The report accompanying these financial statements was issued by 

BDO USA, LLP, a Delaware limited liability partnership and the U.S. member 

of BDO International Limited, a UK company limited by guarantee. 

Farm Credit System Insurance 

Corporation 

Audited Financial Statements 

For the Years Ended December 31, 2018 and 2017
Farm Credit System Insurance Corporation 

Contents 

Independent Auditor’s Report F1 - F3

Financial Statements

Statements of Financial Condition F4 

Statements of Income and Expenses and Changes in Insurance Fund F5 

Statements of Cash Flows F6 

Notes to the Financial Statements F7 - F13 

Management’s Report on Internal Control Over Financial Reporting F14 
8401 Greensboro Drive

Suite 800 

McLean, VA 22102 

Tel: 703-893-0600

Fax: 703-893-2766 

www.bdo.com 

BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part 

of the international BDO network of independent member firms. 

 

BDO is the brand name for the BDO network and for each of the BDO Member Firms. 

F1 

Independent Auditor’s Report 

Board of Directors 

Farm Credit System Insurance Corporation 

McLean, Virginia 

Report on the Financial Statements and Internal Control 

We have audited the accompanying financial statements of the Farm Credit System Insurance 

Corporation (FCSIC), which comprise the statement of financial condition as of December 31, 

2018, and the related statements of income and expenses and changes in Insurance Fund and cash 

flows for the year then ended, and the related notes to the financial statements. We also have 

audited FCSIC’s internal control over financial reporting as of December 31, 2018, based on the 

criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of 

Sponsoring Organizations of the Treadway Commission. 

Management’s Responsibility for the Financial Statements and Internal Control over 

Financial Reporting 

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

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

includes the design, implementation and maintenance of effective internal control over financial 

reporting relevant to the preparation and fair presentation of financial statements that are free 

from material misstatement, whether due to fraud or error. Management is also responsible for 

its assessment about the effectiveness of internal control over financial reporting, which is 

included in the accompanying Management’s Report on Internal Control Over Financial Reporting. 

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements and an opinion on the 

entity’s internal control over financial reporting based on our audit. We conducted our audit in 

accordance with auditing standards generally accepted in the United States of America; the 

standards applicable to financial audits contained in Government Auditing Standards issued by 

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

Bulletin No. 19-01, Audit Requirements for Federal Financial Statements. Those standards require 

that we plan and perform the audit to obtain reasonable assurance about whether the financial 

statements are free from material misstatement and whether effective internal control over 

financial reporting was maintained in all material respects. 

An audit of financial statements involves performing procedures to obtain audit evidence about 

the amounts and disclosures in the financial statements. The procedures selected depend on the 

auditor’s judgment, including the assessment of the risks of material misstatement of the 

financial statements, whether due to fraud or error. In making those risk assessments, the auditor 

considers internal control relevant to the entity’s preparation and fair presentation of the 

financial statements in order to design audit procedures that are appropriate in the 

circumstances. An audit of financial statements also includes evaluating the appropriateness of
F2 

accounting policies used and the reasonableness of significant accounting estimates made by 

management, as well as evaluating the overall presentation of the financial statements. 

An audit of internal control over financial reporting involves performing procedures to obtain 

evidence about whether a material weakness exists. The procedures selected depend on the 

auditor’s judgment, including the assessment of the risk that a material weakness exists. An audit 

of internal control over financial reporting also involves obtaining an understanding of internal 

control over financial reporting and testing and evaluating the design and operating effectiveness 

of internal control over financial reporting based on the assessed risk. 

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

basis for our audit opinion. 

Definition and Inherent Limitations of Internal Control over Financial Reporting 

An entity’s internal control over financial reporting is a process effected by those charged with 

governance, management, and other personnel, designed to provide reasonable assurance 

regarding the preparation of reliable financial statements in accordance with generally accepted 

accounting principles in the United States of America. An entity’s internal control over financial 

reporting includes those policies and procedures that (1) pertain to the maintenance of records 

that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the 

assets of the entity; (2) provide reasonable assurance that transactions are recorded as necessary 

to permit preparation of financial statements in accordance with generally accepted accounting 

principles in the United States of America, and that receipts and expenditures of the entity are 

being made only in accordance with authorizations of management and those charged with 

governance; and (3) provide reasonable assurance regarding prevention, or timely detection and 

correction of unauthorized acquisition, use, or disposition of the entity’s assets that could have 

a material effect on the financial statements. 

Because of its inherent limitations, internal control over financial reporting may not prevent, or 

detect and correct, misstatements. Also, projections of any assessment of effectiveness to future 

periods are subject to the risk that controls may become inadequate because of changes in 

conditions, or that the degree of compliance with the policies or procedures may deteriorate. 

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, 

the financial condition of the Farm Credit System Insurance Corporation as of December 31, 2018, 

and the results of its operations and its cash flows for the year then ended in accordance with 

accounting principles generally accepted in the United States of America. Also, in our opinion, 

the Farm Credit System Insurance Corporation maintained, in all material respects, effective 

internal control over financial reporting as of December 31, 2018 based on the criteria established 

in Internal Control-Integrated Framework (2013) promulgated by the Committee of Sponsoring 

Organizations of the Treadway Commission. 
F3 

Compliance and Other Matters 

As part of obtaining reasonable assurance about whether the Farm Credit System Insurance 

Corporation's financial statements are free from material misstatement, we also performed tests 

of its compliance with certain provisions of laws, regulations, contracts and grant agreements, 

noncompliance with which could have a direct and material effect on the determination of 

financial statement amounts. However, providing an opinion on compliance with those provisions 

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

of our tests disclosed no instances of noncompliance or other matters that are required to be 

reported under U.S. Government Auditing Standards and OMB Bulletin No. 19-01. 

Other Matter 

The 2017 financial statements of FCSIC were audited by other auditors, whose report dated 

February 9, 2018, expressed an unmodified opinion on those financial statements. 

McLean, Virginia 

February 11, 2019 
December 31, 2018 2017

Assets

Cash and cash equivalents $ 287,767 $ 1,613

Investments in U.S. Treasury obligations 4,436,617 4,454,235

Premiums receivable 212,524 340,565

Accrued interest receivable 17,259 21,894

Other receivables - 30,012

General property, plant, equipment, and software, net 60 78

Total assets $ 4,954,227 $ 4,848,397

Liabilities and Insurance Fund

Accounts payable and accrued expenses $ 367 $ 679

Total liabilities 367 679

Insurance Fund

Allocated Insurance Reserves Accounts (AIRAs) 66,061 175,832

Unallocated Insurance Fund 4,887,799 4,671,886

Total Insurance Fund 4,953,860 4,847,718

Total liabilities and Insurance Fund $ 4,954,227 $ 4,848,397

See accompanying notes to the financial statements.

Farm Credit System Insurance Corporation

Statements of Financial Condition

(Dollars in thousands)

F4
Year ended December 31, 2018 2017

Income

Premiums $ 212,524 $ 340,762

Interest income 73,141 57,720

Total income 285,665 398,482

Expenses

Administrative operating expenses 3,691 3,668

Total expenses 3,691 3,668

Net income 281,974 394,814

Insurance Fund - Beginning of year 4,847,718 4,452,904

Payments to AIRAs accountholders (175,832) -

Insurance Fund - End of year $ 4,953,860 $ 4,847,718

See accompanying notes to the financial statements.

Farm Credit System Insurance Corporation

Statements of Income and Expenses and Changes in Insurance Fund

(Dollars in thousands)

F5
Year ended December 31, 2018 2017

Cash flows from operating activities

Net income $ 281,974 $ 394,814

Adjustments to reconcile net income to net cash

provided by operating activities:

Depreciation 18 13

Net amortization and accretion of investments 3,627 11,849

Decrease in premiums receivable 128,041 32,156

Decrease (increase) in accrued interest receivable 4,635 (4,560)

Decrease in other receivables 30,012 16,344

(Decrease) increase in accounts payable and accrued

expenses (312) 118

Net cash provided by operating activities 447,995 450,734

Cash flows from investing activities

Payments for purchase of U.S. Treasury obligations (1,436,080) (1,246,440)

Proceeds from maturity of U.S. Treasury obligations 1,450,071 797,169

Payment for purchase of depreciable assets - (91)

Net cash provided by (used in) investing activities 13,991 (449,362)

Cash flows from financing activity

Payment to AIRAs Accountholders (175,832) - 

Net cash used in financing activity (175,832) -

Net change in cash and cash equivalents 286,154 1,372

Cash and cash equivalents, beginning of year 1,613 241

Cash and cash equivalents, end of year $ 287,767 $ 1,613

See accompanying notes to the financial statements.

Farm Credit System Insurance Corporation

 Statements of Cash Flows

(Dollars in thousands)

F6
Farm Credit System Insurance Corporation 

Notes to the Financial Statements 

F7 

Note 1: Organization and Summary of Significant Accounting Policies 

Farm Credit Insurance Fund (Insurance Fund): Statutory Framework 

The Agricultural Credit Act of 1987 established the Farm Credit System Insurance Corporation (the 

Corporation or FCSIC) for the purpose of ensuring the timely payment of principal and interest on 

notes, bonds, debentures, and other obligations issued under subsection (c) or (d) of section 4.2 of 

the Farm Credit Act of 1971, as amended (the Farm Credit Act). Each bank in the Farm Credit System 

(System) participating in insured obligations is an insured System bank. At December 31, 2018, there 

were four insured System banks and 69 direct lender associations, unchanged from December 31, 

2017. 

The Corporation is managed by a board of directors consisting of the same individuals as the Farm 

Credit Administration (FCA) board except that the chairman of the FCA board may not serve as the 

chairman of the Corporation's board of directors. 

The Corporation must spend amounts in the Insurance Fund necessary to: 

1. Ensure the timely payment of interest and principal on insured obligations; and

2. Ensure the retirement of eligible borrower stock at par value under section 4.9A of the

Farm Credit Act.

The Corporation, in its sole discretion, is authorized to expend amounts to provide financial 

assistance to System banks and direct lender associations. The Corporation may also act as receiver 

or conservator of a System bank or association. 

As of December 31, 2018, there were $283 billion of insured obligations compared to $266 billion as 

of December 31, 2017, and less than $1 million of eligible borrower stock outstanding as of 

December 31, 2018 and 2017. 

If the Corporation does not have sufficient funds to ensure payment on insured obligations, System 

banks will be required to make payments under joint and several liability, as required by section 

4.4 (a)(2) of the Farm Credit Act. The insurance provided by the Insurance Fund is not an obligation 

of and is not guaranteed by the U.S. government. 

Under section 5.63 of the Farm Credit Act, the Corporation is exempt from all Federal, state, and 

local taxes with the exception of real property taxes. 

Note 2: Basis of Accounting 

The accounting and reporting policies of the Corporation conform to accounting principles generally 

accepted in the United States of America (GAAP) and, as such, the financial statements have been 

prepared using the accrual basis of accounting. 
Farm Credit System Insurance Corporation 

Notes to the Financial Statements 

F8 

Cash and Cash Equivalents 

Cash and cash equivalents include investments in U.S. Treasury obligations with original maturities 

of 90 days or less. At December 31, 2018, the Corporation held $287.6 million in overnight Treasury 

certificates maturing on January 2, 2019, with an interest rate of 2.39 percent, and $200 thousand 

in cash. At December 31, 2017, the Corporation held $1,413 thousand in overnight Treasury 

certificates maturing on January 2, 2018, with an interest rate of 1.18 percent, and $200 thousand 

in cash. 

Investments in U.S. Treasury Obligations 

Section 5.62 of the Farm Credit Act requires that funds of the Corporation, not otherwise employed, 

shall be invested in obligations of the United States or in obligations guaranteed as to principal and 

interest by the United States. The Corporation has classified its investments as held to maturity in 

accordance with Financial Accounting Standards Board Accounting Standards Codification 320, 

Investments - Debt and Equity Securities and carries them at amortized cost. Amortization of 

premium and accretion of discount on investments has been computed under the interest method 

since 2002. Fair value of investments is estimated based on quoted market prices for those or similar 

instruments. 

Other Receivables 

The Corporation reports receivables for securities when investments mature at the end of an 

accounting period and proceeds are received in the following month. 

Premium Receivable – Concentration of Credit Risk 

The Farm Credit Act requires that the System banks pay premiums to FCSIC. The premium receivable 

balances consists of amounts due from the four System banks and as such are exposed to risks due 

to concentration. Historically, FCSIC has not experienced any losses related to premium receivable 

balances. FCSIC performs a quarterly analysis related to estimating an allowance for premium 

receivable which continues to indicate that no allowance is warranted. 

Liability for Estimated Insurance Obligations 

The liability for estimated insurance obligations is the present value of estimated probable insurance 

payments to be made in the future based on the Corporation's analysis of economic conditions of 

insured System banks. 

The insured System banks' primary lending markets are borrowers engaged in farming, ranching, and 

producing or harvesting of aquatic products, and their cooperatives. Financial weaknesses in these 

market segments and the effect of general market conditions on the System's borrowers could 

adversely affect the banks' financial condition and profitability. Insured System banks also face risks 

from changing interest rate environments and the need to maintain ongoing access to financial 

markets. Adverse changes in the financial condition and profitability of insured System banks 

resulting from increased levels of credit, financial, or other risks could occur in the future which 

would require a liability for estimated insurance obligations to be recorded. 
Farm Credit System Insurance Corporation 

Notes to the Financial Statements 

F9 

The Corporation actively monitors the creditworthiness and financial condition of the insured 

System banks. Management is not aware of any events or circumstances at this time which would 

require a liability for estimated insurance obligations to be recorded at December 31, 2018. 

Premiums 

Annual premiums are recorded as revenue during the 12-month period on which the premiums are 

based starting in January each year. All premiums are due on or before January 31st of the year 

subsequent to the year in which they are earned. 

Use of Estimates 

The preparation of financial statements, in conformity with GAAP, requires management to make 

estimates and assumptions that affect the reported amount of assets and liabilities and disclosure 

of contingent assets and liabilities at the date of the financial statements and the reported amount 

of revenues and expenses during the reporting period. Actual results could differ from those 

estimates. 

Note 3: Investments in U.S. Treasury Obligations

In addition to the amounts referenced in Note 2, Cash and Cash Equivalents, at December 31, 2018 

and 2017, investments in U.S. Treasury obligations, which are carried at amortized cost, consisted 

of the following: 

Amortized 

Gross 

Unrealized 

Gross 

Unrealized Estimated Fair 

(Dollars in thousands) Cost Gains Losses Value 

 

December 31, 2018 

U.S. Treasury obligations $ 4,436,617 $ 311 $ (40,782) $ 4,396,146 

 

December 31, 2017 

U.S. Treasury obligations $ 4,454,235 $ 304 $ (35,858) $ 4,418,681 

The amortized cost and estimated fair value of U.S. Treasury obligations at December 31, 2018, by 

contractual maturity, are shown below: 

(Dollars in thousands) 

Amortized 

Cost

Estimated Fair 

Value 

 

Due in one year or less $ 2,520,392 $ 2,510,255 

Due after one year through five years 1,866,752 1,837,080 

Due after five years through ten years 49,473 48,811

 

 $ 4,436,617 $ 4,396,146
Farm Credit System Insurance Corporation 

Notes to the Financial Statements 

F10 

The Corporation follows GAAP for measuring, reporting, and disclosing fair value. These standards 

apply to all assets and liabilities that are measured, reported, and/or disclosed on a fair value basis. 

The fair value of FCSIC's investments in U.S. Treasury obligations are estimated based on quoted 

market prices for those instruments. 

Note 4: Premiums, the Secure Base Amount and Excess Insurance Fund Balances 

Each System bank which issues insured obligations under subsection (c) or (d) of section 4.2 of the 

Farm Credit Act is an insured System bank and may be required to pay premiums to the Corporation. 

The Farm Credit Act requires FCSIC to assess premiums based on each bank's pro rata share of 

insured debt (rather than on individual loans). FCSIC may collect from 0 to 20 basis points annually 

on adjusted insured debt outstanding. The Farm Credit Act also authorizes a risk surcharge of up to 

10 basis points on non-accrual loans and on other-than-temporarily impaired investments. The Farm 

Credit Act reduces the total insured debt on which premiums are assessed by 90 percent of Federal 

government-guaranteed loans and investments and 80 percent of state government-guaranteed 

loans and investments and deducts similar percentages of such guaranteed loans and investments 

when calculating the secure base amount (SBA). 

The Farm Credit Act sets a base amount for the Insurance Fund to achieve. The statutory SBA is 

equivalent to 2.0 percent of the aggregate outstanding insured obligations of all insured System 

banks (adjusted downward by a percentage of the guaranteed portions of principal outstanding on 

certain government-guaranteed loans and investments) or such other percentage as determined by 

the Corporation in its sole discretion to be actuarially sound to maintain in the Insurance Fund taking 

into account the risk of insuring outstanding insured obligations. When the assets in the Insurance 

Fund for which no specific use has been designated exceed the SBA, the Corporation is required to 

reduce the premiums, but it still must ensure that reduced premiums are sufficient to maintain at 

the SBA the assets in the Insurance Fund for which no specific use has been designated (the 

unallocated Insurance Fund). 

Insurance premium rates are reviewed semiannually. For 2018, the board of directors set premium 

rates at its January 18, 2018 meeting at 9 basis points on average adjusted insured debt and 

continued the assessment of the 10 basis point surcharge on the average principal balance 

outstanding for nonaccrual loans and other-than-temporarily impaired investments. The board of 

directors again reviewed premiums at its June 14, 2018 meeting. The board of directors voted to 

maintain the premium accrual rate on average adjusted insured debt at 9 basis points and continued 

the assessment of the 10 basis point surcharge on the average principal balance outstanding for 

nonaccrual loans and other-than-temporarily impaired investments for the remainder of 2018. In 

2018, outstanding insured obligations increased by $16.5 billion (6.2 percent). At December 31, 

2018, the unallocated Insurance Fund and the total Insurance Fund were 2.00 percent and 2.03 

percent of adjusted insured obligations, respectively. 

For 2017, the board of directors set premium rates at its January 26, 2017 meeting at 15 basis points 

on average adjusted insured debt and continued the assessment of the 10 basis point surcharge on 

the average principal balance outstanding for nonaccrual loans and other-than-temporarily impaired 

investments. The board of directors again reviewed premiums at its June 8, 2017 meeting. The 

board of directors voted to maintain the premium accrual rate on average adjusted insured debt at 

15 basis points and continued the assessment of the 10 basis point surcharge on the average principal 
Farm Credit System Insurance Corporation 

Notes to the Financial Statements 

F11 

balance outstanding for nonaccrual loans and other-than-temporarily impaired investments for the 

remainder of 2017. In 2017, outstanding insured obligations increased by $7.6 billion (3 percent). 

At December 31, 2017, the unallocated Insurance Fund and the total Insurance Fund were 2.00 

percent and 2.08 percent of adjusted insured obligations, respectively. 

A 1996 amendment to the Farm Credit Act requires the Corporation to establish Allocated Insurance 

Reserves Accounts (AIRAs) for each System bank and an account for the stockholders of the Financial 

Assistance Corporation (FAC). If, at the end of any calendar year, the aggregate of the amounts in 

the Insurance Fund exceed the SBA, the Corporation is to allocate to the AIRAs any excess balances 

less the amount that the Corporation, in its sole discretion, determines to be the sum of the 

estimated operating expenses and estimated insurance obligations of the Corporation for the 

immediately succeeding calendar year. 

As the total Insurance Fund exceeded the 2 percent SBA at December 31, 2018, and December 31, 

2017, there was an allocation of $66.1 and $175.8 million, respectively, to the Farm Credit System 

banks AIRAs. 

At December 31, 2017, $175.8 million of AIRAs was allocated as follows: 

FAC Shareholders $ 13.1 million 

Farm Credit System banks $ 162.7 million 

With the $13.1 million payment from the 2017 AIRAs, FCSIC completed its statutory obligation to 

pay all outstanding FAC shares and the FAC stockholders’ AIRA accounts have been closed. At 

December 31, 2018 no such allocations of AIRAs were necessary. 

The AIRAs' balances are recorded as part of the Insurance Fund until approved for payment by the 

Corporation's board of directors. AIRAs’ balances may be used to absorb any insurance losses and 

claims. Furthermore, the board of directors have discretion to limit or restrict the AIRAs’ payments. 

In accordance with the Corporation's policy, any AIRAs' balances do not count in measuring the 

Insurance Fund's compliance with the SBA. 
Farm Credit System Insurance Corporation 

Notes to the Financial Statements 

F12 

Note 5: Operating Lease 

The Corporation is committed under a ten-year lease with the FCS Building Association for office 

space expiring on November 30, 2025. The Corporation recorded lease expense (including operating 

cost assessments) of $144 thousand for 2018 and 2017. The following is a schedule by year of the 

future minimum lease payments required under this lease as of December 31, 2018: 

Years ending December 31, 

(Dollars in thousands) 

2019 $ 146 

2020 149 

2021 151 

2022 155 

2023 158 

Thereafter 311 

$ 1,070 

Note 6: Line of Credit 

On September 24, 2013, the Corporation entered into an agreement with the Federal Financing Bank 

(the FFB), a United States government corporation subject to the supervision and direction of the 

U.S. Treasury. Pursuant to this agreement, the FFB may advance funds to the Corporation when 

exigent market circumstances make it extremely doubtful that insured System banks will be able to 

pay maturing debt obligations. The Corporation will in turn use the funds advanced by the FFB to 

provide assistance to the System banks until market conditions improve. The agreement provides 

for a short-term revolving credit facility of up to $10 billion, is renewable annually and terminates 

on September 30, 2019, unless otherwise further extended. 

Under the agreement, each provision of funds by the FFB is subject to certain terms and conditions. 

The interest rate for each advance will be established by the FFB at the time the respective advance 

is made. Each advance cannot have a maturity date longer than twelve months and the maturity 

date cannot be later than the final termination date of the agreement. 

The Corporation paid no commitment fee to secure this line of credit. There were no amounts drawn 

on this line of credit during 2018 and 2017. 

Note 7: Retirement Plan 

All permanent Corporation employees are covered by the Civil Service Retirement System (CSRS) or 

the Federal Employees Retirement System (FERS). The Corporation's contribution to the CSRS plan 

during 2018 and 2017 was 7 percent of base pay. For those employees covered by FERS, the 

Corporation's contribution was 13.7 percent of base pay for 2018 and 2017. In addition, for FERScovered employees, the Corporation automatically contributes 1 percent of base pay to the 

employee's Thrift Savings Plan account, matches the first 3 percent contributed by the employee, 

and matches one-half of the next 2 percent contributed by the employee. In 2015, the Corporation 

began a 401K plan for both CSRS and FERS employees. The Corporation automatically contributes 1 
Farm Credit System Insurance Corporation 

Notes to the Financial Statements 

F13 

percent of base pay to the employee's 401K account and matches the first 2 percent contributed by 

the employee. Retirement plan expenses amounted to $393 thousand in 2018 and $385 thousand in 

2017. 

Note 8: Related Parties 

The Corporation purchases services from the FCA under an Interagency Agreement. These include 

examination and administrative support services. The intention of the parties as stated in the 

agreement is that specified rates and fees will reimburse the party providing services for all 

reasonable costs associated with provision of the services. The Corporation purchased services for 

2018 which totaled $339 thousand, compared with $322 thousand for 2017. 

The Corporation may also provide services to the FCA under an Interagency Agreement; however, 

the Corporation provided no services and recognized no revenue for 2018 and 2017. At December 

31, 2018, and 2017, the Corporation did not have any receivables from the FCA. 

Note 9: Subsequent Events 

FCSIC evaluated subsequent events from the date of the statement of financial condition through 

February 11, 2019, the date at which FCSIC’s financial statements were issued. No material 

subsequent events were identified for either recognition or disclosure. 
SIC 

Farm Credit System Insurance Corporation 

Management's Report on Internal Control Over Financial Reporting 

The Farm Credit System Insurance Corporation's (FCSIC) internal control over financial reporting is 

a process effected by those charged with governance, management, and other personnel, designed 

to provide reasonable assurance regarding the preparation of reliable financial statements in 

accordance with generally accepted accounting principles in the United States of America. Our 

internal control over financial reporting includes those policies and procedures that (1) pertain to 

the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions 

and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as 

necessary to permit preparation of financial statements in accordance with generally accepted 

accounting principles and that receipts and expenditures of FCSIC are being made only in accordance 

with authorizations of FCSIC management and those charged with governance; and (3) provide 

reasonable assurance regarding prevention, or timely detection and correction, of unauthorized 

acquisition, use, or disposition of FCSIC's assets that could have a material effect on our financial 

statements. 

Management of FCSIC is responsible for designing, implementing, and maintaining effective internal 

control over financial reporting. Management assessed the effectiveness of FCSIC's internal control 

over financial reporting as of December 31, 2018 using the criteria established in the Internal 

Control - Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the 

Treadway Commission (COSO). Based on that assessment, management concluded that as of 

December 31, 2018, FCSIC's internal control over financial reporting is effective, based on the COSO 

criteria. 

Internal control over financial reporting has inherent limitations. Internal control over financial 

reporting is a process that involves human diligence and compliance and is subject to lapses in 

judgement and breakdowns resulting from human failures. Internal control over financial reporting 

also can be circumvented by collusion or improper management override. Because of its inherent 

limitations, internal control over financial reporting may not prevent, or detect and correct, 

misstatements. Also, projections of any assessment of effectiveness to future periods are subject 

to the risk that controls may become inadequate because of changes in conditions, or that the 

degree of compliance with the policies or procedures may deteriorate. 

C. Richard Pfitzinge 

Chief Operating Officer 

Howard award I. Rubin 

Chief Risk Officer I General Counsel 

February 11, 2019 

--

Chief Financial Officer 

F14 

SIC 

Farm Credit System Insurance Corporation 

Management's Report on Internal Control Over Financial Reporting 

The Farm Credit System Insurance Corporation's (FCSIC) internal control over financial reporting is 

a process effected by those charged with governance, management, and other personnel, designed 

to provide reasonable assurance regarding the preparation of reliable financial statements in 

accordance with generally accepted accounting principles in the United States of America. Our 

internal control over financial reporting includes those policies and procedures that (1) pertain to 

the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions 

and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as 

necessary to permit preparation of financial statements in accordance with generally accepted 

accounting principles and that receipts and expenditures of FCSIC are being made only in accordance 

with authorizations of FCSIC management and those charged with governance; and (3) provide 

reasonable assurance regarding prevention, or timely detection and correction, of unauthorized 

acquisition, use, or disposition of FCSIC's assets that could have a material effect on our financial 

statements. 

Management of FCSIC is responsible for designing, implementing, and maintaining effective internal 

control over financial reporting. Management assessed the effectiveness of FCSIC's internal control 

over financial reporting as of December 31, 2018 using the criteria established in the Internal 

Control - Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the 

Treadway Commission (COSO). Based on that assessment, management concluded that as of 

December 31, 2018, FCSIC's internal control over financial reporting is effective, based on the COSO 

criteria. 

Internal control over financial reporting has inherent limitations. Internal control over financial 

reporting is a process that involves human diligence and compliance and is subject to lapses in 

judgement and breakdowns resulting from human failures. Internal control over financial reporting 

also can be circumvented by collusion or improper management override. Because of its inherent 

limitations, internal control over financial reporting may not prevent, or detect and correct, 

misstatements. Also, projections of any assessment of effectiveness to future periods are subject 

to the risk that controls may become inadequate because of changes in conditions, or that the 

degree of compliance with the policies or procedures may deteriorate. 

C. Richard Pfitzinge 

Chief Operating Officer 

Howard award I. Rubin 

Chief Risk Officer I General Counsel 

February 11, 2019 

--

Chief Financial Officer 

F14 

SIC 

Farm Credit System Insurance Corporation 

Management's Report on Internal Control Over Financial Reporting 

The Farm Credit System Insurance Corporation's (FCSIC) internal control over financial reporting is 

a process effected by those charged with governance, management, and other personnel, designed 

to provide reasonable assurance regarding the preparation of reliable financial statements in 

accordance with generally accepted accounting principles in the United States of America. Our 

internal control over financial reporting includes those policies and procedures that (1) pertain to 

the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions 

and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as 

necessary to permit preparation of financial statements in accordance with generally accepted 

accounting principles and that receipts and expenditures of FCSIC are being made only in accordance 

with authorizations of FCSIC management and those charged with governance; and (3) provide 

reasonable assurance regarding prevention, or timely detection and correction, of unauthorized 

acquisition, use, or disposition of FCSIC's assets that could have a material effect on our financial 

statements. 

Management of FCSIC is responsible for designing, implementing, and maintaining effective internal 

control over financial reporting. Management assessed the effectiveness of FCSIC's internal control 

over financial reporting as of December 31, 2018 using the criteria established in the Internal 

Control - Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the 

Treadway Commission (COSO). Based on that assessment, management concluded that as of 

December 31, 2018, FCSIC's internal control over financial reporting is effective, based on the COSO 

criteria. 

Internal control over financial reporting has inherent limitations. Internal control over financial 

reporting is a process that involves human diligence and compliance and is subject to lapses in 

judgement and breakdowns resulting from human failures. Internal control over financial reporting 

also can be circumvented by collusion or improper management override. Because of its inherent 

limitations, internal control over financial reporting may not prevent, or detect and correct, 

misstatements. Also, projections of any assessment of effectiveness to future periods are subject 

to the risk that controls may become inadequate because of changes in conditions, or that the 

degree of compliance with the policies or procedures may deteriorate. 

C. Richard Pfitzinge 

Chief Operating Officer 

Howard award I. Rubin 

Chief Risk Officer I General Counsel 

February 11, 2019 

--

Chief Financial Officer 

F14 

SIC 

Farm Credit System Insurance Corporation 

Management's Report on Internal Control Over Financial Reporting 

The Farm Credit System Insurance Corporation's (FCSIC) internal control over financial reporting is 

a process effected by those charged with governance, management, and other personnel, designed 

to provide reasonable assurance regarding the preparation of reliable financial statements in 

accordance with generally accepted accounting principles in the United States of America. Our 

internal control over financial reporting includes those policies and procedures that (1) pertain to 

the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions 

and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as 

necessary to permit preparation of financial statements in accordance with generally accepted 

accounting principles and that receipts and expenditures of FCSIC are being made only in accordance 

with authorizations of FCSIC management and those charged with governance; and (3) provide 

reasonable assurance regarding prevention, or timely detection and correction, of unauthorized 

acquisition, use, or disposition of FCSIC's assets that could have a material effect on our financial 

statements. 

Management of FCSIC is responsible for designing, implementing, and maintaining effective internal 

control over financial reporting. Management assessed the effectiveness of FCSIC's internal control 

over financial reporting as of December 31, 2018 using the criteria established in the Internal 

Control - Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the 

Treadway Commission (COSO). Based on that assessment, management concluded that as of 

December 31, 2018, FCSIC's internal control over financial reporting is effective, based on the COSO 

criteria. 

Internal control over financial reporting has inherent limitations. Internal control over financial 

reporting is a process that involves human diligence and compliance and is subject to lapses in 

judgement and breakdowns resulting from human failures. Internal control over financial reporting 

also can be circumvented by collusion or improper management override. Because of its inherent 

limitations, internal control over financial reporting may not prevent, or detect and correct, 

misstatements. Also, projections of any assessment of effectiveness to future periods are subject 

to the risk that controls may become inadequate because of changes in conditions, or that the 

degree of compliance with the policies or procedures may deteriorate. 

C. Richard Pfitzinge 

Chief Operating Officer 

Howard award I. Rubin 

Chief Risk Officer I General Counsel 

February 11, 2019 

--

Chief Financial Officer 

F14 

SIC 

Farm Credit System Insurance Corporation 

Management's Report on Internal Control Over Financial Reporting 

The Farm Credit System Insurance Corporation's (FCSIC) internal control over financial reporting is 

a process effected by those charged with governance, management, and other personnel, designed 

to provide reasonable assurance regarding the preparation of reliable financial statements in 

accordance with generally accepted accounting principles in the United States of America. Our 

internal control over financial reporting includes those policies and procedures that (1) pertain to 

the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions 

and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as 

necessary to permit preparation of financial statements in accordance with generally accepted 

accounting principles and that receipts and expenditures of FCSIC are being made only in accordance 

with authorizations of FCSIC management and those charged with governance; and (3) provide 

reasonable assurance regarding prevention, or timely detection and correction, of unauthorized 

acquisition, use, or disposition of FCSIC's assets that could have a material effect on our financial 

statements. 

Management of FCSIC is responsible for designing, implementing, and maintaining effective internal 

control over financial reporting. Management assessed the effectiveness of FCSIC's internal control 

over financial reporting as of December 31, 2018 using the criteria established in the Internal 

Control - Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the 

Treadway Commission (COSO). Based on that assessment, management concluded that as of 

December 31, 2018, FCSIC's internal control over financial reporting is effective, based on the COSO 

criteria. 

Internal control over financial reporting has inherent limitations. Internal control over financial 

reporting is a process that involves human diligence and compliance and is subject to lapses in 

judgement and breakdowns resulting from human failures. Internal control over financial reporting 

also can be circumvented by collusion or improper management override. Because of its inherent 

limitations, internal control over financial reporting may not prevent, or detect and correct, 

misstatements. Also, projections of any assessment of effectiveness to future periods are subject 

to the risk that controls may become inadequate because of changes in conditions, or that the 

degree of compliance with the policies or procedures may deteriorate. 

C. Richard Pfitzinge 

Chief Operating Officer 

Howard award I. Rubin 

Chief Risk Officer I General Counsel 

February 11, 2019 

--

Chief Financial Officer 

F14 

SIC 

Management's Report on Internal Control Over Financial Reporting 

The Farm Credit System Insurance Corporation's (FCSIC) internal control over financial reporting is 

a process effected by those charged with governance, management, and other personnel, designed 

to provide reasonable assurance regarding the preparation of reliable financial statements in 

accordance with generally accepted accounting principles in the United States of America. Our 

internal control over financial reporting includes those policies and procedures that (1) pertain to 

the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions 

and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as 

necessar:y to permit preparation of financial statements in accordance with generally accepted 

accounting principles and that receipts and expenditures of FCSIC are being made only in accordance 

with authorizations of FCSIC management and those charged with governance; and (3) provide 

reasonable assurance regarding prevention, or timely detection and correction, of unauthorized 

acquisition, use, or disposition of FCSIC's assets that could have a material effect on our financial 

statements. 

Management of FCSIC is responsible for designing, implementing, and maintaining effective internal 

control over financial reporting. Management assessed the effectiveness of FCSIC's internal control 

over financial reporting as of December 31, 2018 using the criteria established in the Internal 

Control - Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the 

Treadway Commission (COSO). Based on that assessment, management concluded that as of 

December 31, 2018, FCSIC's internal control over financial reporting is effective, based on the COSO 

criteria. 

Internal control over financial reporting has inherent limitations. Internal control over financial 

reporting is a process that involves human diligence and compliance and is subject to lapses in 

judgement and breakdowns resulting from human failures. Internal control over financial reporting 

also can be circumvented by collusion or improper management override. Because of its inherent 

limitations, internal control over financial reporting may not prevent, or detect and correct, 

misstatements. Also, projections of any assessment of effectiveness to future periods are subject 

to the risk that controls may become inadequate because of changes in conditions, or that the 

degree of compliance with the policies or procedures may deteriorate. 

C. 

February 11, 2019 

--

F14