Office of Inspector General FISCAL YEARS 2012 & 2013 PERFORMANCE REPORT January 15, 2014 FARM CREDIT ADMINISTRATION Farm Credit Administration Office of Inspector General 1501 Farm Credit Drive McLean, Virginia 22102-5090 January 15, 2014 The Honorable Jill Long Thompson, Board Chair and Chief Executive Officer The Honorable Kenneth A. Spearman, Board Member The Honorable Leland A. Strom, Board Member Farm Credit Administration 1501 Farm Credit Drive McLean, VA 22102-5090 Dear Board Chair Long Thompson and FCA Board Members Spearman and Strom: 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 2012 and 2013. The OIG continues to work to enhance its role as an agent for positive change within the Farm Credit Administration. The results reflect the commitment that OIG staff has to assisting 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 effective in its efforts to accomplish its mission. I welcome your comments on ways to improve OIG services that help you achieve your goals for FCA’s operations. If you have any questions, please call me at extension 4036 or 4030. Respectfully, Elizabeth M. Dean Inspector General Enclosure FARM CREDIT ADMINISTRATION OFFICE OF INSPECTOR GENERAL FISCAL YEARS 2012 & 2013 PERFORMANCE REPORT TABLE OF CONTENTS Page Executive Summary ................................................................................................................... 1 Audits, Inspections, and Evaluations ......................................................................................... 3 Investigations ............................................................................................................................. 8 Legislative and Regulatory Review .......................................................................................... 10 Outreach .................................................................................................................................. 11 Appendix .................................................................................................................................. 13 FARM CREDIT ADMINISTRATION OFFICE OF INSPECTOR GENERAL FISCAL YEARS 2012 & 2013 PERFORMANCE REPORT EXECUTIVE SUMMARY The Office of Inspector General (OIG) of the Farm Credit Administration met or exceeded most goals for performance in fiscal years (FY) 2012 and 2013. 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. OIG Reports, Advisories, and Observations 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 three program audits: o FCA’s Contracting Activities o FCA’s Telework Program o FCA’s Student Loan Repayment Program Two financial statement audits were issued: o Audit of the FCA’s FY 2011 Financial Statements o Audit of the FCA’s FY 2012 Financial Statements Two evaluations were issued: o The Federal Information Security Management Act (FISMA) Evaluation for 2011 o The FISMA Evaluation for 2012 One inspection was issued: o FCA’s Information Technology Equipment Acquisitions Farm Credit Administration ♦ Office of Inspector General Fiscal Years 2012-2013 Performance Report 1 One Management Advisory was issued: o FCA’s Use of Social Media The OIG also continued the practice of issuing Inspector General (IG) Observations. An Observation is designed to alert Agency leadership to new issues, problems, or information to aid in decision making. The IG issued an Observation on: o The Need for Independent Objective Oversight of the Farm Credit System Insurance Corporation by a Statutorily Designated Inspector General. 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 2012-2013, eight quarterly and two annual summary survey reports continued to provide useful feedback, mostly positive. OIG Contributions to the Federal Inspectors General Community FCA’s Inspector General continued to lead the Inspectors General community as Vice Chairperson of the Council of the Inspectors General on Integrity and Efficiency (CIGIE or Council) until retirement in January 2013. The successor Inspector General, appointed June 19, 2013, is on CIGIE’s Legislation Committee, and Inspection and Evaluation Committee, and the Small IG Council. The former 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 assisted 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 were made by the IG at the request of foreign governmental organizations. A measure of the OIG’s success is reflected in OIG’s contribution 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 2012-2013 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 continued 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 (unmodified) opinions for Agency financial statements have continued. Program Audits: Contracting Activities Security of information has been strengthened Telework Program through FISMA reviews. Recommendations and Student Loan Repayment Program suggestions made by the IT auditor are readily accepted and addressed. Inspection: FCA’s Information Technology Acquisitions FCA developed an information technology action plan to guide the Agency in achieving compliance For FY 2011 and FY 2012, OIG contracted with with the United States Government Configuration a Certified Public Accountant (CPA) firm to audit Baseline. FCA’s financial statements. FCA’s management most often agrees with OIG During 2011 and 2012, the OIG’s Senior findings and attempts to resolve problems Information Technology (IT) auditor performed promptly, often before the final report is issued. the FISMA evaluation. That is the case with issues identified in the contracting and acquisition audit. Single source, Products are timely, i.e., average time to complete inherently governmental contracts were curtailed, audits and issue draft reports will not exceed 6 procurement staff was provided additional training, months. and procurement guidance and oversight was enhanced. In addition, the Designated Agency Draft reports for audits, inspections, and Ethics Official and contracting office worked to evaluations were issued in less than 6 months establish clear guidance to prohibit award of (average). contracts to former employees or from a regulated entity. As a result of an OIG audit, FCA took a comprehensive look at the Telework program. Practices to track and update telework agreements were arranged. In addition, policies for certain employees were changed to increase attention to Agency mission. Farm Credit Administration ♦ Office of Inspector General Fiscal Years 2012-2013 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 As a consequence of an OIG audit uncovering products contain recommendations or agreed-upon some inefficiency in the Student Loan Repayment actions to improve Agency operations. The Agency Program, there was a decision by management to accepts at least 80 percent of the OIG audit action suspend the program with the idea of developing items. more efficient and effective incentive programs. Not all audits contained action items if the OIG determined FCA’s information and technology findings did not warrant corrective action. Those acquisitions were efficient and effective and in audit and inspection products containing compliance with applicable guidelines. recommendations to improve Agency operations have been accepted as agreed-upon actions FCA is more effective in carrying out its mission. and are generally addressed within a year. In some cases, Agency management took Management’s attention to resolving open OIG immediate action for improvement as a result of recommendations or agreed-upon actions an OIG suggestion so no formal continues to be diligent and, in the majority of recommendation was necessary. instances, resolution occurs rapidly and almost always within a 6-month timeframe. At the close of FY 2013, one agreed-upon action was open. During the 2-year reporting period, the three audits, the inspection, and two FISMA evaluations resulted in fourteen agreed-upon actions. All but one action items have been addressed and closed. See Appendix (page 13) for details of audits and inspections. Farm Credit Administration ♦ Office of Inspector General Fiscal Years 2012-2013 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 operations. 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 by inspiring thought on with recommendations to strengthen Agency whether student loan repayment was actually operations. necessary or achieving the intended benefit. The IG identifies management’s top Management spent considerable time and challenges in the Agency’s Performance and thought in revising telework policy, in part, Accountability Report and the OIG’s based on the OIG audit of the program and the semiannual reports. issues that the audit surfaced. IG Observations and management advisories address Agency policy or administrative Examination is an inherently governmental functions. function. As a result of the OIG audit on contracting activities, the practice of re-hiring The OIG conducts an ongoing survey of FCS former FCA examiners as contractors was institutions as to the effectiveness of the curtailed. examination function and examiners. The survey of FCS institutions was revamped in OIG did a Management Advisory on Social 2006 and is electronic. The OIG preserves Media. The Agency does not have a social the anonymity of respondents and the integrity media presence but is gathering information of the survey. from other agencies who are actively engaging The OIG performs analyses and provides technical social media and intends to develop a plan and advice to management concerning accounting, strategy. management systems and controls, and performance measures. The Office of the Board sought technical perspective on certain aspects of Agency The OIG’s contract auditing firm assessed the operations: organizational structure and the Agency’s accounting and financial reporting need for an IG for the Farm Credit System annually, including controls and compliance Insurance Corporation. with laws and regulations. Any recommendations were conveyed to the FCA The Office of Management Services continues Board and to the Chief Financial Officer. to strengthen its information security program The OIG’s Senior IT Auditor assessed the based on agreed-upon actions identified in Agency’s compliance with FISMA. Any OIG’s FISMA evaluation. For example, the recommendations were conveyed to the FCA Agency implemented an action plan to guide Board, the Chief Information Officer, and the the Agency in achieving compliance with the Director of the Office of Management Services United States Government Configuration (OMS). In addition, the Senior IT Auditor Baseline. made suggestions that were readily accepted throughout the evaluation process. Farm Credit Administration ♦ Office of Inspector General Fiscal Years 2012-2013 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 2 (continued) – Provide technical advice and assistance to Agency officials in developing sound management information and financial reporting systems and in streamlining programs and operations. PERFORMANCE MEASURES OUTCOME / IMPACT The survey conducted by OIG of FCS institutions which have been examined, has been a useful instrument for the Chief Examiner and FCA Board to track quality of examination and examiners. Increase in management requests for advice, audit work, or technical assistance. The OIG is always receptive to management’s requests for audit work or for the OIG’s perspective on FCA operations, whether technical or non-technical in nature. Farm Credit Administration ♦ Office of Inspector General Fiscal Years 2012-2013 Performance Report 6 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 function meets or exceeds quality The OIG team has taken technical courses to audit standards prescribed by the U.S. Government gain proficiencies. Courses attended include: Accountability Office (GAO) and CIGIE. - OIG Leadership courses - Yellow Book Auditing (Government The U.S. Architect of the Capital OIG Accountability Office) conducted a peer review of the FCA OIG audit - Professionalism, Substance Abuse & Legal function in July 2013 and found full compliance Ethics with GAO and CIGIE auditing standards. - Federal Audit Executive Council Conference OIG’s audit team completed a peer review of - ISACA seminars and webinars the U.S. International Trade Commission in - Federal Audit Executive Committee meetings January 2013. and conferences - Ethics for Virginia CPAs The IG’s opportunity to facilitate positive - Plain Writing Act change within the Agency is enhanced by the - Harassment Training quality and credibility of OIG products and - No Fear Act advice. - National Intergovernmental Audit Forum Management seeks and listens to the OIG’s - CIGIE Annual Meeting views on issues. - FOIA/Privacy Act Training Workshop - Hotline Operator Training Program OIG staff members receive recognition through awards from the CIGIE community. In addition, CIGIE training sessions and legal forums are attended. The OIG team also stays The OIG provides sound opinions for the Office current in FCA operations and strategic of the Board on aspects of Agency operations. management initiatives. The quarterly reports on the OIG’s survey of The OIG implements administrative improvements FCS institutions relative to the Agency’s identified through reviews of Agency programs and examination function provide Agency through staff involvement with the professional management with quantitative and narrative community. feedback that assists in facilitating positive change. The OIG website is continually improved and kept current. As required by the Consolidated Audit, inspection, and other reports are almost always Appropriation Act, Pub.L.110-161, the OIG made public upon issuance and the OIG uses an email mechanism to alert those on the mailing list of maintains an email list for those who wish to receive notification when OIG reports are new publications. posted to the Agency’s website. There is a direct link to the OIG on the Agency homepage. Farm Credit Administration ♦ Office of Inspector General Fiscal Years 2012-2013 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 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 actions, convictions, or pleas are objective and factual manner. Memoranda are sought for employees and/or contractors found guilty issued to management describing internal control 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 2012 and wrongdoing. 2013. The OIG is notified of missing equipment if it contains personally identifiable information. Policies and procedures involving loss of OIG coordinates with law enforcement when equipment have been strengthened. warranted. FCA managers are alerted to employee misconduct for expeditious action. Public confidence in the integrity of FCA programs and internal operations is heightened. Farm Credit Administration ♦ Office of Inspector General Fiscal Years 2012-2013 Performance Report 8 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, firstname.lastname@example.org and phone numbers Several hotline complaints were referred to the 703-883-4316 and 800-437-7322. Office of Congressional and Public Affairs, and the Office of Examination. OIG assisted FCA Follow-up by OIG and appropriate forwarding examiners in referring suspected fraud to the to other Agency offices. Department of Agriculture OIG investigators. The Office of Personnel Management referred an allegation to FCA OIG 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 2012-2013 Performance Report 9 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 Inspectors General 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 FCA’s Office of Regulatory Policy to The CIGIE Legislation Committee is active in designate points in time when information on forwarding interest items. regulations and briefings will be sent to the OIG for review. Constructive comments on relevant documents are submitted by the deadlines requested by the office, Constructive criticism and creative alternatives offered Agency, or staff circulating comments. in OIG comments improve the quality and usefulness of documents issued by the Agency. FCA Board and management are informed about the status of new or pending legislation or regulations initiated externally. A management advisory summarized the relevant Congressional and Administration’s initiatives to decrease spending on conferences. 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 2012-2013 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 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 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 and Management The OIG would be receptive to any and all Advisories has been positive. feedback received from Agency management Audit follow-up is improved. and staff regarding OIG practices and products. Agreed-upon actions are implemented more expeditiously. Rarely does an action take more than six months to clear. Responded to Congressional Request (Rep. Issa) inquiries about “unimplemented recommendations,” and to Senators Grassley’s and Coburn’s biannual requests for information. OIG also responded to committee requests for review of the Agency’s climate control/sustainability status. Farm Credit Administration ♦ Office of Inspector General Fiscal Years 2012-2013 Performance Report 11 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 Inspectors General 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 was IG as Vice Chair of the CIGIE, along with the Chair the Vice Chairperson of CIGIE. The IG was a led monthly meetings of the Council and Executive member of the Executive Council of CIGIE. The Council. IG and staff participated on the Inspection and Evaluation Council of CIGIE, Association of OIG participates in the CIGIE working group on Government Accountants (AGA), Deputy inspections and evaluations. The group Inspectors General Quarterly meetings, Council collaborates and shares common areas for of Counsels (CCIG), CIGIE Federal Audit inspection and evaluation work. Executive Committee (FAEC), CIGIE FAEC IT Committee, Instructor at the Federal Law The IG frequently made presentations on the IG Enforcement Training Center, Federal Women’s Reform Act and CIGIE to organizations and Program Committee, Blacks In Government, international groups. Administrative Burden Reduction Workgroup, and the Combined Federal Campaign. OIG auditors performed a peer review of the audit program of the U.S. International Trade Commission OIG networking opportunities have resulted in an and made recommendations to improve their audit expanded consideration of FCA ideas and practices operations. by community contacts and experts. The OIG has shared telecommuting policies, hotline procedures, An OIG auditor actively participates in the FAEC IT performance measures and performance contracts Committee. This subcommittee worked with the and evaluation methods. Likewise, FCA benefits from Office of Management and Budget to revise the the opportunity to benchmark practices in other performance metrics for FISMA reporting by OIGs. agencies. An 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. An OIG auditor developed a draft security program for the CIGIE. FCA programs and operations are more effective and efficient. The Project on Government Oversight has previously recognized FCA OIG for its effective performance reporting. Farm Credit Administration ♦ Office of Inspector General Fiscal Years 2012-2013 Performance Report 12 APPENDIX AUDITS AUDITS ARE PRODUCTS ARE AUDITS ARE AGENCY ACCEPTS AUDIT NAME RISK ADDRESSED RELEVANT TIMELY CONSTRUCTIVE ≥ 80 % FCA Contracting OIG Initiated Strategic Plan 9 Months 7 Agreed-Upon Actions 100% Accepted Activities FCA’s Telework OIG Initiated Strategic Plan 4 Months 3 Agreed-Upon Actions Program 100% Accepted FY 2011 and 2012 Financial Statements Legislatively Mandated Strategic Plan 6 Months No Action Items N/A (Issued in FYs 2012 and Annual Audit 2013) INSPECTIONS FCA’s Information Requested by FCA Technology Equipment Strategic Plan 4 Months 4 Agreed-Upon Actions 100% Accepted Board Chair Acquisitions EVALUATIONS Federal Information Security Management Act Evaluation for FY Legislatively Mandated Strategic Plan 2 Months No Action Items N/A 2011 and 2012 (Issued in FYs 2012 and 2013) Farm Credit Administration ♦ Office of Inspector General Fiscal Years 2012-2013 Performance Report 13
FYs 2012-2013 Performance Report
Published by the Farm Credit Administration, Office of Inspector General on 2014-01-15.
Below is a raw (and likely hideous) rendition of the original report. (PDF)