oversight

FY 2007-2008

Published by the Farm Credit Administration, Office of Inspector General on 2006-08-16.

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

FARM CREDIT ADMINISTRATION


  Office of Inspector General
Operating and Performance Plan
   Fiscal Years 2007-2008




                    August 2006
Office of
Inspector General



               OPERATING AND PERFORMANCE PLAN

                  FISCAL YEARS 2007 AND 2008
Farm Credit Administration                                   Office of Inspector General
                                                             1501 Farm Credit Drive
                                                             McLean, Virginia 22102-5090




August 16, 2006


The Honorable Nancy C. Pellett
Chairman and Chief Executive Officer
Farm Credit Administration
1501 Farm Credit Drive
McLean, Virginia 22102-5090

Dear Chairman Pellett:

The enclosed document is the Office of Inspector General’s (OIG) Operating and Performance
Plan and Budgets for Fiscal Years 2007 and 2008 (OPP). The OIG’s mission objectives and
goals remain the same.

Nevertheless, we have updated the OPP and its audit plan to remain current with the challenges
facing FCA and the recent changes in FCA’s organization and operations. The audit plan is a
fluid document that may be amended as the year progresses. It is from the audit plan that the
OIG selects most of its assignments.

Please call me if you have any questions or comments.

Sincerely,



Carl A. Clinefelter
Inspector General

Enclosure
                                                TABLE OF CONTENTS

Introduction ......................................................................................................................... Tab 1

Mission, Objectives and Goals, and Assumptions .............................................................. Tab 2

Object Class Budget Overview ........................................................................................... Tab 3
  FY 2007
  FY 2008

Office Operating Plan Control System & Evaluation........................................................... Tab 4

Appendices ......................................................................................................................... Tab 5
  Appendix A—Audit Plan
  Appendix B—IRM Plan Summary
  Appendix C—FY 2004-2008 Performance Budget
Farm Credit Administration
Office of Inspector General
   Fiscal Year 2007-2008

          TAB 1
                    Farm Credit Administration
                    Office of Inspector General
                       Fiscal Year 2007-2008

                                    INTRODUCTION

The Farm Credit Administration (FCA or Agency) Office of Inspector General (OIG) was created
in 1989 as a result of 1988 amendments to the Inspector General Act of 1978 (IG Act). The Act
established specific responsibilities and authorities for all Federal Inspectors General.
The FCA Inspector General (IG) has a dual reporting responsibility to both the FCA Chairman
and the oversight committees of the Congress. The OIG analyzes Agency performance through
audits, inspections, and evaluations and provides conclusions and recommendations designed
to strengthen Agency effectiveness and efficiency. The OIG reviews existing and proposed
legislation and regulations relating to Agency programs and operations to assess the impact on
Agency economy and efficiency. The OIG also contracts with an outside accounting firm for the
annual audit of FCA’s financial statements and for the review of the Agency’s compliance with
the Federal Information Security Management Act. The OIG also maintains a Hotline for
reporting allegations of fraud, waste and abuse and provides independent investigation of
allegations.
Farm Credit Administration
Office of Inspector General
   Fiscal Year 2007-2008

          TAB 2
                    Farm Credit Administration
                    Office of Inspector General
                       Fiscal Year 2007-2008

                                         MISSION
That the OIG’s work products and presence promote economy, efficiency and integrity in
Agency operations.


                             OBJECTIVES AND GOALS

   •   Audit and evaluate the Agency’s programs and operations to promote economy,
       efficiency, and effectiveness.
          1. Deliver quality audit and inspection products and services that are useful to
             management, the Board, and the Congress.
          2. Provide technical advice and assistance to Agency officials in developing sound
             management information and financial reporting systems and in streamlining
             programs and organizations.
          3. Continuously improve OIG staff, products, and internal office administration.

   •   Investigate observed, alleged, or suspected wrongdoing to prevent and detect
       fraud, waste, abuse, and mismanagement in Agency programs and operations.
          1. Effectively investigate and report administrative and criminal violations relating to
             FCA programs and personnel.
          2. Educate employees on their responsibility to report wrongdoing to the OIG.
          3. Provide relevant information on results of investigative activities to appropriate
             parties.

   •   Review and make recommendations regarding existing and proposed legislation
       and regulations relating to Agency programs and operations and the IG
       community.
          1. Maintain an effective program for reviewing and commenting on proposed and
             existing legislation and regulations.

   •   Work with our Agency head and the Congress to improve program management;
       and work with the Inspectors General community and other related organizations
       to address government-wide issues.
          1. Building relationships with program managers based on a shared commitment to
             improving program operations and effectiveness.
          2. Provide leadership to the IG community.
          3. Contribute to special projects to improve the Agency.
              Farm Credit Administration
              Office of Inspector General
                 Fiscal Year 2007-2008

                                ASSUMPTIONS

•   Changing work force. The change in FCA’s work force with fewer and less tenured
    employees and more contractors will necessitate OIG vigilance over the internal
    control environment. FCA’s compensation and reward practices will need to be
    flexible to adapt to a changing work force. The Farm Credit System (FCS or
    System) and the credit needs of rural America will continue to evolve and change.
    The financial and banking industry will continue to become more complex.

•   Changing work environment. As FCA and the OIG look to leverage investments in
    technology, OIG must expand its knowledge of technology to effectively perform
    reviews. Further, as FCA adapts technology to change its processes, the OIG will
    have to be positioned to evaluate new risks in internal controls and security
    measures.

•   Limited budget resources. Budget pressures on the OIG will be equivalent to
    those faced by FCA as a whole. The OIG will have to use an efficient mix of its core
    competencies and external resources to fulfill its mission. Technology will continue
    to cause change in processes and our approach to work.

•   Farm Credit Act. Changes in the agricultural and the financial industries will cause
    the FCS to seek greater flexibility in law and regulations. OIG will continue to ensure
    that the FCA is ever mindful of its arms length regulatory role and goal to facilitate
    System service to rural America, and will continue to review and make
    recommendations regarding laws and regulations.
                                                Farm Credit Administration
                                                Office of Inspector General
                                                   Fiscal Year 2007-2008

                     AUDITS AND EVALUATIONS OF AGENCY PROGRAMS AND OPERATIONS
                                                    AGENCY GOALS 1, 2 AND 3

               OIG GOAL                                      PERFORMANCE MEASURE                                         OUTCOME/IMPACT
1.   Deliver quality audit, inspection, and   Audits and inspections are relevant. Audit coverage          FCA programs and operations are more
     review products and services that        includes all mandated audits and at least 75% of those       effective.
     are useful to the Board,                 suggested by the Board and management.
                                                                                                           Waste in Agency programs and operations is
     management and/or the Congress.
                                              Risk is addressed. 100% of OIG audits are performed in       reduced.
                                              high risk/high dollar programs and activities and/or are
                                                                                                           Increased Agency compliance with laws,
                                              tied to the Agency strategic planning goals.
                                                                                                           regulations, and internal policies and
                                              Findings made during audit fieldwork are recognized and      procedures.
                                              corrected by management prior to drafting of the audit
                                                                                                           The Agency’s stature and reputation is
                                              report.
                                                                                                           elevated in the eyes of the Congress, the
                                              Products are timely, i.e., average time to complete audits   Administration, the FCS, FCA employees and
                                              and issue draft reports will not exceed 6 months.            the public.
                                              Audits are constructive. At least 75% of audit products      FCA is more effective in carrying out its
                                              contain recommendations to improve Agency operations.        mission.
                                              The Agency accepts at least 80% of the OIG audit
                                                                                                           The OIG is more effective in promoting
                                              recommendations.
                                                                                                           economy, effectiveness and efficiency within
                                              The Agency implements all corrective actions prescribed      the Agency.
                                              by management decisions.
                                                                                                           FCA continues to get an unqualified audit
                                                                                                           opinion on financial statements.
                                             Farm Credit Administration
                                             Office of Inspector General
                                                Fiscal Year 2007-2008

                    AUDITS AND EVALUATIONS OF AGENCY PROGRAMS AND OPERATIONS
                                                 AGENCY GOALS 1, 2 AND 3

               OIG GOAL                                   PERFORMANCE MEASURE                                      OUTCOME/IMPACT
2.   Provide technical advice and          The IG advises the Chairman concerning policy direction    OIG input and advice contributes to Agency
     assistance to Agency officials in     or administrative priorities.                              decisions and actions that are more complete
     developing sound management                                                                      and valid in the inception.
                                           OIG performs analysis and provides technical advice to
     information and financial reporting
                                           management concerning accounting, management               Increase in management requests for advice,
     systems and in streamlining
                                           systems and controls, and performance measures.            review, and technical assistance.
     programs and organizations.
                                                                                                      Peer review reports provide an unqualified
                                                                                                      opinion that OIG audit work meets or exceeds
                                                                                                      quality audit standards prescribed by the
                                                                                                      Government Accountability Office (GAO) and
                                                                                                      the President’s Council on Integrity and
                                                                                                      Efficiency (PCIE) and the Executive Council on
                                                                                                      Integrity and Efficiency (ECIE).
3.   Continuous improvement of OIG         Customer survey feedback is used to improve products       Customer survey feedback evidences increase
     staff, products, and internal         and services.                                              satisfaction with report practices.
     administration.
                                           OIG training ensures the technical proficiency of staff.   The IG’s opportunity to facilitate positive
                                                                                                      change within the Agency is enhanced by the
                                           OIG implements administrative improvements identified
                                                                                                      quality and credibility of OIG products and
                                           through reviews of other Agency programs and through
                                                                                                      advice.
                                           staff involvement with the professional community.
                                             Farm Credit Administration
                                             Office of Inspector General
                                                Fiscal Year 2007-2008

                                                              INVESTIGATIONS
                                                   AGENCY GOALS 1 AND 2

              OIG GOAL                                    PERFORMANCE MEASURE                                        OUTCOME/IMPACT
1. Administrative and criminal             Investigative reports are timely and presented in an        Administrative action, convictions or pleas are
   violations relating to FCA programs     objective and factual manner. Memoranda are issued to       obtained for employees and/or contractors
   and personnel are effectively           management describing internal control weaknesses or        found guilty of wrongdoing.
   investigated and reported.              program deficiencies found during the investigative
                                                                                                       Management actions taken against employees
                                           process with suggestions to prevent and/or detect future
                                                                                                       serve as a deterrent to future wrongdoing.
                                           wrongdoing.
                                                                                                       FCA internal policies, procedures and controls
                                           70% of active cases will be less than two years old (from
                                                                                                       are strengthened to prevent and/or detect
                                           the date the case was opened).
                                                                                                       future wrongdoing.
                                           100% of employee cases without criminal prosecution
                                           potential will be completed within one year from opening
                                           the case.
2. FCA employees and managers              Allegations of wrongdoing are received in a timely          Investigations are more successful because
   recognize their responsibility to       manner and are supported by specific information.           they are initiated in a timelier manner and have
   immediately report observed or                                                                      better information.
   suspected wrongdoing to the IG.
                                                                                                       FCA employees are more willing to report real
                                                                                                       or suspected wrongdoing because they trust
                                                                                                       the competence and fairness of OIG’s
                                                                                                       investigations.
3. Agency officials and the Congress       Summaries of investigations and the resulting               The Chairman and the Congress are better
   are kept fully and currently informed   administrative or judicial actions taken are incorporated   informed about OIG investigations, and
   of problems found in the process of     into the Semiannual Report to the Congress, along with      administrative and judicial consequences.
   and resulting from investigative        any disagreements on the actions taken or failure of
                                                                                                       Public confidence in the integrity of FCA
   activities.                             management to act in a timely and responsible fashion.
                                                                                                       programs and internal operations are
                                           Findings made during the investigative process              heightened.
                                           concerning the problem at issue or systemic problems
                                           are recognized and corrected or mediated by
                                           management.
                                             Farm Credit Administration
                                             Office of Inspector General
                                                Fiscal Year 2007-2008

                                           LEGISLATIVE AND REGULATORY REVIEW
                                                           AGENCY GOAL 2

              OIG GOAL                                    PERFORMANCE MEASURE                                      OUTCOME/IMPACT
1. Maintain an effective program for       Processes are established and documented for              OIG input is part of the decision making
   reviewing and commenting on             identifying and circulating (as appropriate) relevant     process in approving or amending legislation,
   proposed and existing legislation and   documents.                                                regulations, circulars and other policy
   regulations affecting the Agency and                                                              documents.
                                           Constructive comments on relevant documents are
   the IG community.
                                           submitted by the deadlines requested by the office,       Constructive criticism and creative alternatives
                                           Agency, or staff circulating comments.                    offered in OIG comments improve the quality
                                                                                                     and usefulness of documents initiated by the
                                           Document review activity is summarized for inclusion in
                                                                                                     Agency.
                                           the Semiannual Report to the Congress.
                                                                                                     FCA Board and management are informed
                                                                                                     about the status of new or pending legislation
                                                                                                     or regulations initiated externally.
                                              Farm Credit Administration
                                              Office of Inspector General
                                                 Fiscal Year 2007-2008

                                                          OUTREACH PROGRAM
                                                    AGENCY GOALS 1 AND 2

               OIG GOAL                                    PERFORMANCE MEASURE                                        OUTCOME/IMPACT
1. Agency personnel understand and          Develop and maintain educational brochures or               Agency employees’ acceptance of and
   accept OIG’s role within FCA and the     pamphlets describing OIG roles and activities.              cooperation with OIG activities is improved
   community at large.                                                                                  through better understanding. OIG programs
                                            Facilitate feedback from Agency employees and refine
                                                                                                        and products are improved through feedback
                                            products and practices based on the feedback to OIG
                                                                                                        from Agency employees.
                                            products and educational materials.
2. OIG staff provides leadership to         Time and resources are provided to OIG staff members        Projects and activities of adjunct organizations
   organizations directly contributing to   as an incentive to contribute to outside organizations by   such as the Association of Government
   the IG community.                        serving on committees and holding offices.                  Accountants (AGA), Institute of Internal
                                                                                                        Auditors (IIA), PCIE/ECIE, Council of Counsels
                                                                                                        to Inspector Generals (CCIG), Federal Law
                                                                                                        Enforcement Training Center (FLETC), and
                                                                                                        Inspectors General Auditor Training Institute
                                                                                                        (IGATI) are improved by OIG staff contributions
                                                                                                        and participation.
                                                                                                        The IG community is more credible and
                                                                                                        effective.
3. OIG staff contributes to special         OIG staff will participate in projects that contribute to   Management practices at the Agency are
   projects for improving the Agency,       achieving the vision of a better Agency and government.     improved by OIG staff participation in FCA
   the OIG community, and the Federal                                                                   special projects.
   government.
                                                                                                        FCA programs and operations are more
                                                                                                        effective and efficient.
Farm Credit Administration
Office of Inspector General
   Fiscal Year 2007-2008

      REVISED BUDGET
      FISCAL YEAR 2007
Farm Credit Administration
Office of Inspector General
   Fiscal Year 2007-2008

          TAB 3
                          Farm Credit Administration
                          Office of Inspector General
                             Fiscal Year 2007-2008

                     FY 2007 REVISED PERFORMANCE BUDGET
                             by Performance Objectives
                                                                   Direct       Indirect
                  Program Activities                 Total Cost                                Total FTE
                                                                   Cost           Cost
1.0 Policy and Regulation                                     0             0                        0.00
1.1 Regulation and Policy Development                         0             0                        0.00
1.2 Statutory and Regulatory Approvals                        0             0                        0.00

2.0 Safety and Soundness                                      0             0                        0.00
2.1 Examination                                               0             0                        0.00
2.2 Economic, Financial and Risk Analysis                     0             0                        0.00
2.3 FCS Data Management                                       0             0                        0.00

3.0 Implement the President’s Management Agenda               0                            0         0.00
3.1 Strategically manage human capital                        0                            0         0.00
3.2 Upgrade the Agency’s financial management                 0                            0         0.00
system
3.3 Continue the expansion of e-government                    0                            0         0.00
3.4 Continue evolution of budget & performance                0                            0         0.00
integration
3.5 Give due consideration to competitive sourcing            0                            0         0.00

4.0 Reimbursable Activities                                   0                                      0.00
4.1 SBA                                                       0             0                        0.00
4.2 USDA                                                      0             0                        0.00
4.3 FCSIC                                                     0             0                        0.00
4.4 NCB/NCB Development Corporation                           0             0                        0.00

5.0 Distributed Costs                                  1,016,578                 1,016,578           4.81
5.1 Budget and Financial Management                           0                            0         0.00
5.2 Human Resources Management                                0                            0         0.00
5.3 Information Resources Management                          0                            0         0.00
5.4 Other Legal Counsel                                       0                            0         0.00
5.5 Communication                                             0                            0         0.00
5.6 Contracting, Procurement, Mail and Supply                 0                            0         0.00
5.7 Board Activities and Information Services                 0                            0         0.00
5.8 Congressional and Intergovernmental Affairs               0                            0         0.00
5.9 Records Management and Information Services               0                            0         0.00
                         Farm Credit Administration
                         Office of Inspector General
                            Fiscal Year 2007-2008

                      FY 2007 REVISED PERFORMANCE BUDGET
                              by Performance Objectives
                                                                   Direct       Indirect
                 Program Activities                  Total Cost                                Total FTE
                                                                   Cost           Cost
5.10 Audit and Investigations                          1,016,578                 1,016,578           4.81
5.11 Administration                                           0                            0         0.00
5.12 OSMO/Farmer Mac (non-exam activities)                    0                            0         0.00

                                             Total    $1,016,578            0   $1,016,578           4.81
                        Farm Credit Administration
                        Office of Inspector General
                           Fiscal Year 2007-2008

                  FY 2007 REVISED PRODUCTS AND SERVICES
                            by Object Classification
                                                              PS 4.81
Resources                                       Total         Audits and     PS #    PS #       PS #       PS #
                                                            Investigations

Full-time Equivalents (FTE)                         4.81             4.81     0.00    0.00       0.00       0.00
% of costs distributed on the basis of FTE          1.00             1.00     0.00    0.00       0.00       0.00
                                      Total   $1,016,578     $1,016,578

Object Classification
11.1 Full-time permanent                        504,965          504,965        0           0          0      0
11.3 Other than full-time permanent             137,818          137,818        0           0          0      0
11.6 Overtime                                           0                0      0           0          0      0
11.7 Other personnel compensation                  2,500            2,500       0           0          0      0
                                   Subtotal     645,283          645,283        0           0          0      0

12.1 Civilian Personnel benefits                162,795          162,795        0           0          0      0
12.3 Incentives                                         0                0      0           0          0      0
12.6 Relocation                                         0                0      0           0          0      0
                                   Subtotal     162,795          162,795        0           0          0      0

13.0 Benefits to former personnel Subtotal              0                0      0           0          0      0

21.1 Domestic and Local Travel                   15,000           15,000        0           0          0      0
21.5 Relocation/Perm. Change of Station                 0                0      0           0          0      0
                                   Subtotal      15,000           15,000        0           0          0      0

22.1 Transportation of things                       750               750       0           0          0      0
22.5 Relocation/Perm. Change of Station                 0                0      0           0          0      0
                                   Subtotal         750               750       0           0          0      0

23.2 Rental payments to others                     2,500            2,500       0           0          0      0
23.4 ADP Rental                                         0                0      0           0          0      0
23.5 Telecommunications                            2,900            2,900       0           0          0      0
23.7 Other Rentals                                      0                0      0           0          0      0
23.8 Postage (Messenger)                            200               200
                                   Subtotal        5,600            5,600       0           0          0      0
                        Farm Credit Administration
                        Office of Inspector General
                           Fiscal Year 2007-2008

                   FY 2007 REVISED PRODUCTS AND SERVICES
                             by Object Classification
                                                               PS 4.81
Resources                                        Total         Audits and     PS #   PS #       PS #       PS #
                                                             Investigations

24.1 Government Printing                                 0                0      0          0          0      0
24.3 Commercial Printing                            1,500            1,500       0          0          0      0
24.5 Advertising                                    2,000            2,000       0          0          0      0
                                    Subtotal        3,500            2,500       0          0          0      0

25.1 Consulting Services                         160,000          160,000        0          0          0      0
25.2 Other services                                 8,000            8,000       0          0          0      0
25.3 Other purchases from Govt accounts           10,400           10,400        0          0          0      0
25.4 Operation & Maintenance of Facilities               0                0      0          0          0      0
25.7 Operation & Maintenance of Equipmt.                 0                0      0          0          0      0
25.8 Relocation/PCS                                      0                0      0          0          0      0
                                    Subtotal     178,400          178,400        0          0          0      0

26.1 Supplies and publications                      3,150            3,150       0          0          0      0
26.4 Fuel                                                0                0      0          0          0      0
                                    Subtotal        3,150            3,150       0          0          0      0

31.2 Office Furniture & Equipment                   1,000            1,000       0          0          0      0
31.5 ADP Software                                    500               500       0          0          0      0
31.6 ADP Equipment/Hardware                          600               600       0          0          0      0
                                    Subtotal        2,100            2,100       0          0          0      0

42.0 Tort Claims                    Subtotal             0                0      0          0          0      0

                                       Total   $1,016,578     $1,016,578         0          0          0      0
                           Farm Credit Administration
                           Office of Inspector General
                              Fiscal Year 2007-2008

                     FY 2007 REVISED PRODUCTS AND SERVICES
The accomplishment of the OIG’s products and services correlate to fulfilling our goals and
objectives. Management, administrative support and leave are disbursed across the four
program areas.

 Products/Service                                         Budget            % Budget             FTE            % FTE
 Audits, Inspections, and Review Products                $762,433               75%              3.56             75%

 Investigations                                           $50,829                 5%               .25              5%

 Legislation and Regulations Review                      $101,658               10%                .50            10%

 Outreach                                                $101,658               10%                .50            10%

                                            Total     $1,016,578               100%              4.81            100%

Audits, Inspections, and Review Products—The OIG issues approximately 5-10 reports per
year (including the annual FCA financial audit). This includes technical advice and assistance to
Agency officials in developing management information and financial reporting systems and in
streamlining programs and organizations. It also includes survey production. At present, one
survey has been produced for over 10 years, the Farm Credit System Survey.
Budget for FY 2007—$762,433....................................................................................3.56 FTE
Investigative Function—Allegations received by the OIG are reviewed by testing information
provided to determine whether an investigation should be opened. Investigations are conducted
when appropriate. Maintaining the OIG HOTLINE and directing FCS borrower complaint or
inquiry issues to Agency components are additional functions of the investigative service.
Budget for FY 2007—$50,829....................................................................................... .25 FTE
Review and Comment on Proposed and Existing Legislation and Regulations—The OIG
reviews and comments on proposed and existing legislation and regulations affecting the Agency
and the IG community. Additionally, the OIG reviews, comments and responds to Congressional
and executive requests and inquiries.
Budget for FY 2007—$101,658.......................................................................................50 FTE
Outreach Program—The OIG educates FCA employees about OIG’s role within the Agency.
The OIG lends leadership to organizations directly contributing to the IG community. Through
involvement in special projects and workgroups, the OIG makes contributions for improving the
Agency, the OIG community and the Federal government. This includes but is not limited to: the
Semiannual Report to the Congress, participation in external activities such as membership on
the ECIE and the CCIG, and instructing at the IG Academy and various public and Government
forums. We also participate in Agency efforts, such as the GPRA initiative, Employee’s Council,
Administrative Workgroup, Blacks in Government, and Continuity of Operations Plan.
Budget for FY 2007—$101,658.......................................................................................50 FTE
                            Farm Credit Administration
                            Office of Inspector General
                               Fiscal Year 2007-2008

                  FY 2007 REVISED BUDGET AND JUSTIFICATIONS
TOTAL OFFICE BUDGET..........................................................................................$1,016,578
   Total approved IRM Plan amount included in Office Budget.......................................$44,150

1100 Personnel Compensation...................................................................................$645,283
Amount required to fund salaries of OIG staff (4.81 FTE) charged with conducting audits,
inspections, evaluations, and investigations related to Agency programs and operations. We
are also responsible for reviewing existing and proposed legislation and regulations to evaluate
their impact on the Agency and on the prevention of fraud and abuse. Funds are included to
provide for one possible promotion. Funds are also allocated for possible cash awards.

1200 Personnel Benefits .............................................................................................$162,795
Benefits are the direct result of salaries, consistent with employees’ retirement systems, health
and other related benefits.

1300 Benefits for Former Personnel .....................................................................................$0
N/A

2100 Travel and Transportation of Persons ................................................................$15,000
OIG staff will use travel funds for audit and investigative related matters. Funds will also be
used for travel related to training courses, professional association meetings, and a
teambuilding session for all OIG staff.

2200 Transportation of Things ..........................................................................................$750
The amount is necessary for express mail services throughout the year.

2300 Rent, Communications, Utilities, and Miscellaneous ..........................................$5,600
   2300 Approved IRM Plan ..............................................................................................$2,900
These funds will cover anticipated usage of telephone credit cards while on official travel, long
distance phone service in McLean, courier delivery services throughout the year to hand-deliver
information and reports to the Congress and other groups, and BlackBerry™ service for the IG.
Funds will cover a portion of telecommuters access expense and maintenance of an
independent internet access for the anonymous HOTLINE account. The independent internet
account is used for confidential reporting of fraud, waste, abuse, and mismanagement.

2400 Printing and Reproduction.....................................................................................$3,500
Cost of printing brochures, pamphlets, business cards, etc. when FCA cannot produce the
items.
                             Farm Credit Administration
                             Office of Inspector General
                                Fiscal Year 2007-2008

                   FY 2007 REVISED BUDGET AND JUSTIFICATIONS
2500 Other Contractual Services................................................................................$178,400
    2500 Approved IRM Plan ............................................................................................$40,000
Contract services will be needed to assist in staff reviews of programs, including FISMA and
FCA financial statements audits. The tuition funds will be used for individual training classes for
staff. Individual training classes are a mandatory requirement of the Federal Yellow Book for
auditors and of the legal bar association for the Counsel to the IG. Membership fees will cover
the dues for professional organizations to which OIG staff belong such as the Institute of
Internal Auditors and Association of Government Accountants.
Government contractual funds will be used for miscellaneous training courses being attended by
staff at the U.S. Department of Agriculture (USDA), Federal Law Enforcement Training Center
(FLETC), and other government agencies. They will also be used for contracts used by other
government agencies such as Department of Labor (DOL) and General Services Administration
(GSA) for independent reviews of such things as the Agency’s financial statements and the
OMB required IT security audit. Government Information Security Reform Act (GISRA) requires
agencies to perform an audit of IT security on an annual basis.

2600 Supplies and Materials ...........................................................................................$3,150
    2600 Approved IRM Plan .................................................................................................$150
To purchase miscellaneous text and reference books as well as on-going subscriptions. Office
supply funds will be used mainly to purchase supplies for dedicated office equipment. Non-cash
awards will be given to staff at the discretion of the IG.

3100 Equipment ...............................................................................................................$2,100
    3100 Approved IRM Plan ..............................................................................................$1,100
Purchase equipment and software as necessary to support IG programs.
Farm Credit Administration
Office of Inspector General
   Fiscal Year 2007-2008

     PROPOSED BUDGET
      FISCAL YEAR 2008
                          Farm Credit Administration
                          Office of Inspector General
                              Fiscal Year 2007-2008

                     FY 2008 PROPOSED PERFORMANCE BUDGET
                              by Performance Objectives
Program Activities                                                  Direct       Indirect       Total FTE
                                                       Total Cost
                                                                    Cost           Cost
1.0 Policy and Regulation                                       0            0                       0.00
1.1 Regulation and Policy Development                           0            0                       0.00
1.2 Statutory and Regulatory Approvals                          0            0                       0.00

2.0 Safety and Soundness                                        0            0                       0.00
2.1 Examination                                                 0            0                       0.00
2.2 Economic, Financial and Risk Analysis                       0            0                       0.00
2.3 FCS Data Management                                         0            0                       0.00

3.0 Implement the President’s Management Agenda                 0                           0        0.00
3.1 Strategically manage human capital                          0                           0        0.00
3.2 Upgrade the Agency’s financial management system            0                           0        0.00
3.3 Continue the expansion of e-government                      0                           0        0.00
3.4 Continue the evolution of budget & performance              0                           0        0.00
integration
3.5 Give due consideration to competitive sourcing              0                           0        0.00

4.0 Reimbursable Activities                                     0            0                       0.00
4.1 SBA                                                         0            0                       0.00
4.2 USDA                                                        0            0                       0.00
4.3 FCSIC                                                       0            0                       0.00
4.4 NCB/NCB Development Corporation                             0            0                       0.00

5.0 Distributed Costs                                   1,047,318                1,047,318           4.81
5.1 Budget and Financial Management                             0                           0        0.00
5.2 Human Resources Management                                  0                           0        0.00
5.3 Information Resources Management                            0                           0        0.00
5.4 Other Legal Counsel                                         0                           0        0.00
5.5 Communication                                               0                           0        0.00
5.6 Contracting, Procurement, Mail and Supply                   0                           0        0.00
5.7 Board Activities and Information Services                   0                           0        0.00
5.8 Congressional and Intergovernmental Affairs                 0                           0        0.00
5.9 Records Management and Information Services                 0                           0        0.00
                          Farm Credit Administration
                          Office of Inspector General
                              Fiscal Year 2007-2008

                      FY 2008 PROPOSED PERFORMANCE BUDGET
                               by Performance Objectives
5.10 Audit and Investigations                         1,047,318        1,047,318   0.00

5.11 Administration                                          0                0    0.00
5.12 OSMO/Farmer Mac (non-exam activities)                   0                0    0.00

                                             Total   $1,047,318   0   $1,047,318   4.81
                        Farm Credit Administration
                        Office of Inspector General
                           Fiscal Year 2007-2008

                  FY 2008 PROPOSED PRODUCTS AND SERVICES
                             by Object Classification
                                                                PS 4.81
Resources                                          Total         Audits and     PS #    PS #       PS #       PS #
                                                               Investigations

Full-time Equivalents (FTE)                            4.81             4.81     0.00    0.00       0.00       0.00
% of costs distributed on the basis of FTE             1.00             1.00     0.00    0.00       0.00       0.00
                                         Total   $1,047,318    $1,047,318          0           0          0      0

Object Classification
11.1 Full-time Permanent                           511,301         511,301        0        0              0      0
11.3 Other than full-time permanent                137,818         137,818        0        0              0      0
11.6 Overtime                                              0                0     0        0              0      0
11.7 Other personnel compensation                     2,500           2,500       0        0              0      0
                                   Subtotal        651,619         651,619        0        0              0      0

12.1 Civilian Personnel Benefits                   154,149         154,149        0        0              0      0
12.3 Incentives                                            0                0     0        0              0      0
12.6 Relocation                                            0                0     0        0              0      0
                                   Subtotal        154,149         154,149        0        0              0      0

13.0 Benefits to former personnel Subtotal                 0                0     0        0              0      0

21.1 Travel & transportation of person              15,000          15,000        0        0              0      0
21.5 Relocation/Perm. Change of Station                    0                0     0        0              0      0
                                   Subtotal         15,000          15,000        0        0              0      0

22.1 Transportation of things                          750              750       0        0              0      0
22.5 Relocation/Perm. Change of Station                    0                0     0        0              0      0
                                   Subtotal            750              750       0        0              0      0

23.2 Rental payments to others                        2,500           2,500       0        0              0      0
23.3 Utilities                                             0                0     0        0              0      0
23.4 ADP Rental                                            0                0     0        0              0      0
23.5 Telecommunications                               2,900           2,900       0        0              0      0
23.7 Other Rentals                                         0                0     0        0              0      0
23.8 Postage (Messenger)                               200              200       0        0              0      0
                                   Subtotal           5,600           5,600       0        0              0      0
                       Farm Credit Administration
                       Office of Inspector General
                          Fiscal Year 2007-2008

               FY 2008 PROPOSED PRODUCTS AND SERVICES
                          by Object Classification
                                                                PS 4.81
Resources                                         Total          Audits and     PS #   PS #       PS #       PS #
                                                               Investigations

24.1 Government Printing                                  0                 0      0          0          0      0
24.3 Commercial Printing                             1,500            1,500        0          0          0      0
24.5 Advertising                                     1,000            1,000        0          0          0      0
                                     Subtotal        2,500            2,500        0          0          0      0

25.1 Consulting Services                          175,000          175,000         0          0          0      0
25.2 Other Services                                  8,000            8,000        0          0          0      0
25.3 Other purchases from Govt accounts            10,400           10,400         0          0          0      0
25.4 Operation & Maintenance of Facilities                0                 0      0          0          0      0
25.7 Operation & Maintenance of Equipmt.                  0                 0      0          0          0      0
25.8 Relocation/PCS                                       0                 0      0          0          0      0
                                     Subtotal     193,400          193,400         0          0          0      0

26.1 Office Supplies & Publication                   3,000            3,000        0          0          0      0
26.4 Fuel                                                 0                 0      0          0          0      0
                                     Subtotal        3,000            3,000        0          0          0      0

31.2 Office Furniture & Equipment                    1,000            1,000        0          0          0      0
31.5 ADP Software                                    1,500            1,500        0          0          0      0
31.6 ADP Equipment/Hardware                        18,800           18,800         0          0          0      0
                                     Subtotal      21,300           21,300         0          0          0      0

42.0 Tort Claims                     Subtotal             00                0      0          0          0      0

                                        Total   $1,047,318     $1,047,318          0          0          0      0
                           Farm Credit Administration
                           Office of Inspector General
                              Fiscal Year 2007-2008

                             FY 2008 PRODUCTS AND SERVICES
The accomplishment of the OIG’s products and services correlate to fulfilling our goals and
objectives. Management, administrative support and leave are disbursed across the four
program areas.

 Products/Service                                         Budget            % Budget            FTE             % FTE
 Audits, Inspections, and Review Products                $785,488               75%              3.56             75%
 Investigations                                            $52,366               5%                .25             5%
 Legislation and Regulations Review                      $104,732               10%                .50            10%
 Outreach                                                $104,732               10%                .50            10%
                                             Total     $1,047,318              100%              4.81           100%

Audits, Inspections, and Review Products— The OIG issues approximately 5-10 reports per
year (including the annual FCA financial audit). This includes technical advice and assistance to
Agency officials in developing management information and financial reporting systems and in
streamlining programs and organizations. It also includes survey production. At present, one
survey has been produced for over 10 years, Farm Credit System Survey.
Budget for FY 2008—$785,488....................................................................................3.56 FTE
Investigative Function— Allegations received by the OIG are reviewed by testing information
provided to determine whether an investigation should be opened. Investigations are conducted
when appropriate. Maintaining the OIG HOTLINE and directing FCS borrower complaint or
inquiry issues to Agency components are additional functions of the investigative service.
Budget for FY 2008—$52,366.........................................................................................25 FTE
Review and Comment on Proposed and Existing Legislations and Regulations—The OIG
reviews and comments on proposed and existing legislation and regulations affecting the
Agency and the IG community. Additionally, the OIG reviews, comments and responds to
Congressional and executive requests and inquiries.
Budget for FY 2008—$104,732..................................................................................... .50 FTE
Outreach Program—The OIG educates FCA employees about OIG’s role within the Agency.
The OIG lends leadership to organizations directly contributing to the IG community. Through
involvement in special projects and workgroups, the OIG makes contributions for improving the
Agency, the OIG community and the Federal government. This includes but is not limited to:
the Semiannual Report to the Congress, participation in external activities such as membership
on the ECIE and the CCIG, and instructing at the IG Academy and various public and
Government forums. We also participate in Agency efforts, such as the GPRA initiative,
Employee’s Council, Administrative Workgroup, Blacks in Government, and Continuity of
Operations Plan.
Budget for FY 2008—$104,732.......................................................................................50 FTE
                            Farm Credit Administration
                            Office of Inspector General
                               Fiscal Year 2007-2008

                          FY 2008 BUDGET AND JUSTIFICATIONS
TOTAL OFFICE BUDGET..........................................................................................$1,047,318
   Total approved IRM Plan amount included in Office Budget......................................$ 63,200

1100 Personnel Compensation...................................................................................$651,619
Amount required to fund salaries of OIG staff (4.81 FTE) charged with conducting audits,
inspections, evaluations, and investigations related to Agency programs and operations. We
are also responsible for reviewing existing and proposed legislation and regulations to evaluate
their impact on the Agency and on the prevention of fraud and abuse. Funds are also allocated
for possible cash awards.

1200 Personnel Benefits .............................................................................................$154,149
Benefits are the direct result of salaries, consistent with employees’ retirement systems, health
and other related benefits.

1300 Benefits for Former Personnel .....................................................................................$0
N/A

2100 Travel and Transportation of Persons ................................................................$15,000
OIG staff will use travel funds for audit and investigative related matters. Funds will also be
used for travel related to training courses, professional association meetings, and a
teambuilding session for all OIG staff.

2200 Transportation of Things ..........................................................................................$750
The amount is necessary for express mail services throughout the year.

2300 Rent, Communications, Utilities, and Miscellaneous ..........................................$5,600
   2300 Approved IRM Plan ..............................................................................................$2,900
These funds will cover anticipated usage of telephone credit cards while on official travel, long
distance phone service in McLean, courier delivery services throughout the year to hand-deliver
information and reports to the Congress and other groups, and BlackBerry™ service for the IG.
Funds will cover a portion of telecommuters access expense and maintenance of an
independent internet access for the anonymous HOTLINE account. The independent internet
account is used for confidential reporting of fraud, waste, abuse, and mismanagement.

2400 Printing, Publications and Advertisement............................................................$2,500
Cost of printing brochures, pamphlets, business cards, etc. when FCA cannot produce the
items.
                             Farm Credit Administration
                             Office of Inspector General
                                Fiscal Year 2007-2008

                            FY 2008 BUDGET AND JUSTIFICATIONS
`2500 Other Contractual Services ..............................................................................$193,400
    2500 Approved IRM Plan ............................................................................................$40,000
Contract services will be needed to assist in staff reviews of programs, including FISMA and
FCA financial statements audits. The tuition funds will be used for individual training classes for
staff. Individual training classes are a mandatory requirement of the Federal Yellow Book for
auditors and of the legal bar association for the Counsel to the IG. Membership fees will cover
the dues for professional organizations to which OIG staff belong such as the Institute of
Internal Auditors and Association of Government Accountants.
Government contractual funds will be used for miscellaneous training courses being attended by
staff at USDA, Federal Law Enforcement Training Center (FLETC), and other government
agencies. They will also be used for contracts used by other government agencies such as
DOL and GSA for independent reviews of such things as the Agency’s financial statements and
the OMB required IT security audit. GISRA requires agencies to perform an audit of IT security
on an annual basis.

2600 Supplies and Materials ...........................................................................................$3,000
To purchase miscellaneous text and reference books as well as on-going subscriptions. Office
supply funds will be used mainly to purchase supplies for dedicated office equipment. Non-cash
awards will be given to staff at the discretion of the IG.

3100 Equipment .............................................................................................................$21,300
    3100 Approved IRM Plan ............................................................................................$20,300
Purchase software as necessary to support IG programs.
Farm Credit Administration
Office of Inspector General
   Fiscal Year 2007-2008

          TAB 3
                     Farm Credit Administration
                     Office of Inspector General
                        Fiscal Year 2007-2008

    OFFICE OPERATING PLAN CONTROL SYSTEM & EVALUATION
STATUTORY ROLE AND RESPONSIBILITIES
The OIG was created within the FCA by the 1988 Amendments to the IG Act as an independent
unit to: 1) conduct and supervise audits and investigations; 2) promote economy, efficiency and
effectiveness and to prevent fraud and abuse in program administration; and 3) keep the
Chairman and the Congress fully informed about problems and deficiencies and the need and
progress in correcting them.
The IG Act specifies the IG’s duties, responsibilities, and authorities. The IG Act precludes the
OIG from performing any Agency program operating function; rather, the OIG advises
management and the Congress about ways to improve programs. The IG works with the
Chairman to promote positive change in the Agency’s programs and operations.

OIG STAFFING NEEDED TO DELIVER PRODUCTS AND SERVICES
This section describes the staffing of the OIG. It also discusses how the OIG is organized to
produce the products and services appropriate to fulfill its responsibilities.
The Inspector General (IG) provides leadership, policy direction, and general management and
supervision of the OIG staff. The IG is also an advisor to the Chairman and the principal
spokesperson for OIG, coordinating its activities and issues with other agencies. The IG
position is comparable in grade with the other office directors.
The Counsel to the Inspector General provides independent legal advice, analysis of
proposed legislation and regulations, and reviews OIG products for legal sufficiency. Counsel
represents and defends OIG in all legal issues. The Counsel also participates in audits and
inspections on an as needed basis. Additionally, the investigative function has come under the
direction of the Counsel concurrent with the transfer of the former criminal investigator in
October 2005 to another office and the subsequent abolishment of the Criminal Investigator
position. The Counsel position is a permanent part-time position as 0.8 FTE.
The Program Auditor position is devoted to audits, inspections, and management analyses,
focusing on the significant management challenges of the Agency.
A second Program Auditor position was created with the discontinuance of the former Criminal
Investigator position. This new position will also be devoted to audits, inspections, and
management analyses, focusing on the significant management challenges of the Agency.
However, this position will function under more supervision, both from the senior Program
Auditor and the IG.
The Management Analyst position will be abolished at the beginning of Fiscal Year 2007. The
position will be replaced by an Administrative Assistant responsible for assisting the IG in
budgeting, procurement, training, administrative matters relating to personnel management, and
for general administrative support to the rest of the staff. This new position is also responsible
for assisting the IG in the completion of the Semiannual Report to the Congress and the FCS
Annual Survey report on the Agency’s examination function.
                     Farm Credit Administration
                     Office of Inspector General
                        Fiscal Year 2007-2008

    OFFICE OPERATING PLAN CONTROL SYSTEM & EVALUATION
OIG PRODUCTS AND SERVICES
Audits and Inspections are the primary vehicles through which the OIG develops
recommendations to promote economy, efficiency, and effectiveness in Agency programs and
prevent waste and mismanagement. OIG also provides input to the Chairman or managers
through management letters and confidential observations.
The auditors are devoted full time to audits and inspections. The Counsel to the IG may also
perform inspections and evaluations under the supervision of the IG, focusing on evaluating
administrative and operational issues.
OIG augments it core staff with contracts when high level subject matter expertise is needed to
perform a particular task.
Investigations encompass all OIG activities designed to detect or prevent fraud and abuse in
administering Agency programs.        Investigations are normally distinguished from other
evaluations mainly in that they are directed at individuals rather than programs and activities.
However, some of OIG’s investigative actions are directed at preventing fraud and abuse
through improving the effectiveness of management and administrative controls and practices,
especially in high-risk areas. OIG also manages a HOTLINE to help FCA employees and the
public report wrongdoing.
Legislative and Regulatory Review includes the review and comment on proposed and
existing legislation and regulations as they may affect the Agency or the OIG community. This
activity review is reported in the Semiannual Report to the Congress.
Outreach directs the OIG to focus attention to improving the Agency, the IG community and the
Federal government. This is accomplished by promoting Agency understanding of the OIG’s
role, providing leadership to organizations contributing to the IG community, and by participating
in special projects. The OIG also develops educational information describing the roles and
activities of the OIG and provides information to the public through the FCA web site.
Other OIG Functions include internal policy direction and leadership and advice to the
Chairman and management about Agency programs and operations. The IG is also
responsible for fully informing the Chairman and the Congress about fraud and other serious
problems in Agency programs, including management’s progress in carrying out corrective
actions.

OIG’S MISSION, VISION AND IMPLICATIONS FOR STAFFING
It is the OIG’s mission that its work products and presence promote economy, efficiency and
integrity in Agency operations. OIG will accomplish this by being a leader and catalyst
identifying Agency challenges and opportunities. We will strive to:
       •   deliver products and services that are competent, objective, timely and relevant;
       •   maintain a customer focus which is responsive to the needs of decision-makers; and
       •   provide a positive working environment that encourages us to be innovative and
           reach our potential through teamwork and candid communication.
                     Farm Credit Administration
                     Office of Inspector General
                        Fiscal Year 2007-2008

    OFFICE OPERATING PLAN CONTROL SYSTEM & EVALUATION
If we are to fulfill these statements, each staff member must broaden and refine their skills and
abilities, adopt a creative approach to problem solving, and take the initiative to influence
management.          In that way, management will be receptive to our conclusions and
recommendations. Staff must be supported through OIG management’s actions, equipment
and training, and mutual support from office teammates.

STAFFING ASSESSMENT AND STRATEGIES
OIG’s diverse responsibilities prescribed by the IG Act dictate the needed competencies within
the OIG staff. The independent nature of the OIG role also has implications for staffing. Even
with a very small staff, the OIG can deliver its products and services by maintaining a high level
of cross training and a broad base of expertise in audit, investigations, law, management, and
administration. The 4.81 FTEs in this plan constitute the critical mass necessary to credibly
perform OIG’s responsibilities. The OIG established the current staffing pattern after careful
analysis of the specialized nature of the OIG’s responsibilities and volume of work. Downsizing
over the years has reduced the OIG to a level at which any further reduction may adversely
affect the OIG’s accomplishment of its mission.
OIG staff performs evaluations and investigations under the general supervision of the IG.
These assignments are often unlike previous assignments and need creative thinking in
planning and developing the project, and mature judgment in developing conclusions and
recommendations and defending them before management.
The current OIG staff profile represents a high level of diversity. When filling future OIG
vacancies, we will make a concerted effort to attract a diverse pool of qualified candidates. We
share the Agency’s affirmative employment objectives and believe that a diverse staff is a
critical factor in the long-term success of an organization.

STAFFING OBJECTIVES AND STRATEGIES
Objectives
       • Retain and refine the skills and competencies represented by the current staff profile.
       • Employ the best-qualified applicant while ensuring the broadest possible pool of
           applicants.
       • Cross-train all OIG staff to ensure each staff member can capably perform at least
           one OIG function as well as their primary staffing role.
       • Increase effectiveness of collaboration among OIG staff members.
       • Expand OIG staff participation in non-program activities of the Agency.
Strategies
       • Staff will identify and participate in training and professional development activities
           identified in individual development plans to retain and enhance skills.
       • Teamwork training will occur regularly to promote collaboration among OIG staff.
       • Agency affirmative employment objectives will be considered in filling all OIG
           vacancies to achieve appropriate diversity.
Farm Credit Administration
Office of Inspector General
   Fiscal Year 2007-2008

          TAB 5
                      Farm Credit Administration
                      Office of Inspector General
                         Fiscal Year 2007-2008

                              APPENDIX A—AUDIT PLAN

BACKGROUND
The Chairman and FCA Board have expressed their ongoing support for independent
assessments of significant programs of the Agency. The OIG has identified its focus issues in
this Operating and Performance Plan (OPP) and in the Semiannual Report to the Congress in
the form of management challenges, as discussed below.

MANAGEMENT CHALLENGES
This part of the OPP highlights major challenges confronting the Agency as it works to fulfill its
mission. The OIG is required by Federal law to identify these challenges and present them in
the Agency’s Performance and Accountability Report. These challenges have remained for
several years. Most can be addressed through concerted action by management. Over the
past year, the OIG has observed progress by FCA management in addressing the challenges.
For example, strategic studies were completed in 2005 that resulted in the initiation of significant
organizational change designed to enable the Agency to further address the challenges.
A major change was the transition to a new Chief Examiner. This resulted in a substantive
transformation in the Office of Examination’s organization and operating methodology. While
well underway, these changes will take some time yet to become fully institutionalized and
reach full efficiency.
Another substantive change was to reconsolidate into a single office, the Office of Management
Services (OMS), the Agency’s personnel, financial, and information technology functions under
the umbrella of a new manager. This has evidenced proactive results. For example, the
Agency’s financial services function, including accounting, financial reporting, contracting, and
procurement, were outsourced to the Department of the Treasury’s Bureau of the Public Debt
effective April 1, 2006. The goal of this outsourcing was to achieve cost and performance
efficiencies for the Agency. To date there have been transitional hurdles to overcome and the
full achievement of the desired efficiencies will take time to be realized.
Additionally, the Agency’s Office of Regulatory Policy and, to a lesser extent, the Office of
General Counsel, reorganized to promote the utilization of a matrix approach to management.
All these changes in Agency organization are designed to promote improved efficiencies in the
utilization of human capital, communication between the FCA Board and staff, and decision-
making and oversight of the Agency by the FCA Board.

Human Capital
       In March 2001, the OIG recommended FCA develop a human capital plan and FCA
       management agreed to this recommendation. Under Chairman Pellett’s leadership,
       senior managers have focused on the challenge of marshalling, managing, and
       maintaining human capital to assure accountability and maximize FCA performance.
       While FCA still does not have a human capital plan; the Agency has made a significant
       investment in strategic studies that can serve as the plan’s foundation. The objective of
                    Farm Credit Administration
                    Office of Inspector General
                       Fiscal Year 2007-2008

                            APPENDIX A—AUDIT PLAN

      the strategic studies was to create a picture of the System and the credit needs of rural
      America in 5 to 7 years and identify organizational and human capital opportunities to
      help FCA adapt. The approach is a marked contrast to past OIG observations where we
      noted the problem was the lack of a consistent strategic approach in establishing a
      human capital plan.
      FCA’s challenge will be to transform the strategic studies into management actions
      (organizational changes and process improvements) that achieve better results and
      clarify accountability. Since early 2005, when the strategic studies were completed, the
      Agency has made significant progress in achieving this challenge. However, full
      transformation of the Agency’s organization and processes has not yet been achieved.
      Complete realignment of resources and/or processes should help FCA pursue
      organizational approaches that recognize the reality of evolving technology, a changing
      workforce, and other environmental forces. In addition to achieving full transformation of
      the Agency’s organization and processes, how FCA meets its mission will be heavily
      dependent on quality of its human capital, having the appropriate skill sets, and how it
      organizes to meet its mission.
      The capstone to achieving this challenge should be a long-term human capital plan that
      incorporates the elements recommended in the OIG’s Audit A00-04, Performance
      Budgeting, issued in March 2001. Additionally, a critical component of managing human
      capital is providing for management succession. Individuals with the potential to
      become managers should be identified, provided developmental opportunities, and,
      when appropriate, promoted to higher positions. This, as part of a human capital plan,
      should be linked to the Agency’s Strategic Plan for long-term achievement of the
      Agency’s mission.

Financial Management
      Timely, accurate, and useful financial information is essential for:
         •   making day-to-day decisions;
         •   managing the Agency’s operations more effectively;
         •   supporting results-oriented management approaches; and
         •   ensuring accountability on an ongoing basis.

      During FY 2001, FCA successfully implemented a financial management system using
      the services of the Department of Interior’s National Business Center. During
      September 2003, the Agency decided to reprogram funds and purchase a new financial
      system. Management originally scheduled implementation of the new system during
      FY 2004. In September 2004, the OIG issued an inspection report that showed
      significant improvements were needed in the project management of this new financial
      management system to successfully complete implementation. In July 2005, the new
      office director over finance put this project on hold until a reevaluation of this new system
                     Farm Credit Administration
                     Office of Inspector General
                        Fiscal Year 2007-2008

                             APPENDIX A—AUDIT PLAN

       could be made.
       Subsequently, a decision was made, in lieu of trying to bring another financial
       management system on line, to outsource to the Bureau of the Public Debt the Agency’s
       accounting, financial reporting, contracting and procurement functions. This was
       initiated April 1, 2006. While the transition is still underway, its ultimate success will
       need to be measured by whether the Agency and its managers are receiving timely
       service, useful financial reporting, and improved efficiencies. To measure this, the
       Agency will need to develop performance measures to assess the achievement of goals
       related to this outsourcing.

Leveraging Technology
       Information technology (IT) is a key element of management reform efforts that can help
       dramatically reshape government to improve performance and reduce costs. The
       Agency has recognized that in order to meet the constraints of its budget, it must be able
       to maximize its return on investment in technology. Internally, there is an opportunity for
       IT to complement human capital initiatives to reformulate the work processes of FCA.
       There is also an opportunity to capture knowledge of employees who are approaching
       retirement. Externally, E-Government offers many opportunities to better serve the
       public, make FCA more efficient and effective, and reduce costs. FCA has begun to
       implement some E-Government applications, including the use of the Internet to collect
       and disseminate information. FCA’s ongoing challenge is to establish effective
       mechanisms to ensure that current and future members of staff have the skills to use
       technology to operate in an efficient and effective manner.

Agency Governance
       The Farm Credit Act provides for a full-time three-member Board. The Board members
       are appointed by the President and confirmed by the Senate. A small full-time Board
       presents a challenge in terms of defining the roles and responsibilities of the Board
       members relative to the governance of the Agency. The Board must be able to engage
       in professional policy debate and set a sound course for the Agency. The Board’s rules
       of operation are a foundation for trust and shared expectations among Board members.
       A collegial Board, founded on mutual trust and respect, is essential to FCA’s ultimate
       effectiveness.
       The Chairman has taken action to address this challenge by sharing authority and
       creating an environment at the Board level that promotes a constructive working
       relationship between the Board members.

Strategic Planning
       The FCA Board adopted its 2004-2009 Strategic Plan in December 2003. Since
       adoption, the Agency has a new Chairman and a new Board member. The changes in
       top leadership provide an opportunity to revise the plan to ensure the Board’s vision is
                          Farm Credit Administration
                          Office of Inspector General
                             Fiscal Year 2007-2008

                                  APPENDIX A—AUDIT PLAN

          accomplished. The challenge is to establish a strategic planning dynamic that is
          ongoing in nature and in pace with the Agency’s environment. In 2005, the Board
          established a Strategic Planning Committee, one of three committees established to
          facilitate the Board’s oversight responsibilities and communication between the Board
          and Agency staff. To date, there is little evidence to indicate that this committee has
          begun to function. Nevertheless, there is the potential for this committee to catalyze the
          strategic planning function and address this challenge.
          The Board refined the performance measures in January 2005. FCA should evaluate its
          performance measures on an ongoing basis to ensure that they challenge and stretch
          the organization. Performance measures can be a powerful tool to continue the push
          into a results-oriented organization. An effective performance management system
          fosters performance and accountability at the individual, organizational, and ultimately
          overall Agency levels.

A Changing Environment
          The System is a single industry lender and is vulnerable to economic swings. The FCS
          remains sound in all material respects. Earnings and capital levels have continued to
          strengthen and asset quality remains high. However, there are many challenges facing
          agriculture and rural America today that raise the question of whether there should be
          modifications to the Farm Credit Act in order to enhance agricultural and rural
          economies of the future. In the early 1990s, the GAO conducted a comprehensive study
          of the cost and availability of credit in rural America.1 The GAO concluded that the
          System did not need new statutory authorities in the near term, but that ongoing
          structural changes in agriculture and rural America could justify such changes in the
          longer term. GAO noted that over time, as agriculture and rural America continue to
          change, the System’s charter may need to be updated to ensure that the System is not
          hampered by outdated legislation.
          The FCA must balance the often competing demands of ensuring the FCS fulfills its
          public policy purpose, proactively examining risk in the regulated institutions both
          individually and systemically, and controlling the cost of the regulator. FCA’s challenge
          is complex because it has become increasingly difficult to reconcile significant provisions
          of the Farm Credit Act with the realities of the agricultural industry, the business
          environment, and financial markets in the 21ST Century.
          The Agency can anticipate that the System will press for broader powers through
          regulatory interpretations of the Farm Credit Act. At the same time, FCA must anticipate
          that the System’s competitors will press for the Agency to be a strict interpreter of the
          Farm Credit Act. As a financial regulator, FCA must maintain a flexible and responsive,
          yet independent and objective, regulatory environment.


1
    GAO/GGD-94-39 Farm Credit System Repayment of Federal Assistance and Competitive Position, March 1994.
                     Farm Credit Administration
                     Office of Inspector General
                        Fiscal Year 2007-2008

                             APPENDIX A—AUDIT PLAN

AUDITS AND INSPECTIONS —FISCAL YEAR 2007
This audit plan identifies issues received from FCA management and staff as well as other
issues identified by OIG staff. OIG audits and inspections provide assurances to the Chairman
and FCA Board members that programs are operating effectively and with appropriate controls.
This audit plan identifies issues received from the FCA Board and management as well as
issues identified by OIG staff. Audit and inspection activities will most likely be selected from
the areas listed below. However, actual audits and inspections conducted may vary in order to
be responsive to changing needs or circumstances.

Audit of Financial Statements
       The OIG contracts with an independent accounting firm to conduct an audit of FCA’s
       financial statements. During FY 2007 and 2008, the OIG will deliver the audit opinion on
       the financial statements as of September 30, 2006 and 2007, respectively. This year
       and next, there is an expectation by FCA management and the Office of Management
       and Budget (OMB) that audit opinions will be issued and the Agency Performance and
       Accountability Report will be published by November 15, 2006 and 2007, respectively.
       The OIG has ensured that its independent accounting firm has incorporated in its audit
       plan a work schedule that will ensure audit delivery expectations are met.

Financial Information Security Management Act of 2002 (FISMA)
       The FISMA mandates an annual evaluation by the OIG or an independent external
       auditor. Field work by our external auditors began in August 2006. The final report is
       due to OMB on October 6, 2006.
       The protection of personally identifiable information is and will continue to remain a
       significant management challenge. The OIG will continue to work with the Director of
       OMS and his Chief Information Officer to incorporate issues of concern in OIG audit
       activities. We anticipate a slightly more complex effort in FY 2007 due to the addition of
       privacy of information security requirements.

FCA Board Standing Committees
       FCA’s organizational structure was recently revised. Strategic studies of the Agency
       preceded the final determinations of organizational change. The intent is to make FCA a
       more efficient and effective regulator. As part of the reorganization and as stated in
       revised FCA Board Policy Statement 64, June 2005, the FCA Board established three
       committees, the Regulation and Policy Development Committee, the Risk Committee,
       and the Strategic Planning Committee.
       Policy Statement 64 indicates these committees are intended by the FCA Board to be
       important mechanisms in assisting the FCA Board in effectively managing the Agency, in
       promulgating policy and regulations, and in assessing risk and its implications.
       The OIG began an audit of these committees in late fiscal year 2006 to determine if they
                       Farm Credit Administration
                       Office of Inspector General
                          Fiscal Year 2007-2008

                             APPENDIX A—AUDIT PLAN

       are meeting the FCA Board’s plan and expectations.

FCA Organizational Changes
       FCA has gone through many organizational changes in past years as a result of
       leadership transition and efforts to increase Agency efficiency. The OIG will review the
       Agency’s organizational structure and other changes after the most recent strategic
       studies (by KPMG and Lindholm) to assess the effectiveness of management’s actions
       in response to the studies.

Management of Succession Planning
       OIG will assess management succession planning in the Agency to determine its
       adequacy, linkage to the Strategic Plan’s human capital initiatives, and linkage to the
       Agency’s achievement of its mission.
FCA Strategic Plan
       We will assess FCA’s process for the development of the strategic plan and evaluate
       compliance with the Government Performance and Results Act (GPRA).

Information Security
       The OIG will access the effectiveness of controls to ensure sensitive information is being
       safeguarded to eliminate vulnerabilities or unauthorized access and intrusions.

Agency Credit Cards

       The OIG will assess the Agency’s administration of and control over credit cards used by
       Agency personnel. This audit will also encompass follow-up on FCA’s actions in
       response to earlier OIG inspections in this area.

SmartPay Program
       Economies and quality of service to be realized in the selection of future SmartPay
       vendors based on a study and comparison of past experience.

Audit Follow-Up
       Saving money and improving programs and operations are the main objectives of the
       audit function. Findings, recommendations, and agreed-upon actions are the vehicles
       by which these objectives are sought. But it is management’s resulting actions that help
       an organization improve its effectiveness and efficiency. Therefore, we will complete a
       review that will focus on FCA’s actions in response to OIG reports.
                  Farm Credit Administration
                  Office of Inspector General
                     Fiscal Year 2007-2008

                          APPENDIX A—AUDIT PLAN

AUDITS AND INSPECTIONS— FISCAL YEAR 2007 AND BEYOND

     •   FCA Policy and Regulation Development
     •   Assess Effectiveness of a Selected Regulation(s)
     •   Financial Information for Management Decisions
     •   Leveraging Technology in Conducting Examinations
     •   Appropriateness of the interface of OSMO and FCA as the Regulators of Two
         Distinct GSEs
     •   Economies Realized through Outsourcing
     •   FCA Centralized Services
     •   The Efficiency and Effectiveness of the OGC Legal Opinion Process
     •   FCA Examiner Commissioning Program
     •   Borrower Complaint Handling
     •   Examination Best Practices
     •   Evaluation of Physical Security Practices and Emergency Preparedness
     •   Policy and Procedures Manual Process
     •   Adherence to the Government in the Sunshine Act
     •   Agency’s Validation of Employees’ Credentials used in Gaining Employment
     •   Agency’s Administration of the Correspondence Tracking System
     •   Sunset Act Compliance Regarding Reports Submitted to Congress
                     Farm Credit Administration
                     Office of Inspector General
                        Fiscal Year 2007-2008

                          APPENDIX B—IRM PLAN SUMMARY
IRM Budget       Object    FY 2007    FY 2008   FY 2009   FY 2010   FY 2011   FY 2012    Total
Category         Code       Costs      Costs     Costs     Costs     Costs     Costs     Costs

Telephone &      2351        2,900      2,900     2,900     2,900     2,900     2,900     17,400
Communications
Services

Consulting       2511       40,000     40,000    40,000    45,000    45,000    50,000    260,000
Services

Supplies         2611        150            0         0         0         0         0       150

Software         3152        500        1,500       500     1,500       500     1,500      6,000

IT Equipment     3162        600       18,800       600       400     1,500    17,900     39,800

                   Total    $44,150   $63,200   $44,000   $49,800   $49,900   $72,300   $323,350