oversight

FY 2016 Audit of FCA's Financial Statements

Published by the Farm Credit Administration, Office of Inspector General on 2016-11-14.

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

OFFICE OF
INSPECTOR GENERAL     Audit Report
                     Audit of the Farm Credit
                    Administra on’s Financial
                           Statements
                        Fiscal Year 2016
                             A‐16‐FS




                        November 2016




                    FARM CREDIT ADMINISTRATION
TABLE OF CONTENTS

Inspector General’s Transmittal Letter of the Auditors’ Report……………………………1

Auditors’ Opinion Letter on the Financial Statements……………………………………...3



For the fiscal year’s financial statements and related notes, refer to FCA’s
Performance and Accountability Report (PAR) for that year. The PARs can be
found on FCA’s website.
Farm Credit Administration                                          Office of Inspector General
                                                                    1501 Farm Credit Drive
                                                                    McLean, VA 22102-5090
                                                                    (703) 883-4030




November 14, 2016


The Honorable Kenneth A. Spearman, Board Chairman
The Honorable Dallas P. Tonsager, Board Member
The Honorable Jeffery S. Hall, Board Member
Farm Credit Administration
1501 Farm Credit Drive
McLean, Virginia 22102-5090

The attached report is the audit of the Farm Credit Administration’s (FCA’s or Agency’s) financial
statements for the fiscal year (FY) ended September 30, 2016. The Office of Inspector General (OIG)
contracted with Harper, Rains, Knight & Company, P.A., an independent public accounting firm, to
perform the audit.

Harper, Rains, Knight & Company issued an unmodified opinion on the Agency’s financial statements.
In the auditors’ opinion, FCA’s principal financial statements present fairly, in all material respects, the
financial position of the Agency as of the FY ended September 30, 2016, in conformity with generally
accepted accounting principles.

Harper, Rains, Knight & Company considered FCA’s internal control over financial reporting to
determine the audit procedures for the purpose of expressing an opinion on the financial statements.
Although they did not express an opinion on the effectiveness of FCA’s internal controls, they did not
identify any deficiencies considered to be a material weakness.

Additionally, Harper, Rains, Knight & Company performed tests of FCA’s compliance with selected
provisions of laws and regulations that could have a direct and material effect on the financial
statements. Although they did not express an opinion on compliance with those provisions, they did not
identify any instances of noncompliance or other matters required to be reported under Government
Auditing Standards issued by the Comptroller General of the United States or the Office of
Management and Budget (OMB) Bulletin No. 15-02, Audit Requirements for Federal Financial
Statements.

Harper, Rains, Knight & Company was required to perform the audit in accordance with Government
Auditing Standards and OMB Bulletin No. 15-02. To ensure the quality of the work performed, the OIG:

     •   reviewed Harper, Rains, Knight & Company’s approach to and planning of the audit,
     •   evaluated the qualifications and independence of the auditors,
     •   attended key meetings with auditors and Agency officials,
     •   monitored the progress of the audit,




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     •   examined workpapers, and
     •   reviewed the audit report.

Harper, Rains, Knight & Company is responsible for the attached auditors’ report and the conclusions
expressed in the report. The OIG is responsible for technical and administrative oversight regarding
the audit firm’s performance under the terms of the contract. Our review was not intended to enable us
to express, and accordingly we do not express, an opinion on the Agency’s financial statements or
conclusions on internal control over financial reporting and compliance with laws and regulations,
including whether the Agency’s financial management systems substantially complied with the Federal
Financial Management Improvement Act. However, our monitoring review disclosed no instances in
which Harper, Rains, Knight & Company did not comply, in all material respects, with the auditing
standards.


Respectfully,



Elizabeth M. Dean
Inspector General




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                                     Independent Auditors' Report

The Board and Inspector General
Farm Credit Administration

Report on the Financial Statements

We have audited the accompanying balance sheets of the Farm Credit Administration (FCA), as of
September 30, 2016 and 2015, 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 for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in
accordance with general accepted accounting principles in the United States of America; this includes 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 No.
15-02, Audit Requirements for Federal Financial Statements. Those standards and OMB Bulletin No. 15-
02 require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.

An audit 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
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 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 also includes evaluating the
appropriateness of accounting policies used and the reasonableness of significant accounting estimates
made by management, as well as evaluating the overall presentation of the financial statements.




                                                     3
The Board and Inspector General
Farm Credit Administration – Continued


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

Opinion on the Financial Statements

In our opinion, the financial statements including the accompanying notes, present fairly, in all material
respects, the financial position of FCA as of September 30, 2016 and 2015, and its net cost of operations,
changes in net position, and budgetary resources for the fiscal years then ended, in conformity with
accounting principles generally accepted in the United States of America.

Other Matters
Required Supplementary Information

Generally accepted accounting principles in the United States of America require that the information in
the Management's Discussion and Analysis, and Required Supplementary Information sections be
presented to supplement the basic financial statements. Such information, although not a part of the basic
financial statements, is required by the Federal Accounting Standards Advisory Board who considers it to
be an essential part of financial reporting for placing the basic financial statements in an appropriate
operational, economic, or historical context. We have applied certain limited procedures to the required
supplementary information 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 information
and comparing the information for consistency with management's responses to our inquiries, the basic
financial statements, and other knowledge we obtained during our audit of the basic financial statements.
We do not express an opinion or provide any assurance on the information because the limited procedures
do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information

Our audit was conducted for the purpose of forming an opinion on the basic financial statements as a
whole. The information in the Statement of the Board Chair and Chief Executive Officer (CEO), Letter
from the Chief Financial Officer, and Other Information section is presented for purposes of additional
analysis and is not a required part of the basic financial statements. Such information has not been
subjected to the auditing procedures applied in the audit of the basic 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 the financial statements as of and for the year ended September
30, 2016, we considered FCA's internal control over financial reporting (internal control) to determine the
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 FCA's
internal control. Accordingly, we do not express an opinion on the effectiveness of FCA's internal control.
We did not test all internal controls relevant to operating objectives as broadly defined by the Federal
Managers' Financial Integrity Act of 1982.



                                                     4
The Board and Inspector General
Farm Credit Administration – Continued


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.

Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control 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 that we consider to be material weaknesses.

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 certain provisions of laws and regulations,
noncompliance with which could have a direct and material effect on the determination of financial
statement amounts. However, providing an opinion on compliance with those provisions was not an
objective of our audit, and accordingly, we do not express such an opinion. The results of our tests of
compliance disclosed no instances of noncompliance or other matters that are required to be reported
herein under Government Auditing Standards or OMB Bulletin No. 15-02.

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. This report is an integral part of an audit performed in accordance with Government Auditing
Standards in considering the entity's internal control and compliance. Accordingly, this communication
is not suitable for any other purpose.




November 14, 2016




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