Download
office of inspector general n.
Skip this Video
Loading SlideShow in 5 Seconds..
Office of Inspector General PowerPoint Presentation
Download Presentation
Office of Inspector General

Office of Inspector General

179 Views Download Presentation
Download Presentation

Office of Inspector General

- - - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript

  1. Office of Inspector General Call Report Data Verification February 3, 2005 Audit Report 04-03

  2. Background • The Farm Credit Administration (FCA) is an independent Federal financial regulatory agency of the United States Government. It has regulatory, examination, and supervisory responsibilities for the Farm Credit System banks, associations, and related institutions charted under the Farm Credit Act. • FCA Regulation Part 621 requires that each Farm Credit System institution prepare and file a call report. The call reports are to be filed quarterly and at other times FCA may require. • The call report is comprised of financial information including a report of condition, report of income and supporting schedules on the financial condition of the Farm Credit System institution. • According to the Office of Examination Manual, examiners perform call report validation checks using risk-based examination principles. • Because FCA relies on the call report data to make decisions and publish periodic reports regarding institutions, it is critical that call reports accurately present the condition and performance of each institution.

  3. Audit Objective & Scope • The audit objective was to assess the process used by the Farm Credit Administration to ensure call report data is accurately reported. • Reviewed the process used by FCA to validate call report data. • Reviewed call report data policies and procedures. • Discussed with FCA staff the call report data validation process. • Discussed with FCA staff their use of call report data. • Conducted the audit from August 2004—December 2004. • Audit was conducted in accordance with Government Auditing Standards.

  4. Sample Selection • Judgmentally selected a sample of 50 institutions to review call report validation checks. • Institutions were selected based on: • Asset volume (low-medium-high) • Office of Policy Analysis error report • Appendix D—Notice of Correction to Call Reports • Reviewed call report validation checks performed during FY 2002-2004. • Our review was limited to reviewing the examiner’s workpaper documentation on call report validation checks.

  5. Call Report Validation Process Farm Credit System Institutions • As part of the call report file there are 208 validation checks of call report data to determine inconsistencies. • When inconsistencies are found a difference report is generated. • Institutions review the difference report and make needed corrections before submitting the file to FCA. The call report validationprocess is adequate to ensure data is accurately reported. Office of Examination • Routine examination includes comparing significant call report data to institution’s financial records. • The comparison determines whether the data accurately reflects the institution’s financial position and ensures the call report is in compliance with FCA regulations. • If deficiencies are found, further call reports should be reviewed. Any call report deficiencies that require resubmission should be reported to Office of Policy and Analysis Special Examination and Supervision Division. Office of Policy & Analysis • 215 validation checks are completed automatically. • Checks are similar to those performed by the Farm Credit System institution. • Data is not moved into production unless validation checks pass.

  6. Call Report Validation Frequency Examiners are routinely validatingsignificant call report data. • The majority of call report data being validated includes significant data such as balance sheet, income statement and loan information. • For 98% of the institutions reviewed, the examiners routinely validated call report data during examinations. • For one institution, the examiners did not perform any validation checks during exams performed in 2002 or 2004.

  7. Lead Sheet Documentation Overall lead sheet summaries provided adequate support for work performed. • Our review showed for 70% of the lead sheets, data reviewed was specifically stated. For example the lead sheet would state: “The balance sheet and income statement in the 2004 annual report were compared against the 3/31/04 call report. Tested line items 2,4 and 5 in March 31, 2004 RC-K schedule to source documents. No material discrepancies noted.” • For the remaining lead sheet, summaries included a general statement on documents reviewed. For example the lead sheet would state: “Tested key items on yearend call report against the annual report to shareholder. No major discrepancies noted.”

  8. Call Report Validation Checks The majority of the call report validation checks compared call report data to the institution’s annual report. • 64% of call report validation checks compared call report data to the institution’s annual report only. • 36% of call report validation checks compared call report data to the institution’s annual report and other financial documents (i.e. general ledger). • 38% of the validation checks reviewed by examiners found discrepancies in the call report data.

  9. Inconsistencies in Call Report Validation Checks Field offices call report data checks varied. Bloomington Field Office Bloomington Field Office routinely reviews supporting financial documents, such as the general ledger, as part of their call report review. Dallas Field Office Dallas Field Office routinely limits their reviews to comparing call report data to the annual report.

  10. Inconsistencies in Call Report Validation Checks Denver Field Office Denver Field office uses a risk-based approach. For high asset volume institutions, call report data is tied back to the general ledger. For other institutions, call report data is tied back to the annual report balance sheet and income statement. McLean /Sacramento Field Office Reviews varied by examinations. One institution received no call report validation check.

  11. Call Report Follow-up Call report follow-up is generally conducted when needed. • The majority of workpapers stated minor discrepancies with call report data with no follow-up conducted. • A few institutions have recurring problems with inaccurate call report data. Overall examiners are following up on problems noted. • There were a couple instances when deficiencies were noted with call report data and the examiner asked the institution to follow-up and correct problems as needed. • For example a call report review conducted in 2003 found weakness in call report data and asked the institution to review all their call reports since the previous exam and make corrections as needed.

  12. Internal Communication FCA Office’s are adequately communicating on call report issues. • Examiners usually contact the Office of Policy and Analysis to determine if there have been any problems noted with call report data. • If a call report needs to be resubmitted, the examiners notify the Office of Policy and Analysis. • The Office of Policy and Analysis informs the Office of Examination if they notice any discrepancies with call report data. • Internal users, such as the Office of the Chief Financial Officer, also notify the Office of Policy and Analysis if they find any discrepancies with call report data.

  13. Agreed Upon Actions • Provide clarification to examiners regarding the use of risk based examination process in conducting call report validation checks. • Reinforce existing guidance on preparing lead sheets or other summary documents that adequately document work performed and the conclusion reached on call report reviews. The Chief Examiner will: