Office of 

Inspector General 

Audit of FCA’s Financial Statements 

Fiscal Year 2014 

A-14-FS 

November 2014 
TABLE OF CONTENTS 

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

Auditor’s Opinion Letter on the Financial Statements..........................................................3 

For the financial statements and related notes to each fiscal year’s financial audit reports, 

refer to FCA’s Performance and Accountability Report (PAR) for that year. The PARs can 

be found on FCA’ s website. 
 

 

 

 

 

Farm Credit Administration Office of Inspector General 

1501 Farm Credit Drive 

McLean, VA 22102-

5090 (703) 883-4030 

November 13, 2014 

The Honorable Jill Long Thompson, Board Chair 

The Honorable Kenneth A. Spearman, Board Member 

The Honorable Leland A. Strom, Board Member 

Farm Credit Administration 

1501 Farm Credit Drive 

McLean, Virginia 22102-5090 

Dear Board Chair Long Thompson and FCA Board Members Spearman and Strom: 

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

statements for the fiscal year (FY) ended September 30, 2014 is attached. 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 auditor’s opinion, FCA’s principal financial statements present fairly, in all 

material respects, the financial position of the Agency as of the FY ended September 30, 2014, 

in conformity with generally accepted accounting principles. 

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

determine the audit procedures for the purpose of expressing an opinion on the financial 

statements. Although they did not express an opinion on the effectiveness of FCA’s internal 

controls, they did not identify any deficiencies considered to be a material weakness. 

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

selected provisions of 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 or other matters required to be 

reported under Government Auditing Standards issued by the Comptroller General of the United 

States or the Office of Management and Budget (OMB) Bulletin No. 14-02, Audit Requirements 

for Federal Financial Statements. 

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

Government Auditing Standards and OMB Bulletin No. 14-02. To ensure the quality of the work 

performed, the OIG: 

 reviewed Harper, Rains, Knight & Company approach to and planning of the audit, 

 evaluated the qualifications and independence of the auditors, 

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 attended key meeting with auditors and Agency officials, 

 monitored the progress of the audit, 

 examined workpapers, and 

 reviewed the audit reports. 

Harper, Rains, Knight & Company is responsible for the attached auditor’s 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 to enable 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, 

Elizabeth M. Dean 

Inspector General 

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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 balance sheet of the Farm Credit Administration (FCA), as of 

September 30, 2014, and the related statements of net cost and changes in net position, and combined 

statements of budgetary resources, for the fiscal year then ended and the related notes to the financial 

statements. 

Management’s Responsibility for the Financial Statements 

Management is responsible for the preparation and fair presentation of these financial statements in 

accordance with general accepted accounting principles in the United States of America; this includes 

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 audit. We 

conducted our audit in accordance with auditing standards generally accepted in the United States of 

America; the standards applicable to financial audit contained in Government Auditing Standards issued 

by the Comptroller General of the United States; and Office of Management and Budget (OMB) 

Bulletin No. 14-02, Audit Requirements for Federal Financial Statements. Those standards and OMB 

Bulletin No. 14-02 require that we plan and perform the audit to obtain reasonable assurance about 

whether the financial statements are free from material misstatement. 

An audit 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 

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 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 also includes evaluating 

the appropriateness of accounting policies used and the reasonableness of significant accounting 

estimates made by management, as well as evaluating the overall presentation of the financial 

statements. 

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

our audit opinion. 

Harper, Rains, Knight & Company, P.A. • Certified Public Accountants • Consultants
 

700 12th Street, NW, Suite 700 • Washington, DC 20005
 

Telephone 202.558.5167 • Facsimile 601.605.0733 • www.hrkcpa.com 

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The Board and Inspector General 

Farm Credit Administration – Continued 

Opinion on the Financial Statements 

In our opinion, the financial statements including the accompanying notes, present fairly, in all material 

respects, the financial position of FCA as of September 30, 2014, and its net cost of operations, changes 

in net position, and budgetary resources for the fiscal year then ended, in conformity with accounting 

principles generally accepted in the United States of America. 

Other Matters 

The financial statements of FCA as of September 30, 2013, were audited by other auditors whose report, 

dated November 6, 2013, expressed an unmodified opinion on those statements. 

Required Supplementary Information 

Generally accepted accounting principles in the United States of America require that the information in 

the Management’s Discussion and Analysis, and Required Supplementary Information sections be 

presented to supplement the basic financial statements. Such information, although not a part of the 

basic financial statements, is required by the Federal Accounting Standards Advisory Board who 

considers it to be an essential part of financial reporting for placing the basic financial statements in an 

appropriate operational, economic, or historical context. We have applied certain limited procedures to 

the required supplementary information 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 information and comparing the information for consistency with management’s responses to our 

inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic 

financial statements. We do not express an opinion or provide any assurance on the information because 

the limited procedures do not provide us with sufficient evidence to express an opinion or provide any 

assurance. 

Other Information 

Our audit was conducted for the purpose of forming an opinion on the basic financial statements as a 

whole. The information in the Statement of the Board Chair and Chief Executive Officer (CEO), Letter 

from the Chief Financial Officer, and Other Information section is presented for purposes of additional 

analysis and is not a required part of the basic financial statements. Such information has not been 

subjected to the auditing procedures applied in the audit of the basic 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 the financial statements, we considered FCA’s internal control 

over financial reporting (internal control) to determine the 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 FCA’s internal control. Accordingly, we do not 

express an opinion on the effectiveness of FCA’s internal control. We did not test all internal controls

relevant to operating objectives as broadly defined by the Federal Managers’ Financial Integrity Act of 

1982. 

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The Board and Inspector General 

Farm Credit Administration – Continued 

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 was for the limited purpose described in the first paragraph of this

section and was not designed to identify all deficiencies in internal control 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 that we consider to be material weaknesses. 

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 certain provisions of laws, regulations, 

contracts, and grant agreements, noncompliance with which could have a direct and material effect on 

the determination of financial statement amounts, and certain provisions of other laws and regulations 

specified in OMB Bulletin No. 14-02. However, providing an opinion on compliance with those 

provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The

results of our tests of compliance disclosed no instances of noncompliance or other matters that are 

required to be reported herein under Government Auditing Standards or OMB Bulletin No. 14-02. 

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

November 13, 2014 

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