oversight

FY 2005 FCS Survey

Published by the Farm Credit Administration, Office of Inspector General on 2005-11-09.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

Office of
Inspector General
                               REPORT ON THE
                       ANNUAL SURVEY OF THE
              FARM CREDIT SYSTEM INSTITUTIONS

                                 Fiscal Year 2005




                             November 2005
Memorandum                                                       Farm Credit Administration
                                                                 1501 Farm Credit Drive
                                                                 McLean, Virginia 22102-5090




November 9, 2005




To:           Thomas G. McKenzie, Chief Examiner
              Office of Examination

From:         Carl A. Clinefelter
              Inspector General

Subject:      Report on the Annual Survey of the Farm Credit System Institutions


The Office of Inspector General is pleased to issue the results of its survey of the Farm Credit
System (FCS) institutions for Fiscal Year 2005. The survey’s purpose is to measure the quality
and consistency of the Agency’s examination and enforcement functions. However, during this
reporting period, there were no enforcement actions taken by the Agency.

Overall, FCS institutions continued to provide favorable ratings on the examination function.
Several examiners received particularly high praise for their professionalism.

We sent 90 surveys and received 57 responses. The 63 percent response rate is a significant
decrease over last year’s rate of 75 percent.

This office will be exploring ways over the next several months to promote participation by those
surveyed and to enhance the survey’s meaningfulness. Part of this process will be to engage
your office in a discussion regarding this matter.


Attachment

Copy to: Nancy C. Pellett, Chairman and CEO
         Douglas L. Flory, FCA Board Member
         Dallas P. Tonsager, FCA Board Member
         Keith H. Heffernan, Chief of Staff
                         Report on the Annual Survey
                                    of t he
                        Farm Credit System Institutions
                               Fiscal Year 2005

                                                 Table of Contents




Background ................................................................................................................ 1

Objectives, Scope and Methodology .......................................................................... 1

Analysis of Responses ............................................................................................... 2

Correlations and Observations................................................................................... 3

Summary of Comments by Respondents................................................................... 6

Appendix I – Survey Rating Responses to Questions 1 – 11 ..................................... 7

Appendix II – Survey Written Responses to Questions 12a, 12b and 24 ................. 13

Appendix III – Numeric Results of Responses Received to Questions 1–11 ........... 18

Appendix IV - Comparison of Average Ratings for Fiscal Years 2000-2005 ............ 19

Appendix V – Graphs of Response Rate and Average Rating ................................. 20




                                                                                                                                i
                       Report on the Annual Survey
                                  of the
                      Farm Credit System Institutions
                             Fiscal Year 2005

                                         BACKGROUND

The Farm Credit Administration (FCA or Agency) is an independent Federal financial
regulatory agency of the United States government with regulation and examination
responsibilities for the Farm Credit System (FCS) banks, associations, and related
entities that are chartered under the Farm Credit Act of 1971, as amended.


The Office of Inspector General (OIG) established this on-going survey of FCS
institutions as a means to provide Agency management with feedback on the quality
and consistency of FCA’s examination and enforcement functions.


                       OBJECTIVES, SCOPE AND METHODOLOGY

The survey objective was to obtain candid feedback from FCS institutions for insight as
to how well FCA is performing its examination and enforcement functions.

The survey instrument included statements designed to rate and monitor Agency
performance of examination and enforcement activities in the following specific areas:

•   the effectiveness of FCA’s communications with institutions;
•   the reasonableness of examiners’ requests for data and information;
•   the quality of examiners’ decision making during the exam process;
•   the quality of written examination reports;
•   the professionalism of FCA examination staff; and
•   examiners’ responsiveness to institutions’ concerns throughout the examination
    process.

The questions along with the responses received throughout the fiscal year are included
as Appendix I and II. A numeric breakdown of answers received is included as
Appendix III.




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The OIG e-mailed the survey to the chief executive officer of each FCS institution after
the FCA’s Office of Examination presented its Report of Examination to the institution
board, or on issuance of the report if no board presentation was planned. We asked the
board and management to jointly complete the survey and encouraged narrative
comments. All institutions were asked to answer questions 1 through 12. The
institutions completed the survey using the online survey link, mailed in a paper copy or
faxed the survey directly to the OIG. The OIG analyzed, summarized, and ensured the
confidentiality of the responses.


Questions 13-23 pertained to institutions operating under enforcement action.
However, no responses were received to these questions as no institutions were
currently, or within the past two years, under an enforcement action.


During FY 2005, OIG sent 90 surveys and received 57 responses—a 63 percent
response rate. This is a decrease of 12 percent from the last reporting period.
Beginning in 1996, the OIG has sent 1319 surveys and received 928 replies—a 70
percent overall response rate over the 10-year period.


                                 ANALYSIS OF RESPONSES

Overall ratings for FY 2005 continue to be favorable. The survey asked respondents to
rate each statement from 1 (completely agree) to 5 (completely disagree). The lower
the number the more favorable the result. The average rating for the eleven survey
statements applicable to all institutions was 1.71. This is a slight decrease from FY
2004 (1.64) and FY 2003 (1.60). (See Appendix IV)


Over 89 percent of the responses either agreed or completely agreed. Just under 5
percent either disagreed or completely disagreed. Neutral responses accounted for 6
percent of the responses. The best individual average rating (1.32) was received for
question 8, which reads, “The examination team acted courteously and professionally.”
Question 8 has received the best overall rating since the inception of the survey.


The least favorable average rating of 1.95 (still a favorable rating) was for question 9.
Question 9 reads, “The examiner’s recommendations for correction actions were
reasonable and consistent with FCA’s role as an arm’s length regulator.”



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                          CORRELATIONS AND OBSERVATIONS

As part of our analysis, we sorted the data to find out if there was any meaningful
correlation between ratings given on the survey and the following attributes: institution
size; institution type; CAMELS rating; FCS district; and examining field office.


                                    INSTITUTION SIZE

                          Number of Range of Average Overall Average Overall Average
     Total Assets
                         Institutions    Rating          Rating          Rating
      (millions)
                         Responding     FY 2005         FY 2005         FY 2004
   Less than $100               4            1.82 – 2.50               2.14   1.33
     $100 - $199                8            1.09 – 2.91               1.82   1.88
     $200 - $299                8            1.00 – 2.09               1.52   1.36
     $300 - $399                5            1.73 – 2.50               2.27   1.57
     $400 - $599                9            1.00 – 2.91               1.42   1.35
     $600 - $799                5            1.00 – 4.00               2.37   1.76
    $800 and over              17            1.00 – 2.27               1.50   1.65
 Assets Not Reported            1            1.00 –1.00                1.00    —

Observations: The data do not support any correlation between institution size and
average rating. However, the overall ratings were slightly less favorable than in FY
2004.


                                    INSTITUTION TYPE

                          Number of Range of Average Overall Average Overall Average
 Type of Institution     Institutions    Rating          Rating          Rating
                         Responding     FY 2005         FY 2005         FY 2004
         ACA                   45            1.00 – 4.00               1.73   1.64
         ACB                    1            1.36 – 1.36               1.36     –
         FCB                    3            1.00 – 1.82               1.39   1.68
         FLCA                   6            1.27 – 2.50               1.82   1.39
       OTHER                    2            1.00 – 2.50               1.73   1.45

Observations: The data do not support any correlation between institution type and
average rating. However, the overall ratings by institution type were slightly less
favorable than in FY 2004 with the exception of FCB. FCB institutions gave a more
favorable rating than last reporting period. The ACB institution gave the most favorable
rating.


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                                   CAMELS RATING

                       Number of          Range of          Overall Average   Overall Average
    CAMELS
                      Institutions      Average Rating          Rating            Rating
     Rating
                      Responding           FY 2005             FY 2005           FY 2004
   NO RATING                1              2.50 – 2.50             2.45            1.45
         1                  46             1.00 – 4.00             1.60            1.49
         2                  10             1.36 – 2.91             2.16            2.07

Observations: As in previous years, there appears to be a slight correlation between
CAMELS rating and survey results—the better the CAMELS rating, the better the
overall survey rating. The institution with no CAMELS rating provided a significantly
lower overall rating this year. The overall average ratings in FY 2005 for institutions
with CAMELS ratings of “1” and “2” were less favorable than in FY 2004. No responses
were received from institutions with a CAMELS rating of “3” or higher.


                                     FCS DISTRICT

                       Number of          Range of          Overall Average   Overall Average
     District         Institutions      Average Rating          Rating            Rating
                      Responding           FY 2005             FY 2005           FY 2004
      AgFirst               15             1.00 – 4.00             1.87            1.61
     AgriBank               10             1.00 – 2.36             1.58            1.51
     CoBank                 3              1.36 – 2.91             1.97            1.58
      Texas                 11             1.00 – 2.50             1.73            1.47
   US AgBank                16             1.00 – 2.82             1.59            1.87
      Other                 2              1.00 – 2.50             1.73            1.45

Observations: The data do not support any correlation between FCS district and
average rating. CoBank institutions provided the least favorable overall average
ratings. AgriBank and US AgBank institutions gave the most favorable ratings. US
AgBank provided the only improved rating. The institutions listed as “Other” are service
corporations.




Report on the Annual Survey of the FCS Institutions—Fiscal Year 2005                            4
                          EXAMINING FIELD OFFICE

                           Number of          Range of     Overall Average Overall Average
     Field Office         Institutions      Average Rating     Rating          Rating
                          Responding           FY 2005        FY 2005         FY 2004
     Bloomington                9             1.00 – 2.36              1.61     1.47
        Dallas                 15             1.00 – 2.50              1.64     1.47
        Denver                  8             1.00 – 2.82              1.66     1.70
       McLean                  16             1.00 – 4.00              1.98     1.61
    Sacramento                  7             1.00 – 2.00              1.50     2.27
 Special Examination
                                2             1.00 – 2.50              1.73     1.55
  and Supervision
Observations: The data do not support any correlation between examining field office
and average rating. The Sacramento field office had the most improved average rating
over last year’s results. The Denver field office had slightly more favorable rating than
the previous reporting period. The McLean field office had the most significant decline
in its rating and the least favorable rating. Bloomington, Dallas, and the Special
Examination and Supervision Division had a somewhat less favorable rating than last
period.




Report on the Annual Survey of the FCS Institutions—Fiscal Year 2005                     5
                     SUMMARY OF COMMENTS BY RESPONDENTS

Many of the comments reflect the favorable ratings in the survey. There were many
comments reflecting praise for the examination in areas such as:

   •   ability to submit pre-exam information electronically
   •   properly identifying key risk areas
   •   discussion opportunities with the examiners
   •   overall professionalism of the examiners
   •   Board presentation
   •   brief concise report

The most common concerns were:

   •   findings not being discussed prior to the report being issued
   •   concerns about FCA’s interpretation of regulations
   •   exam team disorganization
   •   Young, Beginning and Small (YBS) farmer requirements
   •   untimely reports
   •   disruption of normal business operations
   •   knowledge of examiner
   •   interruptions due to FCA trainees

A complete set of survey comments is included as Appendix I and II.*



                                 * NOTES TO READER

 OIG presents comments verbatim. However, brackets indicate that the OIG
 inserted or removed text to maintain anonymity or to clarify the responses.




Report on the Annual Survey of the FCS Institutions—Fiscal Year 2005            6
              Appendix I.—Survey Rating Responses to Questions 1–11


Completely Agree = 1        Agree = 2    Neither = 3     Disagree = 4   Completely Disagree = 5


                                                       Response Rating
                 Question                                                            Average
                                                  1       2       3     4      5

  1. The Report of Examination identified         25     27       3     1      1       1.70
     and prioritized all significant risks
     facing the institution.

   •   Key risks were properly identified.
   •   Emphasis on “all”.


                                                       Response Rating
                 Question                                                            Average
                                                  1       2       3     4      5

  2. The Report of Examination fairly            26      27       1     2      1       1.68
     presented management’s response
     to issues discussed in the report.

   •   Certain comments attributed to management were incomplete or implied a message
       other than the comments made by management during the examination.
   •   Management practices and philosophy were fairly represented following wording
       changes to the draft report with input from management.
   •   There are some differences of opinion regarding information technology.




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                                                       Response Rating                  Average
                 Question
                                                  1       2       3       4       5

  3. The Report of Examination was               23      26       4       4       0        1.81
     factually correct and presented well-
     supported and relevant conclusions
     about the condition and performance
     of the institution.

   •   The report appeared to not reflect any knowledge of the ACA's Business Plan which
       clearly identified several areas the report noted as exceptions, particularly related to
       earnings, etc.
   •   The final report was accurate and the Board presentation was appropriate.
   •   Examination team missed documentation that was in the loan files. Prior to the writing of
       the report the documentation was faxed to individuals on the team, they agreed that the
       documentation was correct. But the final report still listed the items as violations.


                                                       Response Rating
                 Question                                                               Average
                                                  1       2       3       4       5

  4. The Report of Examination was               24      27       4       2       0        1.72
     clearly written, concise, and
     understandable.

   •   The report was appropriately brief and concise.
   •   Examination team missed documentation that was in the loan files. Prior to the writing of
       the report the documentation was faxed to individuals on the team, they agreed that the
       documentation was correct. But the final report still listed the items as violations.




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                                                       Response Rating
                 Question                                                             Average
                                                  1       2       3     4      5

  5. The Report of Examination was               32      22       1     2      0        1.53
     received in a timely manner and,
     therefore, the issues in the Report of
     Examination were still relevant.

   •   The report was issued in a timely manner but the issues addressed were not relevant.
   •   Examination as of 10/31/05[04]. Report presented to board February 24, 2005.
   •   The report was presented on schedule.
   •   The report was as of May 31. The team completed their work on June 18th and the
       report was not issued until 8/23 and due to timing of our Board meetings, the report was
       not given to the Board until 9/29.


                                                       Response Rating
                 Question                                                             Average
                                                  1       2       3     4      5

  6. The examiners conveyed consistent           28      24       2     1      1        1.63
     messages and tone throughout the
     examination process (i.e., in the exit
     conference, Report of Examination,
     and board presentation.

   •   The exit conference contained NO indication of concern that was later displayed in the
       written report.
   •   There was complete inconsistency between the tone of the report and presentation that
       was made. Also, the EIC and other examiners would make comments and give
       consistent feedback, the [examiner] and [examiner] would come in for a few hours and
       tell us something completely different.
   •   Several verbal insinuations made during the course of the examination in regards to
       Association deficiencies and "how the regulator wants to see this." Exit report to board
       and Board presentation was consistent.
   •   Examiner communications were appropriate. Communications regarding classification
       of investments required clarification but issues were appropriately resolved.

   NOTE: One institution did not respond to question #6.




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                                                       Response Rating
                 Question                                                             Average
                                                  1       2       3     4      5

  7. The examiners’ interpretation of the        18      31       3     2      2        1.91
     statutes, regulations, and other
     guidance was consistent with
     previous examinations.

   •   Adequacy of moderate priced dwelling study was not consistent with previous FCA
       approval.
   •   Issues that have been specifically identified as being acceptable were identified as
       problem areas this time.
   •   Examination team identified some historical Association practices (annual meeting
       information statement, regulatory guidance governing eligible persons) not identified in
       previous examinations.
   •   New interpretations regarding classification of some investments, but issue has been
       resolved.
   •   Agree with one exception regarding loan underwriting standards.

   NOTE: One institution did not respond to question #7.


                                                       Response Rating
                 Question                                                             Average
                                                  1       2       3     4      5

  8. The examination team acted                  42      13       1     1      0        1.32
     courteously and professionally.

   •   They appeared somewhat disorganized, which in our opinion led to conclusions over
       which we disagree.
   •   They were excellent to work with.
   •   Granted the concerns FCA had with internal controls with this Association, Association
       board and management recognized/expected increased regulatory oversight in view of
       weaknesses in internal control. However, lead examiner was transparent in her lack of
       trust and dissatisfaction with our circumstance, sometimes to point of being defensive.
       Staff in turn was reluctant in their discussions with examination team and dialogue was
       often one-sided.
   •   Examination Team was very professional in its approach.



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                                                       Response Rating
                 Question                                                             Average
                                                  1       2       3     4      5

  9. The examiner’s recommendations for          19      27       7     3      1          1.95
     corrective actions were reasonable
     and consistent with FCA’s role as an
     arm’s length regulator.

   •   We would agree if we felt they had appropriately analyzed the ACA, however, we feel
       there was a serious breakdown in communication which did not become evident until the
       report was delivered.
   •   Following resolution of classification of investments issue recommendation were
       reasonable. We believe FCA and the System will need to carefully evaluate capital
       levels of earnings in light of FCS of America/Rabobank situation and adjust accordingly.

                                                       Response Rating
                 Question                                                             Average
                                                  1       2       3     4      5

10. The examiners conducted                      28      20       6     3      0          1.72
    examination and monitoring activities
    without undue interference with the
    operation of the institution, including
    the extent of information requested
    during these activities.

   •   They did a great a great job of accommodating the staff from our branch offices.
   •   Given the number of less experienced examiners on the team, the team did not request
       an excessive amount of information/documents.
   •   Association was requested 30 days prior to examination to provide complete list of
       documentation to lead examiner. Association complied in detail all of the requested
       information. On-site it was obvious that members of the exam team did not review or
       have with them the information previously provided, causing Association staff to again
       collect several pieces of the same information for them on-site.
   •   The exam team was experienced and professional and concluded their exam with
       minimal interruption of operations.
   •   Time requested of association staff to assist a new FCA examiner in training was an
       issue with the individual association staff members.
   •   The examiners came on-site with four trainees. They requested a large number of loan
       files but reviewed approximately half of the files that were given to them. After leaving
       items had to be faxed to them to show that they missed seeing the item in the file. I
       have no problem with helping in the training process but when done addition time should
       be allowed for on-site work to allow staff to review the observations and supply the
       correct information to the lead reviewer.                              continued next page


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                                                       Response Rating
                 Question                                                          Average
                                                  1       2       3    4     5

11. The board and management believe             19      30       6    2     0       1.84
    the findings of the examination will
    assist (or have assisted) the
    institution in correcting identified
    weaknesses.

   •   Some findings have led to corrective actions, however other findings are in total
       disagreement with the Board's philosophy and there appears to be a general lack of
       understanding by the examiners of the Board's plan with regard to our operations.

   •   The Board and management work hard to identify any problems or issues in advance of
       their becoming safety and soundness issues, but always value the input and
       observations of the exam team.




Report on the Annual Survey of the FCS Institutions—Fiscal Year 2005                         12
       Appendix II.—Survey Written Responses to Questions 12a, 12b, and 24


Question 12a. What aspects of the examination did you find most beneficial?


   •   Professionalism of examination staff.
   •   Balance report mostly focused on material findings. Communication with members of
       examination team. Ability to discuss/debate issues and understand views and positions.
   •   Open minded exam team; constructive and useful recommendations.
   •   The examiners gave some constructive suggestions on how to evaluate emerging credit
       risk and factor it in to the allowance calculation. The team acted with professionalism
       throughout the exam process.
   •   Pre-examination meeting and the ability to use electronic media to provide information to
       examiners.
   •   [Examiner] and [examiner] did an excellent job in presenting the report to the board.
       This was done at our annual planning session and led to a good planning session as
       well. We thank them.
   •   Technology.
   •   Guidance for corrective actions.
   •   Assistance with expectations regarding Information Technology Management.
   •   Evaluation of loan portfolio management.
   •   Comments related to best practices used elsewhere.
   •   Board evaluation.
   •   Pointing out weaknesses that need to be addressed.
   •   Interaction with the examiners and feedback during the examination process.
   •   Credit quality; risk ratings/system; CAMELS questions/report; reinforced [institution] is
       sound; felt more secure because no major issues.
   •   The willingness of the team to take time and listen to management's position, etc.
   •   Ratings, board meeting.
   •   The formal recommendations in the report and the suggestions made during the
       examination process.




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   •   Confirm association is materially complying with regulations. Validation of internal risk
       ratings on loans.
   •   Regulatory (risk related) safety and soundness.
   •   Recommendations for corrective actions. Report is accurate representation of
       Association status.
   •   Recommendation that the Board of Directors adopt a formal capital plan.
   •   Brief, concise report. Concise close-out discussion and consistent final report.
   •   General discussions with senior exam team members, [examiner] and [examiner], were
       helpful. We do few consumer related/residence loans, so discussions on compliance
       with regs. was most helpful.
   •   Off-site.
   •   Asset Quality.
   •   The examine team works with staff in a productive manner when issues arise, resulting
       in a productive outcome.
   •   Discussion of weaknesses with examiners during the exam.
   •   Findings relative to credit and operations.
   •   Close out with management and board.
   •   The ability to submit requested pre-exam information electronically and the ability to
       have open and two-way communication with the examiners on all pertinent subjects
       throughout the examination.
   •   Another set of eyes to provide the Board of Directors comfort, that they can feel
       comfortable Management is identifying and correcting issues.
   •   Consistency year to year.
   •   Willingness to discuss all aspects of issues.
   •   18-month exam cycle.
   •   Independent assessment of the Association financial condition and performance.
   •   The ability to interact and dialogue with the FCA team.
   •   Reaffirmation of current practice as safe and sound.
   •   Discussions with the examiners on issues that they observed. Including discussions on
       needed corrections.




Report on the Annual Survey of the FCS Institutions—Fiscal Year 2005                               14
Question 12b. What aspects of the examination did you find least beneficial?

   •   YBS.
   •   Examination team's undue focus on risk in FCL operations and portfolio. Failure of
       examiners to give full recognition of risk mitigation by [institution’s] guaranty of large FCL
       leases.
   •   All okay.
   •   Interpretation of 615.5102.
   •   The presenters were unable to satisfactorily explain our CAMELS rating or what we can
       do to improve it, particularly as it pertains to the 'Management' rating.
   •   Compliance.
   •   Individual interpretation of specific regulations that differ from interpretations of previous
       examiners.
   •   All were beneficial in current environment.
   •   Training the trainees (though it is necessary).
   •   I think the whole process is very beneficial and necessary.
   •   Questions on capital; all is important.
   •   Focus and time on irrelevant issues.
   •   Reduplicating information for the exam team on-site. Managements sense that lead
       examiner felt that management was defensive and not completely forthright.
   •   All aspects were beneficial to some degree.
   •   The length of time it took to complete.
   •   Sensitivity.
   •   Examiners are less skilled at treasury, A/L management. Consequently we put less
       reliance on their findings in this area.
   •   Bringing supervisor to close out with management and board.




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   •   The presentation of the exam to the board of directors was a waist of time and money
       and was destructive to the associations relationship with FCA. The presentation took 2
       1/2 hours to present a fairly clean exam. The directors had the report for almost 2
       months prior to the presentation and felt the FCA personnel must think they couldn't read
       as it was presented to them almost word for word. Money could have been better spent
       on a conference call presentation rather than sending 2 people out from [field office].
   •   1) The examination went well beyond safety and soundness issues, and got into
       management areas. 2) There were inconsistent interpretations of the regulations from
       previous examinations.

   •   The exam was not big picture enough compared to previous years.
   •   Unwillingness to change any early decisions.
   •   YBS program analysis.
   •   We do not have any area that we felt was not beneficial. The report was useful and
       balanced.
   •   YBS detail.
   •   Correcting or attempting to correct oversights made by the trainees from their review of
       the loan files. This took considerable employee time, the corrections were agreed to by
       the examination team but the issues were still included in the final report. Because of
       time deadline issues that the examination team had in order to get the exam printed in
       time I hurriedly read the draft of the report. I then approved the report without checking
       with staff. I assumed the items that I knew had been faxed to the team were removed
       from the list of violations. That was my mistake.




Report on the Annual Survey of the FCS Institutions—Fiscal Year 2005                                16
Question 24. If you have other comments about the report of examination or the examination
   process or experience, please enter them here.

   •   During the course of the on-site exam provided copies of all money concept related
       documents to FCA. Immediately following the exam we received a written request for
       the same information.
   •   This particular team was the most disorganized with more interruptions (key staff on
       other assignments) during our exam than any I have experienced in many years. We
       submitted volumes of information prior to the examination to the EIC via electronic
       submission, yet during the exam, other examiners requested the same information
       because they had not seen it prior to or during the site visit. One such instance occurred
       the last day of the exam when we were asked for the Loan Loss Allowance paperwork,
       which had been previously submitted and was on the EIC's laptop. As a result of
       numerous new persons training and the disorganization mentioned, we were blindsided
       with a report that showed no similarity to the discussion held during the exit conference.
       We were told this information was assembled in [field office] after the exam onsite. The
       only problem was the ACA had no opportunity to respond or even attempt to defend the
       findings, some of which we can now show were erroneous judgments by the examiners
       due primarily to lack of communication or understanding where to find the information.
   •   The changes in the review process are going to be good. The quality of the review
       depends on the people conducting it. We had good capable and experienced people.
   •   [Examiner], the EIC on our exam, and the staff that she brought to our office was very
       professional and very capable. They were comprehensive yet fair. They
       accommodated us so that the exam process was not disruptive.
   •   No complaints. The Examiner-in-Charge and his staff were very professional, cordial
       and helpful.
   •   Examiners were professional and open minded yet dedicated to safety and soundness.
   •   Handled professionally.
   •   Overall, we felt the exam team did an excellent job.
   •   Very experienced examiner looked at Credit.




Report on the Annual Survey of the FCS Institutions—Fiscal Year 2005                            17
                       Appendix III.—Numeric R e s u l t s o f R e s p o n s e s R e c e i v e d t o Q u e s t i o n s 1 - 1 1

                                                                       Response
                         Completely Agree        Agree                  Neither         Disagree     Completely Disagree   Total   Average
        Question
                               (1)                 (2)                    (3)              (4)               (5)         Answered Response
                        Number       %       Number    %            Number      %    Number    %     Number        %
     Question 1             25       43.86       27         47.37       3     5.26       1    1.75         1       1.75           57   1.40
     Question 2             26       45.61       27         47.37       1     1.75       2    3.51         1       1.75           57   1.68
     Question 3             23       40.35       26         45.61       4     7.02       4    7.02         0       0.00           57   1.81
     Question 4             24       42.11       27         47.37       4     7.02       2    3.51         0       0.00           57   1.72
     Question 5             32       56.14       22         38.60       1     1.75       2    3.51         0       0.00           57   1.53
     Question 6*            28       50.00       24         42.86       2     3.57       1    1.79         1       1.79           56   1.63
     Question 7*            18       32.14       31         55.36       3     5.36       2    3.57         2       3.57           56   1.91
     Question 8             42       73.68       13         22.81       1     1.75       1    1.75         0       0.00           57   1.32
     Question 9             19       33.33       27         47.37       7    12.28       3    5.26         1       1.75           57   1.95
     Question 10            28       49.12       20         35.09       6    10.53       3    5.26         0       0.00           57   1.72
     Question 11            19       33.33       30         52.63       6    10.53       2    3.51         0       0.00           57   1.84
     Total Responses       284       45.44      274         43.84      38     6.08      23    3.68         6       0.96          625   1.71


     * Only 56 responses were received for this question.



     Total Number of Surveys Sent to Institutions:                     90

     Total Number of Surveys Received From Institutions:               57
18
           Appendix IV.—C o m p a r i s o n o f A v e r a g e R a t i n g s f o r
                        Fiscal Years 2000-2005

Question     FY 05          FY 04         FY 03          FY 02          FY 01       FY 00


   1         1.70           1.72           1.75           1.58           1.66       1.46


   2         1.68           1.62           1.55           1.43           1.58       1.39


   3         1.81           1.58           1.63           1.65           1.66       1.56


   4         1.72           1.46           1.46           1.38           1.54       1.42


   5         1.53           1.47           1.41           1.32           1.53       1.42


   6         1.63           1.70           1.56           1.53           1.69       1.48


   7         1.91           1.91           1.90           1.66           1.71       1.53


   8         1.32           1.25           1.19           1.14           1.20       1.15


   9         1.95           1.75           1.76           1.78           1.78       1.56


  10         1.72           1.66           1.62           1.39           1.53       1.41


  11         1.84           1.88           1.88           1.70           1.82       1.48


Average      1.71           1.64           1.60           1.51           1.61       1.44




                                                                                        19
Appendix V.—G r a p h s o f R e s p o n s e R a t e a n d A v e r a g e R a t i n g


                                                        Farm Credit System Annual Survey
                                                       Surveys Sent vs Repsonses Received
                        300
                              278
                        250
  Number of Surveys




                        200         209

                                          175
                        150
                                                                  147
                                                      142
                                                128
                        100                                                   114
                                                            110         101                 105                     101
                                                                                                        96
                                                                                    79                                                   90
                                                                                                               77              71
                        50                                                                        59                      55                  57
                                                                                                                                    53


                         0
                              1996        1997        1998        1999         2000          2001       2002        2003       2004      2005
                                                                                 Fiscal Year
                                                                         Surveys Sent    Surveys Received




                                                Farm Credit System Annual Survey
                                            Overall Average Response to Questions 1-11

                        1.9
                                            1.87
                        1.8                             1.82
     Average Response




                        1.7                                                                                                              1.71
                                                                   1.67
                        1.6                                                                                                    1.64
                                                                                             1.61                   1.60
                                1.59

                        1.5
                                                                                                            1.51
                                                                                 1.44
                        1.4

                        1.3
                               1996        1997        1998        1999        2000         2001        2002        2003       2004      2005
                                                                                 Fiscal Year




                                                                                                                                                   20
                      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@starpower.net

             mail: Farm Credit Administration
                   Office of Inspector General
                   1501 Farm Credit Drive
                   McLean, VA 22102-5090