Office of

Inspector General

Semiannual Report to the Congress

April 1 through

September 30, 2010

Number 43

October 27, 2010
Farm Credit Administration Office of Inspector General

1501 Farm Credit Drive

McLean, VA 22102-5090

(703) 883-4030

October 27, 2010

The Honorable Leland A. Strom, Chairman and Chief Executive Officer

The Honorable Kenneth A. Spearman, Board Member

The Honorable Jill Long Thompson, Board Member

Farm Credit Administration

1501 Farm Credit Drive

McLean, Virginia 22102-5090

Dear Chairman Strom, Board Member Spearman, and Board Member Long Thompson:

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

Agency) Office of Inspector General (OIG) for the period April 1 through September 30, 2010. This 

is the forty-third report since the establishment of the OIG on January 22, 1989. 

I am submitting this report in accordance with the Inspector General Act of 1978, as amended (IG

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

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

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

items. 

On July 26, 2010, the OIG issued a final report on an inspection of the Agency’s Adherence to the 

Government in the Sunshine Act. This inspection report contained one agreed-upon action. On 

August 30, 2010, we issued a final report on the audit of the Agency’s and the Office of Secondary 

Market Oversight’s Regulation and Policy Development Processes. No action items resulted from 

this audit. On September 16, 2010, the OIG issued a final report on the inspection of the Agency’s 

Borrower Complaint Processing. Ten agreed-upon actions resulted from this inspection. At the end 

of this reporting period, there were eleven open agreed-upon actions. Please refer to page 6-7 for 

further information.

The OIG contracted with the Bureau of the Public Debt for Brown & Company CPAs, PLLC, to 

perform the audit of FCA’s financial statements for fiscal year 2010. This audit was ongoing at the 

end of this reporting period. Please refer to page 7 for further information.
2

Also initiated and ongoing during this period is the OIG’s annual evaluation of the Agency’s 

compliance with the Federal Information Security Management Act. This annual evaluation is 

conducted by the OIG’s Senior Information Technology Auditor. Please refer to page 7 for further 

information.

If you have any questions, please call me at 4241 or 4030. I look forward to continuing a positive 

relationship between the OIG and the FCA Board which I view as a partnership, striving to 

strengthen FCA operations.

Respectfully,

Carl A. Clinefelter

Inspector General

Enclosure
OIG SEMIANNUAL REPORT TO THE CONGRESS

APRIL 1 – SEPTEMBER 30, 2010

TABLE OF CONTENTS

EXECUTIVE SUMMARY.........................................................................................1

BACKGROUND................................................................................................... 2

FARM CREDIT ADMINISTRATION............................................................................2

FARM CREDIT SYSTEM....................................................................................... 2

MANAGEMENT AND PERFORMANCE CHALLENGES................................................3

FARM CREDIT SYSTEM.................................................................................................3

 SAFETY AND SOUNDNESS.......................................................................................3 

 MISSION.................................................................................................................3

FARM CREDIT ADMINISTRATION............................................................................4

 AGRICULTURAL ECONOMIC DOWNTURN.................................................................4

 AGENCY GOVERNANCE...........................................................................................4

 STRATEGIC PLANNING.................................................................................... 5

 HUMAN CAPITAL............................................................................................. 5

 LEVERAGING TECHNOLOGY............................................................................ 5

AUDIT, INSPECTION, AND EVALUATION REPORTS ISSUED......................................6

INSPECTION OF FCA’S ADHERENCE TO THE GOVERNMENT IN THE SUNSHINE ACT ..........6

AUDIT OF FCA’S AND OSMO’S REGULATION AND POLICY DEVELOPMENT PROCESSES ..... 6

INSPECTION OF FCS BORROWER COMPLAINT PROCESSING .......................................7

AUDITS, INSPECTIONS, AND EVALUATIONS IN PROGRESS.......................................7

INDEPENDENT FINANCIAL AUDIT OF FCA FOR FY 2010..................................................7

FEDERAL INFORMATION SECURITY MANAGEMENT ACT

 EVALUATION FOR FY 2010................................................................................7

STATUS OF UNIMPLEMENTED RECOMMENDATIONS.............................................. 8

INVESTIGATIONS.................................................................................................8

LEGISLATION AND REGULATIONS........................................................................9

OTHER ACTIVITIES..............................................................................................11

QUARTERLY SURVEY OF FARM CREDIT SYSTEM INSTITUTIONS..................................11

STAFF PARTICIPATION IN ACTIVITIES OF THE PROFESSIONAL COMMUNITY...................11

STAFF PARTICIPATION IN AGENCY ORGANIZATIONS................................................ 12

STAFF DEVELOPMENT.......................................................................................12

ANNEX...............................................................................................................12

APPENDICES

APPENDIX A – INDEX OF REPORTING REQUIREMENTS..............................................13

APPENDIX B – AUDIT, INSPECTION, AND EVALUATION REPORTS ISSUED.......................14

APPENDIX C – REPORTS WITH QUESTIONED COSTS................................................ 15
OIG SEMIANNUAL REPORT TO THE CONGRESS

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APPENDIX D – REPORTS WITH RECOMMENDATIONS THAT FUNDS

 BE PUT TO BETTER USE...............................................................16

APPENDIX E – PEER REVIEWS CONDUCTED OF THIS OFFICE....................................17

APPENDIX F – PEER REVIEWS CONDUCTED BY THIS OFFICE.................................... 18

APPENDIX G – FCA ORGANIZATIONAL CHART.........................................................19

APPENDIX H – OFFICE OF INSPECTOR GENERAL ORGANIZATIONAL CHART...................20

APPENDIX I – GLOSSARY OF TERMS.................................................................... 21
OIG SEMIANNUAL REPORT TO THE CONGRESS

APRIL 1 – SEPTEMBER 30, 2010

1

EXECUTIVE SUMMARY

This Semiannual Report to the Congress summarizes the activities and 

accomplishments of the Farm Credit Administration’s (FCA or Agency) Office of 

Inspector General (OIG) for the period April 1 through September 30, 2010. The 

OIG’s efforts were directed toward implementing the OIG’s fiscal year (FY) 2010

strategic and operational plan and budget; performing audits, inspections, and 

evaluations of FCA programs and operations; conducting investigations, as 

necessary; independently and confidentially surveying Farm Credit System (FCS or 

System) institutions regarding the effectiveness of the Agency’s examination function 

and examiners; and providing objective, independent reporting and counsel to the 

Agency Chairman on FCA programs and operations.

During this reporting period, the OIG issued one audit report and two inspection 

reports. On July 26, a final inspection report on the Agency’s Adherence to the 

Government in the Sunshine Act was issued. On August 30, a final audit report on 

the Agency’s and the Office of Secondary Market Oversight’s (OSMO) Regulation 

and Policy Development Processes was issued. On September 16, a final 

inspection report on the Agency’s Borrower Complaint Processing was issued. As a 

result of these reports, there were 11 open agreed-upon actions at the end of this 

reporting period. See page 6-7 for further information. 

The independent financial statement audit of FCA for FY 2010 was initiated. The 

OIG contracted with the Bureau of the Public Debt (BPD) for Brown and Company 

CPAs, PLLC (Brown & Co.) to perform the audit of FCA’s financial statements for FY 

2010. This audit was ongoing at the end of this reporting period.

Also initiated and ongoing during this period is the OIG’s annual evaluation of the 

Agency’s compliance with the Federal Information Security Management Act 

(FISMA). This annual evaluation is conducted by the OIG’s Senior Information 

Technology (IT) Auditor.

Additionally, the OIG issued two quarterly reports to the Chief Examiner and FCA 

Chairman on results of OIG surveys of System institutions regarding the examination 

function and the examiners. These reports were for the quarters ended March 31 

and June 30, 2010.
OIG SEMIANNUAL REPORT TO THE CONGRESS

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During the period, the OIG updated and issued its Strategic and Operating 

Performance Plan and Budgets for FYs 2011-2012 (SOPP). The SOPP is on the 

OIG’s website at

http://www.fca.gov/Download/InspectorGeneral/Strategic&PerformancePlans/S&OP

P11-12.pdf. Included in the SOPP is the OIG’s Audit Plan covering FYs 2011-2012 

and beyond.

The OIG maintains five positions: the Inspector General (IG), a General Counsel, a 

Senior Auditor, a Senior IT Auditor, and an Administrative Assistant. Appendix G

and Appendix H reflect the organizational structure of FCA and the OIG, 

respectively.

BACKGROUND

Farm Credit Administration

The FCA is an independent Federal agency of the United States government 

responsible for the regulation and examination of FCS institutions chartered under 

the Farm Credit Act of 1971, as amended (Farm Credit Act). FCA is also a 

“designated Federal entity” within the meaning of the Inspector General Act of 1978, 

as amended (IG Act). 

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

assessments to the institutions it regulates. The Agency’s FY 2010 budget was 

$54,832,588. Assessments by FCA to FCS institutions for FY 2010 were

$49,100,000, with other sources of funding totaling $5,732,588. The OIG’s FY 2010 

budget was $1,088,219. 

At the end of this reporting period, FCA had 288 employees, about half of which are 

examiners located in five field offices. At the end of the prior semiannual reporting 

period, the Agency had 274 employees. The increase is primarily due to the Office 

of Examination (OE) hiring entry-level examiner trainees. 

Farm Credit System

The FCS is a Government-sponsored enterprise comprised of 5 Farm Credit banks 

and 87 lending associations in all 50 states and Puerto Rico that primarily make 

loans to agriculture. The System raises funds by selling securities in the national 

and international money markets through its special purpose entity, the Federal 

Farm Credit Banks Funding Corporation. These securities are not guaranteed by 

the U.S. Government. 
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The Federal Agricultural Mortgage Corporation (Farmer Mac), also a part of the 

FCS, is chartered by the Federal government to provide a secondary market for 

agricultural mortgage loans. Farmer Mac is publicly traded and issues its own debt 

securities.

Additionally, there are four active service corporations organized under the Farm 

Credit Act that provide services to FCS entities and eligible borrowers.

MANAGEMENT AND PERFORMANCE CHALLENGES

As part of the Agency’s annual Performance and Accountability Report, the IG is 

required by law to provide a summary statement on the most serious management 

and performance challenges facing the Agency. These challenges fall into two 

general categories. First are the challenges related to the FCA’s mandate of 

ensuring a safe, sound, and dependable FCS as a source of credit and related 

services to agriculture. Some of these challenges may be influenced by events that 

are outside the control of the Agency. Second, but no less important, are the 

challenges related to Agency operations.

Farm Credit System

Safety and Soundness

The System is a lender to a single industry, agriculture, and is therefore vulnerable to 

the economic volatility and risks in that industry. While the FCS remains generally 

safe and sound, adversity in several major commodity groups has caused 

deterioration in a number of FCS institutions. The Agency’s challenge is to continue 

to ensure the System’s ability to withstand such vulnerabilities and remain safe and 

sound in the long-term. 

Mission

The environment facing agriculture, rural America, and the institutions of the FCS is 

ever-changing, presenting new opportunities and altering historical perspectives on 

System operations. FCA’s challenge is to continue to maintain an independent and 

objective, yet flexible and responsive, regulatory environment for the System, geared 

to continually ensuring the FCS fulfills its public policy purpose. 
OIG SEMIANNUAL REPORT TO THE CONGRESS

APRIL 1 – SEPTEMBER 30, 2010

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Farm Credit Administration

Agricultural Economic Downturn

There are many factors in agriculture today that have caused deterioration in a 

number of FCS institutions and may cause continued stress for FCS institutions. For 

example, 

• the System has experienced rapid growth for several years, which has had 

the effect of eroding the System’s capital to assets ratio;

• large shared assets among many System institutions are experiencing 

serious difficulty; 

• several major commodity groups are experiencing extreme stress;

• asset quality at many associations and several Farm Credit banks has 

deteriorated; and 

• land values, which may not be sustainable, are high.

Thus, a challenge for the Agency is to ensure its ongoing ability to timely assess 

economic and operational conditions affecting the welfare of System institutions, and 

to take preemptive or remedial actions to ensure the ongoing safety and soundness 

of the System. The first line of preparedness for the Agency in accomplishing this is 

an effective examination and risk assessment program. Aligned with this is the 

challenge for the Agency to effectively and timely utilize its enforcement authorities. 

When significant deterioration in a System institution(s) is first evident, the Agency 

should expeditiously consider implementing appropriate rehabilitative enforcement 

measures. 

Agency Governance

In early FY 2010, the FCA Board received two new members, filling out the FCA 

Board’s statutory three-person complement. One new member came on the FCA 

Board in October 2009 and the other in March 2010. This reemphasizes the need 

for the Chairman and Agency staff to ensure an environment in which new members 

may quickly learn their duties and responsibilities, and the mission and functioning of 

the Agency and the System. The Board member arriving in October 2009 received 

a newly implemented orientation program. The challenge for the Agency is to 

formalize and institutionalize an effective orientation and ongoing training program 

for FCA Board members. This should enable FCA Board members to readily 

become knowledgeable about Agency and System operations and issues, and be 

able to properly focus Agency resources through, for example, the strategic planning 

mechanism.
OIG SEMIANNUAL REPORT TO THE CONGRESS

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Strategic Planning

Since the adoption in May 2008 of the strategic plan for FYs 2008-2013, the FCA 

Board has a new Chairman and two new FCA Board Members. This change in 

Board leadership and the two new FCA Board Members provide an opportunity and 

a challenge to ensure the vision of the newly constituted FCA Board is timely 

incorporated into the next strategic plan. 

In 2005, the FCA Board established a Strategic Planning Committee (SPC) 

composed of Agency staff to facilitate FCA Board input into the plan and the 

planning process. The SPC should ensure the updating and issuance by the FCA 

Board of the next 6-year strategic plan covering FYs 2011-2016.

Human Capital

In 2006, a 5-year strategic human capital plan was completed spanning FYs 2007-

2011. The Agency has adopted a strategy of annually updating the plan, resulting in 

a moving 5-year plan. The plan is comprehensive and, because of the ongoing 

updating, reflective of current human capital issues facing the Agency. For example, 

in addressing the attrition of seasoned staff, the Agency has been actively recruiting 

and hiring at both the entry and midcareer-levels, particularly as it pertains to 

ensuring the ongoing capability of examination staff. FCA’s challenge is to continue 

to emphasize, implement, and update the human capital plan to ensure FCA has the 

staff it needs to effectively regulate a constantly evolving FCS, as managing human 

capital is an ever-present and evolving necessity. This is particularly important as it 

applies to the training and commissioning program for newly hired entry and 

midcareer-level examination staff.

Leveraging Technology

The Agency’s ability to leverage investments in new technologies is a key 

element in management’s efforts to continually improve Agency performance by 

increasing the efficiency and effectiveness of operations. The Agency has an 

active information resource management planning process that identifies, 

reviews, and prioritizes new IT initiatives that will improve Agency operations.

Over the past couple of years, the Agency made significant investments in new 

technologies and began implementing several tools that improve 

communication, collaboration, and efficiency of operations. FCA’s challenge is 

to take full advantage of the new capabilities the IT infrastructure provides. The 

successful implementation of new technologies will provide FCA staff with the IT
OIG SEMIANNUAL REPORT TO THE CONGRESS

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6

tools and skills that will enable the Agency to:

• improve the quality and availability of data without creating an undue 

burden on the FCS;

• streamline business processes and enhance communication and 

collaboration to improve the effectiveness of how FCA interacts with the 

FCS, the public, and business partners;

• build business intelligence that will provide decision makers with timely 

management information;

• develop an electronic recordkeeping and knowledge management 

capability that effectively manages electronic data, documents, and 

reports; and protect FCA information systems and data from increasing 

external and internal threats.

AUDIT, INSPECTION, AND EVALUATION REPORTS ISSUED

The OIG conducts all audits in accordance with Government Auditing Standards 

issued by the Comptroller General of the United States for audits of Federal 

organizations, programs, activities, and functions. Inspections and evaluations are 

conducted in accordance with the Council of the Inspectors General on Integrity and 

Efficiency (CIGIE) Quality Standards for Inspections. Copies of most OIG reports 

are available on the FCA OIG web site www.fca.gov/home/inspector.html, or by 

contacting the OIG at (703) 883-4030, or by TTY at (703) 883-4359, or by e-mail at 

ig_information@fca.gov.

Adherence to the Government in the Sunshine Act (Sunshine Act)

The OIG issued the final inspection report on July 26, 2010. The inspection’s 

objectives were to determine whether FCA adheres to the Sunshine Act and 

whether improvement is warranted. While the inspection found the Agency 

adheres to the Sunshine Act, there was one agreed-upon action that resulted. 

Regulation and Policy Development Processes

The OIG issued the final audit report on August 30, 2010. The audit’s objective was 

to assess whether the Agency’s and OSMO’s regulation and policy development 

process is operating efficiently and complies with applicable Federal 

requirements. It was determined that the Agency and OSMO are in compliance. 

There were no action items as a result of this audit.
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Borrower Complaint Processing

The OIG issued the final inspection report on September 16, 2010. The inspection’s 

objective was to review FCA’s process for reviewing, tracking, and responding to 

FCS borrowers’ complaints and identify whether improvements are needed. 

While the borrower complaint handling process was determined to be 

functioning satisfactorily, ten agreed-upon actions resulted from the inspection. 

These agreed-upon actions were administrative in nature and designed to help 

strengthen an already satisfactorily functioning process.

AUDITS, INSPECTIONS, AND EVALUATIONS IN PROGRESS

Independent Financial Audit of FCA for FY 2010

The Accountability of Tax Dollars Act of 2002 extended to FCA and certain other 

agencies a requirement to submit to Congress and the Office of Management and 

Budget (OMB) an audited financial statement each fiscal year. 

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

contracted with the BPD for Brown & Co. to perform the audit of FCA’s financial 

statements for FY 2010. The audit remained ongoing at the end of this reporting 

cycle.

Federal Information Security Management Act Evaluation for FY 2010

The evaluation of the Agency’s compliance with FISMA for FY 2010 is being 

performed by the OIG’s Senior IT Auditor, using guidelines established by 

FISMA, OMB, and the National Institute of Standards and Technology. This 

evaluation also was ongoing at September 30, 2010.
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STATUS OF UNIMPLEMENTED RECOMMENDATIONS

At the beginning of the reporting period, there were no open action items resulting 

from OIG audits, inspections, or evaluation reports. Eleven action items were 

opened during the reporting period. 

Audit, Inspection, and Evaluation Agreed-Upon Actions and 

Recommendations

Report Issued

Open During 

this 6-Month 

Period

Final 

Management 

Actions During 

this Period

Open on 

10/01/2010

Adherence to the 

Government in the 

Sunshine Act

7/26/2010 1 0 1

Regulation and Policy 

Development 

Processes

8/30/2010 0 0 0

Borrower Complaint 

Processing 9/16/2010 10 0 10

Total 11 0 11

INVESTIGATIONS

No hotline calls were received alleging impropriety that would fall within the purview 

of the OIG.

OIG Hotline calls and e-mails dealing with borrower complaints concerning FCS 

institutions and other FCS issues were referred to the FCA office or other Federal 

agency responsible for reviewing such matters. 

No investigations were opened during the reporting period. 
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LEGISLATION AND REGULATIONS

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

regulations, the IG or Counsel to the IG attend joint briefings of the FCA Board on 

regulations at the proposed and final stages. The following were reviewed by 

Counsel to the IG:

Legislation

1) Public Law 111-203, July 21, 2010, Dodd-Frank Wall Street Reform and 

Consumer Protection Act

2) Public Law 111-204, Improper Payment Elimination and Recovery Act of 

2010, July 24, 2010: reduce and recover improper payments. IG is 

responsible for determining Agency compliance with seven requirements.

3) S. 629: The Part-Time Reemployment of Annuitants Act

4) S. 1132: The Law Enforcement Officers Safety Act Improvements Act of 

2010

5) S. 3831: Creating IG for Bureau of Financial Protection

6) S. 3325: The Federal Contracting Oversight and Reform Act

7) S. 139 or S. 1490: The Data Breach and Personal Privacy and Security 

Acts of 2009

8) S. 372 or H.R. 1507: The Whistleblower Protection Enhancement Act of 

2009

9) H.R. 3848 and H.R. 5815: Inspector General Improvement Act of 2009

10) H.R. 885: Improved Financial and Commodity Markets Oversight and 

Accountability Act

11) S. 3217: The Restoring American Financial Stability Act

12) H.R. 4173: The Wall Street Reform and Consumer Protection Act of 2009

13) H.R. 5985: Javits-Wagner-O’Day Act 

14) H.R. 5548, S. 3480: The Protecting Cyberspace as a National Asset Act
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15) H.R. 4900, S. 921: The Federal Information Security Act

16) H.R. 4858: The Public Information Act of 2010

17) H.R. 4983: The Transparency of Government Act

18) H.R. 2142: The Government Efficiency, Effectiveness, and Performance 

Improvement Act

19) H.R. 553: The Reducing Over-Classification Act

20) H.R. 5726, S. 3323: The Federal Contracting Oversight and Reform Act

21) U.S. Office of Government Ethics proposal to modernize Ethics in 

Government Act of 1978, 5 U.S.C. App

Final Rules

22) S.A.F.E. Act

23) Direct Final Technical Changes 12 C.F.R. Part 604, 607, 612, 614, 615, 618 

and 627

24) Unified Agenda

Proposed Rules

25) Loan Policies and Operations – Loan Purchases from FDIC

26) Lending and Leasing Limits and Risk Management

Advanced Notice of Proposed Rulemaking

27) Capital Adequacy; Basel Accord Tier 1 and Tier 2 Capital Components

28) Farmer Mac Non Program Investments and Liquidity

Bookletters (BL) 

29) Farm Credit System Bank Merger Applications (BL- 063)

30) Evaluating Strategies and Risks for Loan Pricing and Structure (BL- 062)

Briefings

31) Mission Related Investment Update
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32) Young, Beginning, Small Farmers -Mission Performance 2009 Results

Notice and Request for Comments

33) Joint and Several Liability Reallocation Agreement

OTHER ACTIVITIES

Quarterly Survey of Farm Credit System Institutions

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

consistency of the Agency’s examination function and examiners. The OIG issues a 

quarterly report and a summary report on the surveys’ results at the end of each FY 

to the Chief Examiner and the FCA Board.

During this 6-month period, we sent surveys to the Audit Committee Chairmen and 

Chief Executive Officers of 32 FCS institutions. Quarterly reports for the 3-month 

periods ended March 31 and June 30, 2010 were issued by the OIG to the Chief 

Examiner and the Chairman. 

Staff Participation in Activities of the Professional Community

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

the mission of the Inspectors General community, as well as their individual 

professional development. Most staff members are actively involved in one or more 

professional organizations, as well as ad hoc activities of the CIGIE. 

The IG serves as the Vice Chairperson of CIGIE, helps chair the monthly meetings 

of all Inspectors General comprising CIGIE, meets monthly with the Inspectors 

General from the other Federal financial regulatory agencies, and participates as a 

member of the CIGIE’s Inspection and Evaluation (I&E) Committee. 

The OIG General Counsel meets monthly with counsels to the other Inspectors 

General. Counsel also attends Directors of Investigations meetings. Counsel also 

led, on behalf of CIGIE and the Council of Counsels to Inspectors General, the 

development of a course for new Offices of Inspector General attorneys.

The OIG Senior Auditor and Senior IT Auditor attend Federal Audit Executive 

Committee meetings and conferences. The Senior Auditor participates as a 

member of the I&E Committee’s Roundtable. The Senior IT Auditor also attends 

local ISACA (formerly known as Information Security and Control Association) 

meetings and Federal information security and audit meetings. The Senior IT 

Auditor is a member of CIGIE’s administrative operations task force charged with 
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developing a business, staffing, and financial plan as well as identifying and 

implementing the infrastructure needed to establish CIGIE operations.

In addition to all administrative duties, the OIG Administrative Assistant handles the 

registration and ongoing interface with the Institute of Internal Auditors for the 

auditors in 20 Offices of Inspector General at designated Federal entities.

Staff Participation in Agency Organizations

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

Staff Development

OIG employees continually seek ways to improve skills and become knowledgeable 

in the initiatives of the community of Inspectors General. Audit and legal staff must 

meet continuing education requirements. Individual development plans are used to 

identify long and short-term career goals along with specific training and 

developmental needs. These plans are geared to enhance individual skills in the 

performance of official duties and meet the criteria needed to achieve OIG 

performance goals and objectives.

ANNEX

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

FY 2008. 

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

include an annex to their semiannual reports as follows:

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

significant audit findings; 

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

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

questioned, or disallowed. 

Significant audit findings are defined as unsupported, questioned, or disallowed 

costs in excess of $10,000,000, or other findings that the Inspector General 

determines to be significant. It defines contracts as a contract, an order placed 

under a task or delivery order contract, or a subcontract.

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

during this reporting period.
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APPENDIX A

INDEX OF REPORTING REQUIREMENTS Page

Section 4(a)(2) Review of Legislation and Regulations 9 – 11

Section 5(a)(1) Significant Problems, Abuses, and Deficiencies None

Section 5(a)(2) Recommendations for Corrective Action none

Section 5(a)(3) Prior Recommendations Not Yet Implemented none

Section 5(a)(4) Matters Referred to Prosecutive Authorities none

Section 5(a)(5) Summary of Instances Where Information Was Unreasonably 

Refused or Not Provided none

Section 5(a)(6) List of OIG Audit/Inspection Reports Issued During the Period 6 - 7

Section 5(a)(7) Summary of Significant Reports Issued During the Period 6 - 7

Section 5(a)(8) Statistical Table on Management Decisions with Questioned Costs 15

Section 5(a)(9) Statistical Table on Management Decisions on Recommendations that 

Funds be put to Better Use 14

Section 5(a)(10) Summary of Each Audit Over Six Months Old for Which No 

Management Decision Has Been Made none

Section 5(a)(11) Significant Revised Management Decisions none

Section 5(a)(12) Significant Management Decisions with Which the Inspector General 

Disagreed none

Section 5(a)(13) Compliance of Agency Financial Management System 7

FY 2008 NATIONAL DEFENSE AUTHORIZATION ACT CITATION 

AND REQUIREMENT Page

Section 845 Review of Legislation and Regulations 9 - 11
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APPENDIX B

Audit, Inspection, and Evaluation Reports Issued

Title of Report

Number of Agreed 

Upon Actions/

Recommendations

Questioned 

Costs

Recommendations 

That Funds Be Put 

to Better Use

Adherence to the Government in 

the Sunshine Act 1 $ 0 $ 0

Regulation and Policy 

Development Processes

0 $ 0 $ 0

Borrower Complaint Processing 10 $ 0 $ 0

Total 11 $ 0 $ 0
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APPENDIX C

Reports with Questioned Costs

Number Dollar Value

Reports Recommendations

Questioned 

Costs

Unsupported 

Costs

A. For which no management decision has 

been made by the commencement of 

the reporting period

B. Which were issued during the reporting 

period

Subtotals (A+B)

C. For which a management decision was 

made during the reporting period

(i) dollar value of disallowed costs

(ii) dollar value of costs not disallowed

D. For which no management decision has 

been made by the end of the reporting 

period

E. For which no management decision was 

made within six months of issuance

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0

$ 0
OIG SEMIANNUAL REPORT TO THE CONGRESS

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APPENDIX D

Reports with Recommendations that Funds be Put to Better Use

Number of 

Reports

Number of 

Recommendations Dollar Value

A. For which no management decision has been 

made by the commencement of the reporting 

period

0 0 $ 0

B. Which were issued during the reporting period 0 0 $ 0

Subtotals (A + B) 0 0 $ 0

C. For which a management decision was made 

during the reporting period 0 0 $ 0

(i) dollar value of recommendations that 

were agreed to by management 0 0 $ 0

--based on proposed management action 0 0 $ 0

--based on proposed legislative action 0 0 $ 0

(ii) dollar value of recommendations that 

were not agreed to by management 0 0 $ 0

D. For which no management decision has been 

made by the end of the reporting period 0 0 $ 0

E. For which no management decision was made 

within six months of issuance 0 0 $ 0
OIG SEMIANNUAL REPORT TO THE CONGRESS

APRIL 1 – SEPTEMBER 30, 2010

17

APPENDIX E

PEER REVIEWS CONDUCTED OF THIS OFFICE

In accordance with Section 989C of the Dodd-Frank Wall Street Reform and Consumer 

Protection Act signed by the President on July 21, 2010, which amended the IG Act, the 

following information is provided:

IG Act’s Section 5(a)(14)(A) – No external peer review of this office’s audit function was

conducted during this reporting cycle.

A peer review of our audit function by the Commodity Futures Trading Commission was 

scheduled for this reporting period but was delayed. It was conducted in October 2010, 

but peer review results were not available for inclusion in this report.

IG Act’s Section 5(a)(14)(B) – The most recent external peer review of this office’s audit 

function was for the year ended September 30, 2006, and was issued April 30, 2007. It 

determined that “...the system of quality control for the audit function of the FCA OIG 

in effect for the year ended September 30, 2006, has been designed to meet the 

requirements of the quality control standards established by the Comptroller 

General of the United States for a Federal government audit organization and was 

complied with during the year ended to provide the OIG with reasonable assurance 

of conforming with applicable auditing standards, policies, and procedures.” As 

required by the IG Act’s Section 5(a)(15), this office reports that all six 

recommendations in the April 30, 2007, audit peer review report have been fully 

implemented. The following is a link to this peer review report:

http://www.fca.gov/Download/InspectorGeneral/Peer/2006PeerReviewOIGAuditFunctio

n.pdf

The most recent external peer review of this office’s investigation function was for 

the year ended September 30, 2007. It was performed by the Securities and 

Exchange Commission’s Office of Inspector General and issued December 26, 

2007. It determined that “...the system of internal safeguards and management 

procedures for the investigation function of the FCA OIG for the year ended 

September 30, 2007, are in full compliance with the quality standards established

by the PCIE/ECIE. These safeguards and procedures provide reasonable 

assurance of conforming with professional standards in the conduct of its 

investigations.” There were no recommendations that resulted from this peer 

review. The following is a link to this peer review report:

http://www.fca.gov/Download/InspectorGeneral/Peer/2007PeerReviewOIGInvestigative

Function.pdfInsert
OIG SEMIANNUAL REPORT TO THE CONGRESS

APRIL 1 – SEPTEMBER 30, 2010

18

APPENDIX F

PEER REVIEWS CONDUCTED BY THIS OFFICE

In accordance with Section 989C of the Dodd-Frank Wall Street Reform and Consumer 

Protection Act signed by the President on July 21, 2010, which amended the IG Act, the 

following information is provided:

IG Act’s Section 5(a)(16) – This office did not conduct any peer review of another Office of 

Inspector General during this reporting period.

The most recent audit peer review conducted by this office was of the Equal 

Employment Opportunity Commission’s Office of Inspector General (EEOCOIG). Our 

report was for the year ended March 30, 2008, and was issued September 4, 2008. Our 

report concluded that “...the system of quality control for the audit function of the OIG in 

effect for year ended March 30, 2008, has been designed in accordance with the quality 

standards established by the Comptroller General of the United States for a Federal 

Government audit organization and was complied with for the year ended to provide the 

OIG with reasonable assurance of conforming with applicable auditing standards, 

policies, and procedures.” While not impacting our opinion, our report contained seven 

recommendations designed to strengthen the EEOCOIG’s audit function. The 

EEOCOIG agreed with all recommendations. We have been apprised by the EEOCOIG 

that all have been implemented.

The most recent investigative peer review conducted by this office was of the 

Government Printing Office’s Office of Inspector General (GPOOIG). Our report was for 

the year ended February 7, 2005, and was issued June 1, 2005. Our report concluded 

that “...the system of internal safeguards and management procedures for the 

investigative function of GPO’s Office of Inspector General is in full compliance with the 

quality standards established by the PCIE/ECIE.” While not impacting our opinion, our 

report contained five suggestions with which the GPOOIG agreed. We have been 

advised by the GPOOIG that all have been implemented.
OIG SEMIANNUAL REPORT TO THE CONGRESS

APRIL 1 – SEPTEMBER 30, 2010 

19

APPENDIX G 

FCA Organizational Chart

Farm Credit Administration Board

Leland A. Strom, Chairman

Kenneth A. Spearman, Member

Jill Long Thompson, Member

Office of the Chairman 

and CEO

Leland A. Strom

Office of the Chief 

Operating Officer

William J. Hoffman

Office of 

Inspector General1

Carl A. Clinefelter

Secretary to the 

Board

Roland E. Smith

Office of 

Congressional and 

Public Affairs

Michael A. Stokke

Office of Secondary 

Market Oversight2

Daniel Fennewald 

Acting

Office of 

Examination

S. Robert Coleman

Office of 

Regulatory Policy

Andrew D. Jacob

Office of 

General Counsel3

Charles R. Rawls

Office of Management 

Services

Stephen G. Smith

1The Dodd-Frank Wall Street and Consumer Protection Act, Public Law 111-203, amended the Inspector General Act, 5 U.S.C. App 3, 

changing the meaning of “head of the designated Federal entity.” The effect is that the Inspector General now reports to the full Board. Prior 

to the amendment, the FCA Chairman was the “head of the designated Federal entity” under the IG Act and the IG reported to the 

Chairman.

2 Reports to the Board for policy and to the CEO for administration.

3 Maintains a confidential advisory relationship with each of the Board members.
OIG SEMIANNUAL REPORT TO THE CONGRESS

APRIL 1 – SEPTEMBER 30, 2010 

20

APPENDIX H

Office of Inspector General Organizational Chart

Carl C

Inspector General

Carl A. Clinefelter

Counsel to the IG

Elizabeth M. Dean

Senior Auditor

Veronica G. McCain

Senior IT Auditor

Tammy F. Rapp

Administrative 

Assistant

Debra M. Miller

 September 4, 2008

Carl A. Clinefelter, Inspector General Date
OIG SEMIANNUAL REPORT TO THE CONGRESS

APRIL 1 – SEPTEMBER 30, 2010

21

APPENDIX I

Glossary of Terms

Agency – Farm Credit Administration

BL – Bookletter

BPD – Bureau of the Public Debt

Brown & Company – Brown & Company CPAs, PLLC

CIGIE – Council of the Inspectors General on Integrity and Efficiency

DFE – Designated Federal Entity

E.O. – Executive Order

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

Farmer Mac – Federal Agricultural Mortgage Corporation

FCA – Farm Credit Administration

FCS – Farm Credit System 

FISMA – Federal Information Security Management Act

FY – Fiscal Year

H.R. – House Resolution

IG – Inspector General

IG Act – Inspector General Act of 1978, as amended

I&E – Inspection and Evaluation

ISACA – Information Security and Control Association

IT – Information Technology 

OE – Office of Examination

OIG – Office of Inspector General

OMB – Office of Management and Budget

PAR – Performance and Accountability Report

SOPP – Strategic and Operating Performance Plan and Budgets for 

 FY 2011-2012

SPC – Strategic Planning Committee

System – Farm Credit System
OIG SEMIANNUAL REPORT TO THE CONGRESS

APRIL 1 – SEPTEMBER 30, 2010

22

REPORT

Fraud | Waste | Abuse | Mismanagement

FARM CREDIT ADMINISTRATION

OFFICE OF INSPECTOR GENERAL

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

• Fax: (703) 883-4059

• E-mail: fca-ig-hotline@rcn.com

• Mail: Farm Credit Administration

Office of Inspector General

1501 Farm Credit Drive

McLean, VA 22102-5090