Office of Inspector General FISCAL YEAR 2005 PERFORMANCE REPORT January 2006 Farm Credit Administration Office of Inspector General 1501 Farm Credit Drive McLean, Virginia 22102-5090 January 10, 2006 The Honorable Nancy C. Pellett Chairman Farm Credit Administration 1501 Farm Credit Drive McLean, Virginia 22102 Dear Ms. Pellett: The Government Performance and Results Act of 1993 encourages organizations to manage for results and hold managers accountable for executing programs to achieve desired outcomes. The enclosed report documents the outcomes or impact of the products, services and leadership of the Office of Inspector General (OIG). The OIG has been successful in its role as an agent for positive change within the Farm Credit Administration (FCA or Agency). The results reflect the commitment that OIG staff has to assisting you, the FCA Board, and FCA employees achieve the Agency’s mission of ensuring a safe and sound Farm Credit System that provides a dependable source of credit to farmers and ranchers. We look forward to continuing to work with you to ensure FCA remains vigilant in its efforts to accomplish its mission. I welcome your comments on ways the OIG can continue to improve our services that help you achieve your goals for FCA operations. If you have any questions, or concerns, please call me. Respectfully, Carl A. Clinefelter Inspector General Enclosure TABLE OF CONTENTS Page Executive Summary ................................................................................................................... 1 Audits and Inspections............................................................................................................... 2 Investigations ............................................................................................................................. 5 Legislative and Regulatory Review............................................................................................ 7 Outreach .................................................................................................................................... 8 Appendix .................................................................................................................................. 10 Farm Credit Administration Office of Inspector General FY 2005 Performance Measures EXECUTIVE SUMMARY The Office of Inspector General (OIG) of the Farm Credit Administration (FCA or Agency) met or exceeded most targets or goals for performance in Fiscal Year (FY) 2005. Goals pertained to: audits and inspections, technical assistance to Agency officials and management, continuous improvement of the OIG staff, investigation of administrative and criminal violations, reviewing and commenting on legislation and regulations affecting the Agency and the IG community, and outreach. During FY 2005 the OIG issued two program audits: 1) the Call Report Data Verification and 2) Performance Measures and Internal Controls. The FY 2004 Audit of the FCA’s Financial Statement was also issued without material findings. An inspection of Protection of Credit Card Numbers was issued, as well as a review of the Federal Information Security Management Act (FISMA). The OIG continued the practice of issuing IG Observations. The purpose of issuing an Observation is to alert Agency officials and managers to new issues, problems or information to aid in decision making. The OIG issued observations on the following topics: Identity Theft, Building Security, Position Evaluation Program, Adherence to Board Policy 64, Suggestions concerning the Proposed Rule on Waiver of Borrower Rights–Syndications, Work-Life Benefits, Notification of impact of legislation concerning privacy of confidential information, and Opt-out provisions for consumers of a rule set forth by the Federal Trade Commission. OIG products were timely and constructive. Most products addressed risk to the Agency. Over 80% of the products contained recommendations to improve Agency operations. Feedback showed management’s satisfaction with OIG products. Since 1995, the OIG has developed, administered, and collected survey data from the Farm Credit System (FCS or System), following a System institution’s examination, for use by the Agency as a feedback mechanism on the quality and effectiveness of the examination function. A measure of our success is contributing to the Agency’s continuous adaptation of sound business practices and basic integrity. We are hopeful that the Agency will continue to show firm commitment to decision making and follow-up to improve operations and programs. The OIG welcomes comments and suggestions related to performance measurement. FCA OIG FY 2005 Performance Report 1 Farm Credit Administration Office of Inspector General FY 2005 Performance Measures AUDITS AND INSPECTIONS Objective—Audit and evaluate the Agency’s programs and operations to promote economy, efficiency and effectiveness. Performance Goal 1—Deliver quality audit and inspection products and services that are useful to the Board. OUTPUT/CRITERIA OUTCOME/IMPACT Audits and inspections are relevant. Audit coverage includes all FCA programs and operations are more effective. Waste in Agency mandated audits and at least 75% of those suggested by the Board and programs and operations is reduced. Better business practices are management. Risk is addressed. 100% of the OIG audits are initiated. performed in high risk/high dollar programs and activities and/or are tied FCA continues to improve and develop mechanisms to streamline to the Agency strategic planning goals. budget data to products and services. OIG contracted with a CPA firm to review FCA’s mission critical Unqualified opinion for Agency financial statements. Security of systems under the Federal Information Security Management information validated through FISMA review. Act (FISMA) and by auditing FCA’s financial statements. FCA has a redesign project underway to improve the Loan Account Findings made during audit fieldwork are recognized and corrected by Reporting System. FCA is more inclined to explore E-Government management prior to drafting of the audit or inspection report. initiatives. These changes are due in part to OIG findings from 8 recommendations and 11 agreed-upon actions remain open: audit and inspection reports. 15 were closed. FCA is more effective in carrying out its mission. Products are timely, i.e., average time to complete audits and issue draft The Chairman has taken a broad approach in seeking opportunities reports will not exceed six months. to streamline and gain efficiencies. As a result of studies under Audits are constructive. At least 75% of audit products contain contract, management has made extensive changes. It is recommendations to improve agency operations. The Agency accepts contemplated that this will also eventually result in a at least 80% of the OIG audit recommendations. The Agency actually comprehensive staffing plan and a solid approach to succession implements all corrective actions prescribed by management decisions. planning. 100% of audit products contain recommendations to improve FCA is faced with evaluating the cost effectiveness of the financial agency operations. management system as well as the adequacy of planning for upgrades and integrated programs. The Agency accepted 75% of audit recommendations. Audits were performed within 6 months (average). See Appendix for details of audits and inspections. FCA OIG FY 2005 Performance Report 2 Farm Credit Administration Office of Inspector General FY 2005 Performance Measures AUDITS AND INSPECTIONS Objective—Audit and evaluate the Agency’s programs and operations to promote economy, efficiency and effectiveness. Performance Goal 2—Provide technical advice and assistance to agency official in developing sound management information and financial reporting systems and in streamlining programs and organizations. OUTPUT/CRITERIA OUTCOME/IMPACT Assist the Agency in building continuous, meaningful measures with OIG input and advice contributes to Agency decisions and actions that are outcomes important to their stakeholders. more complete and valid at their inception. The IG advises the Chairman concerning policy direction or Advice on governance issues was sought by Board members and administrative priorities. senior staff. An OIG Observation resulted in clarification of a Board Policy concerning operations. The OIG conducts an ongoing survey as to the effectiveness of the examination function. The survey is electronic. Results are Increase in management request for advice, audit work or technical benchmarked from year to year. The OIG preserves anonymity assistance. and integrity of the survey. Regularly, management requests the OIG to validate changes in The OIG performs analysis and provides technical advice to business practices. The OIG is a laboratory of change, a model for management concerning accounting, management systems and best practices. The OIG’s budget preparation, with linkage to controls, and performance measures. performance measures was used as a model for the Agency. The IG identifies management’s top challenges in the The OIG advised the Agency on need for more rigorous controls semiannual reports and the Agency’s Performance and during project management. It is imperative that management has Accountability Report. the appropriate information to make informed decisions. OIG frequently serves as a sounding board and the conscience of the Agency. FCA OIG FY 2005 Performance Report 3 Farm Credit Administration Office of Inspector General FY 2005 Performance Measures AUDITS AND INSPECTIONS Objective—Audit and evaluate the Agency’s programs and operations to promote economy, efficiency and effectiveness. Performance Goal 3—Continuous improvement of the OIG staff, products and internal administration. Quality is highly valued. OUTPUT/CRITERIA OUTCOME/IMPACT Customer survey feedback is used to improve products and services. Peer review reports provide an unqualified opinion that the OIG audit work meets or exceeds quality audit standards prescribed by GAO and the The OIG team is studying ways to develop more feedback for PCIE/ECIE. audits, inspections and other reviews as well. OIG website is improved. Most products are made available on OIG training ensures the technical proficiency of staff. line. The OIG team has taken technical courses to gain proficiencies: OIG audit follow-up database is revised and improved, making A incoming IG took Kolbe assessment and OIG will continue to access and sharing of information much more accessible. develop strategies to build a high performance team. Courses attended include: Building High Performance Organizations, Customer survey feedback evidences satisfaction with report practices. Professionalism, Substance Abuse & Legal Ethics, BASEL OIG seeks feedback on products. Office of Examination (OE) was Accord II Seminar, Problem Solving, Practical Kinesic particularly pleased with innovative PowerPoint presentation of the Interviewing & Interrogation, Managing Emotions Under Call Report Verification audit. The Auditor-in-Charge gave a Pressure, Presenting Data and Information, Oversight of Federal presentation and demonstration to OE. Financial Auditing, 14th Annual Government Ethics Conference, AGA 15th Annual Leadership Conference, IIA Auditing in The IG’s opportunity to facilitate positive change within the Agency is Government, National Intergovernmental Audit Forum, and enhanced by the quality and credibility of OIG products and advice. Presdent’s Council on Integrity and Efficiency/Executive Council Solving a longstanding situation whereby an anonymous letter on Integrity and Efficiency (PCIE/ECIE) Retreat. writer sought to undermine various management officials brought In addition, PCIE/ECIE training sessions and legal forums are relief to those troubled by the behavior. attended. The OIG team also stays current in FCA operations PCIE/ECIE honored OIG staff with three Awards of Excellence for training courses and strategic management initiatives. work performed during this period. OIG implements administrative improvements identified through reviews of Agency programs and through staff involvement with the professional community. FCA OIG FY 2005 Performance Report 4 Farm Credit Administration Office of Inspector General FY 2005 Performance Measures INVESTIGATIONS Objective—Investigate observed, alleged or suspected wrongdoing to prevent and detect fraud, waste, abuse and mismanagement in agency programs and operations. Performance Goal 1—Effectively investigate and report administrative and criminal violations relating to FCA programs and personnel to agency officials and Congress. OUTPUT/CRITERIA OUTCOME/IMPACT Investigative reports are timely and presented in an objective and factual Administrative action, convictions or pleas are obtained for employees manner. Memoranda are issued to management describing internal and/or contractors found guilty of wrongdoing. control weaknesses or program deficiencies found during the Management actions taken against employees serve as deterrent to future investigative process with suggestions to prevent and/or detect future wrongdoing. wrongdoing. FCA internal policies, procedures, and controls are strengthened to prevent One investigation was open at the beginning of FY 2005; five and/or detect future wrongdoing. additional investigations were opened during the year. Three were unsubstantiated and closed. One investigation, involving Public confidence in the integrity of FCA programs and internal operations allegations concerning abuse of power and mismanagement are heightened. were substantiated and resolved. Investigations took from four Investigations involving mismanagement and abuse of power by to eleven months. Another involved a series of anonymous letters. Offenses included impersonating a Federal official and senior management were developed and forwarded to appropriate undermining authority. The offending employee was identified officials; subsequently, management changes occurred. by the OIG. The case was substantiated and referred for prosecution; but it was declined. FCA OIG FY 2005 Performance Report 5 Farm Credit Administration Office of Inspector General FY 2005 Performance Measures INVESTIGATIONS Objective—Investigate observed, alleged or suspected wrongdoing to prevent and detect fraud, waste, abuse and mismanagement in agency programs and operations. Performance Goal 2—Cause FCA employees and managers to recognize their responsibility and report observed or suspected wrongdoing to the OIG. OUTPUT/CRITERIA OUTCOME/IMPACT Allegations of wrongdoing are received in a timely manner and are Investigations are more successful because they are initiated in a timely supported by specific information. manner and have better information. Some anonymous complaints are vague, lacking sufficient There was a high level of cooperation from senior officials who information to pursue an investigation. As a result, the OIG is reported problems to OIG and assisted in pinpointing developing ways to obtain further information. mismanagement and abuse of power. FCA employees are more willing to report real or suspected wrongdoing because they trust the competence and fairness of OIG’s investigations. OIG receives allegations through the hotline mechanisms and through anonymous correspondence. Agency management notifies the OIG team when anonymous allegations are sent to them. FCA OIG FY 2005 Performance Report 6 Farm Credit Administration Office of Inspector General FY 2005 Performance Measures LEGISLATIVE AND REGULATORY REVIEW Objective—Review and make recommendations regarding existing and proposed legislation and regulations relating to agency programs and operations and the Inspectors General Community. Performance Goal 1—Maintain an effective program for reviewing and commenting on proposed and existing legislation and regulations affecting the Agency and the IG community. OUTPUT/CRITERIA OUTCOME/IMPACT Processes are established and documented for identifying and OIG input is part of the decision making process in approving or amending circulating (as appropriate) relevant documents. legislation, regulations, circulars and other policy positions. Legislation is tracked on a daily basis. The PCIE/ECIE OIG collaborated with the Office of Regulatory Policy to designate legislation committee is active in forwarding interest items. points in time when information will be sent to the OIG. Constructive comments on relevant documents are submitted by the Constructive criticism and creative alternatives offered in OIG comments deadlines requested by the office, Agency, or staff circulating comments. improve the quality and usefulness of documents initiated by the Agency. OIG updated its Privacy Act Routine Uses in order to participate FCA Board and management are informed about the status of new or in IG community quality assurance reviews of the investigation pending legislation or regulations initiated externally. program. This new routine use became a model for the ECIE ECIE IGs continue to support a legislative effort to have the community. Program Fraud Civil Remedies Act made applicable to a broader (more than cabinet level) range of agencies. Legislative update and reform is continually considered as a future remedy to outdated provisions in the Farm Credit Act. Review of several regulations: Proposed Rule on Governance; Proposed Rule on Loan Syndication; Proposed Rule on Waiver of Borrower Rights; and Proposed Rule on Liquidity and Investment. FCA OIG FY 2005 Performance Report 7 Farm Credit Administration Office of Inspector General FY 2005 Performance Measures OUTREACH Objective—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. Performance Goal 1—Promote OIG’s role within the FCA and the community at large. OUTPUT/CRITERIA OUTCOME/IMPACT Develop and maintain educational brochures or pamphlets describing Agency employees’ acceptance of and cooperation with OIG activities is OIG roles and activities. improved through better understanding. OIG programs and products are improved through feedback from Agency employees. Facilitate feedback from Agency employees and refine products and practices based on the feedback to OIG products and educational OIG updated Strategic Plan brochure form and several Directives. materials. New PowerPoint format used for audit presentation and received well. Hosted event to honor outgoing IG; the three FCA IGs and the Vice Chairman of the ECIE attended. Reaction to OIG Observations is deliberate and quick. Audit follow-up is improved. Compared to last reporting period, there are seven less open recommendations. FCA OIG FY 2005 Performance Report 8 Farm Credit Administration Office of Inspector General FY 2005 Performance Measures OUTREACH Objective—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. Performance Goal 2—Provide leadership to organizations directly contributing to the IG community, the Agency and the Federal Government. OUTPUT/CRITERIA OUTCOME/IMPACT Time and resources are provided to OIG staff members as an incentive Projects and activities of adjunct organizations such as the AGA, IIA, to contribute to the Agency and outside organizations by serving on PCIE/ECIE, CCIG, FLETC, and IGATI are improved by OIG staff committees and holding offices. contributions and participation. OIG staff actively participated in the ECIE, the Inspection and Participating in the PCIE working group on inspections and Evaluation Committee of the ECIE, Association of Government evaluations. Accountants (AGA), Council of Counsels (CCIG), International Performed Quality Assurance Review on investigation operations of Association of Financial Crime, Instructor at the Inspectors U.S. Government Printing Office. General Auditor Training Institute (IGATI), GPRA Roundtable, Employee Council, Council for Excellence in Government, FCA programs and operations are more effective and efficient. Senior Staff, Accountability Report Workgroup, and Federal OIG has a goal to help the Agency build continuous, better, Women’s Program Committee. concrete measures with outcomes important to its stakeholders. OIG networking opportunities have resulted in an expanded This was specifically stressed in the audit of Performance consideration of FCA ideas and practices by community Measures. Implementation occurred immediately. contacts and experts. OIG has shared telecommuting policies, hotline procedures, performance measures and performance Contractors performing studies for the Agency validate the contracts and evaluation methods. Likewise, FCA benefits from evaluations by OIG and urge recommendations to be accomplished. the opportunity to benchmark practices in other agencies. OIG assisted the Agency in improving electronic communication by making suggestions to improve the web site and consider more electronic transactions with regulated entities and the public. FCA OIG FY 2005 Performance Report 9 Farm Credit Administration Office of Inspector General FY 2005 Performance Measures APPENDIX AUDITS AUDITS ARE AUDIT NAME AUDITS ARE RELEVANT RISK IS ADDRESSED PRODUCTS ARE TIMELY AGENCY ACCEPTS 80% CONSTRUCTIVE Call Report Data OIG initiated Strategic Plan 6 Months 2 Agree Upon Actions Accepted all; Verification 0 implemented FY 2004 Financial Mandated Annual Strategic Plan 6 Months No findings n/a Statements Audit Performance OIG initiated 5 Months 1 Agreed Upon Action 1 implemented Measures and Internal and 2 recommendations Controls 2 Recommendations pending decision INSPECTIONS INSPECTIONS ARE INSPECTION NAME INSPECTIONS ARE RELEVANT PRODUCTS ARE TIMELY AGENCY ACCEPTS 80% CONSTRUCTIVE Protection of Credit Card OIG initiated 6 months 3 Agreed Upon Action 3 implemented Numbers REVIEW Federal Information Security Management Act Review—Legislatively mandated. Performed in 2 months. No material findings. Reports to OMB as a follow-up. FCA OIG FY 2005 Performance Report 10
Published by the Farm Credit Administration, Office of Inspector General on 2006-01-10.
Below is a raw (and likely hideous) rendition of the original report. (PDF)