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Transcript of Audit Report Federal Crop Insurance Corporation/ RMA ... · PDF fileOffice of Inspector...

  • Audit Report 05401-18-FM November 2009

    U.S. Department of Agriculture Office of Inspector General

    Audit Report

    Federal Crop Insurance Corporation/ RMA Management Agencys

    Financial Statements for Fiscal Years 2009 and 2008

  • U.S. Department of Agriculture

    Office of Inspector General Washington, D.C. 20250

    DATE: November 6, 2009

    REPLY TO ATTN OF: 05401-18-FM

    TO: William J. Murphy Administrator Risk Management Agency

    ATTN: Michael Hand Deputy Administrator Risk Compliance Risk Management Agency

    FROM: Robert W. Young /s/ Assistant Inspector General for Audit

    SUBJECT: Federal Crop Insurance Corporation/Risk Management Agencys Financial Statements for Fiscal Years 2009 and 2008

    This report presents the results of the audit of Federal Crop Insurance Corporation/Risk Management Agencys (FCIC/RMA) consolidated financial statements for the fiscal years ending September 30, 2009, and 2008. The report contains an unqualified opinion on the financial statements as well as an assessment of FCIC/RMAs internal controls over financial reporting and compliance with laws and regulations.

    Clifton Gunderson LLP (CG), an independent certified public accounting firm, conducted the fiscal year 2009 audit. In connection with the contract, we reviewed CGs report and related documentation and inquired of its representatives. Our review, as differentiated from an audit in accordance with Government Auditing Standards (issued by the Comptroller General of the United States), was not intended to enable us to express, and we do not express, opinions on FCIC/RMAs financial statements, internal control or on whether FCIC/RMAs financial management systems substantially complied with the Federal Financial Management Improvement Act (FFMIA); or conclusions on compliance with laws and regulations. CG is responsible for the attached auditors report, dated November 5, 2009, and the conclusions expressed in the report. However, our review disclosed no instances where CG did not comply, in all material respects, with generally accepted Government Auditing Standards, and the Office of Management and Budget Bulletin No. 07-04, Audit Requirements for Federal Financial Statements, as amended.

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  • William J. Murphy 2

    It is the opinion of CG, that the financial statements present fairly, in all material respects, FCIC/RMAs financial position as of September 30, 2009, and its net costs, changes in net position, and budgetary resources for the years then ended, in conformity with generally accepted accounting principles. No weaknesses related to internal controls or noncompliances with laws and regulations are reported. The consolidated financial statements of FCIC as of and for the year ended September 30, 2008 were audited by Deloitte & Touche LLP whose report dated October 31, 2008, expressed an unqualified opinion on those financial statements.

  • a1

    Independent Auditors Report

    To the Inspector General U.S. Department of Agriculture and the Board of Directors of the Federal Crop Insurance Corporation Washington, DC

    We have audited the accompanying consolidated balance sheet of the Federal Crop Insurance Corporation / Risk Management Agency (FCIC) as of September 30, 2009, and the related consolidated statements of net cost, changes in net position, and combined statements of budgetary resources for the year then ended. These consolidated financial statements are the responsibility of FCICs management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. The consolidated financial statements of FCIC as of September 30, 2008 were audited by other auditors whose report dated October 31, 2008, expressed an unqualified opinion on those consolidated financial statements.

    We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and Office of Management and Budget (OMB) Bulletin No. 07-04, Audit Requirements for Federal Financial Statements, as amended. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

    In our opinion, the 2009 consolidated financial statements referred to above present fairly, in all material respects, the financial position of FCIC as of September 30, 2009, and its net cost, changes in net position, and budgetary resources for the year then ended in conformity with accounting principles generally accepted in the United States of America.

    As discussed in Note 5 to the consolidated financial statements, FCICs ultimate losses on insurance claims may differ significantly from the recorded estimate due to differences between expected and actual yields, weather patterns, and economic conditions.

    In accordance with Government Auditing Standards, we have also issued our report dated November 5, 2009 on our consideration of FCICs internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.

    11710 Beltsville Drive, Suite 300Calverton, MD 207053106 tel: 3019312050 fax: 3019311710

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  • The accompanying sections Managements Discussion and Analysis, Required Supplementary Stewardship Information, and Required Supplementary Information are not a required part of the basic consolidated financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it.

    a1 Calverton, Maryland November 5, 2009

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  • a1

    Independent Auditors Report on Internal Control Over Financial Reporting

    And Compliance and Other Matters

    To the Inspector General U.S. Department of Agriculture and the Board of Directors of the Federal Crop Insurance Corporation Washington, DC

    We have audited the consolidated financial statements of Federal Crop Insurance Corporation / Risk Management Agency (FCIC) as of and for the year ended September 30, 2009, and have issued our report thereon dated November 5, 2009. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and Office of Management and Budget (OMB) Bulletin No. 07-04, Audit Requirements for Federal Financial Statements, as amended.

    INTERNAL CONTROL OVER FINANCIAL REPORTING

    In planning and performing our audit, we considered FCICs internal control over financial reporting as a basis for designing our auditing procedures, we obtained an understanding of design effectiveness of internal controls, determined whether they have been placed in operation, assessed control risk, and performed tests of FCICs controls for the purpose of expressing our opinion on the consolidated financial statements and to comply with OMB Bulletin 07-04, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control over financial reporting. The objective of our audit was not to provide assurance on internal control. Accordingly, we do not express an opinion on the effectiveness of FCICs internal control over financial reporting.

    A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the entity's financial statements that is more than inconsequential will not be prevented or detected by the entity's internal control.

    A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the entity's internal control.

    Our consideration of internal control ov