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Jill Long Thompson, Board Chair and Chief Executive Officer
Kenneth A. Spearman, Board Member
Leland A. Strom, Board Member
COMMISSION CREEM FARM * * EEGL
ESTABLISHED
MINUTES OF THE REGULAR MEETING
OF THE
FARM CREDIT ADMINISTRATION BOARD
January 9, 2014
These minutes reflect the business transacted at the January 9, 2014, Regular Meeting of the Farm
Credit Administration Board (FCA Board) pursuant to the Government in the Sunshine Act (Act), 5
U.S.C. § 552b, and the regulations of the Farm Credit Administration (FCA) adopted thereunder.
The FCA Board meeting was held at the FCA office in McLean, Virginia, beginning at 9:00 a.m. and
concluding at 9:48 a.m. Members of the Board present were:
Jill Long Thompson, Board Chair and Chief Executive Officer
Kenneth A. Spearman, Member
Leland A. Strom, Member
The above named constitute the full Board.
Others present included Charles Rawls, General Counsel; Dale Aultman, Secretary to the Board; staff
of the FCA and Farm Credit System Insurance Corporation (FCSIC); and two members of the general
public. (A list of staff attendees is attached as Exhibit A.)
The Secretary read a statement that announced the meeting would be conducted according to the
requirements of the Government in the Sunshine Act.
Board Chair Long Thompson reviewed the published Agenda. (A copy of the Public Announcement
publishing the Agenda for the meeting is attached as Exhibit B.)
Mr. Spearman moved to adopt the Agenda as published.
Mr. Strom seconded the motion.
1
There being no further discussion, Board Chair Long Thompson called the question.
The Secretary polled the Board Members and the motion carried unanimously.
Mr. Strom noted that the Agenda did include a portion of the meeting that should be closed to the
general public as permitted by the Government in the Sunshine Act and therefore moved that the
meeting be closed at that point.
Mr. Spearman seconded the motion.
There being no further discussion, Board Chair Long Thompson called the question.
The Secretary polled the Board Members and the motion carried unanimously.
OPEN SESSION
Approval of Minutes
Minutes for December 12, 2013 Regular Board Meeting
(BM-09-JAN-14-01)
Mr. Spearman moved to approve the minutes for December 12, 2013 Regular Board Meeting.
Mr. Strom seconded the motion.
There being no further discussion, Board Chair Long Thompson called the question.
The Secretary polled the Board Members and the motion carried unanimously. (BM-09-JAN-14-01)
(A copy of the official "Board Action Item" is attached as Exhibit C.)
New Business
Standards of Conduct - Proposed Rule
(BM-09-JAN-14-02)
Jacqui Melvin of the Office of Regulatory Policy and Mary Alice Donner of the Office of General
Counsel presented the Standards of Conduct - Proposed Rule.
Board Chair Long Thompson opened the discussion for questions by the Board.
Board Chair Long Thompson asked if there was any further discussion and asked staff to provide
their recommendation. Staff provided their recommendation.
Board Chair Long Thompson called for a motion on the staff's recommendation regarding the final
rule.
2
Mr. Strom moved that the Board approve the Standards of Conduct - Proposed Rule.
Mr. Spearman seconded the motion.
Board Chair Long Thompson asked if there was any further discussion.
There being no further discussion, the Board Chair called the question.
The Secretary polled the Members and the motion carried unanimously. (BM-09-JAN-14-02)
(A copy of the "Board Action Item" is attached as Exhibit D.)
Reports
Equal Employment Opportunity and Inclusion Update
Thais Burlew of the Office of Equal Employment Opportunity presented the Equal Employment
Opportunity and Inclusion Update.
Board Chair Long Thompson asked if there were any questions or further discussion from the Board.
There were no further questions or discussion.
(A copy of the PowerPoint presentation is attached as Exhibit E.)
Auditor's Report on FCA FY 2013/2012 Financial Statements
Elizabeth Dean, Inspector General, Kimberly Penn and Gail Jenifer from Brown & Company, CPAs,
PLLC. presented the Auditor's Report on FCA FY 2013/2012 Financial Statements.
Board Chair Long Thompson asked if there were any questions or further discussion from the Board.
There were no further questions or discussion.
(A copy of the PowerPoint presentation and the Inspector General's Audit Report are attached as
Exhibit F.)
CLOSED SESSION
Board Chair Long Thompson thanked the general public for attending and asked that members of
the general public and others not involved in the executive session to exit.
3
The closed session convened at 9:40 a.m. The electronic recording device was activated so that the
proceedings of the closed session were properly recorded as required by the Government in the
Sunshine Act.
The General Counsel furnished the Secretary with a certification, pursuant to 5 U.S.C. § 552b(f), that
the portions of the meeting held in closed session may be properly closed to the public.
(A copy of the Certification is attached hereto as Exhibit G.)
Members of the Board present were:
Jill Long Thompson, Board Chair and Chief Executive Officer
Kenneth A. Spearman, Member
Leland A. Strom, Member
The above named constitute the full Board.
Others present included Dale Aultman, Secretary to the Board; and Charles Rawls, General Counsel.
(A list of staff attendees is attached as Exhibit A).
Reports
Executive Session with External Auditor
The FCA Board held an executive session with Kimberly Penn and Gail Jenifer from Brown &
Company, CPAs, PLLC regarding the Auditor's Report on FCA FY 2013/2012 Financial Statements.
Others present were Executive Assistants Inga Smulkstys, Russell Middleton, and Mark Johansen;
Dale L. Aultman, Secretary to the Board; and Charles Rawls, General Counsel.
The closed session ended at 9:47 a.m.
ADJOURNMENT
There being no further business to come before the Board, Board Chair Long Thompson indicated she
would entertain a motion to adjourn the meeting.
Mr. Spearman moved that the meeting be adjourned.
Mr. Strom seconded the motion.
Board Chair Long Thompson called the question.
The Secretary polled the Board Members and the motion carried unanimously.
The meeting adjourned at 9:48 a.m.
4
NOTATIONAL VOTE ACTIONS
There were no notational vote actions by the FCA Board from December 13, 2013, through January 8,
2014.
The undersigned hereby certify that the foregoing minutes are the official minutes of the Regular
Meeting of the Farm Credit Administration Board held on January 9, 2014.
/s/
/s/
Jill Long Thompson
Dale L. Aultman
Board Chair and Chief Executive Officer
Secretary to the Board
Approved: February 18, 2014
5
Exhibit A
Page 1 of 2
STAFF PRESENT AT THE
FCA REGULAR BOARD MEETING
January 9, 2014
JILL LONG THOMPSON, Board Chair and Chief Executive Officer
KENNETH A. SPEARMAN, Board Member
LELAND A. STROM, Board Member
OPEN
CLOSED
OFFICE
SESSION
SESSION
Office of the Board
Aultman, Dale
X
X
Smulkstys, Inga
X
X
Corey, Kathryn
X
Buccolo, Deb
X
Johansen, Mark
X
X
Calhoun, Gaye
X
Middleton, Russell
X
X
OCOO
Hoffman, William
X
OCPA
Stokke, Mike
X
OSMO
Rea, Laurie
X
OGC
Rawls, Charles
X
X
Strickland, Joy
X
Donner, Mary Alice
X
6
Exhibit A
Page 2 of 2
OPEN
CLOSED
OFFICE
SESSION
SESSION
OE
Coleman, Robert
X
Paulsen, Roger
X
OIG
Dean, Elizabeth
X
Penn, Kimberly (Auditor from Brown &
X
X
Company, CPAs, PLLC)
Jenifer, Gail (Auditor from Brown &
X
X
Company, CPAs, PLLC)
ORP
Van Meter, Gary
X
Mardock, Barry
X
Melvin, Jacqui
X
Edelstein, Jeremy
X
OMS
Smith, Stephen
X
FCSIC
Rubin, Howard
X
Pfitzinger, Rick
X
EEO & Inclusion
Burlew, Thais
X
GENERAL PUBLIC
2
7
Exhibit B
Farm Credit Administration
Farm Credit Administration
1501 Farm Credit Drive
McLean, Virginia 22102-5090
PUBLIC ANNOUNCEMENT OF
MEETING SUBJECT TO THE GOVERNMENT IN THE SUNSHINE ACT
Farm Credit Administration Board
Regular Meeting
January 9, 2014
Summary: Notice is hereby given, pursuant to the Government in the Sunshine Act (5 U.S.C. Sec. 552b(e) (1)), of the
forthcoming regular meeting of the Farm Credit Administration Board.
Date and Time: The regular meeting of the Board will be held January 9, 2014. The meeting is scheduled to be held at
the office of the Farm Credit Administration in McLean, Virginia, from 9:00 a.m. until such time as the Board may
conclude its business.
Address: Farm Credit Administration, 1501 Farm Credit Drive, McLean, Virginia 22102-5090. Submit attendance
requests via e-mail to [email protected]. See SUPPLEMENTARY INFORMATION for further information about
attendance requests.
For Further Information Contact: Dale L. Aultman, Secretary to the Farm Credit Administration Board (703) 883-4009.
TTY is (703) 883-4056.
Supplementary Information: Parts of this meeting of the Board will be open to the public (limited space available), and
parts will be closed to the public. Please send an e-mail to [email protected] at least 24 hours before the meeting.
In your e-mail include: name, postal address, entity you are representing (if applicable), and telephone number. You will
receive an e-mail confirmation from us. Please be prepared to show a photo identification when you arrive. If you need
assistance for accessibility reasons, or if you have any questions, contact Dale L. Aultman, Secretary to the Farm Credit
Administration Board, at (703) 883-4009. The matters to be considered at the meeting are:
OPEN SESSION
Approval of Minutes
1
December 12, 2013
New Business
2
Standards of Conduct - Proposed Rule
Reports
3
Equal Employment Opportunity and Inclusion Update
4
Auditor's Report on FCA FY 2013/2012 Financial Statements
CLOSED SESSION
5
Executive Meeting with Auditors 1
December 30, 2013
/s/
Date
Dale L. Aultman
Secretary to the Board
1 Session Closed-Exempt pursuant to 5 U.S.C. Section 552b(c)(2).
8
Exhibit c
Farm Credit Administration
1501 Farm Credit Drive
McLean, Virginia 22102-5090
(703) 883-4000
BOARD ACTION ITEM
FCA
FARM CREDIT ADMINISTRATION
FCA BOARD ACTION ON
Minutes for December 12, 2013 Regular Board Meeting
BM-09-JAN-14-01
Effective Date:
January 9, 2014
Effect on Previous Action:
None
THE FCA BOARD HEREBY:
Approves the minutes for December 12, 2013, Regular Board Meeting as submitted.
DATED THIS 9th DAY OF JANUARY 2014
BY ORDER OF THE BOARD
/s/
Dale L. Aultman
Secretary to the Board
9
Exhibit D
Farm Credit Administration
1501 Farm Credit Drive
McLean, Virginia 22102-5090
(703) 883-4000
BOARD ACTION ITEM
FCA
FARM CREDIT ADMINISTRATION
FCA BOARD ACTION ON
Standards of Conduct - Proposed Rule
BM-09-JAN-14-02
Effective Date:
January 9, 2014
THE FCA BOARD HEREBY:
Approves the proposed rule that would amend FCA's regulations at part 612,
subpart A, to modify the standards of conduct regulations to clarify rules,
strengthen responsibility and accountability, require System institutions to
establish a Code of Ethics, and enhance the role of the Standards of Conduct
Official; and
Authorizes staff to make any technical or grammatical changes that may be
necessary prior to publication in the Federal Register.
DATED THIS 9th DAY OF JANUARY 2014
BY ORDER OF THE BOARD
/s/
Dale L. Aultman
Secretary to the Board
10
OFFICE OF EQUAL EMPLOYMENT
OPPORTUNITY AND INCLUSION
DIVERSITY UPDATE
FCA Board Meeting
January 9,2014
Thais Burlew
Director
Exhibit E
11
Agenda
Demographics at FCA
Diversity Programs
12
Diversity at FCA
293 Employees in FY 2013
Minority representation maintained at 22 percent
Individuals with disabilities represented 12.3 percent of
FCA's total workforce
Veterans represent 12 percent of FCA workforce
*Preliminary data
13
Demographics
Women represent 41.9 percent of FCA workforce
48.1 percent of CLF
43.9 percent of FCL
Hispanics represent 4.8 percent of FCA workforce
10 percent of CLF
8.0 percent of FCL
Blacks represent 9.2 percent of FCA workforce
12 percent of CLF
17.7 percent of FCL
Asian represent 5.5 percent of FCA workforce
3.9 percent of CLF
5.6 percent of FCL
Preliminary data
14
Areas of Opportunity
Minorities represent 22 percent of FCA workforce
27.6 percent of CLF
33.8 percent of FCL
Veterans represent approximately 12 percent of FCA workforce
54 percent of those vets are or will be retirement eligible by 2016
Women in Senior Ranks (VH-40 and above) increased to 33 percent
Minorities in Senior Ranks remained the same — 9 people
representing 8.5 percent
Preliminary data
15
Leadership Development Day
Three Sessions:
Joint Session
"Finding the Leader Within"
Non-Supervisory
"Leaders of Tomorrow"
Supervisory
"Creating a Positive Environment"
16
Survey Results — Joint Session
Joint Session
How Training Will Be Used
80%
70%
60%
50%
40%
30%
20%
10%
0%
Work
Personal
Coworkers
Strongly Agree or Agree
Netural
Strongly Disagree or Disagree
17
Survey Results - Nonsupervisory
Nonsupervisory Session
How Training Will Be Used
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Work
Personal
Coworkers
Strongly Agree or Agree
Netural
Strongly Disagree or Disagree
18
Survey Results - Supervisory
Supervisory Session
How Training Will Be Used
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Work
Personal
Coworkers
Strongly Agree or Agree
Netural
Strongly Disagree or Disagree
19
Brown Bag Lunches
Homestead Grays
Farmer Veteran Coalition
Migrant Farm Workers Movement
20
Thank You
21
Exhibit F
FARM CREDIT ADMINISTRATION
BOARD PRESENTATION
January 9, 2014
9:00 a.m.
BROWN & COMPANY CPAs, PLLC
CERTIFIED PUBLIC ACCOUNTANTS AND MANAGEMENT CONSULTANTS
FARM CREDIT ADMINISTRATION
FY 2013 FINANCIAL STATEMENT AUDIT
Independent Auditor's Reports were:
Report on the Financial Statements - FCA received an unmodified opinion, the highest
level of assurance.
Report on the Internal Control over Financial Reporting - the objective was not to issue
an opinion on internal control; however we noted no matters involving internal control
that we considered to be a material weaknesses.
Report on the Compliance with Laws and Regulations - the objective was not to issue an
opinion on compliance with applicable laws and regulations; however, we noted no
noncompliance with laws and regulations, which could have a direct and material effect
on the financial statements.
23
BROWN & COMPANY CPAs, PLLC
FARM CREDIT ADMINISTRATION
FY 2013 FINANCIAL STATEMENT AUDIT
Basic financial statements include:
Balance Sheet
Statement of Net Cost
Statement of Changes in Net Position
Statement of Budgetary Resources
Overview of Balance Sheet-Assets
2013
2012
Fund Balance with Treasury
$ 837,120
$ 717,196
Investments
38,352,286
39,824,559
Property, Plant, and Equipment, Net
134,301
402,903
Accounts Receivable, Net
315,436
235,944
Prepaid expenses
186,187
126,811
Total Assets
$39,825,330
$41,307,413
24
BROWN & COMPANY CPAs, PLLC
FARM CREDIT ADMINISTRATION
FY 2013 FINANCIAL STATEMENT AUDIT
Overview of Balance Sheet-Liabilities
2013
2012
Accounts payable
$ 457,767
$ 614,214
Accrued post-employment compensation
34,000
34,488
Employer contributions and payroll taxes
224,396
553,100
Actuarial workers compensation
1,316,210
1,247,046
Accrued payroll and benefits
4,578,402
5,974,658
Accrued taxes payable
1,508
-
Deferred revenue
3,212,730
3,363,965
Total Liabilities
$ 9,825,013
$ 11,787,471
Analysis of Balance Sheet:
Total assets for FY 2013 was approximately $39.8 million, which is an decrease of $1.5
million or 3.6% from FY 2012. The decrease is largely due to the decrease in
investments.
25
BROWN & COMPANY CPAs, PLLC
FARM CREDIT ADMINISTRATION
FY 2013 FINANCIAL STATEMENT AUDIT
Analysis of Balance Sheet :
Total liabilities for FY 2013 was $9.8 million, which is an decrease of $1.9M or 16%
from FY 2012. The decrease is largely due to the decrease in accrued payroll and
benefits.
Overview of Statement of Net Costs
2013
2012
Public Mission
Gross Cost
$ 11,695,922
$ 11,420,694
Less: Earned Revenue
(10,863,530)
(10,835,149)
Net Program Costs
832,392
585,545
26
BROWN & COMPANY CPAs, PLLC
FARM CREDIT ADMINISTRATION
FY 2013 FINANCIAL STATEMENT AUDIT
Overview of Statement of Net Costs
2013
2012
Safety and Soundness
Gross Cost
$ 43,424,434
$ 46,097,124
Less: Earned Revenue
(39,550,402)
(43,774,261)
Net Program Costs
3,874,032
2,322,863
Other Activities
Gross Cost
$ 886,626
$ 935,349
Less: Earned Revenue
( 845,697)
( 955,836)
Net Program Costs
40,929
(20,847)
27
BROWN & COMPANY CPAs, PLLC
FARM CREDIT ADMINISTRATION
FY 2013 FINANCIAL STATEMENT AUDIT
Overview of the Statement of Changes in Net Position
2013
2012
Cumulative Results of Operations,
Beginning Balance
$29,519,942
$26,782,937
Other Financing Sources :
Imputed financing sources from costs absorbed by others
Federal employee benefits
2,527,728
2,674,926
Rent
2,700,000
2,950,000
Total Financing Sources
5,227,728
5,624,926
Less: Net Cost of Operations
( 4,747,353)
(2,887,921)
Net position-ending balances
$ 30,000,317
$ 29,519,942
28
BROWN & COMPANY CPAs, PLLC
FARM CREDIT ADMINISTRATION
FY 2013 FINANCIAL STATEMENT AUDIT
Overview of the Statement of Budgetary Resources
The Statement of Budgetary Resources is below:
2013
2012
Beginning Unobligated Balance
$ 31,866,640
$ 29,052,387
Spending Authority Earned and Collected
51,031,084
54,897,944
Total Budgetary Resources
$ 82,897,724
$ 83,950,331
29
BROWN & COMPANY CPAs, PLLC
FARM CREDIT ADMINISTRATION
FY 2013 FINANCIAL STATEMENT AUDIT
Overview of Statement of Budgetary Resources
The Statement of Budgetary Resources shows resources made available to FCA during the
year and the resulting status of budgetary resources at year-end. FCA does not receive an
annual appropriation from Congress.
FCA had total budgetary resources of $82.8 million, a decrease of $1.1 from the FY 2012
budgetary resources of $83.9 million.
30
BROWN & COMPANY CPAs, PLLC
Office of
Inspector General
Audit of FCA's Financial Statements
Fiscal Year 2013
A-13-FS
*EARM CREDIT ESTABLISHED ADMINICATION 1933 *
November 20, 2013
31
TABLE OF CONTENTS
Inspector General's Transmittal Letter of Auditor's Report
1
Auditor's Opinion Letter on the Financial Statements
5
For the financial statements and related notes to each fiscal year's financial audit reports, refer
to FCA's Performance and Accountability Report (PAR) for that year. The PARs can be found
at http://www.fca.gov/reports/performance_reports.html.
32
Farm Credit Administration
Office of Inspector General
1501 Farm Credit Drive
McLean, VA 22102-5090
(703) 883-4030
FCA
FARM CREDIT ADMINISTRATION
November 20, 2013
The Honorable Jill Long Thompson, Board Chair and Chief Executive Officer
The Honorable Kenneth A. Spearman, Board Member
The Honorable Leland A. Strom, Board Member
Farm Credit Administration
1501 Farm Credit Drive
McLean, Virginia 22102-5090
Dear Board Chair Long Thompson and FCA Board Members Spearman and Strom:
This letter transmits the report on the audit of the Farm Credit Administration's financial
statements for the fiscal year (FY) ended September 30, 2013. The Office of Inspector General
(OIG) contracted with the U.S. Department of the Treasury's Bureau of the Fiscal Service for
Brown & Company CPAs, PLLC, an independent public accounting firm, to perform the audit.
Brown & Co. issued an unmodified opinion on the Agency's financial statements. It opined that
FCA's principal financial statements present fairly, in all material respects, the financial position
of the Agency as of the FYs ended September 30, 2013 and 2012, in conformity with generally
accepted accounting principles.
Brown & Co. considered FCA's internal control over financial reporting to determine the audit
procedures that were appropriate for the limited purpose of expressing an opinion on the
financial statements. Although Brown & Co. did not express an opinion on the effectiveness of
FCA's internal controls, it did not identify any deficiencies in internal controls considered to be a
material weakness.
Additionally, Brown & Co. performed tests of FCA's compliance with certain provisions of laws,
regulations, contracts, and grant agreements that could have a direct and material effect on the
financial statements. Although Brown & Co. did not express an opinion on compliance with
those provisions, it did not identify any instances of noncompliance or other matters required to
be reported under Government Auditing Standards or OMB Bulletin No. 07-04, as amended.
In the OIG's opinion, Brown & Co.'s audit provides a reasonable basis on which to render its
opinion, and we concur with the report dated November 6, 2013.
33
The OIG's contract with the Bureau of the Fiscal Service required that Brown & Co. perform the
audit in accordance with Government Auditing Standards issued by the Comptroller General of
the United States and Office of Management and Budget Bulletin No. 07-04, Audit
Requirements for Federal Financial Statements, as amended. To ensure the quality of the work
performed, the OIG
reviewed Brown & Co.'s approach to and planning of the audit,
evaluated the qualifications and independence of the auditors,
monitored the progress of the audit,
examined work papers, and
reviewed the audit reports.
Management and Performance Challenges
As part of the Agency's annual Performance and Accountability Report, the Inspector General is
required by law to provide a summary statement on management and performance challenges
facing the Agency. The challenges identified fall into two general categories. First is the
challenge related to FCA's mandate of ensuring a safe, sound, and dependable Farm Credit
System (FCS or System) as a source of credit and related services to agriculture and rural
America. However, it should be recognized that some factors affecting this challenge may be
influenced by events outside the control of the Agency. Second, and of equal importance, is the
challenge related to the Agency, remaining an independent, arm's-length, objective, and
effective regulator of the FCS.
Farm Credit System
Safety and Soundness
The System is a lender to a single industry-agriculture-and is therefore vulnerable to
continuing market volatility and uncertain economic conditions. Although the System's overall
condition and performance is sound, there are many highly correlated uncontrollable or
macroeconomic forces directly affecting agriculture. While the FCS remains generally safe and
sound, the current risk environment is a challenge in some FCS institutions, requiring
heightened oversight and supervision. System institutions continue to grow in both size and
complexity, requiring greater risk management skills and oversight responsibilities both in
examination and regulation.
In providing for System oversight, the challenge for the Agency is twofold: to continue to be an
independent, objective, arm's-length and effective regulator; to continue to assess in a timely
manner economic and operational conditions affecting System institutions; and to take prompt
preemptive or remedial actions to ensure their ongoing safety and soundness.
Mission
Further, the overall environment facing agriculture, rural America, and the FCS is ever-
changing, presenting new vulnerabilities and opportunities. FCA's challenge in this
environment is to continue to ensure the FCS fulfills its public policy purpose of providing
constructive credit to farmers, ranchers, rural residents, agricultural and rural utility
cooperatives, and other eligible borrowers.
34
Farm Credit Administration
Agency Governance
The Farm Credit Act of 1971, as amended, provides for a full-time three-member Board to
govern the Agency. Board members are appointed by the President and confirmed by the
Senate, and the President designates the Chairman. Board Chair Long Thompson, an FCA
Board member since March 2010, replaced Board Member Strom as Chair in November 2012.
Board Chair Long Thompson's term expires in May 2014. Board Member Spearman was
appointed in October 2009, and his term expires in May 2016. Board Member Strom's term
expired October 2012. In accordance with law, he may continue to serve until the President
appoints a successor.
All three current Board members are well-experienced, with each having been on the Board for
a number of years. Nevertheless, a full-time three-member Board, particularly when a new
Chairman is named and a new member(s) joins the Board, presents an ongoing challenge of
coordination and cooperation for the Chairman and Board members in defining roles and
responsibilities. In this regard, the Board's various rules of operation are a significant asset;
they provide a foundation for trust and shared expectations among its members, enable the
Board to engage in professional and constructive policy debate, and provide continuity of
operations and a sound course for the Board and the Agency.
Agency Organization
Although the Agency's statutory mission has remained constant, many factors affect the
Agency's operations and organization. A major factor is the periodic turnover in the Board's
composition and chairmanship. In addition, the banks and associations of the FCS have
continued merging, geographic territories of merged institutions have changed, and FCS
institutions' products and the examination thereof have become more complex.
These and other factors bear on FCA's organizational structure. An ongoing challenge to the
Board and senior management is to periodically reassess FCA's organizational structure to
ensure it remains optimal.
Agency Staffing
The Agency has a comprehensive five-year Human Capital Plan covering FYs 2014 to 2018.
Recent recruitment initiatives for all levels within the Agency have broad search criteria and
have focused on obtaining the best skill sets and achieving diversity in FCA's workforce.
The Board and senior management recognize the area of human capital as critical for the
ongoing success of FCA as an effective Federal financial regulator. A few of the factors
contributing to the critical nature of human capital, as delineated by the Agency's Office of
Management Services, are as follows:
Projections indicate that a substantial portion of the Agency's workforce is eligible to
retire during the next several years.
The loss of employees during this period will challenge the Agency to retain historical
knowledge and perspectives on the programs, practices, and mission of the FCS as
well as that of FCA.
35
The evolution of FCA, agriculture and rural America, the FCS, and the financial
services industry means FCA will need to continue to attract and maintain an
experienced and qualified professional staff to meet the anticipated growth and
complexity of the FCS and its environment.
The Agency's challenge is to continue to emphasize the implementation of its human capital
plan to ensure FCA has the staff it needs to remain an effective regulator of the FCS by, for
example, continuing to identify the critical skills needed in the future, appropriately allocating
resources between line and staff functions, and ensuring continuity within senior management
and other staff positions.
Leveraging Technology
The Agency's ability to leverage investments in technologies is a key element in management's
efforts to continually improve Agency performance by increasing the efficiency and
effectiveness of operations. The Agency has an active information resource management
planning process that identifies, reviews, and prioritizes information technology initiatives to
improve Agency operations. The Agency has made significant investments in technologies and
implemented several tools to improve communication, collaboration, and efficiency of
operations. The Agency's challenge is to continue to maximize the use of information
technology investments that will increase Agency efficiency and effectiveness. The successful
implementation of technologies will provide FCA staff with the tools and skills that will enable the
Agency to continue to
improve the quality and availability of financial data that can be used to examine
potential risks across the FCS without creating an undue burden on the FCS;
streamline business processes and build business intelligence to provide decision-
makers with timely management information;
develop electronic recordkeeping and knowledge management capability for capturing,
maintaining, and sharing institutional knowledge; and
protect and secure FCA information systems and data from ever-increasing external
and internal threats.
Respectfully,
Emploints m. Dean
Elizabeth M. Dean
Inspector General
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BC
BROWN & COMPANY CPAs, PLLC
CERTIFIED PUBLIC ACCOUNTANTS AND MANAGEMENT CONSULTANTS
INDEPENDENT AUDITOR'S REPORT
Farm Credit Administration
The Board and Office of Inspector General
Report on the Financial Statements
We have audited the accompanying balance sheets of the Farm Credit Administration (FCA) as of
September 30, 2013 and 2012, and the related statements of net cost, changes in net position, and
budgetary resources, for the years then ended (collectively referred to as the financial statements), and the
related notes to the financial statements.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States; and the Office of Management and Budget
(OMB) Bulletin No. 07-04, Audit Requirements for Federal Financial Statements, as amended. Those
standards and OMB Bulletin No. 07-04, as amended, require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free from material misstatements.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the entity's preparation
and fair presentation of the financial statements in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's
internal control. Accordingly, we express no such opinion. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of significant accounting estimates
made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
1101 MERCANTILE LANE, SUITE 122
LARGO, MD 20774
PHONE: (240) 770-4900 FAX: (301) 773-2090 [email protected] www.brownco-cpas.com
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Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the
financial position of FCA as of September 30, 2013 and 2012, and its net costs, changes in net position,
and budgetary resources for the years then ended, in conformity with accounting principles generally
accepted in the United States of America.
Other Matters
Accounting principles generally accepted in the United States of America require that the information in
the Management's Discussion and Analysis (MD&A), Required Supplementary Information, and
Required Supplementary Stewardship Information sections be presented to supplement the basic financial
statements. Such information, although not a part of the basic financial statements, is required by the
Federal Accounting Standards Advisory Board, who considers it to be an essential part of financial
reporting for placing the basic financial statements in an appropriate operational, economic, or historical
context. We have applied certain limited procedures to the required supplementary information in
accordance with auditing standards generally accepted in the United States of America, which consisted
of inquiries of management about the methods of preparing the information and comparing the
information for consistency with management's responses to our inquiries, the basic financial statements,
and other knowledge we obtained during our audit of the basic financial statements. We do not express an
opinion or provide any assurance on the information because the limited procedures do not provide us
with sufficient evidence to express an opinion or provide any assurance.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the FCA's internal
control over financial reporting (internal control) to determine the audit procedures that are appropriate in
the circumstances for the purpose of expressing our opinion on the financial statements, but not for the
purpose of expressing an opinion on the effectiveness of FCA's internal control. Accordingly, we do not
express an opinion on the effectiveness of FCA's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination
of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement
of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A
significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less
severe than a material weakness, yet important enough to merit attention by those charged with
governance.
Our consideration of the internal control was for the limited purpose described in the first paragraph of
this section and was not designed to identify all deficiencies in internal control over financial reporting
that might be deficiencies, significant deficiencies or material weaknesses. In our fiscal year 2013 audit,
we did not identify any deficiencies in internal control that we consider to be a material weakness.
However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether FCA's financial statements are free from
material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts and grant agreements, noncompliance with which could have a direct and material effect on the
determination of financial statement amounts. However, providing an opinion on compliance with those
BROWN & COMPANY CPAS, PLLC
38
provisions was not an objective of our audit, and accordingly, we do not express such an opinion. Our
fiscal year 2013 audit, disclosed no instances of noncompliance or other matters that are required to the
reported under Government Auditing Standards or OMB Bulletin No. 07-04, as amended.
This report is intended solely for the information and use of the management of FCA, the Office of
Inspector General of FCA, OMB, and Congress, and is not intended to be and should not be used by
anyone other than these specified parties.
Bean & company
November 6, 2013
BROWN & COMPANY CPAS, PLLC
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Exhibit G
Farm Credit Administration
1501 Farm Credit Drive
McLean, Virginia 22102-5090
(703) 883-4000
FCA
FARM CREDIT ADMINISTRATION
CERTIFICATE OF CLOSED MEETING
The General Counsel, in accordance with the Government in the Sunshine Act, 5 U.S.C. § 552b(f)(1),
hereby certifies that the Farm Credit Administration Board regular meeting of January 9, 2014, was
properly closed to the public on the basis of the exemption set forth below:
Information related solely to the internal practices of an Agency - 5 U.S.C.
§552b(c)(2).
/s/
Date: January 9, 2014
Charles R. Rawls
General Counsel
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