oversight

Farm Credit Administration's Travel Compensation and Incentives

Published by the Farm Credit Administration, Office of Inspector General on 2018-03-30.

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

OFFICE OF
INSPECTOR GENERAL    Inspection Report
                    Farm Credit Administration's
                       Travel Compensation
                          and Incentives
                              I-17-03


                             Inspector
                              Ava Bell

                       Issued March 30, 2018




                     FARM CREDIT ADMINISTRATION
Farm Credit Administration                                      Office of Inspector General
                                                                1501 Farm Credit Drive
                                                                McLean, VA 22102-5090




March 30, 2018


The Honorable Dallas P. Tonsager, Board Chairman
The Honorable Jeffery S. Hall, Board Member
The Honorable Glen R. Smith, Board Member
Farm Credit Administration
1501 Farm Credit Drive
McLean, Virginia 22102-5090

Dear Chairman Tonsager and Board Members Hall and Smith:

The Office of Inspector General (OIG) completed an inspection of the Farm Credit
Administration’s (FCA or Agency) Travel Compensation and Incentives. The objective of
the inspection was to determine whether the Agency is effectively and efficiently
administering the Travel Compensation Program and other travel incentives. We found
FCA is effectively administering the program, with program controls that adequately
limit risk for the Agency. This report contains no recommendations or agreed-upon
actions.

We appreciate the courtesies and professionalism extended by FCA personnel to the
OIG staff. If you have any questions about this inspection, I would be pleased to meet
with you at your convenience.

Respectfully,




Wendy R. Laguarda
Inspector General

Enclosure
                                         INSPECTION OF
                                 FCA’S TRAVEL COMPENSATION
                                        AND INCENTIVES

The objective of this       The Farm Credit Administration’s (FCA or Agency) Travel
inspection was to           Compensation Program provides additional
                            compensation to employees who travel extensively
determine whether the
                            throughout the year while on official FCA business to
Agency is effectively and   recognize the burden of extensive travel and encourage
efficiently administering   employee retention.
the Travel Compensation
                            The Office of Inspector General (OIG) reviewed the
Program and other travel
                            Travel Compensation Program’s administration and
incentives.                 controls for efficiency and effectiveness. We also
                            reviewed other travel incentives given through awards.
                            Hence, we focused the scope of our review on travel
This report contains no     compensation payments and other travel incentives
recommendations or          paid during fiscal years (FYs) 2016-2017.

agreed-upon actions.        We found FCA is effectively administering the program,
                            with program controls that adequately limit risk for the
                            Agency, including a documented policy that outlines the
                            process for submitting claims for reimbursement and
                            required supervisory approvals.
TABLE OF CONTENTS


ACRONYMS __________________________________________________________1 

BACKGROUND _______________________________________________________1 

INSPECTION RESULTS _________________________________________________2 

    Program Administration ________________________________________________________________3 

    Program Controls _______________________________________________________________________4 

    Other Travel Incentives__________________________________________________________________5 

    Conclusion ______________________________________________________________________________5 

OBJECTIVE, SCOPE, AND METHODOLOGY _______________________________5 



 
ACRONYMS

           COO           Chief Operating Officer

           Farmer Mac Federal Agricultural Mortgage Corporation

           FCA           Farm Credit Administration

           FCS           Farm Credit System

           FY            Fiscal Year

           OAS           Office of Agency Services

           OCFO          Office of Chief Financial Officer

           OE            Office of Examination

           OIG           Office of Inspector General

           PPM           Policies and Procedures Manual




BACKGROUND

    The Farm Credit Administration (FCA or Agency) is an independent federal agency
    responsible for regulating, examining, and supervising the Farm Credit System (FCS) and
    the Federal Agricultural Mortgage Corporation (Farmer Mac). FCA ensures that FCS
    institutions and Farmer Mac are safe, sound, and dependable sources of credit and
    related services for all creditworthy and eligible persons in agriculture and rural America.
    To accomplish its mission, it is essential for FCA to recruit and retain skilled examiners
    who may be required to travel extensively on official business for the Agency.

    FCA implemented a Travel Compensation Program (PPM 856) in July 2003 that provides
    additional compensation to employees who travel extensively throughout the year while
    on official FCA business to recognize the burden of extensive travel and encourage
    employee retention. This program is used almost exclusively by the Office of
    Examination (OE) where examiners travel extensively on official business to conduct
    examinations of FCS institutions.

    FCA pays travel compensation to employees who travel on official business for the
    Agency in the amount of $50 per night for every night on eligible travel that is in excess



                                                   1 
      of 50 nights in a calendar year. Employees file annual reimbursement claims in the year
      following the calendar year in which the excess overnight travel occurred.
      Reimbursements are budgeted for, and paid during, the fiscal year (FY) following the
      calendar year of travel. For example, if an employee traveled 55 nights in calendar year
      2016, the employee would be reimbursed in FY 2017 for $250 (which is $50 for each of
      the five nights of travel in excess of 50 nights during the previous calendar year).

      We reviewed the Travel Compensation Program’s administration and controls for
      efficiency and effectiveness and focused the scope of this review on FYs 2016-2017.

      The Agency also provides other travel incentives through its awards program. FCA’s
      Incentive Awards and Recognition policy (PPM 818) states that employees may receive a
      special act award for contributing to the economy and efficiency of the Agency, such as
      reducing costs for official business travel. Examples include an employee using frequent
      flyer miles to purchase a plane ticket for a business trip, or an employee staying with
      family or friends while on official business travel. We reviewed all special act awards
      given to employees during FYs 2016-2017 for other travel incentives through the awards
      program.

      Prior Reviews

      The OIG conducted two previous reviews related to this inspection’s objective. In 2009,
      the OIG evaluated OE’s budgeting process, usage and control regarding travel expenses
      (A-09-02, OE Travel Expense Budgeting, Usage and Control). The audit report contained
      no recommendations or agreed-upon actions. In 2017, the OIG audited the Agency’s
      awards program and found that FCA had an adequate control structure in place for
      awards (A-17-01, FCA’s Awards Program). However, the OIG identified opportunities to
      improve controls over the awards program and the audit report included four agreed-
      upon actions.




INSPECTION RESULTS

      The objective of this inspection was to determine whether the Agency is effectively and
      efficiently administering the Travel Compensation Program and other travel incentives.
      During our review, the OIG found FCA is effectively administering the program with
      program controls that adequately limit risk for the Agency.




                                                  2 
Program Administration
OIG reviewed budgeting, program payments, and reporting in FYs 2016-2017 to
determine whether FCA is effectively administering the Travel Compensation Program.

The Travel Compensation Program is open to all employees in the Agency. However, OE
is the primary user of the program since examiners are required to travel extensively
throughout the year while on official FCA business. Outside of OE, we found only one
employee in the Office of Regulatory Policy who was reimbursed for excess eligible
travel in FYs 2016-2017. There were no other employees from other offices (outside of
OE) who received compensation under the program during this period.

The Travel Compensation Program policy states that office directors will budget for
compensation under this program. The program is included in the overall cash award
budget for each office. We reviewed the budgeting methodology OE uses for the Travel
Compensation Program and found that it is a reasonable methodology. OE uses the
historical travel compensation paid in the prior fiscal year as a basis to set the amount
allocated in the next fiscal year budget. For FY 2016, OE allocated $30,000 for travel
compensation, and paid out $35,100. For FY 2017, OE again allocated $30,000, and paid
out $24,950. Because travel compensation is paid from the overall award budget, this
allows flexibility in program budgeting. The FY 2016 program deficit was covered by an
adjustment from the overall award budget, and the FY 2017 program resulted in a
surplus.

In our review, we found the Office of Agency Services (OAS) processed travel
compensation reimbursement forms and the Office of Chief Financial Officer (OCFO)
paid claims in a timely manner to employees. The Travel Compensation Program policy
states that by April 1, employees will receive one annual payment representing their
approved travel compensation claim for eligible travel that occurred during the prior
calendar year. The OCFO provided documentation showing they processed travel
compensation payments in pay periods ending on or before April 1 for both FYs 2016
and 2017, with one exception.

The Travel Compensation Program policy requires OAS to provide a summary report to
the Chief Operating Officer (COO) and the Chief Executive Officer detailing the
employees who were compensated, the number of nights in travel status, and the
amount of compensation received under the program by March 31 of each year. We
reviewed the annual reporting for FYs 2016-2017 payments and found OAS generated
the required reporting by March 31 each year. Each report was provided to the COO.




                                            3 
Program Controls
We reviewed application forms, travel detail, and supervisory approvals to determine
whether FCA has effective controls over the Travel Compensation Program and whether
the Agency is consistently following the documented process for the program.

FCA’s Travel Compensation Program policy requires employees to complete a travel
compensation reimbursement form and submit it to their supervisor for review and
approval by February 1 each year for eligible travel completed in the previous calendar
year. The policy requires supervisors to review reimbursement claims for accuracy and
certify that claims are for eligible official business travel.

The Travel Compensation Program policy describes types of eligible travel, including:

      on-site examinations,
      attending meetings related to FCA business,
      FCA job interviews,
      special projects, and
      other official FCA business (e.g., instructing, recruiting).

The policy also provides examples of ineligible travel, including:

      rotational assignments,
      relocation trips,
      additional nights out for personal convenience (e.g., early arrival or late
       departure), and
      weekend nights when the employee’s supervisor would otherwise have
       authorized the employee’s return to his/her residence.

We reviewed all 101 travel compensation reimbursement claims submitted for calendar
years 2015-2016 travel and found all claims were submitted on or before February 1 of
2016-2017, respectively. We also found all travel compensation payments made during
FYs 2016-2017 were supported by the required reimbursement form.

Additionally, we found reimbursement forms were accompanied by supporting
documentation detailing eligible official FCA business travel, with one exception. All
forms had supervisor approval certifying the travel compensation request was accurate,
and OAS approval authorizing payment for the travel compensation payment.




                                               4 
     Other Travel Incentives
     The scope of our review also included other travel incentives paid to employees. The
     Agency’s Incentive Awards and Recognition policy states that a travel incentive award
     may be paid to employees who contribute to the economy and efficiency of Agency
     operations by reducing travels costs. We reviewed all special act awards given to FCA
     employees during FYs 2016-2017 and found that no travel incentive awards were
     recommended for travel cost savings to FCA.


     Conclusion
     This report contains no recommendations or agreed-upon actions.




OBJECTIVE, SCOPE, AND METHODOLOGY
      
     The objective of this inspection was to determine whether the Agency is effectively and
     efficiently administering the Travel Compensation Program and other travel incentives.
     We conducted fieldwork at FCA’s headquarters in McLean, Virginia from June 2017 to
     March 2018. We limited our scope to review travel compensation and incentives paid
     during FYs 2016-2017 (travel compensation payments for travel nights from calendar
     years 2015-2016).

     We completed the following steps to accomplish the inspection objective:

           Reviewed applicable laws and other guidance related to the inspection objective.
           Considered prior reviews related to the inspection objective.
           Reviewed applicable FCA policies and procedures.
           Reviewed all travel compensation reimbursement forms that were processed in
            FYs 2016-2017.
           Reviewed all special act awards paid to FCA employees in FYs 2016-2017.

     This inspection was performed in accordance with the Council of the Inspectors General
     on Integrity and Efficiency’s Quality Standards for Inspection and Evaluation. Those
     standards require that we plan and perform the inspection to obtain sufficient,
     competent and relevant evidence that supports a reasonable basis for our findings,
     conclusions and recommendations. We assessed internal controls and compliance with
     laws and regulations to the extent necessary to satisfy the objective. Because our review
     was limited, it would not necessarily have disclosed all internal control deficiencies that
     may have existed at the time of our inspection. We assessed the information and data



                                                  5 
collected during the inspection and determined it was sufficiently reliable and valid for
use in meeting the inspection objective. We assessed the risk of fraud related to our
inspection objective while evaluating evidence. Overall, we believe the evidence
obtained is sufficient to provide a reasonable basis for our findings and conclusions
based on the inspection objective.

                             




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         FARM CREDIT ADMINISTRATION
         OFFICE OF INSPECTOR GENERAL




                            REPORT
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        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