conferencing platforms need to be modernized.

• Overall disagree; however, just as in question 7, this is examiner specific.

Statement #10 

Communications with FCA examination staff were efficient for those examinations that 

were conducted entirely remotely. 

Average Numerical Ratings by FY Quarter 

First Second Third Fourth FY 

FY Quarter Quarter Quarter Quarter Average 

2021 N/A 1.3 2.1 1.8 1.7 

2019 Not applicable – new question 

2018 Not applicable – new question 

Comments: 

• The examination staff completed most of their work remotely due to the pandemic and

did an exceptional job using web based technology to conduct productive meetings.

• FCA examination staff were timely and efficient with the remote examinations.

• In many ways the process was more effective because scheduling meetings with the

appropriate people was easier to do and more flexible to differing schedules and time

zones. This was easier than trying to get all meetings scheduled in a short time frame while

examiners were on-site.

• Staff dedicated to the credit administration and other areas were available for

management and were very proactive in meeting with the institution to resolve/address

examination questions.

• We agree that remote work can be completed in an efficient manner.

• Exam went smoothly and comments from institution staff were very positive.

• Please see above response to #9: The exam team was very effective in utilizing technology

to conduct meetings with management.

• No issues; perhaps at times more efficient by allowing everyone to gather at one time to

discuss matters via zoom versus one/off conversations that typically arise with in-person

meetings.

• Management did not note any issues regarding the completion of the exam via fully

remote FCA procedures. The use of technology (WebEx, etc.) supported an effective

examination and should be considered for future reviews.

• See response to question 9: We appreciate the effective communication between FCA

examination staff and institution staff during the remote examination process. FCA

examination staff held mini-close out sessions for each section of the examination which

facilitated good discussion and engagement on issues surrounding the various

examination areas.

15 
 

 

 

 

 

 

 

Comments perceived with negative feedback: 

• Communications were not as efficient for the fully remote examination versus an in-person

examination. Due to the nature of a remote examination the timeline for the examination

activities was not as straightforward as they have been in the past. An assigned examiner

would start an area and reach out with questions. However, it was not known to our team

when these individual areas would be reviewed. It created a time crunch on our end as we

would need to quickly respond amid working through other responsibilities. When the

examination was onsite the work was more contained to the assigned examination work

weeks and would not start and stop as inconsistently as this examination. Overall, things

ran smoothly but there were inefficiencies that occurred with the spread-out work period.

• Overall, the communication was effective with the FCA examination staff. A suggestion

would be to allocate more time for examiners in the areas of IT and Audit. During the

examination, due to FCA examiners’ time constraints, it was difficult at times to have

meetings between FCA staff and management to address examiners’ questions in a more

efficient manner.

• The phone interview with the audit committee chair was a challenging process for the

chairman.

• Remote communication took more time than an in-person examination, we don't feel it

was poorly done, it just takes more staff time.

• Overall disagree; see responses to questions 4 and 5:

o Examiners were mostly professional until final exit conference with the board,

where the EIC’s overall tone was demeaning to a board of successful businessmen.

Efficiency could use improvement. It is noted the review was completely remote,

and likely the examiners’ first time to do a review remotely. That said, in comparison

to all internal reviews, and even FCA Horizontal Examination, which were also done

remotely, the examination was overall less efficient.

o I agree with this statement, with one exception. (One item made it onto the matters

requiring attention that had no discussion during the examination and was only

briefly mentioned in one of the final calls. During that call it was addressed that the

comment would just be a recommendation, not a matter requiring attention). I

would like to note that overall, [name removed] did a commendable job in ensuring

communication was clear. [They] made it regular practice to repeat back a

summarized version of management’s responses, allowed management to

respond to the summaries, and would ask additional questions to clarify, if needed.

GENERAL QUESTIONS 

Statement #11 

What aspect of the examination process did you find most beneficial? 

• Professional communication, timely responses to questions, and offsite review was

favorable.

16 
 

 

 

 

 

 

• The board and staff found the exit conference to be very informative, especially when

discussing the matters requiring attention. The material was presented and discussed in a

manner that was very professional and easy to understand.

• The entirety of the examination was beneficial; the depth of knowledge and the insight

provided with regards to information security was excellent. Because the examiner was

very knowledgeable, it made it very easy to have in-depth conversations about detailed

and nuanced challenges in the information security space.

• The most beneficial part of the exam process were the conversations that occurred during

the exam with the exam team as questions would come up during their review of an area.

A different view of an area may be seen from an examiner’s perspective than from an

internal perspective. Talking and working through questions together allowed for the

creation of more tailored recommendations that can be implemented to more

appropriately address a risk area of the institution.

• The EIC and entire exam team were helpful throughout the exam process. They listened to

institution concerns and worked with board and management to give enough information

and direction to allow for action plans to be developed to address findings.

• It is evident at times that the FCA desires to share common practices and be somewhat

open in their dialogue and approach to the examination process. The exam teams appear

to have reasonable balance between less experienced and experienced staff—and this

balance is necessary for the exam process to be productive and for observations to be

risk-appropriate.

• Having video calls with different members of management during the review to address

questions was very beneficial and effective.

• The EIC was always very attentive and receptive to management questions. EIC was very

organized and made themselves available during the examination when management

needed to talk to the EIC. This made a positive impact in the examination process.

• Aspects of the exam relating to credit underwriting.

• The open dialogue on important issues related to organizational operations.

• Professional, communicative approach by the team.

• The fair and cooperative nature of the exam team.

• Post-exam follow-up and findings.

• The face to face discussions.

• The recommendations made in the area of cybersecurity and IT were particularly helpful

to management.

• The remote nature of the examination work was the most beneficial aspect. Allowed for

more effective process and less interruption of staff’s normal duties.

• The verbal interactions with FCA staff.

• The experiences and explanations provided by FCA staff shared with the board and staff.

• We appreciate our examination team's thoughtful feedback during the examination as well

as in the interim between exams. We have implemented not only our exam team's MRAs

but verbal recommendations and process enhancements/suggested best practices

provided in an effort to get out in front of emerging issues. Over the years, our examination

team has been a valuable resource to us in terms of proactive management of the

17 
 

 

 

 

 

 

 

 

 

 

 

 

institution and specifically on compliance matters, leading to the overall success and 

strength of the institution. 

• The staff.

• The individual report-outs by each examiner after each major area was completed.

• Opportunities to collaborate on the various risks facing the organization and the Farm

Credit System as a whole.

• We appreciated having the examination completed remotely. The remote process is less

disruptive to our staff than onsite examinations.

• Sharing of "best practices" from across the System.

• Wrap up/findings and general discussion.

• The examination staff did a good job of pointing out areas of enhancement, even if they

did not rise to the level of a matter requiring attention.

• We appreciate the opportunity for discussion and learning of best practices across the

Farm Credit System from the lens of the examination function.

• Discussion around model risk management and the annual meeting information

statement. Both areas had new guidance since the last examination. Examiners were very

helpful in adding clarity to the new guidance and took a team approach in helping the

institution ensure practice was in-line with updated guidance.

Statement #12 

What aspect of the examination process did you find least beneficial? 

• In-person briefing on the Report of Examination to the Board of Directors is preferred

when it is safe to travel.

• Though it is known to both be outdated and is currently under revision, it is still worth

reiterating that the e-commerce policy is sorely out of step with contemporary views on

e-commerce and how it applies to a service organization.

• The least beneficial part of our examination was the switch in our EIC shortly prior to the

start of our examination. This required additional conversations that would not have been

necessary if the switch had not occurred.

• The exam for this period was entirely remote. The exam team was very efficient and

effective given the challenge of performing a remote exam, but it is always better to have

an onsite exam.

• The FCA has moved away from making recommendations in favor of containing all

regulatory advisement in the examination outcome as an MRA. While we understand this

move, it has created a setting in which all matters - without regard to materiality - are

represented as MRAs. This approach tends to elevate the sense of urgency on certain

matters that may not justify that level of urgent attention - including the need to assign

resources that have been limited by the pandemic operating environment and the general

expansion of regulatory expectations.

• There is a perceived issue regarding responsiveness in the Agency. We have experienced

substantial delays in getting required actions and official communications delivered to us.

We perceive there are higher levels and processes that result in the lack of timeliness.

Although not communicated directly, we perceive a level of frustration from our frontline

18 
 

 

 

 

 

 

FCA staff including our EIC as well. Truthfully there are subjects that shouldn’t take as long 

as it does. 

• The need to react to questions that are promulgated by emerging issues in the system.

• I have no meaningful negatives.

• Not applicable.

• Not applicable. All was beneficial.

• Not applicable.

• We found the examination to be helpful.

• None.

• The Audit Committee Chair felt the phone interview was a difficult process and would have

worked much better with an in-person interview. It would have been beneficial if the

chairman would have had some knowledge of what to expect in the interview.

• No comments or criticisms here.

• 3 month time frame.

• None to speak of.

• Total length of the examination time frame. . . several months.

• Some compliance discussions with certain regs.

• Although FCA examination staff communicated well throughout the process, the remote

examination required more institution staff resources and time than an onsite examination

due to the length of the examination activities (nearly 3 months) and need to provide all

materials through the FCA portal or institution secure access.

• Attitude and tone set during delivery of findings. While the fully remote examination

created a heavy burden on the institution, it was understandable. The attitude, tone set

and delivery of findings at the exit conference was adversarial and ruined the opportunity

for positive collaboration between the institution and our regulator.

Statement #13 

Please provide any comments from the Board as a whole regarding the examination process 

not provided in the preceding responses. 

Comments: 

• Overall, the examination process was smooth and appropriate conversations occurred

between the exam team, staff, and the board so that there were no surprises when the

draft and final reports were issued. Having open, transparent conversations is important

to our institution and allows for the best possible response to any issues that may occur

during an examination process.

• The Board recognizes the importance that the examination process brings to the

organization as a whole. The examination process and results provide critical feedback to

the Board as it relates to governance and allows us to focus on areas where risks and

improvements are required. The Board very much values the discussion between FCA and

directors.

• This survey was discussed with the board at our December board meeting. No comments

provided.

19 
• Board members had communication with the Examiner in Charge during the examination

process and felt the interaction was helpful for both parties to understand the significant

issues and initiatives being addressed by the board.

• Overall the Board viewed this as a quite positive and constructive exam.

• Appreciate the professionalism and feedback. Thank you.

• From the Board's perspective the exam process and resulting report were thorough.

• Our last examination was [date removed], 2020. We also did not have significant interface

with the FCA during the quarter. So we did not have anything to report for the second

quarter 2021. Not sure why we received this survey but replied with "Does not apply"

responses.

• The Board agrees with management's comments and appreciates the openness of our

examination team in listening to the concerns of the Board. FCA has been very transparent

and has provided constructive feedback and answered any questions the Board has had.

• We appreciate the recognition of our staff’s hard work and quick responses.

• The Chairman of the institution's Board of Directors agreed to allow the Audit Committee

Chairman to review and discuss this survey with management prior to its submission.

Based on the timing of the survey release and the requested due date, a discussion on the

responses amongst the full Board was not possible. However, the survey will be

appropriately discussed as part of the August 2021 board meetings, specifically with the

Audit Committee and a report to the Board as a whole. The Audit Committee Chairman

concurs with management's comments.

• Always like and appreciate the "no surprises" and teaching approach used by our

examination team. General reminder that it would be good to “cc” the CEO and

institution’s internal review lead when any contact is made with the Board Chair and Audit

Committee Chair. [Names removed] and the entire crew did a great job and are always

very professional, responsive and thoughtful.

• Overall good coverage, with a collaborative discussion of the findings.

Comments perceived with negative feedback: 

• While this isn't specific to the examination process, we would like proposed rules and

guidance that is provided to be relevant and accretive to the mission of the Farm Credit

System. Two recent examples of proposed rules that cause some concern in this area relate

to the outside director rule that could potentially limit the pool of qualified directors and

the proposed rule relating to High Value Commercial Real Estate which could adversely

impact the System's ability to meet the capital needs of borrowers.

• The Audit Committee felt there was miscommunication about the frequency and timing

of the agency's consideration of management’s FIRS ratings.

• The Board feels FCA should take into consideration institution size when evaluating and

applying guidance. As a smaller institution we pose less risk to the System than larger

institutions do.

• More time should be given (at least a month) to complete the survey, so we can discuss

the survey during a regular board meeting. Our due date is September 22nd, and I received

the request on August 31st.

20 
 

 

 

 

 

• The Board appreciates the relationship and communications with FCA and FCA's

willingness to enter into dialogue and debate on key issues. In general, we find the

improvements identified to be helpful to the institution. However, the focus of

examinations continues to move away from safety and soundness issues and more

towards operational issues and compliance with relatively minor regulatory items.

• A more comprehensive view from the board may be found in the letter addressed to [name

removed] from [name removed], on behalf of the board. This letter was uploaded to the

FCA Portal on [date remove] 2021. The main points the board would like to make is that

we want the institution and the entire System to thrive. It would only benefit all parties if

FCA and the institution could work together as a team. When an examiner’s attitude is

condescending, particularly about matters that are outside FCA regulation and guidance,

it does not garner the opportunity for positively working together toward a common goal.

Request for OIG Contact 

Would you like the Office of Inspector General to contact you confidentially to discuss your 

survey responses and/or the examination? 

One institution surveyed for this report indicated that they would like a call from the OIG. 

21 
 

 

FISCAL YEAR 2021 SUMMARY REPORT 

The table below provides cumulative data for the FY 2021 ratings for survey statements 1-10. 

During FY 2021, the OIG sent surveys to 39 FCS institutions and received 29 responses. This is a 

74% response rate, down 8 percentage points from FY 2019’s response rate of 82%. The overall 

average rating for survey statements 1-10 was 1.7 for FY 2021. For FY 2021, 88.2% of the ratings 

were either “completely agree” (1), or “agree” (2). 

22 

Number and Percentage per Rating Category 

Statement 

Completely

Agree

(1) 

Agree

(2) 

Neither 

Agree 

nor 

Disagree

(3) 

Disagree

(4) 

Completely

Disagree

(5) 

Does 

Not 

Apply*

(6) 

Average 

Numerical 

Rating 

1 8 29% 17 61% 2 7% 0 0% 0 0% 1 4% 1.8 

2 11 39% 14 50% 2 7% 0 0% 0 0% 1 4% 1.7 

3 8 29% 15 54% 3 11% 0 0% 0 0% 2 7% 1.8 

4 18 64% 6 21% 2 7% 0 0% 1 4% 1 4% 1.5 

5 10 36% 15 54% 1 4% 0 0% 1 4% 1 4% 1.8 

6 13 46% 14 50% 0 0% 0 0% 0 0% 1 4% 1.5 

7 11 39% 15 54% 1 4% 0 0% 0 0% 1 4% 1.7 

8 7 25% 15 54% 4 14% 0 0% 0 0% 2 7% 1.9 

9 13 46% 13 46% 0 0% 0 0% 1 4% 1 4% 1.6 

10 12 43% 12 43% 2 7% 0 0% 1 4% 1 4% 1.7 

Total 

Responses 111 39.6% 136 48.6% 17 6.1% 0 0% 4 1.4% 12 4.3% 1.7 

*Ratings of “6” (Does Not Apply) are not included in average numerical ratings.
 

 

 

Farm Credit Administration 

Office of Inspector General 

REPORT FRAUD, WASTE, ABUSE, & 

MISMANAGEMENT 

Fraud, waste, abuse, and mismanagement in government concerns everyone: Office

of Inspector General staff, Farm Credit Administration employees, Congress, and the 

general public. We actively solicit allegations of any inefficient and wasteful

practices, fraud, and mismanagement related to FCA programs and operations. You

can report allegations to us in several ways: 

Phone: (800) 437-7322 (Toll-Free)

(703) 883-4316

Fax: (703) 883-4059

Email: fca-ig-hotline@rcn.com 

Mail: 1501 Farm Credit Drive 

McLean, VA 22102-5090 

To learn more about reporting wrongdoing to the OIG, please visit our website at

https://www.fca.gov/about/inspector-general.