Farm Credit Administration	 Office of Inspector General

1501 Farm Credit Drive 

McLean, Virginia 22102-5090 

October 16, 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, VA 22102-5090 

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

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 April 1, 2014 through September 30, 

2014. This is the fifty-first 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. 

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

We welcomed Sonya Cerne in May and Tori Kaufman in July, both auditors with prior Inspector 

General experience. Our Administrative Assistant, Debra Miller, put in her notice to retire with 

36 years of Federal government service. Her position will be filled as a Management/Program 

Analyst. 

This year the OIG changed independent public accounting firms to perform the audit of FCA’s 

financial statements. Harper, Rains, Knight & Company, P.A. has the contract for Fiscal Year 

2014. The audit is ongoing as of the end of the reporting period. We also began work on the 

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

Management Act. 

We issued three audit reports during this reporting period on FCA’s training and conference 

expenses, purchase card program, and travel card program. For the six-month period, there 

were 15 agreed-upon actions implemented, with 12 closed as of September 30, 2014. Please 

refer to pages 7-10 of the report for more information. We also initiated an audit on FCA’s 

Examiner Commissioning Program. The objective of this audit is to determine whether FCA is 

effectively managing the program. Please refer to page 11 of the report 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). 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 

find this to be a valuable measuring tool. 

I would like to acknowledge the effective efforts of the OIG staff in diplomatically leading Agency 

management to focus on significant program issues, as well as FCA management’s positive and 

timely reaction and improvement. I look forward to continuing a positive 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 .........................................................................11 

STATUS OF AGREED-UPON ACTIONS AND RECOMMENDATIONS.................................12 

Other Reports ............................................................................................................................. 13 

Investigations .............................................................................................................................. 14 

Legislative and Regulatory Reviews ...........................................................................................15 

Congressional Interaction ........................................................................................................... 18 

Outreach ..................................................................................................................................... 19 

OIG Staff ..................................................................................................................................... 20 

Annex.......................................................................................................................................... 21 

Appendix A Index of Reporting Requirements ............................................................................22 

Appendix B Reports Issued ........................................................................................................ 23 

Appendix C Reports with Questioned Costs ...............................................................................24 

Appendix D Reports with Recommendations that Funds be Put to Better Use ..........................25 

Appendix E Peer Reviews Conducted of this Office ...................................................................26 

Appendix F Peer Reviews Conducted by this Office ..................................................................27 

Appendix G FCA Organizational Chart .......................................................................................28 

Appendix H Glossary of Terms ................................................................................................... 29 

FCA OIG SEMIANNUAL REPORT TO THE CONGRESS

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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 April 1 through September 

30, 2014. The OIG’s efforts were directed toward implementing the OIG’s Fiscal Year 

(FY) 2014 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 three audits during this reporting period. Additionally, the OIG 

issued surveys to FCS institutions, designed to review the quality of mission fulfillment, 

and provided a quarterly report to the Chief Examiner and FCA Board. The OIG also 

contracted with Harper, Rains, Knight & Company, P.A. to perform the audit of FCA’s 

financial statements for FY 2014, which is ongoing. We initiated the OIG’s annual 

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

Management Act (FISMA) during this period. During this period, the OIG also updated 

and issued its Strategic and Operating Performance Plan for FYs 2015-2016, which 

includes the OIG’s audit plan covering FYs 2015-2016 and beyond. In reaction to 

concerns expressed in Congressional discussion draft legislation, the FCA OIG and 14 

additional OIGs formed a working group to analyze and make recommendations for 

Federal entities without IG oversight, including the Farm Credit System Insurance 

Corporation. Briefings with the Council of Inspectors General on Integrity and Efficiency 

and Congressional staff were held, and work is nearing completion. 

I would like to welcome our two senior auditors hired this period and acknowledge 

the effective efforts of the 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. This year marks the 25th anniversary of the 

OIG, and 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 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

Background
 

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 2014 budget was $63,900,000. Assessments by FCA to 

FCS institutions are $50,000,000 with other sources of funding totaling $13,900,000. 

At the end of the prior semiannual reporting period, the Agency had 274 employees. At the end of 

this reporting period, FCA had 286 employees, about half of which are examiners located in five field 

offices. 

FARM CREDIT SYSTEM 

Headquarters McLean, VA 

Bloomington, MN 

Sacramento, CA Denver, CO 

Dallas, TX 

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

Credit Bank, and 78 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 four active service 

corporations organized under the Farm Credit Act that provide services to FCS entities and 

eligible borrowers. 

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Office of Inspector General 

Audits, 

Inspections, 

and Evaluations 

Investigations 

Legislative and 

Regulatory 

Reviews 

Outreach 

Background 

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 2014 budget was $1,264,912. 

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. 

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Strategic Goals
 

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. The audit reports were issued timely and were 

constructive to improve Agency operations. As a result of our work, 15 

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

15 were agreed-upon by FCA and 12 were closed during this reporting period. We 

also have three ongoing reviews to promote effectiveness and efficiency within FCA. 

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 two management advisories to the FCA Board. One 

advisory report was issued regarding FCA’s Interest Reserve. Another advisory 

report was issued to address the need for IG oversight of the Farm Credit System 

Insurance Corporation. 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. 

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Strategic Goals
 

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. For this 

reporting period, our auditors attended the Federal Audit Executive Council’s (FAEC) 

training. 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. During this reporting period, internal 

reviews were conducted on our audit and inspection functions and legislative and 

regulatory internal controls. 

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, four investigations were initiated and one was closed with a report of 

investigation. Six preliminary investigations were opened with five completed. We 

received 16 allegations from the OIG Hotline during the April to September 

timeframe, which resulted in 4 being referred within FCA and 12 referred to other 

agencies, responded to directly, or closed administratively. 

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, the 

OIG updated the FCA OIG brochure. We use these brochures as an outreach 

method, along with briefings when requested, to educate individuals on the role of the 

OIG. In addition, we are in the process of updating our hotline poster for distribution. 

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Strategic Goals
 

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 28 items under the following 

categories: legislation, proposed rule, final rule, regulation, and informational 

memorandum. Thorough efforts were undertaken to lead a workgroup 

responsive to Congressional initiatives for IG oversight of Federal entities. 

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. During this 

reporting period, the OIG presented a briefing to all new FCA employees on the 

OIG and employee responsibilities in reporting fraud, waste, and abuse. We also 

briefed a group of managers from the FCA’s Office of Examination on the OIG 

process, planning, and areas of concern found during OIG reviews. The IG also 

conducted a site visit with the Denver field office and, together with the FCA 

Designated Agency Ethics Official, briefed FCA’s Office of Regulatory Policy. 

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 involved with several 

committees and workgroups for 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 a member of the CIGIE’s Council of Counsels. The auditors are involved with 

CIGIE and the FAEC. 

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Audit 

Reports 

Issued 

3 

Agreed-Upon 

Actions 

15 

In-Process 

Reviews 

3 

Surveys 

Issued to 

FCS 

Institutions 

32 Survey

Report

Issued 

1 

Management

Advisories 

2 

Audits, Inspections, and Evaluations 

REPORTS ISSUED 

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

audit reports with 15 agreed-upon actions. We also have three in-process reviews that were initiated 

during this six-month period. The OIG issued 32 surveys to FCS institutions and issued one survey 

report to the Chief Examiner and FCA Board. The report summarizes stakeholder opinions on the 

quality and issues involved in mission execution. Lastly, two Management Advisories were 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. 

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Audits, Inspections, and Evaluations 

FCA’s Training and Conference Expenses 

FCA provides training opportunities to its employees to enhance the performance of their official 

duties. We performed this audit to determine the effectiveness of controls related to training, 

conference, and related travel expenses. 

Overall, we found FCA has effective controls over training and conference expenses. FCA 

issued policies and procedures that were in line with laws and regulations and training was 

consistent with job responsibilities and FCA’s mission. Additionally, FCA minimized expenses 

associated with agency sponsored conferences and training. 

Training and Conference Expenses - Actual

00,000 7

-

00,000

00,000 

00,000

00,000

00,000

00,000

 1

 2

3

 4

 5

 6

FY 2010 FY 2011 FY 2012 FY 2013 

However, we found FCA’s Office of Management Services (OMS) needed to update policies 

and procedures and strengthen controls over the training program to ensure compliance with 

agency policies and procedures. 

As a result of our audit, OMS agreed to: 

•	 Determine appropriate thresholds for training approvals, update policies and 

procedures, and add increased controls in the approval process for higher cost training. 

•	 Implement additional controls to ensure: 

o	 appropriate authorizations and supporting documentation are obtained and 

maintained, 

o	 training and consulting costs are appropriately allocated, and 

o	 reporting requirements are met. 

•	 Update record retention policies and institute controls over the training database to 

ensure independent verification is required before purging documents. 

The final report was issued on September 22, 2014.

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Audits, Inspections, and Evaluations
 

FCA’s Purchase Card Program 

FCA participates in the government-wide 

General Services Administration’s (GSA) 

SmartPay Purchase Card Program. In 

accordance with the Government Charge Card 

Abuse Prevention Act of 2012 (Charge Card 

Act), the OIG assessed FCA’s charge card 

programs, including the purchase card 

program. We initiated this audit as part of our 

ongoing efforts in this area. The objective of 

this audit was to determine whether FCA’s 

oversight is effective. Overall, we found that 

FCA’s oversight is effective. FCA established and implemented controls over the purchase card 

program. 

We identified changes needed to improve the purchase card program. A limited number of 

cardholders had not consistently followed established policies and procedures and certain 

processes needed to be documented. We judgmentally sampled 471 transactions from Fiscal 

Year 2013 and October 1-May 15 of Fiscal Year 2014. From the judgmental sample, we 

identified nine transactions totaling $1,968 from four field office cardholders related to 

unauthorized food purchases. Cardholders had also not kept supporting documentation for 45 

transactions, as required. We also found OMS had not documented the reasoning behind three 

cardholders’ limits that were higher than the standard amount and certain activities deviated 

from policy in regard to approvals. 

As a result of our audit, OMS completed the following actions: 

•	 Provided education to cardholders and Approving Officials on purchase card policies and 

documentation requirements. 

•	 Distributed a template of an acceptable standard agency buy form. 

•	 Documented justification for cardholders with higher limits. 

•	 Documented exceptions to current processes with signatures from Approving Officials. 

The final report was issued on September 5, 2014. 

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Audits, Inspections, and Evaluations
 

FCA’s Travel Card Program 

For travel, FCA participates in the GSA SmartPay 

Travel Card Program. The objective of this audit was 

to determine whether FCA’s oversight of the travel 

card program is effective. We found that the Agency’s 

oversight was generally effective; however, additional 

changes will improve the program. 

We found 48 of the 347 transactions reviewed 

contained unauthorized transactions that included: 

cash advances outside authorized timeframes, 

expenses charged outside of official travel, and improper hotel charges. We also identified one 

employee who had not used a government travel card for official travel, as required. In addition, 

two employees identified as having restricted accounts did not have lower limits on their travel 

cards. We noted 27 instances of delinquent accounts that went into presuspension status and 4 

accounts with a suspension status due to nonpayment. We also found two employees who left 

FCA and yet remained on the open status report for travel cards. 

Lastly, we found that FCA’s policies and procedures should be updated. FCA’s policies on 

travel cards and disciplinary and adverse actions did not identify consequences following an 

employee’s failure to comply with applicable travel charge card terms and conditions and 

applicable agency regulations. There were inconsistencies between the Charge Card 

Management Plan and other FCA policies and procedures. 

OMS completed the following actions as a result of the audit: 

•	 Provided education to cardholders regarding agency policies. 

•	 Determined a process to distribute quarterly transaction activity reports. 

•	 Documented procedures on placing or removing an account in restricted status and 

changes to travel card limits. 

•	 Incorporated a new process to reconcile open status accounts. 

•	 Documented check out procedures. 

•	 Updated FCA’s PPM 711, PPM 826, and the Charge Card Management Plan. 

The findings in the report were consistent with those identified throughout the Federal 

government according to the Office of Management and Budget’s (OMB) report to Congress on 

the implementation of the Charge Card Act. The final report was issued on August 19, 2014. 

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Audits, Inspections, and Evaluations
 

AUDITS AND EVALUATIONS IN PROCESS 

FY 2014 Independent Financial Statement Audit of FCA 

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 2014. The audit remained ongoing at the end of this reporting period. For FY 2013, the OIG 

contracted with the Bureau of Fiscal Service for Brown & Company to perform the audit. The 

audit resulted in an unmodified opinion, issued November 20, 2013. 

FY 2014 Federal Information Security Management Act Evaluation 

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

Act (FISMA) for FY 2014 is performed by the OIG’s Senior Information Technology Auditor 

using guidelines established by FISMA, OMB, and the National Institute of Standards and 

Technology. This evaluation was ongoing as of September 30, 2014. 

FCA’s Examiner Commissioning Program 

The Examiner Commissioning Program is designed to provide training to associate examiners 

in FCA’s Office of Examination through a segmented approach in developmental stages. The 

program certifies achievement of competencies and is a predominant mission-related function. 

The Commissioning Program is a multiple-year program, with commissioning achieved through 

successful performance on the commissioning test. The objective of this audit is to determine 

whether FCA is effectively managing the Examiner Commissioning Program. The audit began 

in September 2014. 

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Audits, Inspections, and Evaluations
 

STATUS OF AGREED-UPON ACTIONS AND RECOMMENDATIONS 

In total, there were 15 agreed-upon actions added from our three issued audits for the reporting 

period. We did not have any recommendations open at the beginning of the period to carry over. As 

of September 30, 2014, three recommendations remain open. 

Audit, Inspection, and Evaluation Agreed-Upon Actions and 

Recommendations 

Report Issued Open During this 

6-Month Period 

Final Management 

Actions During this Period 

Open on 

10/1/2014 

FCA’s Training and 

Conference Expenses 9/22/2014 3 0 3 

FCA’s Purchase Card 

Program 9/5/2014 4 4 0 

FCA’s Travel Card 

Program 8/19/2014 8 8 0 

Total 15 12 3 

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Other Reports
 

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. 

Second Quarter Fiscal Year 2014 Farm Credit System Survey 

In April 2014, the OIG issued 21 surveys to FCS institutions relevant to the examination program 

during the second quarter of FY 2014. Of those issued the surveys, 18 responded. The OIG issued 

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

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

the third quarter of FY 2014. Third quarter results are currently being compiled. 

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 two management advisories to the FCA Board: 

•	 Board members were advised of the need for independent, objective oversight of the Farm 

Credit System Insurance Corporation (FCSIC). FCSIC is currently not subjected to oversight 

by any IG, including FCA OIG. FCA and FCSIC are managed by the same three-member 

board of directors; however, the same member may not serve as Chairman of both entities. 

•	 The OIG advised the FCA Board on FCA’s Interest Reserve and the need to review the 

Interest Reserve Strategy to decide whether changes through a revised Board policy, 

delegations, or revisions to the current format are appropriate. The Agency revised its 

policy on budget formulation to include annual reserve approvals by the FCA Board. 

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. 

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Investigations 

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 

opened 

4 Report of 

Investigation 

issued 

1 Preliminary 

investigations 

completed 

5 Hotline 

complaints 

addressed 

16 

During this reporting period, the OIG opened four investigations, with one investigation completed 

and forwarded to management for administrative action. Three investigations are pending, including 

one being worked with other federal law enforcement agencies. Two matters were identified during 

the course of an OIG audit. One matter was referred to prosecutive authorities 

OIG also conducted preliminary investigations on five complaints and a sixth matter that was 

identified during the course of an OIG audit of the agency’s conference and training expenses. Five 

of these preliminary investigations were completed, and the allegations unsubstantiated. One 

remained open at the end of the reporting period. The allegations involved alleged unequal 

treatment in personnel matters, including promotions, and application of policies and procedures. 

HOTLINE 

During the reporting period, OIG also received calls and emails on the OIG 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. 

Of the calls and emails the OIG received on its Hotline, 16 involved matters that were referred, 

responded to, or considered closed. The OIG conducted preliminary investigations and/or opened 

investigations on all matters within OIG’s jurisdiction. Four of the Hotline calls or emails were 

borrower complaints concerning FCS institutions, including allegations of loan fraud, improper loan 

processing, conflict of interest, and unfair treatment of institution employees. These four complaints 

were referred to the FCA office responsible for reviewing such matters. 

One of the hotline calls the OIG received involved a bankruptcy filing order. The OIG responded to 

the order by working with the cognizant bankruptcy trustee and FCS institution to ensure future 

orders were submitted to the associated Farm Credit institution. The remaining hotline calls and 

emails were closed or referred to other federal agencies as they involved matters outside OIG’s 

jurisdiction. These included a loan that involved property with alleged environmental issues that was 

referred to the Environmental Protection Agency and allegations that were referred to the U.S. 

Department of Homeland Security and the U.S. Department of Housing and Urban Development. 

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Legislative and Regulatory Reviews 

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: 

Legislative 

Items 

20 

Proposed 

Rules 

3 

Final Rules 

2 

Regulation 

1 

Informational 

Memorandums 

2 

The following were reviewed: 

Legislation 

1) IG Oversight of Small Agencies (Discussion Draft, Senator McCaskill) 

2) H.R. 1211, FOIA Oversight and Implementation Act of 2014 

3) S. 994, Digital Accountability and Transparency Act of 2014 

4) H.R.4487, Legislative Branch Appropriations Act 

5) S. 1953, Oversight Workforce Improvement Act of 2014 

6) Amendments to Legislation to Amend Improper Payments Elimination and Recovery 

Act of 2010 (IPERA) 

7) H.R. 4245, Transparency in Government Act of 2014 

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Legislation and Regulations Review
 

8) H.R. 4312, Public Online Information Act of 2014
 

9) H.R. 3370, Homeowner Flood Insurance Affordability Act of 2014)
 

10) H.R. 2548, Electrify Africa Act of 2014
 

11) H.R. 4533, NSA Internal Watchdog Act
 

12) S. 2263, Stop Wasteful Federal Bonuses Act of 2014
 

13) S. 2381, Flood Insurance Market Parity and Modernization Act of 2014
 

14) S. 1681, 2014 Intelligence Authorization Act
 

15) H.R. 4934, Regulatory Agency De-militarization Act
 

16) H.R. 4937, Protection Against Wasteful Spending Act of 2014
 

17) S. 2439, NSA Internal Watchdog Act of 2014
 

18) S. 2430, Special Inspector General for Monitoring the ACA Act of 2014
 

19) S. 1347, Conference Accountability Act of 2013
 

20) Inspector General Empowerment Act of 2014
 

Proposed Rule 

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

Framework, 12 CFR Parts 607, 614, 615, and 620 

22) RULE: 12 CFR Parts 611 and 615, Organization; Funding and Fiscal Affairs, Loan 

Policies and Operations, and Funding Operations; Investment Eligibility 

23) RULE: Margin and Capital Requirements for Covered Swap Entities 

Final Rule 

24) Final Rule Repealing Non-binding, Advisory Votes on Compensation for CEO and Senior 

officers of System banks or associations, 12 CFR Parts 611, 620, and 630 

25) Final Notice of Intent, Statement on Regulatory Burden 

FCA OIG SEMIANNUAL REPORT TO THE CONGRESS 

APRIL 1, 2014 ─ SEPTEMBER 30, 2014 

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Legislation and Regulations Review
 

Regulations 

26) To amend FCA’s Standards of Conduct and Referral of Known or Suspected Criminal 

Violations; Standards of Conduct (12 CFR part 612, subpart A) 

Informational Memorandum 

27)	 “Revised Guidelines on Submission of Proposals to Merge of Consolidate Farm Credit 

System Associations” 

28)	 “Informational Memorandum: Guidance for Investment Requests under § 615.5140(e) of 

Farm Credit Administration Regulations” 

FCA OIG SEMIANNUAL REPORT TO THE CONGRESS 

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Congressional Interaction
 

OIG Oversight 

During this reporting period, the Honorable Claire McCaskill, Chairman, Subcommittee on 

Financial and Contracting Oversight, held a hearing on April 10, 2014. In conjunction with the 

topic of enhanced oversight of entities without IGs, a discussion draft was developed. In it, 

various entities without IG oversight and nine small IGs were proposed to be consolidated with 

larger, existing IGs. 

Following the hearing, Senator McCaskill asked for a response from CIGIE, as well as entities 

impacted by the legislation. To that end, the FCA IG is on the CIGIE Legislation Committee and 

assisted in formulating a response to include an IG Council paper from 1986 when similar 

issues had arisen. 

In addition, the IG formed and co-chaired a work group of 15 OIGs who analyzed entities 

lacking oversight and made recommendations for risk-based oversight. There is also an 

offshoot workgroup focused on general enhancements for CIGIE. 

FCA OIG SEMIANNUAL REPORT TO THE CONGRESS 

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Outreach
 

Staff Participation in Activities within the Inspector General 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. 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. 

During this reporting period, the OIG joined the Small Agency Oversight Working Group, and the IG 

is serving as co-chair. The working group consists of both large and small OIGs, and has been 

focused on work to analyze and recommend best solutions for entities without IG oversight. The 

workgroup meets at least once each week, and has been drafting a proposal describing possible 

models for oversight. 

The Counsel to the Inspector General is active in the Council of Counsels, the CIGIE Records 

Management Working Group, and the quarterly meetings for Assistant Inspectors General for 

Investigations. 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 is 

currently developing a security program for CIGIE. The Senior IT Auditor attends local ISACA 

(formerly known as Information Security and Control Association) meetings. 

Staff Participation in Agency Organizations 

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

Organizational Briefings 

This reporting period, the OIG conducted several informational briefings. Each year, FCA holds an 

orientation for all new employees. In July 2014, OIG presented a briefing at the orientation. The 

briefing included OIG responsibilities, employee responsibilities, and a brochure on the FCA OIG. 

The OIG also periodically conducts site visits with FCA field offices. During this six-month period, the 

IG conducted a site visit with the Denver field office. The OIG also presented during a FCA Office of 

Examination managers meeting and, together with the Designated Agency Ethics Official, at the 

Office of Regulatory Policy staff meeting. 

FCA OIG SEMIANNUAL REPORT TO THE CONGRESS 

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OIG Staff
 

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 numerous personnel changes this reporting period. We have filled two Senior Auditor 

positions. Both auditors bring prior Inspector General experience to the office. In addition, our 

Administrative Assistant will retire in October 2014. We have announced a new position to fill the 

vacancy as a Management/Program Analyst, and we will work to fill the vacancy as soon as possible. 

The following organizational chart shows the OIG as of September 30, 2014: 

FCA OIG SEMIANNUAL REPORT TO THE CONGRESS 

APRIL 1, 2014 ─ SEPTEMBER 30, 2014 

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Counsel to the Senior Information 

Technology Auditor 

Tammy Rapp 

Senior Auditor Senior Auditor Inspector General 

Sonya Cerne Tori Kaufman Kathy Gallo 

Inspector General 

Elizabeth Dean 

Administrative 

Assistant 

Debra Miller 
 

 

 

 

 

 

Annex
 

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. 

FCA OIG SEMIANNUAL REPORT TO THE CONGRESS 

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Appendix A
 

Index of Reporting Requirements 

SECTION TITLE Page 

4(a)(2) Review of legislation and regulations 15 - 17 

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

5(a)(2) Recommendations for corrective action 22 

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

5(a)(4) Matters referred to prosecutive authorities 14 

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

5(a)(6) List of reports issued 7-10 

5(a)(7) Summaries of significant reports 8-10 

5(a)(8) Management decisions with questioned costs 23 

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

to better use 

23 

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 11 

5(a)(14)(15) Peer reviews conducted of this OIG 25 

5(a)(16) Peer reviews conducted by this OIG 26 

845 FY 2008 National Defense Authorization Act Citation and 

Requirement 20 

FCA OIG SEMIANNUAL REPORT TO THE CONGRESS 

APRIL 1, 2014 ─ SEPTEMBER 30, 2014 

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Appendix B
 

Audit, Inspection, and Evaluation Reports Issued 

Report Number of Agreed Upon 

Actions/Recommendations Questioned Costs 

Recommendations 

That Funds Be Put to 

Better Use 

Audit of FCA’s Training 

and Conference 

Expenses 

3 $ 0 $ 0 

Audit of FCA’s Purchase 

Card Program 4 $ 0 $ 0 

Audit of FCA’s Travel 

Card Program 8 $ 0 $ 0 

Total 15 $ 0 $ 0 

FCA OIG SEMIANNUAL REPORT TO THE CONGRESS 

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Appendix C
 

Reports with Questioned Costs 

Number Dollar Value 

Reports 

Recommendations 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. 

3 15 $ 0 $ 0 

Subtotals (A+B) 3 15 $ 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 

FCA OIG SEMIANNUAL REPORT TO THE CONGRESS 

APRIL 1, 2014 ─ SEPTEMBER 30, 2014 

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Appendix D
 

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. 

3 15 $ 0 

Subtotals (A+B) 3 15 $ 0 

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 

FCA OIG SEMIANNUAL REPORT TO THE CONGRESS 

APRIL 1, 2014 ─ SEPTEMBER 30, 2014 

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Appendix E
 

Peer Reviews Conducted of this Office 

Peer Review Performed By Date of Report 

Function 

Reviewed 

Peer Review 

Rating 

Architect of the Capitol June 26, 2013 Audit Pass 

Office of Inspector General 

U.S. Securities and Exchange Commission 

Office of Inspector General 

December 26, 2007 Investigations Pass 

FCA OIG SEMIANNUAL REPORT TO THE CONGRESS 

APRIL 1, 2014 ─ SEPTEMBER 30, 2014 

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Appendix F
 

Peer Reviews Conducted by this Office 

Peer Review Of Date of Report 

Function 

Reviewed 

Peer Review 

Rating 

Consumer Product Safety Commission 

Office of Inspector General May 23, 2011 Audit Pass 

U.S. International Trade Commission 

Office of Inspector General January 16, 2013 Audit Pass 

FCA OIG SEMIANNUAL REPORT TO THE CONGRESS 

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Appendix G 

FCA ORGANIZATIONAL CHART
 

FCA OIG SEMIANNUAL REPORT TO THE CONGRESS 

APRIL 1, 2014 ─ SEPTEMBER 30, 2014 

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Appendix H
 

Glossary of Terms 

Agency – Farm Credit Administration 

BFS – Bureau of Fiscal Service 

Brown & Co. – Brown & Company CPAs, PLLC 

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 

ISACA – Information Security and Control Association 

IT – Information Technology 

NCUA – National Credit Union Administration 

OE – Office of Examination 

OIG – Office of Inspector General 

OMB – Office of Management and Budget 

Pub. L. – Public Law 

S. – Senate 

System – Farm Credit System 

FCA OIG SEMIANNUAL REPORT TO THE CONGRESS 

APRIL 1, 2014 ─ SEPTEMBER 30, 2014 

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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