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    "ocrText": "Jill Long Thompson, Board Chair and Chief Executive Officer\nKenneth A. Spearman, Board Member\nLeland A. Strom, Board Member\nCOMMISSION CREEM FARM * * EEGL\nESTABLISHED\nMINUTES OF THE REGULAR MEETING\nOF THE\nFARM CREDIT ADMINISTRATION BOARD\nJanuary 9, 2014\nThese minutes reflect the business transacted at the January 9, 2014, Regular Meeting of the Farm\nCredit Administration Board (FCA Board) pursuant to the Government in the Sunshine Act (Act), 5\nU.S.C. § 552b, and the regulations of the Farm Credit Administration (FCA) adopted thereunder.\nThe FCA Board meeting was held at the FCA office in McLean, Virginia, beginning at 9:00 a.m. and\nconcluding at 9:48 a.m. Members of the Board present were:\nJill Long Thompson, Board Chair and Chief Executive Officer\nKenneth A. Spearman, Member\nLeland A. Strom, Member\nThe above named constitute the full Board.\nOthers present included Charles Rawls, General Counsel; Dale Aultman, Secretary to the Board; staff\nof the FCA and Farm Credit System Insurance Corporation (FCSIC); and two members of the general\npublic. (A list of staff attendees is attached as Exhibit A.)\nThe Secretary read a statement that announced the meeting would be conducted according to the\nrequirements of the Government in the Sunshine Act.\nBoard Chair Long Thompson reviewed the published Agenda. (A copy of the Public Announcement\npublishing the Agenda for the meeting is attached as Exhibit B.)\nMr. Spearman moved to adopt the Agenda as published.\nMr. Strom seconded the motion.\n1\nThere being no further discussion, Board Chair Long Thompson called the question.\nThe Secretary polled the Board Members and the motion carried unanimously.\nMr. Strom noted that the Agenda did include a portion of the meeting that should be closed to the\ngeneral public as permitted by the Government in the Sunshine Act and therefore moved that the\nmeeting be closed at that point.\nMr. Spearman seconded the motion.\nThere being no further discussion, Board Chair Long Thompson called the question.\nThe Secretary polled the Board Members and the motion carried unanimously.\nOPEN SESSION\nApproval of Minutes\nMinutes for December 12, 2013 Regular Board Meeting\n(BM-09-JAN-14-01)\nMr. Spearman moved to approve the minutes for December 12, 2013 Regular Board Meeting.\nMr. Strom seconded the motion.\nThere being no further discussion, Board Chair Long Thompson called the question.\nThe Secretary polled the Board Members and the motion carried unanimously. (BM-09-JAN-14-01)\n(A copy of the official \"Board Action Item\" is attached as Exhibit C.)\nNew Business\nStandards of Conduct - Proposed Rule\n(BM-09-JAN-14-02)\nJacqui Melvin of the Office of Regulatory Policy and Mary Alice Donner of the Office of General\nCounsel presented the Standards of Conduct - Proposed Rule.\nBoard Chair Long Thompson opened the discussion for questions by the Board.\nBoard Chair Long Thompson asked if there was any further discussion and asked staff to provide\ntheir recommendation. Staff provided their recommendation.\nBoard Chair Long Thompson called for a motion on the staff's recommendation regarding the final\nrule.\n2\nMr. Strom moved that the Board approve the Standards of Conduct - Proposed Rule.\nMr. Spearman seconded the motion.\nBoard Chair Long Thompson asked if there was any further discussion.\nThere being no further discussion, the Board Chair called the question.\nThe Secretary polled the Members and the motion carried unanimously. (BM-09-JAN-14-02)\n(A copy of the \"Board Action Item\" is attached as Exhibit D.)\nReports\nEqual Employment Opportunity and Inclusion Update\nThais Burlew of the Office of Equal Employment Opportunity presented the Equal Employment\nOpportunity and Inclusion Update.\nBoard Chair Long Thompson asked if there were any questions or further discussion from the Board.\nThere were no further questions or discussion.\n(A copy of the PowerPoint presentation is attached as Exhibit E.)\nAuditor's Report on FCA FY 2013/2012 Financial Statements\nElizabeth Dean, Inspector General, Kimberly Penn and Gail Jenifer from Brown & Company, CPAs,\nPLLC. presented the Auditor's Report on FCA FY 2013/2012 Financial Statements.\nBoard Chair Long Thompson asked if there were any questions or further discussion from the Board.\nThere were no further questions or discussion.\n(A copy of the PowerPoint presentation and the Inspector General's Audit Report are attached as\nExhibit F.)\nCLOSED SESSION\nBoard Chair Long Thompson thanked the general public for attending and asked that members of\nthe general public and others not involved in the executive session to exit.\n3\nThe closed session convened at 9:40 a.m. The electronic recording device was activated so that the\nproceedings of the closed session were properly recorded as required by the Government in the\nSunshine Act.\nThe General Counsel furnished the Secretary with a certification, pursuant to 5 U.S.C. § 552b(f), that\nthe portions of the meeting held in closed session may be properly closed to the public.\n(A copy of the Certification is attached hereto as Exhibit G.)\nMembers of the Board present were:\nJill Long Thompson, Board Chair and Chief Executive Officer\nKenneth A. Spearman, Member\nLeland A. Strom, Member\nThe above named constitute the full Board.\nOthers present included Dale Aultman, Secretary to the Board; and Charles Rawls, General Counsel.\n(A list of staff attendees is attached as Exhibit A).\nReports\nExecutive Session with External Auditor\nThe FCA Board held an executive session with Kimberly Penn and Gail Jenifer from Brown &\nCompany, CPAs, PLLC regarding the Auditor's Report on FCA FY 2013/2012 Financial Statements.\nOthers present were Executive Assistants Inga Smulkstys, Russell Middleton, and Mark Johansen;\nDale L. Aultman, Secretary to the Board; and Charles Rawls, General Counsel.\nThe closed session ended at 9:47 a.m.\nADJOURNMENT\nThere being no further business to come before the Board, Board Chair Long Thompson indicated she\nwould entertain a motion to adjourn the meeting.\nMr. Spearman moved that the meeting be adjourned.\nMr. Strom seconded the motion.\nBoard Chair Long Thompson called the question.\nThe Secretary polled the Board Members and the motion carried unanimously.\nThe meeting adjourned at 9:48 a.m.\n4\nNOTATIONAL VOTE ACTIONS\nThere were no notational vote actions by the FCA Board from December 13, 2013, through January 8,\n2014.\nThe undersigned hereby certify that the foregoing minutes are the official minutes of the Regular\nMeeting of the Farm Credit Administration Board held on January 9, 2014.\n/s/\n/s/\nJill Long Thompson\nDale L. Aultman\nBoard Chair and Chief Executive Officer\nSecretary to the Board\nApproved: February 18, 2014\n5\nExhibit A\nPage 1 of 2\nSTAFF PRESENT AT THE\nFCA REGULAR BOARD MEETING\nJanuary 9, 2014\nJILL LONG THOMPSON, Board Chair and Chief Executive Officer\nKENNETH A. SPEARMAN, Board Member\nLELAND A. STROM, Board Member\nOPEN\nCLOSED\nOFFICE\nSESSION\nSESSION\nOffice of the Board\nAultman, Dale\nX\nX\nSmulkstys, Inga\nX\nX\nCorey, Kathryn\nX\nBuccolo, Deb\nX\nJohansen, Mark\nX\nX\nCalhoun, Gaye\nX\nMiddleton, Russell\nX\nX\nOCOO\nHoffman, William\nX\nOCPA\nStokke, Mike\nX\nOSMO\nRea, Laurie\nX\nOGC\nRawls, Charles\nX\nX\nStrickland, Joy\nX\nDonner, Mary Alice\nX\n6\nExhibit A\nPage 2 of 2\nOPEN\nCLOSED\nOFFICE\nSESSION\nSESSION\nOE\nColeman, Robert\nX\nPaulsen, Roger\nX\nOIG\nDean, Elizabeth\nX\nPenn, Kimberly (Auditor from Brown &\nX\nX\nCompany, CPAs, PLLC)\nJenifer, Gail (Auditor from Brown &\nX\nX\nCompany, CPAs, PLLC)\nORP\nVan Meter, Gary\nX\nMardock, Barry\nX\nMelvin, Jacqui\nX\nEdelstein, Jeremy\nX\nOMS\nSmith, Stephen\nX\nFCSIC\nRubin, Howard\nX\nPfitzinger, Rick\nX\nEEO & Inclusion\nBurlew, Thais\nX\nGENERAL PUBLIC\n2\n7\nExhibit B\nFarm Credit Administration\nFarm Credit Administration\n1501 Farm Credit Drive\nMcLean, Virginia 22102-5090\nPUBLIC ANNOUNCEMENT OF\nMEETING SUBJECT TO THE GOVERNMENT IN THE SUNSHINE ACT\nFarm Credit Administration Board\nRegular Meeting\nJanuary 9, 2014\nSummary: Notice is hereby given, pursuant to the Government in the Sunshine Act (5 U.S.C. Sec. 552b(e) (1)), of the\nforthcoming regular meeting of the Farm Credit Administration Board.\nDate and Time: The regular meeting of the Board will be held January 9, 2014. The meeting is scheduled to be held at\nthe office of the Farm Credit Administration in McLean, Virginia, from 9:00 a.m. until such time as the Board may\nconclude its business.\nAddress: Farm Credit Administration, 1501 Farm Credit Drive, McLean, Virginia 22102-5090. Submit attendance\nrequests via e-mail to [email protected]. See SUPPLEMENTARY INFORMATION for further information about\nattendance requests.\nFor Further Information Contact: Dale L. Aultman, Secretary to the Farm Credit Administration Board (703) 883-4009.\nTTY is (703) 883-4056.\nSupplementary Information: Parts of this meeting of the Board will be open to the public (limited space available), and\nparts will be closed to the public. Please send an e-mail to [email protected] at least 24 hours before the meeting.\nIn your e-mail include: name, postal address, entity you are representing (if applicable), and telephone number. You will\nreceive an e-mail confirmation from us. Please be prepared to show a photo identification when you arrive. If you need\nassistance for accessibility reasons, or if you have any questions, contact Dale L. Aultman, Secretary to the Farm Credit\nAdministration Board, at (703) 883-4009. The matters to be considered at the meeting are:\nOPEN SESSION\nApproval of Minutes\n1\nDecember 12, 2013\nNew Business\n2\nStandards of Conduct - Proposed Rule\nReports\n3\nEqual Employment Opportunity and Inclusion Update\n4\nAuditor's Report on FCA FY 2013/2012 Financial Statements\nCLOSED SESSION\n5\nExecutive Meeting with Auditors 1\nDecember 30, 2013\n/s/\nDate\nDale L. Aultman\nSecretary to the Board\n1 Session Closed-Exempt pursuant to 5 U.S.C. Section 552b(c)(2).\n8\nExhibit c\nFarm Credit Administration\n1501 Farm Credit Drive\nMcLean, Virginia 22102-5090\n(703) 883-4000\nBOARD ACTION ITEM\nFCA\nFARM CREDIT ADMINISTRATION\nFCA BOARD ACTION ON\nMinutes for December 12, 2013 Regular Board Meeting\nBM-09-JAN-14-01\nEffective Date:\nJanuary 9, 2014\nEffect on Previous Action:\nNone\nTHE FCA BOARD HEREBY:\nApproves the minutes for December 12, 2013, Regular Board Meeting as submitted.\nDATED THIS 9th DAY OF JANUARY 2014\nBY ORDER OF THE BOARD\n/s/\nDale L. Aultman\nSecretary to the Board\n9\nExhibit D\nFarm Credit Administration\n1501 Farm Credit Drive\nMcLean, Virginia 22102-5090\n(703) 883-4000\nBOARD ACTION ITEM\nFCA\nFARM CREDIT ADMINISTRATION\nFCA BOARD ACTION ON\nStandards of Conduct - Proposed Rule\nBM-09-JAN-14-02\nEffective Date:\nJanuary 9, 2014\nTHE FCA BOARD HEREBY:\nApproves the proposed rule that would amend FCA's regulations at part 612,\nsubpart A, to modify the standards of conduct regulations to clarify rules,\nstrengthen responsibility and accountability, require System institutions to\nestablish a Code of Ethics, and enhance the role of the Standards of Conduct\nOfficial; and\nAuthorizes staff to make any technical or grammatical changes that may be\nnecessary prior to publication in the Federal Register.\nDATED THIS 9th DAY OF JANUARY 2014\nBY ORDER OF THE BOARD\n/s/\nDale L. Aultman\nSecretary to the Board\n10\nOFFICE OF EQUAL EMPLOYMENT\nOPPORTUNITY AND INCLUSION\nDIVERSITY UPDATE\nFCA Board Meeting\nJanuary 9,2014\nThais Burlew\nDirector\nExhibit E\n11\nAgenda\nDemographics at FCA\nDiversity Programs\n12\nDiversity at FCA\n293 Employees in FY 2013\nMinority representation maintained at 22 percent\nIndividuals with disabilities represented 12.3 percent of\nFCA's total workforce\nVeterans represent 12 percent of FCA workforce\n*Preliminary data\n13\nDemographics\nWomen represent 41.9 percent of FCA workforce\n48.1 percent of CLF\n43.9 percent of FCL\nHispanics represent 4.8 percent of FCA workforce\n10 percent of CLF\n8.0 percent of FCL\nBlacks represent 9.2 percent of FCA workforce\n12 percent of CLF\n17.7 percent of FCL\nAsian represent 5.5 percent of FCA workforce\n3.9 percent of CLF\n5.6 percent of FCL\nPreliminary data\n14\nAreas of Opportunity\nMinorities represent 22 percent of FCA workforce\n27.6 percent of CLF\n33.8 percent of FCL\nVeterans represent approximately 12 percent of FCA workforce\n54 percent of those vets are or will be retirement eligible by 2016\nWomen in Senior Ranks (VH-40 and above) increased to 33 percent\nMinorities in Senior Ranks remained the same — 9 people\nrepresenting 8.5 percent\nPreliminary data\n15\nLeadership Development Day\nThree Sessions:\nJoint Session\n\"Finding the Leader Within\"\nNon-Supervisory\n\"Leaders of Tomorrow\"\nSupervisory\n\"Creating a Positive Environment\"\n16\nSurvey Results — Joint Session\nJoint Session\nHow Training Will Be Used\n80%\n70%\n60%\n50%\n40%\n30%\n20%\n10%\n0%\nWork\nPersonal\nCoworkers\nStrongly Agree or Agree\nNetural\nStrongly Disagree or Disagree\n17\nSurvey Results - Nonsupervisory\nNonsupervisory Session\nHow Training Will Be Used\n90%\n80%\n70%\n60%\n50%\n40%\n30%\n20%\n10%\n0%\nWork\nPersonal\nCoworkers\nStrongly Agree or Agree\nNetural\nStrongly Disagree or Disagree\n18\nSurvey Results - Supervisory\nSupervisory Session\nHow Training Will Be Used\n100%\n90%\n80%\n70%\n60%\n50%\n40%\n30%\n20%\n10%\n0%\nWork\nPersonal\nCoworkers\nStrongly Agree or Agree\nNetural\nStrongly Disagree or Disagree\n19\nBrown Bag Lunches\nHomestead Grays\nFarmer Veteran Coalition\nMigrant Farm Workers Movement\n20\nThank You\n21\nExhibit F\nFARM CREDIT ADMINISTRATION\nBOARD PRESENTATION\nJanuary 9, 2014\n9:00 a.m.\nBROWN & COMPANY CPAs, PLLC\nCERTIFIED PUBLIC ACCOUNTANTS AND MANAGEMENT CONSULTANTS\nFARM CREDIT ADMINISTRATION\nFY 2013 FINANCIAL STATEMENT AUDIT\nIndependent Auditor's Reports were:\nReport on the Financial Statements - FCA received an unmodified opinion, the highest\nlevel of assurance.\nReport on the Internal Control over Financial Reporting - the objective was not to issue\nan opinion on internal control; however we noted no matters involving internal control\nthat we considered to be a material weaknesses.\nReport on the Compliance with Laws and Regulations - the objective was not to issue an\nopinion on compliance with applicable laws and regulations; however, we noted no\nnoncompliance with laws and regulations, which could have a direct and material effect\non the financial statements.\n23\nBROWN & COMPANY CPAs, PLLC\nFARM CREDIT ADMINISTRATION\nFY 2013 FINANCIAL STATEMENT AUDIT\nBasic financial statements include:\nBalance Sheet\nStatement of Net Cost\nStatement of Changes in Net Position\nStatement of Budgetary Resources\nOverview of Balance Sheet-Assets\n2013\n2012\nFund Balance with Treasury\n$ 837,120\n$ 717,196\nInvestments\n38,352,286\n39,824,559\nProperty, Plant, and Equipment, Net\n134,301\n402,903\nAccounts Receivable, Net\n315,436\n235,944\nPrepaid expenses\n186,187\n126,811\nTotal Assets\n$39,825,330\n$41,307,413\n24\nBROWN & COMPANY CPAs, PLLC\nFARM CREDIT ADMINISTRATION\nFY 2013 FINANCIAL STATEMENT AUDIT\nOverview of Balance Sheet-Liabilities\n2013\n2012\nAccounts payable\n$ 457,767\n$ 614,214\nAccrued post-employment compensation\n34,000\n34,488\nEmployer contributions and payroll taxes\n224,396\n553,100\nActuarial workers compensation\n1,316,210\n1,247,046\nAccrued payroll and benefits\n4,578,402\n5,974,658\nAccrued taxes payable\n1,508\n-\nDeferred revenue\n3,212,730\n3,363,965\nTotal Liabilities\n$ 9,825,013\n$ 11,787,471\nAnalysis of Balance Sheet:\nTotal assets for FY 2013 was approximately $39.8 million, which is an decrease of $1.5\nmillion or 3.6% from FY 2012. The decrease is largely due to the decrease in\ninvestments.\n25\nBROWN & COMPANY CPAs, PLLC\nFARM CREDIT ADMINISTRATION\nFY 2013 FINANCIAL STATEMENT AUDIT\nAnalysis of Balance Sheet :\nTotal liabilities for FY 2013 was $9.8 million, which is an decrease of $1.9M or 16%\nfrom FY 2012. The decrease is largely due to the decrease in accrued payroll and\nbenefits.\nOverview of Statement of Net Costs\n2013\n2012\nPublic Mission\nGross Cost\n$ 11,695,922\n$ 11,420,694\nLess: Earned Revenue\n(10,863,530)\n(10,835,149)\nNet Program Costs\n832,392\n585,545\n26\nBROWN & COMPANY CPAs, PLLC\nFARM CREDIT ADMINISTRATION\nFY 2013 FINANCIAL STATEMENT AUDIT\nOverview of Statement of Net Costs\n2013\n2012\nSafety and Soundness\nGross Cost\n$ 43,424,434\n$ 46,097,124\nLess: Earned Revenue\n(39,550,402)\n(43,774,261)\nNet Program Costs\n3,874,032\n2,322,863\nOther Activities\nGross Cost\n$ 886,626\n$ 935,349\nLess: Earned Revenue\n( 845,697)\n( 955,836)\nNet Program Costs\n40,929\n(20,847)\n27\nBROWN & COMPANY CPAs, PLLC\nFARM CREDIT ADMINISTRATION\nFY 2013 FINANCIAL STATEMENT AUDIT\nOverview of the Statement of Changes in Net Position\n2013\n2012\nCumulative Results of Operations,\nBeginning Balance\n$29,519,942\n$26,782,937\nOther Financing Sources :\nImputed financing sources from costs absorbed by others\nFederal employee benefits\n2,527,728\n2,674,926\nRent\n2,700,000\n2,950,000\nTotal Financing Sources\n5,227,728\n5,624,926\nLess: Net Cost of Operations\n( 4,747,353)\n(2,887,921)\nNet position-ending balances\n$ 30,000,317\n$ 29,519,942\n28\nBROWN & COMPANY CPAs, PLLC\nFARM CREDIT ADMINISTRATION\nFY 2013 FINANCIAL STATEMENT AUDIT\nOverview of the Statement of Budgetary Resources\nThe Statement of Budgetary Resources is below:\n2013\n2012\nBeginning Unobligated Balance\n$ 31,866,640\n$ 29,052,387\nSpending Authority Earned and Collected\n51,031,084\n54,897,944\nTotal Budgetary Resources\n$ 82,897,724\n$ 83,950,331\n29\nBROWN & COMPANY CPAs, PLLC\nFARM CREDIT ADMINISTRATION\nFY 2013 FINANCIAL STATEMENT AUDIT\nOverview of Statement of Budgetary Resources\nThe Statement of Budgetary Resources shows resources made available to FCA during the\nyear and the resulting status of budgetary resources at year-end. FCA does not receive an\nannual appropriation from Congress.\nFCA had total budgetary resources of $82.8 million, a decrease of $1.1 from the FY 2012\nbudgetary resources of $83.9 million.\n30\nBROWN & COMPANY CPAs, PLLC\nOffice of\nInspector General\nAudit of FCA's Financial Statements\nFiscal Year 2013\nA-13-FS\n*EARM CREDIT ESTABLISHED ADMINICATION 1933 *\nNovember 20, 2013\n31\nTABLE OF CONTENTS\nInspector General's Transmittal Letter of Auditor's Report\n1\nAuditor's Opinion Letter on the Financial Statements\n5\nFor the financial statements and related notes to each fiscal year's financial audit reports, refer\nto FCA's Performance and Accountability Report (PAR) for that year. The PARs can be found\nat http://www.fca.gov/reports/performance_reports.html.\n32\nFarm Credit Administration\nOffice of Inspector General\n1501 Farm Credit Drive\nMcLean, VA 22102-5090\n(703) 883-4030\nFCA\nFARM CREDIT ADMINISTRATION\nNovember 20, 2013\nThe Honorable Jill Long Thompson, Board Chair and Chief Executive Officer\nThe Honorable Kenneth A. Spearman, Board Member\nThe Honorable Leland A. Strom, Board Member\nFarm Credit Administration\n1501 Farm Credit Drive\nMcLean, Virginia 22102-5090\nDear Board Chair Long Thompson and FCA Board Members Spearman and Strom:\nThis letter transmits the report on the audit of the Farm Credit Administration's financial\nstatements for the fiscal year (FY) ended September 30, 2013. The Office of Inspector General\n(OIG) contracted with the U.S. Department of the Treasury's Bureau of the Fiscal Service for\nBrown & Company CPAs, PLLC, an independent public accounting firm, to perform the audit.\nBrown & Co. issued an unmodified opinion on the Agency's financial statements. It opined that\nFCA's principal financial statements present fairly, in all material respects, the financial position\nof the Agency as of the FYs ended September 30, 2013 and 2012, in conformity with generally\naccepted accounting principles.\nBrown & Co. considered FCA's internal control over financial reporting to determine the audit\nprocedures that were appropriate for the limited purpose of expressing an opinion on the\nfinancial statements. Although Brown & Co. did not express an opinion on the effectiveness of\nFCA's internal controls, it did not identify any deficiencies in internal controls considered to be a\nmaterial weakness.\nAdditionally, Brown & Co. performed tests of FCA's compliance with certain provisions of laws,\nregulations, contracts, and grant agreements that could have a direct and material effect on the\nfinancial statements. Although Brown & Co. did not express an opinion on compliance with\nthose provisions, it did not identify any instances of noncompliance or other matters required to\nbe reported under Government Auditing Standards or OMB Bulletin No. 07-04, as amended.\nIn the OIG's opinion, Brown & Co.'s audit provides a reasonable basis on which to render its\nopinion, and we concur with the report dated November 6, 2013.\n33\nThe OIG's contract with the Bureau of the Fiscal Service required that Brown & Co. perform the\naudit in accordance with Government Auditing Standards issued by the Comptroller General of\nthe United States and Office of Management and Budget Bulletin No. 07-04, Audit\nRequirements for Federal Financial Statements, as amended. To ensure the quality of the work\nperformed, the OIG\nreviewed Brown & Co.'s approach to and planning of the audit,\nevaluated the qualifications and independence of the auditors,\nmonitored the progress of the audit,\nexamined work papers, and\nreviewed the audit reports.\nManagement and Performance Challenges\nAs part of the Agency's annual Performance and Accountability Report, the Inspector General is\nrequired by law to provide a summary statement on management and performance challenges\nfacing the Agency. The challenges identified fall into two general categories. First is the\nchallenge related to FCA's mandate of ensuring a safe, sound, and dependable Farm Credit\nSystem (FCS or System) as a source of credit and related services to agriculture and rural\nAmerica. However, it should be recognized that some factors affecting this challenge may be\ninfluenced by events outside the control of the Agency. Second, and of equal importance, is the\nchallenge related to the Agency, remaining an independent, arm's-length, objective, and\neffective regulator of the FCS.\nFarm Credit System\nSafety and Soundness\nThe System is a lender to a single industry-agriculture-and is therefore vulnerable to\ncontinuing market volatility and uncertain economic conditions. Although the System's overall\ncondition and performance is sound, there are many highly correlated uncontrollable or\nmacroeconomic forces directly affecting agriculture. While the FCS remains generally safe and\nsound, the current risk environment is a challenge in some FCS institutions, requiring\nheightened oversight and supervision. System institutions continue to grow in both size and\ncomplexity, requiring greater risk management skills and oversight responsibilities both in\nexamination and regulation.\nIn providing for System oversight, the challenge for the Agency is twofold: to continue to be an\nindependent, objective, arm's-length and effective regulator; to continue to assess in a timely\nmanner economic and operational conditions affecting System institutions; and to take prompt\npreemptive or remedial actions to ensure their ongoing safety and soundness.\nMission\nFurther, the overall environment facing agriculture, rural America, and the FCS is ever-\nchanging, presenting new vulnerabilities and opportunities. FCA's challenge in this\nenvironment is to continue to ensure the FCS fulfills its public policy purpose of providing\nconstructive credit to farmers, ranchers, rural residents, agricultural and rural utility\ncooperatives, and other eligible borrowers.\n34\nFarm Credit Administration\nAgency Governance\nThe Farm Credit Act of 1971, as amended, provides for a full-time three-member Board to\ngovern the Agency. Board members are appointed by the President and confirmed by the\nSenate, and the President designates the Chairman. Board Chair Long Thompson, an FCA\nBoard member since March 2010, replaced Board Member Strom as Chair in November 2012.\nBoard Chair Long Thompson's term expires in May 2014. Board Member Spearman was\nappointed in October 2009, and his term expires in May 2016. Board Member Strom's term\nexpired October 2012. In accordance with law, he may continue to serve until the President\nappoints a successor.\nAll three current Board members are well-experienced, with each having been on the Board for\na number of years. Nevertheless, a full-time three-member Board, particularly when a new\nChairman is named and a new member(s) joins the Board, presents an ongoing challenge of\ncoordination and cooperation for the Chairman and Board members in defining roles and\nresponsibilities. In this regard, the Board's various rules of operation are a significant asset;\nthey provide a foundation for trust and shared expectations among its members, enable the\nBoard to engage in professional and constructive policy debate, and provide continuity of\noperations and a sound course for the Board and the Agency.\nAgency Organization\nAlthough the Agency's statutory mission has remained constant, many factors affect the\nAgency's operations and organization. A major factor is the periodic turnover in the Board's\ncomposition and chairmanship. In addition, the banks and associations of the FCS have\ncontinued merging, geographic territories of merged institutions have changed, and FCS\ninstitutions' products and the examination thereof have become more complex.\nThese and other factors bear on FCA's organizational structure. An ongoing challenge to the\nBoard and senior management is to periodically reassess FCA's organizational structure to\nensure it remains optimal.\nAgency Staffing\nThe Agency has a comprehensive five-year Human Capital Plan covering FYs 2014 to 2018.\nRecent recruitment initiatives for all levels within the Agency have broad search criteria and\nhave focused on obtaining the best skill sets and achieving diversity in FCA's workforce.\nThe Board and senior management recognize the area of human capital as critical for the\nongoing success of FCA as an effective Federal financial regulator. A few of the factors\ncontributing to the critical nature of human capital, as delineated by the Agency's Office of\nManagement Services, are as follows:\nProjections indicate that a substantial portion of the Agency's workforce is eligible to\nretire during the next several years.\nThe loss of employees during this period will challenge the Agency to retain historical\nknowledge and perspectives on the programs, practices, and mission of the FCS as\nwell as that of FCA.\n35\nThe evolution of FCA, agriculture and rural America, the FCS, and the financial\nservices industry means FCA will need to continue to attract and maintain an\nexperienced and qualified professional staff to meet the anticipated growth and\ncomplexity of the FCS and its environment.\nThe Agency's challenge is to continue to emphasize the implementation of its human capital\nplan to ensure FCA has the staff it needs to remain an effective regulator of the FCS by, for\nexample, continuing to identify the critical skills needed in the future, appropriately allocating\nresources between line and staff functions, and ensuring continuity within senior management\nand other staff positions.\nLeveraging Technology\nThe Agency's ability to leverage investments in technologies is a key element in management's\nefforts to continually improve Agency performance by increasing the efficiency and\neffectiveness of operations. The Agency has an active information resource management\nplanning process that identifies, reviews, and prioritizes information technology initiatives to\nimprove Agency operations. The Agency has made significant investments in technologies and\nimplemented several tools to improve communication, collaboration, and efficiency of\noperations. The Agency's challenge is to continue to maximize the use of information\ntechnology investments that will increase Agency efficiency and effectiveness. The successful\nimplementation of technologies will provide FCA staff with the tools and skills that will enable the\nAgency to continue to\nimprove the quality and availability of financial data that can be used to examine\npotential risks across the FCS without creating an undue burden on the FCS;\nstreamline business processes and build business intelligence to provide decision-\nmakers with timely management information;\ndevelop electronic recordkeeping and knowledge management capability for capturing,\nmaintaining, and sharing institutional knowledge; and\nprotect and secure FCA information systems and data from ever-increasing external\nand internal threats.\nRespectfully,\nEmploints m. Dean\nElizabeth M. Dean\nInspector General\n36\nBC\nBROWN & COMPANY CPAs, PLLC\nCERTIFIED PUBLIC ACCOUNTANTS AND MANAGEMENT CONSULTANTS\nINDEPENDENT AUDITOR'S REPORT\nFarm Credit Administration\nThe Board and Office of Inspector General\nReport on the Financial Statements\nWe have audited the accompanying balance sheets of the Farm Credit Administration (FCA) as of\nSeptember 30, 2013 and 2012, and the related statements of net cost, changes in net position, and\nbudgetary resources, for the years then ended (collectively referred to as the financial statements), and the\nrelated notes to the financial statements.\nManagement's Responsibility for the Financial Statements\nManagement is responsible for the preparation and fair presentation of these financial statements in\naccordance with accounting principles generally accepted in the United States of America; this includes\nthe design, implementation, and maintenance of internal control relevant to the preparation and fair\npresentation of financial statements that are free from material misstatement, whether due to fraud or\nerror.\nAuditor's Responsibility\nOur responsibility is to express an opinion on these financial statements based on our audit. We\nconducted our audit in accordance with auditing standards generally accepted in the United States of\nAmerica and the standards applicable to financial audits contained in Government Auditing Standards,\nissued by the Comptroller General of the United States; and the Office of Management and Budget\n(OMB) Bulletin No. 07-04, Audit Requirements for Federal Financial Statements, as amended. Those\nstandards and OMB Bulletin No. 07-04, as amended, require that we plan and perform the audit to obtain\nreasonable assurance about whether the financial statements are free from material misstatements.\nAn audit involves performing procedures to obtain audit evidence about the amounts and disclosures in\nthe financial statements. The procedures selected depend on the auditor's judgment, including the\nassessment of the risks of material misstatement of the financial statements, whether due to fraud or error.\nIn making those risk assessments, the auditor considers internal control relevant to the entity's preparation\nand fair presentation of the financial statements in order to design audit procedures that are appropriate in\nthe circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's\ninternal control. Accordingly, we express no such opinion. An audit also includes evaluating the\nappropriateness of accounting policies used and the reasonableness of significant accounting estimates\nmade by management, as well as evaluating the overall presentation of the financial statements.\nWe believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for\nour audit opinion.\n1101 MERCANTILE LANE, SUITE 122\nLARGO, MD 20774\nPHONE: (240) 770-4900 FAX: (301) 773-2090 [email protected] www.brownco-cpas.com\n37\nOpinion\nIn our opinion, the financial statements referred to above present fairly, in all material respects, the\nfinancial position of FCA as of September 30, 2013 and 2012, and its net costs, changes in net position,\nand budgetary resources for the years then ended, in conformity with accounting principles generally\naccepted in the United States of America.\nOther Matters\nAccounting principles generally accepted in the United States of America require that the information in\nthe Management's Discussion and Analysis (MD&A), Required Supplementary Information, and\nRequired Supplementary Stewardship Information sections be presented to supplement the basic financial\nstatements. Such information, although not a part of the basic financial statements, is required by the\nFederal Accounting Standards Advisory Board, who considers it to be an essential part of financial\nreporting for placing the basic financial statements in an appropriate operational, economic, or historical\ncontext. We have applied certain limited procedures to the required supplementary information in\naccordance with auditing standards generally accepted in the United States of America, which consisted\nof inquiries of management about the methods of preparing the information and comparing the\ninformation for consistency with management's responses to our inquiries, the basic financial statements,\nand other knowledge we obtained during our audit of the basic financial statements. We do not express an\nopinion or provide any assurance on the information because the limited procedures do not provide us\nwith sufficient evidence to express an opinion or provide any assurance.\nInternal Control Over Financial Reporting\nIn planning and performing our audit of the financial statements, we considered the FCA's internal\ncontrol over financial reporting (internal control) to determine the audit procedures that are appropriate in\nthe circumstances for the purpose of expressing our opinion on the financial statements, but not for the\npurpose of expressing an opinion on the effectiveness of FCA's internal control. Accordingly, we do not\nexpress an opinion on the effectiveness of FCA's internal control.\nA deficiency in internal control exists when the design or operation of a control does not allow\nmanagement or employees, in the normal course of performing their assigned functions, to prevent, or\ndetect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination\nof deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement\nof the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A\nsignificant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less\nsevere than a material weakness, yet important enough to merit attention by those charged with\ngovernance.\nOur consideration of the internal control was for the limited purpose described in the first paragraph of\nthis section and was not designed to identify all deficiencies in internal control over financial reporting\nthat might be deficiencies, significant deficiencies or material weaknesses. In our fiscal year 2013 audit,\nwe did not identify any deficiencies in internal control that we consider to be a material weakness.\nHowever, material weaknesses may exist that have not been identified.\nCompliance and Other Matters\nAs part of obtaining reasonable assurance about whether FCA's financial statements are free from\nmaterial misstatement, we performed tests of its compliance with certain provisions of laws, regulations,\ncontracts and grant agreements, noncompliance with which could have a direct and material effect on the\ndetermination of financial statement amounts. However, providing an opinion on compliance with those\nBROWN & COMPANY CPAS, PLLC\n38\nprovisions was not an objective of our audit, and accordingly, we do not express such an opinion. Our\nfiscal year 2013 audit, disclosed no instances of noncompliance or other matters that are required to the\nreported under Government Auditing Standards or OMB Bulletin No. 07-04, as amended.\nThis report is intended solely for the information and use of the management of FCA, the Office of\nInspector General of FCA, OMB, and Congress, and is not intended to be and should not be used by\nanyone other than these specified parties.\nBean & company\nNovember 6, 2013\nBROWN & COMPANY CPAS, PLLC\n39\nExhibit G\nFarm Credit Administration\n1501 Farm Credit Drive\nMcLean, Virginia 22102-5090\n(703) 883-4000\nFCA\nFARM CREDIT ADMINISTRATION\nCERTIFICATE OF CLOSED MEETING\nThe General Counsel, in accordance with the Government in the Sunshine Act, 5 U.S.C. § 552b(f)(1),\nhereby certifies that the Farm Credit Administration Board regular meeting of January 9, 2014, was\nproperly closed to the public on the basis of the exemption set forth below:\nInformation related solely to the internal practices of an Agency - 5 U.S.C.\n§552b(c)(2).\n/s/\nDate: January 9, 2014\nCharles R. Rawls\nGeneral Counsel\n40"
}