United States Office of Inspector General · Grain and Commodity Inventories; Audit Report No. 50099-13-KC) Better Controls Needed Over Genetically Engineered Germplasm The StarLink

United StatesDepartment ofAgriculture

Office ofInspectorGeneral

No. 51

June 2004

Office ofInspector GeneralSemiannual Reportto CongressFY 2004—First Half

The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color, nationalorigin, sex, religion, age, disability, political beliefs, sexual orientation, and marital or family status. (Not all prohibited bases apply to allprograms.) Persons with disabilities who require alternative means for communication of program information (Braille, large print,audiotape, etc.) should contact USDA’s TARGET Center at (202) 720-2600 (voice and TDD).

To file a complaint of discrimination, write USDA, Director, Office of Civil Rights, Room 326-W, Whitten Building, 1400 IndependenceAvenue, SW, Washington, D.C. 20250-9410 or call (202) 720-5964 (voice or TDD). USDA is an equal opportunity provider andemployer.

On the cover: Graphic commemorating the 25th anniversary of the enactment of the Inspector General Act of 1978,courtesy of the President’s Council on Integrity and Efficiency/Executive Council on Integrity and Efficiency.

i

ii

iii

Key Challenges and Strategic GoalsTo Meet Them

During the last 6 months, we at the U.S. Department ofAgriculture (USDA) Office of Inspector General (OIG)have been working diligently on our Strategic Plan forFiscal Years (FY) 2004-2008. This plan reflects work,introspection, and insight at all levels of theorganization. It assesses our purpose, our future, andwhat we must do to provide a worthy return on the U.S.taxpayers’ investment. It constitutes a roadmap andvitalizes our efforts in OIG.

As part of our strategic plan, we have identified threekey challenges overall for USDA, which constitute themain sections of this report:

1. Safety, Security, and Public Health2. Integrity of Benefits and Entitlements Programs3. Management of Public Resources

To support the Department in these areas, we haveprioritized our work to focus on five key areas ofemphasis:

• Public Health and Safety• Physical and Research Security• Information Technology Security and Management• Farm Programs• Employee Corruption

Finally, our strategic plan addresses not only thechallenges facing the Department but also how the OIGcan work better as well. We have developed fourstrategic goals for improving OIG—three business goalsto address the three key challenges facing theDepartment and one management goal on improvingOIG operations:

1. Support USDA in the Enhancement of Safety andSecurity Measures To Protect USDA andAgricultural Resources and in Related Public HealthConcerns

2. Reduce Program Vulnerabilities and EnhanceIntegrity in the Delivery of Benefits to Individuals

3. Increase the Efficiency and Effectiveness WithWhich USDA Manages and Employs Public Assetsand Resources, Including Physical and InformationResources

4. Ensure OIG Readiness To Achieve Its StrategicGoals

Ultimately, our strategic plans, annual plans, budgetrequests, and semiannual reports will work in concert topresent a unified view of historical trends, our currentsituation, ongoing efforts, and future goals, all based onthe blueprint of our strategic plan. We are at thebeginning of this process and expect to further refineour plans and accomplishment reports as we progress.

iv

v

Contents

Message From the Inspector General .................................................................................................................. i

Key Challenges and Strategic Goals To Meet Them .......................................................................................... iii

Contents .................................................................................................................................................................. v

Safety, Security, and Public Health ...................................................................................................................... 1

OIG Work on Agricultural Security Issues ........................................................................................................... 1

Ongoing and Planned Reviews for Agricultural Security Issues .......................................................................... 5

Public Health and Safety ..................................................................................................................................... 5

Ongoing and Planned Reviews for Public Health and Safety .............................................................................. 7

Integrity of Benefits and Entitlements Programs ................................................................................................ 8

Feeding Programs ............................................................................................................................................... 8

Ongoing and Planned Reviews for Feeding Programs ........................................................................................ 11

Farm Programs .................................................................................................................................................... 12

Ongoing and Planned Reviews for Farm Programs ............................................................................................ 13

Risk Management Agency and Crop Insurance .................................................................................................. 13

Ongoing and Planned Reviews for RMA and Crop Insurance............................................................................. 15

Management of Public Resources ........................................................................................................................ 16

Financial Management and Accountability .......................................................................................................... 16

Ongoing and Planned Reviews for Financial Management and Accountability ................................................... 18

Information Technology Security and IT Management ........................................................................................ 18

Ongoing and Planned Reviews for IT Security and IT Management ................................................................... 20

Special Resource Challenges Facing the Forest Service .................................................................................... 20

Ongoing and Planned Reviews for the FS........................................................................................................... 22

Grain Inspection, Packers and Stockyards Administration .................................................................................. 22

Summaries of Audit and Investigative Activities ................................................................................................ 23

Statistical Data ....................................................................................................................................................... 24

Audits Without Management Decision ................................................................................................................. 24

Indictments and Convictions ................................................................................................................................ 30

Office of Inspector General Hotline ...................................................................................................................... 31

Freedom of Information Act and Privacy Act Requests ....................................................................................... 32

Appendix I: Inventory of Audit ReportsWith Questioned Costs and Loans .................................................................................................................. 33

Appendix II: Inventory of Audit ReportsWith Recommendations That Funds Be Put to Better Use ............................................................................ 34

Appendix III: Summary of Audit Reports Released FromOctober 1, 2003, Through March 31, 2004 ....................................................................................................... 35

vi

1

OIG Strategic Goal Number One:Support USDA in theenhancement of safety andsecurity measures to protectUSDA and agriculturalresources and in related publichealth concerns.

USDA works to ensure that the Nation’s commercialsupply of imported and domestic meat, poultry, and eggproducts is safe, wholesome, and correctly labeled.Challenges to this include food-borne illnesses and theintentional adulteration of meat and poultry and relatedfood products.

• The Food Safety and Inspection Service (FSIS) setsstandards for food safety; inspects meat, poultry, andegg products; informs the public about food safetyissues; and works with a number of national andinternational organizations.

• The Animal and Plant Health Inspection Service(APHIS) protects America’s animal and plantresources by safeguarding them from exotic invasivepests and diseases, monitoring and managing pestsand diseases existing in the United States, resolvingtrade issues related to animal and plant health, andensuring the humane care and treatment of animals.

• The Agricultural Research Service (ARS) works toprovide the scientific knowledge and technologiesneeded to ensure the viability of Americanagriculture.

For the first half of FY 2004, OIG issued sevenaudit reports relating to safety, security, and publichealth. OIG’s investigations for that key challengeduring the first half of FY 2004 yielded 2indictments, 17 convictions, and more than$700,000 in monetary results.

Safety, Security, and Public Health

OIG WORK ON AGRICULTURALSECURITY ISSUES

The events of September 11, 2001, and heightenedconcern about potential terrorist attacks and threatshave added a new dimension to the Department’smissions and priorities. At issue are USDA’s missions toensure the safety and abundance of the Nation’s foodsupply, from the farm to the table, and to protect thehealth of American agriculture from the introduction offoreign animal and plant pests and diseases. USDAmust now readily identify its assets, perform securityrisk assessments, and design and implementappropriate safeguards to prevent or deter deliberateacts to contaminate the food supply, disrupt or destroyAmerican agriculture, or harm U.S. citizens.

Safety and Security Measures for AgriculturalCommodities Need Upgrading

In our recent audit of Farm Service Agency (FSA)oversight of its inventories of food, feed, and fiber, wefound that FSA

• failed to conduct vulnerability and risk assessmentsto determine security weaknesses and neededprotections;

• did not have a clear safety and security policy toaddress the prospect of intentional and widespreadcontamination in the handling, transportation,storage, and distribution of these commodities;

• does not maintain commodity inventory managementsystems capable of providing timely information tomanagers on the location and disposition ofquestionable (i.e., potentially contaminated)inventories; and

• does not subject its warehouse examiners tobackground investigations.

We recommended that FSA, in collaboration with theUSDA Homeland Security Office, develop food safetyand security strategies and conduct risk assessmentsfor agricultural commodity operations and relatedprograms. We further recommended that these riskassessments be used as the basis for formulatingcorrective action for our remaining recommendations,including that FSA develop and implement securityaction plans and tactical procedures to protect its food,

2

feed, and fiber inventories. While FSA generally agreedwith our recommendations, they have not yet set atarget completion date for the necessary riskassessments. (Homeland Security Issues for USDAGrain and Commodity Inventories; Audit Report No.50099-13-KC)

Better Controls Needed Over GeneticallyEngineered Germplasm

The StarLink corn incident—when geneticallyengineered corn approved only for animal feedappeared in consumer food products—raised publicawareness of biotechnology issues. It also prompted usto review USDA’s role in controlling geneticallyengineered organisms (GEO), with a specific focus onthe National Plant Germplasm System (NPGS). Wefocused on NPGS because, in the event of a massivecrop failure or intentional crop destruction, theagriculture industry would need to use NPGSgermplasm (living tissue from which new plants couldbe grown) to restock crops. NPGS would need to knowthat its germplasm inventory had not been contaminatedand that it could accurately identify which of itsgermplasm stores were naturally occurring in plants(and, hence, should be used to restock the world’scrops) and which were genetically engineered (or GEO).

We found several weaknesses in NPGS oversight: theNPGS handbook does not provide national guidance forthe identification, shipment, inventory and disposal ofGEOs; NPGS cannot always identify which of itsgermplasms are genetically engineered; because NPGSdoes not require physical inventories of germplasm,most facility managers do not conduct them regularly;facilities lacked uniform written instructions on thedisposal of germplasm—including GEOs; and physicalsecurity and oversight of foreign visitors was not alwaysadequate to prevent theft or contamination. We alsofound that APHIS (which regulates the movement ofcertain GEOs) policies governing the shipment of GEOswere insufficient; and that it did not adequately ensurethat interstate shipments of GEOs complied with eventhese insufficient policies.

ARS, which oversees NPGS activities, and APHISgenerally agreed with our recommendations that:

• ARS issue written guidance requiring documentationof all GEOs entering NPGS, the conduct of routinephysical inventories of all germplasm storage

facilities, appropriate oversight of foreign visitors atNPGS facilities, and proper germplasm disposalmethods, including those for GEOs;

• ARS take reasonable steps to enhance physicalsecurity at NPGS facilities; and

• APHIS revise its requirements for movement ofGEOs to prevent unauthorized shipment ofgenetically engineered bioplasm.

(Controls Over Plant Variety Protection and GermplasmStorage; Audit Report No. 50601-6-Te)

Improved Security Needed Over Chemical andRadioactive Materials at USDA Facilities

We audited security controls over hazardous chemicaland radioactive materials at 33 USDA laboratories. Wefound that while there is generally adequate nationalguidance on the management and protection ofradioactive materials, there is little indepth guidance onsecurity controls for hazardous chemicals. Instead, eachUSDA agency provides its own definition of hazardouschemicals and determines how its laboratories willmaintain inventory records—resulting in chemicalinventory control problems at some laboratories. Also ofconcern was the absence of a centralized,comprehensive listing of hazardous chemicals at theagency headquarters level, which could potentially limitthe agencies’ ability to respond in the event of ahazardous chemical incident. One weakness we foundthat was common to both hazardous chemical andradioactive materials programs was the lack of policiesand procedures specifying the minimum level ofbackground investigation for personnel with access tohazardous materials.

USDA generally agreed with our recommendations torequire routine physical inventories of chemicals and todevelop a comprehensive, secure inventory, organizedby agency and readily accessible by Departmentmanagers, of hazardous materials at USDAlaboratories. We further recommended that theDepartment develop a monitoring program with site-specific risk assessments for laboratories housinghazardous chemicals and require USDA agencies toimprove security measures based on the results ofthese site assessments. Finally, we recommended thatthe Department implement policies and proceduresspecifying the minimum level of background

3

investigation necessary for personnel with access tohazardous materials. (Controls Over Chemicals andRadioactive Materials at USDA Facilities; Audit ReportNo. 50601-9-At)

Security Over Dangerous Pathogens at USDALaboratories Is Significantly Improved, but FurtherProtections Are Needed

In a March 2002 audit, we found that security overbiological agents was lax at almost half of the 124USDA laboratories we visited. Because USDA performsresearch on animal and plant pathogens, some of which(e.g., citrus canker) can harm agricultural crops, whileothers (e.g., Avian influenza virus) can cause disease ordeath in animals and humans, the security of theselaboratories from inadvertent or intentional release ofpathogens is of extreme importance.

To gauge the Department’s progress in safeguardingthese dangerous pathogens, we recently madeunannounced visits to 16 laboratories where our 2002audit had previously identified deficiencies in physicalsecurity, inventory control, and access to laboratoryareas. Four of the laboratories visited were biosafetylevel-3 (BSL) (high risk) laboratories, and 12 were non-BSL-3 (medium- and low-risk) laboratories.

We found that agency officials have generally madegreat strides to implement biosecurity measures,particularly for BSL-3 laboratories. Overall, we notedsignificant progress during our limited review, althoughsome areas continue to need improvement.

• All four BSL-3 laboratories have had site-specific riskassessments and are remedying security concerns.BSL-3 laboratories have started to implementsecurity system upgrades such as fences, new doorsand locks, 18-gauge expanded metal fastenings forwindows, and proximity card readers.

• The laboratories have implemented stricterrequirements for employees and visitors. Only thosewith the appropriate background investigation mayhave unsupervised access to laboratories workingwith high-consequence pathogens. All personnellacking the appropriate clearance are escorted at alltimes while in high-containment areas as required.

• In accordance with new Departmental guidelines, all16 laboratories have developed inventory lists forbiological agents, and have forwarded inventoryinformation for the National Pathogen Inventory totheir agency headquarters. The four BSL-3laboratories have requirements in place specifyingthe information the inventory records should contain,and no inventory discrepancies were disclosedduring our fieldwork at BSL-3 laboratories.Laboratories that possessed or used listed agentsand toxins have reported them to APHIS as required.

• Some improvements were still needed, however, interms of key biosecurity measures for accountablerecords, internal reviews, and cybersecurity systems.Also, we found that the Department-wide policy andprocedures for BSL-3 laboratories lack key regulatoryrequirements mandated under the Public HealthSecurity and Bioterrorism Preparedness andResponse Act of 2002 (P.L. 107-188).

APHIS and ARS officials concurred with ourrecommendations that they give more specific guidanceto BSL-3 laboratories about interpreting and enforcingthe biosecurity measures listed in the BSL-3 manualand update the BSL-3 manual to include requirementsand regulations published subsequent to the manual’sissuance. They also agreed to work with non-BSL-3laboratories to expedite their implementation of theappropriate policies and procedures. In response to oneparticularly sensitive incident found by the audit, APHISverified that listed agents, in particular BovineSpongiform Encephalopathy (commonly known as BSEor “mad cow disease”), were removed from a strip mallfacility that had previously been used for testing.(Followup Review on the Security of BiohazardousMaterial at USDA Laboratories; Audit Report No. 50601-10-At)

Rural Water Systems Face an Elevated Risk ofContamination or Interruption of Service in the Faceof Manmade or Natural Disasters

Through the Rural Business-Cooperative Service(RBS), Rural Housing Service (RHS), and Rural UtilitiesService (RUS), USDA provides needed support andfunding for basic infrastructure in our Nation’s ruralareas. Given the importance of the rural infrastructuresupported by these programs, we reviewed how each

4

program works with participants to identify and addressrisks related to manmade or natural disasters.

• Our review of RBS activities and RBS-financedfacilities did not identify any significant homelandsecurity risks other than those common to all smallbusinesses. We also found that RBS was proactive inidentifying those borrowers and applicants for loansthat had potentially suspicious purposes (e.g., loanfor purchase of a crop duster airplane, etc.).

• In general, RHS housing activities and related loansdid not present any unique risks or vulnerabilities toterrorist activity. The community facilities loanprogram borrowers we reviewed had developed andimplemented effective emergency response plans.

• The results of our review at RUS were morecomplicated. The electric and telephone borrowerswe visited had generally taken steps to plan foremergency situations. However, we found that RUSwater facility borrowers did not assess thevulnerabilities of their water systems and prepareeffective, updated emergency response plans. The10 water systems we reviewed in 2 States wereunprepared to address emergency situations and didnot have effective processes in place to detect andreact to unanticipated hazards—situations that couldlead to interruptions in the supply of clean drinkingwater in the event of natural or manmade disaster.We concluded that it is vital for RUS to assistcommunity water systems in assessingvulnerabilities, developing effective emergencyresponse plans, and implementing the plans toaddress the risks associated with a natural ormanmade disaster.

In response to our recommendations, RUS agreed toprovide its nearly 8,000 borrowers with technicalassistance for emergency planning over the next 3years. The OIG, however, believes that the currentglobal environment warrants that RUS move to morequickly provide community water facilities with help inassessing vulnerabilities and developing andimplementing effective emergency response plans todeal with a natural or manmade disaster. Without suchassistance, rural communities will continue to face anelevated risk of contamination or interruption in theirsupply of clean drinking water. (Survey of HomelandSecurity Issues at Rural Development; Audit ReportNo. 85099-1-Hy)

Department Effectively Used SupplementalAppropriations for Homeland Security, but CouldBenefit From Improved Agency Reporting

In a recent audit of USDA procedures for overseeing the$302 million supplemental appropriation Congressprovided in 2002 to cover USDA homeland securityactivities, we found that the USDA agencies included inour review were using the supplemental appropriationsfor allowable homeland security purposes. However, themonthly obligations and expenditures status reports theDepartment requires each agency to submit were notalways clear and accurate.

USDA has implemented our recommendation to requireeach agency to establish a review process and internalcontrols to identify and correct errors and outdatedinformation on the monthly obligations and expendituresstatus reports. (Allocation and Use of HomelandSecurity Funds; Audit Report No. 50601-7-Ch)

Foreign National Convicted for Smuggling NarcoticPlant Into U.S.

The OIG participated in an investigation that led to thearrest and conviction of a Yemeni national for smuggling519 kilograms of khat (a shrub containing cathinone—aschedule-one narcotic) into the United States. Inaddition to the narcotics issue, it is illegal to import khat,

Some of the captured khat and the box in which it was smuggled intothe United States. APHIS photo.

5

and the banana leaves khat is generally wrapped in topreserve its narcotic effect, due to the potential forintroducing exotic diseases and pests.

The subject received 5 years of probation and was fined$7,700. APHIS is also proceeding with administrativeaction against the subject. This investigation wasconducted jointly with APHIS, the Federal Bureau ofInvestigation (FBI), and the New York City PoliceDepartment’s Counter Terrorism Bureau.

ONGOING AND PLANNED REVIEWS FORAGRICULTURAL SECURITY ISSUES

Agricultural security issues that will be covered inongoing or planned OIG reviews include:

• information technology (IT) security controls inthe Risk Management Agency, EconomicResearch Service, Rural Development (RD),and Foreign Agricultural Service;

• controls over hazardous materials at APHIS;• use of homeland security funds provided by the

Department to non-Federal research and otherprivate institutions;

• controls over issuance of GEO release permits;• controls over APHIS-owned and -leased aircraft;• transition and coordination of border inspection

activities between USDA and the Department ofHomeland Security;

• USDA activities involving genetically engineeredanimals and insects and the separation ofgenetically engineered crops in the food chain;and

• USDA coordination with other Federal agenciesin implementing the food security provisions ofthe Public Health Security and BioterrorismPreparedness and Response Act of 2002 (P.L.107-188).

The findings and recommendations from theseefforts will be covered in future semiannual reportsas the relevant audits and investigations arecompleted.

PUBLIC HEALTH AND SAFETY

This area of emphasis includes audit and investigativework related to tainted food products, food safetyprogram integrity, intentional or inadvertentdissemination of animal and plant diseases includingmad cow and foot-and-mouth disease, threats againstand assault of USDA employees, and other issues thataffect or have the potential to affect the physical well-being of individuals.

FSIS Improved Controls for the Equivalence ofForeign Food Safety Systems

FSIS determines whether foreign countries and theirestablishments have food safety systems andinspection requirements equivalent to those of theUnited States, and randomly reinspects imported meatand poultry products from those countries. Weevaluated FSIS’ procedures for making the initialdetermination of a foreign country’s equivalence andactions FSIS took in response to OIG’srecommendations in our June 2000 audit report. In ourJune 2003 audit, we found that FSIS had implementedcontrols based on our previous audit and was followingits controls for documenting, reviewing, and approvingthe equivalence determinations for

• the Hazard Analysis and Critical Control Point(HACCP) and Salmonella testing requirements forthe 32 countries we reviewed;

• the residue control programs for the 33 countriesalready approved to export product to the UnitedStates; and

• Slovakia’s meat inspection program and NewZealand’s alternative generic E. coli testing programfor bobby calves (veal).

Because FSIS had implemented the agreed-uponcorrective actions for the 17 recommendations in ourJune 2000 audit report, we made no additionalrecommendations. (Imported Meat and PoultryInspection Process Equivalence Determinations –Phase III; Audit Report No. 24099-5-Hy)

6

Company Owner Sentenced for Poultry Adulteration

In January 2004, the owner of a southern Californiafood service management, storage, and distributionbusiness was sentenced to 1 year of supervisedprobation and fined $10,000 after he pled guilty todelivering adulterated turkey products to area schools.The company, which supplied 47 school districts,transported and distributed poultry products that hadbeen adulterated with rodent hair, rodent feces, andgnawings by rodents to schools in the Bakersfield,California, area in 1996 and 1997. The plant managerhad previously pled guilty to causing the adulteration ofpoultry products and had agreed to testify against theplant owner. The owner and his company are awaitingtrial for similar violations related to his northernCalifornia warehouse.

Former Utah APHIS Worker Sentenced for BrutalMurder of Teenage Girl

In a followup from the second half of FY 2002, a formerAPHIS employee was sentenced in January 2004 to lifein prison without the possibility of parole for the brutalmurder and dismemberment of a teenage girl in June2000 at an APHIS animal research facility in Utah. The31-year-old former USDA employee was found guilty attrial of aggravated capital murder, aggravated felonykidnapping, and desecration of a dead human body.This investigation was conducted jointly with the CacheCounty, Utah, Sheriff’s Department.

Multi-State Dogfighting Case Yields Guilty Pleas

An ongoing investigation identified a loose-knit group ofindividuals in the Northeast who participated in andpromoted illegal dogfighting. The case identifieddogfighters, dog breeders, and an owner and formerowner of an international underground dogfightingmagazine, the Sporting Dog Journal (SDJ), in Georgia,New York, Pennsylvania, West Virginia, and Virginia.

• In New York, the owner and publisher of SDJ wasconvicted in March 2004 on State charges of animalcruelty, animal fighting, tampering with evidence, andother charges.

• Another individual was indicted in March 2004 for theinterstate distribution of animal fighting videotapesand books.

• Information obtained from the investigation has alsoled to the arrest or indictment of six individuals inPennsylvania on State charges of animal cruelty,animal fighting, and other charges. Five have pledguilty, and one is awaiting trial.

• During the execution of State and Federal searchwarrants in 4 States, 96 dogs were seized, as well astruckloads of dogfighting books, videotapes, relatedequipment, and computers.

OIG worked with the Georgia Bureau of Investigation,New York State Police, Pennsylvania State Police, WestVirginia State Police, and State and Federal prosecutorson this case.

The fighting dogs were kept in poor conditions. OIG photo.

7

ONGOING AND PLANNED REVIEWS FORPUBLIC HEALTH AND SAFETY

Public health and safety topics that will be coveredin ongoing or planned reviews include:

• poultry recalls due to a listeria outbreak in theNortheastern United States;

• implementation of HACCP in very small plants;• followup to assess the implementation of

recommendations made in our 2000 FoodSafety Initiative;

• analysis of food safety information systems;• the Department’s BSE surveillance program;• APHIS’ implementation of the listed agents and

toxins provisions of the Public Health Securityand Bioterrorism Preparedness and ResponseAct of 2002 (P.L. 107-188);

• egg processing inspections; and• emergency eradication and control programs.


8

Integrity of Benefits andEntitlements Programs

OIG Strategic Goal Number Two:Reduce program vulnerabilitiesand enhance integrity in thedelivery of benefits toindividuals.

Benefit and entitlement programs in USDA include avariety of programs that provide payments directly andindirectly to individuals or entities to feed at-riskpopulations, including the poor and mothers andchildren, and support farmers and rural communities.These programs involve tens of billions of dollars inestimated outlays for FY 2004 and are susceptible tomisuse by organized groups (such as large-scale foodstamp traffickers) and individuals.

• The Food and Nutrition Service (FNS) administersthe Federal domestic nutrition assistance programs,including the Food Stamp Program (FSP), the ChildNutrition Programs, and the Special SupplementalNutrition Program for Women, Infants, and Children(WIC).

• The Farm Service Agency (FSA) helps ensure thewell-being of U.S. agriculture through theadministration of farm commodity programs; farmoperating, ownership, and emergency loans;conservation and environmental programs;emergency and disaster assistance; domestic andinternational food assistance; and international exportcredit programs.

• The Risk Management Agency (RMA) providesagricultural producers with the opportunity to achievefinancial stability through effective risk managementtools, such as crop insurance.

For the first half of FY 2004, OIG issued 23 auditreports relating to the integrity of benefits andentitlements programs. OIG’s investigations forthat key challenge during the first half of FY 2004yielded 168 indictments, 98 convictions, and$57.2 million in monetary results.

FEEDING PROGRAMS

Because FNS programs have large dollar outlays(approximately $42 billion estimated for FY 2004), thepotential exists for fraud and large dollar losses. In FY2004, we are emphasizing audits of FNS programs,particularly FSP, to ensure that critical internal controlchecks are in place to guarantee efficiency,effectiveness, and economy. We are continuing tomonitor Electronic Benefits Transfer (EBT) systems asthey are implemented.

Food Stamp and EBT Fraud Investigations ReapSignificant Results

OIG investigations of Food Stamp Program fraudcontinued to result in substantial penalties for retailstore owners and their associates who illegally profit by“discounting” food stamp benefits—returning a lesseramount of cash (typically 50 cents on the dollar) torecipients in exchange for program benefits that aresupposed to be used only to purchase food. Nearly allFSP benefits are now issued through ElectronicBenefits Transfer, which, in addition to savingadministrative program costs by eliminating costs ofprinting, issuing, and reconciling millions of paper foodstamps every month, also provides indisputableassistance to investigators in the form of completeelectronic records of FSP transactions made byauthorized retailers. EBT records can be used to targetinvestigations by highlighting suspicious patterns ofactivity; they also provide evidence of food stamp fraud,conspiracy, and wire fraud in criminal proceedings. EBTis a powerful tool for identifying and stopping large-scaletraffickers and for identifying recipients who misuse theirbenefits.

• Chicago, Illinois: Four individuals in Chicago havebeen sentenced to serve from 15 to 57 months inprison and ordered to pay $29.1 million in restitutionfor defrauding FSP from the fall of 1997 throughAugust 2001. The restitution is the largest everordered in a single FSP EBT fraud case in theChicago area. The subjects moved the authorizedpoint of sale device to different locations in Chicagoso they could exchange cash for EBT benefits awayfrom the authorized store. Three pled guilty inSeptember 2003, and the fourth was convicted of allcounts during a jury trial in October 2003.

9

• Miami, Florida: In October 2003, the owner of asmall Miami convenience store was sentenced inU.S. District Court to serve 60 months in Federalprison, ordered to pay nearly $4.5 million inrestitution to USDA, and fined $4,500 after he wasconvicted at trial on charges of conspiracy, illegalredemption of food stamp coupons, and moneylaundering. An employee was also convicted at trialon conspiracy charges and was sentenced to serve42 months in prison. From April 1996 throughFebruary 1998, the store redeemed approximately$3.3 million in illegally obtained food stamps. Theinvestigation also found that the storeownerconspired with others from 1992 to 1998 and, for acommission, redeemed food stamps for unauthorizedstores.

• Tampa, Florida: In November 2003, as a result of ajoint investigation with Federal, State, and local lawenforcement authorities, the owner and threeemployees of a community grocery store in Tampareceived sentences ranging from 12 to 55 months inFederal prison after pleading guilty to Federalcharges of EBT fraud. The defendants were orderedto pay a total of $2.6 million in restitution to USDAand a $500,000 judgment order. From November1998 to October 2002, the store redeemed more than$3 million in food stamp benefits. The storeownerswere previously disqualified from the FSP andconspired with an employee to fraudulently obtain anauthorization to accept food stamp benefits. Inaddition, seven Federal criminal complaints werefiled against recipients who had traded as much as$19,500 in food stamp EBT benefits for cash. Morerecently, 53 State arrest warrants were obtained forrecipients who had discounted up to $5,000 in foodstamp benefits, and 115 cases naming otherrecipients have been referred to FNS foradministrative disqualification.

• Philadelphia, Pennsylvania: The owner of agrocery store in Philadelphia, Pennsylvania, wasspared incarceration due to his failing physical healthand was sentenced in Federal court to 51 months ofelectronic home confinement, followed by 3 years ofprobation. He was ordered to pay more than$770,000 in restitution to USDA for his participationin a $1.1 million food stamp trafficking and money-laundering scheme.

New Mexico Generally Successful in EBT SystemImplementation

All 50 States and the District of Columbia now use EBTsystems to deliver food stamp benefits. This semiannualperiod, we found that the EBT system in New Mexicowas successfully implemented but that weak controlsallowed EBT service fees of more than $95,000 to beimproperly charged to FSP for the New Mexico grossreceipts tax, and an error in account setup resulted in aneeded adjustment to the State Automated Applicationfor Payments balance of more than $450,000. We alsofound that

• EBT benefits of more than $500,000 needed to beremoved from the processor’s authorization-pendingfile, and

• the State agency needed to develop adequate writtenpolicies and procedures for reviewing managementreports, performing reconciliations, resolvingcomplaints, and ensuring authorized access.

The State agency and FNS generally concurred with ourrecommendations. (State of New Mexico ContinuedMonitoring of EBT System Development; Audit ReportNo. 27099-18-Te)

Welfare Recipient Claims Benefits in Five Statesat Once

In December 2003, a U.S. District Court judge inMichigan sentenced a welfare recipient to 180 days ofhome confinement and 2 years of probation, andordered her to pay full restitution after she pled guilty toone count of unlawful acquisition of food stampcoupons. The recipient fraudulently received over$91,000 from the food stamp and other welfare benefitprograms simultaneously in five States (Arkansas,Louisiana, Tennessee, Indiana, and Michigan) from1994 through 1998.

Georgia State Employee Sentenced to FederalPrison for Fraudulent Scheme Involving USDAAssistance Program

A former Georgia Department of Family and ChildrenServices employee was sentenced in December 2003to serve 15 months in Federal prison, followed by 3years of supervised release, after pleading guilty toconspiracy charges. The subject also was ordered to

10

pay approximately $15,000 in restitution. During thecourse of the OIG investigation, it was determined that,during a 7-month period in 1998, the subject conspiredwith an associate to create fictitious recipient cases andreceived food stamp and Temporary Assistance toNeedy Families benefits fraudulently. The subject’saccomplice also pled guilty to conspiracy charges and isawaiting sentencing.

Control Weaknesses Cost National School LunchProgram Operations Money

During this reporting period, we evaluated 10 SchoolFood Authorities’ (SFA) internal controls related to mealaccountability, procurement, and accounting systems in4 States. The SFAs did not always follow mealaccountability procedures, including proper use of editchecks to ensure the accuracy of the daily meal countsand claims for reimbursement, and procurementprocedures did not always comply with Federal or Staterequirements. As a result of such issues:

• Kansas and Missouri: We identified overclaims of$2,850 and underclaims of $142,450. In addition,schools did not perform cost analyses to determinethe cost-effectiveness of individual vendors,purchasing cooperatives, and Food ServiceManagement Companies (FSMC). Some SFAs didnot adequately monitor FSMC billings and contractterms, and purchasing cooperatives did not specifythat they would maximize competition. (Audit ReportNos. 27010-14-KC, 27010-15-KC, 27010-16-KC,27010-17-KC, 27010-19-KC, 27010-20-KC, and27010-21-KC)

• Texas: SFA officials did not competitively bid acontract with an FSMC to provide food services, andthey accepted the contract and subsequent renewalsas fixed-cost contracts, resulting in about $18,300 inineligible management fees. The SFA also could notensure the accuracy and eligibility of meals claimedfor reimbursement. (Accountability and Oversight ofthe National School Lunch Program – Star Programs,Inc., Ingram, Texas; Audit Report No. 27010-9-Te)

• Illinois: An SFA improperly claimed more than71,000 meals during school years 2002 and 2003.Applications were not maintained to support everymeal claimed as free or reduced price, and the meal-counting systems did not yield accurate totals. TheSFA’s milk purchases were inconsistent with

providing a nutritious meal to every eligible student.We questioned $136,138 in National School LunchProgram reimbursements. In addition, theprocurement of vended meal services restrictedcompetition, and the SFA did not maintain keydocuments used in approving and awarding the bid.(Accountability and Oversight of the National SchoolLunch Program; Audit Report No. 27010-16-Ch)

We recommended that FNS require the applicable Stateagencies to institute claims against the SFAs asnecessary. State agencies should ensure that the SFAsestablish controls and implement adequate mealcounting and claiming systems, review those systemsfor accuracy, provide SFAs with procurement training,and ensure the SFAs adhere to Federal or Stateprocurement requirements. The State agencies andFNS concurred with our findings and recommendations,and are implementing the recommendations.

Wisconsin Daycare Sponsor Convicted of Theft

A Wisconsin daycare provider and Child and Adult CareFood Program (CACFP) sponsor was found guilty ofdefrauding CACFP of approximately $85,000 anddefrauding a La Crosse, Wisconsin, bank of more than$150,000. From January 1996 through October 1998,the sponsor obligated CACFP funds to the bank ascollateral for a line-of-credit loan by representing thosefunds as receivables owed to her by the WisconsinDepartment of Public Instruction. In fact, those monieswere intended to go directly to daycare providers underher sponsorship. This allowed the sponsor to use theCACFP funds for purposes not allowed under programregulations. In December 2003, the sponsor wassentenced to 6 months of incarceration and 10 years ofprobation, and was ordered to pay restitution of$212,870.

Director of Louisiana Nonprofit OrganizationSent to Prison

In December 2003, the executive director of a Louisiananonprofit organization was sentenced to serve a yearand a day in Federal prison and ordered to pay$249,000 in restitution. From July 2000 to May 2001,the director inflated meal count records submitted to theLouisiana Department of Education in connection withCACFP. The inflated meal counts resulted in ineligiblereimbursements of more than $80,000. The directoralso was involved in bank fraud violations and violations

11

of laws pertaining to the U.S. Department of Health andHuman Services.

Retailer Forfeits More Than $166,000 in Cash andVehicle for WIC Fraud

The owner of a Georgia retail establishment wassentenced to 60 months of probation and ordered to pay$434,032 in restitution for WIC trafficking. The owneralso forfeited $166,092 in cash and a 1999 LincolnNavigator in January 2004 as part of his pleaarrangement. From March 1996 through April 2001, anaccomplice purchased WIC vouchers on the street forcash and sold them to the retailer at a discount. Theretailer redeemed the illegally trafficked vouchers for fullface value and paid the co-conspirator a percentage.The U.S. Attorney’s office for the Northern District ofGeorgia has appealed the probation sentence.

Phoenix EBT Retailer Convicted in WIC ConspiracyScheme

In February 2004, a Federal jury found a Phoenix,Arizona, storeowner guilty of trafficking in WIC benefits.Our investigation showed that the storeowner hadtrafficked in both food stamp and WIC benefits, and thatfrom about June 2002 through September 2003, thestoreowner fraudulently redeemed more than $1.3million in WIC benefits. One of the individuals whocommitted WIC fraud at this store was a MaricopaCounty, Arizona, employee who created more than 80fictitious families, each with multiple fictitious births, andgenerated WIC instruments valued at more than$83,000 for those families. This employee and threeundocumented aliens assumed the identities of thefictitious persons, negotiated many of the instrumentsfor baby formula, and sold the baby formula to theabove-mentioned Phoenix storeowner for half price. Thestoreowner also negotiated some of these fraudulentWIC instruments for cash. The Maricopa Countyemployee pled guilty and is currently serving a Federalprison term of 15 months. Two of the undocumentedaliens also pled guilty. Sentences for the storeownerand the two undocumented aliens are pending. Thethird undocumented alien is a fugitive.

ONGOING AND PLANNED REVIEWS FORFEEDING PROGRAMS

Feeding program topics that will be covered inongoing or planned OIG reviews include:

• vendor sanction policies for FNS programs;• a review of the special wage incentive program

under the Nutrition Assistance Program inPuerto Rico;

• controls over USDA-donated commodities;• effectiveness of FNS Compliance Branch

operations;• New York City FSP casefile documentation;• the Summer Food Service Program;• WIC Program eligibility;• WIC vendor monitoring;• analyses of EBT databases;• reauthorization of FSP retailers; and• implementation of tiering requirements for

CACFP.


12

FARM PROGRAMS

OIG’s farm programs work encompasses a variety offarm commodity, farm credit, and conservationprograms administered by the Farm Service Agency.The programs are funded primarily through theCommodity Credit Corporation (CCC), a Governmententity for which FSA provides operating personnel.

Since the new Farm Bill—the Farm Security and RuralInvestment Act of 2002 (the 2002 FSRIA)—wasenacted in May 2002, market conditions have improved,and the only major disaster assistance authorized is the$3.1 billion provided in the Agricultural Assistance Act of2003. The 2002 FSRIA mandated substantial changesin farm program and conservation payments; we havebeen monitoring the effects of those changes. TotalFSA outlays are projected to be about $16.2 billion in2004 and $16.3 billion in 2005. FSA’s 2004 budgetedprogram level is more than 24 percent of theDepartment’s total.

Direct and Counter-Cyclical Program Base Acresand Payment Yields Must Be Properly Established

The Farm Service Agency is responsible forimplementing the provisions of the Farm Security andRural Investment Act of 2002 (Farm Bill) that provide fordirect payments, counter-cyclical payments, marketingassistance loans, and loan deficiency payments onselected agricultural commodities. Overall, FSA hadcontrols to reasonably ensure the loan and paymentrates were properly implemented and administered forthose programs.

Our nationwide survey of the newly implemented Directand Counter-Cyclical Program (DCP) for the 2002 and2003 program signup disclosed that FSA generally hadimplemented DCP in compliance with the Farm Bill andFSA procedures. However, we did identify a number ofissues that will require our further review, including theapparent disparate default base and yield optionsavailable to producers in different States, properdocumentation of producers’ certified eligibility beforeissuing payments, the establishment of assigned yields,and the county offices’ verification of land ownership.Additional work planned for FY 2004 includes an auditof DCP base acres and payment yields to address thequestions raised. (Closeout memorandum; AuditAssignment No. 03099-51-KC)

Misrepresentation of Land Ownership NetsLouisiana Producers Excess Payments of Almost$1 Million

Prompted by a request from the Louisiana State office,we found that a current FSA county committeechairperson used his preexisting power of attorney for arelative to continue to sign up and qualify for programbenefits even though the relative had passed away andthe heirs of the relative’s estate had sold the land in1993. Another Louisiana producer received improperfarm program benefits for crop acreage bases on landthat the producer had sold and, therefore, in which hehad no interest. However, a county office employee,who became aware of the sale, allowed the producer,nonetheless, to receive program payments on the land.For these two cases, producers received improper farmprogram benefits, totaling more than $918,300, underthe Production Flexibility Contract program and DCPfrom 1997 through 2003. FSA generally concurred withthe audit recommendations to recover the improperprogram benefits and to take administrative actionsagainst the two county office employees. (Farm ServiceAgency Farm Programs Audit; Audit Report No. 03601-42-Te)

North Carolina Producer Agrees To RepayFSA $2.7 Million

In October 2003, a producer in eastern North Carolinasigned a civil settlement agreement and consent orderagreeing to repay FSA $2.7 million plus interest. Thefarmer admitted to removing and selling 373,064bushels of soybeans held by the Commodity CreditCorporation as collateral for two loans totaling $2 millionand converting the proceeds to his own personal use.

Farm Manager Sentenced in FSA Conspiracy

In October 2003, a California farm manager of a Texas-based landlord was sentenced to serve 7 months in aFederal facility, followed by 36 months of supervisedrelease, and was ordered to pay restitution of $396,638to USDA after he pled guilty to submitting false claims.Our investigation disclosed that the manager conspiredwith three tenant farmers from 1999 to 2001 to defraudFSA of approximately $400,000 from the ProductionFlexibility Contract and Market Loss Assistanceprograms. The farm manager had the tenants signbogus lease agreements for land they did not plant orfarm. The tenants then applied for farm subsidy

13

payments, claiming they had planted rice and oilseedson the land. Upon receipt of the subsidy payments fromFSA, the tenants kept approximately $40,000 andissued checks to the manager for the remainder. Inaddition, the landlord agreed to pay approximately$400,000 as part of a civil settlement that was agreed toin March 2004.

ONGOING AND PLANNED REVIEWS FORFARM PROGRAMS

Farm program topics that will be covered inongoing or planned OIG reviews include:

• DCP base acres and payment yields;• FSA’s implementation of the Cattle Feed

Program;• FSA’s implementation of the Livestock

Compensation Program;• FSA’s implementation of the Milk Income Loss

Contract Program; and• FSA’s application of its finality rule and equitable

relief provisions as they apply to identifying anyimproper payments.


RISK MANAGEMENT AGENCY ANDCROP INSURANCE

RMA administers the Federal Crop InsuranceCorporation (FCIC); its 2003 crop-year liabilityexceeded $40 billion. FCIC is a wholly ownedGovernment corporation that offers subsidized multiple-peril and revenue crop insurance through a privatedelivery system by means of insurance companies. Its2003 crop-year premium subsidy and crop indemnitypayments were $2 billion and $3 billion, respectively.Producer-paid premiums were about $1.4 billion.

Monitoring of RMA Efforts To Renegotiate theStandard Reinsurance Agreement

The Standard Reinsurance Agreement (SRA) isconsidered a cooperative financial assistanceagreement between FCIC and the insurance companynamed on the agreement. Starting in October 2003, inanticipation of RMA’s decision to renegotiate the SRAfor Federal crop insurance, we began to monitor RMA’sactions in this area. We have provided RMA officials ourperspective on their draft SRA and the draft QualityControl Appendix, reviewed portions of a model used byRMA to simulate the loss experience that would havebeen realized under various types of SRAarrangements, discussed recommendations containedin prior audit reports, and provided RMA officialsfeedback from our preliminary analysis. RMA hasindicated that it intends to achieve a cost savings ofabout $68 million per year through a 25-percent cessionof net underwriting gains and losses from eachapproved crop insurance provider. Our monitoring of therenegotiation process continues. (Ongoing audit; AuditAssignment No. 05099-109-KC)

RMA Managers Need To Better Oversee WrittenAgreements

RMA provides crop insurance coverage either throughstandard policies or through written agreements, whichprovide some flexibility by allowing RMA regions toinsure crops in areas where coverage is unavailable bymodifying existing policies for insured acres. Our reviewdisclosed that in crop year 2001, personnel at the RMARegional Offices issued written agreements withoutensuring that the documentation required by RMA tosupport actuarial changes was provided. As a result, weprojected that RMA accrued an additional $138.7 millionin liability and $7.6 million in subsidized premiums. In

14

addition, we found that RMA officials were unable toaccurately and effectively track accepted writtenagreements, which could, and did, allow insuranceproviders to misidentify units or terms and resulted in anexcessive indemnity paid.

We recommended that RMA National Office officialsprovide oversight of Regional Office activities related towritten agreements, and that they develop a review formfor required documentation. We also recommended thatRMA establish procedures to ensure that insuranceproviders properly enter into the data acceptancesystem those units insured under written agreementsand correctly apply the terms of the written agreementsto the applicable units. RMA agreed to issue a reviewform and guidance promptly. (Review of WrittenAgreements; Audit Report No. 05601-11-Te)

Crop Price Elections Adequately Supported,Reasonable, Consistent

RMA establishes commodity price elections withinformation from the World Agricultural Outlook Board(WAOB) and other USDA agencies to provide the basisfor the various program price options available toproducers who purchase all types of crop insurance.Our review disclosed that RMA procedures and controlsresulted in reasonable and supportable crop priceelections for the 2001 through 2002 crop years. RMAhad been generally complying with a prior U.S. GeneralAccounting Office (GAO) report that recommendedRMA use the crop price information from WAOB andother USDA agencies. The methodology and processRMA used to prepare the price memoranda submittedto OMB were sound, and we were able to verify thesupporting documentation for the price guarantees and/or price selections for a variety of agricultural crops.

The reinsured companies use the data supplied by RMAto inform the producers of the established priceguarantees and/or price selections for each type of cropfor each applicable crop year. We assessed the internalcontrols for one reinsured company’s computer systemsand noted that they caught all data errors submitted forthe tests and showed them on error listings as intended.(Risk Management Agency Establishment of MaximumPrices; Audit Report No. 05099-17-KC)

Improper Indemnity Payments Made To PruneProducer, Partner

Our audit disclosed that a California prune producer andone of its two partners received unentitled federallyinsured crop indemnity payments. The prune producerunderreported acreage (1997 and 1998) when applyingfor insurance and underreported crop production (1997through 1999) when submitting loss claims. The pruneproducer’s insurance provider did not follow procedureswhen it failed to verify claimed losses by collecting finalsettlement sheets from packinghouses where the pruneproducer sold its fruit. The improper payments resultedfrom inaccurate information submitted by the pruneproducer and its partner to support insurance claimsfiled with two separate insurance providers. Because ofnegligent servicing, the two insurance providers did notdetect the misrepresentations and improperly paid theprune producer and its partner $386,772 in indemnitiesfor crop losses from 1997 through 1999.

RMA concurred with all the recommendations to pursuerecovery of the questioned amounts except for one—that mandatory claims reviews be performed in caseswhere an arbitration settlement caused an indemnitypayment to exceed the $100,000 threshold. RMAexplained that these reviews are based on a unit basisand even after the arbitration none of the individual unitsexceeded the $100,000 threshold. OIG’s position is thatmandatory claims reviews should not be conducted on a“per unit basis.” Rather, they should be conducted on aproducer’s entire operation to avoid improper paymentssuch as those that occurred for this producer.(Indemnity Payments to Prune Producers in California –Producer D; Audit Report No. 05099-7-SF)

Minnesota Elevator Manager and Four FarmersConvicted in $1.2 Million Conspiracy

After a 7-day trial, a Minnesota elevator manager wasfound guilty of conspiring to defraud USDA and makingfalse statements that enabled farmers to receiveapproximately $1.2 million to which they wereunentitled. The scheme involved the misgrading ofdurum wheat, from October 1999 through April 2000, byinflating the damage so that the farmers would receive aquality adjustment on their crops. This action reducedtheir reported production by 80 percent and qualified

15

them for disaster payments from FSA and insuranceindemnities from RMA. Before the trial began, fourfarmers charged in the scheme entered guilty pleas tomail fraud and making false writings. The elevatormanager was sentenced to serve 46 months in prisonand ordered to pay restitution of $751,758. The fourfarmers who pled guilty were placed on probation andordered to pay a combined $32,834 in restitution.

Federal Jury Finds West Texas Crop InsuranceAgent Guilty of Making False Statements to RMA

A producer, who was also a crop insurance agent,provided false planting information about his 1999crop-year wheat, cotton, and sorghum with the falseclaims resulting in an overall loss to the Government ofmore than $640,000. A Federal jury found him guilty inFebruary 2004 after a 2-week trial. A crop insuranceadjuster previously had pled guilty to making falseclaims in this matter. The adjuster attested to cropappraisals knowing he had not conducted them on theinsurance agent’s 1999 crops. Sentencing is pending forboth the insurance agent and adjuster.

ONGOING AND PLANNED REVIEWS FORRMA AND CROP INSURANCE

RMA and crop insurance topics that will becovered in ongoing or planned reviews include:

• the effectiveness of RMA’s data acceptancesystem;

• the effectiveness of RMA’s compliance activitiesand oversight in preventing and detectingprogram abuse;

• a review to evaluate and validate the zeroacreage data for insured crops submitted toRMA by the reinsured companies in contrast toacreage reports submitted by producers to FSA;

• continued monitoring of and commenting onRMA’s renegotiation of the SRA; and

• as a followup to our ongoing review of RMA’sdata acceptance system, a more intensivereview verifying and validating the policyholders’data submitted by the reinsured companies.


16

OIG Strategic Goal NumberThree: Increase the efficiencyand effectiveness with whichUSDA manages and employspublic assets and resources,including physical andinformation resources.

USDA program assets of more than $118 billioncomprise loans receivable, cash, property, plant,equipment, and other assets. In addition, the ForestService (FS) is responsible for the stewardship of 192million acres of national forests and grasslands. USDAalso employs thousands of personnel who inspect orgrade agricultural products and operations. Theeffectiveness and efficiency with which USDA managesits assets are critical.

To effectively manage the funds and goods which itholds in trust for the American people, USDA must haveeffective financial management and informationtechnology. Two key players in this are:

• the National Finance Center (NFC), which developsand/or operates administrative and financial systems,processing about $67 billion in disbursements in FY2003; and

• the National Information Technology Center (NITC),which is the Department’s primary mainframeprocessing facility and processes the data of FSA/CCC, RMA, FNS, the National Agricultural StatisticsService, APHIS, and the FS.

For the first half of FY 2004, OIG issued 16 auditreports relating to the management of resources,including information technology. OIG’sinvestigations for that key challenge during the firsthalf of FY 2004 yielded 48 indictments, 24convictions, and $2 million in monetary results.

Management of Public Resources

FINANCIAL MANAGEMENT ANDACCOUNTABILITY

The Department and the standalone agencies requiredto prepare their own financial statements received, forthe second consecutive year, unqualified opinions. Thisextraordinary achievement once again reflected theoverall improvements made in financial management.Errors were disclosed, however, in the FS FY 2002financial statements subsequent to issuance, thusnecessitating a restatement. Because of the materialityof the errors corrected, the Department’s FY 2002financial statements also had to be restated.

Significant challenges lie ahead in FY 2004 for theissuance of the statements, because of the acceleratedtimeframes required by law. As in past years, the FS FY2003 financial statements required extensiveadjustments, long after the end of the fiscal year, beforethey could be considered to be fairly presented. A timelyand unqualified opinion on the FY 2004 financialstatements will be attainable only if the FS implementssustainable financial management systems. (AuditReport Nos. 50401-51-FM, 06401-16-FM, 08401-3-FM,05401-12-FM, 85401-9-FM, and 15401-4-FM)

USDA Consolidated—Unqualified Opinion

Our report on Internal Control Over Financial Reportingin the Department’s consolidated financial statementsdisclosed that continued improvements are needed infinancial management at the corporate level, includingquality control, and continued improvements are neededin information technology (IT) security. In our Report onCompliance with Laws and Regulations, we continuedto note where further actions are necessary to improvefinancial management systems and the reporting ofmaterial IT security weaknesses. We also noted apotential Anti-Deficiency Act violation where APHISissued a purchase order for more than $950,000 forcomputers for the Grain Inspection, Packers andStockyards Administration (GIPSA) at yearend; it wassubsequently found that GIPSA did not have the fundsavailable to fund the acquisition.

The Office of the Chief Financial Officer (OCFO) hasimmediate and long-term plans to substantially addressall of the weaknesses in its financial managementsystems. Our recommendations in this report weredirected toward the need to implement furtherimprovements in quality control in order to enhance the

17

reporting and tracking of weaknesses within financialmanagement and information technology. OCFOgenerally agreed with our findings andrecommendations.

Forest Service Internal Controls: The FS contractswith an independent accounting firm to perform theannual financial statement audit; OIG serves as theContracting Officer’s Technical Representative (COTR).The firm’s report on Internal Controls Over FinancialReporting for the FS noted the following reportableconditions:

• FS needs to improve its financial management andaccountability, general controls environment,reconciliation and management of fund balance withTreasury, and compilation of required supplementaryinformation and required supplementary stewardshipinformation; and strengthen its accrual methodology.

• Controls over several areas need improvement—various accounting feeder systems, the accuraterecording of personal property transactions, physicalinventories of capitalized assets, and FS ITapplication systems.

• Posting of certain transactions need proper referencedata.

The firm recommended that FS, to address theweaknesses in controls over financial reporting, trainpersonnel, implement new procedures and/or improveexisting procedures, increase management review andmonitor procedures for compliance, review and revisebusiness processes and general ledger posting models,perform certifications of financial systems, and makesystem enhancements. The agency’s response is stillpending.

Rural Development’s IT and ComplianceWeaknesses: RD’s ineffective oversight andmanagement of its IT resources had unnecessarilyexposed its $56 billion loan portfolio data to the risk ofdisclosure, modification, or deletion. In addition, RD wasnot properly reconciling its suspense/deposit series ofTreasury Symbols to its general ledger. We noted thatRD’s RUS legacy systems were not in compliance withOffice of Management and Budget (OMB) Circular A-127 (Financial Management Systems) and not allfinancial management systems have been certified inaccordance with OMB Circular A-130 (Management of

Federal Information Resources). Rural Developmentofficials generally agreed with our findings andrecommendation that RD establish procedures toreconcile and age the suspense accounts at a detailedtransaction level and on time.

RMA/FCIC Information Systems Controls: OIGcontracts, under a reimbursable agreement with theagency, with an independent accounting firm to performthe annual financial statement audit. OIG serves as theCOTR. The firm’s report on RMA/FCIC disclosed thatcontrols over access to its information systems neededimprovement, as did its application program and systemsoftware change controls. The firm recommended thatRMA/FCIC implement corrective actions to strengthenthe cited control weaknesses. With more than $4 billionin indemnities and $1.4 billion in premium revenue,these systems are highly critical. RMA/FCIC officialsgenerally agreed with the findings andrecommendations in the report.

FSA/CCC Material Internal Controls Weaknesses:FSA contracts with an independent accounting firm toperform the financial statement audit; OIG serves as theCOTR. The independent firm’s report on FSA/CCCdisclosed material internal control weaknesses ininformation security controls, financial systemfunctionality, monitoring and controlling budgetaryresources at the transaction level, financial accountingand reporting policies and procedures, and proceduresfor the budget execution process. Instances ofnoncompliance with the Federal Information SecurityManagement Act of 2002 (FISMA), the Debt CollectionImprovement Act of 1996 (DCIA), and the FederalFinancial Management Improvement Act of 1996(FFMIA) included issues relating to the informationsecurity program, timeliness in referring delinquent non-tax debts for collection, and financial managementsystems, respectively. The firm recommended that CCCimprove its controls related to information security,implement additional financial system improvements,improve funds control processes, and improve policiesand procedures over financial accounting and reportingas well as budget execution. FSA/CCC generallyagreed with the recommendations and has developedcorrective action plans.

Rural Telephone Bank’s (RTB) IT and ComplianceWeaknesses: OIG contracts, under a reimbursableagreement with the agency, with an independentaccounting firm to perform the annual financial

18

statement audit. OIG serves as the COTR. The firm’sreport on RTB disclosed that a material internal controlweakness was found in that improvements were neededin IT security controls. The compliance report found thatRTB’s legacy financial management system is not insubstantial compliance with OMB Circular A-127 andnot all financial management systems have beencertified in accordance with OMB Circular A-130. RTB isworking to correct these weaknesses.

ONGOING AND PLANNED REVIEWS FORFINANCIAL MANAGEMENT ANDACCOUNTABILITY

Financial management and accountability topicsthat will be covered in ongoing or planned OIGreviews include:

• annual audits of the Department and standaloneagencies’ financial statements for FY 2004, and

• the Department’s implementation of theImproper Payments Act.


INFORMATION TECHNOLOGY (IT)SECURITY AND IT MANAGEMENT

USDA depends on IT to efficiently and effectively deliverits programs and provide meaningful and reliablefinancial reporting. One of the more significant dangersUSDA faces is a cyberattack on its IT infrastructure,whether by terrorists seeking to destroy uniquedatabases or criminals seeking economic gains. TheDepartment and most of its agencies have takennumerous actions in the past few years to improvesecurity over their IT resources; however, additionalactions are still needed. Most critical is managementcommitment and accountability for implementing therequirements of OMB Circular A-130 and other federallymandated security guidelines.

The Department Is Improving Its IT Security, butFurther Actions Are Needed

During this reporting period, we assessed the adequacyof IT security at RD; APHIS; the Economic ResearchService; the Grain Inspection, Packers and StockyardsAdministration; the Office of Budget and ProgramAnalysis; and the Office of the Chief Economist. Ouraudits established trends Department-wide in that someweaknesses were disclosed at every agency wereviewed.

• Many of the agencies still did not comply with therequirement of OMB Circular A-130 to prepare allrequired security plans, conduct risk assessments,prepare disaster recovery plans, provide securityawareness training to all employees, and performsystem certification and accreditations.

• We found physical and logical access controlweaknesses in every agency we reviewed, hinderingagencies’ abilities to adequately protect their criticalIT resources. Most agencies we reviewed did nothave adequate controls in place to timely identify andcorrect potential system vulnerabilities that couldcompromise the confidentiality, integrity, andavailability of critical IT systems and data.

• Not all agencies had adequate controls in place toproperly manage and test changes to theirapplications, leaving those applications vulnerable tounauthorized and potentially malicious changes.

19

Of particular concern were the problems we noted atRD. Since 1988, RD has a history of unsatisfactorilycorrecting the IT-related weaknesses identified in ouraudit reports. RD has not instituted a framework forproactively managing the information security risksassociated with its operations by addressing theunderlying causes of its poor information security.Instead, RD has reacted to individual findings as theywere reported, with little attention to the systemicongoing control weaknesses. (Audit report Nos. 85099-4-FM, 33099-4-Ch, 14099-1-Te, 30099-1-SF, 39099-1-At, and 12099-1-At)

NFC’s Administrative and Financial SystemsInternal Controls Require Strengthening

Our audit identified internal control weaknesses inNFC’s administrative and financial systems that couldjeopardize the confidentiality, integrity, and availability ofthe data it processes.

• NFC did not always protect information fromimproper access on its mainframe and networksystems;

• NFC had not fully complied with the securitymanagement requirements included in the FederalInformation Security Management Act of 2002(FISMA); and

• NFC had not always adequately tested systemsoftware changes or evaluated the security impactresulting from system software changes andestablished adequate controls over the configurationof its mainframe operating system.

We recommended that NFC

• establish and/or improve current procedures andguidance to prevent and detect unauthorized accessto sensitive data and resources on its systems;

• finalize security plans and underlying riskassessments for its general support systems andmajor applications and complete revisions to itscertification and accreditation program to ensure thatboth application and general support systems arecertified; and

• ensure that system software changes are sufficientlytested and security impacts associated with thesechanges to system software are adequatelyaddressed during the system software changecontrol process.

NFC agreed with all of the findings andrecommendations and was very responsive to the auditreport. The Center took significant actions before thefinal report to correct identified weaknesses. (FY 2003,NFC, Review of Internal Controls; Audit Report No.11401-15-FM)

Improvements in IT Security at NITC, but SomeWeaknesses Continue

Our review of NITC disclosed that it continued to takeactions toward complying with federally mandatedsecurity requirements but the necessary correctiveactions are long-term in nature and continued actionsare needed. We found that NITC needs to preparesecurity and contingency plans for its general non-mainframe support systems and complete the systemcertification and accreditation process for its criticalsystems. We also noted instances where NITC had notremoved separated employees’ remote accessaccounts, completed documentation of users withspecial access privileges, completed review anddocumentation of security software parameters,implemented polices and procedures outliningmonitoring of security logs, or completed itsimplementation of secure Internet access. Finally, wecontinued to find that approval, testing, andimplementation documentation for NITC’s systemchange management process was not alwaysmaintained.

Because NITC was in the process of implementingsignificant actions to correct the previous weaknesseswe identified, we did not make additionalrecommendations on outstanding issues. However,based on our recent disclosures, we made a newrecommendation to periodically reconcile NITC useridentifications to current employees and contractors toensure timely removal of unneeded accounts. (NITC,General Controls Review – FY 2003; Audit Report No.88099-5-FM)

20

FS Employee Imprisoned for Possession of ChildPornography

In November 2003, a former FS employee in Arkansaswas sentenced to serve 30 months in Federal prison,followed by 3 years of supervised release, afterpleading guilty to possession of child pornography. TheFS employee had reviewed, scanned, and saved childpornography from diskettes in his possession onto hisGovernment computer while he was supervisingtroubled male youth at a Job Corps center. Theemployee was separated from Government service.This case was worked jointly with FS’ Law Enforcementand Investigations organization.

Utah Nonprofit Employee Sentenced for Possessionof Child Pornography

In Utah, an employee of a nonprofit organization,working at a Natural Resources Conservation Service(NRCS) field office, was sentenced in January 2004 to21 months in prison after pleading guilty to possessionof child pornography. Forensic examination of thecomputers by OIG’s Computer Forensic Unit found thatthe nonprofit employee used an NRCS Governmentcomputer and his personal computer to access sexuallyexplicit materials, including child pornography.

ONGOING AND PLANNED REVIEWS FOR ITSECURITY AND IT MANAGEMENT

IT security and IT management topics that will becovered in ongoing or planned reviews include:

• the adequacy of application controls (methodsand measures that ensure that individualprograms process data as intended);

• the adequacy of IT security at several additionalagencies;

• telecommunications controls in the Department;• mandated audits of the Department’s adherence

to FISMA; and• annual assessment of general controls at NFC

and NITC.


SPECIAL RESOURCE CHALLENGES FACINGTHE FOREST SERVICE (FS)

The Forest Service is the largest USDA agency. Thestewardship of 192 million acres of national forests andgrasslands is its responsibility.

FS Needs To Take Further Actions To AcquireSuitable Aircraft In the Most Cost-Efficient MannerPossible

The FS has an urgent need to replace its current fleet oflead planes, used to direct air tankers during firefightingoperations, supervise fire operations from the air, andprovide logistical and tactical support for firefighters onthe ground. While the FS had followed acquisitionregulations, we determined that the FS plannedacquisition of 20 aircraft on long-term lease at anestimated cost of $113 million needed improvement.

The FS could save an estimated $42.5 million over theterm of the lease by contracting airplanes seasonally.The FS plan to lease the aircraft for the full year on a10-year contract is unnecessary and inefficient becausethe FS has only minimal use for its lead plane fleetduring the non-fire season. We also questioned theneed to retain the lead plane pilots as governmentalemployees instead of using seasonally contracted pilots(though FS’ legal ability to contract for the positions isuncertain).

A Beachcraft 58P Baron aircraft that the FS currently uses as a leadplane, guiding an air tanker. FS photo.

21

The FS draft solicitation for aircraft did not adequatelydescribe the abnormally rigorous conditions underwhich the aircraft would be flown or the increasedmaintenance and inspections that would be requiredunder the contract. Further, it did not identify the FSplans for competitive flight-testing or the selectionprocess. This could lead to contractors not offering themost appropriate aircraft or a challenge or protest to thecontract award, potentially delaying the acquisition ofnew aircraft and impairing FS’ ability to combat wildfires.While the FS had notified OMB of its plan for procuringthe new lead planes, it had not prepared the requiredformal analysis, thus risking not having funds available.

The Forest Service agreed with our findings andrecommendations to address the cited issues of cost-effectiveness, contracting pilots, expanding its draftsolicitation, explaining its plans for test flights and theselection process, and providing documentation toOMB. It has already taken corrective action on anumber of them, for example, amending its draftsolicitation. The Forest Service is in the process ofevaluating the cost savings to the Government if itcontracts out for both lead planes and pilots only whenneeded and is providing OMB the documentation itrequires for the lead plane acquisition. (FS Procurementof Firefighting Lead Planes; Audit Report No. 08601-37-SF)

Two Arizona FS Firefighters Convicted forTransporting Marijuana

In January 2003, two Forest Service firefighters inNogales, Arizona, while officially employed, conspired todistribute and transport more than 150 pounds ofmarijuana. Both pled guilty and were sentenced inFebruary 2004. One firefighter, who actually transportedthe marijuana, was sentenced to Federal prison for 15months, followed by 3 years of supervised release. Theother firefighter, who acted as a lookout, was placed on3 years of probation. Both employees resigned. Thisinvestigation was conducted with several Federal, State,and local law enforcement agencies, including FS’ LawEnforcement and Investigations organization.

FS Employee Sentenced for Misuse of PurchaseCard and Convenience Checks

In December 2003, a former FS employee was placedon 5 years of probation, including 6 months of homedetention, and was ordered to pay $35,600 in restitutionafter pleading guilty to submitting false claims. An auditconducted by the FS disclosed evidence that theemployee misused the office purchase card andconvenience checks. The employee was the regionalcoordinator for those items and was responsible forproviding guidance and training to the regionalemployees regarding their proper use, as well asauditing the accounts of those employees. The internalaudit disclosed recent purchases of such items as arefrigerator, washer, dryer, sofa, loveseat, coffee table,and end tables, all of which were delivered to theemployee’s residence. In September 2002, we executeda search warrant at the employee’s residence andseized these items. The employee admitted misusingthe purchase card and convenience checks in order toobtain those items, and she resigned. We subsequentlydetermined that, in 2001 and 2002, she illegally usedthe procurement process in order to obtain more than$35,000 in goods and services for personal use.

Procurement Employee Pleads Guilty to AcceptingGratuities

The president of a large office supply company paidillegal gratuities to a number of Federal employees atvarious agencies, including two USDA purchasingagents employed by the Office of Procurement andProperty Management and the FS. The company alsoimproperly charged items that were not ordered by theGovernment to various Government purchase cardaccounts. The president of the company entered a guiltyplea to one count of paying an illegal gratuity and wassentenced in September 2003 to 2 years of probationwith 6 months of home confinement. One USDAemployee pled guilty to supplementation of aGovernment employee’s salary and was sentenced inJanuary 2004 to 1 year of probation and a $500 fine.The other employee was not prosecuted but wasreprimanded by the agency. This was a jointinvestigation with the FBI and the Defense CriminalInvestigative Service (DCIS).

22

ONGOING AND PLANNED REVIEWS FORTHE FS

FS topics that will be covered in ongoing orplanned reviews, include:

• FS administration of its firefighting safetyprogram;

• the efficiency and effectiveness of contractingactivities related to the National Fire Plan;

• FS progress in implementation of theGovernment Performance and Results Act; and

• FS implementation of the Healthy ForestsInitiative – Hazardous Fuels Reduction.


GRAIN INSPECTION, PACKERS ANDSTOCKYARDS ADMINISTRATION (GIPSA)

The Grain Inspection, Packers and StockyardsAdministration facilitates the marketing of livestock,poultry, meat, cereals, oilseeds, and related agriculturalproducts, and promotes fair and competitive tradingpractices.

Cattle Broker and Bookkeeper Plead Guilty toCattle Scam

OIG, the FBI, and GIPSA jointly investigated a cattlebroker who falsified GIPSA documents in furtherance ofa scheme to defraud investors, business associates,and financial institutions out of $166 million. Thescheme involved the broker’s misrepresentation to hisclients (private investors and financial institutions) of thefinancial status of his business entity and of the numberof cattle available at the time investments were made.Investors relied on untrue, misleading, deceptive, andinaccurate information when making their investments.When the scheme unraveled, the broker was in controlof only 5 percent of the cattle for which he was obligatedto his investors. During the 30-month investigation,more than 150 victims from 4 States were identified. InNovember 2003, the broker and his bookkeeper pledguilty to five counts each of mail fraud, wire fraud, falseentries, and criminal forfeiture. Sentencing informationwill be reported in the next semiannual report.

23

Summary of Audit Activities—October 2003-March 2004

Reports Issued ................................................................................................................................................. 46Audits Performed by OIG .................................................................................... 40Evaluations Performed by OIG ........................................................................... 0Audits Performed Under the Single Audit Act ..................................................... 2Audits Performed by Others ................................................................................ 4

Management Decisions MadeNumber of Reports ........................................................................................................................................ 36Number of Recommendations ....................................................................................................................... 335

Total Dollar Impact (Millions) .......................................................................................................................... $51.6Questioned/Unsupported Costs .......................................................................................... $ 5.8ab

Recommended for Recovery .......................................................................... $4.4Not Recommended for Recovery ................................................................... $1.4

Funds To Be Put to Better Use ............................................................................................ $45.8

a These were the amounts the auditees agreed to at the time of management decision.b The recoveries realized could change as the auditees implement the agreed-upon corrective action plan and seek recovery of amounts recorded

as debts due the Department.

Summary of Investigative Activities—October 2003-March 2004

Reports Issued ................................................................................................................................................... 205Cases Opened ................................................................................................................................................... 177Cases Closed ..................................................................................................................................................... 289Cases Referred for Prosecution ......................................................................................................................... 84

Impact of InvestigationsIndictments .................................................................................................................................................... 218Convictions .................................................................................................................................................... 139a

Searches ........................................................................................................................................................ 49Arrests ........................................................................................................................................................... 213

Total Dollar Impact (Millions) .......................................................................................................................... $59.9Recoveries/Collections ........................................................................................................ $ 2.9b

Restitutions .......................................................................................................................... $50.6c

Fines .................................................................................................................................... $ 1.4d

Claims Established .............................................................................................................. $ 3.3e

Cost Avoidance .................................................................................................................... $ 1.7f

Administrative Sanctions ................................................................................................................................ 109Employees ........................................................................................................................... 30Businesses/Persons ............................................................................................................ 79

a Includes convictions and pretrial diversions. Also, the period of time to obtain court action on an indictment varies widely;therefore, the 139 convictions do not necessarily relate to the 218 indictments.

b Includes money received by USDA or other Government agencies as a result of OIG investigations.c Restitutions are court-ordered repayments of money lost through a crime or program abuse.d Fines are court-ordered penalties.e Claims established are agency demands for repayment of USDA benefits.f Consists of loans or benefits not granted as the result of an OIG investigation.

24

Statistical Data

AUDITS WITHOUT MANAGEMENT DECISION

The following audits did not have management decisions made within the 6-month limit imposed by Congress.Narratives for new entries follow this table.

NEW SINCE LAST REPORTING PERIOD

Amount WithTotal Value No Mgmt.at Issuance Decision

Agency Date Issued Title of Report (in dollars) (in dollars)

FSIS 09/30/03 1. FSIS Oversight of ConAgra 0 0Recall (24601-2-KC)

Multiagency 09/30/03 2. Implementation of ARPA 0 0(50099-12-KC)

09/30/03 3. 2000 Crop Disaster Program 20,049 19,649(50099-15-KC)

RBS 08/27/03 4. Lender Servicing of a 5,436,201 224,951B&I Guaranteed Loanin Georgia (34601-5-At)

09/30/03 5. Liquidation of B&I 818,121 220,009Guaranteed Loans(34601-8-SF)

09/30/03 6. Request Audit of B&I 5,585,136 5,585,136Guaranteed Loan inLouisiana (34099-5-Te)

RHS 06/26/03 7. RRH Tenant Income 7,781,635 7,781,635Verification – Gainesville, FL(04004-3-At)

RUS 09/08/03 8. Water and Wastewater 672,085,758 508,776,607Grants (09601-6-KC)

25



PREVIOUSLY REPORTED BUT NOT YET RESOLVED

These audits are still pending agency action. Some are under judicial, legal, or investigative proceedings. We havemarked those with an asterisk (*) that must be resolved before the agency can act on the recommendations. Detailson the recommendations where management decisions had not been reached have been reported in previousSemiannual Reports to Congress. Agencies have been informed of actions that must be taken to reach managementdecision, but for various reasons the actions have not been completed. The appropriate Under and AssistantSecretaries have been notified of those audits without management decisions.

APHIS 02/20/03 9. Safeguards to Prevent Entry 0 0of Prohibited Pests andDiseases Into the UnitedStates (33601-3-Ch)

03/31/03 10. Controls Over Permits To 0 0Import Biohazardous Materials(33601-4-Ch)

CCC 12/26/02 11. FY 2002 CCC Financial 0 0Statements (06401-15-FM)

Office of 09/30/98 12. Evaluation of CR Efforts 0 0Civil Rights To Reduce Complaints(CR) Backlog (60801-1-HQ)

03/24/99 13. Evaluation of CR Management 0 0of Settlement Agreements(60801-2-HQ)

03/10/00 14. Office of CR Management of 0 0Employment Complaints(60801-3-HQ)

03/10/00 15. Status of Implementation of 0 0Recommendations Made inPrior Evaluations of ProgramComplaints (60801-4-HQ)

CSREES 08/06/02 16. Grants to National Center 1,246,161 1,246,161For Resources Innovation(13099-2-Te)

FNS 05/11/01 17. NSLP Food Service 3,572,137 3,572,137Management Companies(27601-12-KC)

09/06/01 18. NSLP – Food Service 3,537,912 3,198,926Management Companies(27601-24-Ch)*

26

11/21/01 19. CACFP – Wildwood, Inc. 36,895,611 36,895,611Phase II (27010-6-KC)

03/29/02 20. NSLP – Chartwell’s Food 307,711 307,711Service ManagementCompany (27601-13-KC)

02/07/03 21. FSP Administrative Costs 8,663,131 0in New Mexico(27099-14-Te)

03/31/03 22. FSP – Employment and 3,152,731 614,600Training Program inTennessee (27601-12-At)

FSA 03/30/99 23. Payment Limitation - Mitchell 881,924 881,924County, GA (03006-20-At)

07/30/01 24. 1999 Crop Disaster Program 950,891 950,891(03099-42-KC)

09/30/02 25. Assessments on Imported 4,583,797 4,583,797Tobacco (03099-164-At)

FSIS 06/21/00 26. Implementation of the Hazard 0 0Analysis and Critical ControlPoint System (24001-3-At)

06/21/00 27. Imported Meat and Poultry 0 0Inspection Process (24099-3-Hy)

09/30/02 28. Overtime Controls (24099-4-At) 0 0

Multiagency 09/30/98 29. CSREES Managing 3,824,211 74,366Facilities ConstructionGrants (50601-5-At)

03/31/99 30. Private Voluntary 18,629,558 18,236,625Organization Accountability(50801-6-At)

RBS 01/28/02 31. Lender Servicing of a 1,536,060 1,536,060B&I Guaranteed Loan(34601-3-At)

01/10/03 32. Lender Servicing of 3,766,908 3,706,908B&I Guaranteed Loans(34601-4-At)



27

RD 08/05/02 33. Security Over IT Resources - 0 0Rural Development(85099-2-FM)

RHS 01/08/99 34. RRH Program - Dujardin 195,694 195,694Property Management, Inc.Everett, WA (04801-5-SF)*

05/25/00 35. RRH Nationwide Initiative 4,922,879 4,919,579in Missouri, St. Louis, MO(04801-2-KC)

09/28/01 36. RRH, Insurance Expenses, 596,665 499,688Phase II (04601-4-KC)

RMA 09/30/97 37. Crop Insurance on Fresh 15,082,744 0Market Tomatoes(05099-1-At)

02/28/01 38. FY 2000 FCIC Financial 0 0Statements (05401-1-HQ)

03/14/01 39. Crop Insurance for 2,128,843 2,128,843Specialty Crops(05601-4-At)

05/21/01 40. Review of Written 1,565,730 1,565,730Agreements(05002-1-Te)

03/15/02 41. Monitoring of RMA’s 0 0Implementation ofManual 14 Reviews/Quality Control ReviewSystem (05099-14-KC)

09/30/02 42. Viability of 1999 Fall 21,100,000 21,100,000Watermelon CropInsurance In Texas(05601-8-Te)

09/30/02 43. Review of Large Insurance 6,998,779 6,998,779Claim for Watermelons(05601-9-Te)

01/09/03 44. FY 2002 FCIC Financial 0 0Statements(05401-11-FM)



28

1. FSIS Oversight of ConAgra Recall (24601-2-KC),Issued September 30, 2003

Management decisions have been accepted for 10 ofthe 31 recommendations. We recommended that FSISprovide clear authority for its access to all internal andexternal plant pathogen and microbial testing resultsand ensure plants notify FSIS of test results. FSISneeds to provide a documented management controlprogram that specifies the actions required at each levelin the organization to analyze data, establish criteria toensure consistent application of its enforcement actions,and identify options or alternatives to ensurecompliance with regulatory requirements.

FSIS needs to reassess its management controlprocess over the recall operations, provide acompensating control to ensure recalls are timely andefficient, provide clear directions on traceback collectionand processing, establish enforcement action againstfirms that do not fulfill their recall notificationresponsibilities, improve the recall effectiveness checksprocess, and document determinations made for thesuitability of new ingredients used in meat products.

We also recommended that FSIS strengthen itsmonitoring of inspector activities by developing a risk-based sampling program, strengthening samplingprocedures, providing adequate physical security overthe samples, verifying compliance with samplingprocedures, providing a time-phased plan for targetingand reviewing establishment HACCP plans, furnishingdetails on requirements for recurring reassessments,establishing a proactive technical assistance programwhen HACCP plans are found to be technicallydeficient, providing details on how contaminatedcarcasses will be handled, and supplying information onthe inspector responsibilities to monitor the dispositionof contaminated products. We are requesting that theagency reconsider its initial proposals and provide uswith an alternative corrective action plan.

AUDITS WITHOUT MANAGEMENT DECISION - NARRATIVE FOR NEW ENTRIES

2. Implementation of the Agricultural RiskProtection Act (ARPA) (50099-12-KC), IssuedSeptember 30, 2003

We reported that departmental efforts to reconcile FSAand RMA data regarding producers that carried cropinsurance on 2001 crops were not timely or effective. Asa result, effectiveness of the reconciliation as a tool toenhance program integrity has been compromised andthe reconciliation process may not be in compliancewith legislative requirements. We recommended thatRMA and FSA, in consultation with the Under Secretaryfor Farm and Foreign Agricultural Services, establish anexecutive-level joint departmental agency task force todevelop plans for reengineering the Department’s datareporting for each producer, landowner, andpolicyholder under a single integrated commoncomprehensive information collection system. Inaddition, we recommended that the agencies developstrategies to address conditions reported in the report.We also recommended that RMA obtain written legalopinions as to whether (1) reinsured companies can berequired to participate in the data reconciliation processand to clarify their roles and responsibilities in resolvingidentified discrepancies and (2) the limited samplingplan approach being used to address and resolve thediscrepancies identified during the 2001 reconciliationmeets the requirements of ARPA.

3. 2000 Crop Disaster Program (50099-15-KC),Issued September 30, 2003

We identified six producers for whom a reinsuredcompany had changed reported ineligible causes of losson irrigated land to eligible losses. We recommendedthat RMA review the reinsured company’s operationsand determine whether other ineligible causes of losswere improperly changed. RMA should specificallyreview the indemnities for the six producers cited in thereport. Further, any ineligible indemnity amountsdisclosed by RMA’s reviews should be recovered andreported to FSA, and FSA should recover any improperCrop Disaster Program payments based on theincorrect indemnities. The agencies generally agreedwith the audit findings and recommendations. We areworking with RMA and FSA to achieve managementdecision.

29

4. RBS Lender Servicing of a B&I Guaranteed Loanin Georgia (34601-5-At) Issued August 27, 2003

For the one open recommendation, the agency mustdetermine whether a borrower that defaulted on a $5million loan and spent $224,951 for ineligible andquestionable purposes should be debarred fromparticipation in Government programs. We are workingwith the agency to resolve this issue.

5. RBS Liquidation of B&I Guaranteed Loans(34601-8-SF), Issued September 30, 2003

Three recommendations remain without managementdecision, which require the collection of almost$220,000 of improper or unsupported liquidationexpenses and protective advances. RBS is consultingwith USDA’s Office of the General Counsel (OGC) todetermine whether there is a legal basis for seekingrecovery of the recommended amounts. To reachmanagement decision for these recommendations, wewill need a copy of the OGC decision, or documentationthat accounts receivable have been established in theagency’s accounting records for the recommendedamounts.

6. RBS Request Audit of B&I Guaranteed Loan inLouisiana (34099-5-Te), Issued September 30,2003

One recommendation has not been resolved. Werecommended that RBS recover $1.3 million, caused bynegligence, from the lender. RBS has proposed

recovering only $158,246 of this amount. We haverequested that RBS provide the documentation it usedthat was supplied to OGC through counsel for thelender to support recovering the lesser amount. Whenwe have evaluated this documentation, we willdetermine the actions necessary for managementdecision.

7. RHS Rural Rental Housing Tenant IncomeVerification – Gainesville, FL, (04004-3-At),Issued June 26, 2003

Four recommendations are without managementdecision. We recommended that the RHS State Office(a) collect the overpaid assistance, (b) reviseagreements with the appropriate State agency to enableproject managers to use the wage and benefitinformation to certify tenant eligibility, (c) develop andissue a policy requiring the use of wage and benefitdata at the time tenants are certified as eligible for theprogram, and (d) recompute assistance amounts fortenants in the project we reviewed and recover improperpayments. In order to reach management decision,RHS should provide documentation of corrective actionsplanned, including dates for their completion.

8. RUS Water and Wastewater Grants (09601-6-KC), Issued September 8, 2003

Three recommendations remain open. RUS needs toinform us of the timeframes for implementing the actionswe have agreed upon.

30

Between October 1, 2003, and March 31, 2004, OIGcompleted 205 investigations. We referred 84 cases toFederal, State, and local prosecutors for their decision.

During the reporting period, our investigations led to218 indictments and 139 convictions. The period of timeto obtain court action on an indictment varies widely;therefore, the 139 convictions do not necessarily relateto the 218 indictments. Fines, recoveries/collections,restitutions, claims established, cost avoidance, andadministrative penalties resulting from our investigationstotaled about $59.9 million.

The following is a breakdown, by agency, of indictmentsand convictions for the reporting period.

INDICTMENTS AND CONVICTIONS

Indictments and ConvictionsOctober 1, 2003 - March 31, 2004

Agency Indictments Convictions*

AMS 1 4APHIS 26 9ARS 1 3ERS 0 2FNS 115 69FS 1 2FSA 46 28FSIS 4 5NRCS 3 3OALJ 2 0OCFO 1 2RBS 4 0RHS 7 10RMA 7 1SEC 0 1

___ ___Totals 218 139

*This category includes pretrial diversions.

31

The OIG Hotline serves as a national receiving point forreports from both employees and the general public ofsuspected incidents of fraud, waste, mismanagement,and abuse in USDA programs and operations. Duringthis reporting period, the OIG Hotline received 443complaints, which included allegations of participantfraud, employee misconduct, and mismanagement, aswell as opinions about USDA programs. Figure 1displays the volume and type of the complaints wereceived, and figure 2 displays the disposition of thosecomplaints.

OFFICE OF INSPECTOR GENERAL HOTLINE

Hotline ComplaintsOctober 1, 2003 to March 31, 2004(Total = 443)

Disposition of ComplaintsOctober 1, 2003 to March 31, 2004

Figure 1 Figure 2

ParticipantFraud160

Bribery2

Health/Safety7

Opinion/Information

57

EmployeeMisconduct

110Waste/Mismanagement

106

Reprisal1

Referred toFNS for Tracking

61

Referred toUSDA Agencies

for Response220

Referred toState Agency

2

Referred toOIG Audit or

Investigationsfor Review

38

Filed WithoutReferral-

InsufficientInformation

49

Referred toUSDA or OtherAgencies for Information-

No Response Needed

73

32

FREEDOM OF INFORMATION ACT (FOIA) AND PRIVACY ACT (PA) REQUESTSFOR THE PERIOD OCTOBER 1, 2003 – MARCH 31, 2004

Number of FOIA/PA Requests Received 105

Number of FOIA/PA Requests Processed: 53

Number Granted 15Number Partially Granted 17Number Nondisclosed 10

Reasons for Denial:

No Records Available 3Referred to Other Agencies 3Denied in Full (Exemption 7A) 4

Requests for OIG Reports From Congressand Other Government Agencies

Received 27Processed 23

Appeals Processed 1

Appeals Completely Upheld 0Appeals Partially Reversed 0Appeals Completely Reversed 0Appeals Requests Withdrawn 1

Number of OIG Reports/Documents 43Released in Response to Requests

NOTE: A request may involve more than one report.

During this 6-month period, 44 audit reports wereposted to the Internet at the OIG Web site:www.usda.gov/oig/whatsnew.htm.

33

INVENTORY OF AUDIT REPORTSWITH QUESTIONED COSTS AND LOANS

FROM OCTOBER 1, 2003, THROUGH MARCH 31, 2004

DOLLAR VALUES

QUESTIONED UNSUPPORTED a

NUMBER COSTS AND LOANS COSTS AND LOANS

A. FOR WHICH NO MANAGEMENT 37 149,031,962 86,002,502DECISION HAD BEEN MADEBY OCTOBER 1, 2003

B. WHICH WERE ISSUED DURING 9 1,566,497 1,893THIS REPORTING PERIOD

TOTALS 46 $150,598,459 $86,004,395

C. FOR WHICH A MANAGEMENT 13DECISION WAS MADE DURINGTHIS REPORTING PERIOD

(1) DOLLAR VALUE OFDISALLOWED COSTS

RECOMMENDED FOR RECOVERY $4,446,838 $1,489,109

NOT RECOMMENDED FOR RECOVERY $1,353,520 $0

(2) DOLLAR VALUE OF $12,376,453 $1,250,855COSTS NOT DISALLOWED

D. FOR WHICH NO MANAGEMENT 33 $133,107,404 $83,593,713DECISION HAS BEEN MADE BYTHE END OF THIS REPORTINGPERIOD

REPORTS FOR WHICH NO 25 $131,677,045 $83,591,820MANAGEMENT DECISION WASMADE WITHIN 6 MONTHSOF ISSUANCE

a Unsupported values are included in questioned values.

Appendix I

34

INVENTORY OF AUDIT REPORTSWITH RECOMMENDATIONS THAT FUNDS BE PUT TO BETTER USE

FROM OCTOBER 1, 2003, THROUGH MARCH 31, 2004

NUMBER DOLLAR VALUE

A. FOR WHICH NO MANAGEMENT 12 $710,047,556DECISION HAD BEEN MADEBY OCTOBER 1, 2003

B. WHICH WERE ISSUED DURING 6 $51,269,334THE REPORTING PERIOD

TOTALS 18 $761,316,890

C. FOR WHICH A MANAGEMENT 7DECISION WAS MADE DURINGTHE REPORTING PERIOD

(1) DOLLAR VALUE OF $45,800,461DISALLOWED COSTS

(2) DOLLAR VALUE OF $0COSTS NOT DISALLOWED

D. FOR WHICH NO MANAGEMENT 11 $715,516,429DECISION HAS BEEN MADE BYTHE END OF THE REPORTINGPERIOD

REPORTS FOR WHICH NO 8 $707,899,286MANAGEMENT DECISION WASMADE WITHIN 6 MONTHSOF ISSUANCE

Appendix II

35

SUMMARY OF AUDIT REPORTS RELEASEDFROM OCTOBER 1, 2003, THROUGH MARCH 31, 2004

DURING THE 6-MONTH PERIOD FROM OCTOBER 1, 2003, THROUGH MARCH 31, 2004, THE OFFICE OFINSPECTOR GENERAL ISSUED 46 AUDIT REPORTS, INCLUDING 4 PERFORMED BY OTHERS.

THE FOLLOWING IS A SUMMARY OF THOSE AUDITS BY AGENCY:

QUESTIONED UNSUPPORTEDa FUNDS BEAUDITS COSTS COSTS PUT TO

AGENCY RELEASED AND LOANS AND LOANS BETTER USE

ANIMAL AND PLANT HEALTH 1INSPECTION SERVICE

CHIEF INFORMATION OFFICER 1COMMODITY CREDIT CORPORATION 1ECONOMIC RESEARCH SERVICE 1FARM SERVICE AGENCY 2 $918,390FOOD AND NUTRITION SERVICE 14 $261,335 $1,893 $21,228FOOD SAFETY AND INSPECTION SERVICE 1FOREST SERVICE 2 $42,525,000GRAIN INSPECTION, PACKERS AND 1

STOCKYARDS ADMINISTRATIONMULTIAGENCY 8 $1,123,106OFFICE OF BUDGET AND PROGRAM ANALYSIS 1OFFICE OF THE CHIEF FINANCIAL OFFICER 2OFFICE OF THE CHIEF ECONOMIST 1RISK MANAGEMENT AGENCY 4 $386,772 $7,600,000RURAL DEVELOPMENT 3RURAL HOUSING SERVICE 2RURAL TELEPHONE BANK 1

TOTALS 46 $1,566,497 $1,893 $51,269,334

TOTAL COMPLETED:SINGLE AGENCY AUDIT 38MULTIAGENCY AUDIT 8SINGLE AGENCY EVALUATION 0MULTIAGENCY EVALUATION 0

TOTAL RELEASED NATIONWIDE 46

TOTAL COMPLETED UNDER CONTRACT b 4

TOTAL SINGLE AUDIT ISSUED c 2

aUnsupported values are included in questioned valuesbIndicates audits performed by otherscIndicates audits completed as Single Audit

Appendix III

– – Continued

36

AUDIT REPORTS RELEASED AND ASSOCIATED MONETARY VALUESFROM OCTOBER 1, 2003, THROUGH MARCH 31, 2004

QUESTIONED UNSUPPORTED FUNDS BEAUDIT NUMBER COSTS COSTS PUT TORELEASE DATE TITLE AND LOANS AND LOANS BETTER USE

ANIMAL AND PLANT HEALTH INSPECTION SERVICE

330990004CH MANAGEMENT AND SECURITY OF APHIS2004/03/03 INFORMATION TECHNOLOGY RESOURCES

TOTAL: ANIMAL AND PLANT HEALTH INSPECTION SERVICE 1

CHIEF INFORMATION OFFICER

880990005FM FY 2003 NATIONAL INFORMATION2003/10/20 TECHNOLOGY CENTER GENERAL CONTROLS

TOTAL: CHIEF INFORMATION OFFICER 1

COMMODITY CREDIT CORPORATION

064010016FM MONITORING FISCAL YEAR 2003 COMMODITY2003/11/07 CREDIT CORPORATION FINANCIAL STATEMENT

AUDIT

TOTAL: COMMODITY CREDIT CORPORATION 1

ECONOMIC RESEARCH SERVICE

140990001TE MANAGEMENT AND SECURITY OF ERS INFORMATION2004/03/31 TECHNOLOGY RESOURCES

TOTAL: ECONOMIC RESEARCH SERVICE 1

FARM SERVICE AGENCY

036010020KC REVIEW OF 2002 FARM BILL COMMODITY LOAN2003/12/22 AND PAYMENT RATES036010042TE FARM SERVICE AGENCY FARM PROGRAMS AUDIT $918,3902004/03/19

TOTAL: FARM SERVICE AGENCY 2 $918,390

FOOD AND NUTRITION SERVICE

270100005TE ACCOUNTABILITY AND OVERSIGHT OF THE NATIONAL2004/01/23 SCHOOL LUNCH PROGRAM270100009TE ACCOUNTABILITY AND OVERSIGHT OF THE NATIONAL $18,3922003/10/09 SCHOOL LUNCH PROGRAM - STAR PROGRAMS, INC.,

INGRAM, TX270100014KC NATIONAL SCHOOL LUNCH PROGRAM - LAWRENCE, KS2004/03/26270100015KC NATIONAL SCHOOL LUNCH PROGRAM, IOLA, KS2003/10/15270100016CH ACCOUNTABILITY AND OVERSIGHT OF THE NATIONAL $136,138 $4,0852003/12/03 SCHOOL LUNCH PROGRAM270100016KC NATIONAL SCHOOL LUNCH PROGRAM, LEAVENWORTH, KS $684 $6842004/02/18270100017KC NATIONAL SCHOOL LUNCH PROGRAM, OSKALOOSA, KS2003/10/15270100019KC NATIONAL SCHOOL LUNCH PROGRAM, ODESSA, MO $1,209 $1,2092004/02/18270100020KC NATIONAL SCHOOL LUNCH PROGRAM, KEARNEY, MO $959 $8,8622004/03/25270100021KC NATIONAL SCHOOL LUNCH PROGRAM, PLATTE COUNTY, MO $8,2812004/03/24270990018TE STATE OF NEW MEXICO CONTINUED MONITORING $95,5532004/03/18 EBT SYSTEM DEVELOPMENT270990023SF FOOD STAMP EMPLOYMENT AND TRAINING PROGRAM $8,4002004/02/19 IN CALIFORNIA – – Continued

37



270990024SF NATIONAL SCHOOL LUNCH PROGRAM - REVIEW OF2004/03/26 LOCAL SCHOOL DISTRICT270990062HY FOLLOW UP ON THE ADMINISTRATION AND MANAGEMENT2004/03/08 OF THE NEW YORK WIC PROGRAM

TOTAL: FOOD AND NUTRITION SERVICE 14 $261,335 $1,893 $21,228

FOOD SAFETY AND INSPECTION SERVICE

240990005HY IMPORTED MEAT AND POULTRY INSPECTION PROCESS2003/12/29 EQUIVALENCE DETERMINATIONS – PHASE III

TOTAL: FOOD SAFETY AND INSPECTION SERVICE 1

FOREST SERVICE

084010003FM FISCAL YEAR 2003 FOREST SERVICE FINANCIAL STATEMENTS2004/01/26086010037SF FS PROCUREMENT OF FIREFIGHTING LEAD PLANES $42,525,0002004/03/26

TOTAL: FOREST SERVICE 2 $42,525,000

GRAIN INSPECTION, PACKERS AND STOCKYARDS ADMINISTRATION

300990001SF MANAGEMENT AND SECURITY OF INFORMATION2003/11/07 TECHNOLOGY RESOURCES AT GIPSA

TOTAL: GRAIN INSPECTION, PACKERS AND STOCKYARDS 1ADMINISTRATION

MULTIAGENCY

500210006SF QUALITY CONTROL REVIEW – MADERA COUNTY,2003/12/18 CALIFORNIA, FYE 6/30/01500220004KC A-133 AUDIT – BERTIE COUNTY, NORTH CAROLINA (FYE 2002)2004/02/09500990013KC HOMELAND SECURITY ISSUES FOR USDA GRAIN2004/02/23 AND COMMODITIES INVENTORIES504010051FM USDA CONSOLIDATED FINANCIAL STATEMENTS2004/01/26 FOR FISCAL YEAR 2003506010006TE CONTROLS OVER PLANT VARIETY PROTECTION2004/03/04 AND GERMPLASM STORAGE506010007CH ALLOCATION AND USE OF HOMELAND SECURITY FUNDS $1,123,1062004/03/31506010009AT CONTROLS OVER CHEMICALS AND RADIOACTIVE2004/03/24 MATERIALS AT USDA FACILITIES506010010AT FOLLOWUP REVIEW ON THE SECURITY OF2004/03/08 BIOHAZARDOUS MATERIAL AT USDA LABORATORIES

TOTAL: MULTIAGENCY 8 $1,123,106

OFFICE OF BUDGET AND PROGRAM ANALYSIS

390990001AT FY 2003 OBPA INFORMATION TECHNOLOGY2004/01/12 SECURITY REVIEW

TOTAL: OFFICE OF BUDGET AND PROGRAM ANALYSIS 1

– – Continued

38



OFFICE OF THE CHIEF FINANCIAL OFFICER

114010015FM FISCAL YEAR 2003 NATIONAL FINANCE CENTER INTERNAL2003/11/19 CONTROL STRUCTURE REVIEW114010019FM AGREED UPON PROCEDURES: RETIREMENT, HEALTH2003/11/03 BENEFITS, AND LIFE INSURANCE WITHHOLDINGS

CONTRIBUTION AND SUPPLEMENTAL HEADCOUNTREPORT SUBMITTED TO THE OFFICE OF PERSONNELMANAGEMENT

TOTAL: OFFICE OF THE CHIEF FINANCIAL OFFICER 2

OFFICE OF CHIEF ECONOMIST

120990001AT FISCAL YEAR 2003 OCE INFORMATION TECHNOLOGY2004/01/23 SECURITY REVIEW

TOTAL: OFFICE OF CHIEF ECONOMIST 1

RISK MANAGEMENT AGENCY

050990007SF INDEMNITY PAYMENTS TO PRUNE PRODUCERS $386,7722004/03/31 IN CALIFORNIA - PRODUCER D050990017KC RISK MANAGEMENT AGENCY ESTABLISHED MAX2004/03/31 PRICES054010012FM FISCAL YEAR 2003 FCIC FINANCIAL STATEMENTS2003/11/07056010011TE REVIEW OF WRITTEN AGREEMENTS $7,600,0002003/12/30

TOTAL: RISK MANAGEMENT AGENCY 4 $386,772 $7,600,000

RURAL DEVELOPMENT

850990001HY SURVEY OF HOMELAND SECURITY ISSUES AT2004/02/03 RURAL DEVELOPMENT850990004FM REVIEW OF RURAL DEVELOPMENT’S INFORMATION2004/03/31 TECHNOLOGY RESOURCES SECURITY854010009FM FISCAL YEAR 2003 RD FINANCIAL STATEMENTS2003/11/07

TOTAL: RURAL DEVELOPMENT 3

RURAL HOUSING SERVICE

040100001AT AUDIT OF LOCAL GOVERNMENT MANAGEMENT2004/01/09 OF MULTI-FAMILY HOUSING046010008CH RURAL DEVELOPMENT’S ESCROW PROCESS FOR2004/02/02 SINGLE FAMILY HOUSING BORROWERS

TOTAL: RURAL HOUSING SERVICE 2

RURAL TELEPHONE BANK

154010004FM MONITORING FISCAL YEAR 2003 RTB FINANCIAL2003/11/07 STATEMENTS

TOTAL: RURAL TELEPHONE BANK 1

GRAND TOTAL: 46 $1,566,497 $1,893 $51,269,334

Abbreviations of Organizations

AMS Agricultural Marketing ServiceAPHIS Animal and Plant Health Inspection ServiceARS Agricultural Research ServiceCCC Commodity Credit CorporationCR Office of Civil RightsCSREES Cooperative State Research, Education, and Extension ServiceDCIS Defense Criminal Investigative ServiceERS Economic Research ServiceFAS Foreign Agricultural ServiceFCIC Federal Crop Insurance CorporationFNS Food and Nutrition ServiceFS Forest ServiceFSA Farm Service AgencyFSIS Food Safety and Inspection ServiceGAO U.S. General Accounting OfficeGIPSA Grain Inspection, Packers and Stockyards AdministrationNASS National Agricultural Statistics ServiceNFC National Finance CenterNITC National Information Technology CenterNRCS Natural Resources Conservation ServiceOALJ Office of Administrative Law JudgesOBPA Office of Budget and Program AnalysisOCE Office of the Chief EconomistOCFO Office of the Chief Financial OfficerOGC Office of the General CounselOIG Office of Inspector GeneralOMB Office of Management and BudgetOPPM Office of Procurement and Property ManagementRBS Rural Business-Cooperative ServiceRD Rural DevelopmentRHS Rural Housing ServiceRMA Risk Management AgencyRUS Rural Utilities ServiceSEC Office of the SecretaryUSDA U.S. Department of AgricultureWAOB World Agricultural Outlook Board

U.S. DEPARTMENT OF AGRICULTUREOFFICE OF INSPECTOR GENERALSTOP 23091400 INDEPENDENCE AVE., SWWASHINGTON, DC 20250-2309

www.usda.gov/oig