oversight

Sept. 2007

Published by the Farm Credit Administration, Office of Inspector General on 2007-09-01.

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

Office of
Inspector General

                     Semiannual Report
                       to the Congress

                         April 1 through
                    September 30, 2007




                         Number 37
                        October 2007
Farm Credit Administration                                 Office of Inspector General
                                                           1501 Farm Credit Drive
                                                           McLean, VA 22102-5090
                                                           (703) 883-4030




October 11, 2007

The Honorable Nancy C. Pellett
Chairman of the Board
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 through September 30, 2007. This
is the thirty-seventh report since the establishment of the OIG on January 22, 1989.

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

During this reporting period, the OIG was able to fill a significant vacancy. We welcomed to our staff
a Senior Information Technology Auditor with years of experience in this field and in the inspector
general community.

Additionally, during this period, an inspection report on FCA’s Enforcement Program was issued. It
contains six agreed-upon actions. Management has established an implementation plan with
timelines for each agreed-upon action. One agreed-upon action remains open from the audit of
Committees Established by the FCA Board issued in January 2007.

I am confident that the Agency will continue its commitment to address OIG recommendations
and/or agreed-upon actions and the management challenges delineated in this report.

I look forward to a continuing positive relationship between the OIG and your office, which I view as
a partnership, striving to strengthen FCA operations.

Respectfully,



Carl A. Clinefelter
Inspector General

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

BACKGROUND…………………………………………………………………………………….                               1

MANAGEMENT CHALLENGES………………………………………………………………….                           2
 ORGANIZATIONAL CHANGE……………………………………………………………………………                       2
 HUMAN CAPITAL………………………………………………………………………………………….                         2
 FINANCIAL MANAGEMENT……………………………………………………………………………...                     3
 LEVERAGING TECHNOLOGY…………………………………………………………………………..                      3
 AGENCY GOVERNANCE………………………………………………………………………………...                       3
 STRATEGIC PLANNING………………………………………………………………………………….                       4
 A CHANGING ENVIRONMENT…………………………………………………………………………..                     4

AUDIT AND INSPECTION REPORTS ISSUED………………………………………………… 5
  INSPECTION OF FCA’S ENFORCEMENT PROGRAM……………………………………………….. 5
 FEDERAL INFORMATION SECURITY MANAGEMENT ACT (FISMA) REVIEW
    FOR FY 2007…………………………………………………………………………………………. 6

AUDITS AND INSPECTIONS IN PROGRESS………………………………………………….. 6
  INDEPENDENT FINANCIAL AUDIT FOR FY 2007……………………………………………………. 6
  EFFICIENCIES REALIZED THROUGH OUTSOURCING…………………………………………….. 6
  IT INFRASTRUCTURE PROJECT MANAGEMENT………………………………………………….. 7

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

INVESTIGATIONS………………………………………………………………………………….                            7

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

OTHER ACTIVITIES…………………………………………………………………………….....                        8
 OIG OBSERVATIONS ISSUED………………………………………………………………………….                     8
 SURVEY OF FARM CREDIT SYSTEM INSTITUTIONS………………………………………………              9
 STAFF PARTICIPATION IN ACTIVITIES OF THE PROFESSIONAL COMMUNITY……………….   9
 STAFF PARTICIPATION IN AGENCY ORGANIZATIONS…………………………………………….            9
 STAFF DEVELOPMENT………………………………………………………………………………….                        9

APPENDICES
 APPENDIX A – INDEX OF REPORTING REQUIREMENTS…………………………………………             11
 APPENDIX B – AUDIT/INSPECTION REPORTS ISSUED……………………………………………            12
 APPENDIX C – REPORTS WITH QUESTIONED COSTS……………………………………………              12
 APPENDIX D – REPORTS WITH RECOMMENDATIONS THAT FUNDS
               BE PUT TO BETTER USE…………………………………………………………….               13
 APPENDIX E – FCA ORGANIZATIONAL CHART……………………………………………………..              14
 APPENDIX F – OFFICE OF INSPECTOR GENERAL ORGANIZATIONAL CHART……………….     15
                               FCA   SE MI ANNU AL REPOR T TO THE C ONGRE SS
                                                APRI L 1 —SEPT EMB ER 3 0 , 2 00 7


EXECUTIVE SUMMARY

      This Semiannual Report to the Congress summarizes the activities and
      accomplishments of the Farm Credit Administration’s (FCA or Agency) Office of
      Inspector General (OIG) for the period April 1 through September 30, 2007. The
      OIG’s efforts were directed toward operational and audit planning and performing
      audits, inspections, and evaluations of FCA programs and operations; conducting
      investigations, as necessary; and providing objective, independent counsel to the
      Agency Chairman on FCA programs and operations.

      The FCA Board Chairman continues to demonstrate a commitment to resolve open
      OIG recommendations and/or agreed-upon actions and to address the management
      challenges delineated in this report.

      The Agency’s current senior management team, formed in 2004 and 2005, continues
      to develop and refine operating processes, improve coordination between offices, and
      solidify as a unit. The evolution of this management team has resulted in the further
      strengthening of the performance and effectiveness of the Agency, a Federal financial
      regulator.

      During this reporting period, the OIG underwent a peer review of our audit function
      conducted by the Office of Inspector General of the National Archives and Records
      Administration. We received an unmodified opinion, that is, the review found that our
      OIG’s quality control system is designed adequately and functioning as prescribed,
      thus yielding a reasonable assurance that Government Auditing Standards are met.

      Also during this period, the OIG welcomed a new person to our staff, a Senior
      Information Technology (IT) Auditor, who complements our interdisciplinary team and
      provides further depth to our ongoing auditing engagements.



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 Inspector General Act of
      1978, as amended (IG Act).

      As a non-appropriated agency, FCA funds its expenses primarily through
      assessments to the institutions it regulates. The Agency’s fiscal year (FY) 2007
      budget was $45.7 million. Assessments by FCA to FCS institutions for FY 2007
      totaled $41.5 million, with other sources of funding totaling $4.2 million. The OIG’s FY
      2007 budget was $1,016,578.



                                           1
                                FCA   SE MI ANNU AL REPOR T TO THE C ONGRE SS
                                                 APRI L 1 —SEPT EMB ER 3 0 , 2 00 7


       At the end of this semiannual reporting period, FCA had 258 employees, about half of
       which are examiners located in five field offices. At the end of the prior semiannual
       reporting period, the Agency had 257 employees.

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


MANAGEMENT CHALLENGES

       This part of the semiannual report highlights major challenges confronting the Agency
       as it works to fulfill its mission. The OIG is required by Federal law to identify these
       challenges and present them in the Agency’s Performance and Accountability Report.
       Except for external environmental challenges, most can be addressed through
       concerted action by management. Over the past year, the OIG has observed
       progress by FCA management in addressing the internal challenges.

Organizational Change
       Strategic studies were completed in 2005 that resulted in the initiation of significant
       organizational change designed to enable the Agency to further address all internal
       challenges and to better prepare for external environmental challenges. These
       organizational changes, fully described in previous semiannual reports, have now
       been fully institutionalized.

Human Capital
       In March 2001, the OIG recommended that FCA develop a human capital plan and
       FCA management agreed. Chairman Pellett assumed her FCA Board and Agency
       leadership position in May 2004. In 2006, a comprehensive 5-year strategic human
       capital plan was completed. The plan identifies five human capital goals and six
       human capital initiatives, including knowledge management and succession planning.

       FCA’s challenge is to continue to implement the human capital plan to ensure
       organizational approaches that enable FCA to adapt to evolving technology, a
       changing workforce, and other environmental forces. In addition to achieving full
       transformation of the Agency’s organization and processes, how FCA meets its
       mission will be heavily dependent on the quality of its human capital, having the
       appropriate skill sets, and how it organizes to meet its mission.

       A critical component in implementing the human capital plan is providing for
       management succession. Individuals with the potential to become managers should
       be identified, provided developmental opportunities, and, when appropriate, 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.



                                            2
                                 FCA    SE MI ANNU AL REPOR T TO THE C ONGRE SS
                                                   APRI L 1 —SEPT EMB ER 3 0 , 2 00 7


Financial Management
       Timely, accurate, and useful financial information is essential for:

           •   making day-to-day decisions;

           •   managing the Agency’s operations more effectively;

           •   supporting results-oriented management approaches; and

           •   ensuring accountability on an ongoing basis.

       In April 2006, FCA outsourced financial reporting, contracting, and procurement
       functions to the Department of the Treasury’s Bureau of the Public Debt (BPD). While
       the transition is essentially complete, its ultimate success will need to be measured by
       whether the Agency and its managers are receiving timely service, useful financial
       reporting, and improved efficiencies. However, timely and efficient service in the
       procurement area was not occurring and management brought procurement back
       within the Agency during the prior reporting period. To ensure the effectiveness of
       BPD’s performance and the Agency’s reacquisition of the procurement function, the
       Office of Management Services will need to continue its ongoing assessment of
       performance and efficiencies in these service areas.

       The OIG has initiated an audit of this outsourcing. See page 6, Audits and Inspections
       in Progress.

Leveraging Technology
       Information technology (IT) is a key element in management’s efforts to continually
       improve Agency performance and reduce costs. The ongoing challenge is to continue
       to establish an effective IT infrastructure to ensure that staff have the IT tools and skills
       to operate in an efficient and effective manner. In this regard, the Agency is in the
       early stages of a major infrastructure transition.

       The OIG has initiated an audit of this infrastructure transition. See page 6, Audits and
       Inspections in Progress.

Agency Governance
       The Farm Credit Act provides for a full-time three-member board to govern the
       Agency. FCA Board members are appointed by the President and confirmed by the
       Senate. A small full-time FCA Board presents a challenge in defining the roles and
       responsibilities of its 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. The FCA Board’s rules of operation are a foundation for trust and
       shared expectations among its members. A collegial FCA Board, founded on mutual
       trust and respect, is essential to the Agency’s ultimate effectiveness.



                                               3
                                    FCA    SE MI ANNU AL REPOR T TO THE C ONGRE SS
                                                      APRI L 1 —SEPT EMB ER 3 0 , 2 00 7


        The Chairman has taken action to address this challenge by sharing authority and
        creating an environment at the FCA Board level that promotes a constructive working
        relationship between members. FCA Board members continually strive to remain
        current and knowledgeable in the dynamic agriculture, financial, and regulatory
        environments. Changes in the membership of the FCA Board present opportunities
        and challenges to the FCA Board’s governance of the Agency.

Strategic Planning
        The FCA Board adopted its current Strategic Plan, which covers 2004-2009, in
        December 2003. Since adoption, the FCA Board has a new Chairman and two new
        members. These changes in leadership provide an opportunity to revise the plan to
        ensure the FCA Board’s vision is accomplished. The challenge is to establish a
        strategic plan that is ongoing in nature and in pace with the Agency’s environment. In
        2005, the FCA Board established a Strategic Planning Committee (SPC), one of three
        committees established to facilitate the FCA Board’s oversight responsibilities and
        communication between the FCA Board and Agency staff. This committee has the
        potential to catalyze the strategic planning function and address this challenge. Steps
        in this regard were continued by the SPC during this and the past reporting periods,
        although management’s operating plans were submitted without optimum benefit of a
        revised strategic plan.

        The FCA Board refined the Agency’s performance measures in January 2005. FCA
        should evaluate its performance measures on an ongoing basis to ensure that they
        challenge 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.
        Nevertheless, the FCS remains sound in all material respects. Earnings and capital
        levels have continued to strengthen and asset quality remains high. However, 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 1994, the Government Accountability Office (GAO) published a report on 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


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

                                                 4
                                FCA    SE MI ANNU AL REPOR T TO THE C ONGRE SS
                                                  APRI L 1 —SEPT EMB ER 3 0 , 2 00 7


       System’s charter may need to be updated to ensure that the System is not hampered
       by outdated legislation.

       The System, through its Horizons project, has developed recommendations for the
       Congress to update the Farm Credit Act. The Agency can also anticipate that the
       System will press for broader powers through regulatory interpretations of the Farm
       Credit Act. At the same time, FCA must anticipate that the System’s competitors will
       press for the Agency to be a strict interpreter of the Farm Credit Act.

       As a financial regulator, FCA must maintain a flexible and responsive, yet independent
       and objective, regulatory environment. In this regard, 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 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

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


FCA’s Enforcement Program
       The OIG completed an inspection to evaluate the status of FCA’s enforcement
       program and readiness of FCA to impose an enforcement action. Management
       agreed that, although the need for the Agency’s use of its enforcement authority has
       been dormant for years due to the credit and financial strength of the FCS, attention to
       better preparation for the utilization of the Agency’s enforcement authorities is needed.
       In this regard, management agreed to identify positions and duties of FCA staff likely
       to be involved in any enforcement action; capture knowledge from employees
       experienced in enforcement matters; update all enforcement policies, procedures, and
       processes and provide briefings to those who may become involved in enforcement;
       establish policy guidance and thresholds on when enforcement action will be
       considered to ensure an objective and sound process; and to establish measures to
       ensure that independent adjudication advice is available to the FCA Board.

       Management forwarded implementation plans with timelines to update the
       enforcement program.


                                             5
                                 FCA   SE MI ANNU AL REPOR T TO THE C ONGRE SS
                                                  APRI L 1 —SEPT EMB ER 3 0 , 2 00 7


Federal Information Security Management Act (FISMA) Review for FY
2007
        The OIG contracted with Harper, Rains, Knight & Co., P.A. (HRK) to perform an
        independent review of the Agency’s information security program’s compliance with
        FISMA for FY 2007. The evaluation was performed using guidelines established by
        FISMA, OMB Circular A-130, GAO’s Federal Information System Controls Audit
        Manual, and the National Institute of Standards and Technology.

        We determined that FCA has an effective information security program. FCA
        conducted an annual self-assessment of the Agency’s security program, categorized
        systems based on risk, applied a common security configuration, and completed
        certifications and accreditations on all Agency systems. In addition, FCA implemented
        an Agency-wide security awareness and training program, tested the Agency’s
        continuity of operations plan, and followed a comprehensive incident response
        program.

        We observed an active, engaged Chief Information Officer (CIO) with a cohesive,
        experienced, and well trained staff, proactive in their approach to information security
        and responsive to suggestions made during the FISMA evaluation. We also reviewed
        the CIO’s plan to internally develop a Senior Agency Information Security Officer
        (SAISO) over the next fifteen months, which includes requiring the SAISO to be a
        Certified Information Systems Security Professional.

        Our evaluation did not reveal any information security control matters that we deemed
        to be significant deficiencies that must be reported under FISMA.


AUDITS AND INSPECTIONS IN PROGRESS

Independent Financial Audit for FY 2007
        The Accountability of Tax Dollars Act of 2002 extended to FCA and certain other
        agencies a requirement to submit to the Congress and the Office of Management and
        Budget (OMB) an audited financial statement each fiscal year. Also, the President’s
        Management Agenda states agencies must continue to improve their financial
        performance by improving timeliness, enhancing usefulness, and ensuring reliability by
        obtaining and sustaining a clean audit opinion.

        In continuing to assist the Agency in meeting these requirements, the OIG contracted
        with the BPD for Brown & Company, CPA, PLLC to perform the audit of FCA’s
        financial statements for FY 2007.


Efficiencies Realized Through Outsourcing
        An audit is in progress to determine whether the outsourcing of financial services to
        BPD improved Agency operations and reduced costs.



                                             6
                                   FCA   SE MI ANNU AL REPOR T TO THE C ONGRE SS
                                                    APRI L 1 —SEPT EMB ER 3 0 , 2 00 7


IT Infrastructure Project Management
        An audit is underway to determine if FCA is using sound project management
        practices to minimize risks associated with making significant changes to the IT
        infrastructure. We will evaluate the effectiveness of project management and
        determine if the process complies with agency policy and best practices.


STATUS OF UNIMPLEMENTED RECOMMENDATIONS

        At the beginning of the reporting period, there were two unimplemented agreed-upon
        actions from an audit. One of these was closed during this period and one remains
        open. Six new agreed-upon actions from an inspection were opened. At the end of
        the period, seven agreed-upon actions remain open.

Audits and Inspections
        The following table summarizes the status of action items from audits and inspections.

                Audit and Inspection Agreed-Upon Actions and Recommendations
                                                                          Final
                                                      Open during
                                                                      Management       Open on
         Audit Report                    Issued       this 6-month
                                                                     Actions during   10/01/2007
                                                         period
                                                                       this period
        Committees Established
                                         1/26/07           2               1              1
          by the FCA Board
        FCA’s Enforcement
                                         7/31/07           6               0              6
          Program
                           Total                           8               1              7



        An audit report on Committees Established by the FCA Board was issued in January
        2007. Management agreed with the report’s two recommendations.              One
        recommendation remains open at this time as an agreed-upon action.

        An inspection report on FCA’s Enforcement Program was issued on July 31, 2007.
        Management agreed with the report’s six recommendations. Management submitted
        acceptable proposed resolutions to the agreed-upon actions and is working on closing
        the action items.


INVESTIGATIONS

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

        No investigations are currently open.

                                                  7
                                FCA   SE MI ANNU AL REPOR T TO THE C ONGRE SS
                                                 APRI L 1 —SEPT EMB ER 3 0 , 2 00 7



LEGISLATION AND REGULATIONS

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

          Legislation

              1) H.R. 928 – Improving Government Accountability Act

          Advanced Notice of Proposed Rulemaking

              2) FCA Capital Adequacy

              3) Farmer Mac Risk-Based Capital Stress Test Version 3.0

          Final Rule

              4) Joint and Several Liability - Priority of Claims

              5) Priority of Claims – Subordinated Debt

          Briefings

              6)   Fall Unified Agenda

              7)   Mission Related Investments

              8)   Participation Consortium Issues

              9)   Governance in FCS Institution

             10)   Providing Sound and Constructive Credit to Young Beginning and Small
                   Farmers – Bookletter #40

             11)   Preferred Stock

             12)   Table Funding


OTHER ACTIVITIES

OIG Observations Issued
       Although none were issued during this reporting period, the OIG utilizes Observations
       to provide feedback to management on issues that come to our attention while
       performing other OIG work.

                                             8
                                 FCA   SE MI ANNU AL REPOR T TO THE C ONGRE SS
                                                  APRI L 1 —SEPT EMB ER 3 0 , 2 00 7


Survey of Farm Credit System Institutions
        The OIG administers an ongoing survey of the regulated institutions of the FCS. The
        survey measures the quality and consistency of the Agency’s examination function.
        During this 6-month period, we sent surveys to the Audit Committee Chairman and
        CEO of 26 FCS institutions. The OIG issues a quarterly report to the Chief Examiner
        and to the Chairman and a summary report at the end of each fiscal year on the
        responses to surveys.


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 are actively involved in one or more professional
        organizations, as well as ad hoc activities of the President’s Council on Integrity and
        Efficiency (PCIE) and the Executive Council on Integrity and Efficiency (ECIE).

        The IG continues to meet monthly with all Inspectors General from the ECIE; with
        Inspectors General from the other Federal financial regulatory agencies, and
        participates as a member of the PCIE’s Inspection and Evaluation Committee.

        The IG General Counsel meets at least monthly with counsels to the IGs. Counsel
        also attends Directors of Investigations meetings.

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


Staff Participation in Agency Organizations
        Staff is active on several Agency workgroups and task forces. During this reporting
        period, the OIG was represented in Blacks in Government, Administrative Burden
        Reduction Workgroup, the Combined Federal Campaign, Infrastructure Review Pilot,
        and the FCA Employees’ Council. Counsel conducted a briefing of the OIG’s mission
        and operations at an orientation for new employees. The OIG Senior IT Auditor and
        Administrative Assistant attended the orientation.


Staff Development
        OIG employees continually seek ways to improve skills and become knowledgeable in
        inspector general community initiatives. During this period, the IG participated in
        several web cast training/information seminars on the audit function. Additionally, the
        IG attended the PCIE/ECIE Annual Training Conference and Retreat. The Counsel to
        the IG, a trained mediator, participated in the Sharing Neutrals program by mediating a
        personnel dispute at the U. S. Department of Agriculture and attended an American


                                             9
                        FCA   SE MI ANNU AL REPOR T TO THE C ONGRE SS
                                         APRI L 1 —SEPT EMB ER 3 0 , 2 00 7


Bar Association course on mediation. Counsel also attended a Summit on Conflict of
Interest and Ethics at the Securities and Exchange Commission. The auditors
attended: a symposium on Emerging Issues in Banking, an A-123 training course, an
ISACA National Capital Area Annual Meeting, a conference of the Federal Audit
Executive Council, and a U.S. Government Accountability Office presentation on
revisions to the “Yellow Book”. The Administrative Assistant attended Excel training.




                                    10
                                          FCA     SE MI ANNU AL REPOR T TO THE C ONGRE SS
                                                             APRI L 1 —SEPT EMB ER 3 0 , 2 00 7




      APPENDIX A – INDEX OF REPORTING REQUIREMENTS


INSPECTOR GENERAL ACT CITATION AND REQUIREMENT                                                              PAGE

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

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

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

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

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

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

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

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

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 ...................................none
                    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 ................................6




                                                         11
                                           FCA   SE MI ANNU AL REPOR T TO THE C ONGRE SS
                                                            APRI L 1 —SEPT EMB ER 3 0 , 2 00 7


                                                                                         APPENDIX B


                                 Audit / Inspection Reports Issued


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

  FCA’s Enforcement Program                         6                 $0                     $0

                              Total                 6                 $0                     $0



                                                                                            APPENDIX C


                                  Reports with Questioned Costs

                                                         Number                     Dollar Value

                                                              Recom-       Questioned     Unsupported
                                                 Reports
                                                             mendations      Costs           Costs


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

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

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

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

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

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

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

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




                                                        12
                                       FCA       SE MI ANNU AL REPOR T TO THE C ONGRE SS
                                                            APRI L 1 —SEPT EMB ER 3 0 , 2 00 7



                                                                                   APPENDIX D

              Reports with Recommendations that Funds be Put to Better Use

                                                                      Number of
                                                          Number of    Recom-
                                                           Reports    mendations     Dollar Value

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

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

Subtotals (A + B)                                            0            0              $0

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

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

        --based on proposed management action                0            0              $0

        --based on proposed legislative action               0            0              $0

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

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

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




                                                     13
          FCA   SE MI ANNU AL REPOR T TO THE C ONGRE SS
                           APRI L 1 —SEPT EMB ER 3 0 , 2 00 7



APPENDIX E – FCA Organizational Chart




                    14
                             FCA     SE MI ANNU AL REPOR T TO THE C ONGRE SS
                                                APRI L 1 —SEPT EMB ER 3 0 , 2 00 7



APPENDIX F – Office of Inspector General Organizational Chart




                                    Inspector General
                                     Carl A. Clinefelter

      Counsel to IG      Senior Auditor               Senior IT Auditor   Administrative Assistant
   Elizabeth M. Dean   Veronica G. McCain             Tammy F. Rapp          Debra M. Miller




                                             15
             R E P O R T
Fraud        Waste          Abuse            Mismanagement




                 FARM CREDIT ADMINISTRATION
                OFFICE OF INSPECTOR GENERAL

        phone: Toll Free (800) 437-7322

                           (703) 883-4316

           Fax:    (703) 883-4059

            e-mail: fca-ig-hotline@rcn.com

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