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62 Inspector General Act

62 Federal Managers' Financial Integrity Act

62 Summary of Audit Activities for FY 2001

63 Federal Financial Management Improvement Act

63 Prompt Payment Act

63 Civil Monetary Penalty Act

63 Debt Collection Act

64 Farm Credit Administration Financial Statements

65 Letter of Transmittal from the Inspector General

67 Farm Credit Administration Report of Management

68 About the Farm Credit Administration and its Mission

68 About the Financial Statements

69 Performance and Financial Results

72 Independent Auditor's Report on the Financial Statements

74 Independent Auditor's Report on Internal Control

76 Independent Auditor's Report on Compliance with Laws and Regulations

78 Financial Statements and Related Notes

94 Glossary

98 Building A Better Work Place ... A Solid Foundation for the Future

100 Employees of the Farm Credit Administration

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The Farm Credit Administration Performance and Accountability Report for Fiscal Year
2001 consolidates the reporting requirements of the Chief Financial Officers Act of 1990,
the Government Performance and Results Act of 1993 (GPRA), and several other
Statutes covering public accountability Management's Discussion and Analysis of the
Farm Credit Administration's (FCA or Agency) operations and financial coodition,
which is part of tie financial stæernents, is on pages 3, 6 and 7, 29 through 31, 33 and
34,52 Tough 63, and on through 71. Also included in this report is intormation on the
financial condition and performance of the farm Credit Sysłem. FCA examines and
regulates System institutions anc is responsible for ensuring their operations are safe and

We welcome your comments

on the content and presentation of this report.

They may be sent to

This report covers FCA's activities from October 1, 2000, through September 30, 2001, with mention of some subsequent events and future plans. FCA's ar nual Performance Report required by GPRA is presented on pages 53 through 61, it contains actual performance achieved in fiscal year (FY) 2001 compared with the performance goals set forth in FCA's Annual Performance Plan for FY 2000 and 2001.

Office of Congressional and

Public Affairs
Farm Credit Administration

1501 Farm Credit Drive McLean, VA 22102-5090

Financial statements were prepared under standards developed by the Federal Account-
ing Standards Advisory Board and reporting instructions issued by the Office of
Management and Budget. We are proud of achieving an unqualified audit opinion for
FY 2001, the eighth consecutive year.

or E-mail Address,

This report is the final step in FCA's annual planning process. The process begins when
we develop the Strategic Plan, which describes FCA's strategic goals and objectives
along with the level of performance we expect to achieve. Next, we develop an Annual
Performance Plan, which provides detailed information about how the Agency will
achieve the goals and objectives outlined in the Strategic Plas. and then measure the
results. Embodied in these documents are not only the principles of safety and sound-
ness, but of customer service, product quality, effective and efficient operations, and
clear comriunication. Finally, we prepare this report, which spells out what we have
done and how weil we have carried out our mission during the year, íor Congress, the



Statement of the Chairman and CEO

January 2002

My Fellow Citizens,

On behalf of my colleague Ann Jorgensen, and the men and women of the Farm Credit Administration, I invite you to review our fiscal year 2001 Performance and Accountability Report.

Our Agency is congressionally mandated to ensure a dependable source of credit for agriculture and rural America. We accomplish this mission in two important ways. First, we conduct on-site financial safety and soundness examinations of each Farm Credit System (FCS or System) institution. These examinations also focus on whether System institutions are meeting their public mandate to serve all eligible borrowers having a basis for credit.

Seconcly, we approve corporate charter changes and research, develop and adopt rules, regulations and other
guidelines that govern how System institutions conduct their business and interact with their customers, If, in the
conduct of their business, a System ir stitution violates a law or regulation, or does not meet safety and soundness
standards, we can use our enforcement anhorities to ensure the problem is corrected promptly.
The System is a nationwide network of borrower-owned financial institutions and related service organizations
that provide credit to farmers, ranchers and their cooperatives in all fifty states and Puerto Rico. As the nation's
oldest government sponsored enterprise, the System serves a broad public purpose by preserving liquidity and
competition in rural credit markets during both good and bad economic times

During fiscal year 2001, the System has had a solid record of performance. Capital levels have continued to
increase through retained earnings and stock purchases and asset quality has remained high, even during
moderate loan growth. The System has knowledgeable and experienced managers at all levels and year-over-
year earnings are up. Thanks to the diligent work of the Federal Farm Credit Banks Funding Corporation,
which markets debe securities sold by System banks, there was no disruption in the System's liquidity following
the attacks that occured on September 11, 2001.
We will remain ever vigilart in our efforts to ensure that the System remains financially strong and mission
focused on agriculture and rural America for generations to come. We welcome your comments on ways we can
continue to improve our operations and, hence, better fulfill our cole and responsibility. If you have questions,
comments and or concerns, please call me personally at (703) 883-4005.

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Farm Credit Administration
Organization and Mission

The FCA Board

The Farm Credit Administration is an If a System institution violates a law or
independent agency in the executive regulation, or doesn't meet safety and
branch of the U.S. Government responsible soundness standards, FCA may use its
for regulating and supervising the banks enforcement authorities to ensure that the
associations, and related entities in the problem is corrected. FCA also protects
Farm Credit System, including the Federal the rights of borrowers, issues or changes
Agricultural Mortgage Corporation the charters of FCS institutions, reports to
(Farmer Mac). The FCS is a nationwide Congress on the financial condition and
network of borrower-owned financial performance of the FCS, and approves the
institutions that provide credit to farmers, issuance of System debt obligations.
ranchers, cooperatives, and rural utility

The Agency has its headquarters and a

fied office in McLean, Virginia. There are Created by an Executive order of President also field offices in Bloomington, MinneFranklin D. Roose relt in 1933, FCA derives sota; Dallas, Texas; Denver, Colorado; and its powers and authorities from the Farm Sacramento, California. Credit Act of 1971, 23 amended (Farm Credit Act or Act). Congressional oversight of FCA and the System is provided by the U.S. Senate Committee on Agricalture, Nutrition, and Forestry and the U.S. House of Representatives Committee on Agriculture

FCA policy and the regulatory agenda
are established by a full-time, three-
person Board, whose members are
appointed by the President with the
advice and consent of the U.S. Senate.
They serve a six-year term and may not
be reappointed after serving a full term
or more than three years of a previous
member's term. The President desig-
nates one member as Chairman of the
Board, who serves un il the end of that
member's term. The Chairman also
serves as FCAs chief executive officer


Our mission here at FCA is to ensure a
dependable source of credit for agriculture
and rural America. We do this in two
specific ways. First, we conduct on-site
financial examinations of Purm Credit
System institutions as a way to monitor
and oversee the safety and soundness of
their ongoing activities. These examina-
tions also focus on whether System
institutions are meeting their public
mandate to serve all eligible borrowers
having a basis for credit. Secondly, we
approve corporate charter changes and
research, develop, and adopt rules, regula-
tions, and other guidelines that govern how
System institucions conduct their business

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