Office of Inspector General FISCAL YEARS 2010 & 2011 PERFORMANCE REPORT January 2012 Farm Credit Ad dministrattion Offic ce of Inspec ctor General r 1501 Farm Cred dit Drive McLLean, Virginia 22102-50090 January 9, 2012 The Honorable Lelan nd A. Strom, Chairman and Chief Exxecutive Offiicer The Honorable Kenn neth A. Spea arman, Board d Member The Honorable Jill Lo ong Thomps son, Board Member Farm Cre edit Adminisstration 1501 Farrm Credit Drrive McLean, VA 22102--5090 Dear Cha airman Strom m and FCA Board Memb bers Spearm man and Lon ng Thompso on: The Government Performance and Results Act of 1993 encouragess organizatio ons to managge for resultts and hold managers ac ccountable ffor executing g programs to achieve desired outcomes. The enclo osed report documents the outcome es or impactt of the products, service es, and leadership of the e Office of In nspector Gen neral (OIG) d uring fiscall years 2010 0 and 2011. The OIG continues too work to en nhance its ro ole as an age ent for positiive change within the Fa arm Credit Ad dministration n (FCA or Aggency). Thee results refle ect the comm mitment thatt OIG staff has to assisting the FCA Booard and FCCA employee es in achievinng the Agen ncy’s mission n of ensuring ga safe and sound Farm m Credit Sys stem that pro ovides a dep pendable sou urce of credit to farmerss and rancherss. We look forward to continuing to work with you to ensure e FCA remaains effective e in its effortss to accompliish its missio on. I welcom me your commments on w ays to impro ove OIG serrvices that he elp eve your goa you achie als for FCA’s s operations s. If you have any ques stions, please call me at extension 4 241 or 4030 0. Respectffully, Carl A. Clinefelter Inspector General Enclosurre FARM CREDIT ADMINISTRATION OFFICE OF INSPECTOR GENERAL FISCAL YEARS 2010 & 2011 PERFORMANCE REPORT TABLE OF CONTENTS Page Executive Summary ................................................................................................................... 1 Audits, Inspections, and Evaluations ......................................................................................... 3 Investigations ............................................................................................................................. 7 Legislative and Regulatory Review ............................................................................................ 9 Outreach .................................................................................................................................. 10 Appendix .................................................................................................................................. 12 FARM CREDIT ADMINISTRATION OFFICE OF INSPECTOR GENERAL FISCAL YEARS 2010 & 2011 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) 2010 and 2011. 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 community, and outreach. The OIG products listed below were timely and constructive while accommodating the priorities of the Agency. Most products addressed risk to the Agency. Many of the products contained recommendations to improve Agency operations. During the reporting period the OIG issued two program audits: o Regulation and Policy Development Processes o FCA’s Approval Process of Funding Corporation Debt Issuance Two financial statement audits were issued: o Audit of the FCA’s FY 2009 Financial Statements o Audit of the FCA’s FY 2010 Financial Statements Two evaluations were issued: o The Federal Information Security Management Act (FISMA) Evaluation for 2009 o The FISMA Evaluation for 2010 Two inspections were issued: o FCA’s Adherence to the Government in the Sunshine Act o FCA’s Borrower Complaint Processing Farm Credit Administration ♦ Office of Inspector General Fiscal Years 2010-2011 Performance Report 1 The OIG also continued the practice of issuing Inspector General (IG) Observations. The purpose of issuing an Observation is to alert Agency leadership to new issues, problems, or information to aid in decision making. The IG issued Observations on: o Review and Update of FCA Board Policies o Compensation and Job Grading o Consideration of Legislative Initiatives Regarding FCA and the Farm Credit System Insurance Corporation’s Prior Approval of Funding Corporation Debt Issuances. Survey to Gather Feedback on FCA Examination of System Institutions Since 1995, the OIG has developed, administered, and collected survey data from the Farm Credit System (FCS or System) on the quality and effectiveness of the Agency’s examination function and examiners for use by the Chief Examiner and FCA Chairman and Board as a feedback mechanism. During FY 2010-2011, eight quarterly and two annual summary survey reports continued to provide useful feedback, mostly positive. FCA’s Inspector General Continues to Lead the Inspectors General Community as Vice Chairperson of the Council of the Inspectors General on Integrity and Efficiency (CIGIE or Council) The IG assumed a major role as Vice Chairperson of the CIGIE, a council formed as a result of the passage of the IG Reform Act of 2008. He assists the Chairperson in planning and carrying out all agenda items and cross cutting projects undertaken by the Council, consisting of all 73 Inspectors General and six other Federal officials. A charter and strategic plan are operational and a fully functioning Council, including various operating committees, permanent staff, and a training institute have enhanced the cohesiveness of the statutory IGs. There is national and international interest by governmental groups to learn and use CIGIE as a model. As a result, presentations on CIGIE are made by the IG at the request of foreign governmental organizations. 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 the independence of the OIG and 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. Farm Credit Administration ♦ Office of Inspector General Fiscal Years 2010-2011 Performance Report 2 AUDITS, INSPECTIONS, AND EVALUATIONS Objective – Audit and evaluate the Agency’s programs and operations to promote economy, efficiency, and effectiveness. Performance Goal 1 – Deliver quality audit, inspection, and evaluation products and services that are useful to the Board. PERFORMANCE MEASURES OUTCOME / IMPACT Audits, inspections, and evaluations are relevant. FCA programs and operations are more effective. Audit coverage includes all mandated audits and at Waste in Agency programs and operations is reduced. least 75 percent of those suggested by the Board and Better business practices are initiated. management. Risk is addressed. One hundred percent of the OIG audits are performed in high The OIG found and continues to avail itself of risk/high dollar programs and activities and/or are tied opportunities to save contracting funds by utilizing to the Agency strategic planning goals. the Department of the Treasury’s Bureau of the Public Debt contract for financial statement auditing OIG performed or supervised the following audits, services. inspections, and evaluations of mission critical operational areas: Unqualified opinions for Agency financial statements have continued. Audit: Regulation and Policy Development Security of information has been validated and FCA’s Approval Process of Funding strengthened through FISMA reviews. Corporation Debt Issuances In lieu of a contractor, the OIG Senior IT Auditor Inspections: performs the FISMA evaluation. FCA’s Adherence to the Government in the Sunshine Act FCA developed an information technology action FCA’s Borrower Complaint Process plan to guide the Agency in achieving compliance with United States Government Configuration For FY 2010 and FY 2011, OIG contracted with Baseline. a Certified Public Accountant (CPA) firm to audit FCA’s financial statements. FCA has assured there are appropriate procedures and safeguards in place to promote compliance During 2009 and 2010, the OIG’s Senior IT with the Government in the Sunshine Act. To auditor performed the FISMA evaluation. enhance understanding, at OIG’s recommendation, management developed scenarios to assist Board Products are timely, i.e., average time to complete members in understanding requirements of the audits and issue draft reports will not exceed 6 Government in the Sunshine Act. months. FCA made improvements to the borrower Draft reports for audits, inspections, and complaint process, increasing efficiency, evaluations were issued in less than 6 months transparency, and accountability in investigating (average). and processing such complaints. OIG determined that FCA’s approval process of the Funding Corporation debt issuances was operating efficiently and effectively. OIG determined FCA’s regulation and policy development process was operating efficiently and effectively and in compliance with applicable guidelines. Farm Credit Administration ♦ Office of Inspector General Fiscal Years 2010-2011 Performance Report 3 AUDITS, INSPECTIONS, AND EVALUATIONS Objective – Audit and evaluate the Agency’s programs and operations to promote economy, efficiency, and effectiveness. Performance Goal 1 (continued) – Deliver quality audit, inspection, and evaluation products and services that are useful to the Board. PERFORMANCE MEASURES OUTCOME / IMPACT Audits are constructive. At least 75 percent of audit FCA is more effective in carrying out its mission. products contain recommendations or agreed-upon actions to improve Agency operations. The Agency Management’s attention to resolving open OIG accepts at least 80 percent of the OIG audit action recommendations or agreed-upon actions items. continues to be diligent and in the majority of instances, resolution occurs within a 6-month Not all audits contained action items if the timeframe. findings did not warrant corrective action. Those audit and inspection products containing recommendations to improve Agency operations have been accepted as agreed-upon actions and are generally addressed within a year. In some cases, Agency management took immediate action for improvement as a result of an OIG suggestion so no formal recommendation was necessary. At the close of FY 2011, one agreed-upon action was open. During the 2-year reporting period, the two audits, two inspections and one FISMA evaluation resulted in twelve agreed-upon actions. All but one action items have been addressed and closed. See Appendix (page 12) for details of audits and inspections. Farm Credit Administration ♦ Office of Inspector General Fiscal Years 2010-2011 Performance Report 4 AUDITS, INSPECTIONS, AND EVALUATIONS 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 officials in developing sound management information and financial reporting systems and in streamlining programs and organizations. PERFORMANCE MEASURES OUTCOME / IMPACT The IG advises the FCA Board concerning policy The OIG input and advice contributes to Agency direction or administrative priorities. decisions and actions that are more complete and valid at their inception. The OIG, through its audit, inspection, and evaluation reports, provides the FCA Board The OIG contributed to enhancing the with recommendations to strengthen Agency Agency’s orientation and training program for operations. FCA Board members by recommending development of further guidance on The IG identifies management’s top Government in the Sunshine Act scenarios. challenges in the Agency’s Performance and Accountability Report and the OIG’s The Office of the Board sought technical semiannual reports. perspective on certain aspects of Agency IG Observations address Agency policy or operations: compensation, organizational administrative functions. structure, legislative proposals, etc. The OIG conducts an ongoing survey of FCS OMS continues to strengthen its information institutions as to the effectiveness of the security program. For example, the Agency examination function and examiners. The implemented an action plan to guide the survey of FCS institutions was revamped in Agency in achieving compliance with the 2006 and is electronic. The OIG preserves United States Government Configuration the anonymity of respondents and the integrity Baseline. of the survey. The OIG performs analyses and provides technical Together with the Office of Examination, the advice to management concerning accounting, OIG is currently working on updating the management systems and controls, and performance survey to obtain meaningful responses from measures. the FCS institutions following examination for FY 2012 and beyond. The OIG’s contract auditing firm assessed the Agency’s accounting and financial reporting Increase in management requests for advice, audit annually, including controls and compliance work, or technical assistance. with laws and regulations. Any The OIG is always receptive to management’s recommendations were conveyed to the FCA requests for audit work or for the OIG’s Board and to the Chief Financial Officer. perspective on FCA operations, whether The OIG’s Senior IT Auditor assessed the technical or non-technical in nature. Agency’s compliance with FISMA. Any recommendations were conveyed to the FCA The OIG has recently completed audit work in Board, the Chief Information Officer, and the the contract and procurement areas and Director of the Office of Management Services management was receptive to findings and (OMS). In addition, the Senior IT Auditor recommendations. made suggestions that were readily accepted throughout the evaluation process. Farm Credit Administration ♦ Office of Inspector General Fiscal Years 2010-2011 Performance Report 5 AUDITS, INSPECTIONS, AND EVALUATIONS 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. PERFORMANCE MEASURES OUTCOME / IMPACT OIG training ensures the technical proficiency of staff. Peer review reports provide an unqualified opinion that the OIG audit and investigative functions meet or The OIG team has taken technical courses to exceed quality audit standards prescribed by the U.S. gain proficiencies. Courses attended include: Government Accountability Office (GAO) and the - OIG Leadership courses CIGIE. - Yellow Book Auditing (Government Accountability Office) OIG peer review of the audit function was - Professionalism, Substance Abuse & Legal performed by the U.S. Commodity Futures Ethics Trading Commission OIG in February 2011. - Federal Audit Executive Council Conference We were found to be in full compliance with - ISACA seminars and webinars GAO and CIGIE auditing standards. The next - Federal Audit Executive Committee meetings such review is scheduled for March 2013. and conferences OIG’s audit team completed a peer review of - Ethics for Virginia CPAs the Consumer Product Safety Commission - Plain Writing Act OIG’s audit operations in May 2011. - Harassment Training - No Fear Act The IG’s opportunity to facilitate positive - National Intergovernmental Audit Forum change within the Agency is enhanced by the - CIGIE Retreat quality and credibility of OIG products and - Ethics of Email advice. - FOIA/Privacy Act Training Workshop Management seeks and listens to the OIG’s - Hotline Operator Training Program perspective on issues. In addition, CIGIE training sessions and legal OIG staff members receive recognition through forums are attended. The OIG team also stays awards from the CIGIE community. current in FCA operations and strategic management initiatives. The OIG provides sound perspectives for the Office of the Board on aspects of Agency The OIG implements administrative improvements operations. identified through reviews of Agency programs and through staff involvement with the professional The quarterly reports on the OIG’s survey of community. FCS institutions relative to the Agency’s examination function provide Agency The OIG website is continually improved and management with quantitative and narrative kept current. As required by the Consolidated feedback that assists in facilitating positive Appropriation Act, Pub.L.110-161, the OIG change. maintains an email list for those who wish to receive notification when OIG reports are Audit, inspection, and other reports are made public upon issuance and the OIG uses an email mechanism posted to the Agency’s website. There is a to alert those on the mailing list of new publications. direct link to the OIG on the Agency homepage. Farm Credit Administration ♦ Office of Inspector General Fiscal Years 2010-2011 Performance Report 6 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 Administrative action, convictions, or pleas are objective and factual manner. Memoranda are obtained for employees and/or contractors found issued to management describing internal control guilty of wrongdoing. weaknesses or program deficiencies found during the Management actions taken against employees serve investigative process with suggestions to prevent as deterrent to future wrongdoing. and/or detect future wrongdoing. FCA internal policies, procedures, and controls are There were no investigations with strengthened to prevent and/or detect future substantiated findings during FYs 2010 and wrongdoing. 2011. The OIG is notified of missing equipment if it contains personally identifiable information Policies and procedures involving loss of (PII). Coordinate with law enforcement when equipment have been strengthened. warranted. Public confidence in the integrity of FCA programs and internal operations is heightened. Farm Credit Administration ♦ Office of Inspector General Fiscal Years 2010-2011 Performance Report 7 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 Investigations are more successful because they are manner and are supported by specific information. initiated in a timely manner and have better information. The OIG has a secure email hotline, email@example.com and phone numbers Several hotline complaints were referred to the 703-883-4316 and 800-437-7322. Office of Congressional and Public Affairs, the Office of Examination, Department of Follow-up by OIG and appropriate forwarding Agriculture, and the Federal Bureau of to other Agency offices. Investigation for review and follow-up. FCA employees are more willing to report real or suspected wrongdoing because they trust the competence, fairness, and confidentiality of OIG’s investigations. The IG and Deputy IG made presentations to new employees regarding their responsibility to report observed or suspected fraud, waste, abuse of authority, mismanagement, or other wrongdoing. Farm Credit Administration ♦ Office of Inspector General Fiscal Years 2010-2011 Performance Report 8 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 The OIG input is part of the decision making process identifying and circulating (as appropriate) relevant in approving or amending legislation, regulations, documents. circulars, and other policy positions. Legislation and proposed rules are tracked on a The OIG established a collaborative process regular basis. with the Office of Regulatory Policy to designate The CIGIE Legislation Committee is active in points in time when information on regulations forwarding interest items. and briefings will be sent to the OIG. Constructive comments on relevant documents are Constructive criticism and creative alternatives offered submitted by the deadlines requested by the office, in OIG comments improve the quality and usefulness Agency, or staff circulating comments. of documents initiated by the Agency. FCA Board and management are informed about the status of new or pending legislation or regulations initiated externally. The IG and Deputy IG/Counsel were active in informing the Board of the changes to reporting under the IG Act caused by the Dodd-Frank legislation. The IG now reports to the FCA Board, as agency head, as opposed to the Chairman of the FCA (as previously defined). Legislative update and reform is continually considered as a future remedy to outdated provisions in the Farm Credit Act. Regulations reviewed by OIG are noted in the OIG’s semiannual reports to Congress. Farm Credit Administration ♦ Office of Inspector General Fiscal Years 2010-2011 Performance Report 9 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 governmentwide 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 Agency employees’ acceptance of and cooperation pamphlets describing OIG roles and activities. with OIG activities is improved through better understanding. OIG programs and products are Examples include: Strategic Planning brochure, improved through feedback from Agency employees. The IG at FCA pamphlet, FCA Orientation PowerPoint presentation, and input into the OIG updates Directives periodically. CIGIE Annual Report to the President. Developed PowerPoint presentation on the OIG Facilitate feedback from Agency employees and refine at FCA for web use and for new employee products and practices based on the feedback to OIG training. products and educational materials. Reaction to IG Observations has been positive. The OIG would be receptive to any and all Observation on compensation and grading feedback received from Agency management resulted in a consultant review. and staff regarding OIG practices and products. An inspection from a prior time period suggested revision of enforcement policies and procedures. Although at first reluctant, FCA management reaped the benefits of revising and upgrading enforcement policies and practices since they have been needed in recent times. An observation on Board policy review was successful in prompting revisions and suspense dates. Audit follow-up is improved. Agreed-upon actions are implemented more expeditiously. Rarely does an action take more than a year to clear. Responded to Congressional Request (Rep. Issa) inquiries about “unimplemented recommendations.” Farm Credit Administration ♦ Office of Inspector General Fiscal Years 2010-2011 Performance Report 10 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 governmentwide 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 Projects and activities of adjunct organizations such members as an incentive to contribute to the Agency as the AGA, the Institute of Internal Auditors, CIGIE and outside organizations by serving on committees Training Institute and CCIG meetings and forums are and holding offices. improved by OIG staff contributions and participation. OIG staff actively participated in CIGIE: IG is the IG as Vice Chair of the CIGIE, along with the Chair Vice Chairperson of CIGIE. The IG is a member leads monthly meetings of the Council and of the Executive Council of CIGIE. The IG and Executive Council. staff participate on the Inspection and Evaluation Council of CIGIE, Association of Government OIG participates in the CIGIE working group on Accountants (AGA), Deputy Inspectors General inspections and evaluations. The group Quarterly meetings, Council of Counsels (CCIG), collaborates and shares common areas for CIGIE Federal Audit Executive Committee inspection and evaluation work. (FAEC), CIGIE FAEC IT Committee, Instructor at the Federal Law Enforcement Training Center IG frequently makes presentations on the IG Reform (FLETC), Federal Women’s Program Committee, Act and CIGIE to organizations and international Blacks In Government, Administrative Burden groups. Reduction Workgroup, and the Combined Federal Campaign. Deputy IG/Counsel led the development and presentation of a CIGIE course for new OIG OIG networking opportunities have resulted in an attorneys. expanded consideration of FCA ideas and practices by community contacts and experts. The OIG has OIG auditors performed a peer review of the audit shared telecommuting policies, hotline procedures, program of the OIG, Consumer Product Safety performance measures and performance contracts Commission (CPSC) in 2011. FCA OIG shared with and evaluation methods. Likewise, FCA benefits from the CPSC OIG several recommendations to improve the opportunity to benchmark practices in other their audit operations. agencies. An OIG auditor actively participates in the FAEC IT Committee. This subcommittee worked with the Office of Management and Budget to revise the performance metrics for FISMA reporting by OIGs. OIG auditor participated on an administrative workgroup charged with setting up the infrastructure for CIGIE operations which included developing business, financial and staffing plans; and acquiring business services, office space, IT equipment and services, and telecommunications. FCA programs and operations are more effective and efficient. OIG was acknowledged by the Project on Government Oversight (POGO) for having effective performance reporting. Farm Credit Administration ♦ Office of Inspector General Fiscal Years 2010-2011 Performance Report 11 APPENDIX AUDITS AUDITS ARE PRODUCTS ARE AUDITS ARE AGENCY ACCEPTS AUDIT NAME RISK ADDRESSED RELEVANT TIMELY CONSTRUCTIVE ≥ 80 % Regulation and Policy OIG Initiated Strategic Plan 6 Months No Action Items N/A Development FCA’s Approval Process FCA Board Chairman of Funding Corporation Strategic Plan 6 Months No Action Items N/A Requested Debt Issuances FY 2009 and 2010 Financial Statements Legislatively Mandated Strategic Plan 6 Months No Action Items N/A (Issued in FYs 2010 and Annual Audit 2011) INSPECTIONS FCA’s Adherence to the Management Accepted; Government in the OIG Initiated Strategic Plan 4 Months 1 Agreed-Upon Action Implemented Sunshine Act Management Accepted; Borrower Complaint OIG Initiated Strategic Plan 6 Months 10 Agreed-Upon Actions 9 implemented Process 1 outstanding EVALUATIONS Federal Information Security Management 1 Agreed-Upon Action Management Accepted; Act Evaluation for FY Legislatively Mandated Strategic Plan 3 Months (FY 2009 Evaluation Implemented 2009 and 2010 (Issued Report) in FYS 2010 and 2011) Farm Credit Administration ♦ Office of Inspector General Fiscal Years 2010-2011 Performance Report 12
FYs 2010-2011 Performance Report
Published by the Farm Credit Administration, Office of Inspector General on 2012-01-09.
Below is a raw (and likely hideous) rendition of the original report. (PDF)