oversight

Sept. 2004

Published by the Farm Credit Administration, Office of Inspector General on 2004-09-01.

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

Office of
Inspector General

                     Semiannual Report
                       to the Congress

                          April 1, 2004
                               to
                    September 30, 2004




                          Number 31
                        September 2004
Farm Credit Administration                                  Office of Inspector General
                                                            1501 Farm Credit Drive
                                                            McLean, VA 22102-5090
                                                            (703) 883-4030




   October 26, 2004




   The Honorable Nancy C. Pellett
   Chairman of the Board and
    Chief Executive Officer
   Farm Credit Administration
   McLean, Virginia 22102

   Dear Ms. Pellett:

   Enclosed is the semiannual report on the activities of the Farm Credit Administration’s Office of
   Inspector General for the period from April 1, 2004 through September 30, 2004. We are filing
   this report in accordance with the Inspector General Act of 1978, as amended (Act). This is the
   thirty-first report since creation of the office on January 22, 1989. Section 5(b) of the Act requires
   that you send this report to the appropriate Congressional committees and subcommittees within
   30 days after the date of this transmittal, with management’s report on the status of audit
   recommendations.

   In this first Semiannual Report addressed to you as Chairman, I am optimistic that the Agency
   has demonstrated a renewed commitment to address some long standing management
   challenges. I am hopeful that the commitment will translate to closure on a number of agreed
   upon actions. Over the past several years there has been a steady increase in the number of
   open agreed upon actions and the number of recommendations without management decisions
   has increased, as well. I look forward to working with you and FCA managers to reverse these
   trends.

   Respectfully,




   Stephen G. Smith
   Inspector General

   Enclosure
                                                                   FCA SEMIANNUAL REPORT TO THE CONGRESS
                                                                            APRIL 1, 2004 – SEPTEMBER 30, 2004



                                   TABLE OF CONTENTS

INDEX REPORTING REQUIREMENTS __________________________________________________ii
EXECUTIVE SUMMARY ______________________________________________________________1
BACKGROUND_____________________________________________________________________2
MANAGEMENT CHALLENGES ________________________________________________________2
 FARM CREDIT SYSTEM RISK ___________________________________________________________2
 HUMAN CAPITAL ____________________________________________________________________3
 AGENCY GOVERNANCE _______________________________________________________________4
 STRATEGIC PLANNING________________________________________________________________4
 FINANCIAL MANAGEMENT _____________________________________________________________5
 SECURITY AND DISASTER PREPAREDNESS _________________________________________________6
 LEVERAGING TECHNOLOGY ____________________________________________________________6
AUDIT AND INSPECTION REPORTS ISSUED ____________________________________________7
 HUMAN CAPITAL: JOB CLASSIFICATION ___________________________________________________7
 PROJECT MANAGEMENT ______________________________________________________________7
STATUS OF UNIMPLEMENTED AGREED UPON ACTIONS _________________________________8
 AUDITS___________________________________________________________________________8
 INSPECTIONS ______________________________________________________________________9
 INVESTIGATIONS ____________________________________________________________________9
 LEGISLATION AND REGULATIONS ________________________________________________________9
 OTHER ACTIVITIES _________________________________________________________________10
   Management Advisories ___________________________________________________________________                10
   Survey of Farm Credit System Institutions______________________________________________________          10
   OIG Performance Measures ________________________________________________________________                10
   Staff Participation in Activities of the Professional Community_______________________________________   10
   Staff Participation in Agency Organizations _____________________________________________________        10
APPENDIX A ______________________________________________________________________11
 TABLE 1.--AUDIT / INSPECTION REPORTS ISSUED    ___________________________________________11
 TABLE 2. --REPORTS WITH QUESTIONED COSTS ____________________________________________12
 TABLE 3.--REPORTS WITH RECOMMENDATIONS THAT FUNDS BE PUT TO BETTER USE _________________13

APPENDIX B ______________________________________________________________________14
 FARM CREDIT ADMINISTRATION ORGANIZATION CHART_______________________________________14
APPENDIX C ______________________________________________________________________15
 FCA OFFICE OF INSPECTOR GENERAL ORGANIZATION CHART _________________________________15




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                                                                                        FCA SEMIANNUAL REPORT TO THE CONGRESS
                                                                                                 APRIL 1, 2004 – SEPTEMBER 30, 2004




                                    INDEX REPORTING REQUIREMENTS

INSPECTOR GENERAL ACT CITATION AND REQUIREMENT                                                                                    PAGE

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

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

Section 5(a)(2) Recommendations With Respect to Significant ............................................................. none
    Problems, Abuses and Deficiencies

Section 5(a)(3) Prior Recommendations Not Yet Implemented.................................................................. 8-9

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

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

Section 5(a)(6) List of OIG Audit/Inspection Reports.....................................................................................11

Section 5(a)(7) Summary of Each Particularly Significant Report...................................................................7

Section 5(a)(8) Statistical Table on Management Decisions.........................................................................12
    on Questioned Costs

Section 5(a)(9) Statistical Table on Management Decisions on ...................................................................13
    Recommendations that Funds be Put to Better Use

Section 5(a)(10) Summary of Each Audit Over Six Months Old for ...............................................................8
    Which No Management Decision Has Been Made

Section 5(a)(11) Significant Revised Management Decisions ................................................................. none

Section 5(a)(12) Significant Management Decisions With Which ........................................................... none
    the Inspector General Disagrees

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




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                                                    FCA SEMIANNUAL REPORT TO THE CONGRESS
                                                             APRIL 1, 2004 – SEPTEMBER 30, 2004




EXECUTIVE SUMMARY

     This semiannual report to the Congress summarizes the activities and
     accomplishments of the Farm Credit Administration (FCA or Agency), Office of
     Inspector General (OIG) and covers the period April 1, 2004 through September 30,
     2004. Our efforts were directed toward performing audits, inspections, and
     evaluations of FCA programs and operations, conducting investigations, and
     providing technical assistance and advice on FCA programs.

     During the reporting period, FCA underwent an important transition. The President
     designated Nancy C. Pellett as Chairman during May 2004. While there was a
     change in chairmanship, the members of the Board remained unchanged. As with
     many transitions, the new Chairman has made some changes in top management of
     the Agency. With such changes, there are opportunities to implement new ideas
     that can bring about improvements in the Agency. There are also risks that
     important controls may be lost in the changes.

     During this period of transition, management initiated several actions that show
     promise of resolving some of the long standing recommendations. While the
     number of unresolved recommendations has increased, the Chairman has
     demonstrated a good faith effort to tackle the recommendations and address the
     management challenges by committing resources to correct issues.
                                                           FCA SEMIANNUAL REPORT TO THE CONGRESS
                                                                    APRIL 1, 2004 – SEPTEMBER 30, 2004



 BACKGROUND

         The FCA is an independent Federal agency of the United States government
         responsible for the regulation, examination and supervision of institutions chartered
         under the Farm Credit Act of 1971, as amended (Farm Credit Act). FCA is a non-
         appropriated agency with a fiscal year (FY) 2004 budget of $38.4 million for
         administrative costs. The FY 2004 budget for the OIG was $865,844. FCA is a
         “designated Federal entity” within the meaning of the Inspector General Act of 1978,
         as amended.

         FCA currently has 287 employees, about half of which are examiners located at five
         field offices. The OIG maintains five positions. Appendix B displays the board
         approved organizational structure of FCA and Appendix C displays the OIG within
         that structure.


 MANAGEMENT CHALLENGES

         This part of the semiannual report highlights major challenges confronting the
         Agency as it works to fulfill its mission. These challenges have remained for several
         years. While some are outside of the Agency’s control, most should be addressed
         through concerted action by management. Over the past six months, the OIG has
         observed a renewed commitment by FCA management in addressing the
         challenges.

Farm Credit System Risk

         The Farm Credit System (FCS or System) is a single industry lender and is
         vulnerable to economic swings. FCS is sound in all material respects. Earnings and
         capital levels have continued to strengthen and asset quality remains high. While
         the System is presently sound, there are many challenges facing agriculture and
         rural America today that raise the question of whether there should be modifications
         to the Farm Credit Act in order to enhance agricultural and rural economies of the
         future.

         The FCA is challenged to balance the often competing demands of ensuring the
         FCS fulfills it public purpose, proactively examining risk in the regulated institutions
         both individually and systemically, and controlling the cost of the regulator. FCA’s
         challenge is more complex because it has become increasingly difficult to reconcile
         significant provisions of the Farm Credit Act with the realities of the agricultural
         industry, the business environment, and financial markets in the 21st Century. FCA
         management fully understands this challenge and the Chairman recently provided
         testimony to Congress on the issue.




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                                                                        FCA SEMIANNUAL REPORT TO THE CONGRESS
                                                                                 APRIL 1, 2004 – SEPTEMBER 30, 2004


        In the early 1990s, the General Accounting Office (GAO) conducted a
        comprehensive study of the cost and availability of credit in rural America. The
        GAO1 concluded that the System did not need new statutory authorities in the near
        term, but that ongoing structural changes in agriculture and rural America could
        justify such changes in the longer term. GAO noted that over time, as agriculture
        and rural America continued to change, the System’s charter might need to be
        updated to ensure that the System is not hampered by outdated restrictions.

        As a financial regulator, FCA must maintain a flexible and responsive regulatory
        environment. FCA is pressed to test the limits of its flexibility within the bounds of
        the Farm Credit Act. The constraints of the Act may be part of the reason that one of
        the largest institutions recently announced it would be applying to terminate its
        charter. The FCA Board has faced pressures to consider loan syndications to be
        “participations” instead of “loans” to avoid certain provisions in the Act. The Board
        has faced similar issues related to preferred stock. The Chairman’s testimony
        before the House Agriculture Subcommittee on Conservation, Credit, Rural
        Development, and Research on September 29, 2004 clearly identifies the
        challenge:

                        “What we learned is that we must maintain a flexible and responsive
               regulatory environment. And where appropriate, we should eliminate or revise
               regulations that unnecessarily impair the System’s activities.

                        However, the limits of that flexibility are currently being tested as the
               changes in agriculture and rural America have eclipsed the legislative
               parameters initially granted to the System. The mission-driven desire and
               sometime financially-driven need of the System to expand its operations, not
               only within agriculture but also to rural America presents some challenges within
               existing authorities.”

Human Capital

        The OIG recommended FCA develop a human capital plan in March 2001. FCA
        management agreed to this recommendation, yet FCA still does not have a plan. In
        prior semiannual reports, we noted the problem was the lack of a consistent strategic
        approach to marshalling, managing, and maintaining human capital to maximize
        FCA performance and assure its accountability. In 2001, the President identified
        human capital as a critically needed management reform in the Federal government.
        The General Accounting Office’s (GAO) High-Risk2 report also identified the human
        capital challenges that the government faces.

        FCA has the opportunity to consider organizational realignment to better achieve
        results and clarify accountability. Realignment may help FCA pursue organizational
        approaches that recognize the reality of evolving technology, a changing workforce,
        and other environmental forces. For example, as competitive sourcing, electronic

        1
            GAO/GGD-94-39 Farm Credit System Repayment of Federal Assistance and Competitive Position, March 1994
        2
            GAO-03-95


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                                                          FCA SEMIANNUAL REPORT TO THE CONGRESS
                                                                   APRIL 1, 2004 – SEPTEMBER 30, 2004


         government (E-Government), financial management, and other initiatives lead to
         changes—how FCA meets its mission may need to change, including the skill sets it
         needs and how it organizes those skills to meet its mission.

         FCA can also improve its performance by building commitment and accountability
         through involving and empowering employees. FCA staff and its leaders must
         understand the rationale for making organizational and cultural changes. Everyone
         has a stake in helping to shape and implement initiatives as part of the Agency’s
         efforts to meet current and future challenges. The cooperation of leaders and
         employees throughout the organization can lead to effective and sustained changes.

         Agency management has made a renewed commitment to develop a human capital
         plan. Part of that commitment is evidenced by a study that the Chairman
         announced to FCA staff to evaluate the Agency’s needs over a five to seven year
         planning horizon. The Chairman plans to evaluate the examination function, the
         regulatory development function and then the functions that support these
         operations. This approach is promising because it is a methodical and cohesive
         strategy designed to produce measurable results addressing the human capital
         needs of the Agency. It is also promising because the Chairman has communicated
         her plans to all staff—building understanding of and commitment to the
         organization’s needs.

Agency Governance

         The Farm Credit Act provides for a full time three-member Board. The Board
         members are appointed by the President and confirmed by the Senate. A small full-
         time Board presents a challenge in terms of defining the roles and responsibilities of
         the Board members relative to the governance of the Agency. The Board must be
         able to engage in professional policy debate and set a sound course for the Agency.
         The Board and the Agency are most effective when they can focus on the business
         of the Agency instead of the processes. The Board’s rules of operation are a
         foundation for trust and shared expectations among Board members. A collegial
         Board founded on mutual trust and respect is essential to FCA’s ultimate
         effectiveness.

         The Chairman has taken action to address this challenge by sharing authority and
         tasking a Board member with the responsibility to lead the Board in its efforts on
         governance issues. This represents a positive and concrete commitment with
         accompanying resources to address this longstanding management challenge.

Strategic Planning

         The FCA Board adopted a Strategic Plan a year ago. A change in chairmanship is
         an opportunity for management to refine strategies and alignment to ensure the
         Board’s vision is accomplished



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                                                         FCA SEMIANNUAL REPORT TO THE CONGRESS
                                                                  APRIL 1, 2004 – SEPTEMBER 30, 2004


        The Board and Agency staff will face the significant challenge of refining
        performance measures to enhance a results-oriented culture at FCA. The Agency
        will need to achieve a balance among results, public expectations, and employee
        issues. FCA should evaluate its performance measures to ensure that they
        challenge and stretch the organization. Performance measures can be a powerful
        tool to continue the push into a results-oriented organization. An effective
        performance management system fosters performance and accountability at the
        individual, organizational, and ultimately overall Agency levels.

Financial Management

        Timely, accurate, and useful financial information is essential for making day-to-day
        decisions; managing the Agency’s operations more efficiently, effectively, and
        economically; supporting results-oriented management approaches; and ensuring
        accountability on an ongoing basis. During FY 2001, FCA successfully implemented
        a financial management system using the services of the Department of Interior’s
        National Business Center. During September 2003, the Agency decided to
        reprogram funds and purchase a new financial system. Management originally
        scheduled implementation of the new system during FY 2004. However,
        implementation has been delayed until June 2005. This reporting period, OIG
        performed an inspection that showed significant improvements were needed in
        project management to successfully complete implementation.

        Management’s challenge is to bring yet another system on line at a reasonable cost
        to the FCA and concurrently leverage the system to deliver timely financial
        information critical for making well-informed management decisions. The challenge
        forces the Agency to develop new measures of financial management success.
        Financial management success goes far beyond an unqualified financial statement
        audit opinion. Measures such as delivering financial information that managers can
        use for day-to-day operations, and developing reports that capture the full cost of
        programs and projects can help bring about improvements.

        Financial management represents a challenge that goes to the fiber of FCA’s
        business operations and management culture. FCA needs to ensure that underlying
        financial management processes, procedures, and information are in place for
        effective program management. FCA already has information that is readily
        available. However, the CFO seems to be stuck in controlling the distribution of the
        information. This type of information control serves as a roadblock to improved
        management. FCA needs to take steps to get information into the hands of
        managers. FCA will also need to improve managers’ ability to use the information to
        measure, control, and manage costs, to manage for results, and to make timely and
        fully informed decisions about allocating limited resources.




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                                                          FCA SEMIANNUAL REPORT TO THE CONGRESS
                                                                   APRIL 1, 2004 – SEPTEMBER 30, 2004


Security and Disaster Preparedness

         Recently, management has made significant strides towards improving its
         preparedness by acting on OIG suggestions for an expedited effort to prepare for an
         emergency. Management completed a Continuity of Operations Plan, conducted
         drills and revised procedures based upon those drills. The Agency’s level of
         preparedness is improving but it remains a management challenge to continue to
         refine procedures to ensure that the Agency reduces its vulnerability to significant
         disruption in operations in the event of an emergency. The speed of change in the
         security environment will be a challenge for all government organizations. This is
         especially true and a challenge for smaller organizations like FCA where an
         increased emphasis on physical and information security competes with program
         areas for limited budget funding.

Leveraging Technology

         Information technology (IT) is a key element of management reform efforts that can
         help dramatically reshape government to improve performance and reduce costs.
         The Agency has recognized that in order to meet the constraints of its budget, it
         must be able to maximize its return on investment in technology. FCA’s challenge is
         to establish effective mechanisms to ensure that current and future staff has the
         skills to use technology to operate in an efficient and effective manner.

         Internally, there is an opportunity for IT to complement human capital initiatives to
         reformulate the work processes of FCA. In order for this to come about, FCA will
         need to invest in training and reward employees who are able to develop innovative
         approaches to accomplish Agency goals using technology.

         Externally, E-Government offers many opportunities to better serve the public, make
         FCA more efficient and effective, and reduce costs. FCA has begun to implement
         some E-Government applications, including the use of the Internet to collect and
         disseminate information and forms.       Here, FCA’s challenge is to identify
         opportunities to develop partnerships with other agencies to develop joint E-
         Government strategies.




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                                                          FCA SEMIANNUAL REPORT TO THE CONGRESS
                                                                   APRIL 1, 2004 – SEPTEMBER 30, 2004



 AUDIT AND INSPECTION REPORTS ISSUED

         We conduct all audits in accordance with Government Auditing Standards issued
         by the Comptroller General of the United States for audits of Federal organizations,
         programs, activities, and functions. Inspections are in accordance with the
         President’s Council on Integrity and Efficiency’s Quality Standards for Inspections.
         Copies of most OIG reports are available on FCA OIG Web site (www.fca.gov/oig),
         or by contacting the OIG on (703) 883-4030, (703) 883-4359 for TTY, or by e-mail at
         ig_information@fca.gov.

Human Capital: Job Classification

         The OIG issued an audit report in June 2004 on the job classification program and
         position management at the FCA. The audit’s objectives were to determine whether
         the FCA position management is adequately administered and whether the job
         evaluation program reflects sound management principles. The audit found that if
         administered properly the FCA job evaluation program is effective in achieving a
         “performance based system” reflecting equal pay for equal work. It also found that
         desk audits completed on job positions were generally well documented and
         completed fairly and objectively. However, it noted the job evaluation system is over
         15 years old. To ensure job classification continues to be in alignment with the
         Agency’s values and goals, FCA should periodically revalidate or revise the job
         evaluation criteria. In addition, management must be held accountable for
         reasonable decision making on issues that effect job classification. Internal controls
         should also be improved to ensure position management is effectively administered.
         The five action items issued in the report remain open.

Project Management

         The objective of the inspection was to compare project management techniques of
         FCA's financial systems to best practices. The systems evaluated are among the
         Agency’s largest technology investments. We found many important elements of
         sound project management missing in the projects, which resulted in delayed
         implementations.      Some unavoidable technical issues caused delay in the
         implementation, but other inefficiencies could have been prevented through better
         project management. Overall the project management of these two systems was
         below standards. We also found FCA is not fully prepared to comply with Federal
         Travel Regulations regarding E-Travel. Both projects lacked sufficient authoritative
         support for their costs and as a result, we questioned over $250,000 of expenditures
         associated with implementing these systems. We recommended that both projects
         be stopped and reevaluated before further implementation. The report provided five
         recommendations for project management improvement that can be applied to the
         FCA’s future large-scale projects. An evaluation team is convening to provide an
         appropriate and cost-effective approach for the Agency on the issues raised.


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                                                                  FCA SEMIANNUAL REPORT TO THE CONGRESS
                                                                           APRIL 1, 2004 – SEPTEMBER 30, 2004



 STATUS OF UNIMPLEMENTED AGREED UPON ACTIONS

         At the beginning of the period, there were 14 unimplemented agreed upon actions
         for audits and three unimplemented recommendations for inspections. During this
         period, five more agreed upon actions and five more recommendations were issued.
         Management took final action on one of the agreed upon actions. At the end of this
         reporting period, 18 agreed upon actions and eight recommendations remain
         unimplemented.

Audits

         The following table summarizes the final actions management took on open audit
         items.


                                      AUDIT AGREED UPON ACTIONS
                                                                                Final
                                                         Open during
                                                                            Management           Open on
          Audit Report                    Issued         this 6-month
                                                                           Actions during       10/01/2004
                                                            period
                                                                             this period
          Performance Budgeting           03/23/01            2                    0                 2
          Office of Chief Financial
                                          01/24/02            2                    0                 2
              Officer
          Loan Account Reporting
                                          08/28/03            5                    1                 4
              System
          FCSBA Business Practices        03/09/04            5                    0                 5
          Human Capital: Job
                                          06/29/04            5                    0                 5
            Classification
                               Total                         19                    1                 18


         The OIG issued audit reports on Performance Budgeting over three years ago and
         the Office of Chief Financial Officer more than two years ago. Two of the original
         agreed upon actions from each of these reports remain open. The agreed upon
         actions can serve to partially address the management challenges.

         The OIG issued an audit report on the quarterly collection of detailed borrower data
         (Loan Account Reporting Data) seven months ago that included nine action items.
         Since the report’s issuance, four action items remain open.

         The OIG issued an audit report during the last reporting period on the business
         practices of the FCS Building Association. Although all action items remain open,
         the OIG has noted substantive progress toward resolving the agreed upon actions.




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                                                          FCA SEMIANNUAL REPORT TO THE CONGRESS
                                                                   APRIL 1, 2004 – SEPTEMBER 30, 2004


Inspections

         The following table summarizes the final action that management took on
         recommendations contained in two inspection reports.


                                INSPECTION RECOMMENDATIONS

                                                                       Final
                                                Open during
                                                                   Management            Open on
          Inspection Report         Issued      this 6-month
                                                                  Actions during        10/01/2004
                                                   period
                                                                    this period

          FCA Board Policies       09/15/03          3                    0                  3
          Project Management       09/09/04          5                    0                  5
                        Total                        3                    0                  8


         The OIG issued an inspection report on FCA Board Policy Statements a year ago.
         Management has not made any decisions on the recommendations. However, the
         new Chairman has requested a Board member to lead a group of staff to address
         the issues noted in the report.

         In the inspection report on FCA’s project management, the OIG made five
         recommendations for improved project management that can be applied to FCA’s
         future large-scale projects. Management has not made a decision on the
         recommendations.

Investigations

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

         Three investigations were open at the beginning of this reporting period. Two new
         investigations were opened and four were closed.

Legislation and Regulations

         OIG staff reviewed several FCA regulations in both proposed and final form.
         Statutory and regulatory compliance issues were reviewed as they arose in the
         evaluative process. Also, we reviewed and commented on proposed legislation
         affecting the Inspector General community through the legislation committee of the
         President’s Council on Integrity and Efficiency and the Executive Council on Integrity
         and Efficiency (PCIE/ECIE).




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                                                           FCA SEMIANNUAL REPORT TO THE CONGRESS
                                                                    APRIL 1, 2004 – SEPTEMBER 30, 2004


          OIG reviewed comments and followed Agency publications on syndication loans,
          preferred stock, and permanent capital.

          This office is involved in workgroups that develop guidelines for use in the
          investigation review process. Our office will participate in the PCIE/ECIE quality
          assurance review of investigations.

Other Activities

      Management Advisories

          During this reporting period, the OIG has continued the use of management
          advisories. These advisories provide management with feedback on issues that
          came to our attention during the process of performing other OIG work. In this
          6-month period, we advised Agency managers on a range of issues from the record
          of a Board vote to a comparison of compensation among financial regulators.

      Survey of Farm Credit System Institutions

          OIG administers an ongoing Agency survey of the regulated institutions of the FCS.
          This survey provides the FCA Board and senior management with independent
          feedback about how well FCA performs its examination and enforcement activities.
          The feedback is based on confidential responses received from FCS institutions
          following their receipt of FCA’s report of examination. OIG reports the results of the
          survey annually. During this 6-month period, we sent 31 surveys and received 18
          responses, equating to a 58 percent response rate. Overall, the responses for this
          reporting period were similar to the prior semiannual reporting period.

      OIG Performance Measures

          OIG’s performance measures were developed in 1995. Each year we review these
          measures and issue a report on our performance. It is available on the FCA OIG
          Web page at www.fca.gov/oig.

      Staff Participation in Activities of the Professional Community

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

      Staff Participation in Agency Organizations

          Staff is active on several Agency workgroups and task forces. During this reporting
          period, the OIG was represented in Blacks in Government, FCA Employees’
          Council, Administrative Burden Reduction Workgroup, the Federal Women’s
          Program, and the Budget Workgroup.




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                                                       FCA SEMIANNUAL REPORT TO THE CONGRESS
                                                                APRIL 1, 2004 - SEPTEMBER 30, 2004
                                                                                      APPENDIX A


APPENDIX A



                      TABLE 1.--AUDIT / INSPECTION REPORTS ISSUED


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

Human Capital: Job Classification           5                   $0                     $0

Project Management                          5              $ 250,0000                  $0

                           Total           10               $ 250,000                  $0




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                                                                FCA SEMIANNUAL REPORT TO THE CONGRESS
                                                                         APRIL 1, 2004 - SEPTEMBER 30, 2004
                                                                                               APPENDIX A




                            TABLE 2. --REPORTS WITH QUESTIONED COSTS

                                                       Number                       Dollar Value

                                                                         Questioned         Unsupported
                                                 Reports     Recs.
                                                                           Costs               Costs

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

B.   Which were issued during the
                                                   1            0          $ 250,000              $0
     reporting period

Subtotals (A+B)                                    1            0          $ 250,000              $0

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

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

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

D.   For which no management decision
     has been made by the end of the               1            0          $ 250,000              $0
     reporting period

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




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                                                            FCA SEMIANNUAL REPORT TO THE CONGRESS
                                                                     APRIL 1, 2004 - SEPTEMBER 30, 2004
                                                                                           APPENDIX A




      TABLE 3.--REPORTS WITH RECOMMENDATIONS THAT FUNDS BE PUT TO BETTER USE

                                                  Number of          Number of
                                                   Reports             Recs.            Dollar Value

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

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

Subtotals (A + B)                                       0                 0                   $0

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

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

        --based on proposed management
                                                        0                 0                   $0
          action

        -- based on proposed legislative action         0                 0                   $0

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

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

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




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                                                     FCA SEMIANNUAL REPORT TO THE CONGRESS
                                                              APRIL 1, 2004 – SEPTEMBER 30, 2004
                                                                                    APPENDIX B


 APPENDIX B
Farm Credit Administration Organization Chart




                                                14
                                                             FCA SEMIANNUAL REPORT TO THE CONGRESS
                                                                      APRL 1, 2004—SEPTEMBER 30, 2004
                                                                                         APPENDIX C


 APPENDIX C

FCA Office of Inspector General Organization Chart




                Farm Credit Administration
                Office of Inspector General



                                             Inspector General
                                               Stephen G. Smith


                    Investigator     Counsel to IG            Auditor       Management Analyst
                  Joan D. Ohlstrom   Elizabeth Dean       Veronica McCain   Mary Beth Barbagallo




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            R E P O R T
Fraud        Waste          Abuse           Mismanagement




                FARM CREDIT ADMINISTRATION
               OFFICE OF INSPECTOR GENERAL

        phone: Toll Free (800) 437-7322

                           (703) 883-4316

           Fax:    (703) 883-4059

            e-mail: fca-ig-hotline@starpower.net

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




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