oversight

Semiannual Report September 30, 2016

Published by the Farm Credit Administration, Office of Inspector General on 2016-09-30.

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

3
Farm Credit Administration                                             Office of Inspector General
                                                                       1501 Farm Credit Drive
                                                                       McLean, Virginia 22102-5090




October 14, 2016

The Honorable Kenneth A. Spearman, Board Chairman
The Honorable Dallas P. Tonsager, Board Member
The Honorable Jeffery S. Hall, Board Member
Farm Credit Administration
1501 Farm Credit Drive
McLean, VA 22102-5090

Dear Board Chairman Spearman and FCA Board Members Tonsager and Hall:

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, 2016 through September 30, 2016. This is the
fifty-fifth report since the establishment of the OIG on January 22, 1989.

I submit this report in accordance with the Inspector General Act of 1978, as amended (IG Act). Section
5(b) of the IG Act requires that the FCA Board 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.

I would like to thank Board Chairman Kenneth Spearman and Board Members Dallas Tonsager and
Jeffery Hall for their support of the OIG’s work. I would also like to acknowledge FCA management’s
positive and timely reaction to our work. I look forward to continuing a harmonious and productive
relationship.

The OIG issued four program audit reports during this reporting period on: FCA’s Controls Over the
Electronic Official Personnel Folder, Examination of Business Continuity at FCS Institutions, FCA’s
Position Management and Job Evaluation Program, and FCA’s Oversight of Young, Beginning, and Small
Farmer Programs. We also issued one inspection report on Elimination of Unnecessary Use of Social
Security Numbers at FCA.

This year, the required external peer review of our audit function was completed by the IG of the Federal
Labor Relations Authority. Our office received a “pass,” the highest of ratings; indicating our office’s
system of quality control for the audit organization was suitably designed and complied with to provide
reasonable assurance that performance and reporting is in conformance with professional standards in all
material respects. In addition to audit and inspection reports, we continued to conduct surveys on the
examination program, and we address investigation matters.

I look forward to continuing a responsive and effective relationship between the OIG and the FCA Board,
a partnership striving continuously to strengthen FCA operations.

If you have any questions, please call me at (703) 883-4036 or 4030.

Sincerely,




Elizabeth M. Dean
Inspector General

Enclosure
                                                     Table of Contents


Message from the Inspector General ..................................................................................... 1
Background ........................................................................................................................... 2
Strategic Goals ...................................................................................................................... 4
Audits, Inspections, and Evaluations ...................................................................................... 7
   REPORTS ISSUED ................................................................................................................ 7
   AUDITS AND EVALUATIONS IN PROCESS ........................................................................... 13
   STATUS OF AGREED-UPON ACTIONS AND RECOMMENDATIONS....................................... 14
Other Reports ..................................................................................................................... 17
   QUARTERLY SURVEY OF FARM CREDIT SYSTEM INSTITUTIONS.......................................... 17
Investigations ...................................................................................................................... 19
Legislative and Regulatory Reviews ..................................................................................... 20
Congressional Interaction .................................................................................................... 22
Outreach ............................................................................................................................. 23
OIG Staff ............................................................................................................................. 25
Annex.................................................................................................................................. 26
Appendix A.......................................................................................................................... 27
Appendix B .......................................................................................................................... 28
Appendix C .......................................................................................................................... 29
Appendix D ......................................................................................................................... 30
Appendix E .......................................................................................................................... 31
Appendix F .......................................................................................................................... 32
Appendix G ......................................................................................................................... 33
Appendix H ......................................................................................................................... 34
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, 2016 through September 30,
        2016. The OIG’s efforts were directed toward implementing the OIG’s Fiscal Year (FY) 2016
        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 five audit and inspection reports during this reporting period.
        Additionally, the OIG issued 26 surveys to Farm Credit System (FCS) institutions, designed to
        obtain feedback on the quality of the FCA examination program. Two survey reports
        summarizing the results were delivered to the Chief Examiner and FCA Board. We completed
        audits of: FCA’s Controls Over the Electronic Official Personnel Folder, Examinations of
        Business Continuity at Farm Credit System Institutions, FCA’s Position Management and Job
        Evaluation Program, and FCA’s Oversight of Young, Beginning, and Small Farmer Programs.
        We also completed an inspection on the Elimination of Unnecessary Use of Social Security
        Numbers at FCA.
                 I would like to acknowledge the effective efforts of the talented OIG staff in providing
        timely and comprehensive products. These OIG efforts, together with the interest and
        cooperation of Agency management, continue to result in improved programs and operations
        at FCA. The FCA management is both cooperative and responsive. OIG findings are generally
        accepted and there is a willingness to consider and make
        improvements. I look forward to continuing our positive
        relationship with all FCA managers and collaboration with
        the FCA Board, as we continue to strengthen FCA operations
        in good times and in more challenging times 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
                                      APRIL 1, 2016 ─ SEPTEMBER 30, 2016
                                                        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 2016 budget was $66,200,000.

      At the end of the prior semiannual reporting period, the Agency had 288 employees. At the end of
      this reporting period, FCA had 314 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 associations serving 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
                                      APRIL 1, 2016 ─ SEPTEMBER 30, 2016
                                                        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 FCA 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 2016 budget was $1,493,393.
      The OIG’s proposed FY 2017 budget is $1,563,324.

      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 three major components: audits, inspections, and evaluations of programs and
      operations; investigations; and outreach.




                                       Office of Inspector General




                 Audits,
            Inspections, and                    Investigations                        Outreach
               Evaluations




                                FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
                                      APRIL 1, 2016 ─ SEPTEMBER 30, 2016
                                                        3
Strategic Goals



       To accomplish our mission, the OIG has three 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 strategic goals and related outcomes during
       this reporting period.

              Strategic Goal 1:

              Audit, inspect, and evaluate the Agency’s programs and
              operations to assist the Agency in fulfilling its oversight
              mission more efficiently and effectively.
              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 in planning our workload. During this reporting period, we issued four
              audit reports on: FCA’s controls over the Electronic Official Personnel Folder;
              business continuity examinations; position management; and oversight of young,
              beginning, and small farmer programs. We also issued an inspection report on the
              elimination of unnecessary use of social security numbers at FCA. The issued
              reports were timely and constructive developed to improve Agency effectiveness
              and efficiency. As a result of our work, 17 recommendations were made to FCA
              management. Each action was agreed-upon by Agency management. We also
              have work ongoing for the FY 2016 financial statement audit and FISMA
              evaluation.

              Communication with Agency stakeholders is another key aspect of the OIG’s
              effective oversight. During our reviews we continuously meet with officials to keep
              them informed of results and areas for improvements. The Inspector General also
              holds regular meetings with FCA Board members to discuss work products and
              Agency priorities.

              The OIG is continuously working to ensure compliance with standards, improve
              internal processes, and advance professional competencies. This year, in
              compliance with the IG Act and government auditing standards, an external peer
              review of the audit function was performed by the IG of the Federal Labor
              Relations Authority. Our office received a “pass” rating, which is the highest
              possible. In addition, our quality assurance review found the OIG established and
              implemented effective internal policies and procedures. We continue to prioritize
              staff training to both meet requirements for professional education and gain new
              skills.




                                 FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
                                       APRIL 1, 2016 ─ SEPTEMBER 30, 2016
                                                         4
Strategic Goals




           Strategic Goal 2:

           Investigate alleged wrongdoing to prevent and detect
           fraud, abuse, and mismanagement in Agency programs
           and operations and to address Congressional, public, and
           employee concerns.
           OIG’s investigative function recognizes the importance of fairness and
           transparency in the OIG’s investigative mission. The Deputy IG/Counsel performs
           the investigative function for the OIG. For this reporting period, we opened two
           preliminary investigations and closed one. As of the end of the reporting period,
           the OIG has one pending preliminary investigation. The closed investigation
           addressed allegations relating to travel expenses and the allegations were not
           substantiated.
           We also received 23 complaints via the OIG Hotline during the April through
           September timeframe, four of which were FCS borrower complaints. All 23
           complaints were referred, responded to, or closed during the reporting time period
           except two that are pending review.
           OIG’s public release of brief summaries of closed investigations, without including
           personally identifiable information, highlights OIG’s emphasis on transparency in
           performing its statutory mission. These publications also serve as a deterrent
           against wrongdoing and confirm the effectiveness and responsive nature of OIG’s
           investigations. When appropriate, OIG also provides advisories to the Agency on
           systemic issues and increased risks identified during the course of some
           investigations. This heightens public confidence in the integrity of FCA programs
           and oversight operations by strengthening the Agency’s internal policies,
           procedures, and controls.
           OIG’s orientation presentation to all new Agency employees educates employees
           on OIG’s Hotline by encouraging employees to reach out to OIG with concerns
           regarding fraud, waste, and abuse relating to Agency programs and operations.
           OIG’s development of an online fraud awareness training webinar also will provide
           the Inspector General’s office with another avenue for reaching out to Agency
           employees to facilitate an open door between the OIG and Agency employees. A
           new OIG initiative, “Ask the IG”, will provide Agency employees with a mechanism
           to ask questions regarding the IG’s mission and authorities in order to encourage
           communication between the OIG and Agency employees and create a better
           understanding of OIG’s role. OIG also continues its work on cross-cutting audit,
           investigation, and inspection issues that impact not only other OIGs, but Federal
           agencies across the Federal government.




                            FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
                                  APRIL 1, 2016 ─ SEPTEMBER 30, 2016
                                                    5
Strategic Goals



           Strategic Goal 3:

           Review and make recommendations regarding existing and
           proposed legislation and regulations and provide other
           outreach to support the Agency’s oversight mission and the
           Inspector General community on government-wide issues.
           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 35 items, including 25 legislative initiatives; eight
           final rules; one proposed rule; and one Informational Memorandum issued by the
           FCA’s Office of Examination (OE). These issuances addressed varied issues,
           including, but not limited to:
              •   Standards of Ethical Conduct for Employees of the Executive Branch
              •   Equal Opportunity and Diversity
              •   Federal Agricultural Mortgage Corporation Governance and Risk Management
              •   Releasing Information; Availability of Records of the FCA; Freedom of
                  Information Act (FOIA) Fees – Regulatory Amendments Under the FOIA
                  Improvement Act of 2016
              •   Controlled Unclassified Information
              •   Revised Guidelines on Submission of Proposals to Merge or Consolidate Farm
                  Credit System Banks and Merge or Consolidate Farm Credit System
                  Associations
           Most OIG products are posted on our public website to ensure timely, effective
           communication and transparency. The OIG annually briefs incoming employees on the
           OIG’s history, mission, reporting, and audit and investigative activities during FCA’s
           new employee orientation. OIG staff participate in workgroups, conferences, and
           training to support and advance 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 Deputy/Counsel is Vice-Chair of CIGIE’s
           Council of Counsels, and participates in CIGIE working groups, including the Deputy
           Inspectors General Working Group, Council of Counsels to IGs (CCIG), CIGIE Records
           Administrators Group, and Small OIGs Working Group. The auditors are involved with
           CIGIE cross-cutting projects, the Federal Audit Executive Council (FAEC), the
           Inspection and Evaluation Roundtable, and OIG Community Public Affairs.




                             FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
                                   APRIL 1, 2016 ─ SEPTEMBER 30, 2016
                                                     6
Audits, Inspections, and Evaluations




       REPORTS ISSUED
       This reporting period, the OIG continued to provide FCA with high quality products. We issued four
       audit reports and one inspection report with a total of seventeen agreed-upon actions by FCA
       management. We have two in-process reviews initiated during this six-month period. The OIG also
       issued 26 surveys to FCS institutions and two reports on the survey results to the Chief Examiner
       and FCA Board. The reports summarize survey results and stakeholder opinions on the quality and
       issues involved in the examination function.




             5        Audit,
                      Inpection &
                                             17        Agreed-Upon
                                                                                2
                                                       Actions                           In-Process
                      Evaluation                       Initiated
                      Reports




                                26         Surveys
                                                                     2         Survey
                                           Issued to FCS
                                                                               Reports
                                           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 Inspection and Evaluation.

       Copies of most OIG reports are available on our website 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
       subscription service that provides automatic notification by e-mail when a 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
                                       APRIL 1, 2016 ─ SEPTEMBER 30, 2016
                                                         7
Audits, Inspections, and Evaluations



       Audit of FCA’s Controls Over the Electronic Official Personnel Folder

       The objective of the audit was to review the effectiveness of controls related to the Electronic
       Official Personnel Folder (eOPF). FCA has a responsibility to maintain official personnel records
       for its employees in accordance with requirements Within FCA, the Human Resources (HR)
       Team oversees the eOPF system.

       We found FCA implemented various controls since the eOPF implementation in 2009. The
       Agency created an eOPF security plan, and a process was in place to review a listing of records
       accessed and roles report identifying personnel with access to employee eOPFs. We also found
       personnel actions performed in eOPFs were timely. FCA had awarded a contract to ensure
       service computation dates were accurate and documented correctly. Another contract was let to
       eliminate a backlog of documents to be scanned into eOPFs. The HR Team had conducted a
       benefits review in 2015 focused on ensuring eOPFs contained correct benefit election forms.

       Our review identified opportunities to improve: incomplete or missing forms, access controls,
       and progress by contractors. We found issues with forms because of: in-process internal
       procedures; gaps in the process for new, transferred and promoted employees; and an
       ineffective process for collecting emergency contact forms. We also identified former employees
       whose eOPFs were past due for transfer. Some users had logged into the system but were not
       identified as authorized. Lastly, for the contractor hired to review eOPFs for complete Federal
       service history, salary, military service, and other creditable service, many outstanding items
       remained open and needed to be resolved.

       In response to our audit, the Agency agreed to take the following actions:

          1. Document decisions on those forms FCA is requiring in the eOPF and finalize the eOPF
             Internal Procedures.

          2. Develop and implement policies, procedures, and/or controls for new, transfer, and
             promoted employees to ensure completeness.

          3. Initiate a process to review and transfer eOPFs for separating personnel. Monitor status
             of transferred files on a quarterly basis to ensure folders are closed and can no longer
             be accessed.

          4. Complete a plan to update missing information that includes finalizing the results from
             the contractor review.

       The final report was issued April 21, 2016.



                                FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
                                      APRIL 1, 2016 ─ SEPTEMBER 30, 2016
                                                        8
Audits, Inspections, and Evaluations



       Examination of Business Continuity at Farm Credit System Institutions
       FCA requires FCS institutions to have policies and procedures that address “business
       resumption after disruption.” Business continuity planning refers to the activities necessary to
       continue, resume, and recover an organization’s business processes when operations are
       interrupted unexpectedly. The objective of this audit was to evaluate FCA’s process in
       determining which business continuity procedures were performed at FCS institutions and
       whether there were any gaps during the Agency’s examination process.

       FCA issued guidance in the form of directives and an Examination Manual that provides
       elements an examiner should consider during examination and monitoring of System
       institutions. As a result of our audit recommendations, OE modified a few references in the
       Examination Manual that needed updates.

       In our review of the examination of business continuity procedures performed at System
       institutions, we observed documentation supporting the procedures performed and conclusions
       made. In most cases, if a procedure was not performed, there was justification provided in the
       workpapers. In a few cases, the workpapers did not identify justification for skipping a procedure
       during the examination cycle. The reasons for not performing a procedure were a result of the
       risk based approach, resource availability, and priorities.

       OE developed workpaper templates to be used during the examination of business continuity
       that describe the items an examiner should consider. Our audit identified the workpaper
       templates as an effective method for documenting the work performed and observations made
       during examinations of business continuity when they were used. However, the templates were
       not consistently included in the workpaper documentation.

       As a result of our audit recommendations, OE took the following actions that will improve the
       examination of business continuity at FCS institutions:

          1. Updated references in the Examination Manual.

          2. Reminded examiners to document their justifications for examining or skipping the
             business continuity topic at System institutions.

          3. Encouraged examiners to utilize workpaper templates when completing the business
              continuity examination procedures, especially those examiners with little or no
              experience in this area.

       The final report was issued on June 1, 2016.




                                FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
                                      APRIL 1, 2016 ─ SEPTEMBER 30, 2016
                                                        9
Audits, Inspections, and Evaluations



       Elimination of Unnecessary Use of Social Security Numbers at FCA

       The core mission of FCA is to ensure a safe, sound, and dependable source of credit and
       related services for agriculture and rural America. With this mission comes a responsibility to
       safeguard sensitive FCS and loan information, as well as sensitive, personal information within
       the Agency itself, including personally identifiable information (PII).

       The objective of the inspection was to determine whether the Agency has eliminated
       unnecessary use of Social Security Numbers (SSN) and is safeguarding SSN information in
       Agency processes and systems.

       We found the Agency is not storing or using Social Security Numbers unnecessarily and there
       are safeguards in place when SSN information is used in Agency processes and systems. The
       Agency:

          •   Eliminated requests for SSNs from current FCA forms, with the exception of a few for
              which SSN use accomplishes an agency function;
          •   Does not unnecessarily collect and store SSNs in its processes and systems; and
          •   Protects SSN information with administrative, technical and physical safeguards.

       The inspection report contained no recommendations or agreed-upon actions.

       The final report was issued August 31, 2016.




                                FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
                                      APRIL 1, 2016 ─ SEPTEMBER 30, 2016
                                                       10
Audits, Inspections, and Evaluations



       FCA’s Position Management and Job Evaluation Program
       FCA has a position management and job evaluation program to identify, rate, and assign grade
       levels to Agency positions according to their relative contribution to accomplishment of Agency
       goals, objectives, and mission requirements. The objective of the audit was to determine
       whether the position management and job evaluation program is adequately administered.

       We found FCA adequately administered the program. Career ladder positions have generally
       been established and documented in position descriptions, and a system is in place to evaluate
       and rank positions within the Agency. FCA also updated the format for position descriptions to
       correlate with job evaluation factors and provide more standardized information to decrease the
       amount of judgement used for job evaluation scoring.

       Despite these advances, we identified opportunities to further improve the job evaluation system
       and position management. Scoring in the job evaluation system did not always correspond to
       information in position descriptions, and some position descriptions lacked information to
       support rankings. There was a lack of knowledge and documentation surrounding the job
       evaluation system, process, and scoring factors. We also identified incomplete files and
       inconsistent processes for Agency desk audits used to determine whether a position should be
       graded at a different level.

       In response to our audit, the Agency agreed to take the following actions:

          1. Create internal procedures on the job evaluation and position management program to
             memorialize and standardize HR processes. Include additional controls over inputs into
             the job evaluation system.

          2. Establish and initiate a plan to update all position descriptions to the new format.
             Address inconsistencies identified between position descriptions and the rating system.

          3. Document the method chosen to increase transparency of the job evaluation system.

          4. Document how the job evaluation system works and how weights are assigned to the
             factors to ensure adequate knowledge of the system exists in the Agency. Safeguard the
             information as appropriate. Seek contractor assistance as necessary.

          5. Document the promotion process at the Executive Management Team phase of the OE
             career ladder.

          6. Revise Policy and Procedure Manual 819 for the position description review and desk
             audit withdrawal processes.

       The final report was issued September 23, 2016.


                                FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
                                      APRIL 1, 2016 ─ SEPTEMBER 30, 2016
                                                       11
Audits, Inspections, and Evaluations



       FCA’s Oversight of Young, Beginning, and Small Farmer Programs

       The Farm Credit Act of 1971, as amended, set forth requirements for System institutions to
       serve young, beginning, and small farmers and ranchers (YBS). Specific standards for the
       System’s YBS programs are promulgated in FCA regulations. FCA’s oversight includes reviews
       of YBS programs by OE and analysis of trends and regulation development within the Office of
       Regulatory Policy (ORP). The objective of this audit was to determine whether FCA’s oversight
       of YBS programs is effectively administered.

       We found oversight was effectively administered, and FCA had an extensive program in place
       to oversee the System’s YBS programs and trends. OE’s examination process includes a risk-
       based YBS procedure, and ORP analyzes and reports on the System’s YBS trends and
       performance each year through multiple communication channels. This year-round process
       informs Congress, the public, the FCA Board, and System institutions.

       We identified areas for improvement related to documentation, data integrity, and disclosures in
       annual reports to shareholders. ORP had not documented its YBS oversight process and
       control activities in policies and procedures. We also identified improvements to YBS data
       processes, documenting transaction testing in examinations, and development of a plan to
       implement recommendations in ORP’s YBS definitions review. Lastly, annual reports to
       shareholders did not always fully describe the status and results of quantitative and qualitative
       YBS goals. Actions in these areas will strengthen oversight through additional controls,
       consistency, and transparency.

       The following actions were agreed-upon as a result of our audit:

          1. ORP document policies and procedures for YBS oversight activities, including:
               • A methodology for YBS comparison reporting that accounts for institution size;
                  and
               • A process to address deficiencies identified through YBS reporting and analysis.

          2. ORP incorporate YBS oversight activities and processes in internal control planning and
             evaluation.

          3. ORP develop a plan for addressing recommendations in the Agency’s YBS definitions
             review.

          4. OE provide guidance to examiners to ensure YBS transaction testing and conclusions
             are appropriately documented.

          5. ORP complete an interpretation on YBS disclosure requirements in annual reports to
             shareholders.

       The final report was issued September 28, 2016.




                                FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
                                      APRIL 1, 2016 ─ SEPTEMBER 30, 2016
                                                       12
Audits, Inspections, and Evaluations



       AUDITS AND EVALUATIONS IN PROCESS

       Audit of FCA’s Financial Statements Fiscal Year 2016
       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 2016. The audit remained ongoing at the end of this reporting period. For FY 2015, the OIG
       also contracted with Harper, Rains, Knight & Company, P.A. to perform the audit.

       FY 2016 Federal Information Security Modernization Act Evaluation
       The evaluation of the Agency’s compliance with the Federal Information Security Modernization
       Act (FISMA) for FY 2016 is performed by the OIG’s Senior Information Technology Auditor and
       Senior Auditor using guidelines established by FISMA, OMB, the Department of Homeland
       Security, and the National Institute of Standards and Technology. This evaluation was ongoing
       as of September 30, 2016.




                               FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
                                     APRIL 1, 2016 ─ SEPTEMBER 30, 2016
                                                      13
Audits, Inspections, and Evaluations



        STATUS OF AGREED-UPON ACTIONS AND RECOMMENDATIONS
        In total, there were 17 agreed-upon actions added from our five reports issued for the reporting
        period. We had 21 actions open at the beginning of the period to carry over. As of September
        30, 2016, 18 agreed-upon actions remained open.


                           Audit, Inspection, and Evaluation Agreed-Upon Actions
                                                  Carryover                       Final Management
                                                                New During this                          Open on
                Report              Issued       from Prior                       Actions During this
                                                                6-Month Period                          9/30/2016
                                               6-Month Period                       6-Month Period

         FCA’s Commissioning
                                   3/31/2015         3                0                   0                 3
               Program


       Human Capital Planning
                                   2/29/2016        10                0                   10                0
              at FCA


          FCA’s Risk Project       3/31/2016         5                0                   1                 4


           FCA’s Process in
       Developing and Updating
                                   3/31/2016         3                0                   3                 0
         Agency Policies and
             Procedures

        FCA’s Oversight of the
          Electronic Official      4/21/2016         0                4                   4                 0
          Personnel Folder


       Examination of Business
       Continuity at Farm Credit   6/1/2016          0                2                   2                 0
         System Institutions


          FCA’s Position
        Management and Job         9/23/2016         0                6                   0                 6
        Evaluation Program


       FCA’s Oversight of Young,
         Beginning, and Small      9/28/2016         0                5                   0                 5
           Farmer Programs


                Total                               21                17                  20               18




                                     FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
                                           APRIL 1, 2016 ─ SEPTEMBER 30, 2016
                                                            14
Audits, Inspections, and Evaluations




       OPEN AGREED-UPON ACTIONS
       The following charts show open agreed-upon actions for issued reports as of September 30,
       2016:


                        FCA’s Commissioning Program (Issued 3/31/15)
                               Identify and track specific commissioning costs to evaluate the cost of the program
              Agreed-Upon
                               and identify cost-saving opportunities and consider timekeeping code revisions, with
            Action Number 1
                               OMS assistance in implementation.
                               Analyze the costs and benefits of streamlining and consolidating current testing and
              Agreed-Upon
                               assessment milestones through the elimination of the final Commissioning Test
            Action Number 3
                               simulations.

              Agreed-Upon      Revise processes to provide feedback to every Associate Examiner on Technical
            Action Number 9    Evaluations and Commissioning Test multiple-choice test performance.




                               FCA’s Risk Project (Issued 3/31/16)
                               Add or modify current procedures for large IT investments to:
                                   •   Designate a project manager and project management responsibilities;
              Agreed-Upon
                                   •   Assess resources and determine whether consultants are needed for project
            Action Number 1
                                       planning and implementation; and
                                   •   Establish guidelines for incremental investment.


              Agreed-Upon      Establish a control to ensure project management guidance is implemented for large IT
            Action Number 2    investments.

                               Create an incremental project plan for the remainder of the Risk Project in
              Agreed-Upon      coordination with the Risk Project workgroup. Include an assessment of required
            Action Number 3    resources and tasks requiring consultants and evaluate other tools that may be
                               incorporated to accomplish Risk Project goals and objectives.

                               Modify standard operating procedures to define levels of approval for large IT
              Agreed-Upon
                               acquisitions and establish a control to ensure appropriate reviews and approvals are
            Action Number 4
                               obtained.




                               FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
                                     APRIL 1, 2016 ─ SEPTEMBER 30, 2016
                                                      15
Audits, Inspections, and Evaluations




               FCA’s Position Management and Job Evaluation Program
                                 (Issued 9/23/16)
                            Create internal procedures on the job evaluation and position management program
            Agreed-Upon
                            to memorialize and standardize HR processes. Include additional controls over inputs
          Action Number 1
                            in the job evaluation system.
                            Establish and initiate a plan to update all position descriptions to the new format.
            Agreed-Upon
                            Address inconsistencies identified between position descriptions and the rating
          Action Number 2
                            system.

            Agreed-Upon
                            Document the method chosen to increase transparency of the job evaluation system.
          Action Number 3

                            Document how the job evaluation system works and how weights are assigned to the
            Agreed-Upon
                            factors to ensure adequate knowledge of the system exists in the Agency. Safeguard
          Action Number 4
                            the information as appropriate. Seek contractor assistance as necessary.

            Agreed-Upon
                            Document the promotion process at the EMT phase of the OE career ladder.
          Action Number 5

            Agreed-Upon     Revise PPM 819 for the position description review and desk audit withdrawal
          Action Number 6   processes.




                FCA’s Oversight of Young, Beginning, and Small Farmer
                             Programs (Issued 9/28/16)
                            ORP document policies and procedures for YBS oversight activities, including:
            Agreed-Upon     •   A methodology for YBS comparison reporting that accounts for institution size and
          Action Number 1   •   A process to address deficiencies identified through YBS reporting and analysis.

                            ORP incorporate YBS oversight activities and processes in internal control planning and
            Agreed-Upon
                            evaluation.
          Action Number 2

                            ORP develop a plan for addressing recommendations in the Agency’s YBS definitions
            Agreed-Upon
                            review.
          Action Number 3

                            OE provide guidance to examiners to ensure YBS transaction testing and conclusions
            Agreed-Upon
                            are appropriately documented.
          Action Number 4

                            ORP complete an interpretation on YBS disclosure requirements in annual reports to
            Agreed-Upon
                            shareholders.
          Action Number 5




                            FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
                                  APRIL 1, 2016 ─ SEPTEMBER 30, 2016
                                                   16
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, including the examiners’ performance.
      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
      FCS institution’s board and management team. Each quarter there are a relatively small number
      of respondents. Over time, however, analyses 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 (January 1 – March 31, 2016)
             In April 2016, the OIG issued 13 surveys to FCS institutions for feedback on the
             examination program and staff during the second quarter of FY 2016. Eleven FCS
             institutions responded. The OIG issued a report in June 2016 to the Chief Examiner and
             the FCA Board.

         •   Third Quarter Fiscal Year 2016 (April 1 – June 30, 2016)
             In July 2016, the OIG issued 13 surveys to FCS institutions for feedback on the third
             quarter of FY 2016. Eleven institutions responded. The OIG provided a report in
             September 2016 to the Chief Examiner and the FCA Board.




                                FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
                                      APRIL 1, 2016 ─ SEPTEMBER 30, 2016
                                                       17
Other Reports



      OIG Strategic and Operating Performance Plan for Fiscal Years 2017-
      2018
      Each year, FCA OIG prepares a Strategic and Operating Performance Plan to cover the office’s
      goals, budget, and project plan for the upcoming fiscal years. This year, the Agency revised its
      strategic goals, and the FCA OIG did the same in order to ensure its goals work in conjunction
      with the Agency goals that are designed to assist the FCA in fulfilling its oversight and public
      agricultural and rural missions. The FCA OIG streamlined its strategic goals to three goals that
      focus on OIG’s core audit, evaluation, investigation, and outreach missions:

             OIG Goal 1 — Audit, inspect, and evaluate the Agency’s programs and operations to
             assist the Agency in fulfilling its oversight mission more efficiently and effectively.

             OIG Goal 2 — Investigate alleged wrongdoing to prevent and detect fraud, abuse, and
             mismanagement in Agency programs and operations and to address Congressional,
             public, and employee concerns.

             OIG Goal 3 — Review and make recommendations regarding existing and proposed
             legislation and regulations and provide other outreach to support the Agency’s oversight
             mission and the Inspector General community on government-wide issues.


      Quality Assurance Review Report
      The objective of the OIG’s annual Internal Quality Assurance Review is to determine whether
      internal procedures were established, implemented, and operating effectively within FCA OIG.
      The OIG’s Internal Quality Assurance Review found the OIG established and implemented
      effective internal policies and procedures. The report was completed September 19, 2016.


      Peer Review of FCA OIG
      A peer review of FCA OIG was conducted by the Federal Labor Relations Authority OIG and
      issued August 2, 2016. The review found that FCA OIG’s system of quality control for the audit
      organization in effect for the year ended March 31, 2016 was suitably designed and complied
      with to provide reasonable assurance that performance and reporting is in conformance with
      professional standards in all material respects. Professional standards for audit organizations
      are established by the Government Accountability office as well as the Council of Inspectors
      General for Integrity and Efficiency. FCA OIG achieved a “pass” rating, which is the highest
      rating possible in the peer review process. An external peer review must be completed every
      three years, as required by the Inspector General Act of 1978, as amended.




                               FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
                                     APRIL 1, 2016 ─ SEPTEMBER 30, 2016
                                                      18
Investigations




           1                       2                          1                       23
                                                                                               Hotline
                Investigation             Investigations            Investigation
                                                                                               complaints
                closed                    opened                    pending
                                                                                               processed




       Investigations
       This reporting period, the OIG opened two investigations and closed one. The closed
       investigation involved allegations relating to travel expenses and was not substantiated. The
       OIG conducts preliminary investigations to evaluate the extent of investigative activity required
       for specific complaints. It evaluates the nature of the allegation and related jurisdictional issues,
       generally assessing availability of records, credibility, and other factors to determine whether the
       case has criminal, civil, or administration violations that necessitate formal investigation.

       Hotline
       The OIG Hotline is available 24/7 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. OIG evaluates all Hotline complaints on multiple levels, examining jurisdictional issues, the
       type of allegation, and other factors. OIG refers all borrower complaints to the FCA Office of
       Congressional and Public Affairs as required by FCA policy and procedure, and follows up as
       appropriate.

       During the reporting period, the OIG received 23 Hotline complaints, four of which involved
       borrowers. Two of the Hotline complaints are pending review, as they were received at the end
       of the reporting period. The remaining 21 complaints were referred for preliminary investigation
       or to the FCA office responsible for reviewing related issues, or they were responded to or
       administratively closed, including 15 closed because they involved matters outside OIG’s
       jurisdiction and/or had already been sent to the appropriate agency.




                                 FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
                                       APRIL 1, 2016 ─ SEPTEMBER 30, 2016
                                                        19
Legislative and Regulatory Reviews



       This past reporting period, OIG continued to review existing and proposed legislation and
       regulations, and commented or provided analysis as a member of the CIGIE Legislative
       Committee, through the Council of Counsels to the Inspectors General, and to the Agency as
       required. The OIG also continued to review proposed and final regulations. During this reporting
       period, we reviewed:




         25       Legislative
                                  1        Proposed
                                                          8       Final Rules
                                                                                 1      Informational
                  Initiatives              Rule                                         Memorandum




       The following were reviewed:

       Legislation
           1.  S. 742, Stop Wasteful Federal Bonuses Act of 2015
           2.  S. 2715, National Security Whistleblower Protection Act of 2015
           3.  S. 2714, Security Clearance Oversight and Accountability Act
           4.  S. 2723, Congressional Whistleblower Protection Act of 2016
           5.  S. 356, Electronic Communications Privacy Act Amendments Act of 2015
           6.  H.R. 1557, Federal Employee Antidiscrimination Act of 2015
           7.  S. 2012, Energy Policy Modernization Act of 2015
           8.  S. 2837, Commerce, Justice, Science, and Related Agencies Appropriations Act of
               2017
           9. S. 2577, Military Construction, Veterans Affairs, and Related Agencies Appropriations
               Act of 2015
           10. H.R. 4361, Federal Information Systems Safeguards Act of 2016
           11. S. 337, FOIA Improvement Act of 2015
           12. S. 2968, OSC Reauthorization Act of 2016
           13. H.R. 4639, Thoroughly Investigating Retaliation Against Whistleblowers Act
           14. H.R. 4909, National Defense Authorization Act of FY 2017
           15. S. 1378, Bonuses for Cost-Cutters Act of 2015
           16. H.R. 5709, Federal Records Modernization Act – record retention reporting
               requirements
           17. H.R. 5485, Financial Services and General Government Appropriations Act
           18. S. 795, Bill to Enhance Whistleblower Protection for Contractor and Grantee Employees
           19. S. 2972, Grant Act


                                FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
                                      APRIL 1, 2016 ─ SEPTEMBER 30, 2016
                                                       20
Legislative and Regulatory Reviews



          20. S. 2450, Administrative Leave Act
          21. S. 2976, The DHS Accountability Act
          22. H.R. 5922, Saving Federal Dollars Through Better Use of Government Purchase and
              Travel Cards Act of 2016
          23. H.R. 5839, The Public Online Information Act of 2016
          24. H.R. 5795, Forensic Science and Standards Act of 2016 (related S. 3259, Forensic
              Science and Standards Act of 2016)
          25. S. 3184, Back the Blue Act of 2016

       Proposed Rules
           1.   Amendments to 5 CFR Part 2635, Standards of Ethical Conduct for Employees of
                the Executive Branch, 81 Fed. Reg. 74004-74018 (Jun. 6, 2016).

       Final Rules
          1.    Adjustment to Civil Money Penalties Under the Farm Credit Act, 12 CFR § 622.61(a)(2),
                81 F.R. 32633 (May 24, 2016).
          2.    Margin and Capital Requirements for Covered Swap Entities, 12 CFR Part 1221, 81
                F.R. 50605 (Aug. 2, 2016).
          3.    Federal Agricultural Mortgage Corporation Governance; Standards of Conduct; Risk
                Management; and Disclosure and Reporting, 12 CFR Parts 650 et seq., 81 Fed.
                Reg. 49139 (July 27, 2016).
          4.    Equal Employment Opportunity and Diversity, 81 F.R. 53482 (Aug. 12, 2016).
          5.    Tier 1/Tier 2 Capital Framework Final Rule, 81 F.R. 49720 (Jul. 28, 2016).
          6.    Releasing Information; Availability of Records of the FCSIC; Fees for Provision of
                Information, 12 CFR § 1402, 81 F.R. 59427 (Aug. 30, 2016).
          7.    Releasing Information; Availability of Records of the FCA; FOIA Fees – Regulatory
                amendments under the FOIA Improvement Act of 2016, 12 CFR § 602, 81 F.R.
                63365 (Sep. 15, 2016).
          8.    Controlled Unclassified Information, 32 CFR § 2002, 81 F.R. 63342 (Sep. 14, 2016).

       Informational Memoranda and Bookletters
           1. Revised Guidelines on Submission of Proposals to Merge or Consolidate Farm Credit
              System Banks and Merge or Consolidate Farm Credit System Associations (Jun. 1,
              2016).




                              FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
                                    APRIL 1, 2016 ─ SEPTEMBER 30, 2016
                                                     21
Congressional Interaction



       During this reporting period, the OIG also continued provide Congress with information
       regarding ongoing Agency and OIG activities through meetings and correspondence. OIG
       issued letter reports on cybersecurity, open recommendations, access to information, and cost
       savings, specifically to the following committees:

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

       These letter reports responded to the Committees’ requests for information on various topics,
       including any attempts to interfere with IG independence; information on open
       recommendations or limitations placed on the OIG’s access to documents, information, and
       Agency employees; reports not responded to by the Agency within 60 days; and whistleblower
       retaliation allegations. The OIG also issued a letter report as required by section 406(b) of the
       Cybersecurity Act of 2015, which required each OIG to report information regarding its agency’s
       policies, practices, and controls relating to logical access, multi-factor authentication, privileged
       users, and other technology-related areas of interest.

       Through its participation in CIGIE activities, including the CIGIE Legislative Committee, and in
       various workgroups and training activities, the OIG provided assistance throughout the IG
       community on crosscutting issues involving legislative and executive changes, including work
       on revisions to government ethics regulations and preparation of a Transition Handbook to be
       made available in the coming months to presidential transition personnel.




                                 FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
                                       APRIL 1, 2016 ─ SEPTEMBER 30, 2016
                                                        22
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 continues her leadership role on committees and
      workgroups, and also serves as At Large Delegate on the CIGIE Executive Council. The CIGIE
      Executive Council assists the Chair in governance of the CIGIE and its members are limited to the
      current and former CIGIE Chair and Vice Chair, the chair of each standing CIGIE committee, and the
      At Large Delegate. The IG also continues to serve 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, a group of IGs who meet quarterly and exchange ideas and practices, as
      necessary.

      The Deputy IG continues her leadership role in the Council of Counsels of IGs (CCIG) as one of two
      Vice Chairs to the CCIG for 2015-2016. The Deputy IG also participated this reporting period in
      CIGIE working groups that examined revisions to ethics regulations, and she also assisted in drafting
      the Presidential Transition handbook as an IG community project. The Deputy IG is a frequent
      contributor to the CCIG’s listserv in answering questions posed by other IG offices; is involved in the
      CIGIE Records Administrators Group; and also attends quarterly meetings for CIGIE groups
      including the Assistant Inspectors General for Investigations, OIG FOIA Working Group, Deputy IGs,
      and the Small OIGs CCIG Working Group.

      The OIG Senior IT Auditor and Senior Auditors participate in cross-cutting audit projects and attend
      FAEC meetings and conferences. The IT Auditor attends local ISACA meetings and is actively
      involved in the IT Subcommittee of the FAEC. 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, including Special Emphasis
      groups such as the Asian Americans and Pacific Islander at FCA; PRIDE at FCA; and Federal
      Women’s Program.




                                FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
                                      APRIL 1, 2016 ─ SEPTEMBER 30, 2016
                                                       23
Outreach




      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 highlighted articles on fraud and whistleblower topics and
      is developing online training on fraud awareness for the Agency. OIG has recently developed an
      intra agency electronic tool, ASK the IG, through which employees can ask questions of the OIG, or
      make suggestions on topics to review.




                                FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
                                      APRIL 1, 2016 ─ SEPTEMBER 30, 2016
                                                       24
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. 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 OIG also continues to certify its compliance with the Office of Special Counsel’s 2302(c)
       Certification of Whistleblower Notifications by providing its staff with the requisite notice and training
       on prohibited personnel practices and whistleblower protections. In 2014, the OIG’s was one of the
       first OIG’s to complete the OSC 2302(c) certification process, and the FCA OIG continued its
       certification status this reporting period.

       The following organizational chart shows the OIG as of September 30, 2016:




                                                       Inspector General
                                                         Elizabeth Dean



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




                                   FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
                                         APRIL 1, 2016 ─ SEPTEMBER 30, 2016
                                                          25
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.




                                  FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
                                        APRIL 1, 2016 ─ SEPTEMBER 30, 2016
                                                         26
Appendix A



      Index of Reporting Requirements

      SECTION                                         TITLE                       Page

      4(a)(2)        Review of legislation and regulations                        20-21

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

      5(a)(2)        Recommendations for corrective action                        7-16

      5(a)(3)        Prior recommendations not yet implemented                    15-16

      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                                        27

      5(a)(7)        Summaries of significant reports                             8-13

      5(a)(8)        Management decisions with questioned costs                    28

                     Management decisions on recommendations that funds be put
      5(a)(9)                                                                      29
                     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              13


      5(a)(14)(15)   Peer reviews conducted of this OIG                            30

      5(a)(16)       Peer reviews conducted by this OIG                            31

                     National Defense Authorization Act of FY 2008 Citation and
      845                                                                          25
                     Requirement



                          FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
                                APRIL 1, 2016 ─ SEPTEMBER 30, 2016
                                                 27
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 Controls Over the
       Electronic Official                    4                    $0                   $0
       Personnel Folder

       Examination of Business
       Continuity at FCS                      2                    $0                   $0
       Institutions
       Elimination of
       Unnecessary Use of
                                              0                    $0                   $0
       Social Security Numbers
       at FCA
       FCA’s Position
       Management and Job                     6                    $0                   $0
       Evaluation Program


       FCA’s Oversight of
       Young, Beginning, and                  5                    $0                   $0
       Small Farmer Programs



                Total                        17                    $0                   $0




                                 FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
                                       APRIL 1, 2016 ─ SEPTEMBER 30, 2016
                                                        28
Appendix C




                                        Reports with Questioned Costs


                                                            Number                     Dollar Value


                                                                               Questioned     Unsupported
                                                  Reports   Recommendations
                                                                                 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.




                                   FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
                                         APRIL 1, 2016 ─ SEPTEMBER 30, 2016
                                                          29
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
                                                         0                0          $0
          period.

       Subtotals (A+B)                                   0                0          $0

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

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

            - based on proposed management 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.




                              FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
                                    APRIL 1, 2016 ─ SEPTEMBER 30, 2016
                                                     30
Appendix E




                               Peer Reviews Conducted of this Office

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

       Federal Labor Relations Authority Office
                                                   August 2, 2016         Audit           Pass
       of Inspector General


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




                               FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
                                     APRIL 1, 2016 ─ SEPTEMBER 30, 2016
                                                      31
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




                              FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
                                    APRIL 1, 2016 ─ SEPTEMBER 30, 2016
                                                     32
Appendix G



              FCA ORGANIZATIONAL CHART




             FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
                   APRIL 1, 2016 ─ SEPTEMBER 30, 2016
                                    33
Appendix H




                                      Glossary of Terms


             Agency          – Farm Credit Administration
             CIGIE           – Council of the Inspectors General on Integrity and Efficiency
             eOPF            – Electronic Official Personnel Folder
             FAEC            – Federal Audit Executive Council
             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 Modernization Act
             FY              – Fiscal Year
             H.R.            – House of Representatives
             IG              – Inspector General
             IG Act          – Inspector General Act of 1978, as amended
             IT              – Information Technology
             NIST            – National Institute of Standards and Technology
             OE              – Office of Examination
             OIG             – Office of Inspector General
             OIT             – Office of Information Technology
             OMB             – Office of Management and Budget
             OMS             – Office of Management Services
             PPM             – Policies and Procedures
             Pub. L.         – Public Law
             S.              – Senate
             SSN             – Social Security Number
             System          – Farm Credit System
             YBS             – Young, Beginning, and Small Farmers and Ranchers




                            FCA OIG SEMIANNUAL REPORT TO THE CONGRESS
                                  APRIL 1, 2016 ─ SEPTEMBER 30, 2016
                                                   34
           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