Farm Credit Administration Office of Inspector General 

1501 Farm Credit Drive 

 McLean, Virginia 22102-5090

 

 

April 21, 2015 

The Honorable Kenneth A. Spearman, Board Chairman 

The Honorable Dallas P. Tonsager, Board Member 

The Honorable Jeffery S. Hall, Board Member 

Farm Credit Administration 

1501 Farm Credit Drive 

McLean, VA 22102-5090 

Dear Board Chairman Spearman and FCA Board Members Tonsager and Hall: 

Enclosed is the semiannual report on the activities of the Farm Credit Administration’s (FCA or 

Agency) Office of Inspector General (OIG) for the period October 1, 2014 through March 31, 

2015. This is the fifty-second report since the establishment of the OIG on January 22, 1989. 

I submit this report in accordance with the Inspector General Act of 1978, as amended (IG Act). 

Section 5(b) of the IG Act requires that the FCA Board send this report to the appropriate 

Congressional committees and subcommittees within 30 days after the date of this transmittal, 

accompanied by management’s report on the status of audit, inspection, and/or evaluation 

action items. 

I would like to thank outgoing Board Chair Jill Long Thompson and Board Member Leland Strom 

for their sustained support of the OIG’s work. Moreover, I congratulate Kenneth Spearman on 

his appointment as Chairman of the FCA Board, as well as welcoming Board Member Dallas 

Tonsager and Board Member Jeffery Hall. I look forward to a harmonious and productive 

relationship. 

This reporting period, the OIG has experienced additional transitions regarding our personnel. 

In October, our Administrative Assistant retired. We transitioned the position to a 

Management/Program Analyst in October; we currently have a staff of six professionals. 

The OIG is diligent in keeping to its core mission of conducting independent audits, 

investigations, and reviews to improve the Agency’s efficiencies and effectiveness. We issued 

two program audit reports during this reporting period: one on FCA’s Special Supervision and 

Enforcement processes and the second on FCA’s Commissioning Program. 

For the six-month period, there were 13 agreed-upon actions implemented, with 1 closed as of 

March 31, 2015. Please refer to pages 8-11 of the report for more information. We also 

initiated an audit on mobile device cost controls at FCA and the FY 2015 Financial Statement 

Audit of FCA. Please refer to page 12 of the report for further information. 

We initiated a contract with Harper, Rains, Knight & Company for the FY 2014 Financial 

Statement Audit of FCA. This audit was overseen by the OIG and completed during this 
reporting period. The audit resulted in an unmodified opinion. Please refer to page 8 for 

additional information. Also, the OIG’s annual evaluation of the Agency’s compliance with the 

Federal Information Security Management Act was completed. This annual evaluation is 

conducted by the OIG’s Senior Information Technology Auditor, and the report was issued on 

November 14, 2014. There was one agreed-upon action as a result of this evaluation, which 

was resolved. Please refer to page 9 for further information. 

 

The OIG continues to send surveys to the Farm Credit System institutions following regulatory 

safety and soundness examinations and other interactions with the FCA Office of Examination 

(OE). Three surveys were issued this reporting period. The results of the surveys, evaluating 

the quality of the examination work and OE interactions, are summarized without attribution on a 

quarterly basis. The FCA Board and OE have found this to be a valuable measuring tool. 

I would like to acknowledge FCA management’s positive and timely reaction to our work. I look 

forward to continuing a responsive and effective relationship between the OIG and the FCA 

Board, a partnership striving continuously to strengthen FCA operations. 

If you have any questions, please call me at 703-883-4036 or 4030. 

Sincerely, 

Elizabeth M. Dean 

Inspector General 

Enclosure 
Table of Contents 

Message from the Inspector General ........................................................................................ 1 

Background ................................................................................................................................. 2 

Strategic Goals ............................................................................................................................ 4 

Audits, Inspections, and Evaluations ....................................................................................... 7 

REPORTS ISSUED ................................................................................................................... 7 

AUDITS AND EVALUATIONS IN PROCESS ........................................................................ 12 

STATUS OF AGREED-UPON ACTIONS AND RECOMMENDATIONS ................................ 13 

Other Reports ............................................................................................................................ 14 

QUARTERLY SURVEY OF FARM CREDIT SYSTEM INSTITUTIONS ................................. 14 

MANAGEMENT ADVISORY REPORTS ................................................................................ 15 

Investigations ............................................................................................................................ 16 

Legislative and Regulatory Reviews ....................................................................................... 18 

Congressional Interaction ........................................................................................................ 20 

Outreach .................................................................................................................................... 21 

OIG Staff .................................................................................................................................... 22 

Other Activities ......................................................................................................................... 23 

Annex ......................................................................................................................................... 24 

Appendix A ................................................................................................................................ 25 

Appendix B ................................................................................................................................ 26 

Appendix C ................................................................................................................................ 27 

Appendix D ................................................................................................................................ 28 

Appendix E ................................................................................................................................ 29 

Appendix F ................................................................................................................................ 30 

Appendix G ................................................................................................................................ 31 

Appendix H ................................................................................................................................ 32 

FCA OIG SEMIANNUAL REPORT TO THE CONGRESS

OCTOBER 1, 2014 ─ MARCH 31, 2015

1

Message from the Inspector General

I am pleased to submit this Semiannual Report to the Congress. This report 

summarizes the activities and accomplishments of the Farm Credit Administration’s 

(FCA or Agency) Office of Inspector General (OIG) for the period October 1, 2014 

through March 31, 2015. The OIG’s efforts were directed toward implementing the 

OIG’s Fiscal Year (FY) 2015 strategic and operating plan and budget; performing 

audits, inspections, and evaluations of FCA programs and operations; conducting 

investigations; reviewing existing and proposed legislation and regulations relating to 

Agency programs and the IG community; and providing objective, independent 

reporting and counsel to the FCA Board on FCA programs and operations. 

 The OIG issued four audits and evaluations during this reporting period. 

Additionally, the OIG issued 26 surveys to FCS institutions, designed to review the 

quality of mission fulfillment. Three survey reports summarizing survey results were 

delivered to the Chief Examiner and FCA Board. We contracted with Harper, Rains, 

Knight & Company, P.A. to perform the audit of FCA’s financial statements for FY 

2014, which was issued in November 2014. We completed the OIG’s annual 

evaluation of the Agency’s compliance with the Federal Information Security 

Management Act (FISMA) and issued the report in November 2014. We also 

completed program audits of: FCA’s Special Supervision and Enforcement 

Processes, and FCA’s Commissioning Program. During this period, the OIG also 

initiated new audits on mobile devices and the FY 2015 Financial Statement Audit. 

 I would like to acknowledge the effective efforts of the talented OIG staff in 

diplomatically leading Agency management to focus on significant program issues. In 

conjunction, FCA management was positive and timely in reacting and making 

improvements. I look forward to continuing a positive and effective relationship 

between the OIG and the FCA Board, a partnership striving to 

continuously strengthen FCA operations. 

Message from the Inspector General 
FCA OIG SEMIANNUAL REPORT TO THE CONGRESS

OCTOBER 1, 2014 ─ MARCH 31, 2015

2

FARM CREDIT ADMINISTRATION

The Farm Credit Administration (FCA or Agency) is an independent Federal agency of the United 

States government responsible for the regulation and examination of Farm Credit System (FCS or 

System) institutions chartered under the Farm Credit Act of 1971, as amended (Farm Credit Act). 

As a non-appropriated agency, FCA funds its expenses primarily through assessments to the 

institutions it regulates. FCA’s Fiscal Year 2015 budget is $65,600,000. Assessments by FCA to 

FCS institutions are $54,500,000 with other sources of funding totaling $10,600,000. 

At the end of the prior semiannual reporting period, the Agency had 286 employees. At the end of 

this reporting period, FCA had 284 employees, about half of which are examiners located in five field 

offices. 

FARM CREDIT SYSTEM 

The FCS is a Government-sponsored enterprise comprised of 3 Farm Credit banks, 1 Agricultural 

Credit Bank, and 76 lending associations in all 50 states and Puerto Rico that primarily make loans to 

agriculture. The System raises funds by selling securities in the national and international money 

markets through its special purpose entity, the Federal Farm Credit Banks Funding Corporation. 

These securities are not guaranteed by the U.S. Government. 

The Federal Agricultural Mortgage Corporation (Farmer Mac), also a part of the FCS, is chartered by 

the Federal government to provide a secondary market for agricultural mortgage loans. Farmer Mac 

is publicly traded and issues its own debt securities. Additionally, there are five active service 

corporations that provide services to FCS entities and eligible borrowers. 

Background 

Headquarters McLean, VA

Bloomington, MN 

Sacramento, CA Denver, CO

Dallas, TX
FCA OIG SEMIANNUAL REPORT TO THE CONGRESS

OCTOBER 1, 2014 ─ MARCH 31, 2015

3

OFFICE OF INSPECTOR GENERAL 

The mission of the Office of Inspector General (OIG) is to be an agent of positive change, striving for 

continual improvement in FCA’s management and program operations. The Inspector General Act 

of 1978, as amended, established the OIG in 1989. 

The Inspector General is appointed by the FCA Board without regard to political affiliation and solely 

based on integrity and demonstrated ability in accounting, auditing, financial analysis, management 

analysis, investigations, law, or public administration. The OIG’s FY 2015 budget is $1,445,925. 

While the OIG is under the general supervision of the FCA Board, it operates with independent 

personnel and contracting and budget authority. The Inspector General reports both to the FCA 

Board and to the Congress. 

The OIG has four major components: audits, inspections, and evaluations of programs and 

operations; investigations; legislative and regulatory reviews; and outreach. 

Office of Inspector General

Audits,

Inspections,

and Evaluations

Investigations

Legislative and

Regulatory

Reviews

Outreach

Background 
FCA OIG SEMIANNUAL REPORT TO THE CONGRESS

OCTOBER 1, 2014 ─ MARCH 31, 2015

4

To accomplish our mission, the OIG has eight strategic goals in place that are aligned to FCA’s 

mission, programs, and activities (see the OIG’s Strategic and Operating Performance Plan for 

additional information). The following list summarizes our eight strategic goals and related outcomes 

during this reporting period. 

Strategic Goal 1: 

 

Deliver quality audit, inspection, and evaluation products 

and services that are useful to the FCA Board, 

management, and the Congress. 

In pursuit of this goal, the OIG continues to provide quality reports to FCA 

management for improvement to programs. The OIG initiates a risk-based approach 

to FCA programs in determining the workload plan. During this reporting period, we 

issued three audit reports and one evaluation report. The reports were directly related 

to FCA’s oversight and supervision of the regulated FCS institutions, FCA training of 

examiners and FCA monitoring of information security. The issued reports were timely 

and constructive to improve Agency operations. As a result of our work, thirteen 

recommendations related to the examination, supervision and continuous IT 

monitoring were made to FCA management. Of these recommendations, all thirteen 

were agreed-upon, and three recommendations involving FCA conference and 

training expenses were closed from prior reporting periods. We also have two 

ongoing audits to promote effectiveness and efficiency. 

Strategic Goal 2: 

 

Provide technical advice and assistance to Agency 

officials in developing sound management information and 

financial reporting systems and in streamlining programs 

and operations. 

The OIG provides technical advice to management in a variety of methods. For this 

reporting period, the OIG issued one management advisory to the FCA Board. The 

advisory report was issued to recommend that FCA consider how the Agency might 

use suspension and debarment mechanisms to protect government interests in 

procurement actions. The OIG also presented at the January 2015 Farm Credit 

System Insurance Corporation (FCSIC) Audit Committee meeting to discuss the 

need for IG oversight of FCSIC. The Inspector General also communicates with the 

Board on a regular basis on issues facing FCA, which provides an opportunity for 

discussion of relevant topics.

Strategic Goals 
FCA OIG SEMIANNUAL REPORT TO THE CONGRESS

OCTOBER 1, 2014 ─ MARCH 31, 2015

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Strategic Goal 3: 

 

Continuous improvement of the OIG staff, products, and 

internal office administration. Quality is highly valued. 

The OIG continuously works to improve internal staff and processes. All OIG staff 

maintain requirements for their related professional standards. We participate in a 

peer review every three years, and we received a pass rating during our last peer 

review in June 2013. The OIG conducts an annual quality assurance review on the 

audit function and assesses internal controls on a continuous basis. 

Strategic Goal 4: 

 

Effectively investigate and report administrative and 

criminal violations relating to FCA programs and personnel 

to Agency officials, the Attorney General (when 

appropriate), and the Congress. 

The IG Counsel performs the investigative function for the OIG. For this reporting 

period, three reports of investigation were issued. Five investigations were closed, 

and there are currently two preliminary investigations at the end of the reporting 

period. We received eight allegations from the OIG Hotline during the October to 

March timeframe. All eight complaints were closed or referred to other Federal 

agencies as they involved matters outside OIG’s jurisdiction. 

Strategic Goal 5: 

 

Cause FCA employees and managers to recognize their 

responsibility and report observed or suspected 

wrongdoing to the OIG.

The OIG recognizes the importance of employees and managers reporting, and the 

OIG reacting, to suspected or observed wrongdoing. During this reporting period, we 

updated the OIG Hotline poster and distributed it throughout the Agency. Hotline 

information is prominent in reports and publications. In addition, we are in the 

process of completing a fraud awareness briefing. This briefing will be used to 

educate FCA employees on fraudulent actions and potential indicators of fraud. 

Strategic Goals 
FCA OIG SEMIANNUAL REPORT TO THE CONGRESS

OCTOBER 1, 2014 ─ MARCH 31, 2015

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Strategic Goal 6: 

 

Maintain an effective program for reviewing and 

commenting on proposed and existing legislation and 

regulations affecting the Agency and the IG community.   

Reviewing and commenting on proposed and existing legislation and regulations 

affecting FCA and the IG community remain an important area for the OIG. 

During this reporting period, we reviewed 15 items under the following 

categories: legislation, proposed rule, final rule, and informational memorandum. 

Strategic Goal 7: 

 

Promote OIG’s role within the FCA and the community at 

large. 

Outreach and communication are essential to the OIG’s role. We briefed 

incoming Board members on the OIG role and activities. The OIG briefs 

incoming employees annually at FCA’s new employee orientation. For this 

reporting period, the IG also briefed the Farm Credit System Insurance 

Corporation on the need for IG oversight. 

Strategic Goal 8: 

 

Provide leadership to organizations directly contributing to 

the IG community, the Agency, and the Federal 

government. 

OIG staff participate in workgroups, conferences, and training related to the IG 

community, FCA, and the Federal government. The IG is a member of the 

Executive, Legislation, and Inspection and Evaluation Committees of the Council 

of Inspectors General on Integrity and Efficiency (CIGIE). The CIGIE Legislative 

Committee has engaged in several responses to legislative efforts and 

congressional hearings. The Counsel is Vice-Chair of CIGIE’s Council of 

Counsels. The auditors are involved with CIGIE, the FAEC, and the Inspection 

and Evaluation Roundtable.

Strategic Goals 
FCA OIG SEMIANNUAL REPORT TO THE CONGRESS

OCTOBER 1, 2014 ─ MARCH 31, 2015

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REPORTS ISSUED 

This reporting period, the OIG continued to provide FCA with high quality products. We issued four 

audit and evaluation reports with thirteen agreed-upon actions. We also have two in-process audits, 

both initiated during this six-month period. The OIG also issued 26 surveys to FCS institutions and 

issued three reports, summarizing the survey results, to the Chief Examiner and FCA Board. The 

reports summarize stakeholder opinions on the quality and issues involved in mission execution. 

Lastly, one Management Advisory was issued to the FCA Board. 

The OIG conducts all audits in accordance with Government Auditing Standards issued by the 

Comptroller General of the United States for audits of Federal organizations, programs, activities, and 

functions. Inspections and evaluations are conducted in accordance with the CIGIE Quality 

Standards for Inspections. 

Copies of most OIG reports are available on our web site at www.fca.gov/home/inspector.html, or by 

contacting the OIG at (703) 883-4030, or by e-mail at ig_information@fca.gov. We offer a free e-mail 

subscription service that provides automatic notification by e-mail when new report or other 

information is posted to the OIG website. Go to http://apps.fca.gov/subscribeOIG/, provide your 

email, and click join the list.

Audit and 

Evaluation 

Reports 

Issued

4

Agreed-Upon 

Actions 

13

In-Process 

Reviews

2

Surveys 

Issued to 

FCS 

Institutions

26

Survey 

Reports

3

Management 

Advisory

1 

Audits, Inspections, and Evaluations 
FCA OIG SEMIANNUAL REPORT TO THE CONGRESS

OCTOBER 1, 2014 ─ MARCH 31, 2015

8

Audit of FCA’s Financial Statements Fiscal Year 2014 

The OIG contracted with Harper, Rains, Knight & Company, P.A., an independent public 

accounting firm, and oversaw the audit of FCA’s financial statements for FY 2014. Harper, 

Rains, Knight & Company completed the audit and issued an unmodified opinion in November 

2014. 

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. The auditors did not express an opinion on the effectiveness of FCA’s internal 

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

The auditors 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. 

The final report was issued on November 13, 2014. 

Audits, Inspections, and Evaluations 
FCA OIG SEMIANNUAL REPORT TO THE CONGRESS

OCTOBER 1, 2014 ─ MARCH 31, 2015

9

OIG 2014 Evaluation of the Farm Credit Administration’s Compliance with the Federal 

Information Security Management Act 

The Federal Information Security Management Act (FISMA) of 2002 requires an agency’s Chief 

Information Officer and OIG to conduct annual assessments of the agency’s information security 

program. The purpose of FISMA was to strengthen the security of the Federal government’s 

information systems and develop minimum standards for agency systems. 

The OIG completed the 2014 independent evaluation of FCA’s compliance with FISMA during 

this reporting period. The evaluation found that FCA’s Chief Information Officer and 

experienced IT team are proactive in their approach to information security. 

OMB required OIGs to evaluate 11 areas during 2014: 

FCA established a program in 10 of the areas that is consistent with National Institute of 

Standards and Technology’s (NIST) and OMB’s guidelines. One area, continuous monitoring, 

was identified where improvements needed to be made. FCA agreed to the following action: 

 Define, document, and implement an enterprise-wide information security continuous 

monitoring program consistent with OMB policy and NIST guidelines. 

The final report was issued on November 14, 2014. In March 2015, the Agency provided their 

information security continuous monitoring strategy and implementation plan.

Risk

Management

Continuous

Monitoring

Incident

Response and

Reporting

Security  

Training

Plan of Actions

and Milestones

Remote Access

Management

Identity and

Access

Management

Configuration

Management

Contingency

Planning

Contractor

Systems

Security Capital

Planning

Audits, Inspections, and Evaluations 
FCA OIG SEMIANNUAL REPORT TO THE CONGRESS

OCTOBER 1, 2014 ─ MARCH 31, 2015

10

Enforcement

Special Supervision

Normal Supervision

Farm Credit Administration’s Special Supervision and Enforcement Processes 

FCA regulates and supervises System institutions. FCA’s Office of Examination (OE) conducts 

examinations of FCS banks and associations to ensure their safety, soundness, and compliance 

with laws and regulations. If examiners identify concerns with institutions 

through examination activities, they may refer the institution to OE’s Risk 

Supervision Division (RSD) for possible special supervision or 

enforcement actions. Sections 5.25 through 5.38 (12 U.S.C. § 2261-

2274) of the Farm Credit Act, provides the FCA with statutory 

enforcement authorities to take action for unsafe, unsound 

practices or for violations of law, rule or regulation. In general, 

there are three levels of supervision of FCS institutions by 

FCA: normal supervision, special supervision, and 

enforcement. Each level provides increased monitoring, 

communication, and involvement with the institution. 

Our objective was to determine whether FCA is 

following the special supervision and enforcement 

processes and monitoring institution compliance 

effectively. Overall, FCA is generally following 

the processes and monitoring compliance. We 

found the Watch List utilized by OE is effective, identification and escalation of concerns were 

appropriate, complexity and length of actions are correlated, and persistent involvement and 

communication leads to corrective action. We also identified opportunities to improve or modify 

the processes through increasing staff readiness; ensuring institutions adhere to the criminal 

referral process requirements; and expanding or changing directives and/or processes. 

As a result of our audit, OE agreed to: 

 Develop a training program for special supervision and enforcement actions to ensure 

the organization has the knowledge to react to the changing FCS environment. 

 Emphasize the requirement of FCA Regulation 612, Subpart B, and provide training 

and/or education to examiners on the role and responsibility FCA has regarding the 

criminal referral form and to ensure institutions are filing the form as required. 

 Address the use of informal ratings and other supervisory letters by either expanding or 

changing current directives and/or processes to include when they are appropriate and 

how they will be used. 

The final report was issued on March 31, 2015. 

Audits, Inspections, and Evaluations 
FCA OIG SEMIANNUAL REPORT TO THE CONGRESS

OCTOBER 1, 2014 ─ MARCH 31, 2015

11

Farm Credit Administration’s Commissioning Program

A commission is a designation to signify that an FCA examiner is qualified to examine FCS 

institutions. The Commissioning Program consists of specific training, on-the-job work 

experience, and testing. Commissioning Program requirements are aligned with essential OE 

knowledge, skills, tasks, and performance attributes, which are updated periodically to reflect 

current examination responsibilities. The objective of this audit was to determine whether FCA 

is effectively managing the Commissioning Program. 

Our audit revealed opportunities for improvement and efficiency in the Commissioning Program. 

As a result of our audit, OE agreed to: 

 Identify and track specific commissioning costs to evaluate the cost of the program and 

identify cost-saving opportunities and consider timekeeping code revisions, with Office of 

Management Services (OMS) assistance in implementation. 

 Establish a process to verify time charged by Associate Examiners complies with work 

performed and timekeeping guidance. 

 Analyze the costs and benefits of streamlining and consolidating current testing and 

assessment milestones through the elimination of the final Commissioning Test 

simulations. 

OE and OMS agreed to: 

 Establish a plan to compete Commissioning Program contractor services to manage 

risks of reliance on one source and ensure the best value to the Agency. 

 Ensure current Commissioning Program contracts are well-defined in regards to general 

and administrative and hourly rates. 

 Ensure the invoice approval process for the Commissioning Program covers the 

requirements of the contract and review by all Agency personnel necessary to verify 

work performed before approval and payment. 

 Assess strategies to identify the cause of hiring shortfalls and employee attrition to meet 

commissioned examiner goals and maximize Agency investments. 

 Evaluate opportunities to implement Service Agreements or another type of comparable 

reimbursement arrangement to protect Agency investments in Commissioning Program 

training and certification. 

 Revise processes to provide feedback to every Associate Examiner on Technical 

Evaluations and Commissioning Test multiple-choice test performance. 

The final report was issued on March 31, 2015. 

Audits, Inspections, and Evaluations 
FCA OIG SEMIANNUAL REPORT TO THE CONGRESS

OCTOBER 1, 2014 ─ MARCH 31, 2015

12

AUDITS AND EVALUATIONS IN PROCESS 

Audit of FCA’s Financial Statements Fiscal Year 2015

The Accountability of Tax Dollars Act of 2002 requires FCA and certain other agencies to submit 

to the Congress and OMB an audited financial statement each fiscal year. 

In continuing to assist the Agency in meeting these requirements, the OIG contracted with 

Harper, Rains, Knight & Company, P.A. to perform the audit of FCA’s financial statements for 

FY 2015. Harper, Rains, Knight & Company also completed the FY 2014 Financial Statement 

Audit, issued in November 2014. 

Officials from Harper, Rains, Knight & Company, OIG, and FCA attended the entrance 

conference held on February 24, 2015. The audit remained ongoing at the end of this reporting 

period. 

Mobile Device Cost Controls at FCA

In carrying out FCA’s mission, many Agency employees spend a significant amount of time 

traveling or away from their offices. In today’s technological environment, the FCA keeps 

employees connected by leveraging technology to increase efficiency and communication. 

Mobile devices such as smartphones and tablets are one of the tools the Agency uses to keep 

employees connected to its’ information systems and each other. 

The objective of this audit is to determine whether FCA has implemented effective cost controls 

for mobile devices and related services. The audit began in January 2015 and is ongoing as of 

the end of the reporting period. 

Audits, Inspections, and Evaluations 
FCA OIG SEMIANNUAL REPORT TO THE CONGRESS

OCTOBER 1, 2014 ─ MARCH 31, 2015

13

STATUS OF AGREED-UPON ACTIONS AND RECOMMENDATIONS

In total, there were thirteen agreed-upon actions added from three issued reports for the reporting 

period. We had three actions open at the beginning of the period to carry over. As of March 31, 

2015, twelve agreed-upon actions remain open. 

Audit, Inspection, and Evaluation Agreed‐Upon Actions

Report Issued Open During this

6‐Month Period

Final Management

Actions During this Period

Open on

3/31/2015

FCA’s Training and

Conference Expenses 9/22/2014 0 3 0

Federal Information

Security Management

Act 2014 Evaluation

11/14/2014 1 1 0

FCA’s Enforcement

and Special

Supervision Processes

3/31/2015 3 0 3

FCA’s Commissioning

Program 3/31/2015 9 0 9

Total 13 4 12

   

Audits, Inspections, and Evaluations 
FCA OIG SEMIANNUAL REPORT TO THE CONGRESS

OCTOBER 1, 2014 ─ MARCH 31, 2015

14

QUARTERLY SURVEY OF FARM CREDIT SYSTEM INSTITUTIONS

The OIG administers an ongoing survey of FCS institutions regarding the quality and consistency of 

the Agency’s examination function and the examiners performing the main mission functions. The 

OIG issues a quarterly report and, at the end of each fiscal year, a summary report on the surveys’ 

results to the Chief Examiner and the FCA Board.

Third Quarter Fiscal Year 2014 Farm Credit System Survey 

In July 2014, the OIG issued 11 surveys to FCS institutions relevant to the examination program 

during the third quarter of FY 2014. Of those issued the surveys, six responded. There were two 

responses for the second quarter that were received and included in the report. The OIG issued the 

summary report in October 2014 to the Chief Examiner and the FCA Board. 

Fourth Quarter and Fiscal Year 2014 Summary, Farm Credit System Survey

In October 2014, the OIG issued 16 surveys to FCS institutions relevant to the examination program 

during the fourth quarter of FY 2014. Of those issued the surveys, 12 responded. There were two 

responses from the third quarter that were received and included in the report. The OIG issued the 

summary report in January 2015 to the Chief Examiner and the FCA Board. 

First Quarter Fiscal Year 2014 Farm Credit System Survey 

In February 2015, 10 surveys were issued to FCS institutions relevant to the examination program 

during the first quarter of FY 2015. Of those issued the surveys, eight responded. The OIG issued the 

summary report to the Chief Examiner and the FCA Board in March 2015. 

 

Other Reports 
FCA OIG SEMIANNUAL REPORT TO THE CONGRESS

OCTOBER 1, 2014 ─ MARCH 31, 2015

15

MANAGEMENT ADVISORY REPORTS 

The OIG Management Advisory Reports are designed to be a quick mechanism to offer the Agency 

head and management suggestions on ways to strengthen Agency operations. 

During this reporting period, the OIG issued one management advisory to the FCA Board: 

 On December 18, 2014, Board members were advised of the need for a suspension and 

debarment policy that would enhance FCA’s ability to expediently review and refer cases to 

another Federal agency for suspension and debarment proceedings, when appropriate. The 

advisory stated the FCA Board should consider developing a policy that would provide 

guidelines for FCA to follow should a contractor’s actions raise questions on whether the 

contractor should be suspended or debarred from contracting with Federal agencies. FCA 

subsequently implemented such procedures into its contract and procurement policy. 

The OIG also continues to forward best practices, articles, and plans to the Social Media 

workgroup and FCA’s Office of Congressional and Public Affairs for consideration. This has 

been a practice since issuance of the OIG Management Advisory, Survey of FCA’s Use of 

Social Media, in 2012. 

Other Reports 
FCA OIG SEMIANNUAL REPORT TO THE CONGRESS

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16

The OIG continued to provide quality investigative work during this period. The OIG investigates 

matters referred internally and externally, through the OIG Hotline and other notification mechanisms. 

INVESTIGATIONS

During this reporting period, the OIG issued three Reports of Investigation; closed five investigations, 

including one preliminary investigation; and closed the reporting period with two pending preliminary 

investigations. Two of the closed investigations involved alleged misuse of government travel cards 

by FCA employees. One of these Reports of Investigation was issued in the prior semiannual 

reporting period (September 24, 2014), but closed in this reporting period. In both cases involving 

alleged travel card misuse, the Agency subsequently notified the OIG that it had taken appropriate 

management action.

The OIG issued a Report of Investigation on December 4, 2014 that addressed an improper payment 

made to an FCA vendor, and related allegations of false claims and statements. We referred the 

Report of Investigation to Agency management and were notified twelve days later that appropriate 

action had been taken.

OIG issued its third Report of Investigation in this reporting period, on December 30, 2014. This 

investigation involved a computer security incident involving FCA systems. OIG determined after 

extensive record reviews, that further forensic evaluation or referral was not merited. We, therefore, 

closed the investigation and referred the Report of Investigation to management for information only. 

In all cases referred to Agency management, OIG was advised in three weeks or less that 

appropriate action had been taken. The only open investigations as of the close of this reporting 

period, were two preliminary investigations relating to personnel matters, one opened on March 12, 

2015 and the second on March 30, 2015.

Reports of 

Investigation 

issued

3 

Investigations 

closed

5 

Hotline 

complaints 

addressed

8 

Pending 

preliminary 

investigations

2 

Investigations 
FCA OIG SEMIANNUAL REPORT TO THE CONGRESS

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17

HOTLINE 

The OIG Hotline is available 24 hours a day, 7 days a week, to receive tips and complaints about 

fraud, waste, or abuse relating to FCA programs and operations. The Hotline allows individuals to 

report their allegations to the OIG directly and confidentially and is available through email, phone, 

fax, and mail. 

The OIG received eight Hotline complaints during the reporting period, and all eight complaints were 

closed or referred to other Federal agencies as they involved matters outside OIG’s jurisdiction. 

Responses were provided and contacts made with other Federal agencies as appropriate. 

   

Investigations 
FCA OIG SEMIANNUAL REPORT TO THE CONGRESS

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18

In furtherance of the OIG’s mandate to review existing and proposed legislation and regulations, 

the IG attends joint briefings of the FCA Board on regulations at the proposed and final stages. 

During this reporting period, we reviewed:

The following were reviewed: 

Legislation 

1) H.R. 5492 and S. 579, Inspector General Empowerment Act of 2014

2) H.R. 2747, Small Business Regulatory Sunset Act of 2014

3) S. 2927, The Inspectors General Streamlining Act 

4) S. 264, Federal Reserve Transparency Act of 2015

5) H.R. 50, Unfunded Mandates Information and Transparency Act of 2015

6) S. 2521, Federal Information Security Modernization Act of 2014

7) H.R. 5185, Retention of Electronic Correspondence of Regulatory Decisions Act of 

2014 (RECORD Act)

Proposed Rule

8) Loans in Areas Having Special Flood Hazards, Joint Rule, 12 CFR Part 614, 79 Fed. 

Reg. 64518

9) Regulatory Capital Rules: Regulatory Capital, Implementation of Tier 1/Tier 2 

Framework, 12 CFR Parts 607, 614, 615, 620 and 628, 79 Fed. Reg. 76927

Legislative 

Items

7 

Proposed 

Rules 

4 

Final Rules

3 

Informational 

memorandum

1 

Legislative and Regulatory Reviews 
FCA OIG SEMIANNUAL REPORT TO THE CONGRESS

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19

10) Organization; Mergers, Consolidations, and Charter Amendments of Farm Credit 

System Banks or Associations, 12 CFR Part 611, 80 F.R.D. 2614 

11) Federal Agricultural Mortgage Corporation General Provisions; Federal Agricultural 

Mortgage Corporation Governance; Federal Agricultural Mortgage Corporation Risk 

Management; Federal Agricultural Mortgage Corporation Disclosure and Reporting; 

Farmer Mac Corporate Governance and Standards of Conduct, 80 FR 15931 

Final Rule

12) Disclosure to Shareholders; Pension Benefit Disclosures 12 C.F.R. § 620.6(c)(2), 80 

Fed. Reg. 10325 

13) Organization; Institution Stockholder Voting Procedures, 79 F.R. 62058 

14) Farm Credit Administration Organization and Functions; Field Office Locations, 12 

CFR Part 600 

Informational Memorandum 

15) OMB Circular A-130, Appendix III, Security of Federal Information Resources 

Legislation and Regulations Review 
FCA OIG SEMIANNUAL REPORT TO THE CONGRESS

OCTOBER 1, 2014 ─ MARCH 31, 2015

20

Meetings 

During this reporting period, the OIG met with Congressional staff members from the House 

Committee on Oversight and Government Reform and Senate Committee on Agriculture, 

Nutrition and Forestry. 

Letter Responses 

The OIG also provided letter reports to the Senate Committee on Homeland Security and 

Governmental Affairs, Senate Committee on the Judiciary, and the House Committee on 

Oversight and Government Reform that included information on open OIG recommendations; 

OIG investigation, audit, inspection, and evaluation reports; whistleblower retaliation incidents; 

and the OIG’s access to Agency records. 

Proposal for Oversight of Certain Entities Without an Office of 

Inspector General

A group of IGs, of which the FCA IG was a member, formed a working group last year to 

formulate a risk-based approach for achieving effective, efficient and economical oversight of 

small Government agencies. The primary objective of the working group was to raise the level 

of informed dialogue as a foundation for collegial deliberations and analysis among all 

stakeholders. The working group focused on 56 Executive Branch entities without direct OIG 

oversight; these entities have combined budgets in excess of $1 billion. The Proposal included 

two possible models for risk-appropriate frameworks for OIG oversight of these entities. The 

first recommended model for small entities with a low level of apparent risk involves a central 

hotline-focused framework for OIG oversight. Each small entity would be paired with a 

legislatively designated OIG. Additionally, a central administrator would be designated to 

manage a coordinated Central Hotline and refer allegations of fraud, waste, abuse and 

whistleblower retaliation to the appropriate OIG. A second proposed model would include 

creating four new OIGs for traditional oversight of six entities and expanding the authorities and 

responsibilities of five existing OIGs to include the traditional oversight of eleven entities with 

closely aligned missions, activities, and risks. 

The working group’s proposal has been distributed to congressional committees for 

consideration. 

 

Congressional Interaction 
FCA OIG SEMIANNUAL REPORT TO THE CONGRESS

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21

Staff Participation in Activities within the IG Community 

OIG staff members are encouraged to take part in organizations that contribute to the mission of the 

Inspectors General community, as well as their individual professional development. Most staff 

members are actively involved in one or more professional organizations, as well as activities within 

CIGIE. 

The Inspector General is a member of CIGIE, which provides a forum for IGs from various 

government agencies to discuss government-wide issues and shared concerns. Collectively, the 

members of CIGIE work toward improving government programs and operations, work that involves, 

for example, comments on proposed legislation and training development. The IG was appointed to 

the CIGIE Executive Committee as the Member-At-Large by the incoming Chairman of the CIGIE. 

The IG also serves as a member of CIGIE’s Legislation Committee and participates as a member of 

CIGIE’s Inspection and Evaluation Committee, and is the Chair of the Small IG group. 

The Counsel to the Inspector General is active in the Council of Counsels of IGs (CCIG) and was 

elected one of two Vice Chairs to the CCIG for 2015. The Counsel is also involved in the CIGIE 

Records Management Working Group and attends the quarterly meetings for three additional CIGIE 

groups – the Assistant Inspectors General for Investigations, Deputy IGs, and the Small OIGs CCIG 

Working Group. 

The OIG Senior IT Auditor and Senior Auditors attend FAEC meetings and conferences. The IT 

Auditor is also actively involved in the IT Subcommittee of the FAEC and assists CIGIE with their 

information security program. The Senior IT Auditor attends local ISACA meetings. One Senior 

Auditor is also a member of the CIGIE Roundtable on Inspections and Evaluations. 

During this reporting period, the OIG also submitted data to the CIGIE for compilation in the annual 

CIGIE Progress Report to the President, and provided comments on consolidated CIGIE comments 

on proposed legislation and government-wide issuances, such as OMB circulars. 

OIG employees are also active in Agency workgroups and task forces, as appropriate. 

Organizational Briefings 

The OIG has distributed posters identifying Hotline and contact information and has implemented a 

Fraud Awareness initiative to provide training and guidance to FCA employees on reporting 

responsibilities, fraud indicators, methods of reporting, and protections provided to whistleblowers 

under Federal law and policy. 

Outreach 
FCA OIG SEMIANNUAL REPORT TO THE CONGRESS

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22

Staff Development 

OIG employees continually seek ways to improve skills and become knowledgeable in the initiatives 

of the community of Inspectors General. Audit and legal staff must meet continuing education 

requirements. Individual development plans are used to identify long and short-term career goals 

along with specific training and developmental needs. These plans are geared toward enhancing 

individual skills in the performance of official duties and meeting the criteria needed to achieve OIG 

performance goals and objectives. 

Personnel Changes 

The OIG had personnel changes this reporting period. Our Administrative Assistant retired in 

October 2014. We announced a new position to fill the vacancy as a Management/Program Analyst 

and filled the vacancy in October. The following organizational chart shows the OIG as of March 31, 

2015: 

   

Inspector General

Elizabeth Dean

Counsel to the

Inspector General

Kathy Gallo

Senior Information

Technology Auditor

Tammy Rapp

Senior Auditor

Sonya Cerne

Senior Auditor

Tori Kaufman

Management/

Program Analyst          

Ava Bell

OIG Staff 
FCA OIG SEMIANNUAL REPORT TO THE CONGRESS

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23

CHARGE CARD RISK ASSESSMENT AND SUBMISSIONS 

The Government Charge Card Abuse Prevention Act of 2012 (Charge Card Act) requires the OIG of 

each executive agency to conduct periodic assessments of charge card programs to analyze the 

risks of illegal, improper, or erroneous purchases. As part of adherence to the Charge Card Act and 

the implementation guidance, the Farm Credit Administration (FCA) OIG will conduct an annual risk 

assessment. The risk assessment will include FCA’s purchase and travel card programs, and the 

centrally billed account utilized by FCA. The OIG completed its annual risk assessment and issued 

the Charge Card Risk Assessment to the Agency in March 2015. 

The OIG also issued a report to the Office of Management and Budget on agency progress in 

implementing audit recommendations. During FY 2014, we conducted two audits pertaining to 

FCA’s charge card programs: 

 Farm Credit Administration’s Travel Card Program (A-14-03), issued August 19, 2014. 

 Farm Credit Administration’s Purchase Card Program (A-14-02), issued September 5, 2014. 

As a result of the two audits, the OIG made 12 recommendations. All recommendations were 

agreed upon by management and were closed as of September 30, 2014. We will continue to 

conduct risk assessments and reviews as part of our audit and inspection functions. 

DISCUSSIONS WITH FCA MANAGEMENT 

In October 2014, the OIG held a meeting with FCA and the Farm Credit System Building Association 

(FCSBA) officials on emergency preparedness and security protocols. Processes and 

communication to employees and tenants of FCA buildings were discussed. FCA and FCSBA 

officials stated current emergency preparedness protocols were being revised to ensure employees 

and tenants were informed of potential security events. 

The OIG also met with OE officials in October 2014 regarding an ongoing review of an institution. 

Officials provided the OIG with an update on activities performed and planned for the institution. 

FCSIC AUDIT COMMITTEE 

The OIG presented at the January 2015 FCSIC Audit Committee meeting. The IG presented a 

briefing on the need for IG oversight at FSCIC. 

Other Activities 
FCA OIG SEMIANNUAL REPORT TO THE CONGRESS

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24

This annex is provided in accordance with the National Defense Authorization Act for FY 2008. 

This referenced statute requires all Inspectors General appointed under the IG Act to include an 

annex to their semiannual reports as follows: 

1) listing all contract audit reports issued during the reporting period containing significant audit 

findings; 

2) briefly describing the significant audit findings in the report; and 

3) specifying the amounts of costs identified in the report as unsupported, questioned, or 

disallowed. 

Significant audit findings are defined as unsupported, questioned, or disallowed costs in excess of 

$10,000,000, or other findings that the Inspector General determines to be significant. It defines 

contracts as a contract, an order placed under a task or delivery order contract, or a subcontract. 

No contract audit reports meeting these criteria were issued on behalf of the OIG during this 

reporting period. 

 

Annex 
FCA OIG SEMIANNUAL REPORT TO THE CONGRESS

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25

Index of Reporting Requirements 

SECTION TITLE Page

4(a)(2) Review of legislation and regulations 18 ‐ 19

5(a)(1) Significant problems, abuses, and deficiencies None

5(a)(2) Recommendations for corrective action 7‐11

5(a)(3) Prior recommendations not yet implemented None

5(a)(4) Matters referred to prosecutive authorities 16

5(a)(5) Information unreasonably refused or not provided None

5(a)(6) List of reports issued 7‐11

5(a)(7) Summaries of significant reports 8‐11

5(a)(8) Management decisions with questioned costs 27

5(a)(9) Management decisions on recommendations that funds be put

to better use

28

5(a)(10) Prior audit reports unresolved None

5(a)(11) Significant revised management decisions None

5(a)(12) Significant management decisions with which the Inspector

General disagreed None

5(a)(13) Compliance of Agency financial management system 8

5(a)(14)(15) Peer reviews conducted of this OIG 29

5(a)(16) Peer reviews conducted by this OIG 30

845 FY 2008 National Defense Authorization Act Citation and

Requirement   24

Appendix A 
FCA OIG SEMIANNUAL REPORT TO THE CONGRESS

OCTOBER 1, 2014 ─ MARCH 31, 2015

26

Audit, Inspection, and Evaluation Reports Issued

Report Number of Agreed Upon

Actions/Recommendations Questioned Costs

Recommendations

That Funds Be Put to

Better Use

Federal Information

Security Management

Act 2014 Evaluation

1 $ 0 $ 0

FY 2014 Financial

Statement Audit of

FCA  

0 $ 0 $ 0

Audit of FCA’s

Enforcement and

Special Supervision

Processes

3 $ 0 $ 0

Audit of FCA’s

Commissioning

Program

9 $ 0 $ 161,277

Total 13 $ 0 $ 161,277

 

Appendix B 
FCA OIG SEMIANNUAL REPORT TO THE CONGRESS

OCTOBER 1, 2014 ─ MARCH 31, 2015

27

Reports with Questioned Costs

  

  

Number Dollar Value

Reports

Recom‐ 

mendations

Questioned

Costs

Unsupported

Costs

A.  For which no management decision has

been made by the commencement of the

reporting period.

0 0 $ 0 $ 0

B.  Which were issued during the reporting

period.

0 0 $ 0 $ 0

Subtotals (A+B) 0 0 $ 0 $ 0

C.  For which a management decision was

made during the reporting period.

0 0 $ 0 $ 0

     (i)   dollar value of disallowed costs 0 0 $ 0 $ 0

     (ii)  dollar value of costs not disallowed 0 0 $ 0 $ 0

D.  For which no management decision has

been made by the end of the reporting

period.

0 0 $ 0 $ 0

E.  For which no management decision was

made within six months of issuance.

0 0 $ 0 $ 0

 

Appendix C 
FCA OIG SEMIANNUAL REPORT TO THE CONGRESS

OCTOBER 1, 2014 ─ MARCH 31, 2015

28

Reports with Recommendations that Funds  

be Put to Better Use

   Number of

Reports

Number of

Recommendations

Dollar

Value

A.  For which no management decision has been

     made by the commencement of the reporting

     period.  

0 0 $ 0

B.  Which were issued during the reporting

period.

1 9 $ 161,277

Subtotals (A+B) 1 9 $ 161,277

C.  For which a management decision was made

     during the reporting period.

0 0 $ 0

     (i)   dollar value of recommendations that

were  

           agreed to by management

0 0 $ 0

          ‐ based on proposed management action 0 0 $ 0

          ‐ based on proposed legislative action 0 0 $ 0

    (ii)  dollar value of recommendations that

were  

          not agreed to by management

0 0 $ 0

D.  For which no management decision has been

     made by the end of the reporting period.

0 0 $ 0

E.  For which no management decision was  

     made within six months of issuance.

0 0 $ 0

   

Appendix D 
FCA OIG SEMIANNUAL REPORT TO THE CONGRESS

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29

Peer Reviews Conducted of this Office

Peer Review Performed By Date of Report   Function

Reviewed

Peer Review

Rating

Architect of the Capitol  

Office of Inspector General

June 26, 2013 Audit Pass

U.S. Securities and Exchange Commission

Office of Inspector General

December 26, 2007 Investigations Pass

   

Appendix E 
FCA OIG SEMIANNUAL REPORT TO THE CONGRESS

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30

Peer Reviews Conducted by this Office

Peer Review Of Date of Report   Function

Reviewed

Peer Review

Rating

U.S. International Trade Commission   

Office of Inspector General January 16, 2013 Audit Pass

Consumer Product Safety Commission  

Office of Inspector General May 23, 2011 Audit Pass

   

Appendix F 
FCA OIG SEMIANNUAL REPORT TO THE CONGRESS

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31

FCA ORGANIZATIONAL CHART

Appendix G 
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32

Glossary of Terms 

Agency – Farm Credit Administration 

CIGIE – Council of the Inspectors General on Integrity and Efficiency 

Farm Credit Act – Farm Credit Act of 1971, as amended 

Farmer Mac – Federal Agricultural Mortgage Corporation 

FCA – Farm Credit Administration 

FCS – Farm Credit System 

FISMA – Federal Information Security Management Act 

FY – Fiscal Year 

H.R. – House of Representatives 

IG – Inspector General 

IG Act – Inspector General Act of 1978, as amended 

IT – Information Technology 

OE – Office of Examination 

OIG – Office of Inspector General 

OMB – Office of Management and Budget 

OMS – Office of Management Services 

Pub. L. – Public Law 

RSD – Risk Supervision Division 

S. – Senate 

System – Farm Credit System 

Appendix H 

                             

   

       

              

      

  

      

       

       

  

REPORT

Fraud | Waste | Abuse | Mismanagement

FARM CREDIT ADMINISTRATION
 

OFFICE OF INSPECTOR GENERAL
 

Phone: Toll Free (800) 437‐7322; (703) 883‐4316
 

Fax: (703) 883‐4059
 

E‐mail: fca‐ig‐hotline@rcn.com

Mail: Farm Credit Administration
 

Office of Inspector General
 

1501 Farm Credit Drive
 

McLean, VA 22102‐5090