Farm Credit Administration Office of Inspector General 1501 Farm Credit Drive McLean, Virginia 22102-5090 February 11, 2008 The Honorable Nancy C. Pellett Chairman Farm Credit Administration 1501 Farm Credit Drive McLean, Virginia 22102 Dear Chairman 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) during fiscal years 2006 and 2007. 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 in achieving 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, please call me. Respectfully, Carl A. Clinefelter Inspector General Enclosure TABLE OF CONTENTS Page Executive Summary ................................................................................................................... 1 Audits and Inspections ............................................................................................................... 3 Investigations ............................................................................................................................. 6 Legislative and Regulatory Review ............................................................................................ 8 Outreach .................................................................................................................................... 9 Appendix .................................................................................................................................. 11 Farm Credit Administration Office of Inspector General Fiscal Years 2006 & 2007 Performance Report EXECUTIVE SUMMARY The Office of Inspector General (OIG) of the Farm Credit Administration (FCA or Agency) met or exceeded most goals for performance in fiscal years (FY) 2006 and 2007. 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 Inspector General (IG) community, and • outreach. During the reporting period the OIG issued four program audits: • Records Management and Preservation of Institutional Knowledge • Committees Established by the FCA Board • Audit of the FCA’s FY 2005 Financial Statement • Audit of the FCA’s FY 2006 Financial Statement Two evaluations were issued: • The Federal Information Security Management Act Review for FY 2006 • The Federal Information Security Management Act Review for FY 2007 One inspection was issued: • FCA’s Enforcement Program The OIG also 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: Computer Banners; the results of a consultation with the Office of Management and Budget regarding the applicability of legislation mandating third-party review of information and data protection; and re-advising employees of the proper use of Agency computers, as well as the establishment of proper internal reporting guidelines related to misuse of Agency computers. OIG products were timely and constructive while accommodating the priorities of the Agency. Most products addressed risk to the Agency. Most of the products contained recommendations to improve Agency operations. Since 1995, the OIG has developed, administered, and collected survey data on the quality and effectiveness of the Agency’s examination function from the Farm Credit System (FCS or FCA OIG FY 2006-2007 Performance Report 1 System) for use by the Chief Examiner and FCA Chairman as a feedback mechanism. During FY 2006, the survey was discontinued while the survey was being substantially revamped by the OIG, aided by consultation with the Office of Examination and an outside professional. Beginning with FY 2007, the survey was reinstituted and continues to provide useful and positive feedback. A measure of the OIG’s success is contributing to the Agency’s continuous utilization of sound business practices and basic integrity. We are confident the Agency will continue to show firm commitment to follow-up on OIG report findings, conclusions, and recommendations to improve operations and programs. The OIG welcomes comments and suggestions related to performance measurement. FCA OIG FY 2006-2007 Performance Report 2 Farm Credit Administration Office of Inspector General Fiscal Years 2006 & 2007 Performance Report 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. PERFORMANCE MEASURES 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 percent of those suggested by the programs and operations is reduced. Better business practices are Board and management. Risk is addressed. One hundred percent of initiated. the OIG audits are performed in high risk/high dollar programs and activities and/or are tied to the Agency strategic planning goals. • FCA continues to improve and develop mechanisms to streamline budget data to products and services. • OIG conducted an audit and an inspection of two mission critical • Unqualified opinions for Agency financial statements have operational areas. continued. Security of information has been validated through FISMA reviews. • OIG contracted with two Certified Public Accountant (CPA) firms • OIG found an opportunity to save contracting funds by utilizing the to review FCA’s mission critical systems under the Federal Department of the Treasury’s Bureau of the Public Debt contract for Information Security Management Act (FISMA) and by auditing financial statement auditing services. FCA’s financial statements. FCA is more effective in carrying out its mission. Products are timely, i.e., average time to complete audits and issue draft reports will not exceed 6 months. • The Chairman has taken a broad approach in seeking opportunities to streamline and gain efficiencies. Management has made • Audits were performed within 6 months (average). changes. Financial management services have been outsourced Audits are constructive. At least 75 percent of audit products contain and a 5-year Human Capital Plan has been issued. recommendations to improve Agency operations. The Agency accepts • Management’s attention to resolving open OIG recommendations at least 80 percent of the OIG audit recommendations. and agreed-upon actions has improved. • 100 percent of audit products have contained recommendations to improve Agency operations. • The Agency accepted 100 percent of audit recommendations. • 7 agreed-upon actions remain open: 23 were closed. See Appendix (page 11) for details of audits and inspections. Performance Goal 2—Provide technical advice and assistance to Agency officials in developing sound management FCA OIG FY 2006-2007 Performance Report 3 Farm Credit Administration Office of Inspector General Fiscal Years 2006 & 2007 Performance Report AUDITS AND INSPECTIONS Objective—Audit and evaluate the Agency’s programs and operations to promote economy, efficiency and effectiveness. information and financial reporting systems and in streamlining programs and organizations. PERFORMANCE MEASURES OUTCOME/IMPACT The IG advises the Chairman concerning policy direction or OIG input and advice contributes to Agency decisions and actions that are administrative priorities. more complete and valid at their inception. • The OIG, through its audit and inspection reports, provides the • The OIG advised the Agency on the need for more rigorous Chairman with recommendations to strengthen Agency attention to the enforcement authorities and processes. Staff is operations. updating the program. • The IG identifies management’s top challenges in the semiannual • The Office of the Board sought technical perspective on certain reports and the Agency’s Performance and Accountability Report. aspects of Agency operations. • The OIG conducts an ongoing survey of FCS institutions as to the • The Office of Examination participated with OIG in revamping the effectiveness of the examination function. The survey of FCS survey of FCS institutions to ensure the revised instrument institutions has been revamped and is electronic. The OIG remained relevant as a feedback mechanism on the quality and preserves the anonymity of respondents and the integrity of the effectiveness of the Agency’s examination function. survey. Increase in management requests for advice, audit work or technical The OIG performs analysis and provides technical advice to assistance. management concerning accounting, management systems and controls, and performance measures. • The OIG is always receptive to management’s requests for audit work or for OIG’s perspective on FCA operations, whether technical • The OIG’s contract auditing firm assesses the Agency’s or non-technical in nature. accounting and financial reporting annually, including controls and compliance with laws and regulations. Any recommendations are conveyed to the Chairman and CEO, and to the Chief Financial Officer. • The OIG’s contract FISMA auditing firm assesses the Agency’s compliance with Federal information security guidelines. Any recommendations are conveyed to the Chairman and CEO, and to the Chief Information Officer. Performance Goal 3—Continuous improvement of the OIG staff, products and internal administration. Quality is highly valued. FCA OIG FY 2006-2007 Performance Report 4 Farm Credit Administration Office of Inspector General Fiscal Years 2006 & 2007 Performance Report AUDITS AND INSPECTIONS Objective—Audit and evaluate the Agency’s programs and operations to promote economy, efficiency and effectiveness. PERFORMANCE MEASURES OUTCOME/IMPACT OIG training ensures the technical proficiency of staff. 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 has taken technical courses to gain proficiencies. PCIE/ECIE. Courses attended include: OIG Leadership courses, A-123 course, Yellow Book Auditing (Government Accountability Office), • OIG peer review of the audit function was performed by the Professionalism, Substance Abuse & Legal Ethics, Federal Audit National Archives and Records Administration in April of 2007 and Executive Council Conference, MIS Training Institute Conference we were found to be in full compliance with auditing standards. on IT Audit and Controls, ISACA seminars, Ethics for Virginia The IG’s opportunity to facilitate positive change within the Agency is CPAs, BASEL Accord II Seminar, Problem Solving, Symposium enhanced by the quality and credibility of OIG products and advice. on Emerging Banking Issues, IIA Auditing in Government, IIA Audit Project Management, National Intergovernmental Audit • Management seeks and listens to the OIG’s perspective on issues. Forum, and President’s Council on Integrity and • OIG staff members receive recognition through awards from the Efficiency/Executive Council on Integrity and Efficiency PCIE/ECIE community. (PCIE/ECIE) Retreat, Mediation, Business Writing. • The IG is a sounding board for the Office of the Board on aspects of In addition, PCIE/ECIE training sessions and legal forums are Agency operations. attended. The OIG team also stays current in FCA operations • The quarterly reports on the OIG’s survey of FCS institutions training courses and strategic management initiatives. relative to the Agency’s examination function provide Agency management with quantitative and narrative feedback that assists OIG implements administrative improvements identified through reviews in facilitating positive change. of Agency programs and through staff involvement with the professional community. • OIG website is improved. Most OIG products are made available on line. A direct link to the OIG pages is provided on the Agency homepage. FCA OIG FY 2006-2007 Performance Report 5 Farm Credit Administration Office of Inspector General Fiscal Years 2006 & 2007 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, the Attorney General (when appropriate) and Congress. PERFORMANCE MEASURES 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 • Counsel to the IG has taken over the OIG’s investigative function and/or detect future wrongdoing. since the OIG’s investigator left in early FY 2006. • However, there were no investigations with substantiated findings • Policies and procedures involving lost laptops were strengthened to during FYs 2006 and 2007. protect personally identifiable information. • The Office of Examination heightened awareness of risk and vulnerability of national shared credits and adjusted examination and monitoring policies accordingly. Public confidence in the integrity of FCA programs and internal operations is heightened. FCA OIG FY 2006-2007 Performance Report 6 Farm Credit Administration Office of Inspector General Fiscal Years 2006 & 2007 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. PERFORMANCE MEASURES 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. • The OIG has a secure email hotline, email@example.com and • One allegation of pornography was handled expeditiously and phone numbers 703-883-4316 and toll free 800-437-7322. found to be unsubstantiated. • Follow-up by OIG and appropriate forwarding to other Agency • Several hotline complaints were referred to the Office of offices. Congressional and Public Affairs and Office of Examination for review and follow-up. In one potential criminal case, OIG acted as a liaison with the U.S. Attorney’s office. • The IG led an attempt to retrieve a lost laptop through coordination with airline officials at Dulles Airport. FCA employees are more willing to report real or suspected wrongdoing because they trust the competence and fairness of OIG’s investigations. FCA OIG FY 2006-2007 Performance Report 7 Farm Credit Administration Office of Inspector General Fiscal Years 2006 & 2007 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. PERFORMANCE MEASURES 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 and proposed rules are tracked on a regular basis. • OIG collaborated with the Office of Regulatory Policy to designate • The PCIE/ECIE legislation committee is active in forwarding points in time when information on regulations and briefings will be interest items. 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. FCA Board and management are informed about the status of new or pending legislation or regulations initiated externally. • ECIE IGs continue to support a legislative effort to have the Program Fraud Civil Remedies Act made applicable to a broader (more than cabinet level) range of agencies. • Several bills were introduced to update the Inspector General Act. Comments were collected and briefings with Congressional staff were held. • Legislative update and reform is continually considered as a future remedy to outdated provisions in the Farm Credit Act. • Review of several regulations including: Proposed and Final Rule on Priority of Claims; Proposed Rule on Processing and Marketing; Final Rule on Farmer Mac Risk-Based Capital Stress Test Revisions; and Proposed Rule on Liquidity and Investment. FCA OIG FY 2006-2007 Performance Report 8 Farm Credit Administration Office of Inspector General Fiscal Years 2006 & 2007 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. PERFORMANCE MEASURES 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. • Examples include Strategic Planning brochure, The IG at FCA pamphlet, FCA Orientation PowerPoint presentation, and the • OIG updated several Directives. PCIE/ECIE Annual Report. • Developed PowerPoint presentation on the OIG at FCA for web use and for new employee training. Facilitate feedback from Agency employees and refine products and practices based on the feedback to OIG products and educational • IG led an attempt to retrieve a lost laptop through coordination with materials. airline officials at Dulles Airport. • Reaction to OIG Observations has been positive. • The OIG would be receptive to any and all feedback received from Agency management and staff regarding OIG practices and Audit follow-up is improved. products. • Agreed-upon actions are taken more expeditiously. Rarely does an action take more than a year to clear. FCA OIG FY 2006-2007 Performance Report 9 Farm Credit Administration Office of Inspector General Fiscal Years 2006 & 2007 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. PERFORMANCE MEASURES OUTCOME/IMPACT Time and resources are provided to OIG staff members as an incentive Projects and activities of adjunct organizations such as the AGA, the to contribute to the Agency and outside organizations by serving on Institute of Internal Auditors, PCIE/ECIE, CCIG, FLETC, and IGATI are committees and holding offices. improved by OIG staff contributions and participation. • OIG staff actively participated in the ECIE, the Inspection and • IG participates in the PCIE working group on inspections and Evaluation Committee of the PCIE/ECIE, Association of evaluations. The group collaborates and shares common areas for Government Accountants (AGA), Council of Counsels (CCIG), inspection and evaluation work. PCIE/ECIE Federal Audit Executive Committee, Instructor at the • IG was asked to participate on a panel discussion at the IG Training Inspectors General Auditor Training Institute (IGATI), FCA Institute. Employees’ Council, Council for Excellence in Government, • IG participates in monthly Financial Regulatory Coordinating Accountability Report Workgroup, Federal Women’s Program Committee meetings. Committee, Blacks In Government, Administrative Burden • Counsel was on several workgroups with other counsels, including Reduction Workgroup, and the Combined Federal Campaign. investigation curriculum and awards workgroups. • OIG networking opportunities have resulted in an expanded • OIG Auditor performed a peer review of the audit program of the consideration of FCA ideas and practices by community contacts Office of Inspector General, National Labor Relations Board. and experts. OIG has shared telecommuting policies, hotline FCA programs and operations are more effective and efficient. procedures, performance measures and performance contracts and evaluation methods. Likewise, FCA benefits from the • OIG made presentations about the OIG at FCA at New Employee opportunity to benchmark practices in other agencies. Orientation. • OIG employee led a successful Combined Federal Campaign as co-chair during FY 2006. FCA OIG FY 2006-2007 Performance Report 10 Farm Credit Administration Office of Inspector General Fiscal Years 2006 & 2007 Performance Measures APPENDIX AUDITS AUDITS ARE AGENCY ACCEPTS AUDIT NAME AUDITS ARE RELEVANT RISK ADDRESSED PRODUCTS ARE TIMELY CONSTRUCTIVE ≥ 80% Records Management OIG Initiated Strategic Plan 6 Months 4 Agreed-Upon Management and Preservation of Actions Accepted All; Institutional 4 Implemented Knowledge FY 2005 and 2006 Legislatively Mandated Strategic Plan 6 Months No Findings N/A Financial Statements Annual Audit FCA Board OIG Initiated Strategic Plan 2 Agreed-Upon Management Committees Actions Accepted All: 1 Implemented 1 Outstanding REVIEWS Federal Information Legislatively Mandated Strategic Plan 2 Months No Findings N/A Security Management OMB Receives Report Act Review for FY and Follow-up 2006 and 2007 FCA OIG FY 2006-2007 Performance Report 11 Farm Credit Administration Office of Inspector General Fiscal Years 2006 & 2007 Performance Measures APPENDIX (CONTINUED) INSPECTIONS INSPECTIONS ARE INSPECTIONS ARE AGENCY ACCEPTS INSPECTION NAME RISK ADDRESSED PRODUCTS ARE TIMELY RELEVANT CONSTRUCTIVE ≥ 80% FCA’s Enforcement OIG Initiated Strategic Plan 11.5 months 6 Agreed-Upon Management Program Actions Accepted All; 0 Implemented FCA OIG FY 2006-2007 Performance Report 12
FYs 2006-2007 Performance Report
Published by the Farm Credit Administration, Office of Inspector General on 2008-02-11.
Below is a raw (and likely hideous) rendition of the original report. (PDF)