oversight

Sept. 2009

Published by the Farm Credit Administration, Office of Inspector General on 2009-09-01.

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, 2009



                                Number 41
                               October 2009
Farm Credit Administration                                 Office of Inspector General
                                                           1501 Farm Credit Drive
                                                           McLean, VA 22102-5090
                                                           (703) 883-4030




October 26, 2009

The Honorable Leland A. Strom
Chairman of the Board
Farm Credit Administration
1501 Farm Credit Drive
McLean, Virginia 22102-5090

Dear Chairman Strom:

Enclosed is the semiannual report on the activities of the Farm Credit Administration’s (FCA or
Agency) Office of Inspector General (OIG) for the period April 1 through September 30, 2009. This
is the forty-first report since the establishment of the OIG on January 22, 1989.

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

On June 30, 2009, the OIG issued a final report on an inspection of Agency Travel and Purchase
Card Distribution, Usage, and Control. At the end of this reporting period, all four action items
resulting from this inspection were satisfactorily implemented by management and closed. On
July 21, 2009, we issued a final report on the audit of the Agency’s Certification and Accreditation
Process of its information technology (IT) infrastructure. No action items resulted from this
audit. On July 23, 2009, the OIG issued a final report on the audit of the Office of Examination’s
Travel Expense Budgeting Process, Usage, and Control. No action items resulted from this audit.
Please refer to page 6 for further information on these reports.

The OIG contracted with the Bureau of the Public Debt for Brown & Company CPAs, PLLC, to
perform the audit of FCA’s financial statements for fiscal year 2009. This audit is ongoing at the end
of this reporting period. Please refer to page 7 for further information.

Also initiated and ongoing during this period is the OIG’s annual evaluation of the Agency’s
compliance with the Federal Information Security Management Act. This annual evaluation is
conducted by the OIG’s Senior IT Auditor. Please refer to page 7 for further information.
                                                                                                 2

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

Respectfully,



Carl A. Clinefelter
Inspector General

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

BACKGROUND……………………………………………………………………………………… 2
  FARM CREDIT ADMINISTRATION…………………………………………………………………. 2
  FARM CREDIT SYSTEM…………………………………………………………………………… 2

MANAGEMENT AND PERFORMANCE CHALLENGES………………………………………... 3
  FARM CREDIT SYSTEM……………………………………………………………………………………. 3
    SAFETY AND SOUNDNESS…………………………………………………………………………… 3
    MISSION……………………..…………………………………………………………………………… 3
  FARM CREDIT ADMINISTRATION…………………………………………………………………..4
    AGRICULTURAL ECONOMIC DOWNTURN………………………………….…………………….4
    AGENCY GOVERNANCE………………………………………………………………………………. 4
    STRATEGIC PLANNING……..…………………………………………………………………. 5
    HUMAN CAPITAL……………..…………………………………………………………………. 5
    LEVERAGING TECHNOLOGY…….…………………………………………………………… 5

AUDIT, INSPECTION, AND EVALUATION REPORTS ISSUED…..…………………………… 6
  TRAVEL AND PURCHASE CARD DISTRIBUTION, USAGE,
     AND CONTROL INSPECTION…..……………………………………………………………... 6
  CERTIFICATION AND ACCREDITATION AUDIT……………..……………………………………. 6
  OFFICE OF EXAMINATION TRAVEL EXPENSE AUDIT……..……………………………………. 7

AUDITS AND INSPECTIONS IN PROGRESS……………………………………………………. 7
  INDEPENDENT FINANCIAL AUDIT FOR FY 2009………………….……………………………….. 7
  FEDERAL INFORMATION SECURITY MANAGEMENT ACT (FISMA)
    EVALUATION FOR FY 2009……………………………………………………………………. 7
  GOVERNMENT IN THE SUNSHINE ACT INSPECTION…………………………………………… 7
  REGULATION DEVELOPMENT AUDIT………………… ……………………………………………7
  BORROWER COMPLAINT PROCESSING INSPECTION………………………………………….. 8

STATUS OF UNIMPLEMENTED RECOMMENDATIONS………………………………………. 8
  AUDITS, INSPECTIONS, AND EVALUATIONS…………………………………………………….. 8

OIG OBSERVATIONS ISSUED…………………………………………………………………….. 9

INVESTIGATIONS…………………………………………………………………………………… 9

LEGISLATION AND REGULATIONS………………………………………………………………9

OTHER ACTIVITIES………………………………………………………………………………....11
  QUARTERLY SURVEY OF FARM CREDIT SYSTEM INSTITUTIONS……………………………. 11
  STAFF PARTICIPATION IN ACTIVITIES OF THE PROFESSIONAL COMMUNITY………………. 11
  STAFF PARTICIPATION IN AGENCY ORGANIZATIONS………………………………………… 12
  STAFF DEVELOPMENT…………………………………………………………………………… 12

ANNEX…………………………………………………………………………………………….......13
APPENDICES
 APPENDIX A – INDEX OF REPORTING REQUIREMENTS………………………………………. 14
 APPENDIX B – AUDIT, INSPECTION, AND EVALUATION REPORTS ISSUED………………….. 15
 APPENDIX C – REPORTS WITH QUESTIONED COSTS………………………………………… 16
 APPENDIX D – REPORTS WITH RECOMMENDATIONS THAT FUNDS
                BE PUT TO BETTER USE……………………………………………………… 17
 APPENDIX E – FCA ORGANIZATIONAL CHART…………………………………………….…… 18
 APPENDIX F – OFFICE OF INSPECTOR GENERAL ORGANIZATIONAL CHART……………..... 19
 APPENDIX G – GLOSSARY OF TERMS…………..………………………………………….…… 20
                                                       OIG SEMIANNUAL REPORT TO THE CONGRESS
                                                                    APRIL 1 – SEPTEMBER 30, 2009




EXECUTIVE SUMMARY

      This Semiannual Report to the Congress summarizes the activities and
      accomplishments of the Farm Credit Administration’s (FCA or Agency) Office of
      Inspector General (OIG) for the period April 1 through September 30, 2009. The
      OIG’s efforts were directed toward operational and audit planning; performing audits,
      inspections, and evaluations of FCA programs and operations; conducting
      investigations, as necessary; independently and confidentially surveying Farm Credit
      System (FCS or System) institutions regarding the effectiveness of the Agency’s
      examiners and examination function; and providing objective, independent reporting
      and counsel to the Agency Chairman on FCA programs and operations.

      During the period, the OIG issued one inspection report and two audit reports. On
      June 30, a final inspection report on Agency Travel and Purchase Card Distribution,
      Usage, and Control was issued. On July 21, a final audit report on the Agency’s
      Certification and Accreditation (C&A) Process of its information technology (IT)
      infrastructure was issued. On July 23, a final audit report on the Office of
      Examination’s (OE) Travel Expense Budgeting Process, Usage, and Control
      was issued. See page 6 for further information on these reports.

      There were four agreed-upon actions in the inspection report. At the end of this
      reporting period, all four were satisfactorily implemented by management and
      closed. There were no recommendations in either of the two audit reports.

      The independent financial audit of FCA for fiscal year (FY) 2009 was initiated.
      The OIG contracted with the Bureau of the Public Debt (BPD) for Brown and
      Company CPAs, PLLC (Brown & Co.) to perform the audit of FCA’s financial
      statements for FY 2009. This audit was ongoing at the end of this reporting period.

      Also initiated and ongoing during this period is the OIG’s annual evaluation of the
      Agency’s compliance with the Federal Information Security Management Act
      (FISMA). This annual evaluation is conducted by the OIG’s Senior IT Auditor.

      Additionally, the OIG issued two quarterly reports to the Chief Examiner and FCA
      Chairman on OIG surveys of System institutions regarding the examination function
      and the examiners. These reports were for the quarters ended March 31 and
      June 30, 2009.

      During the period, the OIG updated and issued its Strategic and Operating
      Performance Plan and Budgets for FYs 2010-2011 (SOPP). The SOPP is on the
      OIG’s website at https://www.fca.gov/Download/InspectorGeneral/Strategic&




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        PerformancePlans/S&OPP10-11.pdf. Included in the SOPP is the OIG’s Audit Plan
        covering FYs 2010-2011 and beyond.

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


BACKGROUND

Farm Credit Administration

        FCA is an independent Federal agency of the United States government responsible
        for the regulation and examination of FCS institutions chartered under the Farm
        Credit Act of 1971, as amended (Farm Credit Act). FCA is also a “designated
        Federal entity” within the meaning of the Inspector General Act of 1978, as amended
        (IG Act).

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

        At the end of this semiannual reporting period, FCA had 274 employees, about half
        of which are examiners located in five field offices. At the end of the prior
        semiannual reporting period, the Agency had 259 employees. The primary reason
        for the increase is OE’s recruitment and hiring of entry-level examiner trainees.

Farm Credit System

        The FCS is a Government-sponsored enterprise comprised of 5 Farm Credit banks
        that provide funds to 90 associations in all 50 states and Puerto Rico to make loans
        to agriculture and rural America. The System raises funds by selling securities in the
        national and international money markets through its special purpose entity, the
        Federal Farm Credit Banks Funding Corporation (Funding Corporation). These
        securities are not guaranteed by the U.S. Government. The Funding Corporation is
        considered a special purpose entity within the FCS.

        The Federal Agricultural Mortgage Corporation (Farmer Mac), also a part of the
        FCS, is chartered by the Federal government to provide a secondary market for




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     agricultural mortgage loans. Farmer Mac is publicly traded and issues its own debt
     securities.

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


MANAGEMENT AND PERFORMANCE CHALLENGES

     As part of the Agency’s annual Performance and Accountability Report (PAR), the
     Inspector General is required by law to provide a summary statement on the most
     serious management and performance challenges facing the Agency. The Agency’s
     PAR for FY 2009, including the challenges, is to be issued by mid-November 2009.
     The challenges are also presented below.

     The challenges fall into two general categories. First are the challenges related to
     the FCA’s mandate of ensuring a safe, sound, and dependable FCS as a source of
     credit and related services to agriculture and rural America. Some of these
     challenges may be influenced by events that are outside the control of the Agency.
     Second, but no less important, are the challenges related to Agency operations.
     The management challenges listed below are identified in the Agency’s FY 2009
     PAR.

                                     Farm Credit System
     Safety and Soundness

     The System is a lender to a single industry, agriculture, and is therefore vulnerable to
     the economic volatility and risks in that industry. While the FCS remains generally
     safe and sound, recent adversity in several major commodity groups has caused
     deterioration in a number of FCS institutions. The Agency’s challenge is to continue
     to ensure the System’s ability to withstand such vulnerabilities in the long-term, and
     remain safe and sound.

     Mission

     Further, the environment facing agriculture, rural America, and the institutions of the
     FCS is ever-changing presenting new opportunities and altering historical
     perspectives on System operations. FCA’s challenge is to continue to maintain an
     independent and objective, yet flexible and responsive, regulatory environment for
     the System, geared to continually ensuring the FCS fulfills its public policy purpose.




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                                                               APRIL 1 – SEPTEMBER 30, 2009




                            Farm Credit Administration

Agricultural Economic Downturn

There are many factors in agriculture today that have caused deterioration in a
number of FCS institutions and may cause increased stress for FCS institutions. For
example,
     •   the System has experienced rapid growth for several years, which has had
         the effect of eroding the System’s capital to assets ratio;
     •   large shared assets among many System institutions are experiencing
         serious difficulty;
     •   several major commodity groups are experiencing extreme stress;
     •   asset quality at many associations and several Farm Credit banks has
         deteriorated; and
     •   land values, which may not be sustainable, are high.

Thus, a challenge for the Agency is to ensure its ongoing ability to timely assess
economic and operational conditions affecting the welfare of System institutions, and
to take preemptive or remedial actions to ensure the ongoing safety and soundness
of the System. The first line of preparedness for the Agency in accomplishing this is
an effective examination and risk assessment program.

Aligned with this is the challenge for the Agency to effectively and timely utilize its
enforcement authorities. Recently, other Federal financial regulatory agencies have
been determined to have reacted too late with appropriate enforcement measures to
remediate deterioration in their regulated institutions. When significant deterioration
in a System institution(s) is first evident, the Agency should expeditiously consider
implementing appropriate rehabilitative enforcement measures.

Agency Governance

In early FY 2010, the FCA Board will likely receive two new members, filling out the
FCA Board’s statutory three-person complement. Two new members at virtually the
same time imposes on the Chairman and Agency staff the need to ensure an
environment in which the new members may relatively quickly learn their duties and
responsibilities, and the mission and functioning of the Agency and the System. In
recognizing this need, the Agency has taken initial steps toward an orientation and
education program. However, the challenge for the Agency is to formalize and
institutionalize an effective orientation and ongoing training program for FCA Board
members.        This should enable FCA Board members to readily become




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knowledgeable about Agency and System operations and issues, and be able to
properly focus Agency resources through, for example, the strategic planning
mechanism.

Strategic Planning

Since the adoption of the FYs 2008-2013 strategic plan in May 2008, the FCA Board
has a new Chairman. This change in leadership and the probability of two new FCA
Board Members in FY 2010 will provide an opportunity and a challenge to ensure
the new FCA Board’s vision is timely incorporated into the next strategic plan.

In 2005, the FCA Board established a Strategic Planning Committee (SPC)
composed of Agency staff to facilitate FCA Board input into the plan and the
planning process. The SPC should ensure the updating and issuance by the FCA
Board of the next 6-year strategic plan in FY 2011 covering FYs 2011-16.

Human Capital

In 2006, a 5-year strategic human capital plan was completed spanning FYs 2007-
2011. The Agency has adopted a strategy of annually updating the plan, resulting in
a moving 5-year plan. The plan is comprehensive and, because of the ongoing
updating, reflective of the current human capital issues facing the Agency. For
example, in addressing the attrition of seasoned staff, the Agency has been actively
recruiting and hiring at both the entry and mid-career levels, particularly as it pertains
to ensuring the ongoing capability of examination staff. FCA’s challenge is to
continue to emphasize, implement, and update the human capital plan to ensure
FCA has the staff it needs to effectively regulate a constantly evolving FCS, as
managing human capital is an ever-present and evolving necessity. This is
particularly important as it applies to the training and commissioning program for
newly hired entry- and midcareer-level examiner trainees.

Leveraging Technology

The Agency’s ability to leverage investments in new technologies is a key
element in management’s efforts to continually improve Agency performance by
increasing the efficiency and effectiveness of operations. The Agency has an
active information resource management planning process that identifies,
reviews, and prioritizes new IT initiatives that will improve Agency operations.
Over the past couple years, the Agency made significant investments in new
technologies and began implementing several tools that improve
communication, collaboration, and efficiency of operations. FCA’s challenge is
to take full advantage of the new capabilities the IT infrastructure provides. The




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        successful implementation of new technologies will provide FCA staff with the IT
        tools and skills that will enable the Agency to:

             •     Improve the quality and availability of data without creating an undue
                   burden on the FCS;
             •     Streamline business processes and enhance communication and
                   collaboration to improve the effectiveness of how FCA interacts with
                   the FCS, the public, and business partners;
             •     Build business intelligence that will provide decision makers with
                   timely management information;
             •     Develop an electronic recordkeeping and knowledge management
                   capability that effectively manages electronic data, documents, and
                   reports; and
             •     Protect FCA information systems and data from increasing external
                   and internal threats.


AUDIT, INSPECTION, AND EVALUATION REPORTS ISSUED

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


Travel and Purchase Card Distribution, Usage, and Control Inspection

        The OIG issued the final inspection report on June 30, 2009. The inspection
        evaluated the Agency’s distribution, usage, and control over travel and purchase
        cards. While the inspection found the Agency’s management of travel and purchase
        cards to be generally satisfactory, there were four agreed-upon actions that resulted.


Certification and Accreditation (C&A) Audit

        The OIG issued the final audit report on July 21, 2009. The audit evaluated the
        quality of the C&A process used for the Agency’s IT infrastructure and, while there
        were no recommendations, the audit identified potential areas for improvement
        which can be applied to the next C&A process.




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Office of Examination (OE) Travel Expense Audit

           On July 23, 2009, the OIG issued the final audit report on OE’s travel expense
           budgeting, usage, and control. The objective was to determine whether the OE’s
           travel funds are being managed economically and efficiently. The audit determined
           OE’s management of its travel expense budget to be satisfactory. There were no
           recommendations.


AUDITS AND INSPECTIONS IN PROGRESS

Independent Financial Audit for FY 2009

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

          In continuing to assist the Agency in meeting these requirements, the OIG contracted
          with the BPD for Brown & Co. to perform the audit of FCA’s financial statements for
          FY 2009. The audit is ongoing.

Federal Information Security Management Act Evaluation for FY 2009

          The evaluation of the Agency’s compliance with FISMA for FY 2009 is being
          performed by the OIG’s Senior IT Auditor, using guidelines established by FISMA,
          OMB, and the National Institute of Standards and Technology. This evaluation is
          ongoing.

The following audit activities are in the initial OIG-discussion phase, but will be undertaken in
early FY 2010:

Government in the Sunshine Act Inspection

          The objective will generally be to determine the Agency’s compliance with the
          Government in the Sunshine Act.


Regulation Development Audit

          The objective will generally be to assess the Agency’s compliance with all
          applicable Federal requirements and its efficiency in developing regulations.




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Borrower Complaint Processing Inspection

         The objective will generally be to assess the Agency’s policies and processes for
         tracking, investigating, and responding to System borrowers’ complaints.


STATUS OF UNIMPLEMENTED RECOMMENDATIONS

         At the beginning of the reporting period, there were no open action items resulting
         from OIG audits, inspections, or evaluation reports. However, during this period,
         four action items resulted from the inspection of Agency Travel and Purchase Card
         Distribution, Usage, and Control issued June 30, 2009. At the end of the period,
         there were no open action items.

Audits, Inspections, and Evaluations

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

           Audit, Inspection, and Evaluation Agreed-Upon Actions and Recommendations
                                                                        Final
                                                 Open During
                                                                    Management          Open on
                 Audit Report          Issued    this 6-Month
                                                                   Actions During      10/01/2009
                                                    Period
                                                                     this Period
          Agency Travel and
            Purchase Card
                                       6/30/09         4                   4                 0
            Distribution, Usage,
            and Control
          Certification and
            Accreditation (C&A)        7/21/09         0                   0                 0
            Process
          OE Travel Expenses           7/23/09         0                   0                 0

                            Total                      4                   4                 0




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OIG OBSERVATIONS ISSUED

      The OIG issued to the Chairman during the period two OIG Observations. One was
      issued on April 20, 2009, OIG Observation 09 - 03, Orientation and Ongoing Training
      of Designated Federal Entity (DFE) Governing Body Members, suggesting to the
      Chairman that new FCA Board member orientation and ongoing training be
      formalized and institutionalized.

      The other was issued June 4, 2009, titled Possible Message to System Institutions
      Regarding Agricultural Stress on Borrowers, suggesting a message from the Agency
      to System institutions regarding forbearance, when appropriate.

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


INVESTIG ATIONS

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

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

       No investigations were opened during the reporting period.


LEGISLATION AND REGULATIONS

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

       Legislation

          1) S. 976 – Would amend the Paperwork Reduction Act to exclude the
             collection of information during the conduct of any investigation, audit,
             inspection, evaluation or other review conducted by any Federal office of
             Inspector General.




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   2) S. 789 – Government Credit Card Abuse Prevention Act of 2008

   3) H.R. 1507 and S. 372 – Whistleblower Protection Enhancement Act of
      2009

   4) Proposed Amendments to the IG Reform Act

   5) S.139- Data Breach Notification Act

   6) S. 1390 and S. 1391 – Testimonial Subpoena Authority for IGs

   7) S. 3393/S. 1508 – Improper Payments Elimination and Recovery Act of
      2009

   8) H.R. 2142 – The Government Efficiency, Effectiveness and Performance
      Improvement Act of 2009

Final Rules

   9) Disclosure to Shareholders and Accounting Requirements

  10) Sunshine Act Meetings

  11) Interagency Questions and Answers Regarding Flood Insurance

  12) SAFE Mortgage Licensing Act

Proposed Rules

  13) Effective Interest Rates

Bookletters

  14) Financing Agricultural Land in Transition (in the Path of Development)-
      Eligibility and Scope of Financing Considerations

  15) Confronting Current and Future Challenges in the FCS

  16) Farm Credit Banks’ and Associations’ Compensation Committees




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          17) Frequently Asked Questions Regarding Scope of Financing for Limited
              Liability Companies

          18) Regulatory Capital: Risk-Weighting the Senior-Most Position of an Asset
              or Non-Agency Mortgage Backed Securitization

        Briefings

          19) Rural Community Investments Rulemaking Update

          20) Impacts of the Contractual Interbank Performance Agreement and the
              Market Access Agreement on the FCS

          21) Swine and Poultry Update


OTHER ACTIVITIES

Quarterly Survey of Farm Credit System Institutions

        The OIG administers an ongoing survey of FCS institutions regarding the quality and
        consistency of the Agency’s examination function and examiners. During this
        6-month period, we sent surveys to the Audit Committee Chairmen and Chief
        Executive Officers of 31 FCS institutions. Quarterly reports for the 3-month periods
        ended March 31 and June 30, 2009, were issued by the OIG to the Chief Examiner
        and the Chairman.

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

Staff Participation in Activities of the Professional Community

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

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




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

        The OIG Senior Auditor and Senior IT Auditor attend Federal Audit Executive
        Committee meetings and conferences. The Senior IT Auditor also attends local
        ISACA (formerly known as Information Security and Control Association) meetings
        and Federal information security and audit meetings. The Senior IT Auditor is a
        member of CIGIE’s administrative operations task force charged with developing a
        business, staffing, and financial plan as well as identifying and implementing the
        infrastructure needed to establish CIGIE operations.
        The OIG Administrative Assistant handles the registration and ongoing interface with
        the Institute of Internal Auditors for the auditors in 21 Offices of Inspector General at
        designated Federal entities.

Staff Participation in Agency Organizations

        OIG employees are active on Agency workgroups and task forces, as appropriate.

Staff Development

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




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ANNEX

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

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

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

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

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

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

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




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     APPENDIX A – INDEX OF REPORTING REQUIREMENTS


INSPECTOR GENERAL ACT CITATION AND REQUIREMENT                                                                 PAGE

Section 4(a)(2)    Review of Legislation and Regulations .......................................................... 9-11

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

Section 5(a)(2)    Recommendations for Corrective Action.......................................................... 6-7

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

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 ....................... 6-7

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

Section 5(a)(8)    Statistical Table on Management Decisions ..................................................... 16
                   with Questioned Costs

Section 5(a)(9)    Statistical Table on Management Decisions on ................................................ 17
                   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 ..................................... 7

FY 2008 NATIONAL DEFENSE AUTHORIZATION ACT CITATION AND REQUIREMENT

Section 845        Requires Information from OIG Contract Audit Reports…………………….…..13




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                                                        OIG SEMIANNUAL REPORT TO THE CONGRESS
                                                                     APRIL 1 – SEPTEMBER 30, 2009



                                                                             APPENDIX B




                     Audit, Inspection, and Evaluation Reports Issued


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

Agency Travel and Purchase
   Card Distribution, Usage, and            4                $0                    $0
   Controls
Certification and Accreditation
                                            0                $0                    $0
    (C&A) Process
OE Travel Expenses                          0                $0                    $0

                             Total          4                $0                    $0




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                                                                   OIG SEMIANNUAL REPORT TO THE CONGRESS
                                                                                APRIL 1 – SEPTEMBER 30, 2009



                                                                                           APPENDIX C




                                  Reports with Questioned Costs

                                                      Number                         Dollar Value

                                                           Recom-          Questioned       Unsupported
                                                Reports
                                                          mendations         Costs             Costs




A. For which no management decision has           0            0                $0                $0
   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)
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 reporting
   period
                                                  0            0                $0                $0
E. For which no management decision was
   made within six months of issuance
                                                  0            0                $0                $0




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                                                            OIG SEMIANNUAL REPORT TO THE CONGRESS
                                                                         APRIL 1 – SEPTEMBER 30, 2009




                                                                                APPENDIX D



              Reports with Recommendations that Funds be Put to Better Use

                                                                  Number of
                                                   Number of       Recom-
                                                    Reports       mendations          Dollar Value

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

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

Subtotals (A + B)                                       0               0                  $0

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

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

        --based on proposed management action           0               0                  $0

        --based on proposed legislative action          0               0                  $0

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

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

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




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                                          OIG SEMIANNUAL REPORT TO THE CONGRESS
                                                       APRIL 1 – SEPTEMBER 30, 2009




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




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                                                             OIG SEMIANNUAL REPORT TO THE CONGRESS
                                                                          APRIL 1 – SEPTEMBER 30, 2009




     APPENDIX F – Office of Inspector General Organizational Chart




                                  Inspector General
                                  Carl A. Clinefelter


                      Administrative
                        Assistant
                      Debra M. Miller



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




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




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                                                        OIG SEMIANNUAL REPORT TO THE CONGRESS
                                                                     APRIL 1 – SEPTEMBER 30, 2009




APPENDIX G – Glossary of Terms



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




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                                  OIG SEMIANNUAL REPORT TO THE CONGRESS
                                               APRIL 1 – SEPTEMBER 30, 2009




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




        FARM CREDIT ADMINISTRATION
        OFFICE OF INSPECTOR GENERAL

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

   • Fax:     (703) 883-4059

   • E-mail: fca-ig-hotline@rcn.com

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




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