oversight

Semiannual Report September 30, 2015

Published by the Farm Credit Administration, Office of Inspector General on 2015-09-30.

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

                                                     Table of Contents


Message from the Inspector General ..................................................................................... 1
Background ........................................................................................................................... 2
Strategic Goals ...................................................................................................................... 4
Audits, Inspections, and Evaluations ...................................................................................... 8
   REPORTS ISSUED ................................................................................................................ 8
   AUDITS AND EVALUATIONS IN PROCESS ........................................................................... 11
   STATUS OF AGREED-UPON ACTIONS AND RECOMMENDATIONS....................................... 12
Other Reports ..................................................................................................................... 13
   QUARTERLY SURVEY OF FARM CREDIT SYSTEM INSTITUTIONS.......................................... 13
   MANAGEMENT ADVISORY REPORTS ................................................................................ 13
Investigations ...................................................................................................................... 14
Legislative and Regulatory Reviews ..................................................................................... 14
Congressional Interaction .................................................................................................... 14
Outreach ............................................................................................................................. 14
OIG Staff ............................................................................................................................. 14
Annex.................................................................................................................................. 14
Appendix A.......................................................................................................................... 14
Appendix B .......................................................................................................................... 14
Appendix C .......................................................................................................................... 14
Appendix D ......................................................................................................................... 14
Appendix E .......................................................................................................................... 14
Appendix F .......................................................................................................................... 14
Appendix G ......................................................................................................................... 14
Appendix H ......................................................................................................................... 14
Message from the Inspector General
  Message from the Inspector General



                I am pleased to submit this Semiannual Report to the Congress. This report
        summarizes the activities and accomplishments of the Farm Credit Administration’s (FCA
        or Agency) Office of Inspector General (OIG) for the period April 1, 2015 through
        September 30, 2015. The OIG’s efforts were directed toward implementing the OIG’s
        Fiscal Year (FY) 2015 strategic and operating performance plan and budget. The OIG
        does so by performing audits, inspections, and evaluations of FCA programs and
        operations; conducting investigations; reviewing existing and proposed legislation and
        regulations relating to Agency programs and the IG community; and providing objective,
        independent reporting and consultation with the FCA Board.
                The OIG issued two audit reports during this reporting period on FCA’s Mobile
        Device Cost Controls and FCA’s Personnel Security and Suitability Program. Additionally,
        the OIG issued 30 surveys to FCS institutions, designed to obtain feedback on the quality
        of the examination program. Two survey reports summarizing the results were delivered
        to the Chief Examiner and FCA Board. We contracted with Harper, Rains, Knight &
        Company, P.A. to perform the audit of FCA’s financial statements for FY 2015, which we
        anticipate will be issued in November 2015. During this period, the OIG also initiated an
        audit on Human Capital Planning. Additionally, we initiated the OIG’s independent
        evaluation for the Federal Information Security Modernization Act. Five findings from OIG
        audits were addressed by FCA management and closed.
                I would like to acknowledge the effective efforts of the talented OIG staff in
        diplomatically leading Agency management to focus on significant program issues. In
        conjunction, FCA management continues to be forthright in
        reacting to OIG findings and making improvements. I look
        forward to continuing our positive relationship with managers
        and collaboration with the FCA Board, as we continue to
        strengthen FCA operations to meet the needs of American
        agriculture, keeping the nation’s economy strong and helping
        meet global food needs.




                              FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
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                                                      1
Background



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

     As a non-appropriated agency, FCA funds its expenses primarily through assessments to the
     institutions it regulates. FCA’s Fiscal Year 2015 budget was $65,600,000. FCA’s proposed Fiscal
     Year 2016 budget is $69,400,000.

     At the end of the prior semiannual reporting period, the Agency had 284 employees. At the end of
     this reporting period, FCA had 298 employees, about half of which are examiners located in five field
     offices.


                                                            Bloomington, MN



                                     Denver, CO
        Sacramento, CA
                                                                                    Headquarters McLean, VA




                                                       Dallas, TX



     FARM CREDIT SYSTEM
     The FCS is a Government-sponsored enterprise comprised of 3 Farm Credit Banks, 1 Agricultural
     Credit Bank, and 74 lending associations in all 50 states and Puerto Rico that primarily make loans to
     agriculture. The System raises funds by selling securities in the national and international money
     markets through its special purpose entity, the Federal Farm Credit Banks Funding Corporation.
     These securities are not guaranteed by the U.S. Government.

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



                               FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
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                                                       2
Background



     OFFICE OF INSPECTOR GENERAL
     The mission of the Office of Inspector General (OIG) is to be an agent of positive change, striving for
     continual improvement in FCA’s management and program operations. The Inspector General Act
     of 1978, as amended, established the OIG in 1989.

     The Inspector General is appointed by the FCA Board without regard to political affiliation and solely
     based on integrity and demonstrated ability in accounting, auditing, financial analysis, management
     analysis, investigations, law, or public administration. The OIG’s FY 2015 budget was $1,445,925.
     The OIG’s FY 2016 budget is $1,493,393.

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

     The OIG has four major components: audits, inspections, and evaluations of programs and
     operations; investigations; legislative and regulatory reviews; and outreach.




                                          Office of Inspector General




              Audits,                                       Legislative and
           Inspections,           Investigations              Regulatory                  Outreach
         and Evaluations                                       Reviews




                                FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
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Strategic Goals



      To accomplish our mission, the OIG has eight strategic goals in place that are aligned to FCA’s
      mission, programs, and activities (see the OIG’s Strategic and Operating Performance Plan for
      additional information). The following list summarizes our eight strategic goals and related outcomes
      during this reporting period.


             Strategic Goal 1:

             Deliver quality audit, inspection, and evaluation products
             and services that are useful to the FCA Board,
             management, and the Congress.
             In pursuit of this goal, the OIG continues to provide quality reports to FCA
             management for improvement to programs. The OIG initiates a risk-based approach
             to FCA programs in determining the workload plan. During this reporting period, we
             issued two audit reports relating to FCA’s mobile device cost controls and the
             personnel security and suitability program. The issued reports were timely and
             constructive to improve Agency operations. As a result of our work, seven
             recommendations were made to FCA management. Of these recommendations, all
             seven were agreed-upon and three were closed. Two recommendations were also
             closed from prior reporting periods. We also have ongoing audits on human capital
             planning, the financial statement and the FISMA evaluation.

             Strategic Goal 2:

             Provide technical advice and assistance to Agency
             officials in developing sound management information and
             financial reporting systems and in streamlining programs
             and operations.
             The OIG provides technical advice to management in a variety of methods. For this
             reporting period, the OIG issued one Management Advisory to the FCA Board.
             Based on statutory changes to the Federal Records Act, the advisory recommended
             changes to FCA policy and notifications regarding preservation of personal
             emails and text messages that constitute federal records. In response, the
             Agency issued revised guidance to employees on record retention requirements
             relating to personal emails and text messaging. An all hands message was also
             issued. The Inspector General communicates with the Board on a regular basis on
             issues facing FCA, which provides an opportunity for discussion of relevant topics.



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Strategic Goals




          Strategic Goal 3:

          Continuous improvement of the OIG staff, products, and
          internal office administration. Quality is highly valued.
          The OIG continuously works to improve internal staff and processes. All OIG staff
          maintain requirements for their related professional standards. We participate in a
          peer review every three years, and we received a pass rating during our last peer
          review in June 2013. Our next peer review is scheduled for the third quarter FY
          2016. We updated our office directives in the following areas: workpapers; audit
          follow up and tracking; and OIG reporting and recordkeeping. We also developed a
          new directive on Ethics. The OIG also conducts an annual quality assurance review
          on the audit function and assesses internal controls on a continuous basis.



          Strategic Goal 4:

          Effectively investigate and report administrative and
          criminal violations relating to FCA programs and personnel
          to Agency officials, the Attorney General (when
          appropriate), and the Congress.
          The IG Counsel performs the investigative function for the OIG. For this reporting
          period, two reports of investigation were issued. Eight investigations were closed,
          and as of the end of the reporting period, there were four investigations pending. Of
          the eight closed investigations, none resulted in substantiated allegations although
          one allegation was resolved during the course of the OIG investigation and another
          investigation led to a recommendation to the agency to reevaluate personnel actions
          and an administrative procedure. We received six allegations from the OIG Hotline
          during the April to September timeframe, and these were closed or referred to FCA
          programs or other Federal agencies as they involved matters outside the OIG’s
          jurisdiction.




                            FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
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Strategic Goals




          Strategic Goal 5:

          Cause FCA employees and managers to recognize their
          responsibility and report observed or suspected
          wrongdoing to the OIG.
          The OIG recognizes the importance of employees and managers reporting, and the
          OIG reacting, to suspected or observed wrongdoing. During this reporting period, we
          included information on reporting fraud in the OIG’s presentation during the Agency-
          wide new employee orientation. We also continued our work on fraud awareness
          briefings and publications, including publication of new OIG Hotline posters and
          publication of intra-Agency news articles that addressed whistleblower protections,
          time and attendance fraud, and misuse of government property.


          Strategic Goal 6:

          Maintain an effective program for reviewing and
          commenting on proposed and existing legislation and
          regulations affecting the Agency and the IG community.

          Reviewing and commenting on proposed and existing legislation and regulations
          affecting FCA and the IG community is an important area for the OIG. During
          this reporting period, we reviewed 28 items, including 16 legislative initiatives;
          four final rules; one proposed rule; and eight Informational Memoranda issued by
          the FCA Office of Examination. These issuances addressed a myriad of issues,
          including but not limited to:
              ·   Farm Credit System institutions’ whistleblower protection programs;
              ·   Cybersecurity assessments within Farm Credit System institutions;
              ·   Loans in areas having special flood hazards;
              ·   Improper government payments;
              ·   Grants oversight;
              ·   Transparency in government; and
              ·   IG empowerment and access issues.




                            FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
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Strategic Goals




          Strategic Goal 7:

          Promote OIG’s role within the FCA and the community at
          large.

          Outreach and communication are essential to the OIG’s role. The OIG briefed
          incoming employees on the OIG’s history, mission, reporting and fraud
          awareness at FCA’s new employee orientation. The OIG also issued letter
          reports to Congress, which OIG started posting on its public webpage during this
          reporting period. OIG attended Congressional hearings, responded to
          Congressional inquiries, and updated Congressional staff on issued OIG reports.
          The OIG worked closely with the Agency in developing more streamlined
          procedures to ensure 508 compliance, and in the whistleblower arena, issued
          updated posters and IG publications. The OIG renewed its status to maintain
          compliance with the Office of Government Ethics section 2302(c). The OIG also
          made recommendations to the Agency on records management, recruitment and
          other issues.


          Strategic Goal 8:

          Provide leadership to organizations directly contributing to
          the IG community, the Agency, and the Federal
          government.
          OIG staff participate in workgroups, conferences, and training related to the IG
          community, FCA, and the Federal government. The IG is a member of the
          Executive, Legislation, and Inspection and Evaluation Committees of the Council
          of Inspectors General on Integrity and Efficiency (CIGIE). The CIGIE Legislation
          Committee has engaged in several responses to legislative efforts and
          congressional hearings. The Counsel is Vice-Chair of CIGIE’s Council of
          Counsels, and participates in associated working groups, including the CIGIE
          Records Administration Group and FOIA. The auditors are involved with CIGIE
          cross-cutting audits, the FAEC, the Inspection and Evaluation Roundtable, and
          OIG Community Public Affairs.




                           FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
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Audits, Inspections, and Evaluations




      REPORTS ISSUED
      This reporting period, the OIG continued to provide FCA with high quality products. We issued two
      audit reports with seven agreed-upon actions. We have three in-process audits and evaluations, all
      initiated during this six-month period. The OIG also issued 30 surveys to FCS institutions and issued
      two reports on survey results to the Chief Examiner and FCA Board. The reports summarize survey
      results and stakeholder opinions on the quality and issues involved in mission execution. Lastly, one
      Management Advisory was issued to the FCA Board.




            2        Audit and
                     Evaluation
                                             7       Agreed-Upon
                                                                             3        In-Process
                     Reports                         Actions                          Reviews
                     Issued




         30         Surveys
                    Issued to
                                            2        Survey
                                                                            1        Management
                    FCS                              Reports                         Advisories
                    Institutions




      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 conducted in accordance with the CIGIE Quality
      Standards for Inspections.

      Copies of most OIG reports are available on our web site at www.fca.gov/home/inspector.html, or by
      contacting the OIG at (703) 883-4030, or by e-mail at ig_information@fca.gov. We offer a free e-mail
      subscription service that provides automatic notification by e-mail when new report or other
      information is posted to the OIG website. Go to http://apps.fca.gov/subscribeOIG/, provide your
      email, and click join the list.




                                  FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
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Audits, Inspections, and Evaluations



       Mobile Device Cost Controls at FCA
       Mobile devices such as smartphones and tablets are one of the tools the Agency uses to keep
       employees connected to its’ information systems and each other. Additionally, mobile devices
       are part of the Agency’s continuity of operations and emergency response strategy. It is the
       Agency’s policy to provide mobile devices to employees based on the business needs of each
       office and the Agency. The FCA incurred $192,787 in wireless communications expenses from
       October 23, 2013, through October 22, 2014. Additionally, the FCA purchased $18,762 in
       mobile devices.

       The objective of our audit was to determine whether the FCA had implemented effective cost
       controls for mobile devices and related services.

       We concluded that the FCA used a sound approach for selecting a smartphone and wireless
       communications service provider. Additionally, invoices for wireless communications service
       were reviewed for accuracy prior to payment.

      We also identified areas that could reduce the cost of monthly wireless communication
      expenses and decrease the amount of data usage consumed. A review of the wireless
      communications service provider’s Rate Plan Analysis Report and historical voice minute usage
      revealed that approximately $15,000 per year could be saved by reducing the voice minutes for
      smartphones. As a result of our audit, the Office of Management Services and the Office of
      Information Technology implemented the following actions that will improve the management of
      mobile devices:

              1. Develop procedures for obtaining the Rate Plan Analysis Report from its wireless
                 communications provider on a semi-annual basis and evaluating the benefits of
                 proposed changes to plans.

              2. Educate users on prohibited uses and the impact of excessive data usage.

              3. Identify users exceeding the 5 GB threshold during a billing cycle and notify the user
                 and their supervisor of the data usage during that cycle.

      The final report was issued July 31, 2015.




                               FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
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                                                       9
Audits, Inspections, and Evaluations



      FCA’s Personnel Security and Suitability Program
      FCA’s Personnel Security and Suitability Program is responsible for ensuring that employment
      and retention within the federal service is consistent with public trust and national security.
      Primary responsibility for the program is assigned to FCA’s Office of Management Services
      (OMS) with overall operations managed by the Personnel Security Officer (PSO). The majority
      of Agency employees are high, moderate and low risk with no national security sensitivity, and
      investigations are completed by the Office of Personnel Management (OPM). For Fiscal Year
      (FY) 2014 and 2015, FCA allocated about $300,000 to complete background investigations.

      FCA uses OPM required systems to track required timeframes for initiating investigations,
      validate reciprocity, and ensure consistency in risk designations. Risk designations for each
      Agency position are completed using OPM’s required Position Designation Tool (PDT). All
      background investigations are initiated and adjudicated by the PSO. Adjudication is the
      evaluation of data in background investigations, as well as any other relevant and reliable
      information, to determine whether an employee is suitable for government employment.

      Our objective was to determine whether FCA has effectively managed the Personnel Security
      and Suitability Program. Overcoming weaknesses from past efforts, FCA, in recent times, made
      significant progress in updating and improving its Personnel Security and Suitability Program.
      The current PSO reviewed employees’ security files and updated the spreadsheet for tracking
      investigations. Additional steps are necessary to ensure items identified by the PSO are
      addressed and all Agency employees have the appropriate background investigation for their
      position.

      As a result of our audit, OMS agreed to:
         ·   Review and implement internal control procedures to ensure the PSO’s tracking
             spreadsheet, security files, and risk designations are accurate and complete.

         ·   Finalize the designation of an Alternate PSO so that appropriate resources are available
             to fulfill the requirements of the Personnel Security and Suitability Program.

         ·   Update Procedures for:
                 o Deciding and documenting position risk level and sensitivity to ensure all
                   positions have a PDT designation that is appropriate for the duties and
                   responsibilities of the position.
                 o Maintaining and organizing PDT records.
         ·   Revise processes to ensure employees are cleared or pre-appointment investigative
             requirements are waived before entering high risk positions.

      The final report was issued September 29, 2015.


                               FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
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                                                      10
Audits, Inspections, and Evaluations




      AUDITS AND EVALUATIONS IN PROCESS

      Audit of FCA’s Financial Statements Fiscal Year 2015
      The Accountability of Tax Dollars Act of 2002 requires FCA and certain other agencies to submit
      to the Congress and OMB an audited financial statement each fiscal year.

      In continuing to assist the Agency in meeting these requirements, the OIG contracted with
      Harper, Rains, Knight & Company, P.A. to perform the audit of FCA’s financial statements for
      FY 2015. The audit remained ongoing at the end of this reporting period. For FY 2014, the OIG
      also contracted with Harper, Rains, Knight & Company, P.A. to perform the audit. The FY 2014
      audit resulted in an unmodified opinion, issued November 30, 2014.

      FY 2015 Federal Information Security Modernization Act Evaluation
      The evaluation of the Agency’s compliance with the Federal Information Security Modernization
      Act (FISMA) for FY 2015 is performed by the OIG’s Senior Information Technology Auditor and
      Senior Auditor using guidelines established by FISMA, OMB, and the National Institute of
      Standards and Technology. This evaluation was ongoing as of September 30, 2015.

      Audit of Human Capital Planning at FCA
      An effective human capital program is essential to ensure the Agency has the right people with
      the right skills to accomplish its mission as a financial regulator. The Human Capital Plan
      documents the Agency’s plans for the next five years and aligns with the Agency’s Strategic
      Plan toward the following goals: leadership and knowledge management, results-oriented
      performance culture, and talent management.

      The objective of this audit is to assess the adequacy of the Agency’s human capital planning
      and the effectiveness of its implementation. The audit is focused on the following three areas:
      key person dependency and succession planning; employee turnover and recruiting; and
      workplace diversity and inclusion. The audit began in April 2015 and is ongoing as of the end of
      the reporting period.




                              FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
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                                                     11
Audits, Inspections, and Evaluations




      STATUS OF AGREED-UPON ACTIONS AND RECOMMENDATIONS
      In total, there were seven agreed-upon actions added from two reports issued for the reporting
      period. We had twelve actions open at the beginning of the period to carry over. As of September
      30, 2015, fourteen agreed-upon actions remained open.




                       Audit, Inspection, and Evaluation Agreed-Upon Actions

                                             Open During this       Final Management          Open on
              Report              Issued
                                             6-Month Period     Actions During this Period   9/30/2015


        Mobile Device Cost
                                7/31/2015           3                       3                    0
            Controls



        Personnel Security
          and Suitability       9/29/2015           4                       0                    4
             Program


        FCA’s Enforcement
           and Special          3/31/2015           3                      1*                    2
       Supervision Processes



       FCA’s Commissioning
                                3/31/2015           9                      1**                   8
             Program


               Total                               19                       5                   14




      *One recommendation was closed for the Audit of FCA’s Enforcement and Special Supervision
      Processes. FCA’s OE provided training to all examiners and staff on supervision and enforcement
      authorities, regulatory requirements on reporting known or suspected criminal activity, and the
      criminal referral process.

      **One recommendation was closed for the Audit of FCA’s Commissioning Program. OE and OMS
      established a plan, including timeframes, to compete Commissioning Program contractor services to
      manage risks of reliance on one source and ensure the best value to the Agency.


                                  FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
                                        APRIL 1, 2015 ─ SEPTEMBER 30, 2015
                                                         12
Other Reports



      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 the examiners performing the main mission functions.
      Without attribution, the OIG issues a quarterly report and, at the end of each fiscal year, a summary
      report on the survey results to the Chief Examiner and the FCA Board.

      The survey asks respondents to rate eight statements regarding examination activities,
      communications and FCA regulations and guidance. Additionally, respondents have the opportunity
      to discuss the aspects of the examination that were the most and least helpful to the institution’s
      board and management team. Each quarter there are a relatively small number of respondents.
      Over time, however, analysis of response patterns enable sound conclusions as to the quality of the
      examiners and the examination function. The consistent trend indicates the examination program
      and staff are well regarded.

         ·   Second Quarter Fiscal Year 2015 Farm Credit System Survey
             In April 2015, the OIG issued 14 surveys to FCS institutions for feedback on the examination
             program and staff on the second quarter of FY 2015. Twelve FCS institutions responded.
             The OIG issued a summary report in June 2015 to the Chief Examiner and the FCA Board.

         ·   Third Quarter Fiscal Year 2015 Farm Credit System Survey
             In July 2015, the OIG issued 16 surveys to FCS institutions for feedback on the third
             quarter of FY 2015. Fifteen institutions responded. The OIG provided a summary report
             in September 2015 to the Chief Examiner and the FCA Board.

      MANAGEMENT ADVISORY REPORTS
      The OIG Management Advisory Reports are designed to be a quick mechanism to offer the Agency
      head and management suggestions on ways to strengthen Agency operations.

      During this reporting period, the OIG issued one management advisory to the FCA Board. On April
      16, 2015, the OIG issued a management advisory addressing amendments to the Federal
      Records Act. OIG urged management to change FCA policy and notify staff of the updated
      requirements for preservation of personal emails and text messages constituting federal
      records. In response, the Agency issued revised guidance to employees on record retention
      requirements relating to personal emails and text messaging.

      The OIG also continues to forward best practices, articles, and plans related to use of social
      media to FCA’s Office of Congressional and Public Affairs for consideration. This has been a
      practice since issuance of the OIG Management Advisory, Survey of FCA’s Use of Social
      Media, in 2012.



                                FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
                                      APRIL 1, 2015 ─ SEPTEMBER 30, 2015
                                                       13
Investigations



      The OIG continued to provide quality investigative work during this period. The OIG investigates
      matters referred internally and externally, through the OIG Hotline and other notification mechanisms.




           2     Reports of
                                    8                         4                         6
                                           Investigations            Pending                   Hotline
                 Investigation                                       investigations            complaints
                                           closed
                 issued                                                                        addressed




      Investigations
      During this reporting period, the OIG issued two Reports of Investigation; closed eight investigations,
      including six preliminary investigations; and closed the reporting period with four pending
      investigations. The closed investigations involved allegations relating to various issues, including
      alleged interference with the EEO counseling process; personnel suitability; and personnel
      selections. None of the investigations resulted in substantiated allegations, although one allegation
      was resolved while the investigation was proceeding and another investigation led to a
      recommendation that the agency reevaluate a personnel action and administrative procedure. Some
      of these investigations did not require referral to the agency for administrative action. In the EEO
      counseling process investigation, the Agency notified the OIG within 16 days that it had taken
      appropriate management action.

      Investigations pending at the close of this reporting period include an investigation that awaits
      Agency action, and three investigations, one of which was opened in April 2015 and the other two
      opened in September 2015.

      Hotline
      The OIG Hotline is available 24 hours a day, 7 days a week, to receive tips and complaints about
      fraud, waste, or abuse relating to FCA programs and operations. The Hotline allows individuals to
      report their allegations to the OIG directly and confidentially and is available through email, phone,
      fax, and mail.

      During the reporting period, the OIG received six Hotline complaints, and all six complaints were
      referred, responded to, administratively closed, or closed after referral for OIG investigation. One
      complaint was closed because it involved matters outside OIG’s jurisdiction and had already been
      sent to the cognizant agency. Three were closed after referral for OIG investigation and the
      remaining two were borrower complaints concerning FCS institutions, and these were referred to the
      FCA office responsible for reviewing these matters.



                                 FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
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                                                        14
Legislative and Regulatory Reviews



      In furtherance of the OIG’s mandate to review existing and proposed legislation and regulations,
      the IG attends joint briefings of the FCA Board on regulations at the proposed and final stages.
      During this reporting period, we reviewed:




           15      Legislative
                                    1      Proposed
                                                             4     Final Rules
                                                                                     8      Informational
                   Items                   Rule                                             Memoranda




      The following were reviewed:

      Legislation
      1)    H.R. 2395 and S. 579, Inspector General Empowerment Act of 2014
      2)    S. 614 and H.R. 2320, Federal Improper Payments Coordination Act of 2015
      3)    S. 742, Stop Wasteful Federal Bonuses Act of 2015
      4)    S. 754, Cybersecurity information Sharing Act of 2015
      5)    H.R. 1560, Protecting Cyber Networks Act
      6)    H.R. 1381, Transparency in Government Act of 2015
      7)    S. 846, H.R. 3328, Small Business Regulatory Sunset Act of 2015
      8)    S. 794, A bill to extend whistleblower protections for defense contractor employees to
            employees of contractors of the elements of the intelligence community
      9)    H.R. 2826, Government Transformation Act
      10)   H.R. 2807, Sunshine on Government Act of 2015
      11)   H.R. 2532, EASY Savings Act of 2015
      12)   S. 1115, Grants Oversight and New Efficiency Act (“GONE” Act)
      13)   S. 1527, Improving Department of State Oversight Act of 201
      14)   H.R. 1557, Federal Employee Antidiscrimination Act
      15)   S. 1990, Federal Computer Security Act


      Proposed Rule
             1) Proposed: Regulatory Capital, Implementation of Tier 1/Tier 2 Framework Regulatory
                Capital Rules: Regulatory Capital, Implementation of Tier 1/Tier 2 Framework, 12
                CFR Parts 607, 614, 615, 620 and 628, 79 Fed. Reg. 76927




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Legislation and Regulations Review




      Final Rules
          1) Organization and Functions; Field Office Locations,12 CFR Part 600, 80 Fed. Reg.
             40896 (7-14-2015)

          2) Loans in Areas Having Special Flood Hazards, Joint Agency Regulation,12 CFR Part
             614, 80 Fed. Reg. 43216 (7-21-2015)

          3) Organization; Institution Stockholder Voting Procedures, 12 CFR Part 611, 80 F.R.
             44258 (7-27-2015)

          4) Organization; Mergers, Consolidations, and Charter Amendments of Farm Credit
             System Banks or Associations, 12 CFR Part 611, 80 F.R. 51113 (8-24-2015)



      Informational Memoranda
          1) Amendments to Asset-Size Exemption Thresholds under Regulation Z and Integrated
             Mortgage Disclosures under Regulation X and Regulation Z (4-2-2015)

          2) Notice of Prohibition and Orders of Removal, Suspension, or Prohibition (4-16-2015)

          3) TILA-RESPA Integrated Mortgage Disclosures – Clarification of Borrower Stock and
             Participation Certificates Disclosure (4-28-2015)

          4) Farm Credit Administration Reduces Assessment (5-29-2015)

          5) Safety and Soundness of the Farm Credit System (7-7-2015)

          6) Whistleblower Programs (7-9-2015)

          7) Cybersecurity Assessment and Expectations for System Institutions (8-5-2015)

          8) National Oversight Plan for Fiscal Year 2016 (9-24-2015)




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Congressional Interaction




      During this reporting period, the OIG met with Congressional staff members and attended
      hearings on various issues relating to OIG access concerns across the OIG community and the
      related U.S. Department of Justice, Office of Legal Counsel opinion issued in July of 2015. The
      OIG also provided input for responses to post-hearing questions submitted to the CIGIE by
      Senate staffers.

      The OIG issued letter reports to the:

          ·   Senate Committee on Homeland Security and Governmental Affairs;
          ·   Senate Agriculture, Nutrition and Forestry Committee; and
          ·   House Committee on Oversight and Government Reform.

      The letter reports included information on limitations placed on the OIG’s access to documents,
      information, or Agency employees; open OIG audit recommendations; OIG salaries and the
      conduct of financial statement audits; and OIG oversight of how the Agency responds to
      Freedom of Information Act (FOIA) requests.




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Outreach



      Staff Participation in Activities within the IG 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 activities within
      CIGIE.

      The Inspector General is a member of CIGIE, which provides a forum for IGs from over 70
      government agencies to discuss government-wide issues and shared concerns. Collectively, the
      members of CIGIE work toward improving government programs and operations, work that involves,
      for example: comments on proposed legislation; development of projects involving cross-cutting
      issues; and training development. The IG was appointed to the CIGIE Executive Committee as the
      Member-At-Large in January 2015. The IG also serves as a member of CIGIE’s Legislation
      Committee and participates as a member of CIGIE’s Inspection and Evaluation Committee, and is
      the Chair of the Small IG group. The IG has a leadership role on committees and workgroups and
      has initiated group projects to advance and streamline CIGIE practices and processes.

      The Counsel to the Inspector General continues her leadership role in the Council of Counsels of IGs
      (CCIG) as one of two Vice Chairs to the CCIG for 2015. The Counsel is also involved in the CIGIE
      Records Management Working Group and attends the quarterly meetings for three additional CIGIE
      groups – the Assistant Inspectors General for Investigations, Deputy IGs, and the Small OIGs CCIG
      Working Group. The Counsel also contributes frequently to requests for assistance throughout the
      CCIG community.

      The OIG Senior IT Auditor and Senior Auditors are participating in cross-cutting audit projects and
      attend FAEC meetings and conferences. The IT Auditor attends local ISACA meetings, is actively
      involved in the IT Subcommittee of the FAEC, and assists CIGIE with their information security
      program. One Senior Auditor is also a member of the CIGIE Roundtable on Inspections and
      Evaluations, and is an Adjunct Instructor for CIGIE’s Training Institute.

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

      Organizational Briefings and Notifications
      The OIG has distributed posters identifying Hotline and contact information and continues to develop
      its Fraud Awareness program to provide training and guidance to FCA employees on reporting
      responsibilities, fraud indicators, methods of reporting, and protections provided to whistleblowers
      under Federal law and policy. OIG has also published several articles on fraud and whistleblower
      topics.




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OIG Staff




      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 toward enhancing
      individual skills in the performance of official duties, cross training, succession planning and meeting
      the criteria needed to achieve OIG performance goals and objectives.

      The following organizational chart shows the OIG as of September 30, 2015:




                                                     Inspector General
                                                      Elizabeth Dean



           Counsel to the     Senior Information                                                   Management/
                                                      Senior Auditor         Senior Auditor
         Inspector General    Technology Auditor                                                  Program Analyst
                                                       Sonya Cerne           Tori Kaufman             Ava Bell
            Kathy Gallo          Tammy Rapp




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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

     SECTION                                         TITLE                      Page

     4(a)(2)        Review of legislation and regulations                       15-16

     5(a)(1)        Significant problems, abuses, and deficiencies              None

     5(a)(2)        Recommendations for corrective action                       8-12

     5(a)(3)        Prior recommendations not yet implemented                   None

     5(a)(4)        Matters referred to prosecutive authorities                 None

     5(a)(5)        Information unreasonably refused or not provided            None

     5(a)(6)        List of reports issued                                      8-12

     5(a)(7)        Summaries of significant reports                            9-12

     5(a)(8)        Management decisions with questioned costs                   23

                    Management decisions on recommendations that funds be put
     5(a)(9)                                                                     24
                    to better use

     5(a)(10)       Prior audit reports unresolved                              None

     5(a)(11)       Significant revised management decisions                    None

                    Significant management decisions with which the Inspector
     5(a)(12)                                                                   None
                    General disagreed

     5(a)(13)       Compliance of Agency financial management system             11


     5(a)(14)(15)   Peer reviews conducted of this OIG                           25

     5(a)(16)       Peer reviews conducted by this OIG                           26

                    FY 2008 National Defense Authorization Act Citation and
     845                                                                         20
                    Requirement



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Appendix B




                        Audit, Inspection, and Evaluation Reports Issued
                                                                                Recommendations
                                   Number of Agreed Upon
              Report                                        Questioned Costs   That Funds Be Put to
                                  Actions/Recommendations
                                                                                    Better Use

      FCA’s Mobile Device
                                             3                    $0                $ 15,000
      Cost Controls



      FCA’s Personnel
      Security and Suitability               4                    $0                   $0
      Program


               Total                         7                    $0                $ 15,000




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Appendix C




                                      Reports with Questioned Costs


                                                         Number                   Dollar Value

                                                             Recommend-   Questioned    Unsupported
                                                   Reports
                                                                ations      Costs          Costs

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

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

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




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Appendix D




                           Reports with Recommendations that Funds

                                          be Put to Better Use

                                                      Number of      Number of       Dollar
                                                       Reports    Recommendations    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
                                                          1               3         $ 15,000
          period.

       Subtotals (A+B)                                    1               3         $ 15,000

       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
                                                          0               0           $0
          made within six months of issuance.




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Appendix E




                              Peer Reviews Conducted of this Office

                                                                      Function       Peer Review
             Peer Review Performed By            Date of Report
                                                                      Reviewed         Rating


      Architect of the Capitol                    June 26, 2013         Audit           Pass
      Office of Inspector General

      U.S. Securities and Exchange Commission   December 26, 2007   Investigations      Pass
      Office of Inspector General




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                                                      25
Appendix F




                             Peer Reviews Conducted by this Office

                                                                  Function   Peer Review
                   Peer Review Of               Date of Report
                                                                  Reviewed     Rating

      U.S. International Trade Commission
                                               January 16, 2013    Audit        Pass
      Office of Inspector General


      Consumer Product Safety Commission
                                                May 23, 2011       Audit        Pass
      Office of Inspector General




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                                                     26
Appendix G



              FCA ORGANIZATIONAL CHART




             FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
                   APRIL 1, 2015 ─ SEPTEMBER 30, 2015
                                    27
Appendix H




                                 Glossary of Terms


         Agency          – Farm Credit Administration
         CIGIE           – Council of the Inspectors General on Integrity and Efficiency
         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
         FY              – Fiscal Year
         H.R.            – House of Representatives
         IG              – Inspector General
         IG Act          – Inspector General Act of 1978, as amended
         IT              – Information Technology
         OE              – Office of Examination
         OIG             – Office of Inspector General
         OMB             – Office of Management and Budget
         OMS             – Office of Management Services
         Pub. L.         – Public Law
         RSD             – Risk Supervision Division
         S.              – Senate
         System          – Farm Credit System




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