oversight

Semiannual Report March 31, 2018

Published by the Farm Credit Administration, Office of Inspector General on 2018-03-31.

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

  FARM CREDIT ADMINISTRATION

OFFICE OF INSPECTOR GENERAL
           Message from the Inspector General


I am pleased to submit this Semiannual Report to Congress, which addresses the many changes
we have made in the Office of Inspector General (OIG), and the activities and accomplishments
of our office in the Farm Credit Administration (FCA or Agency) for the period from October 1,
2017 through March 31, 2018.

During this reporting period, our office underwent changes involving reduced staff and greater
efficiency. Since the first of the year, we have been using the shared legal and investigative
services of the Treasury Inspector General for Tax Administration (TIGTA). It is reassuring to know
that the exceptional staff at TIGTA support us for both legal and investigative advice.

During this reporting period, the audit, inspection, and evaluation activities of our office focused
on Agency physical security in two FCA field offices, FCA’s Office of Secondary Market Oversight,
and travel compensation and incentives. We also introduced an evaluation product that will
benchmark our information technology spending and use of contractors against the other
federal financial regulators to better inform the FCA Board’s decisions and policy. This past year
Brown and Company audited FCA’s compliance with the Federal Information Security
Modernization Act of 2014

and concluded FCA’s information security program was effective. The Agency received another
clean opinion on its financial statements from the outside auditing firm, Harper, Rains, Knight &
Company, P.A. (HRK). We contracted with HRK for the audit of FCA’s fiscal year 2018 financial
statements, a contract that can be renewed every year up to the next 4 years.

Our office conscientiously carries out its reporting duties to the FCA Board and Congress. We
held two quarterly briefings with each of the three members of the FCA Board and met with our
oversight committees in both the Senate and the House. We also continued our outreach efforts,
publishing the second issue of our internal newsletter, the dIG, and participated in several
Council of the Inspectors General on Integrity and Efficiency committees and workgroups,
including the workgroup that reviewed the top management and performance challenges
reported throughout multiple federal agencies.

This reporting period, FCA welcomed Glen R. Smith, our newest member of the FCA Board,
whose term runs from December 8, 2017 to May 21, 2022. Board Member Smith hails from
Atlantic, Iowa, with experience in farm management, land appraisal, and
farmland brokerage services. He also owns a family farm operation that
encompasses about 2,000 acres of primarily corn and soybeans. We
welcome Board Member Smith to the Agency.



Wendy R. Laguarda
Inspector General




                              FCA OIG Semiannual Report to Congress
                                  October 1, 2017—March 31, 2018
                              https://www.fca.gov/home/inspector.html
                        Abbreviations


Agency          – Farm Credit Administration
Charge Card Act – The Government Charge Card Abuse Prevention Act of 2012
CIGIE           – Council of the Inspectors General on Integrity and Efficiency
FAMC            – Federal Agricultural Mortgage Corporation
FCA             – Farm Credit Administration
FCS             – Farm Credit System
FISMA           – Federal Information Security Modernization Act of 2014
FLRA            – Federal Labor Relations Authority
FY              – Fiscal Year
HRK             – Harper, Rains, Knight & Company, P.A.
IAA             – Inter-Agency Agreement
IG              – Inspector General
IG Act          – Inspector General Act of 1978, as amended
IT              – Information Technology
OCPA            – Office of Congressional and Public Affairs
OE              – Office of Examination
OIG             – Office of Inspector General
OIT             – Office of Information Technology
OMB             – Office of Management and Budget
OSC             – Office of Special Counsel
OSCRA           – OSC Reauthorization Act of 2017
OSMO            – Office of Secondary Market Oversight
PPP             – Prohibited Personnel Practice
Pub. L.         – Public Law
System          – Farm Credit System
TIGTA           – Treasury Inspector General for Tax Administration
WPA             – Whistleblower Protection Act of 2017




                    FCA OIG Semiannual Report to Congress
                        October 1, 2017—March 31, 2018
                    https://www.fca.gov/home/inspector.html
                                                  Table of Contents




MISSION, VISION, VALUES, GOALS .......................................................................................................... 1
BACKGROUND ............................................................................................................................................ 2
STRATEGIC GOALS...................................................................................................................................... 5
PERFORMANCE MEASURES ...................................................................................................................... 9
AUDITS, INSPECTIONS, AND EVALUATIONS ........................................................................................ 11
   Reports Issued....................................................................................................................................... 11
       Table 1: Audit, Inspection, and Evaluation Reports Issued ......................................................... 11
   In Progress ............................................................................................................................................. 17
   Agreed-upon Actions ........................................................................................................................... 19
       Table 2: Audit, Inspection, and Evaluation Agreed-Upon Actions ............................................. 19

   Open Agreed-upon Actions ................................................................................................................ 20
       Table 3: Open Audit, Inspection, and Evaluation Agreed-Upon Actions .................................. 20
OTHER REPORTS ....................................................................................................................................... 21
   Survey of Farm Credit System Institutions ........................................................................................ 21
   Charge Card Risk Assessment ............................................................................................................. 22
INVESTIGATIONS ...................................................................................................................................... 23
       Table 4: Investigative Activity .......................................................................................................... 25
LEGISLATIVE AND REGULATORY REVIEWS ........................................................................................... 26
REPORTING AND OUTREACH ................................................................................................................. 30
APPENDIX A: FCA Organizational Chart ................................................................................................ 31
APPENDIX B: Peer Reviews ...................................................................................................................... 32
APPENDIX C: Management Decisions.................................................................................................... 34
APPENDIX D: Index of Reporting Requirements .................................................................................. 35




                                                  FCA OIG Semiannual Report to Congress
                                                      October 1, 2017—March 31, 2018
                                                  https://www.fca.gov/home/inspector.html
                   Mission, Vision, Values, Goals

                                      Our Mission
The OIG’s independent eyes, ears, and voice serve to protect, inform,
           and advance Agency programs and operations.

                                        Our Vision
                                   Harvesting Change

                                        Our Values
              Relevant, Respectful, Trustworthy, and Objective

                                         Our Goals
               1. Detect and Deter Fraud, Waste, and Abuse
              2. Investigate and Protect Against Wrongdoing
                       3. Promote Quality and Value
                          4. Advance FCA’s Future


    GOAL 1                   GOAL 2                      GOAL 3               GOAL 4

  Perform risk-based                                 Create benchmarks     Recruit, retain, and
  audits, inspections,    Guard confidentiality     for improved Agency    empower a diverse
   and evaluations                                    decision making          workforce



 Reinforce the OIG as a   Produce timely, clear,
                                                     Ensure the OIG and
      safe zone for        focused, and factual                            Promote leadership,
                                                     FCA are models for
    reporting fraud,            reports of                                 vision, and expertise
                                                     good government
   waste, and abuse           investigation


     Listen to and
                                                   Produce OIG products
 understand the needs,     Provide outreach on
                                                      that are timely,
    challenges, and       how to prevent fraud,                            Leverage technology
                                                   relevant, reasonable,
    interests of our        waste, and abuse
                                                        and helpful
      stakeholders



                               Source: FCA OIG’s Strategic Plan



                              FCA OIG Semiannual Report to Congress
                                  October 1, 2017—March 31, 2018
                              https://www.fca.gov/home/inspector.html

                                                     1
                                                        Background

                             The Farm Credit Administration (FCA or Agency) is an independent federal agency of the
                             United States government responsible for the regulation and examination of Farm Credit
                             System (FCS or System) institutions chartered under the Farm Credit Act of 1971, as
                             amended.
Farm Credit Administration


                             As a non-appropriated agency, FCA funds its expenses primarily by assessing the FCS
                             institutions. FCA’s revised budget for fiscal year (FY) 2018 is $70,600,000.

                             At the end of the prior semiannual reporting period, the Agency had 299 employees.
                             As of the end of this reporting period, FCA has 300 employees, about half of whom
                             are examiners located in the Agency’s five field offices as shown below.


                                                                                       Bloomington, MN



                                                              Denver, CO
                                Sacramento, CA
                                                                                                              Headquarters McLean, VA




                                                                                  Dallas, TX
Farm Credit System




                             The System is a government-sponsored enterprise comprised of 3 Farm Credit Banks, 1
                             Agricultural Credit Bank, 1 Federal Land Credit Association, and 68 Agricultural Credit
                             Associations that primarily makes loans to agriculture in all 50 states and Puerto Rico. 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.
                             These securities are not guaranteed by the U.S. government.

                             The Federal Agricultural Mortgage Corporation (FAMC), also a part of the System, is
                             chartered by the federal government to provide a secondary market for agricultural
                             mortgage loans. FAMC is publicly traded and issues its own debt securities. Additionally,
                             there are five active service corporations that provide services to FCS entities and
                             eligible borrowers.



                                                  FCA OIG Semiannual Report to Congress
                                                      October 1, 2017—March 31, 2018
                                                  https://www.fca.gov/home/inspector.html

                                                                           2
                                                         Background




                              The mission of the Office of Inspector General (OIG) is as follows:

                                  The OIG’s independent eyes, ears, and voice serve to protect,
                                  inform, and advance Agency programs and operations.

                              The Inspector General Act of 1978, as amended (IG Act), established the FCA OIG in 1989.
                              The Inspector General (IG) is appointed by the FCA Board without regard to political
                              affiliation and solely based on integrity and demonstrated ability in accounting,
Office of Inspector General




                              auditing, financial analysis, management analysis, investigations, law, or public
                              administration.

                              While the OIG is under the general supervision of the FCA Board, it operates with
                              independent hiring, contracting, and budget authority. The IG reports both to the FCA
                              Board and to Congress.

                              The three major components for this reporting period include audits, inspections, and
                              evaluations of programs and operations, investigations, and outreach.




                                                                    Office of
                                                                   Inspector
                                                                    General




                                     Audits,
                                Inspections, and                Investigations                      Outreach
                                   Evaluations




                                                   FCA OIG Semiannual Report to Congress
                                                       October 1, 2017—March 31, 2018
                                                   https://www.fca.gov/home/inspector.html

                                                                          3
                                                      Background


                              OIG Staff         OIG employees continually seek ways to improve skills and become
                                                knowledgeable in the initiatives of the IG community. OIG staff must
                                                meet continuing education requirements. Development plans are
                                                used to identify long- and short-term career goals along with
Office of Inspector General


                                                specific training and developmental needs. These plans are geared
                                                toward enhancing individual skills in the performance of official
                                                duties, cross training, succession planning, and meeting the criteria
                                                needed to achieve OIG performance goals and objectives.

                              Changes in         Earlier this year, Ava Bell, whose duties include management and
                                                 program analyst functions, took the training course conducted
                              the OIG
                                                 by the Inspector General Criminal Investigator Academy to
                                                 become an 1810 investigator. Ms. Bell began her primary duties
                                                 as an 1810 investigator for the OIG starting in March 2018, while
                                                 continuing her secondary analyst role.

                                                 In November 2017, our office executed an Inter-Agency
                                                 Agreement (IAA) with the Treasury Inspector General for Tax
                                                 Administration (TIGTA) to obtain legal and investigative services,
                                                 as necessary. The IAA runs from January 1 through September
                                                 30, 2018, at which time we will reassess this shared services
                                                 arrangement with the possibility of renewing for another fiscal
                                                 year.

                                                 We are very grateful to the exceptional lawyers and investigators
                                                 at TIGTA for providing us with needed legal and investigative
                                                 support.


 The following organizational chart shows the OIG as of March 31, 2018:


                                                        Inspector General
                                                       Wendy Laguarda, JD



                   Senior Auditor           Senior Auditor             Senior Auditor         Investigator
      Tammy Rapp, CISA, CPA                Sonya Cerne, CFE          Tori Kaufman, CPA         Ava Bell, JD




                                                FCA OIG Semiannual Report to Congress
                                                    October 1, 2017—March 31, 2018
                                                https://www.fca.gov/home/inspector.html

                                                                        4
                                                                       Strategic Goals


                                              To accomplish our mission, the OIG identified four strategic goals in our Strategic Plan.
                                              The following summarizes our strategic goals and related outcomes during this reporting
                                              period.


                                              Critical to the OIG’s mission is detecting and deterring fraud, waste, and abuse. We
                                              employ a multi-faceted approach of detection and deterrence that includes:
Goal 1: Detect & Deter Fraud, Waste & Abuse




                                                 •   Performing risk-based audits, inspections, and evaluations.
                                                 •   Reinforcing the OIG as a safe zone for reporting fraud, waste, and abuse.
                                                 •   Listening to and understanding the needs, challenges, and interests of our
                                                     stakeholders.

                                              During this reporting period, we issued three audit reports and two inspection reports,
                                              with two reviews in progress. The in-progress reviews include an information
                                              technology (IT) budget benchmarking study and a physical security inspection of the
                                              Dallas office.

                                              The OIG hotline is available 24/7 to confidentially receive tips and complaints about
                                              fraud, waste, or abuse relating to FCA programs and operations. The OIG has telephone
                                              and fax numbers, as well as an independent hotline email account. Only OIG staff have
                                              access to these avenues that allow individuals to report allegations to the OIG directly
                                              and confidentially.

                                              Communication with Agency stakeholders is another key aspect of the OIG’s oversight.
                                              During our reviews, we continually meet with Agency officials to keep them informed
                                              of our progress, results, and areas for improvements. The IG regularly meets with FCA
                                              Board Members to discuss work products, Agency priorities, and any concerns. The IG
                                              and OIG staff also frequently interact with Agency staff and managers to obtain an
                                              understanding of their needs, challenges, and interests in our work.

                                              An OIG goal is to work diligently with Agency management to obtain agreement on
                                              planned actions addressing any recommendations resulting from an audit, inspection,
                                              or evaluation. Management identifies planned actions they will take to address any
                                              recommendations before we issue a final report. Once the OIG is satisfied with
                                              management’s planned actions, we convert our “recommendation” to an “agreed-
                                              upon action” before issuing our final report. In some instances, corrective action is
                                              completed prior to issuing a final report. We are pleased to recognize completed
                                              actions in the final report. During this reporting period, Agency management agreed
                                              with all our recommendations and developed corrective action plans.




                                                                    FCA OIG Semiannual Report to Congress
                                                                        October 1, 2017—March 31, 2018
                                                                    https://www.fca.gov/home/inspector.html

                                                                                           5
                                                                           Strategic Goals

Goal 2: Investigate & Protect Against Wrongdoing

                                                   The OIG conducts timely, relevant, and high-quality investigations. Our investigative
                                                   reports fairly and accurately report our findings and may offer actions for
                                                   consideration to correct and deter future misconduct, fraud, waste, or abuse.
                                                   The OIG employs the following actions in support of this goal:
                                                      •   Guard confidentiality
                                                      •   Produce timely, clear, focused, and factual reports of investigation
                                                      •   Provide outreach on how to prevent fraud, waste, and abuse
                                                   Our investigative procedures and internal controls are designed, to the extent
                                                   possible, to guard the confidentiality of all complainants and persons involved in the
                                                   investigative process. As provided by the IG Act, the FCA OIG will not disclose the
                                                   identity of a complainant without the consent of the complainant, unless the IG
                                                   determines that such disclosure is unavoidable during an investigation. To ensure all
                                                   relevant aspects of the investigation are accurately and objectively addressed in our
                                                   reports, our investigations manual describes: the process for developing an
                                                   investigation plan and obtaining IG approval; legal requirements during an
                                                   investigation; communications and case management; reporting procedures; and
                                                   referrals to FCA. The OIG follows the Council of Inspectors General on Integrity and
                                                   Efficiency (CIGIE) Quality Standards for Investigations as guidance for all its
                                                   investigative activity.
                                                   OIG evaluates all complaints, examining jurisdictional issues, the nature of the
                                                   allegation, and other factors. We also receive complaints from borrowers or potential
                                                   borrowers in the System regarding their lending rights or alleged wrongdoing in an
                                                   FCS institution. We refer these complaints to the FCA Office of Congressional and
                                                   Public Affairs (OCPA), as required by Agency policy, and follow up, as appropriate. The
                                                   OIG also assesses availability of records and other factors to determine whether the
                                                   complaint includes allegations of criminal, civil, or administrative violations that
                                                   necessitate a formal investigation. During this reporting period, the OIG reviewed 13
                                                   complaints and did not open any formal investigations.
                                                   The OIG participates in FCA’s new employee training to discuss our investigative
                                                   program, and we distribute posters identifying hotline contact information, as well as
                                                   Office of Special Counsel (OSC) notices. This reporting period, we updated the OIG
                                                   whistleblower page to more clearly explain whistleblower protections.




                                                                        FCA OIG Semiannual Report to Congress
                                                                            October 1, 2017—March 31, 2018
                                                                        https://www.fca.gov/home/inspector.html

                                                                                               6
                                                        Strategic Goals




                                  As the safety and soundness regulator of the System, FCA ensures the well-being and
                                  future of agricultural producers and rural communities. OIG is committed to
Goal 3: Promote Quality & Value




                                  promoting FCA’s quality of oversight and maximizing the value of funds invested in
                                  such oversight.

                                  The OIG performs the following actions in support of this goal:

                                     •   Create benchmarks for improved Agency decision making
                                     •   Ensure the OIG and FCA are models for good government
                                     •   Produce OIG products that are timely, relevant, reasonable, and helpful

                                  During this reporting period, the OIG initiated a benchmarking study of IT spending
                                  and use of contractors. The purpose of this benchmarking study is to determine the
                                  changes in IT spending and use of contractors over the past three years and compare
                                  FCA’s IT budget and use of contractors to other federal financial regulators.

                                  The OIG is continuously working to ensure compliance with standards, improve
                                  internal processes, and advance professional competencies. During this period, we
                                  continued to review and update our office directives. We prioritize staff training to
                                  meet requirements for professional education and gain new skills.

                                  OIG products are generally completed in six months or less. Our audit, inspection,
                                  and evaluation work is risk based to align with top management and performance
                                  challenges at the Agency. This reporting period, our work included 14 agreed-upon
                                  actions to improve the Agency.




                                                     FCA OIG Semiannual Report to Congress
                                                         October 1, 2017—March 31, 2018
                                                     https://www.fca.gov/home/inspector.html

                                                                            7
                                                        Strategic Goals



                               The OIG continuously strives to advance excellence and innovation in our own
                               organization and operations.

                               The OIG employs the following actions in support of this goal:

                                   •   Recruit, retain, and empower a diverse workforce
Goal 4: Advance FCA´s Future




                                   •   Promote leadership, vision, and expertise
                                   •   Leverage technology

                               The OIG continuously works to retain and empower a diverse workforce. This reporting
                               period, each OIG employee received training for professional development. Although
                               the OIG is not currently recruiting for positions, the IAA with TIGTA provides an
                               opportunity for diversity in our workforce.

                               OIG staff assume leadership roles in the IG community. Staff auditors participate on
                               various CIGIE committees and workgroups. One senior auditor teaches for CIGIE and
                               was recognized with an “Adjunct Instructor of the Year” award. OIG staff maintain
                               various professional certifications in different areas of expertise, including: auditing, IT
                               auditing, accounting, fraud, legal, and mediation.

                               One example of the OIG leveraging technology is our initiative to adopt an email
                               record retention policy. The Office of Management and Budget (OMB) requires federal
                               agencies to manage all email records in an electronic format by December 31, 2016. 1
                               Capstone was developed to offer agencies a simplified and automated approach to
                               managing email. This reporting period, the OIG evaluated the Capstone approach,
                               made the determination to use Capstone, and adopted a policy for such use.

                               In addition, the OIG embraces technology to increase our efficiency. We are currently
                               exploring other automated workpaper solutions to determine the best solution for our
                               needs.




 1
     OMB Memorandum M-14-16, Guidance on Managing Email (September 15, 2014)




                                                     FCA OIG Semiannual Report to Congress
                                                         October 1, 2017—March 31, 2018
                                                     https://www.fca.gov/home/inspector.html

                                                                            8
                                               Performance Measures

                            The following discussion describes the performance measures of our office, as set forth
                            in our Strategic Plan for FYs 2018-2019, and the actions we have taken to meet these
                            measures.


                            Performance            Actions Taken
                            Measure
                            Efficiencies           Have been gained with the downsizing of our office and the use of
                                                   shared services with TIGTA.

                            Completion time of     Has been appropriate based on the complexity or unique nature of
                            OIG work               each assignment. Most of our audit, inspection, and evaluation
Measuring Our Performance




                            assignments            reports are completed within a six-month period or less. All our
                                                   required reports have been completed on time. We had no
                                                   investigations during the reporting period but aim to complete
                                                   them on as timely a basis as possible.

                            Accepted audit,        Have been 100 percent accepted by the Agency and converted to
                            inspection, and        agreed-upon actions.
                            evaluation
                            recommendations

                            Complaints activity    Has remained consistent with activity in the recent past, reflecting
                                                   the fact that employees have confidence in the OIG and its ability
                                                   to investigate wrongdoing while guarding their confidentiality.

                            Interaction with       Has included “meet and greet” sessions with our oversight
                            Congress               committees and a prompt and satisfactory response to a
                                                   committee’s inquiries regarding audit, inspection, and evaluation
                                                   recommendations and agreed-upon actions.

                            Communication          Is an ongoing priority of our office. We held quarterly briefings with
                            with the FCA Board     each FCA Board Member and their executive assistants. We
                            and management         regularly communicate with FCA management through our audit,
                                                   inspection, evaluation, and investigative work.

                            Aligning audit         Is important to ensure that our work is risk-based and that it
                            planning with FCA’s    addresses the most significant challenges of the Agency. In this
                            top management         report, we cite the relevant management and performance
                            and performance
                                                   challenge in discussing each audit, inspection, and evaluation.
                            challenges




                                                  FCA OIG Semiannual Report to Congress
                                                      October 1, 2017—March 31, 2018
                                                  https://www.fca.gov/home/inspector.html

                                                                         9
                                               Performance Measures




                            Performance            Actions Taken
                            Measure
                            Outreach efforts       Have included two quarterly issues of the dIG, our office
Measuring Our Performance




                                                   newsletter with articles about what we do, how we do it, and
                                                   why we do it, as well as examples of fraud, waste and abuse in
                                                   government. We held a town hall meeting with the Office of
                                                   Examination (OE) management team where the IG presented
                                                   her perspective on the role of the OIG and answered questions.

                            Participation in       Is an integral part of our office objectives. Every staff member
                            CIGIE                  is active on one or two committees or initiatives of CIGIE,
                                                   including participating in CIGIE’s teaching program and in peer
                                                   reviews. Interacting with the wider IG community is a necessary
                                                   and beneficial part of our mission.

                            Training taken         This reporting period included audit, investigative, IT, and
                                                   mediation training. Each staff member is cognizant of the
                                                   required training that they must take to keep up their skills and
                                                   all such training requirements have been met. Of note, a senior
                                                   auditor completed the Harvard Senior Executive Fellows course
                                                   at the Harvard Kennedy School in the Fall of 2017.

                            Diversity of OIG       Is a goal of our office. However, we have had no hiring
                            staff when hiring      opportunities this reporting period, but our shared services
                            opportunities arise    agreement with TIGTA provides an opportunity to work with a
                                                   diverse staff.




                                                  FCA OIG Semiannual Report to Congress
                                                      October 1, 2017—March 31, 2018
                                                  https://www.fca.gov/home/inspector.html

                                                                        10
                    Audits, Inspections, and Evaluations


                 This reporting period, the OIG continued to provide FCA with high-quality products.
                 We issued three audit reports and two inspection reports, with a total of 14 agreed-
                 upon actions with FCA management. We also have two reviews in progress. The OIG
                 found no significant problems, abuses, or deficiencies relating to the administration of
                 programs and operations.
Summary



                 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. We conduct inspections and evaluations in accordance with CIGIE’s
                 Quality Standards for Inspection and Evaluation.

                 Copies of most OIG reports are available on our website, by contacting the OIG at (703)
                 883-4030, or by email. We offer a free subscription service that provides automatic
                 notification by email when a new report or other information is posted to the OIG website.
                 Finally, we post all our public reports and information on Oversight.gov.



                 Below is a listing of the audit, inspection, and evaluation reports issued during this
                 reporting period. FCA OIG did not identify any questioned costs, unsupported costs,
                 or disallowed costs during this reporting period.


                                Table 1: Audit, Inspection, and Evaluation Reports Issued


                                                                                                Number of
Reports Issued




                                                                                           Agreed-upon Actions/
                                                Report Title                                Recommendations

                 FY 2017 Audit Report on Evaluation of FCA’s Compliance with the Federal            4
                 Information Security Modernization Act (FISMA)

                 Audit of FCA’s Financial Statements Fiscal Year 2017                               0



                 Audit of FCA’s Office of Secondary Market Oversight                                5



                 Inspection of Physical Security in FCA’s Bloomington Field Office                  5



                 Inspection of FCA’s Travel Compensation and Incentives                             0



                                                    Total                                          14




                                          FCA OIG Semiannual Report to Congress
                                              October 1, 2017—March 31, 2018
                                          https://www.fca.gov/home/inspector.html

                                                                   11
                  Audits, Inspections, and Evaluations


                 FY 2017 Evaluation of the Farm Credit Administration’s
                 Compliance with the Federal Information Security
                 Modernization Act of 2014 (FISMA)
                 Audit           FISMA requires IGs or an independent external auditor to
                                 perform an annual evaluation of their agency’s security program
                 Justification
                                 and practices. The OIG contracted with Brown and Company to
                                 perform the independent evaluation (which was undertaken as
                                 an audit) of FCA’s compliance with FISMA for FY 2017.

                 Audit           The objectives of this audit were to determine the effectiveness
                                 of FCA’s information security programs and practices and to
                 Objective
                                 provide the OIG with the ability to report the results to the OMB
Reports Issued




                                 and the U.S. Department of Homeland Security.

                 Management      The OIG identified information technology as one of FCA’s top
                                 management and performance challenges in FCA’s FY 2017
                 Challenge
                                 Performance and Accountability Report. This challenge is the
                                 ability to leverage investments in IT while maintaining a secure
                                 environment. The OIG performs an annual evaluation of FCA’s
                                 compliance with FISMA to address this management challenge.

                 Conclusions     Brown and Company concluded that FCA's information security
                                 program is generally compliant with the FISMA legislation and
                                 applicable OMB guidance, was effective, and provided
                                 reasonable assurance of adequate security. The contractor found
                                 that FCA continued to make positive strides in addressing
                                 information security weaknesses, but identified improvements
                                 that could be made in the areas of: identity management,
                                 configuration management, and incident response. The Office of
                                 Information Technology (OIT) completed corrective action on
                                 two of the four agreed-upon actions prior to the end of this
                                 reporting period.

                                 Brown and Company’s report contained sensitive information
                                 about FCA and potential vulnerabilities that could be used
                                 against the Agency; therefore, the OIG did not release the full
                                 report publicly.

                 Milestones      The final report, OIG 2017 Evaluation of the FCA’s Compliance
                                 with the FISMA, was issued on October 27, 2017.


                                 FCA OIG Semiannual Report to Congress
                                     October 1, 2017—March 31, 2018
                                 https://www.fca.gov/home/inspector.html

                                                       12
                   Audits, Inspections, and Evaluations

                 Audit of FCA’s Financial Statements Fiscal Year 2017
                 Audit           The Accountability of Tax Dollars Act of 2002 requires FCA to
                                 submit to the Congress and OMB audited financial statements
                 Justification
                                 each fiscal year. The OIG contracted with Harper, Rains, Knight &
                                 Company, P.A. (HRK), an independent public accounting firm to
                                 perform the audit, and monitored the audit of FCA’s financial
                                 statements for FY 2017.

                 Audit           The objective of the audit was for the auditors to express an
                                 opinion on FCA’s financial statements.
                 Objective
                 Management      The financial statement audit is a required audit and is therefore
                                 not designed to address any specific FCA management and
                 Challenge
                                 performance challenge. However, this audit indirectly addresses
                                 the management challenge on organizational structure and
                                 governance, which entails FCA’s need to align its organizational
Reports Issued




                                 structure, in part, to the goals and priorities of the FCA Board
                                 while remaining a strong safety and soundness regulator.

                 Conclusions     HRK completed the audit and issued an unmodified opinion in
                                 November 2017.

                                 In the auditors’ opinion, FCA’s principal financial statements
                                 present fairly, in all material respects, the financial position of the
                                 Agency as of the fiscal year ended September 30, 2017, in
                                 conformity with generally accepted accounting principles.

                                 HRK considered FCA’s internal control over financial reporting to
                                 determine the audit procedures for the purpose of expressing an
                                 opinion on the financial statements. The auditors did not express
                                 an opinion on the effectiveness of FCA’s internal controls;
                                 however, they did not identify any deficiencies considered to be
                                 a material weakness.

                                 The auditors performed tests of FCA’s compliance with selected
                                 provisions of laws and regulations that could have a direct and
                                 material effect on the financial statements. Although they did not
                                 express an opinion on compliance with those provisions, they did
                                 not identify any instances of noncompliance.

                 Milestones      The final report, Audit of FCA’s Financial Statements for Fiscal
                                 Year 2017, was issued on November 16, 2017.


                                 FCA OIG Semiannual Report to Congress
                                     October 1, 2017—March 31, 2018
                                 https://www.fca.gov/home/inspector.html

                                                       13
                   Audits, Inspections, and Evaluations


                 FCA’s Office of Secondary Market Oversight
                 Audit           FAMC is a government-sponsored enterprise with the mission of
                                 providing a secondary market for agricultural real estate
                 Justification
                                 mortgage loans, rural housing mortgage loans, and rural utility
                                 cooperative loans. FAMC is regulated, examined, and supervised
                                 by FCA through the Office of Secondary Market Oversight
                                 (OSMO). The OIG initiated this audit because OSMO had never
                                 been reviewed by the OIG since its formation.

                 Audit           The objective of the audit was to assess the staffing arrangements
                                 and reporting process for OSMO. In addressing staffing in OSMO,
                 Objective
                                 we also looked at how the Agency is assessing FAMC for the cost
                                 of its supervision, regulation, and enforcement.

                 Management      This audit addresses the management challenge on
                                 organizational structure and governance. This challenge
Reports Issued




                 Challenge
                                 entails FCA’s need to align its organizational structure to the
                                 goals and priorities of the FCA Board and the Executive Branch
                                 reform initiative while remaining a strong safety and soundness
                                 regulator.

                 Conclusions     We found staff resources were planned and projected each year,
                                 and staff hours are tracked by office and employee. An annual
                                 assessment amount is calculated and communicated to FAMC.

                                 In response to our audit, OSMO revised its office directive and
                                 required independence documentation from rotational staff.
                                 OSMO also created an office directive on the assessment process
                                 roles and responsibilities.

                                 The Office of the Chief Financial Officer documented the
                                 methodology and process used to calculate the FAMC
                                 assessments.

                                 The Office of the Board agreed to document the reporting
                                 relationship between the OSMO Director and the FCA Board,
                                 including delegations, supervisory relationships, and FCA Board
                                 oversight involvement of the OSMO Director. This action remains
                                 open.

                 Milestones      We issued the final report, FCA’s OSMO Oversight, on March 20,
                                 2018.

                                 FCA OIG Semiannual Report to Congress
                                     October 1, 2017—March 31, 2018
                                 https://www.fca.gov/home/inspector.html

                                                       14
                   Audits, Inspections, and Evaluations



                 Inspection of Physical Security in FCA’s Bloomington
                 Field Office
                 Inspection      Physical security controls safeguard FCA employees and assets.
                                 Physical security is unique in different locations and buildings,
                 Justification
                                 and the strongest controls cannot eliminate security risks.
                                 However, strong controls and preparedness can improve overall
                                 security. For this inspection, we reviewed the Bloomington field
                                 office. Our review focused on controls related to access,
                                 computers and other equipment, emergency preparedness, and
                                 personnel records.

                 Inspection      The objective of the inspection was to determine the
Reports Issued




                                 effectiveness of controls related to physical security in the
                 Objective
                                 Bloomington field office.

                 Management      This inspection addresses the management challenge on human
                                 capital. This challenge entails FCA’s need to maintain a well-
                 Challenge
                                 trained, sustainable workforce in the face of retirement
                                 eligibilities, workforce retention, and diversity, and the need to
                                 invest in its employees and their development. To address this
                                 management challenge, this inspection looked at physical
                                 security controls in the workplace for the safety of FCA
                                 employees.

                 Conclusions     We found controls were in place and largely effective. However,
                                 we identified opportunities to further improve physical security
                                 in the Bloomington field office. In response to our inspection,
                                 Agency management completed five actions that will improve
                                 physical security. The report contains sensitive information about
                                 FCA and potential vulnerabilities. Therefore, we did not release
                                 this report publicly.

                 Milestones      We issued the final report, Physical Security in FCA’s Bloomington
                                 Field Office, on March 19, 2018.




                                 FCA OIG Semiannual Report to Congress
                                     October 1, 2017—March 31, 2018
                                 https://www.fca.gov/home/inspector.html

                                                       15
                   Audits, Inspections, and Evaluations




                 Farm Credit Administration’s Travel Compensation and
                 Incentives
                 Inspection      FCA pays travel compensation to employees who travel on official
                                 business for the Agency in the amount of $50 per night for every
                 Justification
                                 night of eligible travel that exceeds 50 nights in a calendar year.
                                 The Agency also provides other travel incentives through its
                                 awards program by rewarding employees for contributing to the
                                 economy and efficiency of the Agency, such as reducing costs for
                                 official business travel through use of personal frequent flyer
                                 miles. Our inspection focused on program controls and program
Reports Issued




                                 administration for FYs 2016-2017.

                 Inspection      The objective of this inspection was to determine whether the
                                 Agency is effectively and efficiently administering the Travel
                 Objective
                                 Compensation Program and other travel incentives.

                 Management      This inspection addresses the management challenge on human
                                 capital. Recognizing that employees are FCA’s most valuable
                 Challenge
                                 assets, this inspection addressed this challenge by looking at the
                                 internal controls of the travel program that rewards employees
                                 who travel excessively and who save the Agency travel expenses.

                 Conclusions     We found FCA effectively administered the program, with
                                 program controls that adequately limit risk for the Agency,
                                 including a documented policy that outlines the process for
                                 submitting claims for reimbursement and required supervisory
                                 approvals. The report contained no recommendations or agreed-
                                 upon actions.

                 Milestones      We issued the final report, FCA’s Travel Compensation and
                                 Incentives, on March 30, 2018.




                                 FCA OIG Semiannual Report to Congress
                                     October 1, 2017—March 31, 2018
                                 https://www.fca.gov/home/inspector.html

                                                       16
                Audits, Inspections, and Evaluations




              Information Technology Budget Benchmarking Study
              Evaluation      IT spending, including the use of IT contractors, has changed at
                              FCA over the past few years. The purpose of this benchmarking
              Justification
                              study is to determine the IT budget changes over the past three
                              years and compare FCA’s IT budget and use of contractors to
                              other federal financial regulators.
In Progress




              Evaluation      The objective of this evaluation is to compare FCA’s IT budget and
                              use of contractors to other federal financial regulators.
              Objective
              Management      The OIG identified information technology as one of four top
                              management and performance challenges at FCA. This challenge
              Challenge
                              is the ability to leverage investments in IT while maintaining a
                              secure environment.

                              While cybersecurity threats are increasing, FCA is increasingly
                              reliant on IT software to identify and analyze potential risks from
                              the sensitive financial data that the Agency receives from the
                              System. Hence, it is imperative that FCA has the necessary IT tools
                              and staff to protect its systems and data from cybersecurity
                              threats and to operate more efficiently and effectively. At the
                              same time, the Agency must be prudent and responsible with its
                              spending.

              Milestones      Fieldwork is in progress and we anticipate issuing our report
                              within the near future.




                              FCA OIG Semiannual Report to Congress
                                  October 1, 2017—March 31, 2018
                              https://www.fca.gov/home/inspector.html

                                                    17
                Audits, Inspections, and Evaluations




              Inspection of Physical Security in FCA’s Dallas Field
              Office
              Inspection      Physical security poses a continuous challenge for federal
                              agencies. The OIG initiated physical security inspections of FCA
              Justification
                              field offices during 2017. To date, we have completed inspections
                              of the Denver and Bloomington field offices.
In Progress




              Inspection      The objective of the inspection is to determine the effectiveness
                              of controls related to physical security in the Dallas field office.
              Objective
              Management      This inspection addresses the management challenge on human
                              capital. This challenge entails FCA’s need to maintain a well-
              Challenge
                              trained, sustainable workforce in the face of retirement
                              eligibilities, workforce retention, and diversity, and the need to
                              invest in its employees and their development. To address this
                              management challenge, this inspection looked at physical
                              security controls in the workplace for the safety of FCA
                              employees.

              Milestones      We issued the final report, Physical Security in FCA’s Dallas Field
                              Office, on April 18, 2018, after the reporting period.




                              FCA OIG Semiannual Report to Congress
                                  October 1, 2017—March 31, 2018
                              https://www.fca.gov/home/inspector.html

                                                    18
                          Audits, Inspections, and Evaluations


                      The Agency issued five reports during this reporting period with 14 agreed-upon
                      actions. In addition, at the beginning of the period, 13 carry-over actions were still
                      open. As of March 31, 2018, eight agreed-upon actions remained open. Before and
                      during the commencement of this reporting period, there were no questioned costs,
                      unsupported costs, disallowed costs, or recommendations that funds be put to better
                      use for which no management decision had been made.



                                 Table 2: Audit, Inspection, and Evaluation Agreed-Upon Actions

                                                                                                    Final
                                                                   Carryover        New
                                                                                                Management
                                                         Date      from Prior    During this                     Open on
                             Report Title                                                      Actions During
Agreed-upon Actions




                                                        Issued      6-Month       6-Month                       3/31/2018
                                                                                                    this
                                                                     Period        Period
                                                                                               6-Month Period
                      FCA’s Position
                      Management and Job              9/23/2016         1             0              0              1
                      Evaluation Program
                      FCA’s Oversight of Young,
                      Beginning, and Small            9/28/2016         4             0              4              0
                      Farmer Programs

                      FCA’s Awards Program            2/23/2017         1             0              1              0


                      FCA’s Contracting
                                                      5/22/2017         2             0              2              0
                      Activities

                      Physical Security in FCA’s
                                                      9/29/2017         5             0              1              4
                      Denver Field Office

                      FY 2017 Evaluation of
                      FCA’s Compliance with          10/27/2017         0             4              2              2
                      FISMA

                      FCA’s Office of Secondary
                                                      3/20/2018         0             5              4              1
                      Market Oversight

                      Physical Security in FCA’s
                                                      3/19/2018         0             5              5              0
                      Bloomington Field Office


                                Total                                  13            14             19             8




                                                   FCA OIG Semiannual Report to Congress
                                                       October 1, 2017—March 31, 2018
                                                   https://www.fca.gov/home/inspector.html

                                                                         19
                               Audits, Inspections, and Evaluations




                           The following chart shows open agreed-upon actions for reports issued as of
                           March 31, 2018.
Open Agreed-upon Actions




                                  Table 3: Open Audit, Inspection, and Evaluation Agreed-Upon Actions

                                                                   Agreed-
                                 Report Title       Date Issued     upon              Summary of Agreed-upon Action
                                                                   Action #
                           FCA’s Position                                       Document the promotion process at the
                           Management and Job       9/23/2016          5        Executive Management Team phase of the OE
                           Evaluation Program                                   career ladder.
                                                                                To OE (not released publicly) 2
                                                                       2
                           Physical Security in                                 To OE (not released publicly)
                                                                       3
                           FCA’s Denver Field       9/29/2017                   To OE (not released publicly)
                                                                       4
                           Office                                               To OE (not released publicly)
                                                                       5

                           FY 2017 Evaluation of
                                                                       1        To OIT (not released publicly) 3
                           FCA’s Compliance with    10/27/2017
                                                                       2        To OIT (not released publicly)
                           FISMA
                                                                                Document the reporting relationship between
                                                                                the OSMO Director and the FCA Board including
                           FCA’s Office of
                                                                                delegations, supervisory relationships, and FCA
                           Secondary Market         3/20/2018          5
                                                                                Board oversight involvement of the OSMO
                           Oversight
                                                                                Director.




2   Protected by 5 U.S.C. 552(b)(7)(F)
3   Protected by 44 U.S.C. 3555(f)




                                                   FCA OIG Semiannual Report to Congress
                                                       October 1, 2017—March 31, 2018
                                                   https://www.fca.gov/home/inspector.html

                                                                           20
                                                                    Other Reports

Summary
                                             This reporting period, the OIG issued 15 surveys to FCS institutions and one report
                                             on the survey results to the Chief Examiner and FCA Board. The report summarizes
                                             survey results and stakeholder opinions on the quality and issues involved in the
                                             examination function. Additionally, the OIG issued its annual charge card risk
                                             assessment.
Survey of Farm Credit System Institutions




                                            Survey               The OIG administers a quarterly survey of FCS institutions
                                                                 regarding the quality and consistency of the Agency’s
                                            Justification
                                                                 examination function, including the examiners’ performance.

                                            Survey               The objective of the survey is to obtain feedback from FCS
                                                                 institutions about FCA examiners and the examination process
                                            Objective
                                                                 without identifying the responding institutions.

                                            Management           The OIG identified the Examination and Supervision Program
                                                                 as one of four top management and performance challenges at
                                            Challenge
                                                                 FCA. This challenge identifies and addresses risks in the System
                                                                 through effective examination and supervision to ensure the
                                                                 System remains safe and sound.

                                            Conclusions          The consistent trend in numerical ratings and narrative
                                                                 comments indicates that the System has a positive view of the
                                                                 examination program and staff.

                                            Milestones           Each quarter the OE identifies several FCS institutions that were
                                                                 in a position to provide meaningful survey responses for that
                                                                 period. The OIG sends surveys to those institutions for the
                                                                 quarter.

                                                                 In November 2017, the OIG issued 15 surveys to FCS institutions
                                                                 for feedback on the fourth quarter of FY 2017 (July 1 –
                                                                 September 30, 2017). Fourteen institutions responded. The OIG
                                                                 provided a report on January 19, 2018, to the Chief Examiner
                                                                 and the FCA Board. This report included summary data for FY
                                                                 2017.




                                                                FCA OIG Semiannual Report to Congress
                                                                    October 1, 2017—March 31, 2018
                                                                https://www.fca.gov/home/inspector.html

                                                                                      21
                                                  Other Reports




                              Justification   The Government Charge Card Abuse Prevention Act of 2012
                                              (Charge Card Act) requires the OIG of each executive agency to
                                              conduct periodic assessments of charge card programs to analyze
Charge Card Risk Assessment




                                              the risks of illegal, improper, or erroneous purchases.

                              Objective       As part of adherence to the Charge Card Act and the
                                              implementation guidance, the OIG conducts an annual risk
                                              assessment of FCA’s charge card programs.

                              Management      This assessment addresses the management challenge on human
                                              capital. This challenge entails FCA’s need to maintain a well-
                              Challenge
                                              trained, sustainable workforce in the face of retirement
                                              eligibilities, workforce retention, and diversity, and the need to
                                              invest in its employees and their development. To address this
                                              management challenge, the OIG assessed the risk of the Agency’s
                                              charge card program, which allows certain employees the use of
                                              government-issued travel and purchase cards for official business.

                              Conclusions     Based on the risk assessment, we determined that the overall risk
                                              of FCA’s charge card programs was low. The OIG also issued a
                                              letter to OMB in December 2017 on the Agency’s progress in
                                              implementing audit recommendations related to the charge card
                                              program. All recommendations from our previous audits and
                                              inspections were agreed upon by management and subsequently
                                              closed. Therefore, there were no open recommendations or
                                              agreed-upon actions related to the charge card program as of
                                              December 2017.

                              Milestones      The OIG completed its annual risk assessment and issued the
                                              Charge Card Risk Assessment to the Agency on March 9, 2018.




                                              FCA OIG Semiannual Report to Congress
                                                  October 1, 2017—March 31, 2018
                                              https://www.fca.gov/home/inspector.html

                                                                    22
                                   Investigations


          The OIG Investigator has responsibility for developing and implementing an
          investigative program that furthers OIG’s objectives. The Investigator’s primary
          responsibilities include:

             •   Investigating possible violations of criminal statutes relating to FCA’s programs
                 and activities.
             •   Investigating allegations of misconduct by FCA employees.
             •   Interfacing with the Department of Justice on OIG-related criminal matters.
             •   Coordinating investigations and OIG initiatives with other federal, state, and
                 local investigative agencies and other OIGs through the Assistant IGs for
                 Investigations Committee.

          Investigations cover a broad range of allegations concerning criminal wrongdoing or
          administrative misconduct affecting various FCA programs and operations.
          Investigations may be initiated because of allegations or referrals from:
Summary




             •   FCA employees
             •   Congress
             •   OIG audits
             •   OIG Hotline
             •   Private citizens
             •   OIG’s proactive efforts directed at areas bearing a high potential for fraud,
                 waste, and abuse

          This reporting period we processed 13 complaints, including seven borrower rights-
          type complaints, which we referred to the OCPA. No formal investigations were
          opened.
          The Agency cooperated in all preliminary investigations, providing records in response
          to investigation inquiries in a timely manner. The OIG had no reported allegations of
          whistleblower retaliation. The OIG had no investigations involving senior government
          employees in which allegations of misconduct were substantiated. No investigative
          matters were referred to prosecutorial authorities that resulted in prosecutions or
          convictions.

          The OIG conducts all investigations in accordance with CIGIE’s Quality Standards for
          Investigations. Closing memoranda for OIG investigations are available on our website.




                               FCA OIG Semiannual Report to Congress
                                   October 1, 2017—March 31, 2018
                               https://www.fca.gov/home/inspector.html

                                                     23
                                  Investigations


                 Priorities   The FCA OIG is committed to conducting fair, thorough, and
                              timely investigations. Our work products will be clear, focused,
                              and factual reports of investigation. It is also our goal to guard
                              the confidentiality of all with whom we interact in the
                              investigative process to the extent possible permitted by the law.

                              In November 2018, FCA OIG executed an IAA for shared services
                              with TIGTA for support services in the investigative function. The
                              IAA period runs from January 1, 2018 to September 30, 2018, at
                              which time it can be renewed. We met with TIGTA’s Deputy
                              Assistant IG for Investigations in March to discuss the shared
                              service arrangement.

                 Outreach     We updated the FCA OIG Whistleblower page to more clearly
                              explain the whistleblower protections, including whistleblower
Investigations




                              protection rights of federal contractors, and to include links to
                              the latest whistleblower legislation. Our office also reviewed
                              FCA’s guidance on whistleblower protections to ensure that the
                              information was comprehensive and correct.

                 Complaint    We received 13 complaints this reporting period as follows:
                 Activity         •   Seven complaints were from System borrowers and were
                                      referred to OCPA.
                                  •   Three complaints involved matters outside the
                                      jurisdiction of the FCA OIG and were either closed or
                                      referred to appropriate FCA offices or other federal
                                      agencies.
                                  •   One complaint alleged FCA did not follow standard
                                      process by announcing a vacancy without stating the job
                                      series or allowing for veterans’ preference. We opened a
                                      preliminary investigation and found the complaint to be
                                      unsubstantiated. The job series was included in the
                                      USAJOBS announcement and veterans’ preference did
                                      not apply to that position vacancy. Therefore, we closed
                                      the preliminary investigation.
                                  •   Two complaints involving similar matters are open.




                              FCA OIG Semiannual Report to Congress
                                  October 1, 2017—March 31, 2018
                              https://www.fca.gov/home/inspector.html

                                                    24
                                                       Investigations




                         The table below is a summary of investigative activity during the reporting period.
Investigative Activity




                                                        Table 4: Investigative Activity


                         A. Total number of investigative reports issued during the reporting period     0


                         B. Total number of persons referred to the Department of Justice for criminal
                                                                                                         0
                         prosecution during the reporting period

                         C. Total number of persons referred to State and local prosecuting
                                                                                                         0
                         authorities for criminal prosecution during the reporting period

                         D. Total number of indictments and criminal informations during the
                         reporting period that resulted from any prior referral to prosecuting           0
                         authorities




                                                   FCA OIG Semiannual Report to Congress
                                                       October 1, 2017—March 31, 2018
                                                   https://www.fca.gov/home/inspector.html

                                                                           25
                Legislative and Regulatory Reviews


              As required by section 4(a)(2) of the IG Act, the OIG routinely reviews existing and
              proposed legislation and regulations relating to programs and operations of FCA.
              The OIG makes recommendations concerning the impact of such law on the
Summary


              economy and efficiency in the administration of programs and operations or the
              prevention and detection of fraud and abuse.

              This past reporting period, OIG continued to review and provide comment and
              analysis on existing and proposed cross-cutting legislation and regulations through
              our participation in various CIGIE committees, including the Legislation Committee.

              The OIG reviewed the following significant legislation, rules, regulations, bookletters,
              and other Board approved actions.




              Whistleblower          This reporting period, the two following new laws were enacted
                                     to enhance the protection of whistleblowers:
              Legislation
                                         •   Whistleblower Protection Act of 2017 (WPA), Pub. L.
                                             No. 115-73 (Oct. 26, 2017) (5 U.S.C. 2302(b))
                                         •   OSC Reauthorization Act of 2017 (OSCRA), Pub. L. No.
                                             115-91 (Dec. 12, 2017) (5 U.S.C. 2302(c))
Legislation




                                     A summary of the laws follows and, as required, the OIG will
                                     work with the Agency to ensure that all FCA employees and
                                     contractors receive the required training.

              New                    The WPA added a 14th prohibited personnel practice (PPP),
                                     which makes it a PPP to “access the medical record of another
              Prohibited
                                     employee or an applicant for employment as a part of, or
              Personnel              otherwise in furtherance of, any conduct described in
              Practice               paragraphs (1) through (13) of 5 U.S.C. 2302(b).”

              Public and             Under the OSCRA, FCA must post information about
                                     whistleblowing protections on our public website (FCA.gov)
              Online Portal
                                     and any online portal accessible only to FCA employees.
              Posting about
              Whistleblower
              Protections




                                  FCA OIG Semiannual Report to Congress
                                      October 1, 2017—March 31, 2018
                                  https://www.fca.gov/home/inspector.html

                                                        26
                Legislative and Regulatory Reviews


              Education       New Employees: Within 180 days after the date of appointment
                              of a new employee to FCA, the FCA Chairman, in consultation
              Requirements    with OSC and the IG, must ensure that the new employee is
                              informed of the rights and remedies available under:

                                  •   PPPs (5 U.S.C. 2302(b))
                                  •   Merit Systems Protection Board
                                  •   OSC
                                  •   An employee’s right to seek corrective action under 5
                                      U.S.C. Chapter 12

                              Supervisors: Under the WPA, the FCA Chairman, in consultation
                              with OSC and the IG, must provide annual training to supervisors
                              regarding how to respond to complaints alleging a violation of
Legislation




                              whistleblower protections. FCA must also provide such training
                              to new supervisors.

              Supervisors’    The OSCRA requires that the FCA Chairman, in consultation with
                              the Office of Personnel Management and OSC, develop criteria
              Performance
                              to promote the protection of whistleblowers as a critical element
              Appraisals      for establishing the job duties of all supervisory employees. The
                              criteria must include:

                                  •   Principles for the protection of whistleblowers, such as
                                      the degree to which supervisory employees respond
                                      constructively when employees make protected
                                      disclosures.
                                  •   How supervisors take responsible actions to resolve
                                      these disclosures.
                                  •   Ways in which the supervisors foster an environment in
                                      which employees feel comfortable making such
                                      disclosures.

                              FCA must submit an annual report to Congress detailing the
                              number of annual performance appraisals which determined
                              that an agency supervisor failed to meet the standards for
                              protecting whistleblowers. The report must include the reasons
                              for the failing determination and each performance-based or
                              corrective action taken by FCA in response.




                             FCA OIG Semiannual Report to Congress
                                 October 1, 2017—March 31, 2018
                             https://www.fca.gov/home/inspector.html

                                                   27
                 Legislative and Regulatory Reviews




              Required      Both the WPA and the OSCRA require discipline for supervisors
                            who commit a prohibited personnel action defined in:
              Discipline
                                 •   5 U.S.C. 2302(b)(8) (retaliating against a whistleblower)
                                 •   5 U.S.C. 2302(b)(9) (other retaliation)
                                 •   5 U.S.C. 2302(b)(14) (accessing medical records in
Legislation




                                     furtherance of a PPP)

                            Disciplinary action must be approved by the OSC.

                            If the FCA Chairman or the IG determines that a supervisor
                            violated one of the foregoing PPPs:

                                •    For the first offense, the Agency must propose to
                                     suspend a supervisor not less than 3 days. The FCA
                                     Chairman may propose additional action, including a
                                     reduction in grade of pay.
                                •    For the second offense, the FCA Chairman must propose
                                     removing the supervisor.




                           FCA OIG Semiannual Report to Congress
                               October 1, 2017—March 31, 2018
                           https://www.fca.gov/home/inspector.html

                                                 28
                             Legislative and Regulatory Reviews

FCA Board Approved Actions




                             •   Direct Final Rule on Technical Amendments to FCA Regulation Section 606.2(b):
                                 Assessment and Apportionment of Administrative Expenses (October 12, 2017)

                             •   Office of Examination’s FY 2018 Oversight and Examination Plan (October 16,
                                 2017)

                             •   FCS Building Association Budget and Assessments (November 16, 2017)

                             •   FCA 2018 Compensation Plan (December 19, 2017)

                             •   Inflation Adjustment to FCA Civil Money Penalties Regulation (January 4, 2018)

                             •   Joint Notice of Proposed Rulemaking – Margin and Capital Requirements for
                                 Covered Swap Entities – Amendment to the Definition of “Eligible Master
                                 Netting Agreement” (January 25, 2018)

                             •   Spring 2018 Abstract of the Unified Agenda and Regulatory Project Plan
                                 (February 20, 2018)

                             •   Bookletter 069 on Lending and Loan Servicing Controls to promote efficiency,
                                 reduce risk of asset loss, ensure reliable financial statements, and ensure
                                 compliance with laws and regulations (March 8, 2018)




                                              FCA OIG Semiannual Report to Congress
                                                  October 1, 2017—March 31, 2018
                                              https://www.fca.gov/home/inspector.html

                                                                    29
                              Reporting and Outreach

Congress

               In October, the IG and a Senior Auditor had meet and greet sessions with Congressional
               staffers from the Senate Committee on Agriculture, Nutrition and Forestry and the House
               Committee on Agriculture. The OIG discussed the audit plan, budget, and strategic goals
               of the office with the staff.




               OIG staff members are encouraged to take part in organizations that contribute to the
               mission of the IG community and their individual professional development.
IG Community




               The IG is a member of CIGIE and serves on the CIGIE Legislation Committee and the
               Small and Unique Agency IGs working group. The IG also participated in writing a CIGIE
               cross-cutting report on the top management and performance challenges facing
               multiple federal agencies.
               The Senior Auditors and Investigator also participate in CIGIE workgroups. One Auditor
               attends local Information Systems Audit and Control Association (ISACA) meetings and
               participates on CIGIE’s Audit Committee and the IT Subcommittee of the Federal Audit
               Executive Council. Another Senior Auditor is a member of the CIGIE Roundtable on
               Inspections and Evaluations and is an adjunct instructor for CIGIE’s Training Institute.
               Another Senior Auditor is a member of the IG Act Commemoration Working Group. Our
               Investigator participates in the Assistant IG for Investigations Committee.




               The OIG started a new outreach initiative by launching an internal, quarterly newsletter,
               the dIG, to FCA employees explaining the role of the OIG and how the OIG performs
FCA




               its work, including examples of fraud, waste, and abuse in government, and other
               topics. We issued two quarterly newsletters this reporting period. The IG also reports
               quarterly to the FCA Board and as needed.




                                     FCA OIG Semiannual Report to Congress
                                         October 1, 2017—March 31, 2018
                                     https://www.fca.gov/home/inspector.html

                                                           30
Appendix A: FCA Organizational Chart


      FCA ORGANIZATIONAL CHART




         FCA OIG Semiannual Report to Congress
             October 1, 2017—March 31, 2018
         https://www.fca.gov/home/inspector.html

                               31
                       Appendix B: Peer Reviews

Summary


            Under various standards, OIGs have external quality assurance reviews of audits,
            investigations, inspections, evaluations, and other OIG activities. The purpose of these
            external reviews is to provide an additional level of assurance that the OIG conducts its
            audits, investigations, inspections, and evaluations in compliance with applicable
            professional standards.




            Government Auditing Standards require an external peer review every three years.
            During this reporting period, FCA OIG did not have an external peer review of its
            audit function. The last peer review of our audit operations was completed by the
            Federal Labor Relations Authority (FLRA) OIG in August 2016 for the year ended on
Audit




            March 31, 2016. The FLRA OIG concluded that our system of quality control for the
            audit organization was suitably designed and complied with to provide reasonable
            assurance of performing and reporting in conformity with applicable professional
            standards in all material respects. We received the highest rating of pass, and FLRA
            OIG did not make any recommendations for improvement.

            The next audit peer review of our office is scheduled for the period ending March 31,
            2019.
Inspections &
 Evaluations




            Recently, CIGIE membership adopted a new peer review requirement for OIGs that
            perform inspections and evaluations in accordance with CIGIE’s Quality Standards of
            Inspection and Evaluation. One senior auditor assisted CIGIE in implementing this
            new requirement. The senior auditor is a member of the peer review implementation
            team.

            Our first inspection and evaluation peer review is scheduled for the period ending
            June 30, 2019.




                                FCA OIG Semiannual Report to Congress
                                    October 1, 2017—March 31, 2018
                                https://www.fca.gov/home/inspector.html

                                                      32
                           Appendix B: Peer Reviews




                 CIGIE’s Qualitative Assessment Review Guidelines for Investigative Operations of
                 Federal Offices of Inspector General established an independent external evaluation
                 process for investigative operations. The objective of the investigation peer review
                 is to determine whether internal controls systems are in place and operating
Investigations




                 effectively to provide reasonable assurance that an OIG’s investigative operations
                 comply with CIGIE’s Quality Standards for Investigations.

                 The last peer review of our investigation function was performed by the Securities
                 and Exchange Commission OIG for the year ended September 30, 2007. SEC OIG
                 concluded that our system of internal safeguards and management procedures for
                 the investigative function were in full compliance with quality standards and
                 provided reasonable assurance of conforming with professional standards.
                 Although there were no formal recommendations, SEC OIG made suggestions for
                 improvements in our investigation practices and procedures.

                 FCA OIG is reinitiating the investigative peer review process of our investigation
                 program. We have volunteered to participate in a peer review of our investigation
                 function within the next few years.
of Other OIGs
Peer Reviews




                 FCA OIG did not perform any peer reviews of other OIGs during this reporting
                 period. There were also no outstanding recommendations made from any previous
                 peer reviews conducted by our office.




                                   FCA OIG Semiannual Report to Congress
                                       October 1, 2017—March 31, 2018
                                   https://www.fca.gov/home/inspector.html

                                                         33
                         Appendix C: Management Decisions




                       Status of            All recommendations were agreed upon by management.
                                            Therefore, no management decisions have been made on
                       Recommendations
                                            audit, inspection, and evaluation reports issued before the
                       with No              beginning of this reporting period.
                       Management
                       Decisions
                       Revised              No management decisions were revised during the
                                            period.
                       Management
Management Decisions




                       Decisions
                       Agreement with       There were no significant management decisions for the
                                            OIG to agree with regarding audit, inspection, and
                       Significant
                                            evaluation recommendations since all recommendations
                       Management           were agreed to by management.
                       Decisions
                       Reports for Which    There were no audit, inspection, or evaluation reports
                                            issued before the beginning of this reporting period for
                       No Agency
                                            which no agency comment was returned within 60 days of
                       Comment Was          providing the report to the Agency.
                       Returned Within
                       60 Days
                       Instances Where      During this reporting period, there were no instances
                                            where the Agency unreasonably refused or failed to
                       the Agency
                                            provide information to the OIG or attempted to interfere
                       Unreasonably         with the independence of the OIG.
                       Refused or Failed
                       to Provide
                       Information to the
                       OIG or Attempted
                       to Interfere with
                       OIG Independence




                                     FCA OIG Semiannual Report to Congress
                                         October 1, 2017—March 31, 2018
                                     https://www.fca.gov/home/inspector.html

                                                           34
      Appendix D: Index of Reporting Requirements


    SECTION                                       REQUIREMENT                             PAGE
    4(a)(2)          Review of legislation and regulations                                26-29
    5(a)(1)          Significant problems, abuses, and deficiencies                        11
    5(a)(2)          Recommendations for corrective action                                11-16
    5(a)(3)          Prior recommendations not yet implemented                            19-20
    5(a)(4)          Matters referred to prosecutive authorities                           23
    5(a)(5)          Information unreasonably refused or not provided                      34
    5(a)(6)          List of reports issued                                                11
    5(a)(7)          Summaries of significant reports                                     11-22
    5(a)(8)          Management decisions with questioned costs                            19
    5(a)(9)          Management decisions on recommendations that funds be put             19
                     to better use
    5(a)(10)(A)      Audit reports for which no management decision made                   34
    5(a)(10)(B)      Audit reports with comments not received within 60 days               34
    5(a)(10)(C)      Audit reports with unimplemented recommendations                     19-20
    5(a)(11)         Significant revised management decisions                              34
    5(a)(12)         Significant management decisions with which the IG disagreed          34
    5(a)(13)         Compliance of Agency financial management system                      13
    5(a)(14)(15) Peer reviews conducted of this OIG                                        32
    5(a)(16)         Peer reviews conducted by this OIG                                    33
    5(a)(17)(18) Statistical tables for investigations and referrals                       25
    5(a)(19)         Investigations of a senior government employee with                   23
                     substantiated misconduct
    5(a)(20)         Instances of whistleblower retaliation                                23
    5(a)(21)         Instances of attempts to interfere with IG independence               34
    5(a)(22)(A)      Closed audits not disclosed to the public                            12, 15
    5(a)(22)(B)      Closed investigations involving a senior government employee          23
    845              Significant contract audits required to be reported under National   N/A 4
                     Defense Authorization Act for FY 2008 (Pub. L. 110-181)




4
    FCA OIG does not conduct contract audits. Therefore, we did not include this annex.


                                       FCA OIG Semiannual Report to Congress
                                           October 1, 2017—March 31, 2018
                                       https://www.fca.gov/home/inspector.html

                                                              35
 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