oversight

March 2009

Published by the Farm Credit Administration, Office of Inspector General on 2009-03-01.

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

Office of
Inspector General
                    Semiannual Report to the Congress

                             October 1, 2008
                                 through
                             March 31, 2009


                                Number 40
                                April 2009
Farm Credit Administration                                Offic e of Inspec tor Genera l
                                                          1501 Fa rm Cred it Drive
                                                          Mc Lea n, VA 22102-5090
                                                          (703) 883-4030




April 22, 2009

The Honorable Leland A. Strom
Chairman of the Board
Farm Credit Administration
McLean, Virginia 22102-5090

Dear Chairman Strom:

Enclosed is the semiannual report on the activities of the Farm Credit Administration’s (FCA or
Agency) Office of Inspector General (OIG) for the period October 1, 2008 through March 31, 2009.
This is the fortieth report since the establishment of the OIG on January 22, 1989.

I am submitting this report in accordance with the Inspector General Act of 1978, as amended (IG
Act). Section 5(b) of the IG Act requires that you send this report to the appropriate Congressional
committees and subcommittees within 30 days after the date of this transmittal, accompanied by
management’s report on the status of audit, inspection, and/or evaluation action items.

In an earlier reporting period, October 1, 2007 through March 31, 2008, the open agreed-upon
action regarding establishing charters for the Strategic Planning, Risk, and Regulation and Policy
Development committees was closed by the OIG. The closing of this open agreed-upon action was
due to the OIG being notified by the former chairman that it was felt the committees were operating
satisfactorily and the OIG’s concurrence that management had sufficiently complied with the agreed-
upon action would no longer be sought. After you were named chairman, I recommended that you
revisit this audit report. In response, you initiated action to properly charter these committees. A
charter for each committee was implemented during this reporting period, which ended March 31,
2009.

The audit report’s other agreed-upon action was that minutes of the committees’ meetings would be
maintained in official Agency files. On September 18, 2008, the OIG initiated a follow-up activity
regarding this agreed-upon action. We determined that the committees’ minutes are satisfactory in
content. However, the Strategic Planning Committee was not recording its minutes in an official
Agency filing system. This was also corrected during this reporting period.

At the beginning of this reporting period there were three open agreed-upon actions resulting from
the OIG’s 2008 Federal Information Security Management Act evaluation. All three were
successfully implemented by management and closed during this reporting period.
                                                                                                 2

The OIG contracted with the Bureau of the Public Debt for Brown & Company CPAs, PLLC, to
perform the audit of FCA’s financial statements for fiscal year 2008. The audit delivered an
unqualified opinion and was issued November 7, 2008, meeting the Office of Management and
Budget’s reporting guideline. Please refer to page 5 for further information on this audit report.

If you have any questions, please call me at extension 4241 or 4030. I look forward to a continuing
positive relationship between the OIG and your office, which I view as a partnership, striving to
strengthen FCA operations.

Respectfully,



Carl A. Clinefelter
Inspector General

Enclosure
                      TABLE OF CONTENTS
EXECUTIVE SUMMARY…………………………………………………………….………………. 1

BACKGROUND……………………………………………………………………………………… 1
  FARM CREDIT ADMINISTRATION………………………………………………………………… 1
  FARM CREDIT SYSTEM…………………………………………………………………………… 2

MANAGEMENT CHALLENGES………………………………………………………….……….. 2
  FARM CREDIT SYSTEM…………………………………………………………………………………… 3
  FARM CREDIT ADMINISTRATION………………………………………………………………… 3
  THE NEXT POSSIBLE AGRICULTURAL ECONOMIC DOWNTURN………….……………………. 3
  HUMAN CAPITAL……………………………………………………………………………………………. 4
  STRATEGIC PLANNING……………………………………………………………………………. 4
  LEVERAGING TECHNOLOGY………………………………………………………………………5

AUDIT, INSPECTION, AND EVALUATION REPORTS ISSUED……………………………… 5
  INDEPENDENT FINANCIAL AUDIT FOR FY 2008………………….………………………………. 5

SIGNIFICANT REVISED MANAGEMENT DECISIONS…………………………………………. 6

OIG OBSERVATIONS ISSUED……………………………………………………………………. 6

AUDITS AND INSPECTIONS IN PROGRESS……………………………………………………                    6
  CERTIFICATION AND ACCREDITATION AUDIT………………………………………………….               6
  OFFICE OF EXAMINATION TRAVEL EXPENSE AUDIT………………………………………….             7
  TRAVEL AND PURCHASE CARD INSPECTION……………………………………………………                 7

STATUS OF UNIMPLEMENTED RECOMMENDATIONS………………………………………. 7
  AUDITS, INSPECTIONS, AND EVALUATIONS…………………………………………………….. 7

INVESTIGATIONS…………………………………………………………………………………… 7

LEGISLATION AND REGULATIONS…………………………………………………………….. 8

OTHER ACTIVITIES………………………………………………………………………………… 9
  SURVEY OF FARM CREDIT SYSTEM INSTITUTIONS…………………………………………… 9
  STAFF PARTICIPATION IN ACTIVITIES OF THE PROFESSIONAL COMMUNITY………………. 10
  STAFF PARTICIPATION IN AGENCY ORGANIZATIONS………………………………………… 10
  STAFF DEVELOPMENT…………………………………………………………………………… 10

ANNEX……………………………………………………………………………………………….. 11

APPENDICES
  APPENDIX A – INDEX OF REPORTING REQUIREMENTS………………………………………. 12
  APPENDIX B – AUDIT, INSPECTION, AND EVALUATION REPORTS ISSUED………………… 13
  APPENDIX C – REPORTS WITH QUESTIONED COSTS………………………………………… 14
  APPENDIX D – REPORTS WITH RECOMMENDATIONS THAT FUNDS
                 BE PUT TO BETTER USE……………………………………………………… 15
  APPENDIX E – FCA ORGANIZATIONAL CHART…………………………………………….…… 16
  APPENDIX F – OFFICE OF INSPECTOR GENERAL ORGANIZATIONAL CHART……………..... 17
  APPENDIX G – GLOSSARY OF TERMS…………..………………………………………….…… 18
                                                           OIG SEMIANNUAL REPORT TO THE CONGRESS
                                                                     OCTOBER 1, 2008 – MARCH 31, 2009




EXECUTIVE SUMMARY

        This Semiannual Report to the Congress summarizes the activities and
        accomplishments of the Farm Credit Administration’s (FCA or Agency) Office of
        Inspector General (OIG) for the period October 1, 2008 through March 31, 2009.
        The OIG’s efforts were directed toward operational and audit planning; performing
        audits, inspections, and evaluations of FCA programs and operations; conducting
        investigations, as necessary; independently and confidentially surveying Farm Credit
        System (FCS or System) institutions regarding the effectiveness of the Agency’s
        examiners and examination function; and providing objective, independent reporting
        and counsel to the Agency Chairman on FCA programs and operations.

        During the period, the OIG issued one audit report. The OIG contracted with the
        Bureau of the Public Debt (BPD) for Brown and Company CPAs, PLLC (Brown &
        Co.) to perform the audit of FCA’s financial statements for fiscal year (FY) 2008.
        The audit delivered an unqualified opinion and was issued November 7, 2008.

        Also, the OIG initiated two audits and one inspection. One audit is of the certification
        and accreditation process of the Agency’s information technology (IT) infrastructure.
        The other audit is of the Office of Examination’s (OE) travel expense budgeting,
        usage, and controls. The inspection is of the Agency’s use and control over travel
        and purchase cards.

        Additionally, the OIG issued two quarterly reports on the surveys of System
        institutions regarding the examination function and the examiners. These reports
        were for the quarters ended September 30, 2008 and December 31, 2008.

        The OIG maintains five positions: the Inspector General (IG), a General Counsel, a
        Senior Auditor, a Senior IT Auditor, and an Administrative Assistant. Appendix E
        and Appendix F reflect the organizational structure of FCA and the OIG,
        respectively.


BACKGROUND

Farm Credit Administration

        FCA is an independent Federal agency of the United States government responsible
        for the regulation and examination of FCS institutions chartered under the Farm
        Credit Act of 1971, as amended (Farm Credit Act). FCA is also a “designated




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       Federal entity” within the meaning of the Inspector General Act of 1978, as amended
       (IG Act).

       As a non-appropriated agency, FCA funds its expenses primarily through
       assessments to the institutions it regulates. The Agency’s FY 2009 budget is
       $50,322,552. Assessments by FCA to FCS institutions for FY 2009 totaled
       $45,100,000, with other sources of funding totaling $5,222,552. The OIG’s FY 2009
       budget is $1,035,316.

       At the end of this semiannual reporting period, FCA had 259 employees, about half
       of which are examiners located in five field offices. At the end of the prior
       semiannual reporting period, the Agency had 260 employees.

Farm Credit System

       The FCS is a Government-sponsored enterprise comprised of 5 Farm Credit banks
       that provide funds to 92 associations in all 50 states and Puerto Rico to make loans
       to agriculture and rural America. The System raises funds by selling securities in the
       national and international money markets through its special purpose entity, the
       Federal Farm Credit Banks Funding Corporation (Funding Corporation). These
       securities are not guaranteed by the U.S. Government.

       The Federal Agricultural Mortgage Corporation (Farmer Mac), also a part of the
       FCS, is chartered by the Federal government to provide a secondary market for
       agricultural mortgage loans. Farmer Mac is publicly traded and issues its own debt
       securities.

       Including the Funding Corporation, there are four service corporations organized
       under the Farm Credit Act that provide services to FCS entities and eligible
       borrowers.


MANAGEMENT CHALLENGES

       The OIG is required by statute to identify the most serious management and
       performance challenges and present them in the Agency’s Performance and
       Accountability Report. The OIG also presents them in its semiannual reports to the
       Congress. Except for external environmental challenges, they can be effectively
       addressed through concerted action by Agency management.




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                                 Farm Credit System
The System is a lender to a single industry, agriculture, and is therefore vulnerable to
economic swings in that industry. Nevertheless, the FCS remains sound in all
material respects. Earnings and capital levels have continued to strengthen, and
asset quality remains high. The Agency’s challenge is to continue to ensure the
System’s ability to withstand this vulnerability through effective examination and
regulatory activities. The Agency’s regulatory attention must also address other
vulnerabilities in the System. Among these are scope of lending excesses and risks
associated with exposure to new enterprises, such as alternative fuel production and
System institutions’ “investments in rural America.”

                             Farm Credit Administration
There continue to be issues facing agriculture and rural America today that raise the
question of whether there should be modifications to the Farm Credit Act to enable
the System to better serve agricultural and rural economies of the future. Whether
or not there are modifications to the Farm Credit Act, the Agency should anticipate
that the System will continue to seek broad regulatory interpretations. However, as a
financial regulator, FCA’s challenge is to continue to maintain an independent and
objective, yet flexible and responsive, regulatory environment for the System, geared
to continually ensuring the FCS fulfills its public policy purpose. Key to this for FCA is
effective examination and regulation of System institutions by maintaining a properly
staffed and resourced Agency.


               The Next Possible Agricultural Economic Downturn
There are several factors in the general economy and agriculture today that may
indicate future serious difficulties for agriculture and the FCS. For example,
    •   critical deterioration in the general economy, particularly in the financial and
        housing sectors, has resulted in massive losses to individuals and
        companies, and a severe upturn in unemployment;
    •   the System has been experiencing rapid growth for several years, which has
        had the effect of eroding the System’s capital to assets ratio;
    •   agricultural land values, which may not be sustainable, are high;
    •   some agricultural sectors have and continue to experience stress; and
    •   there has been volatility in commodity prices and input costs.

While the OE reports that System institutions remain safe and sound, these factors
have also led the OE to state that credit deterioration is likely and risks are rising.




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Thus, a major challenge for the Agency is to ensure its ongoing ability to timely
assess economic and operational conditions affecting the welfare of the System’s
borrowers and thus System institutions, and to take preemptive or remedial actions
to ensure the ongoing safety and soundness of the System. The first line of
preparedness for the Agency in accomplishing this is an effective risk assessment
and examination program, including the continual assessment of the reliability of risk
evaluation and examination findings, and the sufficiency of the Agency’s supervision
and enforcement processes.

                                  Human Capital
In 2006, a five-year strategic human capital plan was completed. FCA’s challenge
is to continue to implement the human capital plan to ensure that FCA has the staff it
needs to effectively regulate a constantly evolving FCS. In meeting this challenge,
the Agency should continue to address the attrition of seasoned staff and ensure the
viability of the examination staff, a critical component of the Agency’s regulatory
capability.

As the Agency moves further into the human capital plan’s five-year cycle, the
Agency must critically assess the implementation of the current plan and, as the
current plan nears completion, establish a new five-year human capital plan based
on current human capital experience and future perceived human resource needs.

                                Strategic Planning
In December 2003, the FCA Board adopted the Strategic Plan for Fiscal Years
2004–2009. The next Agency strategic plan was not adopted by the FCA Board until
May 2008. In accordance with the Government Performance and Results Act of
1993 and Office of Management and Budget (OMB) Circular A-11, an updated and
revised strategic plan is required within three years of submitting a prior strategic
plan.

Since the adoption of the 2008-2013 strategic plan, the FCA Board has a new
Chairman. This change in leadership and the likelihood of two new FCA Board
Members prior to the next major updating of the strategic plan will provide an
opportunity and a challenge to ensure the FCA Board’s vision is timely incorporated
into the next strategic plan.

In 2005, the FCA Board established a Strategic Planning Committee (SPC)
composed of Agency staff to facilitate FCA Board input into the plan and the




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         planning process. The SPC should ensure the updating and issuance by the FCA
         Board of the next strategic plan, presumably dated FY 2011-2016.

                                     Leveraging Technology
         Information technology is a key element in management’s efforts to continually
         improve Agency performance. The Agency is in the process of a major
         infrastructure transition designed to promote efficient work processes and to
         provide staff with enhanced communication and collaboration tools. The
         challenge is to stay abreast of emerging technologies and to establish an IT
         infrastructure that provides FCA staff with IT tools and skills to operate in an
         efficient, effective, and secure manner. In addition, the Agency must ensure that
         its technical staff has the skills and knowledge to implement and maintain its
         infrastructure, and initiatives in this regard are underway.


AUDIT, INSPECTION, AND EVALUATION REPORTS ISSUED

         The OIG conducts all audits in accordance with Government Auditing Standards
         issued by the Comptroller General of the United States for audits of Federal
         organizations, programs, activities, and functions. Inspections and evaluations are
         in accordance with the Council of the Inspectors General on Integrity and Efficiency
         (CIGIE) Quality Standards for Inspections. Copies of most OIG reports are available
         on the FCA OIG web site www.fca.gov/home/inspector.html, or by contacting the
         OIG at (703) 883-4030, or by TTY at (703) 883-4359, or by e-mail at
         ig_information@fca.gov.

Independent Financial Audit for FY 2008

        The Accountability of Tax Dollars Act of 2002 extended to FCA and certain other
        agencies a requirement to submit to the Congress and the OMB an audited financial
        statement each fiscal year.

        In continuing to assist the Agency in meeting these requirements, the OIG contracted
        with the BPD for Brown & Co. to perform the audit of FCA’s financial statements for
        FY 2008. The audit delivered an unqualified opinion and was issued November 7,
        2008, meeting OMB’s reporting guideline.




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SIGNIFICANT REVISED MANAGEMENT DECISIONS

       In an earlier reporting period, October 1, 2007 through March 31, 2008, the open
       agreed-upon action regarding establishing charters for the Strategic Planning, Risk,
       and Regulation and Policy Development committees that resulted from the audit
       report entitled Committees Established by the FCA Board issued in January 2007
       was closed by the OIG. The closing of this open agreed-upon action was due to the
       OIG being notified by the former chairman that it was felt the committees were
       operating satisfactorily and the OIG’s concurrence that management had sufficiently
       complied with the agreed-upon action would no longer be sought. In our first monthly
       meeting on June 23, 2008, after you were named chairman, I recommended that you
       revisit this audit report. I indicated that without well constructed charters the three
       committees may not achieve their intended purposes. In response, you initiated
       action to properly charter these committees. A charter for each committee was
       implemented during this reporting period, which ended March 31, 2009.


OIG OBSERVATIONS ISSUED

       The OIG issued to the Chairman during the period two OIG Observations. One was
       issued on March 11, 2009, and suggested to the Chairman that consideration be
       given to whether there are any additional Agency functions or processes that would
       benefit from more formalization through their establishment as additional committees
       to serve the FCA Board.

       The other was issued March 12, 2009, and suggested policy and organizational
       changes to better position the Agency to address any downturn in the condition of
       FCS institutions.

       OIG Observations are designed to be a quick mechanism to offer the Agency head
       suggestions on ways to strengthen Agency operations.


AUDITS AND INSPECTIONS IN PROGRESS

Certification and Accreditation (C&A) Audit

        An audit was initiated on the C&A process of the Agency’s IT infrastructure. The
        objective is to evaluate the quality of the C&A process and identify potential areas for
        improvement which can be applied to the next C&A process.




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Office of Examination (OE) Travel Expense Audit

        An audit was initiated of OE’s travel expense budgeting, usage, and control. The
        objective is to determine whether the OE’s travel funds are being managed
        economically and efficiently.


Travel and Purchase Card Inspection

        An inspection was initiated of the Agency’s use and control over travel and purchase
        cards. The objective is to review FCA employees’ use of travel and purchase cards,
        the Agency’s travel and purchase card administration controls, and Agency actions
        in response to recommendations made in the prior purchase card inspection.


STATUS OF UNIMPLEMENTED RECOMMENDATIONS

        At the beginning of the reporting period, there were three open agreed-upon actions
        from the Federal Information Security Management Act (FISMA) evaluation issued
        September 29, 2008. The actions were closed during this reporting period.

Audits, Inspections, and Evaluations

        The following table summarizes the status of action items from audits, inspections,
        and evaluations.


          Audit, Inspection, and Evaluation Agreed-Upon Actions and Recommendations
                                                                         Final
                                                  Open during
                                                                     Management          Open on
                 Audit Report          Issued     this 6-month
                                                                    Actions during       4/01/2009
                                                     period
                                                                      this period

         FISMA                         9/29/08         3                   3                 0

                           Total                       3                   3                 0




INVESTIG ATIONS

        No hotline calls were received alleging impropriety that would fall within the purview
        of the OIG.




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      OIG Hotline calls and e-mails dealing with borrower complaints concerning FCS
      institutions and other FCS issues were referred to the FCA office or other Federal
      agency responsible for reviewing such matters.

      No investigations were opened during the reporting period.


LEGISLATION AND REGULATIONS

      In the furtherance of the OIG’s mandate to review existing and proposed legislation
      and regulations, the IG or Counsel to the IG attends joint briefings of the FCA Board
      on regulations at the proposed and final stages. The following were reviewed by
      Counsel to the IG:

         Legislation

            1)      House Resolution (H.R.) 928 – The Inspector General Reform Act of
                    2008, signed into law in October 14, 2008, amending various
                    authorities of the Inspectors General.

            2)      H.R. 1424 – Emergency Economic Stabilization Act, signed into law
                    on October 3, 2008.

            3)      H.R. 923 – Emmett Till Unsolved Civil Rights Crime Act, signed into
                    law on October 7, 2008– permits OIG employees to participate with
                    National Center for Missing and Exploited Children.

            4)      H.R. 478 – Federal Agency Performance Review and Efficiency Act-
                    would amend IG Act to mandate OIG conduct annual performance
                    review of all Agency programs.

            5)      H.R. 1– American Recovery and Reinvestment Act of 2009, signed
                    into law on January 26, 2009. Stimulus to national economy.

            6)      H.R. 885 – Improved Financial and Commodity Markets Oversight
                    and Accountability Act – would make the IGs of the Securities and
                    Exchange Commission, Federal Reserve Board, Commodity Futures
                    Trading Commission, Pension Benefit Guaranty Corporation, and the
                    National Credit Union Administration – Presidential appointees
                    requiring Senate confirmation.

            7)      H.R. 1105 – Omnibus Appropriations Act of 2009, signed into law on
                    February 23, 2009, reiterates requirements for IG websites.




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                                                            OIG SEMIANNUAL REPORT TO THE CONGRESS
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           Proposed Rules

              8)       Disclosure and Accounting Requirements

              9)       Director Elections and Voting Rules

           Final Rules

             10)       Adjusting Civil Money Penalties for Inflation

           Executive Orders (E.O.)

             11)       Facilitation of a Presidential Transition

             12)       E.O. 13490 – requires an ethics pledge and limitations on appointees
                       to accept gifts.

             13)       Freedom of Information Act Memorandum – encouraging
                       discretionary disclosures of information.

           Briefings

             14)       Market Emergency Standby Resolution

             15)       Revised Guidelines on Submission of Proposals to Merge or
                       Consolidate Associations


OTHER ACTIVITIES

Survey of Farm Credit System Institutions

        The OIG administers an ongoing survey of FCS institutions regarding the quality and
        consistency of the Agency’s examination function and examiners. During this 6-
        month period, we sent surveys to the Audit Committee Chairmen and Chief
        Executive Officers of 19 FCS institutions. Quarterly reports for the 3-month periods
        ended September 30 and December 31, 2008, were issued by the OIG to the Chief
        Examiner and the Chairman.

        The OIG issues a quarterly report and a summary report at the end of each fiscal
        year to the Chief Examiner and the Chairman on the surveys’ results.




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Staff Participation in Activities of the Professional Community

        OIG staff members are encouraged to take part in organizations that contribute to
        the mission of the Inspectors General community, as well as their individual
        professional development. Most staff members are actively involved in one or more
        professional organizations, as well as ad hoc activities of the CIGIE.

        The IG serves as the Vice Chairperson of CIGIE, helps chair the monthly meetings
        of all Inspectors General comprising CIGIE, meets monthly with the Inspectors
        General from the other Federal financial regulatory agencies, and participates as a
        member of the CIGIE’s Inspection and Evaluation Committee.

        The OIG General Counsel meets at least monthly with counsels to the other
        Inspectors General. Counsel also attends Directors of Investigations meetings.

        The OIG Senior Auditor and Senior IT Auditor attend Federal Audit Executive
        Committee meetings and conferences. The Senior IT Auditor also attends local
        ISACA (formerly known as Information Security and Control Association) meetings
        and Federal information security and audit meetings.

Staff Participation in Agency Organizations

        Staff is active on several Agency workgroups and task forces. During this reporting
        period, the OIG was represented on the Administrative Burden Reduction
        Workgroup and the Combined Federal Campaign.

Staff Development

        OIG employees continually seek ways to improve skills and become knowledgeable
        in the initiatives of the community of Inspectors General. Audit and legal staff must
        meet continuing education requirements. Individual development plans are used to
        identify long- and short-term career goals along with specific training and
        developmental needs. These plans are geared to enhance individual skills in the
        performance of official duties and meet the criteria needed to achieve OIG
        performance goals and objectives.




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ANNEX

        This annex is provided in accordance with the National Defense Authorization Act for
        FY 2008.

        This referenced statute requires all Inspectors General appointed under the IG Act to
        add an annex to their semiannual reports as follows:

           1) listing all contract audit reports issued during the reporting period containing
              significant audit findings;

           2) briefly describing the significant audit findings in the report; and

           3) specifying the amounts of costs identified in the report as unsupported,
              questioned, or disallowed.

        Significant audit findings are defined as unsupported, questioned, or disallowed
        costs in excess of $10,000,000, or other findings that the Inspector General
        determines to be significant. It defines contracts as a contract, an order placed
        under a task or delivery order contract, or a subcontract.

        No contract audit reports meeting these criteria were issued on behalf of the OIG
        during this reporting period.




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     APPENDIX A – INDEX OF REPORTING REQUIREMENTS


INSPECTOR GENERAL ACT CITATION AND REQUIREMENT                                                            PAGE

Section 4(a)(2)    Review of Legislation and Regulations ...................................................... 8-9

Section 5(a)(1)    Significant Problems, Abuses, and Deficiencies ..................................... none

Section 5(a)(2)    Recommendations for Corrective Action.................................................... 5-7

Section 5(a)(3)    Prior Recommendations Not Yet Implemented............................................. 7

Section 5(a)(4)    Matters Referred to Prosecutive Authorities............................................ none

Section 5(a)(5)    Summary of Instances Where Information .............................................. none
                   Was Unreasonably Refused or Not Provided

Section 5(a)(6)    List of OIG Audit/Inspection Reports Issued During the Period .................... 5

Section 5(a)(7)    Summary of Significant Reports Issued During the Period ........................... 5

Section 5(a)(8)    Statistical Table on Management Decisions ............................................... 14
                   with Questioned Costs

Section 5(a)(9)    Statistical Table on Management Decisions on .......................................... 15
                   Recommendations that Funds be put to Better Use

Section 5(a)(10)   Summary of Each Audit Over Six Months Old for .................................. none
                   Which No Management Decision Has Been Made

Section 5(a)(11)   Significant Revised Management Decisions ................................................. 6

Section 5(a)(12)   Significant Management Decisions with Which....................................... none
                   the Inspector General Disagreed

Section 5(a)(13)   Compliance of Agency Financial Management System ............................... 5




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                                                                               APPENDIX B




                    Audit, Inspection, and Evaluation Reports Issued


                                      Number of Agreed                     Recommendations
                                                         Questioned
                                        Upon Actions/                      That Funds Be Put
                                                           Costs
          Title of Report             Recommendations                        to Better Use

Financial Audit for FY 2008                  0                $0                    $0

                              Total          0                $0                    $0




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                                                                                              APPENDIX C




                                  Reports with Questioned Costs

                                                        Number                          Dollar Value

                                                           Recom-             Questioned       Unsupported
                                                Reports
                                                          mendations            Costs             Costs


A. For which no management decision has
   been made by the commencement of
   the reporting period                           0              0                 $0                $0

B. Which were issued during the reporting
   period                                         0              0                 $0                $0

Subtotals (A+B)                                   0              0                 $0                $0

C. For which a management decision was
   made during the reporting period               0              0                 $0                $0

    (i) dollar value of disallowed costs          0              0                 $0                $0

    (ii) dollar value of costs not disallowed     0              0                 $0                $0

D. For which no management decision has
   been made by the end of the reporting
                                                  0              0                 $0                $0
   period

E. For which no management decision was
                                                  0              0                 $0                $0
   made within six months of issuance




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                                                                                   APPENDIX D



              Reports with Recommendations that Funds be Put to Better Use

                                                                     Number of
                                                        Number of     Recom-
                                                         Reports     mendations           Dollar Value

A. For which no management decision has been
   made by the commencement of the reporting               0               0                   $0
   period

B. Which were issued during the reporting period           0               0                   $0

Subtotals (A + B)                                          0               0                   $0

C. For which a management decision was made
                                                           0               0                   $0
   during the reporting period

    (i) dollar value of recommendations that
                                                           0               0                   $0
        were agreed to by management

        --based on proposed management action              0               0                   $0

        --based on proposed legislative action             0               0                   $0

    (ii) dollar value of recommendations that
                                                           0               0                   $0
         were not agreed to by management

D. For which no management decision has been
                                                           0               0                   $0
   made by the end of the reporting period

E. For which no management decision was made
                                                           0               0                   $0
   within six months of issuance




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                                          OIG SEMIANNUAL REPORT TO THE CONGRESS
                                                    OCTOBER 1, 2008 – MARCH 31, 2009




A P P E N D I X E – F C A O R G A N I Z AT I O N A L C H A R T




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                                                                OIG SEMIANNUAL REPORT TO THE CONGRESS
                                                                          OCTOBER 1, 2008 – MARCH 31, 2009




     APPENDIX F – Office of Inspector General Organizational Chart




                                        Inspector General
                                         Carl A. Clinefelter



                      Administrative
                        Assistant
                      Debra M. Miller




         Counsel to the IG            Senior Auditor                      Senior IT Auditor
         Elizabeth M. Dean          Veronica G. McCain                     Tammy F. Rapp




                                                                                    September 4, 2008
                                 Carl A. Clinefelter, Inspector General             Date
Carl C




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                                                        OIG SEMIANNUAL REPORT TO THE CONGRESS
                                                                  OCTOBER 1, 2008 – MARCH 31, 2009




APPENDIX G – Glossr y of Terms



  Agency                – Farm Credit Administration
  BPD                   – Bureau of the Public Debt
  Brown & Company       – Brown & Company CPAs, PLLC
  C&A                   – Certification and Accreditation
  CIGIE                 – Council of the Inspectors General on Integrity and Efficiency
  E.O.                  – Executive Order
  Farm Credit Act       – Farm Credit Act of 1971, as amended
  Farmer Mac            – Federal Agricultural Mortgage Corporation
  FCA                   – Farm Credit Administration
  FCS                   – Farm Credit System
  FISMA                 – Federal Information Security Management Act
  Funding Corporation   – Federal Farm Credit Banks Funding Corporation
  FY                    – Fiscal Year
  H.R.                  – House Resolution
  IG                    – Inspector General
  IG Act                – Inspector General Act of 1978, as amended
  ISACA                 – Information Security and Control Association
  IT                    – Information Technology
  OE                    – Office of Examination
  OIG                   – Office of Inspector General
  OMB                   – Office of Management and Budget
  SPC                   – Strategic Planning Committee
  System                – Farm Credit System




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                                   OIG SEMIANNUAL REPORT TO THE CONGRESS
                                             OCTOBER 1, 2008 – MARCH 31, 2009




        R E P O R T
Fraud   |    Waste    |    Abuse     |     Mismanagement




        FARM CREDIT ADMINISTRATION
        OFFICE OF INSPECTOR GENERAL

   • Phone: Toll Free (800) 437-7322; (703) 883-4316

   • Fax:     (703) 883-4059

   • E-mail: fca-ig-hotline@rcn.com

   • Mail:    Farm Credit Administration
              Office of Inspector General
              1501 Farm Credit Drive
              McLean, VA 22102-5090




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