62 Farm Credit Administration Management Systems, Controls, and Legal Compliance

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 condition,
which is part of the financial statements, is on pages 3, 6 and 7, 29 through 31, 33 and
34, 52 through 63, and 68 through 71. Also included in this report is information on the
financial condition and performance of the Farm Credit System. FCA examines and
regulates System institutions anc is responsible for ensuring their operations are safe and
sound.

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 annual 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.

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.

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 Plan 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 communication. Finally, we prepare this report, which spells out what we have
done and how weil we have carried out our mission during the year, for Congress, the

We welcome your comments on the content and presentation of this report.

They may be sent to

Office of Congressional and
Public Affairs
Farm Credit Administration
1501 Farm Credit Drive
McLean, VA 22102-5090

or

E-mail Address, info-line@fca.gov

2

FARM-CRED T-ADMINISTRATION-PERFORMANCE AND ACCOUNTABILITY REPORT FY 2001

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.

Secondly, 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 institution violates a law or regulation, or does not meet safety and soundness standards, we can use our enforcement authorities 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-overyear earnings are up. Thanks to the diligent work of the Federal Farm Credit Banks Funding Corporation, which markets debt securities sold by System banks, there was no disruption in the System's liquidity following the attacks that occurred on September 11, 2001.

We will remain ever vigilant 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 role and responsibility. If you have questions, comments and or concerns, please call me personally at (703) 883-4005.

All the best, always!

Michael M. Regua

Michael M. Reyna

Chairman and CEO

FARM-CREDIT ADMINISTRATION-PERFORMANCE-AND-ACCOUNTABILITY REPORT FY 2001

Farm Credit Administration
Organization and Mission