oversight

Sept. 2005

Published by the Farm Credit Administration, Office of Inspector General on 2005-09-01.

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

Office of
Inspector General

                     Semiannual Report
                       to the Congress

                           April 1, 2005
                                to
                    September 30, 2005




                           Number 33
                          October 2005
Farm Credit Administration                                Office of Inspector General
                                                          1501 Farm Credit Drive
                                                          McLean, VA 22102-5090
                                                          (703) 883-4030




   October 20, 2005




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

   Dear Chairman Pellett:

   Enclosed is the semiannual report on the activities of the Farm Credit Administration’s (FCA or
   Agency) Office of Inspector General (OIG) for the period April 1, 2005 through September
   30, 2005. We are filing this report in accordance with the Inspector General Act of 1978, as
   amended (IG Act). Section 5(b) of the IG Act requires that you send this report to the
   appropriate Congressional committees and subcommittees within 30 days after the date of this
   transmittal along with management’s report on the status of audit recommendations.

   I am confident that the Agency will continue to demonstrate a commitment to address the
   management challenges delineated in this report and to implement open recommendations.
   During this reporting period, ten previously open recommendations were closed. Additionally,
   the FCA Board’s operational policy underwent major revision to reflect updated rules and
   processes related to its transaction of business.

   While this is the thirty-third report since creation of the OIG on January 22, 1989, it is my first
   semiannual report as the Inspector General. In this new capacity, I look forward to working with
   you, the FCA Board and FCA managers to continue these positive trends. I view the
   relationship between the OIG and your office as a partnership to strive to continually strengthen
   Agency operations.

   Respectfully,




   Carl A. Clinefelter
   Inspector General

   Enclosure
                                    TABLE OF CONTENTS

EXECUT IVE SUM MAR Y __________________________________________________________1
BACKGR OUND __________________________________________________________________2
MANAGEMENT CHA LLEN GES ___________________________________________________2
  H UM AN C AP IT AL _________________________________________________________________3
  F IN ANCI AL M AN AGEMENT _________________________________________________________3
  L EVER AGIN G T ECHNOLOGY ________________________________________________________4
  A GENCY G OV E RN AN C E ____________________________________________________________4
  S TR ATEGIC P L ANNING ____________________________________________________________5
  A C H ANGING E NVIRONMENT _______________________________________________________5
AUD IT A ND IN SPECT ION R EPOR T S ISSU ED ____________________________________6
  P ERFORM AN CE M E ASURES        AND I NTERN AL   C ONTROLS ________________________________6
  P ROTECTION     OF   C REDIT C ARD N UMBERS ___________________________________________6
AUD IT A ND IN SPECT ION R EPOR T S IN PRO GRESS _____________________________6
  I NDEPENDENT F IN ANCI AL A UDIT ___________________________________________________6
  K NOWLEDGE M AN AG EMENT          AT THE   FCA ____________________________________________7
STA TU S OF UN IM PLEM EN TED R ECO MM ENDA T ION S ___________________________7
  A UDITS _________________________________________________________________________7
  I NSPECTIONS ____________________________________________________________________8
IN VEST IGAT ION S ________________________________________________________________9
L EG ISLAT ION AND REGU LAT ION S ______________________________________________9
O TH ER ACT IVIT IES ______________________________________________________________9
  O BSERV ATIONS __________________________________________________________________9
  S URVEY   OF   F ARM C REDIT S YSTEM I NSTITUTIONS ___________________________________10
  I NVESTIGATI ON P EER R EVIEW ____________________________________________________10
  I NTERN AL OIG P ROCESSES ______________________________________________________10
  OIG P ERFORM ANCE M EAS URES ___________________________________________________10
  S T AFF P ART ICIP ATION   IN   A CTIVITIES   OF THE   P ROFESSION AL C OMMUNITY ______________10
  S T AFF P ART ICIP ATION   IN   A GENCY O RG ANIZ ATION S _________________________________11
  S T AFF D EVELOPMENT ____________________________________________________________11
A PPEND IX A ____________________________________________________________________12
  AUDIT / INSPECTION REPORTS ISSUED ___________________________________________________12
  REPORTS WITH QUESTIONED COSTS ____________________________________________________12
  REPORTS WITH RECOMMENDATIONS THAT FUNDS BE PUT TO BETTER USE_________________________13
A PPEND IX B ____________________________________________________________________14
  FARM CREDIT ADMINISTRATION ORGANIZATION CHART_______________________________________14
  FCA OFFICE OF INSPECTOR GENERAL ORGANIZATION CHART _________________________________15
I N D E X O F R E P O R T I N G R E Q U I R E M E N T S _________________________________16



                                                             i
EXECUTIVE SUMMARY

     This Semiannual Report to the Congress summarizes the activities and
     accomplishments of the Farm Credit Administration’s (FCA or Agency) Office of
     Inspector General (OIG) and covers the period April 1, 2005 through September 30,
     2005. 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.

     FCA Chairman and Chief Executive Officer, Nancy C. Pellett, made substantive
     changes in Agency senior management and in its organizational structure. These
     changes were based on extensive studies of FCA operations and structure. With
     such changes, there are opportunities to bring about significant improvements in the
     Agency’s operations and performance. Indeed, many Agency processes have
     already undergone reengineering. The OIG’s audit plan for 2006-2007 includes a
     review of the more significant of these reengineered processes.

     The number of unresolved recommendations has decreased. The Chairman has
     demonstrated a commitment to resolve open recommendations and address the
     management challenges delineated in this report by committing resources and
     attention to their correction. The Agency is currently in a cycle of change that is
     creating the opportunity for the further strengthening of Agency performance and
     effectiveness as a Federal financial regulator.
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BACKGROUND

     FCA 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
     Act). FCA is also a “designated Federal entity” within the meaning of the IG Act.

     As a non-appropriated agency, FCA funds its expenses primarily through
     assessments to the institutions it regulates. The Agency’s fiscal year (FY) 2006
     budget is $45.5 million. Assessments by FCA to FCS institutions for FY 2006 totaled
     $40.5 million with other sources of funding totaling $5.0 million. The FY 2006 budget
     for the OIG is $998,248.

     At the end of the semiannual period, FCA had 261 employees, about half of which
     are examiners located at five field offices. This is a six percent decrease in staffing
     during this reporting period and a nine percent decrease from the same reporting
     period last year. The OIG maintains five positions. Appendix B displays the
     organizational structure of FCA and the OIG.


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 year, the OIG has
     observed progress by FCA management in addressing the challenges. For
     example, strategic studies were completed that have resulted in significant
     organizational change.

     A major organizational change was the transition to a new Chief Examiner. This has
     resulted in a substantive transformation in the Office of Examination’s organization
     and operating methodology. These changes will take some time to become fully
     institutionalized and reach full efficiency.

     Another substantive change was to reconsolidate into a single office, the Office of
     Management Services (OMS), the Agency’s personnel, financial, and information
     technology functions under the umbrella of a new manager who will also serve as
     the Chief Financial Officer (CFO). This was also a proactive management action
     that has every opportunity to provide positive results. Strategic improvement for the
     Agency in the human capital and financial areas, in particular, should be enhanced
     by this transition.




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Human Capital
        In March 2001, the OIG recommended FCA develop a human capital plan. FCA
        management agreed to this recommendation. Under Chairman Pellett’s leadership,
        senior managers have focused on the challenge of marshalling, managing, and
        maintaining human capital to assure accountability and maximize FCA performance.
        While FCA still does not have a human capital plan, the Agency has made a
        significant investment in strategic studies that can serve as the plan’s foundation.
        The objective of the strategic studies was to create a picture of the System and the
        credit needs of rural America in 5 to 7 years and identify organizational and human
        capital opportunities to help FCA adapt. The approach is a marked contrast to past
        OIG observations where we noted the problem was the lack of a consistent strategic
        approach in establishing a human capital plan.

        FCA’s challenge will be to transform the strategic studies into management actions
        (organizational changes and process improvements) that achieve better results and
        clarify accountability. Realignment of resources and/or processes should help FCA
        pursue organizational approaches that recognize the reality of evolving technology, a
        changing workforce, and other circumscribing forces. For example, as competitive
        sourcing, electronic government (E-Government), financial management, and other
        initiatives lead to change—how FCA meets its mission may need to change
        including the skill sets it needs and how it organizes those skills.

        The capstone to this should be a long-term human capital plan that incorporates the
        elements recommended in the OIG’s Audit A00-04, Performance Budgeting, issued
        in March 2001. A critical component of managing human capital is providing for
        management succession. Individuals with the potential to become managers should
        be identified, provided developmental opportunities, and ultimately promoted to
        higher positions. This, as part of a human capital plan, should be linked to the
        Agency’s Strategic Plan for long-term achievement of the Agency’s mission.

        Transparency, staff commitment, and accountability are key ingredients to sustained
        improvements in human capital.

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


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        financial system. Management originally scheduled implementation of the new
        system during FY 2004. In September 2004, the OIG issued an inspection report
        that showed significant improvements were needed in the project management of
        this new financial management system to successfully complete implementation. In
        July 2005, the new director of OMS put this project on hold until a reevaluation of this
        new system can be made.

        Management’s continuing challenge is to outsource or bring yet another system on
        line at a reasonable cost to FCA and concurrently leverage the system to deliver
        timely financial information, critical for making well-informed management decisions.
        The challenge suggests the Agency should develop measures of financial
        management success beyond an unqualified financial statement audit opinion, as
        stated in the FCA 2004-2009 Strategic Plan. 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.

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 members of staff
        have 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. There is also an opportunity to capture
        knowledge of employees who are approaching retirement. In order to take
        advantage of these opportunities, 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. FCA’s challenge is to identify opportunities to
        develop partnerships with other agencies to develop joint E-Government strategies.

Agency Governance
        The Farm Credit Act provides for a full-time three-member FCA Board. The
        members are appointed by the President and confirmed by the Senate. A full-time
        three-member FCA Board for this relatively small Agency presents a challenge in
        defining the roles and responsibilities of the members relative to the governance of
        the Agency. The FCA Board must be able to engage in professional policy debate
        and set a sound course for the Agency. Its rules of operation are a foundation for


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        trust and shared expectations among FCA Board members. A collegial FCA Board,
        founded on mutual trust and respect, is essential to FCA’s ultimate effectiveness.

        The Chairman took action to address this challenge by sharing authority and tasking
        a member with the responsibility to lead the FCA Board in its efforts on governance
        issues as they apply to System institutions. Also, the FCA Board’s operational policy
        has been revised and captures current rules and processes related to its transaction
        of business.

Strategic Planning
        The FCA Board adopted its 2004-2009 Strategic Plan in December 2003. Since
        adoption, the Agency has a new Chairman and a new FCA Board member. These
        changes in leadership provide an opportunity to revise the plan to ensure the FCA
        Board’s vision is incorporated.

        The FCA Board refined the performance measures in January 2005. FCA should
        evaluate its performance measures on an ongoing basis 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.

A Changing Environment
        The System is a single industry lender and is vulnerable to economic swings.
        However, the FCS remains sound in all material respects. Earnings and capital
        levels have continued to strengthen and asset quality remains high. Nevertheless,
        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. In the early 1990s, the
        Government Accountability Office (GAO) conducted a comprehensive study of the
        cost and availability of credit in rural America.1 The GAO 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 continue to
        change, the System’s charter may need to be updated to ensure the System is not
        hampered by outdated legislation.

        The FCA must balance the often competing demands of ensuring the FCS fulfills its
        public policy purpose, proactively examining risk in the regulated institutions both
        individually and systemically, and controlling the cost of the regulator. FCA’s
        challenge is complex because it has become increasingly difficult to reconcile



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

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        significant provisions of the Farm Credit Act with the realities of the agricultural
        industry, the business environment, and financial markets in the 21ST Century.


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.

Performance Measures and Internal Controls
        The OIG issued an audit report in July 2005 on the Agency’s performance
        measures and internal controls. We determined whether the Agency is
        adequately verifying and validating performance measure accomplishments
        presented in the Agency’s Performance and Accountability Report. We also
        evaluated the adequacy of the supporting documentation for the Agency’s
        internal control program review assessments. Our review found that the FCA is
        committed to developing a comprehensive system for reporting performance
        results and assessing internal control. Some improvements are needed to
        ensure performance results accurately reflect accomplishments. In addition, the
        Agency’s internal management control program could be enhanced to be a more
        systematic integration of internal control review efforts, approached and written
        in a more standardized format.

Protection of Credit Card Numbers
        The OIG issued an inspection report of the Agency’s credit card security
        controls. We evaluated the controls over sensitive credit card information
        generated by Bank of America for the FCA. We interviewed FCA staff
        responsible for travel and purchase cards and account reconciliations. We
        reviewed internal procedures for credit card programs and previous work
        performed by the OIG. We found that Bank of America was unresponsive to
        previous account maintenance requests by the Agency’s Official Point-of-
        Contact. Actions taken by FCA will improve present data security conditions.


AUDIT AND INSPECTION REPORTS IN PROGRESS

Independent Financial Audit
        The Accountability of Tax Dollars Act of 2002 was created as a government-
        wide initiative. The President’s Management Agenda states agencies must


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         continue to improve their financial performance by improving timeliness,
         enhancing usefulness, and ensuring reliability by obtaining and sustaining a
         clean audit opinion. OIG has contracted with Harper, Rains & Knight, PA (HRK)
         to perform the audit of FCA’s financial statements for the Fiscal Year 2005. The
         audit is currently underway and is expected to meet the November 15, 2005
         reporting requirements set by the Office of Management and Budget (OMB).

Knowledge Management at the FCA
         The OIG is currently reviewing the Agency’s process of capturing, maintaining and
         managing the flow of institutional knowledge critical to the operations of the FCA.
         We held an entrance conference in August 2005 with management to discuss the
         audit.


STATUS OF UNIMPLEMENTED RECOMMENDATIONS

         At the beginning of the period, there were 15 unimplemented agreed upon actions
         for audits. During this period, one agreed upon action and two recommendations
         were issued. Management closed five of the agreed upon actions. At the end of this
         reporting period, 11 agreed upon actions and 2 recommendations remain
         unimplemented for audits.
Audits
         The following table summarizes the final actions management took on open audit
         items.

                      Table 1. Audit Agreed-Upon Actions and Recommendations
                                                                           Final
                                                       Open during
                                                                       Management       Open on
          Audit Report                      Issued     this 6-month
                                                                      Actions during   10/01/2005
                                                          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        4               0              4
              System
          FCSBA Business Practices          03/09/04        1               1              0
          Human Capital: Job
                                            06/29/04        4               3              1
            Classification
          Call Report Data Verification     02/03/05        2               0              2
          Performance Measures and
                                            07/01/05        3               1              2
             Internal Controls
                              Total                        18               5             13




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        The OIG issued audit reports on Performance Budgeting over 4 ½ years ago and on
        the Office of Chief Financial Officer more than 3 years ago. Two of the original
        agreed upon actions from each of these reports remain open.

        The OIG issued an audit report on the quarterly collection of detailed borrower data
        (Loan Account Reporting Data) 2 years ago that included nine action items. Since
        the report’s issuance, four action items remain open.

        Audit reports on Human Capital: Job Classification, Call Report Data Verification,
        and Performance Measures and Internal Controls have a total of five action items
        that remain open.

Inspections
        At the beginning of the period, there were 8 unimplemented recommendations for
        inspections. During the period, the OIG issued 3 action items needing management
        attention. Management took action to close 5 action items. At the end of the period,
        6 items remain unimplemented.

                  Table 2. Inspection Agreed-Upon Actions and Recommendations

                                                                     Final
                                              Open during
                                                                 Management        Open on
         Inspection Report        Issued      this 6-month
                                                                Actions during    10/01/2005
                                                 period
                                                                  this period

         FCA Board Policies       09/15/03           3                0               3
         Project Management       09/09/04           5                2               3
         Protection of Credit
                                  06/02/05           3                3               0
         Card Numbers
                        Total                        11               5               6


        The OIG issued an inspection report on FCA Board Policy Statements a year and a
        half ago. Management made decisions on the recommendations and has
        committed resources 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 closed two recommendations and is
        working towards resolution of the remaining three.
        During this reporting period the OIG issued an inspection report on the protection of
        credit card numbers which resulted in three action items needing management
        attention. Management took action to close all of three items during this reporting
        period.




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INVESTIGATIONS

       OIG Hotline calls and e-mails dealing with borrower complaints concerning FCS
       institutions and other FCS issues were referred to the FCA office responsible for
       reviewing such matters. All other complaints were investigated or continue to be
       investigated by this office.
       No investigations were open at the beginning of this reporting period. During the
       period, the OIG opened and completed an investigation related to anonymous letters
       sent to FCA Board members, FCA employees and at least one person outside the
       FCA. This was the fourth investigation that the OIG conducted in this matter. This
       investigation provided evidence substantiating criminal and administrative violations
       by an FCA employee. This case was referred to the Attorney General but was
       declined for prosecution. No investigations were open at the end of the reporting
       period.


LEGISLATION AND REGULATIONS

       OIG staff reviewed several FCA regulations in both proposed and final form,
       including the draft of the Farmer Mac Risk Based Capital Stress Test Revision and
       the draft of the Farmer Mac Non-Program Investments and Liquidity regulations. We
       also researched the one year post-employment restrictions for Senior Examiners
       and the implications of the regulations imposed by the Office of the Comptroller of
       the Currency, the Federal Reserve System, the Federal Deposit Insurance
       Corporation and the Office of Thrift Supervision.
       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).


OTHER ACTIVITIES

Observations
       During this reporting period, the OIG has continued the use of Observations to
       provide management feedback on issues that came to our attention during the
       process of performing other OIG work. In this 6-month period, we commented on
       opportunities to expand upon existing practices to protect identity theft, security of
       the parking garage, and Board Policy. We commended the OMS for quick
       responsiveness to ensure employee benefits and programs are well documented
       and easy to understand. We recommended that the OMS provide information to
       employees on opting-out of pre-screened/pre-approved credit card solicitations,
       which was done through the Agency’s weekly newsletter.

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Survey of Farm Credit System Institutions
        OIG administers an ongoing Agency survey of the regulated institutions of the FCS.
        The survey objectively measures the quality and consistency of the Agency’s
        examination and enforcement functions. During this 6-month period, we sent 45
        surveys and received 30 responses, equating to a 67 percent response rate. During
        fiscal year 2005 OIG sent 89 surveys and received 61 responses. This 69
        percent response rate on the survey was a decrease over the prior year’s rate of
        75 percent. During this reporting period there were no enforcement actions.
        Overall, Farm Credit institutions continued to provide favorable ratings.

Investigation Peer Review
        Our office completed the PCIE/ECIE quality assessment review of the U.S.
        Government Printing Office investigative operations.

Internal OIG Processes
        This reporting period, we continued the review and update of OIG operating
        procedures.

OIG Performance Measures
        This is the tenth year this office has been using performance measures. Each year
        we assess the validity of the measures, update our benchmarks, as appropriate, and
        use the performance results to review and/or improve our effectiveness. We issue a
        report on our performance each year. 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.
        During this reporting period, a staff member participated in a panel discussion
        involving best practices of OIGs at the 14th Annual U.S. Office of Government Ethics
        Conference. Also, the FCA Inspector General (IG) continues to meet monthly with
        Inspectors General from the other Federal financial regulators and participates as a
        member of the PCIE/ECIE Inspection and Evaluation Committee.
        The OIG began participation in a PCIE/ECIE pilot test for the newly launched e-
        Learning program.




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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, Administrative Burden
        Reduction Workgroup, and the Federal Women’s Program.

Staff Development
        OIG employees continually seek ways to improve skills and become knowledgeable
        in Inspector General community efforts. The former FCA Inspector General
        participated in Association of Government Accountants 15th Annual Leadership
        conference and the Government Auditing Conference sponsored by the Institute of
        Internal Auditors.




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 APPENDIX A



                          Table 3. Audit / Inspection Reports Issued


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

     Performance Measures and
                                                        3                    $0                  $0
     Internal Controls
     Protection of Credit Card
                                                        3                    $0                  $0
     Numbers

                                  Total                 6                    $0                  $0




                          Table 4. 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
                                                        0            0            $0              $0
        reporting period

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

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



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             Table 5. 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 period         0          0             $0

Subtotals (A + B)                                        0          0             $0

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

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

        --based on proposed management action            0          0             $0

        -- based on proposed legislative action          0          0             $0

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

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

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




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APPENDIX B
              Farm Credit Administration Organization Chart




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FCA Office of Inspector General Organization Chart




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                   INDEX OF 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 for Corrective Action ..................................................none

Section 5(a)(3)    Prior Recommendations Not Yet Implemented...........................................7-8

Section 5(a)(4)    Matters Referred to Prosecutive Authorities...................................................9

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

Section 5(a)(6)    List of OIG Audit/Inspection Reports Issued During the Period...................12

Section 5(a)(7)    Summary of Significant Reports Issued During the Period............................6

Section 5(a)(8)    Statistical Table on Management Decisions.................................................12
                   with 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 ......................................7-8
                   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 Disagreed

Section 5(a)(13)   Compliance of Agency Financial Management System .............................3-4




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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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