FCA Performance and Accountability Report — 2019 | i
Mission

The Farm Credit Administration ensures 

that Farm Credit System institutions and 

Farmer Mac are safe, sound, and dependable 

sources of credit and related services for 

all creditworthy and eligible persons in 

agriculture and rural America.
FCA Performance and Accountability Report — 2019 | 1

Contents

Statement of Board Chairman and CEO 4

Management’s Discussion and Analysis 6

FCA at a Glance 7

FCA offices 7

Highlights of FCA’s Performance Goals and Results   

Analyses and Highlights of FCA’s Financial Statements 13

Financial Highlights 13

Program costs and revenues   

Limitations of financial statements   

Analysis of FCA’s Systems, Controls, and Legal Compliance 19

Statement of Assurance  .

Program Performance 24

FCA Performance Report 25

Goal 1 — Ensure that the FCS and Farmer Mac fulfill their public missions for 

agriculture and rural areas. 25

Goal 2 — Evaluate risk and provide timely and proactive oversight to ensure the 

safety and soundness of the System and Farmer Mac. 29

Goal 3 — Cultivate an environment that fosters a well-trained, motivated, and 

diverse staff while providing an effective plan for leadership succession. 32

Financial Section   

Statement of Chief Financial Officer 39

Transmittal Letter of Auditor’s Report 40

Independent Auditor’s Report 42

Financial Statements   

Balance sheets 47

Statements of net cost 48

Statements of changes in net position 49

Statements of budgetary resources 50

Notes to the financial statements   
2 | FCA Performance and Accountability Report — 2019

Other Information 62

Letter from Inspector General on FCA’s Management Challenges 63

Management’s Response to Challenges Identified by FCA’s Inspector General . 

Summary of Financial Statement Audit and Management Assurances 73

Payment Integrity 75

Fraud Reduction Report 76

Civil Monetary Penalty Adjustment for Inflation 77

Additional Information  .
FCA Performance and Accountability Report — 2019 | 3

Tables Appearing in Report

Table 1. Composition of assets . 

Table 2. Composition of liabilities 15

Table 3. Agency budget  .

Table 4. Funds used by major budget category 15

Table 5a. Goal 1 — Performance measures and results for public mission   

Table 5b. Goal 2 — Performance measures and results for safety and soundness 36

Table 5c. Goal 3 — Performance measures and results for workforce management 37

Table 6. Summary of financial statement audit.  

Table 7. Summary of management assurances 73

Table 8. Civil monetary penalties annual inflation adjustments 77

List of Figures Appearing in Report

Figure 1. FCA organizational chart as of September 2019   

Figure 2. Composition of liabilities 14

Figure 3. FY 2019 funds used by major budget category 16

Figure 4. FY 2018 funds used by major budget category 16

Figure 5. FY 2019 gross costs by agency goal 17

Figure 6. FY 2019 gross revenue by agency goal  .
4 | FCA Performance and Accountability Report — 2019

Statement of Board Chairman and CEO 

November 8, 2019

As board chairman and CEO of the Farm Credit Administration, I invite you to review our Performance 

and Accountability Report for Fiscal Year 2019.

The past year has been challenging for us because of the sudden, unexpected death of Chairman Dallas 

Tonsager in May. Dallas was a highly respected leader at FCA, and his death was a great loss to our agency. We also had several changes in the senior leadership team because of retirements. However, I am 

pleased to report that, despite these challenges, we achieved the goals outlined in our strategic plan and 

met or exceeded almost all performance targets.

In addition, our financial statements received an unmodified opinion from an independent auditor. 

Based on the results of our internal evaluations, I can provide reasonable assurance that the financial 

and performance information in this report is complete and reliable. We also have no material weaknesses in our internal controls.

FCA is the arm’s length regulator of the Farm Credit System (System) and the Federal Agricultural Mortgage Corporation (Farmer Mac). Our mission is to ensure that System institutions and Farmer Mac are 

safe, sound, and dependable sources of credit and related services for all creditworthy and eligible persons in agriculture and rural America.

The System holds more than 41% of the nation’s total farm business debt, so it plays a vital role in the 

health of the nation’s agricultural economy. And Farmer Mac, which provides a secondary market for 

agricultural real estate mortgages and rural cooperative loans, enhances the ability of lenders to offer 

competitive financing to rural borrowers and farmland investors.

Both the System and Farmer Mac are well capitalized and remain financially safe and sound. The banks 

and associations of the System together held $353 billion in assets as of June 30, 2019, up 5.6% from the 

year before. Farmer Mac had a net worth of $774 million as of that date, up 1% from the year before.

Over the past 12 months, we worked to protect the financial soundness of the System and Farmer Mac 

and to ensure that they continue to fulfill their missions to serve agriculture and rural America. Here are 

some of the ways we accomplished these goals:

• Examined System institutions and Farmer Mac in accordance with statutory requirements.

• Prepared 54 formal reports of examination and 37 interim activity letters.

• Issued a proposed rule on the criteria to reinstate nonaccrual loans and a proposed rule on the eligibility criteria for outside directors.
FCA Performance and Accountability Report — 2019 | 5

• Issued final rules governing private flood insurance, transfers of legacy swaps, and investment eligibility criteria for Farmer Mac.

• Analyzed and reported on the System’s service to young, beginning, and small farmers and ranchers, 

as well as economic conditions in agriculture and the Farm Credit System.

• Requested public comment on ways to improve the collection, evaluation, and reporting of data on 

young, beginning, and small farmers and ranchers.

• Issued guidance to System institutions on various topics, such as assigning a reduced risk weight to 

certain loans to rural water and wastewater utilities, interest rate risk management for Farmer Mac, 

director nomination procedures, and issuing loans when the National Flood Insurance Program is 

unavailable.

• Responded to borrower inquiries and complaints.

Also, our efforts to strengthen employee engagement continue to yield results. Our employee engagement index on the Federal Employee Viewpoint Survey went up by one percentage point in 2019 to 79. 

Last year, we were ranked number four among small agencies in the Partnership for Public Services’ Best 

Places to Work in the Federal Government.

We had a successful year in FY 2019, thanks to the hard work and dedication of our staff. I look forward to 

continued success in FY 2020 and beyond.

Glen R. Smith

Board Chairman and CEO
6 | FCA Performance and Accountability Report — 2019

Management’s 

Discussion and 

Analysis
FCA Performance and Accountability Report — 2019 | 7

FCA at a Glance

The Farm Credit Administration is an independent agency in the executive branch of the U.S. 

government. We are responsible for regulating 

and supervising the Farm Credit System (its banks, 

associations, and related entities) and the Federal 

Agricultural Mortgage Corporation (Farmer Mac).

The System is a nationwide network of borrower-owned financial institutions that provide credit 

to farmers, ranchers, residents of rural communities, agricultural and rural utility cooperatives, and 

other eligible borrowers.

FCA is responsible for ensuring that the System remains a dependable source of credit for agriculture 

and rural America. We do this in two specific ways:

• We ensure that System institutions, including 

Farmer Mac, operate safely and soundly and 

comply with applicable laws and regulations.

• We issue policies and regulations governing 

how System institutions conduct their business 

and interact with borrowers.

FCA derives its powers and authorities from the 

Farm Credit Act of 1971, as amended (12 U.S.C. 

2001 – 2279cc). The U.S. Senate Committee on Agriculture, Nutrition, and Forestry and the U.S. House 

of Representatives Committee on Agriculture oversee FCA and the Farm Credit System.

FCA does not receive a federal appropriation. We 

maintain a revolving fund financed primarily by 

assessments from the institutions we regulate. 

Other sources of income for the revolving fund are 

interest earned on investments with the U.S. Treasury and reimbursements for services we provide 

to federal agencies and others.

FCA policy, regulatory agenda, and supervisory 

and examination activities are established by a 

full-time, three-person board whose members are 

appointed by the president of the United States 

with the advice and consent of the Senate. 

Board members serve a six-year term and may 

remain on the board until a successor is appointed. 

The president designates one member as chairman 

of the board, who serves in that capacity until the 

end of his or her own term. The chairman also 

serves as our chief executive officer.

FCA board members also serve as the board of 

directors for the Farm Credit System Insurance 

Corporation.

Our headquarters and one field office are in 

McLean, Virginia. We also have field offices in 

Bloomington, Minnesota; Dallas, Texas; Denver, 

Colorado; and Sacramento, California.

FCA offices

As of Sept. 30, 2019, FCA had 312 full- and parttime employees. These employees work in the 

following offices, with the majority serving in the 

Office of Examination.

The FCA board manages, administers, and establishes policies for FCA. The board approves the 

policies, regulations, charters, and examination 

and enforcement activities that ensure a strong 

FCS. The board also provides for the examination 

and supervision of the FCS, including Farmer Mac, 

and oversees the activities of the FCS Building Association, which acquires, manages, and maintains 

FCA headquarters and field office facilities. Glen R. 

Smith is the board chairman.

The chairman of the FCA board serves as the chief 

executive officer (CEO). The CEO enforces the 

rules, regulations, and orders of the FCA board. He 

or she directs the implementation of policies and 

regulations adopted by the FCA board. The Office 

of the Chief Executive Officer plans, organizes, 

directs, coordinates, and controls our day-to-day 

operations and leads the agency’s efforts to achieve 
8 | FCA Performance and Accountability Report — 2019

and manage a diverse workforce. Glen R. Smith is 

the CEO.

The chief operating officer (COO) has broad 

responsibility for planning, directing, and controlling the operations of the Offices of Agency 

Services, Examination, Regulatory Policy, Information Technology, Chief Financial Officer, and 

General Counsel in accordance with the operating 

philosophy and policies of the FCA board. He or 

she supervises and provides policy direction to 

the executive staff responsible for managing these 

offices. The COO oversees and coordinates the development and implementation of the agencywide 

strategic, operating, and budget plans and activities. The COO also coordinates the resolution of internal policy, personnel, and program issues with 

agency executive leadership and the FCA board.

The Office of Agency Services manages and delivers human capital and administrative services 

for the agency. The office consists of three service 

delivery teams: Human Resources Division, Operations Division, and Learning and Organizational 

Change Team. Services provided include staffing 

and placement, job evaluation, compensation and 

benefits, payroll administration, performance 

management, awards, employee relations, employee training and development, acquisition, records 

and property management, personnel security, 

continuity of operations and emergency preparedness, supply services, agency purchase cards, 

graphic design, publication, and mail service.

The Office of the Chief Financial Officer supports 

FCA’s operations by providing financial management policy advice, reporting the agency’s financial results, and facilitating the agency’s strategic 

planning efforts. The office manages the agency’s 

compliance with federal financial management 

requirements. It also reports on the accuracy and 

propriety of transactions, the extent to which 

assets are accounted for and safeguarded, and the 

adequacy of internal controls to detect and prevent 

material financial misstatements. It oversees the 

agency’s budget, the investments committee, the 

FCS assessments, and the agency’s travel and relocation program. It also facilitates the agency’s risk 

management and internal control efforts to help 

ensure operational and fiscal effectiveness and 

efficiency.

The Office of Congressional and Public Affairs

serves as the agency’s principal point of contact for 

Congress, the media, other government agencies, 

FCS institutions, employees, System borrowers, 

and the public. The office develops and monitors 

legislation pertinent to FCA and the FCS, serves 

as the agency’s congressional liaison, facilitates 

intergovernmental relations, and prepares testimony for the chairman and other board members. 

It also provides information to external audiences 

through news releases, fact sheets, reports, and 

other publications. The office cultivates relationships with media representatives who report on 

matters related to agriculture and rural credit, and 

it manages the content of the FCA website. It also 

organizes special meetings, briefings for international visitors, and field hearings.

The Office of Examination is responsible for examining and supervising each FCS institution in accordance with the Farm Credit Act and applicable 

regulations. The office develops oversight plans; 

conducts examinations; monitors the System’s condition and current and emerging risks to the System; and develops supervisory strategies to ensure 

that the FCS operates in a safe and sound manner, 

complies with the law and regulations, and fulfills 

its public policy purpose. For more information 

about the role of the Office of Examination, go to 

www.fca.gov/bank-oversight/guidance and click 

board policy statements to read “Examination Philosophy” (FCA-PS-53).

The Office of General Counsel provides the FCA 

board and staff with legal counsel as well as guidance on the Farm Credit Act and general corporate, 

personnel, ethics, and administrative matters. 

The office supports the agency’s development and 
FCA Performance and Accountability Report — 2019 | 9

promulgation of regulations, enforcement of applicable laws and regulations, and implementation of 

conservatorships and receiverships. It represents 

and advises the agency on civil litigation. It also 

serves as the liaison to the Federal Register, administers the agency’s ethics program, and handles 

Freedom of Information Act requests.

The Office of Information Technology supports 

the information, solutions, and IT infrastructure 

that empower FCA to fulfill its mission. It is a respected partner in fulfilling FCA’s mission through 

innovative solutions. The office is responsible for 

protecting agency technology assets, planning and 

controlling information technology investments, 

and leading change to improve the efficiency and 

effectiveness of agency operations. It is responsible for continuing to leverage FCA’s investment in 

technology by collaborating across agency offices 

to identify and re-engineer business applications, 

data systems, and processes.

The Office of Inspector General provides independent and objective oversight of agency programs 

and operations through audits, inspections, evaluations, investigations, and the review of proposed 

legislation and regulations. The office promotes 

economy and efficiency within FCA and seeks to 

prevent and detect fraud, waste, abuse, and mismanagement in the agency’s programs and operations.

The Office of Regulatory Policy manages policy 

and regulation development activities that ensure 

the safety and soundness of the FCS and support 

the System’s mission. Policy and regulation development activities include the analysis of policy 

and strategic risks to the System on the basis of 

economic trends and other risk factors. The office 

also evaluates all regulatory and statutory prior 

approvals for System institutions on behalf of the 

FCA board, including chartering and other corporate approvals as well as funding approvals.

The Office of Secondary Market Oversight provides for the examination, regulation, and supervision of Farmer Mac to ensure its safety and soundness and the accomplishment of its public policy 

purpose as authorized by Congress. It also ensures 

that Farmer Mac complies with applicable laws 

and regulations, and it manages FCA’s enforcement 

activities with respect to Farmer Mac.

The secretary to the board serves as the parliamentarian for the board and keeps permanent and 

complete records of the acts and proceedings of 

the board. He or she ensures that the board complies with statutory, regulatory, and internal operation reporting requirements. The secretary to the 

board also serves as secretary to the Farm Credit 

System Insurance Corporation board. In addition, 

he or she serves as the Sunshine Act official for the 

FCA board.

The Office of Equal Employment Opportunity and 

Inclusion manages and directs the diversity, inclusion, and equal employment opportunity (EEO) 

program for FCA and FCSIC. The office serves as 

the chief liaison with the Equal Employment Opportunity Commission and the Office of Personnel 

Management on all EEO, diversity, and inclusion 

issues. The office provides counsel and leadership 

to agency management to carry out its continuing 

policy and program of nondiscrimination, affirmative action, and diversity.

The designated agency ethics official (DAEO) is 

designated by the FCA chairman to administer the 

provisions of title I of the Ethics in Government 

Act of 1978, as amended, to coordinate and manage FCA’s ethics program and to provide liaison to 

the Office of Government Ethics with regard to all 

aspects of FCA’s ethics program.
10 | FCA Performance and Accountability Report — 2019

Figure 1. FCA organizational chart as of September 2019

For an accessible version of this chart, go to 

www.fca.gov/about/fca-organizational-chart

FCA Board

Glen R. Smith, 

Chairman

Jeffery S. Hall, 

Member

⸺ Office of the Board 

Chairman and Chief 

Executive Officer 

Glen R. Smith 

⸺ Office of Inspector 

General 

Wendy R. Laguarda 

⸺ Office of the Chief Operating Officer

S. Robert Coleman

⸺ Office of Secondary Market Oversight*

Laurie A. Rea

⸺ Office of Congressional and Public 

Affairs 

Michael A. Stokke

⸺ Designated Agency Ethics Official 

Jane Virga

⸺ Equal Employment and Inclusion 

Director 

Thais Burlew

⸺ Secretary to the Board 

Dale L. Aultman

⸺ Office of the Chief 

Financial Officer

Stephen G. Smith

⸺ Office of Agency Services

Vonda Bell

⸺ Office of Examination

Roger Paulsen

⸺ Office of Information 

Technology

Jerald Golley

⸺ Office of Regulatory 

Policy

David Grahn

⸺ Office of General 

Counsel†

Charles R. Rawls

A view from inside the Farm 

Credit Building, the headquarters of the Farm Credit 

Administration, located in 

McLean, Virginia.

* Reports to the board for policy and to the CEO for administration.

† Maintains a confidential advisory relationship with each of the board members.
FCA Performance and Accountability Report — 2019 | 11

Highlights of FCA’s Performance Goals 

and Results 

FCA’s mission is to ensure that Farm Credit System 

institutions and Farmer Mac are safe, sound, and 

dependable sources of credit and related services 

for all creditworthy and eligible persons in agriculture and rural America.

In our Strategic Plan for Fiscal Years 2018 – 2023, 

we identified three goals we must meet to fulfill 

our mission. For each goal, we identified strategies 

and actions to achieve the goal, as well as a set of 

performance measures to monitor our progress in 

meeting the goal.

Our Performance Report (page 25) shows that 

we met the goals identified in our Strategic Plan 

and met or exceeded most of the performance 

measures for which there are data to measure performance. The following is a summary analysis of 

our performance in reaching our goals.

Goal 1 Highlights 

Public Mission: Ensure that the FCS and Farmer 

Mac fulfill their public missions for agriculture 

and rural areas.

There are nine strategies and six performance 

measures established for goal 1 in the Strategic 

Plan (see table 5a). The six performance measures 

are as follows:

1. Percentage of FCS institutions providing products and services that serve creditworthy and eligible persons and perform outreach to enhance 

diversity and inclusion. (Target: ≥90%)

2. Whether Farmer Mac’s business plan contains 

strategies to promote and encourage the inclusion of all qualified loans, including loans to 

small farms and family farmers, in its secondary 

market programs, and whether its business 

activities further its mission to provide a source 

of long-term credit and liquidity for qualifying 

loans. (Target: Yes)

3. Percentage of direct-lender institutions with 

satisfactory consumer and borrower rights compliance. (Target: ≥90%)

4. Percentage of direct-lender institutions with 

YBS programs that are in compliance with YBS 

regulations. (Target: ≥90%)

5. Whether the majority of objectives listed in the 

preamble of each final rule were met on the 

two-year anniversary of the rule’s effective or 

implementation date. (Target: Yes)

6. Percentage of pre-rulemaking projects and proposed rules on which FCA requested input from 

persons outside of FCA. (Target: 100%)

We achieved or exceeded our targets for all six 

measures associated with goal 1.

Goal 2 Highlights 

Safety and Soundness: Evaluate risk and 

provide timely and proactive oversight to 

ensure the safety and soundness of the System 

and Farmer Mac.

There are six strategies and six performance measures for goal 2 (see table 5b). The performance 

measures are as follows:

1. Percentage of System assets in institutions with 

composite CAMELS ratings of 1 or 2. (Target: 

≥90%)

2. Percentage of requirements in supervisory 

agreements with which FCS institutions have at 

least substantially complied within 18 months of 

execution of the agreements. (Target: ≥80%)

3. Percentage of institutions complying with regulatory capital ratio requirements. (Target: ≥90%)

4. Whether the Office of Secondary Market Oversight’s examination and oversight plan and 
12 | FCA Performance and Accountability Report — 2019

activities effectively identify emerging risks, and 

whether appropriate supervisory and corrective 

actions have been taken to effect change when 

needed. (Target: Yes)

5. Percentage of institutions with satisfactory audit 

and review programs, including institutions 

with acceptable corrective action plans. (Target: 

100%)

6. Whether five or more reports and dashboards 

were created that use data collected from the 

Farm Credit System to assess risk in the System. 

(Target: Yes)

We achieved or exceeded the targets for five of the 

six measures associated with goal 2. For performance measure 5, we missed our target of 100% 

because two institutions did not have acceptable 

corrective action plans in place at the end of the 

reporting period.

Goal 3 Highlights

Workforce Management: Cultivate an 

environment that fosters a well-trained, 

motivated, and diverse staff while providing an 

effective plan for leadership succession.

There are four strategies and two performance 

measures for goal 3 (see table 5c). The performance measures are as follows:

1. Whether, as part of its recruiting efforts for 

entry-level examiners, FCA has ensured that 

25% of its outreach efforts target applicants with 

a disability or who are members of a minority 

group. (Target: Yes)

2. Whether we have maintained or improved our 

score from last year in the annual employee satisfaction survey. (Target: Yes)

We achieved the targets for both measures associated with goal 3. For the second measure, our 

employee engagement index score on the Federal 

Employee Viewpoint Survey increased by 1 percentage point — from 78 in 2018 to 79 in 2019.

For more information about our performance 

results, see the performance results tables on page 

35 to page 37.
FCA Performance and Accountability Report — 2019 | 13

Analyses and Highlights 

of FCA’s Financial Statements

Financial Highlights

Financial operation of FCA

We pay for planned administrative expenses from 

a revolving fund, which is funded primarily by 

assessments received from Farm Credit System institutions, including the Federal Agricultural Mortgage Corporation (Farmer Mac) and the System’s 

service corporations.

We calculate the assessments using a formula 

established by FCA regulation. The FCA board approves our budget, and Congress usually imposes a 

limitation on the dollar amount of obligations that 

we may incur in a given fiscal year.

In addition to assessments, we receive funds from 

two other sources:

• Reimbursable services: We are reimbursed for 

the cost of examining the National Consumer 

Cooperative Bank and for performing services 

for the Farm Credit System Insurance Corporation and the U.S. Department of Agriculture 

(USDA).

• Interest earned: We earn interest on investments with the U.S. Department of the Treasury. 

We use interest earned on investments to build 

and maintain an agency reserve. The reserve 

ensures that we can effectively and efficiently 

respond to unexpected, unbudgeted expenses 

without needing to increase assessments.

This section highlights our financial condition for 

fiscal years 2019 and 2018. Our financial statements 

are provided on page 46 to page 61.

FCA’s assets, liabilities, and net position

As shown in table 1, our total assets (the resources 

we own) for FY 2019 are composed of the following:

• Fund balance with Treasury (3.7%)

• Investments (92.0%)

• Accounts receivable and prepayments (1.2%)

• Property and equipment (3.1%)

During FY 2019, total assets increased by only 

$30,287, or 0.1%, from amounts reported in FY 

2018.

Our investment portfolio, which accounts for the 

largest portion of our total assets, increased by 

$3,121,714 in FY 2019. This increase occurred in 

part because we received some prepaid assessments (that is, assessments due on Oct. 1 but 

received on or before Sept. 30). The timing of the 

prepaid assessments enabled us to invest those 

funds before the investment cutoff on Sept. 30. 

Table 1. Composition of assets

Fiscal 

year

Fund balance 

with Treasury

Investments Accounts 

receivable and 

prepayments

Property and 

equipment

Total

2019 $1,388,463 $34,614,229 $447,803 $1,173,085 $37,623,580

2018 $4,127,940 $31,492,515 $365,497 $1,607,341 $37,593,293
14 | FCA Performance and Accountability Report — 2019

We purchased $14,865,300 in U.S. Treasury securities during fiscal year 2019, using an investment 

strategy that enables us to both maintain a steady 

cash flow for agency operations and earn interest 

to build the agency reserve. We hold the reserve 

funds in contingency to address specific, onetime, 

unforeseen events.

As of Sept. 30, 2019, the agency held $1,388,463 in 

cash. We prefer to keep our cash balances low by 

investing all excess cash in U.S. Treasury securities; however, we received funds from a few FCS 

institutions on Sept. 30 — after the cutoff time for 

investing.

Our liabilities, as shown in figure 2 and table 2, 

consist of the following:

• Accounts payable (4.6%)

• Payroll and benefits (45.8%)

• Employer contributions and taxes payable 

(6.5%)

• Workers’ compensation (9.8%)

• Deferred revenue (33.3%)

Unlike total assets, our total liabilities (what we 

owe to the public and other government agencies) 

decreased. Driven primarily by the decreases in 

accounts payable and deferred revenue, overall 

liabilities decreased by $347,587 or 2.0% from 2018 

to 2019.

Accounts payable decreased because there were 

fewer year-end liabilities in 2019 than in 2018. At 

the end of FY 2018, we had a number of year-end 

accruals because of an examiner conference that 

took place in late September. 

Deferred revenue — assessments received from 

FCS institutions that are not due until Oct. 1 — also 

decreased this year. At the beginning of each fiscal 

year we reclassify any prepaid assessments as revenue earned in October of the new year.

Our net position, which represents the cumulative results of operations since the agency began, 

increased by $377,874, or 1.8%, during FY 2019. 

The net position increased primarily because of 

the decrease in the net cost of operations (see 

the Program Costs and Revenues section). For a 

breakdown of the net position, see the statement 

of changes in net position on page 49.

Figure 2. Composition of liabilities
FCA Performance and Accountability Report — 2019 | 15

Table 2. Composition of liabilities

Liabilities FY 2019 FY 2018

Accounts payable $764,605 $1,360,201

Accrued liabilities (payroll and benefits) 7,659,548 7,253,008

Employer contributions and taxes payable 1,094,009 1,006,195

Workers’ compensation (funded and unfunded) 1,630,984 1,542,010

Deferred revenue 5,572,620 5,907,939

FCA’s status of funds

Our budget represents our plan for achieving our 

mission and strategic goals while operating as effectively and efficiently as possible. Table 3 shows 

our board-approved budget amounts for FYs 2019 

and 2018. The overall FY 2019 budget increased by 

3.0% over the 2018 budget.

In FY 2019, we continued to carry out our mission, 

program goals, and objectives within the available 

budget. Our board-approved budget for FY 2019 

was $75.4 million and the congressional limitation 

on our spending was $74.6 million. The FY 2018 

limitation was $70.6 million.

As table 4 shows, the funds used in 2019 increased 

by $5,027,286 over 2018. The funds we used in 2019 

amounted to 99.4% of our congressional limitation 

in 2019. The increase in personnel compensation, 

driven by salary and benefit increases, accounts 

for the largest dollar amount increase in funds 

used from 2018 to 2019. Personnel compensation 

Table 3. Agency budget

FY 2019 FY 2018

Assessments (current year)* $72,700,000 $71,200,000

Assessments (carryover from prior years) 1,900,000 1,400,000

Reimbursable activity 760,000 600,000

Total $75,360,000 $73,200,000

* Assessments for FY 2018 were reduced by $3 million in the fourth quarter.

Table 4. Funds used by major budget category

Budget category FY 2019 FY 2018

Personnel compensation and benefits $62,361,778 $58,821,237

Travel and transportation 2,907,216 3,029,833

Contractual services 6,314,604 5,487,623

Property and equipment 1,173,357 526,704

Other 1,908,007 1,772,279

Total* $74,664,962 $69,637,676

* The total funds used include reimbursable activity that is not subject to the congressional limitation.
16 | FCA Performance and Accountability Report — 2019

and benefits continue to account for the most significant use of funds at FCA, representing approximately 83.5% of total funds used in 2019.

Outside of salary and benefits, the contractual services and the property and equipment categories 

were the main drivers in the increase in funds used 

in 2019. Contractual services increased by 15.1% 

over last year and represented approximately 8.5% 

of the total funds used in 2019. The increase in 

contractual services was from actions to address 

agency needs for security, data analytics, examiner 

training, and temporary gaps in staffing. Property and equipment increased by $646,653; this 

increase was due primarily to the planned acquisition of agency laptops. 

Figure 4. FY 2018 funds used by major budget category

Figure 3. FY 2019 funds used by major budget category
FCA Performance and Accountability Report — 2019 | 17

Program costs and revenues

This section describes our program costs and revenues for the fiscal years ended Sept. 30, 2019, and 

Sept. 30, 2018. Please read this section in conjunction with the statements of net cost. Because this 

section focuses on the cost of operations, some of 

the data provided here may differ from data provided in other sections of this report that are based 

on budgetary accounting.

We manage agency costs through sound business 

planning and effective resource management. The 

net cost of our programs totaled $6,744,924 for the 

12 months ended Sept. 30, 2019, compared with 

$7,461,968 for the same period the previous year. 

Earned revenue increased more than gross costs 

this year, resulting in lower net costs in 2019 than 

in 2018.

The total cost of our programs for FY 2019 is 

$80,918,903, compared with $76,746,813 for FY 

2018. This represents an increase of $4,172,090, or 

5.4%, from 2018. Figure 5 shows the breakdown of 

FY 2019 gross costs for each of our goals. Most of 

our costs support our mission and program goals. 

The increase in total costs is primarily due to increases in staff, employee compensation, and contract services related to information technology.

Employee salaries and benefits represent our 

greatest overall cost. For 2019, employee compensation totaled $65,911,914, or 81.5%, of total 

cost. Increases in staff, pay-for-performance, and 

employee benefits, along with career ladder promotions contributed to the cost increase in 2019. 

We periodically perform compensation studies 

to comply with the Financial Institution Reform, 

Recovery, and Enforcement Act of 1989, which requires us to keep our salaries and benefits comparable with the salaries and benefits of other federal 

financial institution regulators.

Keeping compensation competitive helps us continue to fulfill our mission to provide the FCS, including Farmer Mac, with effective regulation and 

oversight.

Figure 6 shows the breakdown of FY 2019 gross 

revenue for each of our goals. Earned revenue for 

2019 totaled $74,173,979, up $4,889,134, or 7.1%, 

from 2018. Earned revenue went up because of 

in-creases in institution assessments, interest 

earned on investments, and reimbursable work. 

Figure 5. FY 2019 gross costs by agency goal

Figure 6. FY 2019 gross revenue by agency goal
18 | FCA Performance and Accountability Report — 2019

Public mission program

We invest significant resources in our policymaking, regulatory, and corporate activity functions 

to ensure that the FCS, including Farmer Mac, 

fulfills its public mission as mandated by Congress. 

During FY 2019, we continued to ensure the safe 

and sound flow of funds to U.S. agriculture and 

rural areas by providing regulation, policy, and 

guidance for the FCS and Farmer Mac.

Costs for our public mission program include the 

review of borrower complaints. In accordance with 

the Farm Credit Act, we also review and approve 

FCS institutions’ mergers to enable institutions to 

structure themselves to best serve their customers.

For the fiscal year ended Sept. 30, 2019, the program cost for our public mission was $20,472,180, 

representing an increase of $382,334, or 1.9%, from 

the same period the previous year. The cost for the 

public mission program represents 25.3% of our 

total costs for 2019.

Safety and soundness program

Costs associated with the agency’s examination and 

supervision activities make up the largest portion 

of our expenditures at the program level. In 2019, 

the cost of the safety and soundness program 

increased because of increases in staff and higher 

costs for employee compensation, travel, and 

professional training. We hired more examiners to 

meet additional human capital demands for institution examination and oversight.

We invest heavily in the recruitment and training of examination staff through our Examiner 

Commissioning Program. These recruiting and 

training efforts are necessary to meet human resource needs and to offset the impact of unplanned 

employee attrition and the large number of retirements expected within the next few years.

During FY 2019, we met our goals and performance 

targets to ensure the safety and soundness of FCS 

institutions and Farmer Mac. Program cost for the 

examination and supervision of the FCS increased 

$4,030,546 to $59,441,216, which represents 73.5% 

of our total costs in 2019.

Other activity

“Other activity” includes examining and overseeing the National Consumer Cooperative Bank and 

performing reimbursable services for USDA and 

the Farm Credit System Insurance Corporation. We 

performed more reimbursable services this year 

than last year. Costs associated with this category 

increased by $334,830 from 2018 to $1,005,507. 

Despite the increase, the costs for providing reimbursable services remain relatively low compared 

with the total costs for our public mission and safety and soundness goals. Other activity represented 

approximately 1.2% of our total costs in 2019.

Earned revenue for other activity totaled $668,273 

for 2019, compared with $487,337 for 2018. Like 

costs, revenue for other activity also increased as 

a result of the increased reimbursable work performed in 2019.

Limitations of financial statements

As required by 31 U.S.C. 3515(b), we have prepared 

the principal financial statements to report the 

financial position and results of our operations. We 

have prepared these statements from our books 

and records in accordance with U.S. generally 

accepted accounting principles for federal entities 

and the formats prescribed by the Office of Management and Budget. Reports used to monitor and 

control budgetary resources are prepared from the 

same books and records. 

As you read these statements, please keep in mind 

that they are for a component of the U.S. government.
FCA Performance and Accountability Report — 2019 | 19

Analysis of FCA’s Systems, Controls, and 

Legal Compliance

Strategy for FCA’s financial management 

system

We partner with the Bureau of the Fiscal Service’s 

Administrative Resource Center (ARC) to provide 

FCA with several financial management services. 

This shared services approach helps us maximize 

efficiency while maintaining a high standard of 

financial management and accountability.

This partnership gives us access to core financial 

systems without our having to maintain the necessary technical and systems architectures. Our 

partnership with ARC has also improved our data 

reliability, which helps us comply with Office of 

Management and Budget (OMB) M-15-12, Increasing Transparency of Federal Spending by Making 

Federal Spending Data Accessible, Searchable, and 

Reliable.

Through our partnership with ARC, we use Oracle 

Federal Financials as our financial system of record. Oracle Federal Financials is a commercial, 

off-the-shelf software package, which is certified 

under the Joint Financial Management Improvement Program to meet federal government accounting requirements. This web-based software 

integrates our key activities, such as e-payroll, 

e-travel, purchase card activity, and federal investments.

Although we perform all procurement activities 

in-house, we partner with ARC for procurement 

system services and support. The procurement 

system is fully integrated with Oracle Federal 

Financials. This integration enables us to check 

our funds in real time and to commit and obligate 

funds as transactions are approved.

By working with ARC, we comply with the OMB 

Financial Management Line of Business initiative, 

which encourages agencies to improve the cost, 

quality, and performance of financial management 

systems by using shared services. The partnership 

also helps us address the President’s Management 

Agenda cross-agency priority goal for sharing quality services.

Federal Managers’ Financial Integrity Act

The Federal Managers’ Financial Integrity Act 

(FMFIA) requires federal agencies to establish and 

maintain a system of internal control to achieve 

the objectives of effective and efficient operations, 

reliable financial reporting, and compliance with 

applicable laws and regulations. 

The management control objectives under the FMFIA are to reasonably ensure the following:

• Obligations and costs are in compliance with 

applicable laws.

• Funds, property, and other assets are safeguarded against waste, loss, unauthorized use, or 

misappropriations. 

• Revenues and expenditures applicable to agency 

operations are properly recorded and accounted 

for to permit the preparation of accounts and 

reliable financial and statistical reports and to 

maintain accountability over the assets. 

Agencies must evaluate and report on the effectiveness of their internal controls and assess whether 

their financial management systems comply with 

requirements outlined in section 4 of the FMFIA.

Through our financial management system strategy, management control program, and compliance 

with applicable laws and regulations, we ensure 

our compliance with the FMFIA.
20 | FCA Performance and Accountability Report — 2019

Management control program

We have established management controls to meet 

the objectives of section 2 and section 4 of the 

FMFIA, as well as the requirements of the Federal 

Financial Management Improvement Act (FFMIA). 

Our system of internal control conforms with 

GAO’s Standards for Internal Control in the Federal 

Government (Green Book). 

Our internal controls are designed to provide reasonable assurance that transactions are properly 

recorded, processed, and summarized to permit 

the preparation of financial statements and that 

assets are safeguarded.

Our program offices are responsible for implementing and maintaining effective risk management practices and internal controls to ensure 

(1) alignment of strategic goals with the agency’s 

mission, (2) effective and efficient operations, (3) 

reliable reporting, and (4) compliance with applicable laws and regulations. 

We conduct risk-based internal control assessments in accordance with OMB Circular A-123, 

Management’s Responsibility for Enterprise Risk 

Management and Internal Control, and all applicable appendices. Based on the results of the assessments, we have reasonable assurance that controls 

over operations, reporting, and compliance with 

laws and regulations are designed and operating 

effectively. 

In addition, our independent financial statement 

auditor reported that we maintained effective 

internal control over financial reporting and compliance with applicable laws and regulations. The 

auditor did not report any material weaknesses or 

significant deficiencies. 

Federal Financial Management Improvement 

Act

The FFMIA requires certain executive branch federal agencies to implement and maintain financial 

management systems that substantially comply 

with federal financial management systems requirements, applicable accounting standards, and 

the U.S. Standard General Ledger at the transaction 

level. A financial management system includes an 

agency’s overall financial operation, reflecting the 

people, processes, and technology to capture, classify, summarize, and report data in a meaningful 

manner to support business decisions.

Although we are not required to report under this 

act, we conformed with the requirements of Appendix D to OMB Circular A-123, Compliance with 

the FFMIA for FY 2019. We assessed our financial 

management systems along with available information from audit reports and other relevant 

sources to determine whether our financial management systems substantially comply with the 

FFMIA as of September 30, 2019. 

Prompt Payment Act

We follow the Prompt Payment Act guidelines, 

which call for vendors generally to be paid 30 days 

after receipt of a valid invoice for goods and services ordered and delivered.

During FY 2019, we paid on time 99.6% of the 

3,383 invoices subject to the Prompt Payment Act. 

Payments are made by electronic funds transfer 

through the Secure Payment System.

Debt Collection Improvement Act

The Debt Collection Improvement Act of 1996 prescribes standards for carrying out federal agency 

collection actions and for referring an agency’s 

uncollectible debts to the proper federal agency for 

collection and litigation. The act has no material 

effect on us because we operate with virtually no 

delinquent debt.

This act was amended by the Digital Accountability and Transparency Act of 2014 (DATA Act) to 

require that debts outstanding for more than 120 

days be transferred to the Treasury Department 

for collection under the Treasury Offset Program. 

We currently have one debt being serviced by the 

Treasury Department. 
FCA Performance and Accountability Report — 2019 | 21

Improper payments

The Improper Payments Elimination and Recovery 

Improvement Act of 2012 requires agencies to report annually on all programs and activities, identify programs that may be susceptible to significant 

improper payments, estimate annual improper 

payment amounts in the susceptible programs, 

and report on the results of improper payment 

activities. 

Additional information on our improper payment 

activities are reported under “Payment integrity” 

in the “Other information” section of this report. 

Digital Accountability and Transparency Act 

The DATA Act was enacted to increase accountability and transparency in federal spending and 

expand the requirements of the Federal Funding 

Accountability and Transparency Act of 2006. Since 

our agency does not receive federal tax dollars, 

OMB has determined that FCA is not subject to the 

reporting requirements of the DATA Act. 

Inspector General Act

The Inspector General Act of 1978, as amended, 

requires inspectors general to report semiannually 

to their agency heads and to Congress. The semiannual reports prepared by FCA’s Office of Inspector General (OIG) describe its audits, inspections, 

evaluations, investigations, and related activities, 

as well as the agency’s follow-up to its recommendations.

The FCA OIG posts all audit, inspection, and evaluation reports on its website within three days of 

final submission to the FCA board. These reports 

are also posted on Oversight.gov, which contains 

OIG reports from across the federal government.

Below is a summary of the recommendations in 

these reports, as well as our progress in taking corrective action. 

Summary of OIG audit, inspection, and 

evaluation activities

The OIG issued six audit, inspection, or evaluation 

reports during FY 2019, resulting in 19 new recommendations. Ten recommendations have been 

closed (including one from a prior fiscal year). 

Therefore, 11 recommendations remain open (including one from a prior fiscal year). The reports 

are available on the FCA OIG’s website at www.fca.

gov/about/inspector-general-plans-and-reports.

• October 31, 2018: The OIG issued a final report 

on an evaluation of the agency’s compliance 

with the Federal Information Security Modernization Act for FY 2018. The report contained 

five recommendations.

• November 15, 2018: The OIG issued a report on 

the audit of FCA’s financial statements and other 

reporting required by “Government Auditing 

Standards for FY 2018.” The audit produced no 

recommendations.

• December 7, 2018: The OIG issued the inspection report, Physical Security in the Farm Credit 

Administration’s Headquarters. The inspection 

resulted in seven recommendations. For security purposes, a summary, rather than the full 

report, was posted online. 

• March 20, 2019: The OIG issued the final evaluation report, Farm Credit Administration’s Office 

of Examination Structure and Organization 

Benchmarking Evaluation. The report contained 

no recommendations.

• September 19, 2019: The OIG issued the final 

audit report, FCA’s Stress Testing Guidance, and 

Use of Data and Analytical and Examination 

Tools. The audit resulted in one recommendation. 

• September 26, 2019: The OIG issued the final 

audit report, The Farm Credit Administration’s 

Process for Contractor Background Investigations. The audit resulted in six recommendations. 
22 | FCA Performance and Accountability Report — 2019

Summary of OIG recommendations

Recommendations uncorrected 

as of Oct. 1, 2018 2

New recommendations 

during FY 2019 19

Recommendations closed 

during FY 2019 10

Open recommendations 

as of Sept. 30, 2019 11

Recommendations open 

more than one year 

OIG survey of FCS institutions regarding the 

agency’s examination function

The OIG conducts a quarterly survey of FCS institutions on our examination function and examiners. 

The OIG issues semiannual reports and a fiscal 

year summary report to the FCA chief examiner 

and the FCA board. 

Average numerical ratings remained high for FY 

2019, and anonymous comments provided by 

institutions generally reflected favorably on the examination process and examiners. The comments 

of survey respondents often provide constructive 

information that we can use to strengthen our examination processes.

Improper Payments Elimination and Recovery 

Improvement Act of 2012 (IPERIA) Compliance 

Report for FY 2018

The OIG determined that FCA complied with 

IPERIA reporting requirements applicable to the 

agency for FY 2018. As required by the IPERIA, the 

OIG issued the conclusions to the FCA board and 

required oversight bodies on May 15, 2019.
FCA Performance and Accountability Report — 2019 | 23

Statement of Assurance

The Farm Credit Administration’s management is 

responsible for managing risks and maintaining effective internal controls and financial management 

systems that meet the objectives of sections 2 and 

4 of the Federal Managers’ Financial Integrity Act 

(FMFIA).

FCA has considered risk management practices 

in the design of its internal controls and in the 

assessment of their effectiveness. We conducted 

our assessment of risk and internal controls in 

accordance with Office of Management and Budget 

(OMB) Circular A-123, Management’s Responsibility for Enterprise Risk Management and Internal 

Control. Based on the results of this assessment, 

we can provide reasonable assurance that the 

internal controls over operational, reporting, and 

compliance objectives were operating effectively as 

of September 30, 2019.

FCA management is also responsible for designing, 

implementing, and maintaining effective internal 

controls over financial reporting. We conducted 

our assessment of the effectiveness of these internal controls according to the criteria established 

under FMFIA and OMB Circular A-123. Based on 

the results of this assessment, we can provide reasonable assurance that the internal controls over 

financial reporting were operating effectively, and 

no material weaknesses were found in the design 

or operation of the internal controls.

In addition, we conducted assessments of our 

financial management systems in accordance with 

Appendix D to OMB Circular A-123, Compliance 

with the Federal Financial Management Improvement Act (FFMIA). Based on the results of this 

assessment, our financial management systems 

substantially comply with FFMIA as of September 

30, 2019.

As part of our evaluation process, we considered 

the results of extensive testing and assessment 

across the organization, as well as independent 

audits. 

Glen R. Smith

Chairman and Chief Executive Officer 

FARM CREDIT ADMINISTRATION

September 30, 2019
24 | FCA Performance and Accountability Report — 2019

Program 

Performance
FCA Performance and Accountability Report — 2019 | 25

FCA Performance Report

FCA’s mission is to ensure that System institutions 

and Farmer Mac are safe, sound, and dependable 

sources of credit and related services for all creditworthy and eligible persons in agriculture and 

rural America.

We fulfill our mission (1) by issuing regulations 

and implementing public policy and (2) by identifying risk and taking corrective action. The FCA 

board has adopted three strategic goals:

• Ensure that the FCS and Farmer Mac fulfill their 

public missions for agriculture and rural areas.

• Evaluate risk and provide timely and proactive 

oversight to ensure the safety and soundness of 

the System and Farmer Mac.

• Cultivate an environment that fosters a welltrained, motivated, and diverse staff while 

providing an effective plan for leadership succession.

Our Strategic Plan for Fiscal Years 2018 – 2023 

contains a desired outcome for each goal, as well 

as 19 strategies we will use to meet these goals. In 

addition, we have 14 performance measures with 

associated targets to measure our success in meeting our goals.

The Strategic Plan addresses the changing environment facing agriculture: commodity and input 

price volatility; sustainability, environmental, food 

safety, and animal welfare issues; fluctuating interest rates and land values; diversity; and pressure to 

reduce subsidies and support payments in the 2018 

Farm Bill.

The plan focuses on helping the agency operate 

effectively and efficiently; minimizing costs for FCS 

borrowers and Farmer Mac customers; and helping ensure a safe, sound, and dependable source of 

credit and financially related services for agriculture and rural America.

As our performance results show, we succeeded in 

meeting the three strategic goals described below.

Goal 1 — Ensure that the FCS and Farmer 

Mac fulfill their public missions for 

agriculture and rural areas.

The purpose of goal 1 is to maximize the ability of 

the FCS and Farmer Mac to fulfill their purposes 

and meet their public missions as defined by Congress in the Farm Credit Act of 1971, as amended. 

We established nine strategies to accomplish this 

goal, and we defined six performance measures to 

evaluate our progress and success.

Strategy 1: Ensure that the capital rules for 

the FCS and Farmer Mac are consistent with 

standards for the financial service industry and 

preserve their financial strength and stability 

so they can meet the credit needs of eligible 

borrowers.

The FCA board adopted a final rule in March 2016 

that revised our capital rules for FCS banks and 

associations and provides clearly defined capital 

standards that are both consistent with Basel III 

and appropriate for the farmer-owned cooperative 

Farm Credit System. 

In FY 2017, we updated our Financial Institution 

Rating System benchmarks for capital and our 

examination guidance and examiner training to 

ensure that FCS institutions implement the capital 

rules properly. We also issued an informational 

memorandum to the System titled “Implementation of the Tier 1/Tier 2 Capital Framework.” 

In FY 2019, we issued guidance on Farmer Mac’s interest rate risk management. The guidance makes 

clear the board of directors’ ultimate responsibility 

for interest rate risk governance and management’s role in the design and execution of interest 

rate risk measurement systems. 
26 | FCA Performance and Accountability Report — 2019

Strategy 2: Within the framework of the 

Farm Credit Act, develop and update policies 

and regulations as appropriate so that the 

System, including Farmer Mac, can continue to 

effectively serve its members as conditions in 

agriculture and rural America change.

The following actions are examples of ways we 

have used this strategy in FY 2019:

• Issued a final rule governing flood insurance 

• Issued a proposed rule governing the eligibility 

of investments made by the System’s associations

• Issued a proposed rule governing the accounting classifications for high-risk loans and the 

criteria to reinstate nonaccrual loans 

• Issued a proposed rule governing the implementation of the current expected credit losses 

methodology for allowances

• Requested public comment on ways to improve 

the collection, evaluation, and reporting of data 

on young, beginning, and small farmers and 

ranchers 

• Continued to study the loan syndication market

• Issued guidance to Farmer Mac on the appropriate implementation of effective interest rate risk 

management processes

• Issued guidance to the System revising the regulatory capital treatment for certain water and 

wastewater exposures 

As part of every rulemaking project, we consider 

ways to reduce the burden of existing rules and 

to minimize the regulatory burden of the rule 

being proposed. Also, we regularly solicit public 

comments on regulations that are unnecessary, 

unduly burdensome, or not based on law; our most 

recent solicitation was in May 2017. We addressed 

the comments we received from this solicitation in 

May 2019.

We routinely provide guidance to System institutions to protect their safety and soundness and to 

help them manage risk. This guidance facilitates 

the flow of funds to agriculture and rural areas by 

providing System institutions with sound practices 

to follow in developing and implementing lending 

programs. We also provide guidance related to internal controls and information technology. 

Ultimately, our guidance helps institutions manage 

loan and funding programs more efficiently. 

Farmer Mac continues to enhance its relationships 

with its loan sellers and servicers by holding informational forums, providing updates to its formal 

servicing guidelines, and performing internal 

credit reviews. And our Office of Secondary Market 

Oversight evaluates Farmer Mac’s efforts to enhance these relationships.

We support advances in Farmer Mac’s product 

offerings within the bounds of safety and soundness and the provisions of the Farm Credit Act. 

Our communication, examination reports, and 

off-site monitoring of Farmer Mac provide timely 

guidance to management on the possible risks associated with new products and policies. Over the 

reporting period, we provided Farmer Mac with 

guidance on regulatory compliance issues, policy 

direction, and questions regarding new products.

In addition, we continue to advance regulatory 

rulemaking projects related to investment eligibility and creditworthiness and to update other areas 

of supervision.

Strategy 3: Emphasize the public purpose 

and mission-related responsibilities of 

the agricultural government-sponsored 

enterprises (GSEs) to serve all of agriculture 

and rural America. This includes innovative 

programs for serving the credit and related 

service needs of young, beginning, and small 

(YBS) farmers, ranchers, and producers and 

harvesters of aquatic products.

FCA examiners evaluate the operating and strategic plans and the credit delivery programs of System institutions. We also evaluate System outreach 

efforts and best practices for serving the credit and 

related service needs of all creditworthy eligible 

customers.
FCA Performance and Accountability Report — 2019 | 27

In addition, our examiners evaluate each institution’s YBS farmer and rancher program relative to 

the demographics of its chartered territory. These 

evaluations help examiners identify trends in lending to YBS farmers and ranchers and assess the 

System’s efforts to provide financial and business 

management assistance and outreach to YBS farmers and ranchers.

When evaluating YBS programs, we continue to 

assess the extent to which FCS institutions use loan 

guarantee programs. We encourage System institutions to work with federal and state agencies that 

offer such programs. For example, we encourage 

institutions to meet the requirements to qualify for 

the USDA Farm Service Agency’s “preferred lender” status.

Not only can loan guarantees help institutions manage risk, they also help borrowers obtain the funding they need. We encourage System institutions to 

use loan guarantees to make loans to YBS borrowers 

with limited financial capacity and to existing borrowers with temporary financial difficulties.

All of the YBS programs we evaluated during the 

reporting period were in compliance with YBS regulations. Each year, we survey FCS associations regarding their YBS programs. With the information 

received, we prepare a YBS annual report that we 

publish in our Annual Report on the Farm Credit 

System.

FCA regulations require each direct-lender System 

institution to include in its operating and strategic 

business plan a marketing plan with strategies for 

providing the institution’s products and services to 

all creditworthy and eligible persons. In addition, 

each institution must report annually to its board 

of directors on the progress it has made in this 

area. We review these reports and evaluate the 

System’s progress in meeting this requirement. As 

part of our examination activities, we also review 

institution annual reports and encourage institutions to include a discussion of how they are meeting their mission.

We evaluate Farmer Mac’s mission accomplishment as well. Farmer Mac’s customer base includes 

financial institutions and other lenders that seek 

a secondary market for their agricultural, rural 

housing, and rural utility cooperative loans. We 

evaluate Farmer Mac’s performance in reaching 

out to all potential customers and in creating easy 

access to its services.

Farmer Mac submits an annual mission report to 

FCA. This report includes data on Farmer Mac’s 

participation in federal guarantee programs, the 

geographic distribution of Farmer Mac’s program 

business, the proportion of fixed- versus variable-rate loan volume, and activity related to rural 

utilities. In addition, the report highlights activity 

related to small and family farms, which Farmer 

Mac is required by statute to promote and encourage. These reporting requirements encourage 

Farmer Mac to motivate its business development 

staff to focus on the credit needs of small and family farms when working with its lender customers.

Strategy 4: Encourage the System to provide 

products and services to all creditworthy and 

eligible potential borrowers and to promote 

outreach to enhance diversity and inclusion.

Our examinations assess the System’s efforts to 

provide financial or business management assistance and outreach to all creditworthy eligible customers, including YBS farmers and ranchers. The 

System continues to implement programs to meet 

the needs of YBS producers and other borrowers.

The business plan of each direct-lender institution 

must include strategies and actions to market the 

institution’s products and services to all eligible 

and creditworthy persons, with specific outreach 

toward diversity and inclusion within each market segment. We evaluate the System’s progress 

in meeting this requirement. We have updated 

our examination guidance and communications 

with the System to clearly convey our minimum 

expectations regarding business plans, including 

our expectations regarding diversity and inclusion 

requirements.

In addition, we review borrower inquiries and 

complaints about the lending process and investigate any allegations of discrimination. During the 

reporting period from July 1, 2018, through June 

30, 2019, we responded to 28 borrower inquiries. 
28 | FCA Performance and Accountability Report — 2019

Our investigations did not discover any pattern 

or practice of deliberate discrimination, or an 

unwillingness of FCS institutions to serve eligible 

customers within their chartered territories. However, our examinations did find some technical 

violations of applicants’ rights. Those violations 

were promptly corrected or addressed in follow-up 

plans by System institutions. We also found that 

System institutions continue to comply with equal 

credit opportunity and equal housing laws.

We are also concerned about the needs of disabled 

farmers and farmer veterans. In previous years, 

we have held presentations on these topics to raise 

awareness among our staff about the challenges 

these individuals face. In 2016, members of our 

staff met with the USDA undersecretary to discuss 

ways to better meet the credit needs of farmer 

veterans.

To ensure that Farmer Mac meets its responsibility 

to promote and encourage the inclusion of small 

and family farms in its programs, we have developed certain reporting requirements. We also provide Farmer Mac with feedback on various issues, 

including loan eligibility on prospective new lines 

of business.

Farmer Mac continues to work to make its programs accessible to all market participants, including those involved in rural utilities and federal 

agricultural loan guarantee programs. It seeks to 

ensure equitable treatment of all potential borrowers and the lenders that serve them. However, 

ensuring equitable treatment of borrowers within 

the operations of its primary lenders presents a 

challenge for Farmer Mac, as it would for any secondary market entity.

During examinations, we review loans presented to 

Farmer Mac to ensure that their underwriting and 

loan-approval standards are appropriate and consistent. Further, Farmer Mac’s annual mission report 

includes a section covering its financing of rural 

utility cooperatives and small and family farmers.

FCA Bookletter (BL-066) “Providing Credit to Farmers and Ranchers Operating in Local/Regional 

Food Systems” encourages System associations to 

meet the credit and related service needs of farmers who market their agricultural products through 

local and regional food systems. It explains that 

System associations have authority to finance 

local-food farmers and certain farm-related businesses under existing statutes and regulations and 

under prior FCA guidance. The bookletter also provides guidance on how the regulations on System 

strategic business planning and senior officer compensation apply to financing local-food farmers 

(including those operating in urban areas).

Strategy 5: Encourage diversity on the boards 

and in the workforce of System institutions.

Our oversight and examination programs include 

risk-based evaluation of each institution’s human 

capital planning, director elections, and nominating committees. Examination guidance and 

procedures consider any significant changes in 

bylaws, policies, control systems, staffing, board 

membership, board involvement, election processes, or issues related to standards of conduct. As 

part of our review of the nominating committee’s 

processes and practices, we evaluate the committee’s outreach efforts to expand diversity on the 

board. In 2018 we updated examination guidance 

on this topic.

As part of the review of human capital management, we may evaluate conditions such as staff 

turnover levels or changes in key personnel (actual 

or upcoming), depth of management, changes 

in compensation and benefit programs or levels, 

involvement of the compensation committee, and 

extent of operational weaknesses cited in audit, 

review, and examination reports that could be connected to human capital issues.

Strategy 6: Consistent with the Farm Credit 

Act, enable the agricultural GSEs to structure 

themselves to best serve their members and 

rural America.

FCA analyzes and approves periodic requests by 

institutions to restructure or offer new programs 

designed to better serve their customers. 

During the year, FCA approved a combination of 

operations. On July 1, 2019, two associations affiliated with CoBank, ACB, combined operations into 

a single association.
FCA Performance and Accountability Report — 2019 | 29

As a result, at fiscal year-end 2019, the System had 

68 institutions (67 agricultural credit associations 

and 1 federal land credit association), compared 

with 69 associations a year earlier.

Strategy 7: Encourage System institutions to 

be conscious of the reputation risk associated 

with their lending and investments decisions.

We issue guidance on business planning, capital 

management, portfolio risk management, debt 

issuance, secondary liquidity sources, and related 

topics. We also work with FCS-wide committees 

and groups to discuss challenges, opportunities, 

and best practices in these areas. Further, we 

assess System institutions’ use of programs undertaken jointly with other financial service providers. 

Through our supervisory and enforcement activities, we require institutions to develop plans to 

address any potential reputation risks associated 

with their lending and investment decisions.

Strategy 8: Promote public trust in FCA’s 

regulatory framework for the System and 

Farmer Mac by developing policy guidance 

that supports mission achievement, financial 

stability, and transparency.

We promote public trust and investor confidence 

by helping ensure that the System and Farmer Mac 

meet their missions to serve agriculture and rural 

America. See strategies 2 and 3 for a discussion 

of some of the ways we have helped them achieve 

their missions.

We provide guidance to System institutions to help 

them better understand their lending authorities 

and, therefore, to more appropriately market 

their products and services to prospective eligible 

customers. We also publish our semiannual Regulatory Projects Plan on our website to notify the 

public of upcoming regulatory actions so that the 

public may participate in the regulatory process. 

Our e-government program allows the public to 

make comments in electronic format and to review 

comments from others on our website.

We further support public trust and investor 

confidence by reviewing borrower inquiries and 

complaints about the loan-granting process and 

by investigating any allegations of discrimination. 

See strategy 4 above for more information about 

borrower inquiries and complaints.

Farmer Mac, too, has increased its focus on its 

public mission. Its year-end annual report and 

Form 10-K filing now include numerous references 

to its public mission, including a discussion of 

how pursuing its mission may contribute to lower 

returns to stockholders. Farmer Mac actively oversees its sellers/servicers, ensuring that loans sold 

into the secondary market meet its underwriting 

standards and that processes are in place to detect 

fraud and operational errors.

The guidance we have provided has had a positive 

impact on Farmer Mac’s public disclosures related 

to its mission, and we will continue to encourage 

Farmer Mac to regularly disclose its mission accomplishments.

Strategy 9: Encourage full participation of stakeholders in the development and review of regulatory and policy proposals as appropriate.

We encourage stakeholders to provide input on 

regulatory proposals before we issue rules. We 

publish our semiannual Regulatory Projects Plan 

on our website to notify the public of upcoming 

regulatory actions. In addition, our e-government 

program allows the public to make comments in 

electronic format and to review comments from 

others on our website.

Where practicable, we solicit input from stakeholders before we publish rules for comment. In 

some cases, we use advance notices of proposed 

rulemaking to obtain input. In almost all cases, we 

publish our proposed rules with comment periods 

of at least 60 days. For regulatory proposals that relate to the System’s GSE mission, we also reach out 

to nontraditional commenters for their input.

Goal 2 — Evaluate risk and provide timely 

and proactive oversight to ensure the 

safety and soundness of the System and 

Farmer Mac.

We accomplish goal 2 by examining and supervising each System institution and Farmer Mac. We 
30 | FCA Performance and Accountability Report — 2019

have six strategies to accomplish this goal and six 

performance measures to evaluate our success.

Strategy 1: Seek early FCA board input on 

policy and regulatory issues. Ensure that 

the board has timely and comprehensive 

information to be fully informed and able to 

respond appropriately.

The FCA board provides early input on regulatory and policy projects. For regulatory projects, 

the board provides input before and during the 

development and approval of the semiannual 

Regulatory Projects Plan, which outlines our regulatory agenda. For policy projects, the board also 

provides early input; a policy project may produce 

a guidance document, or it may eventually become 

a regulatory project.

After we’ve started a regulatory or policy project, 

board involvement continues to be crucial. We obtain board input regarding the initial issues paper, 

and we provide board briefings and monthly progress reports throughout the project.

The Office of Examination and the Office of Secondary Market Oversight report important issues 

at least monthly or as needed to the FCA board, 

and they deliver reports to the board each quarter 

on the condition of the System and Farmer Mac.

Strategy 2: Maintain strong and frequent twoway communication with stakeholders on 

issues of risk and safety and soundness.

FCA management and staff participate regularly in 

FCS meetings and conferences to answer questions 

related to regulatory and FCS operational issues. 

We also use these opportunities to reinforce our 

expectations regarding these issues and to discuss 

new regulatory direction. FCA staff also participates in agencywide workgroups and FCS-wide 

committees and groups to discuss challenges, opportunities, and best practices.

Our approach to oversight and examination involves meeting with institution boards and audit 

committees on risk issues, interim examination 

activities, and corrective actions. Through direct 

interaction with System institutions, we hear 

about emerging issues and acquire a systemic view 

of issues warranting regulatory attention. Our 

oversight and examination approach also involves 

timely written communication through interim 

activity letters and examination reports. We also 

regularly communicate with FCS management on 

upcoming examination practices that may affect 

their institutions.

Annually, we issue an informational memorandum on our National Oversight Plan in which we 

identify risk topics that we will emphasize in our 

examination and oversight activities. This informational memorandum provides perspective on our 

concerns and priorities. When needed, we use the 

supervisory and enforcement process to require 

institutions to take certain action. In addition, we 

review borrower inquiries and complaints about 

the lending process and investigate any allegations.

Strategy 3: Continue proactive oversight of 

institution-specific and systemic risks.

We proactively identify and evaluate emerging issues that create Systemwide risk and allocate oversight and examination resources based on that risk 

in accordance with board policy statement 53. FCA 

continues to prioritize oversight activities according to risk, and we develop individualized oversight 

and examination plans for each institution. A key 

element to this approach is the national oversight 

planning process, which guides our efforts to ensure the safety and soundness of the System. We 

manage and update this process on a regular basis. 

We strive to provide timely guidance related to how 

examinations are conducted and emerging risks.

Through examinations, we routinely evaluate the 

operations and risk management practices of System institutions, and we share our conclusions and 

recommendations with System boards of directors. 

We determine whether FCS institutions have internal control systems and processes to manage 

their operations and loan portfolios, and whether 

direct-lender institutions maintain systems that 

allow them to properly assess the loans and risk 

exposures in their portfolios. With two exceptions, 

all institutions had adequate internal control programs or adequate corrective actions in place in FY 

2019. We are currently evaluating what improvements these institutions need.
FCA Performance and Accountability Report — 2019 | 31

Overall, we have found that FCS institutions have 

adequate lending systems in place and that they 

continue to enhance these systems. The FCS uses a 

two-dimensional risk rating system, consisting of 

a 14-point scale to measure each borrower’s probability of default and a set of ratings to measure the 

borrower’s loss given default. The FCS enhances 

this system through periodic refinements, and we 

closely evaluate those refinements. The System 

also performs database querying and stress testing. We consider the following elements when we 

examine loan portfolios:

• Management of risk concentrations

• Loan underwriting

• Collateral risk management

• Portfolio planning and analysis

• Credit administration

• Risk identification

Strategy 4: Effectively remediate weakened 

institutions.

We use a risk-based supervisory and enforcement 

program to differentially respond to the risks and 

particular oversight needs of FCS institutions. If 

we discover unacceptable risks, we take action to 

ensure that the identified risks are appropriately 

mitigated. Corrective actions include reducing risk 

exposures; increasing capital and enhancing earnings, which improve an institution’s ability to bear 

risk; and strengthening risk management.

We use a three-tiered supervision program: normal 

supervision, special supervision, and enforcement 

actions. Institutions under normal supervision 

are performing in a safe and sound manner and 

operating in compliance with applicable laws and 

regulations. These institutions are able to correct 

identified weaknesses in the normal course of 

business.

For those institutions displaying more serious or 

protracted weaknesses, we shift from normal to 

special supervision, and our examination oversight 

increases accordingly. Under special supervision, 

we give an institution clear and firm regulatory 

guidance to address weaknesses, and we allow the 

institution time to correct the problems.

If informal supervisory approaches have not been 

or are not likely to be successful, we will use our 

formal enforcement authorities. We may take an 

enforcement action for a number of reasons:

• A situation threatens an institution’s financial 

stability.

• An institution has a safety and soundness problem or has violated a law or regulation.

• An institution’s board is unable or unwilling to 

correct problems we have identified.

• Our enforcement authorities include the following powers:

• To enter into formal agreements

• To issue cease-and-desist orders

• To levy civil money penalties

• To suspend or remove officers, directors, and 

other persons

If we take an enforcement action, the FCS institution must operate under requirements of action, 

and report back to our agency on the institution’s 

progress in fulfilling the requirements. Our examiners oversee the institution’s performance to 

ensure compliance with the enforcement action. 

As of June 30, 2019, there were no formal enforcement actions in place.

Strategy 5: Ensure that technology, 

information management, and cybersecurity 

awareness are priorities at FCA and in the FCS.

Through the FCS Loan Database Project, we built 

an enterprise system for the dependable collection 

and storage of data for examination activities and 

systemic risk analysis. The loan database provides 

a robust dataset for analyzing institution loan 

portfolios and facilitating the loan review activities 

of the Office of Examination, as well as supporting 

Systemwide systemic risk analysis. 

We previously established uniform instructions 

for the timely and reliable reporting of accounts. 

We also worked with the System to improve data 

quality, systems, and analysis capabilities. This 

improvement effort included adding the ability to 

identify shared assets and systemically significant 
32 | FCA Performance and Accountability Report — 2019

customers by incorporating into the dataset both 

the System shared-asset and customer numbers 

and the attribution data on the largest System customers. 

We deployed an agency-level data mart/data cube 

environment, which is a centralized data warehouse for transactional and indicative data provided by each financial institution in the Farm Credit 

System.

In 2019, we continued to improve our examination 

processes by better using technology: 

• We implemented new business intelligence 

tools and examiner analysis applications to 

leverage the agency’s various information 

sources, including the data mart, for analytical 

purposes.

• We continued enhancements to the EDGe Loan 

Workpaper, a web-based application that accesses the FCS Loans2 database.

• We continued improvements to the FCS Loan 

Database. 

• We continued developing and integrating new 

management reports and examination tools as 

part of the EDGe project.

We continually evaluate whether institutions are 

maintaining systems to analyze their portfolio risk 

and borrower profiles. We review their processes 

and tools for analyzing sensitivity and stress. In 

December 2018, we issued a System memorandum 

on cybersecurity risks titled “Use of Personal Email 

and Cybersecurity Concerns.”

Strategy 6: Ensure that strong governance, 

standards of conduct, and ethical behavior are 

part of the organizational culture of the FCS.

We evaluate the compliance of System institutions 

with governance regulations and their adherence 

to cooperative principles. We evaluate each institution’s standards of conduct, ethics, and organizational culture. We share our conclusions and 

recommendations with System boards of directors. 

As discussed under goal 2, strategy 4, we use a 

three-tiered supervision program to ensure that 

institutions take appropriate measures to mitigate 

any risks our examiners identify.

In May 2018, we issued a proposed rule that would 

require FCS institutions to develop a standards of 

conduct program based on certain core principles. 

It would also require each institution to adopt a 

code of ethics and to develop strategies and a system of internal controls to promote institutional 

and individual accountability for ethical conduct. 

We are in the process of developing a final rule. 

Goal 3 — Cultivate an environment that 

fosters a well-trained, motivated, and 

diverse staff while providing an effective 

plan for leadership succession.

The purpose of goal 3 is to ensure that FCA maintains a workforce that can carry out its mission. 

We have four strategies to accomplish this goal 

and two performance measures to evaluate our 

success.

Strategy 1: Maintain a highly skilled and 

diverse workforce to meet FCA’s current and 

future regulatory development, risk analysis, 

examination, and supervision needs.

Our success as an agency depends largely on our 

people, talent, and technology. We will continue 

to invest in hiring, developing, and retaining a talented, diverse workforce and to provide employees 

with the tools they need to be effective. We strive 

to keep our work environment positive, innovative, 

diverse, and family friendly, and we encourage 

teamwork and high productivity.

We have emphasized diversity in our recruiting, 

training, policies and procedures, and management/employee performance standards. We have 

made good use of the Schedule A, Persons with 

Disabilities, hiring authority. As a result, the diversity of our workforce is growing. According to 

FCA’s FY 2019 employment data, more than 17.5% 

of our workforce has disabilities and almost 4.2% 

of those employees have targeted disabilities, or 

conditions that can create significant barriers to 

employment. This surpasses the goal set in the 

Equal Employment Opportunity Commission’s 
FCA Performance and Accountability Report — 2019 | 33

final rule, which directs federal agencies to aim for 

12% of its workforce to be people with disabilities, 

2% of whom are people with targeted disabilities. 

By continually assessing human capital needs, 

we have established appropriate human capital 

requirements, and we have used our human capital 

assessments to develop, enhance, and redirect 

training and development programs. We have upgraded our information technology infrastructure 

to improve our ability to work, collaborate, gather 

information, review, approve, and store work products. As a result, our workforce has become more 

effective and efficient.

To address workforce gaps and challenges, we are 

taking the following measures:

• Identifying positions in which risk of key-person 

dependency exists and developing plans to build 

bench strength and manage succession for these 

positions

• Hiring to meet projected staffing needs

• Offering training programs and developing 

strategies to increase our employees’ technical 

competencies 

• Creating opportunities for employees to become 

more engaged with their work

• Increasing workplace diversity and promoting 

inclusion

Through our examiner commissioning program, 

we are building the next generation of diverse and 

highly motivated examiners, ensuring they have 

the knowledge, skills, and talents necessary to accomplish the agency’s mission. The program helps 

examiners develop their skills in FCA’s primary 

areas of oversight — credit, finance, and operations 

as well as examination management.

We also invest in the development of our commissioned examiners through human capital 

planning, examiner career development, and 

specialty programs. The specialty programs enable 

examiners to gain technical expertise and encourage them to pursue professional development and 

certification.

Strategy 2: Facilitate the development of the 

skills our workforce needs to evaluate FCS risk 

and provide timely and proactive oversight.

In 2019, FCA continued to devote significant resources toward developing new employees through 

our examiner commissioning program. In addition, we increased our focus on helping midcareer 

staff develop their skills. For example, we took the 

following measures:

• Trained and developed examination staff with 

the necessary technical and soft skill sets

• Supported post-commission examiner career 

development and related specialist programs 

(for credit, finance, operations, and examination management) to ensure our staff has the expertise and credibility to carry out our mission, 

including training in the necessary soft skills.

• Helped our staff maintain its readiness to administer elevated supervision when necessary

• Ensured that all our examiners understand our 

risk supervision approaches and how to implement them

Strategy 3: Ensure adequate succession 

planning and knowledge transfer to ensure 

that future FCA leadership and staff possess 

the knowledge and skills required to be an 

effective arm’s length regulator.

We have updated our examiner career development program to help us replace retiring managers 

and supervisors by developing the leadership, 

management, and supervisory skills of our examiners. Our strategy is to develop a pool of candidates who could become successful supervisors 

and managers, including director of the Office of 

Examination. We recognize that retirements also 

create opportunity for diversity and inclusion in 

management.

We use the following methods to develop our next 

group of program managers and leaders:

• Creating leadership positions for program and 

portfolio managers
34 | FCA Performance and Accountability Report — 2019

• Providing selected candidates with formal leadership training, on-the-job training, and opportunities to participate in other projects

• Helping staff build skill sets by providing developmental assignments such as serving as 

examiners-in-charge of complex institutions, 

completing special projects, and participating in 

Office of Examination specialist programs

• Providing internal rotational assignments between divisions in our Office of Examination

• Offering opportunities for Office of Examination 

employees to work in other FCA offices

To transfer knowledge from more tenured examiners to the new generation of examination staff, we 

use developmental initiatives. Our ongoing project 

to update the FCA Examination Manual also provides opportunities for knowledge transfer. 

Strategy 4: Encourage a workplace culture 

that motivates staff to be engaged, embraces 

diversity in all its forms, and promotes strong 

ethical behavior.

According to the Federal Employee Viewpoint 

Survey, FCA’s employee engagement index went up 

by one percentage point in 2019, from 78% to 79%. 

FCA is continually ranked among the top five best 

places to work among small federal agencies. We 

promote engagement in various ways, such as providing training and development opportunities for 

employees to build their skills and advance their 

careers.

We also strengthen engagement by having an 

inclusive workplace. For example, our Special 

Emphasis Programs, such as the Federal Women’s 

Program, Blacks in Government, and HOLA-FCA 

(Hispanic Organization for Leadership and Advancement), sponsor regular presentations on 

issues affecting women and minority groups. 

And each year we have a Diversity Day when we 

celebrate the diverse cultures represented in our 

workplace.

We also strive to increase workforce diversity. We 

target at least 25% of our recruiting efforts toward 

potential applicants who have a disability or who 

are members of a minority group. For example, 

during each recruiting season, we attend career 

fairs at historically black colleges and universities 

and schools with a high rate of minority enrollment.

And as a financial banking regulator, we emphasize ethical conduct among all employees. In 2011, 

our board adopted a policy statement on ethics, 

independence, and our role as an arm’s length regulator. This document states the following:

• The FCA board will continue to hold itself to the 

highest standards of ethical conduct in recognition that its commitment and adherence to the 

agency ethics program sets the standard for the 

commitment and conduct of agency staff.

• FCA board members and employees must remain mindful of their duty to make independent 

determinations on matters being considered by 

the agency.

• As the arm’s length regulator of the Farm Credit 

System, FCA is committed to carrying out its 

work without any undue influence, favoritism, 

or special access.

Our ethics program performs the following functions:

• Oversees financial disclosure reporting (that 

is, the completion of public, confidential, and 

certification forms) of covered FCA and FCSIC 

employees

• Provides ethics counseling to FCA and FCSIC 

employees

• Provides ethics training to all covered FCA and 

FCSIC employees annually, as well as to new 

employees during their orientation

• Provides a liaison to coordinate with other government agencies regarding ethics issues

• Helps develop regulations and policies related 

to ethics
FCA Performance and Accountability Report — 2019 | 35

Table 5a. Goal 1 — Performance measures and results for public mission

July 1, 2018, to June 30, 2019

Measure Results

2018 

Target

2018 

Results

2019 

Target

2019 

Results

Results 

vs. 

target

1. Percentage of FCS institutions 

providing products and services 

that serve creditworthy and 

eligible persons and perform outreach to enhance diversity and 

inclusion.

All FCS institutions had 

satisfactory operating and 

strategic plans for providing 

products and services to all 

creditworthy and eligible 

persons.

≥90% 100% ≥90% 100%

2. Whether Farmer Mac’s business 

plan contains strategies to 

promote and encourage the 

inclusion of all qualified loans, including loans to small farms and 

family farmers, in its secondary 

market programs, and whether 

its business activities further its 

mission to provide a source of 

long- term credit and liquidity for 

qualifying loans.

Farmer Mac’s business plan 

contains adequate strategies 

to promote and encourage the 

inclusion of all qualified loans, 

including small and family farm 

loans, in its secondary market 

programs. Its business activities 

further its mission to provide a 

source of long- term credit and 

liquidity.

Yes Yes Yes Yes

3. Percentage of direct-lender 

institutions with satisfactory 

consumer and borrower rights 

compliance.

Ninety-five percent of directlender institutions have 

satisfactory consumer and 

borrower rights compliance

≥90% 97.3% ≥90% 95%

4. Percentage of direct-lender 

institutions with YBS programs 

that are in compliance with YBS 

regulations.

All direct-lender institutions 

with YBS programs are 

in compliance with YBS 

regulations.

≥90% 100% ≥90% 100%

5. Whether the majority of objectives listed in the preamble of 

each final rule were met on the 

two-year anniversary of the rule’s 

effective or implementation date.

There were seven rules that 

met the reporting requirement. 

Most of the objectives listed 

in the preambles of the 

final rules were met on the 

two-year anniversary of the 

implementation dates.

Yes Yes Yes Yes

6. Percentage of pre–rulemaking 

projects and proposed rules 

on which FCA requested input 

from persons outside of FCA. 

(This measure considers all of 

the pre-rulemaking projects and 

proposed rules that were listed 

as completed on FCA’s Unified 

Agenda Abstracts for the reporting period.)

There were two proposed 

rules that met the reporting 

requirement; we did request 

input on these rules from 

persons outside of FCA.

100% 100% 100% 100%

The following defines the symbols and abbreviations used to describe targets in the Performance Measures and Results tables: ≥ is 

greater than or equal to; NA indicates either that the measure is not applicable or that FCA’s performance could not be measured; 

 indicates we exceeded the FY 2019 target; indicates we achieved the FY 2019 target; indicates we did not meet the FY 2019 

target.

Notes: In April 2018, the FCA board adopted the FCA Strategic Plan for FYs 2018 – 2023. The performance measures in the new plan 

remain substantially the same as the measures in the previous plan.
36 | FCA Performance and Accountability Report — 2019

Table 5b. Goal 2 — Performance measures and results for safety and soundness 

July 1, 2018, to June 30, 2019

Measure Results

2018 

Target

2018 

Results

2019 

Target

2019 

Results

Results 

vs. 

target

1. Percentage of System assets 

in institutions with composite 

CAMELS ratings of 1 or 2.

Ninety-eight percent of 

System assets have composite 

CAMELS ratings of 1 or 2.

≥90% 98.6% ≥90% 98%

2. Percentage of requirements in 

supervisory agreements with 

which FCS institutions have at 

least substantially complied 

within 18 months of execution 

of the agreements.

The agency does not have any 

supervisory agreements in 

place with FCS institutions.

≥80% NA ≥80% NA NA

3. Percentage of institutions complying with regulatory capital 

ratio requirements.

All institutions complied 

with regulatory capital ratio 

requirements.

≥90% 100% ≥90% 100%

4. Whether the Office of Secondary 

Market Oversight’s examination 

and oversight plan and activities 

effectively identify emerging 

risks, and whether appropriate 

supervisory and corrective actions have been taken to effect 

change when needed.

OSMO activities effectively 

identify emerging risks, and 

appropriate supervisory and 

corrective actions have been 

taken.

Yes Yes Yes Yes

5. Percentage of institutions with 

satisfactory audit and review 

programs, including institutions 

with acceptable corrective action plans.

All institutions but two 

have satisfactory audit and 

review programs, including 

institutions with acceptable 

corrective action plans.

100% 95.9% 100% 97%

6. Whether five or more reports 

and dashboards were created 

that use data collected from the 

Farm Credit System to assess 

risk in the System.

We created at least five 

reports that use System data 

to assess risk.

Yes Yes Yes Yes

The following defines the symbols and abbreviations used to describe targets in the Performance Measures and Results tables: ≥ is 

greater than or equal to; NA indicates either that the measure is not applicable or that FCA’s performance could not be measured; 

 indicates we exceeded the FY 2019 target; indicates we achieved the FY 2019 target; indicates we did not meet the FY 2019 

target.

Notes: In April 2018, the FCA board adopted the FCA Strategic Plan for FYs 2018 – 2023. The performance measures in the new plan 

remain substantially the same as the measures in the previous plan.
FCA Performance and Accountability Report — 2019 | 37

Table 5c. Goal 3 — Performance measures and results for workforce management 

July 1, 2018, to June 30, 2019

Measure Results 2018 

Target

2018 

Results

2019 

Target

2019 

Results

Results 

vs. 

target

1. Whether, as part of its recruiting 

efforts for entry level examiners, 

FCA has ensured that at least 

25% of its outreach efforts target 

applicants with a disability or 

who are members of a minority 

group. 

At least 25% of our outreach 

efforts targeted disabled or 

minority potential applicants.

Yes Yes Yes Yes

2. Whether we have maintained 

or improved our score from last 

year in the annual employee 

satisfaction survey.

We achieved a 1 percentage 

point increase in our 

Employee Engagement Index 

score.

Yes Yes Yes Yes

The following defines the symbols and abbreviations used to describe targets in the Performance Measures and Results tables: ≥ is 

greater than or equal to; NA indicates either that the measure is not applicable or that FCA’s performance could not be measured; 

 indicates we exceeded the FY 2019 target; indicates we achieved the FY 2019 target; indicates we did not meet the FY 2019 

target.

Notes: In April 2018, the FCA board adopted the FCA Strategic Plan for FYs 2018 – 2023. The performance measures in the new plan 

remain substantially the same as the measures in the previous plan.
38 | FCA Performance and Accountability Report — 2019

Financial Section
FCA Performance and Accountability Report — 2019 | 39

Statement of Chief Financial Officer

November 8, 2019

I am pleased to present the Farm Credit Administration’s 2019 financial statements and the auditor’s report on the financial position of the agency as of the fiscal year ended September 30, 2019. The audit was 

conducted by an independent public accounting firm contracted with the Office of Inspector General. 

The agency received an unmodified audit opinion on our financial statements for the 26th consecutive 

year. The auditors concluded that FCA’s financial statements are presented fairly, in all material respects, 

and in accordance with U.S. generally accepted accounting principles.

As part of the financial audit, the auditors assessed our internal controls over financial reporting and 

compliance with selected provisions of applicable laws, regulations, and contracts that are material to 

the financial statements. No material weaknesses or significant deficiencies were reported. 

FCA leadership and staff remain committed to sound financial management practices through governance, accountability and transparency. During fiscal year 2019, we enhanced our enterprise risk management capabilities to further strengthen our financial stewardship to rural America, the president, 

Congress, and the members and investors of the Farm Credit System.

We strongly support the cross-agency priority goal of the President’s Management Agenda that promotes 

effectiveness and efficiency of administrative services through adoption of established governmentwide 

shared service providers. Per objectives laid out in Office of Management and Budget (OMB) memorandum M-19-16, Centralized Mission Support Capabilities for the Federal Government, we will continue 

to work toward increased economies of scale and operational cost savings. At FCA, we contract with the 

Department of the Treasury’s Bureau of Fiscal Service for financial management, procurement, and travel services. We also contract with the Department of Transportation for management of employee transit 

benefits and with the National Finance Center for payroll processing.

This shared services approach helps us to maximize efficiency and enables us to focus more on data analytics and financial management reporting. Additionally, by sharing services, we are able to direct more 

dollars to deliver on our core mission of ensuring that the Farm Credit System meets the needs of our 

nation’s farmers, ranchers, and rural communities. 

Looking forward, we will continue to enhance our internal risk management practices and internal control activities to maintain effective and efficient operations, reliable reporting, and compliance with laws 

and regulations. We will seek opportunities to further reduce manual processes and improve data quality 

and reporting. Doing so will enhance our capabilities to work on behalf of rural America. 

I would like to thank all the FCA financial personnel, as well as the staff from other offices who worked 

with them, for their conscientious management of agency resources. Our shared commitment to ensuring accountability and transparency in the execution of our fiduciary duties is the foundation of our 

strong stewardship and ability to deliver reliable financial information to our stakeholders.

Sincerely,

Stephen G. Smith

Chief Financial Officer
40 | FCA Performance and Accountability Report — 2019

Transmittal Letter of Auditor’s Report

1501 Farm Credit Drive, McLean, VA 22102 703-883-4030 www.fca.gov/about/inspector-general

November 13, 2019

The Honorable Glen R. Smith, Board Chairman and Chief Executive Officer

The Honorable Jeffery S. Hall, Board Member

Farm Credit Administration

1501 Farm Credit Drive

McLean, VA 22102-5090

Dear Chairman Smith and Board Member Hall:

We contracted with the independent public accounting firm of Harper, Rains, Knight & Company 

P.A. (HRK) to audit the financial statements of the Farm Credit Administration (FCA) as of and for 

the fiscal years ended September 30, 2019 and 2018 and provide a report on internal control over 

financial reporting and compliance with laws and other matters. The contract required that the 

audit be performed in accordance with U.S. generally accepted government auditing standards, 

Office of Management and Budget audit guidance, and the U.S. Government Accountability 

Office/Council of the Inspectors General on Integrity and Efficiency’s Financial Audit Manual. 

In its audit of FCA, HRK reported: 

• the financial statements were fairly presented, in all material respects, in accordance with 

U.S. generally accepted accounting principles;

• FCA had no material weaknesses in internal control over financial reporting and 

compliance with laws and other matters; and

• no reportable noncompliance with provisions of laws tested or other matters.

In connection with the contract, we reviewed HRK’s report and related documentation and 

inquired of its representatives. Our review, as differentiated from an audit of the financial 

statements in accordance with U.S. generally accepted government auditing standards, was not 

intended to enable us to express, and we do not express, opinions on FCA’s financial statements 

or conclusions about the effectiveness of internal control over financial reporting, or on 

compliance with laws and other matters. HRK is responsible for the attached auditor’s report dated 

November 8, 2019 and the conclusions expressed therein. However, our review disclosed no 

instances where HRK did not comply, in all material respects, with U.S. generally accepted 

government auditing standards.
FCA Performance and Accountability Report — 2019 | 41

1501 Farm Credit Drive, McLean, VA 22102 703-883-4030 www.fca.gov/about/inspector-general

Respectfully,

Sonya K. Cerne 

Assistant Inspector General for Audits, Inspections, and Evaluations

Enclosure
42 | FCA Performance and Accountability Report — 2019

Independent Auditor’s Report

Independent Auditors' Report

FCA Board and Inspector General 

Farm Credit Administration

Report on the Financial Statements

We have audited the accompanying financial statements of the Farm Credit Administration (FCA). FCA's 

financial statements comprise the balance sheets as of September 30, 2019 and 2018, and the related 

statements of net cost and changes in net position, and statements of budgetary resources, for the fiscal 

years then ended; and the related notes to the financial statements. 

Management's Responsibility

FCA's management is responsible for (1) the preparation and fair presentation of these financial statements 

in accordance with accounting principles generally accepted in the United States of America; (2) 

preparing, measuring, and presenting the Required Supplementary Information (RSI) in accordance with 

accounting principles generally accepted in the United States of America; (3) preparing and presenting 

other information included in documents containing the audited financial statements and auditors' report, 

and ensuring the consistency of that information with the audited financial statements and the RSI; and 

(4) maintaining effective internal control over financial reporting, including the design, implementation, 

and maintenance of internal control relevant to the preparation and fair presentation of financial statements 

that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted 

our audits 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 19-03, 

Audit Requirements for Federal Financial Statements. Those standards and OMB require that we plan and 

perform the audit to obtain reasonable assurance about whether the financial statements are free from 

material misstatement. We are also responsible for applying certain limited procedures to RSI and other 

information included with the financial statements.

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 auditors' 

judgment, including the auditors' assessment of the risks of material misstatement of the financial 

statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal 
FCA Performance and Accountability Report — 2019 | 43

FCA Board and Inspector General 

Farm Credit Administration (continued) 

Auditors' Responsibility (continued)

control relevant to the entity's preparation and fair presentation of the financial statements in order to 

design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an 

opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An 

audit of financial statements also involves evaluating the appropriateness of the accounting policies used 

and the reasonableness of significant accounting estimates made by management, as well as evaluating 

the overall presentation of the financial statements. Our audits also included performing such other 

procedures as we considered necessary in the circumstances.

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

our audit opinion. 

Opinion on the Financial Statements

In our opinion, FCA's financial statements present fairly, in all material respects, FCA's financial position 

as of September 30, 2019 and 2018, and its net cost of operations, changes in net position, and budgetary 

resources for the fiscal years then ended, in accordance with accounting principles generally accepted in 

the United States of America.

Other Matters

Required Supplementary Information 

Accounting principles generally accepted in the United States of America issued by the Federal 

Accounting Standards Advisory Board (FASAB) require that the information in the Management's 

Discussion and Analysis be presented to supplement the financial statements. Such information, although 

not a part of the financial statements, is required by FASAB who considers this information to be an 

essential part of financial reporting for placing the financial statements in appropriate operational, 

economic, or historical context. We have applied certain limited procedures to the RSI in accordance with 

auditing standards generally accepted in the United States of America, which consisted of inquiries of 

management about the methods of preparing the RSI and comparing the information for consistency with 

management's responses to the auditors' inquiries, the financial statements, and other knowledge we 

obtained during the audit of the financial statements, in order to report omissions or material departures 

from FASAB guidelines, if any, identified by these limited procedures. We did not audit and we do not 

express an opinion or provide any assurance on the RSI because the limited procedures we applied do not 

provide sufficient evidence to express an opinion or provide any assurance. 

Other Information 

Our audit was conducted for the purpose of forming an opinion on FCA's financial statements. The 

information in the Statement of Board Chairman and CEO, Statement of Chief Financial Officer, FCA 

Performance Report, and Other Information section contains a wide range of information, some of which 

is not directly related to the financial statements. This information is presented for purposes of additional 
44 | FCA Performance and Accountability Report — 2019

FCA Board and Inspector General 

Farm Credit Administration (continued) 

Other Information (continued) 

analysis and is not a required part of the financial statements or the RSI. We read the other information 

included with the financial statements in order to identify material inconsistencies, if any, with the audited 

financial statements.

The Statement of Board Chairman and CEO, Statement of Chief Financial Officer, FCA Performance 

Report, and Other Information section has not been subjected to the auditing procedures applied in the 

audit of the financial statements, and accordingly, we do not express an opinion or provide any assurance 

on it. 

Other Reporting Required by Government Auditing Standards 

Internal Control over Financial Reporting 

In planning and performing our audit of FCA's financial statements as of and for the year ended 

September 30, 2019, in accordance with U.S. generally accepted government auditing standards and OMB

Bulletin 19-03, Audit Requirements for Federal Financial Statements, we considered the entity's internal 

control over financial reporting as a basis for designing audit procedures that are appropriate in the 

circumstances for the purpose of expressing our opinion on the financial statements, but not for the 

purpose of expressing an opinion on the effectiveness of the entity's internal control over financial 

reporting. Accordingly, we do not express an opinion on the entity's internal control over financial 

reporting. We did not consider all internal controls relevant to operating objectives as broadly established 

by the Federal Managers' Financial Integrity Act of 1982, such as those controls relevant to preparing 

performance information and ensuring efficient operations. We are required to report all deficiencies that 

are considered to be significant deficiencies or material weaknesses.

Our consideration of internal control over financial reporting was for the limited purpose described in the 

preceding paragraph and was not designed to identify all deficiencies in internal control over financial 

reporting that might be material weaknesses or significant deficiencies, and therefore, material weaknesses 

or significant deficiencies may exist that were not identified. Given these limitations, during our audit, we 

did not identify any deficiencies in internal control over financial reporting that we consider to be material 

weaknesses.

A deficiency in internal control exists when the design or operation of a control does not allow 

management or employees, in the normal course of performing their assigned functions, to prevent, or 

detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination 

of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement 

of the entity's financial statements will not be prevented or detected and corrected on a timely basis. A 

significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe 

than a material weakness, yet important enough to merit attention by those charged with governance. 
FCA Performance and Accountability Report — 2019 | 45

FCA Board and Inspector General 

Farm Credit Administration (continued) 

Compliance and Other Matters 

As part of obtaining reasonable assurance about whether FCA's financial statements are free from material 

misstatement, we performed tests of its compliance with selected provisions of applicable laws, 

regulations, contracts, and grant agreements, noncompliance with which would have a direct and material 

effect on the financial statements. We performed our tests of compliance in accordance with U.S. generally 

accepted government auditing standards and OMB Bulletin 19-03, Audit Requirements for Federal 

Financial Statements. We caution that noncompliance may occur and not be detected by these tests. 

Management is responsible for complying with laws, regulations, contracts, and grant agreements 

applicable to the entity. 

Our responsibility is to test compliance with selected provisions of applicable laws, regulations, contracts, 

and grant agreements applicable to the entity that have a direct effect on the determination of material 

amounts and disclosures in the entity's financial statements and perform certain other limited procedures. 

Accordingly, we did not test compliance with all laws, regulations, contracts, and grant agreements 

applicable to FCA. 

Our tests for compliance with selected provisions of applicable laws, regulations, contracts, and grant 

agreements disclosed no instances of noncompliance for fiscal year 2019 that would be reportable under 

U.S. generally accepted government auditing standards or OMB Bulletin 19-03, Audit Requirements for 

Federal Financial Statements. However, the objective of our tests was not to provide an opinion on 

compliance with laws, regulations, contracts, and grant agreements applicable to FCA. Accordingly, we 

do not express such an opinion. 

Purpose of the Other Reporting Required by Government Auditing Standards

The purpose of the communication described in the Other Reporting Required by Government Auditing 

Standards section is solely to describe the scope of our testing of internal control and compliance and the 

result of that testing, and not to provide an opinion on the effectiveness of FCA's internal control or 

compliance. These reports are an integral part of an audit performed in accordance with U.S. generally 

accepted government auditing standards in considering the entity's internal control and compliance.

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

November 8, 2019 
46 | FCA Performance and Accountability Report — 2019

Financial Statements

We have prepared the accompanying financial statements in accordance with U.S. generally accepted accounting principles and with the Office of Management and Budget Circular A-136, as amended. For comparison purposes, we present our financial statements and notes for FY 2019 and FY 2018. All amounts 

are in whole dollars. The financial statements include the following:

• Balance sheets, which show our assets, our liabilities, and our net position (assets minus liabilities).

• Statements of net cost, which show our net cost of operations. We calculate our net costs by subtracting from our gross costs any revenue we earn. We break the statement of net cost into three program 

components: public mission, safety and soundness, and other activity.

• Statements of changes in net position, which show the change in our net position over the two-year 

period ending Sept. 30, 2019.

• Statements of budgetary resources, which show our resources, the status of our resources, and the 

outlay of resources during the fiscal year.

• Notes to the financial statements, which clarify and provide additional detail regarding the amounts in 

the financial statements.

Not all of the statements mentioned in Circular A-136 apply to our agency. For this reason, we do not include a statement of custodial activity, a statement of social insurance, or a statement of changes in social 

insurance amounts.
FCA Performance and Accountability Report — 2019 | 47

Balance sheets

As of Sept. 30, 2019 and 2018 

(In dollars)

2019 2018

Assets Intragovernmental

Fund balance with Treasury (note 2) $1,388,463 $4,127,940

Investments (note 3) 34,614,229 31,492,515

Accounts receivable (note 4) 7,516 13,382

Total intragovernmental 36,010,208 35,633,837

Accounts receivable (note 4) 150,342 84,409

General property, equipment, and software, net 

(note 5)

1,173,085 1,607,341

Prepaid expenses 289,945 267,706

Total assets $37,623,580 $37,593,293

Liabilities Intragovernmental

Accounts payable $37,859 $49,426

Accrued post-employment compensation 35,914 32,618

Employer contributions and payroll taxes payable 549,182 484,936

Other 132 109

Total intragovernmental 623,087 567,089

Accounts payable 726,614 1,310,666

Actuarial workers’ compensation liability (note 6) 1,595,070 1,509,392

Accrued payroll and benefits 7,659,548 7,253,008

Employer contributions and payroll taxes payable 544,827 521,259

Deferred revenue 5,572,620 5,907,939

Total liabilities $16,721,766 $17,069,353

Net position Cumulative results of operations – Other funds $20,901,814 $20,523,940

Total net position 20,901,814 20,523,940

Total liabilities and net position $37,623,580 $37,593,293

The accompanying notes are an integral part of these statements.
48 | FCA Performance and Accountability Report — 2019

Statements of net cost

For the years ended Sept. 30, 2019 and 2018 

(In dollars)

Program Costs 2019 2018

Public mission Gross costs $20,472,180 $20,089,846

Less: Earned revenue (18,833,677) (18,156,025)

Net program cost $1,638,503 $1,933,821

Safety and soundness Gross costs $59,441,216 $55,986,290

Less: Earned revenue (54,672,029) (50,641,483)

Net program cost $4,769,187 $5,344,807

Other activity Gross costs $1,005,507 $670,677

Less: Earned revenue (668,273) (487,337)

Net program cost $337,234 $183,340

Net cost of operations (note 7) $6,744,924 $7,461,968

The accompanying notes are an integral part of these statements.
FCA Performance and Accountability Report — 2019 | 49

Statements of changes in net position

For the years ended Sept. 30, 2019 and 2018 

(In dollars)

2019 2018

Cumulative results of operations

Beginning balances $20,523,940 $20,915,620

Other financing 

sources 

(Non-exchange)

Imputed financing sources

Federal employee benefits (note 8) 3,472,798 3,070,288

Rent (note 8) 3,650,000 4,000,000

Total financing sources 7,122,798 7,070,288

Net cost of operations (6,744,924) (7,461,968)

Net change 377,874 (391,680)

Cumulative results of operations $20,901,814 $20,523,940

Net position $20,901,814 $20,523,940

The accompanying notes are an integral part of these statements.
50 | FCA Performance and Accountability Report — 2019

Statements of budgetary resources

For the years ended Sept. 30, 2019 and 2018 

(In dollars)

2019 2018

Budgetary resources Unobligated balance from prior year budget 

authority, net

$21,951,094 $21,406,841

Spending authority from offsetting collections 73,430,739 69,496,735

Total budgetary resources (note 10) $95,381,833 $90,903,576

Status of budgetary 

resources

New obligations and upward adjustments (total) $73,954,318 $68,952,482

Unobligated balance, end of year

Exempt from apportionment, unexpired 

accounts

15,854,895 16,043,155

Exempt from apportionment, not available 5,572,620 5,907,939

Unobligated balance, end of year (total) 21,427,515 21,951,094

Total budgetary resources (note 10) $95,381,833 $90,903,576

Outlays, net Outlays, net (total) (264,710) (1,280,081)

Agency outlays, net $(264,710) $(1,280,081)

The accompanying notes are an integral part of these statements.
FCA Performance and Accountability Report — 2019 | 51

Notes to the financial statements

Note 1. Significant accounting policies

A. Reporting entity — See the section titled Management’s Discussion and Analysis for a description of 

the reporting entity.

B. Basis of accounting and presentation — The financial statements have been prepared in accordance 

with OMB Circular No. A-136, as amended. In addition, the financial statements have been prepared 

on an accrual basis from our books and records in accordance with GAAP and the Statements of Federal Financial Accounting Standards prescribed by the Federal Accounting Standards Advisory Board, 

the official body for setting accounting standards for the federal government. Under the accrual method, revenues are recognized when earned, and expenses are recognized when goods or services are 

received, without regard to receipt of funds or payment of cash. FCA is not subject to apportionment. 

Budgetary accounting has been applied to facilitate compliance with legal constraints and control over 

the use of funds.

C. Fund balance with Treasury — We maintain a revolving, no-year account with the U.S. Treasury 

through which cash receipts and disbursements are processed. We do not receive appropriated funds. 

See note 2.

D. Investments — The Farm Credit Act gives us the authority to invest in public debt securities with maturities suitable to our needs. We invest solely in U.S. Treasury securities, which are normally held to 

maturity and carried at cost. Investments are adjusted for unamortized premiums or discounts. Premiums and discounts are amortized and interest is accrued using the level-yield, scientific method of 

effective interest amortization over the term of the respective issues. We use interest earned on investments to build and maintain an agency reserve, which allows us to respond effectively and efficiently 

to unexpected, unbudgeted expenses without increasing assessments. See note 3.

E. Accounts receivable — Accounts receivable are composed of

1. reimbursements for FCA administrative expenses according to agreements with other federal entities,

2. assessments from institutions in accordance with the Farm Credit Act and FCA regulations, and

3. amounts owed FCA that are generated through the normal course of business with employees and 

vendors.

Amounts due from federal agencies are considered fully collectible. An allowance for uncollectible 

amounts receivable from the public is established when we have determined that the collection is unlikely to occur after considering the debtor’s ability to pay.

The Office of the Chief Financial Officer, in conjunction with the agency’s accounting service provider, 

the Bureau of the Fiscal Service, reviews the agency’s accounts receivable on a regular basis. We have 

determined that all accounts receivable as of Sept. 30, 2019, are fully collectible. See note 4.
52 | FCA Performance and Accountability Report — 2019

F. Advances and prepaid expenses — Payments made before the receipt of goods and services are recorded as advances or prepaid expenses at the time of prepayment and are recognized as expenses 

when the goods and services are received. This process helps to minimize large dollar fluctuations 

in cost and provides for the recognition of cost based on use. When the prepayment amount has 

minimal impact on cost, it is more cost-effective to expense the advance or prepayment at the time of 

payment. We establish advances for prepaid maintenance agreements over $20,000 and for prepaid 

training exceeding $15,000.

G. General property, equipment, and software — Property (including vehicles), equipment, and software 

are recorded at cost, net of an allowance for accumulated depreciation. Repairs and maintenance 

costs are expensed as incurred. We capitalize all property and equipment with itemized costs of 

$50,000 or more and a useful life of two years or more. We also capitalize groups of items that individually are under $50,000 but together meet the bulk purchase criteria of $500,000 or more. We capitalize software when its costs exceed $250,000 and when the software has a useful life of two years or 

more. We use the straight-line method of depreciation with half-year convention to allocate the cost of 

capitalized property, equipment, or software over its estimated useful life. See note 5.

H.Accounts payable — Accounts payable consist of amounts owed to other federal agencies and the 

public. We strive to make payments in a timely manner in accordance with the Prompt Payment Act. 

If payments are late, we pay interest penalties.

I. Liabilities — Liabilities may or may not be covered by budgetary or other resources. All of our liabilities are covered by budgetary resources with the exception of the actuarial workers’ compensation 

liability (see note 6). Intragovernmental liabilities are claims against us by other federal agencies.

J. Inter-entity costs — Goods and services are received from other entities at no cost or at a cost less 

than full cost to the providing entity. Consistent with accounting standards, certain costs of the providing entity that are not fully reimbursed by FCA are recognized as imputed cost on the statement of net 

cost, and are offset by imputed revenue on the Statement of Changes in Net Position. FCA’s inter-entity 

costs that are reported as imputed costs include federal employee benefits and rent. See note 8.

K. Annual, sick, and other leave — Annual leave, compensatory leave, credit hours, and some other 

types of leave are accrued as a funded liability when earned, with an offsetting reduction for leave 

taken. The accrued leave liability for each of these types of leave is calculated using current pay rates. 

Sick leave and other types of nonvested leave are expensed as the leave is taken. Our methodology 

for calculating the leave liability includes the cost of benefits associated with the compensation. This 

ensures that our estimated liability for leave reflects the current composition of our staff; most of our 

employees are under the Federal Employees Retirement System instead of the Civil Service Retirement System.

L. Assessments — A substantial portion of our revenues is based on direct assessments billed to the System institutions we regulate or examine. We also recognize revenues based on examination services 

provided by the Office of Examination. We use a formula established in our regulations to calculate 

assessments. We base each institution’s assessment, in part, on its average risk-adjusted assets and its 

overall financial health.

M.Deferred revenue — Any funds received before the beginning of the new fiscal year are considered 

unearned revenue and are reported as deferred revenue on the balance sheet. These amounts are also 

reported as “exempt from apportionment, not available” on the statement of budgetary resources.
FCA Performance and Accountability Report — 2019 | 53

N. Use of estimates — We have made certain estimates and assumptions when reporting assets, liabilities, revenue, and expenses; we have also made estimates and assumptions in the note disclosures. Actual results could differ from these estimates. Some estimates include year-end accruals and accrued 

workers compensation.

O. Financial data — All amounts presented in this report are in whole dollars.

P. Reclassifications — Certain amounts presented in the prior years have been reclassified to conform 

to the current period financial statement presentation. These reclassifications have no effect on previously reported net position or budgetary resources.

Q. Classified activities — Accounting standards require all reporting entities to disclose that accounting 

standards allow certain presentations and disclosures to be modified, if needed, to prevent the disclosure of classified information. FCA does not have any classified activities. 

Note 2. Fund balance with Treasury

2019 2018

Status of fund balance with Treasury

Unobligated balance

Available $15,854,895 $16,043,155

Unavailable 5,572,620 5,907,939

Obligated balance not yet disbursed 14,293,317 13,505,029

Subtotal — Status of fund balance 35,720,832 35,456,123

Funds invested with Treasury net of unamortized discount (34,332,369) (31,328,183)

Total fund balance with Treasury $1,388,463 $4,127,940

The status of our fund balance with Treasury may be classified as unobligated available, unobligated 

unavailable, or obligated. Unobligated available amounts represent funds available for incurring new obligations. The unobligated unavailable amounts include funds not yet available for use and represent the 

amount of new fiscal year assessments received before Oct. 1. These unavailable amounts are also classified as deferred revenue on the Balance Sheet. Amounts noted as “obligated balance not yet disbursed” 

represent amounts designated for payment of goods and services received and not yet paid.

Unobligated balances noted above agree with unobligated balances reported on the Statement of Budgetary Resources.

All of our funds invested with Treasury are in U.S. Treasury securities.
54 | FCA Performance and Accountability Report — 2019

Note 3. Investments

Intragovernmental securities

Amounts for 2019 balance sheet reporting

Cost Amortized 

(premium) 

discount

Investments, 

net

Interest 

receivable

9/30/19 

Investment 

balance

Market value 

disclosure

Nonmarketable: 

market-based

$34,345,472 $178,865 $34,524,337 $89,892 $34,614,229 $34,611,584

Amounts for 2018 balance sheet reporting

Cost Amortized 

(premium) 

discount

Investments, 

net

Interest 

receivable

9/30/18 

Investment 

balance

Market value 

disclosure

Nonmarketable: 

market-based

$31,435,396 $(24,955) $31,410,441 $82,074 $31,492,515 $31,177,346

Premiums and discounts are amortized, and interest is accrued using the level-yield, scientific method of effective interest amortization over the term of the respective issues. Interest revenue on investments was $805,339 

and $597,007 for FYs 2019 and 2018, respectively.

Note 4. Accounts receivable

2019 2018

Intragovernmental

Reimbursements for services provided $7,516 $13,382

Subtotal 7,516 13,382

With the public

Reimbursements for services provided 146,536 78,834

Expenditure refunds 3,806 5,575

Subtotal 150,342 84,409

Total accounts receivable $157,858 $97,791

The intragovernmental receivables represent reimbursable services provided to USDA and FCSIC but unbilled as 

of Sept. 30.
FCA Performance and Accountability Report — 2019 | 55

Note 5. General property, equipment, and software

As of September 30, 2019

Estimated 

useful life

Depreciation 

method

Acquisition 

value

Accumulated/Amortized 

depreciation

Book value

Equipment 3 years Straight line $723,580 $(723,580) $0

Equipment 5 years Straight line 498,326 (239,595) 258,731

Equipment 10 years Straight line 305,304 (136,910) 168,394

Internal use 

software

5 years Straight line 1,270,813 (524,853) 745,960

Total $2,798,023 $(1,624,938) $1,173,085

As of September 30, 2018

Estimated 

useful life

Depreciation 

method

Acquisition 

value

Accumulated/Amortized 

depreciation

Book value

Equipment 3 years Straight line $723,580 $(602,983) $120,597

Equipment 5 years Straight line 434,055 (146,358) 287,697

Equipment 10 years Straight line 305,304 (106,379) 198,925

Internal use 

software

5 years Straight line 1,270,813 (270,691) 1,000,122

Total $2,733,752 $(1,126,411) $1,607,341

Capitalization thresholds for property and equipment are $50,000 per individual asset and $500,000 for bulk purchase of equipment. Capitalized internal use software is capitalized when costs exceed $250,000.
56 | FCA Performance and Accountability Report — 2019

Note 6. Liabilities not covered by budgetary resources (actuarial workers’ compensation liability)

We record an unfunded liability (liability not covered by budgetary resources) for the actuarial liability under the 

Federal Employees’ Compensation Act (FECA). The actuarial FECA liability is the estimated liability for future 

benefit payments and is recorded as a component of federal employee benefits. The actuarial liability estimate 

for benefits under FECA includes the expected liability for costs associated with death, disability, and medical 

care for approved compensation cases. The estimate also includes costs associated with incurred but unreported 

claims.

The Department of Labor estimates future workers’ compensation liability for specified entities that are preparing statements under the Chief Financial Officers Act and the Government Management Reform Act. Because we 

are not one of the entities for which the Department of Labor provides individual estimates on a routine basis, 

we calculated our estimated FECA actuarial liability amount by using the Department of Labor’s FY 2019 model to 

estimate FECA actuarial liability.

2019 2018

Federal Employees’ Compensation Act actuarial liability $1,595,070 $1,509,392

Total liabilities not covered by budgetary resources 1,595,070 1,509,392

Total liabilities covered by budgetary resources 15,126,696 15,559,961

Total liabilities $16,721,766 $17,069,353
FCA Performance and Accountability Report — 2019 | 57

Note 7. Suborganization program costs/program costs by segment

The following tables provide a detailed breakout of the statement of net cost for each of the fiscal years 

ended 2019 and 2018. We display our cost and earned revenue amounts by office within each program.

For the year ended September 30, 2019

Office of 

Examination

Office of 

Regulatory 

Policy

Office of 

Secondary 

Market 

Oversight

Other 

offices

Total

Public missionGross costs $755,454 $5,668,326 $564,309 $13,484,091 $20,472,180

Less: Earned 

revenue

(698,625) (5,243,131) (422,580) (12,469,341) (18,833,677)

Net program 

cost

56,829 425,195 141,729 1,014,750 1,638,503

Safety and 

soundness

Gross costs 38,989,922 1,257,124 1,519,556 17,674,614 59,441,216

Less: Earned 

revenue

(36,004,004) (1,157,338) (1,131,808) (16,378,879) (54,672,029)

Net program 

cost

2,985,918 99,786 387,748 1,295,735 4,769,187

Other 

activity

Gross costs 311,999 122,189 2,047 569,272 1,005,507

Less: Earned 

revenue

(207,358) (81,208) (1,361) (378,346) (668,273)

Net program 

cost

104,641 40,981 686 190,926 337,234

Net cost of operations $3,147,388 $565,962 $530,163 $2,501,411 $6,744,924

For the year ended September 30, 2018

Office of 

Examination

Office of 

Regulatory 

Policy

Office of 

Secondary 

Market 

Oversight

Other 

offices

Total

Public 

mission

Gross costs $585,548 $5,476,669 $571,224 $13,456,405 $20,089,846

Less: Earned 

revenue

(531,923) (4,975,058) (446,357) (12,202,687) (18,156,025)

Net program 

cost

53,625 501,611 124,867 1,253,718 1,933,821

Safety and 

soundness

Gross costs 36,583,724 1,268,009 1,325,825 16,808,732 55,986,290

Less: Earned 

revenue

(33,196,083) (1,150,304) (1,033,734) (15,261,362) (50,641,483)

Net program 

cost

3,387,641 117,705 292,091 1,547,370 5,344,807

Other 

activity

Gross costs 220,211 56,537 634 393,295 670,677

Less: Earned 

revenue

(160,013) (41,081) (460) (285,783) (487,337)

Net program 

cost

60,198 15,456 174 107,512 183,340

Net cost of operations $3,501,464 $634,772 $417,132 $2,908,600 $7,461,968
58 | FCA Performance and Accountability Report — 2019

Note 8. Inter-entity costs

Federal employee benefits

2019 2018

Imputed pension costs $1,445,263 $1,150,819

Other imputed retirement 

benefits

2,027,535 1,919,469

Total $3,472,798 $3,070,288

We report the amount of our pension expense and other retirement benefits in accordance with SFFAS 

No. 5, Accounting for Liabilities of the Federal Government. These expenses are treated as an imputed 

expense, which is recognized when amounts remitted to OPM are less than the full cost to the government. Corresponding amounts of imputed revenue are recorded to offset the imputed cost.

Pension expenses — Our employees are covered under the Civil Service Retirement System (CSRS) and 

the Federal Employees Retirement System (FERS) to which we make contributions according to plan 

requirements. CSRS and FERS are multiemployer plans. We do not maintain or report information about 

the assets of the plan, nor do we report actuarial data for accumulated plan benefits. The reporting of 

such amounts is the responsibility of OPM.

Other retirement benefit expenses — We also recognize an expense for the cost of providing health 

benefits and life insurance to our employees after they retire. OPM provides the factors used to calculate 

these costs.

Rent

2019 2018

Leased field offices $1,380,013 $1,378,394

FCA headquarters 2,269,987 2,621,606

Total $3,650,000 $4,000,000

In accordance with the Farm Credit Act, we occupy buildings owned and leased by the Farm Credit 

System Building Association (FCSBA). Our administrative headquarters building and land are located 

in McLean, Virginia. In addition, the FCSBA leases office space for field offices on our behalf at various 

locations throughout the United States. Rent is provided at no cost to us. Our imputed rent expense is an 

estimate based on the FCSBA’s estimated budget for 2019. In accordance with SFFAS No. 4, Managerial 

Cost Accounting Concepts and Standards for the Federal Government, the rent expense and the associated imputed revenue are recorded as a nonmonetary transaction.
FCA Performance and Accountability Report — 2019 | 59

Note 9. Undelivered orders at the end of the period

As of Sept. 30, 2019, budgetary resources obligated for undelivered orders were as follows:

Federal Nonfederal Total

Paid undelivered orders $0 $289,945 $289,945

Unpaid undelivered orders 468,338 4,877,209 5,345,547

Total undelivered orders $468,338 $5,167,154 $5,635,492

As of Sept. 30, 2018, budgetary resources obligated for undelivered orders were as follows:

Federal Nonfederal Total

Paid undelivered orders $0 $267,706 $267,706

Unpaid undelivered orders 671,538 4,017,579 4,689,117

Total undelivered orders $671,538 $4,285,285 $4,956,823

Note 10. Explanation of differences between the Statement of Budgetary Resources and the 

budget of the U.S. government

SFFAS 7 requires the reporting of material differences between amounts reported in the Statement of 

Budgetary Resources and the actual amounts reported in the Budget of the United States Government.

There are no material differences between the amounts reported in the FY 2018 Statement of Budgetary 

Resources and the FY 2018 actual amounts reported in the FY 2020 Budget of the United States Government. The FY 2021 Budget of the United States is not yet available to compare the FY 2019 actual amounts 

to the FY 2019 Statement of Budgetary Resources. The budget is expected to be available in February 

2020.

Note 11. Incidental custodial collections

Our custodial collections include receipts to cover the costs of fulfilling Freedom of Information Act requests; they also include other receipts, such as interest and penalties. During the fiscal year, we include 

these collections in the Fund Balance with Treasury. However, since these collections are immaterial to 

the financial statements and incidental to our mission, we do not provide a Statement of Custodial Activity. Custodial collections totaled $215 for the period ended Sept. 30, 2019, and $557 for Sept. 30, 2018. The 

funds collected in FY 2019 were transferred to the Department of the Treasury at the end of FY 2019.
60 | FCA Performance and Accountability Report — 2019

Note 12. Reconciliation of net cost to net outlays

As prescribed by SFFAS 53, Budget and Accrual Reconciliation, this note explains the relationship between our net outlays on a budgetary basis and the net cost of operations during the reporting period. It 

is a reconciliation between budgetary and financial accounting information. 

Budgetary and financial accounting information differ. Budgetary accounting is used for planning and 

control purposes and relates to both the receipt and use of cash. Because financial accounting is intended to provide a picture of the government’s financial operations and financial position, it presents information on an accrual basis. The accrual basis includes information about costs arising from consuming 

assets and incurring liabilities. The analysis in the table on page 61 illustrates this reconciliation by 

listing the key differences between net cost and net outlays.
FCA Performance and Accountability Report — 2019 | 61

 Note 12. Reconciliation of net cost to net outlays (continued)

Intragovernmental With the public Total

Net Operating Cost $19,573,348 $(12,828,424) $6,744,924

Components of net operating cost that are not part of budgetary outlays

Property, plant, and equipment depreciation0 (498,528) (498,528)

Increase/(decrease) in assets

Accounts receivable 1,953 65,933 67,886

Other assets 0 22,238 22,238

Investments 109,710 0 109,710

(Increase)/decrease in liabilities not affecting budgetary outlays

Accounts payable 11,566 584,051 595,617

Salaries and benefits (67,542) (430,533) (498,075)

Other liabilities (23) 250,066 250,043

Other financing sources

Federal employee retirement benefit 

costs

(3,472,798) 0 (3,472,798)

Other imputed finance (3,650,000) 0 (3,650,000)

Total components of net operating cost 

that are not part of budgetary outlays

(7,067,134) (6,773) (7,073,907)

Components of budgetary outlays that are not part of net operating cost 

Acquisition of capital assets 0 64,273 64,273

Other 238 (238) 0

Total components of budgetary outlays 

that are not part of net operating cost 

238 64,035 64,273

Net outlays (calculated total) $12,506,452 $(12,771,162) $(264,710)

Related amounts on the Statement of Budgetary Resources

Outlays, gross (264,710)

Outlays, net $(264,710)
62 | FCA Performance and Accountability Report — 2019

Other Information
FCA Performance and Accountability Report — 2019 | 63

Letter from Inspector General on FCA’s 

Management Challenges

October 7, 2019

The Honorable Glen R. Smith, Chairman and Chief Executive Officer

The Honorable Jeffery S. Hall, Board Member

Farm Credit Administration

1501 Farm Credit Drive 

McLean, Virginia 22102-5090

Dear Chairman Smith and Board Member Hall:

As part of the Farm Credit Administration’s (FCA or Agency) annual Performance and 

Accountability Report, the Reports Consolidation Act of 2000 requires Inspectors General to 

provide a summary perspective on the most serious management and performance challenges 

facing the Agency. We solicited the FCA Board and management for thoughts on this issue and 

identified the following top five management challenges:

1. Examination and Supervision Program

2. Information Technology

3. Data Quality and Analysis

4. Human Capital

5. Secondary Market Oversight

Please note that we added a fifth challenge this year, “Data Quality and Analysis,” to reflect the 

growing importance of obtaining and using quality data to monitor and ensure the safety and 

soundness of the Farm Credit System. 

We appreciate the continued, ongoing support of Agency leadership. We will continue to work 

with you in addressing these and other challenges faced by the Agency in achieving FCA’s mission. 

If you have any questions, please call me at (703) 883-4234.

Sincerely,

Wendy R. Laguarda

Inspector General
64 | FCA Performance and Accountability Report — 2019
FCA Performance and Accountability Report — 2019 | 65
66 | FCA Performance and Accountability Report — 2019
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68 | FCA Performance and Accountability Report — 2019
FCA Performance and Accountability Report — 2019 | 69
70 | FCA Performance and Accountability Report — 2019
FCA Performance and Accountability Report — 2019 | 71
72 | FCA Performance and Accountability Report — 2019

Management’s Response to Challenges 

Identified by FCA’s Inspector General

November 8, 2019

Ms. Wendy Laguarda

Inspector General

Farm Credit Administration

1501 Farm Credit Drive

McLean, VA 22102-5090

Dear Ms. Laguarda:

We concur with your assessment of the management challenges as described in your letter dated 

October 7, and we value your recommendations in addressing these challenges. Overcoming them will 

require long-term strategies for ensuring stable operations, adequate risk mitigation, and sustained resources, but we are committed to continuing our progress. 

We remain focused on ways to mitigate our operational risks. We recognize that risk management and 

risk mitigation are critical to our ability to fulfill our mission as the regulator of the Farm Credit System. 

During FY 2019, we updated our agency risk profile to better evaluate and report on the top risks to the 

agency. We enhanced our enterprise risk management (ERM) capabilities and applied the ERM framework to document our assessment of the risks posed by the management challenges you identified. 

In addition to evaluating the likelihood of certain risk events and their impact on our agency, we identified actions we can take to mitigate those risks. We plan to further improve our ERM capabilities in the 

new fiscal year so that we can better assess, coordinate, and lead the agency’s various risk management 

efforts.

Another way we seek to improve our operations is by enhancing the quality of our data and data systems. 

For example, we recently designated a chief data officer to coordinate these efforts at our agency. Our 

focus on data integrity is consistent with recent congressional initiatives to improve evidence-based decision-making across government. 

Sincerely,

Glen R. Smith

Board Chairman and CEO
FCA Performance and Accountability Report — 2019 | 73

Summary of Financial Statement Audit and 

Management Assurances

FCA has no reported material weakness, and we are in conformance with the Federal Managers’ Financial Integrity Act (FMFIA) and in compliance with the Federal Financial Management Improvement Act 

(FFMIA).

Table 6. Summary of financial statement audit

Audit opinion: Unmodified

Restatement: No

Material 

weaknesses

Beginning 

balance

New Resolved Consolidated Ending balance

No material 

weaknesses

0 0 0 0 0

Table 7. Summary of management assurances

Effectiveness of internal control over financial reporting (FMFIA § 2) 

Statement of assurance: Unmodified

Material 

weaknesses

Beginning 

balance

New Resolved Consolidated Reassessed Ending 

balance

Total material 

weaknesses

0 0 0 0 0 0

Effectiveness of internal control over operations (FMFIA § 2) 

Statement of assurance: Unmodified

Material 

weaknesses

Beginning 

balance

New Resolved Consolidated Reassessed Ending 

balance

Total material 

weaknesses

0 0 0 0 0 0
74 | FCA Performance and Accountability Report — 2019

Conformance with federal financial management system requirements (FMFIA § 4)

Statement of assurance: Federal systems conform

Nonconformances Beginning 

balance

New Resolved Consolidated Reassessed Ending 

balance

Total 

nonconformance

0 0 0 0 0 0

Compliance with FFMIA section 803(a)

Compliance requirements Agency Auditor

1. Federal financial management system 

requirements

Not applicable Not applicable

2. Applicable federal accounting standards Not applicable Not applicable

3. U.S. Standard General Ledger at transaction level

Not applicable Not applicable
FCA Performance and Accountability Report — 2019 | 75

Payment Integrity

Background

The Improper Payments Information Act of 2002 (IPIA), as amended by the Improper Payments Elimination and Recovery Act of 2010 (IPERA) and the Improper Payments Elimination and Recovery Improvement Act of 2012 (IPERIA), outlines legislative and administrative requirements with which agencies 

must comply in order to identify, estimate, and report on their improper payment activities. Appendix 

C to OMB Circular A-123, Requirements for Payment Integrity Improvement, provides implementation 

guidance for agencies to comply with IPIA, IPERA, and IPERIA. OMB Circular A-136 provides the guidance for reporting on payment integrity in the Performance and Accountability Report.

Payment reporting

Agencies are required to report annual improper payment estimates for OMB-designated high-priority 

programs and programs that are susceptible to significant improper payments. A program is considered 

to be high priority if it has $2 billion in estimated improper payments. A program is deemed susceptible 

to significant improper payments if its improper payments amount to more than $10 million and more 

than 1.5% of all payments made under that program, or if the program has more than $100 million in 

estimated improper payments. 

Detailed information on improper payments for the U.S. government is available online at www.paymentaccuracy.gov. FCA data are not included on this website because we do not have any programs that were 

designated by OMB as high priority, and our risk assessments did not identify any programs or activities 

that were susceptible to significant improper payments. Thus, we are not required to perform any statistically valid estimates of improper payments or report on root cause identification, corrective actions, or 

reduction targets.

Risk assessments

In accordance with legislative requirements and OMB guidance, we conduct risk assessments at least 

once every three years to identify programs that may have a significant risk of improper payments. We 

perform our assessment on contract payments, purchase cards, travel cards, claims and vouchers, and 

payroll. Following our most recent risk assessment in FY 2017, we determined that our programs and 

activities are low risk and are not susceptible to significant improper payments. The next assessment will 

be for the period ending Sept. 30, 2020.

Payment recapture audits

To recover improper payments, the Improper Payments Elimination and Recovery Act requires agencies 

to conduct payment recapture audits for each program and activity that expends $1 million or more annually — provided that conducting these audits would be cost-effective.

We have determined that a payment recapture audit is not cost-effective for our agency because of the 

low risk for our programs. The benefits of any recaptured amounts would not exceed the cost of a payment recapture audit program. As required by OMB A-123, Appendix C, we have notified both OMB and 

our inspector general of our determination that a payment recapture audit is not cost-effective for FCA. 

OMB concurred with our assessment. 
76 | FCA Performance and Accountability Report — 2019

ARC, our service provider, has internal control procedures to ensure that payments are made properly. 

One such procedure is the post-payment audit in which ARC reviews a random sample of 10% of invoices processed each month. In addition, our agency invoice approvers review payments before they are 

processed to ensure payments are appropriate. We also work closely with ARC to ensure that payroll 

and charge card payments are reviewed and monitored to ensure payments are complete, accurate, and 

timely. Additionally, we perform routine operational reviews and oversight to help identify improper 

payments.

For FY 2019, we identified improper payments amounting to $25,286, or 0.03% of total outlays for the 

year. The improper payments were a combination of travel and vendor overpayments. We have collected 

or are in the process of collecting all overpayments. 

Agency improvement of payment accuracy with the Do Not Pay initiative

Treasury’s Do Not Pay system is the legislatively mandated and OMB-designated source of centralized 

data and analytic services to help agencies verify eligibility and identify and prevent potential fraud, 

waste, and abuse associated with improper payments. We work closely with ARC to ensure that all payments are proper and paid to valid vendors. ARC continually monitors the vendor file in the financial 

system and cross-checks it against the various Do Not Pay databases. This process serves both the prepayment and the pre-award review requirement to ensure that only eligible recipients are paid. To date, we 

have not had any vendors with a match to the Do Not Pay databases.

Fraud Reduction Report

The Fraud Reduction and Data Analytics Act of 2015 requires agencies to take steps to improve financial 

and administrative controls and procedures to assess and mitigate fraud risks. We maintain effective 

processes and systems to detect and prevent potential fraud. Whether an act is in fact fraud is a determination made through the judicial or other adjudicative system and is beyond management’s professional 

responsibility for assessing the likelihood and impact of fraud risk.

Through our internal assessments, in accordance with OMB Circular A-123, we monitor and evaluate 

controls to ensure that our business units are preventing, detecting, and responding to potential fraud. 

No instances of fraud in our programs have surfaced through management’s internal identification and 

reporting mechanisms or from internal and external auditors.
FCA Performance and Accountability Report — 2019 | 77

Civil Monetary Penalty Adjustment 

for Inflation

Under the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, agencies must 

make annual inflation adjustments to civil monetary penalties and report on these adjustments. Table 8 

below shows the adjustments FCA has made this year.

Table 8. Civil monetary penalties annual inflation adjustments

Statutory 

authority

Penalty name 

& description

Year 

enacted

Latest year of 

adjustment 

(via statute or 

regulation)

Current penalty 

(dollar amount 

or range) Bureau name

Location 

for penalty 

update 

details

Section 5.32(a) of 

the Farm Credit 

Act of 1971, as 

amended

Violation of a 

final order

1985 2019 $2,326 84 FR 1354

Section 5.32(a) of 

the Farm Credit 

Act of 1971, as 

amended

Violation of 

the act or 

regulation

1985 2019 $1,052 84 FR 1354

Section 102(f) of 

the Flood Disaster 

Protection Act of 

1973

Pattern or 

practice of 

committing 

violations of 

the National 

Flood 

Insurance 

Program

1994 2019 $2,187 84 FR 1354
78 | FCA Performance and Accountability Report — 2019

Additional Information

The Farm Credit Administration Performance 

and Accountability Report Fiscal Year 2019 is 

available on FCA’s website at www.fca.gov/about/

reports-publications. While supplies last, printed 

copies of this publication and earlier editions may 

be obtained without charge from 

Office of Congressional and Public Affairs

Farm Credit Administration

1501 Farm Credit Drive

McLean, VA 22102-5090

Telephone: 703-883-4056

Fax: 703-790-3260

Email: info-line@fca.gov

The Federal Farm Credit Banks Funding Corporation, with the support of the System banks, prepares the financial press releases and the System’s 

annual and quarterly information statements, 

which contain the System’s combined financial 

statements. Copies are available on the Funding 

Corporation’s website at www.farmcredit-ffcb.com 

or from 

Federal Farm Credit Banks Funding 

Corporation

10 Exchange Place

Suite 1401

Jersey City, NJ 07302

Telephone: 201-200-8000

The Farm Credit System Insurance Corporation 

publishes an annual report. Copies are available on 

FCSIC’s website at www.fcsic.gov or from

Farm Credit System Insurance Corporation

1501 Farm Credit Drive

McLean, VA 22102

Telephone: 703-883-4380

In addition, FCS banks and associations are required by regulation to prepare annual and quarterly financial reports. Copies of these documents 

are available for public inspection at FCA headquarters in McLean, Virginia.