RMA provides its annual list to the appropriate FSA state offices for  distribution to FSA county offices, as well as to the insurance company  selling the policy to the farmer. Provisions under the Supplemental Revenue Assistance Payments Program

The 2008 farm bill authorized and funded a new disaster program for  losses in crop years 2008 through 2011. FSA Largely Based Crop Disaster Payments on RMA Data, Resulting in About $395 Million to Farmers RMA Identified as Having Received Suspicious Crop Insurance Payments

FSA largely used RMA crop insurance payment data to calculate nearly $7  billion in crop disaster payments under the three crop disaster programs  from 2001 through 2007. Crop Disaster Programs Resulted in Payments to Farmers RMA Identified as Having Received Suspicious Crop Insurance Payments

Of the nearly $7 billion in payments made under the 2001 through 2007  crop disaster assistance programs, we found that FSA made about $395  million in crop disaster payments to farmers or entities that were  identified by RMA’s data mining as having received suspicious crop  insurance claims payments during that same period of time. However,  in a 2005 report, we found that few suspicious claims payments resulted in  a conviction for fraud. According  to Department of Justice officials, the factors considered when accepting a  case include sufficiency of the evidence, complexity of the case, whether  the fraudulent activity is part of a pattern or scheme, and workload and  resources that would be needed to investigate and prosecute the case. First,  under the past programs, FSA county officials could not verify the cause of  a crop loss because of the lag—as much as 4 years—between the  occurrence of a disaster-related crop loss and the application for a disaster  payment for that loss. Under the new program, FSA officials will still face  a lag time, and without more timely eligibility determinations, FSA county  officials will be unable to verify that applicants experienced losses due to  an eligible cause. Second, the lack of documentation in FSA’s data systems  for calculating and issuing payments under the ad hoc programs makes it  difficult to validate the accuracy of those payments. A similar lack of  documentation under the new program could hamper FSA officials’ efforts  to track payments and ensure the payments adhere to statutes,  regulations, and FSA guidelines. Conclusions

FSA helps the nation’s farmers recover financially from natural disasters. First, USDA  disagreed with our statement that FSA officials did not provide systems  documentation, such as specifications and business rules on how FSA  used data in its systems to calculate crop disaster payments. Key contributors to this report are listed in appendix V.

Appendix I: Objectives, Scope, and Methodology

Our objectives were to determine (1) how the U.S. Department of  Agriculture’s (USDA) Farm Service Agency (FSA) administered its crop  disaster programs for losses from 2001 through 2007 and the results of  payments under these programs and (2) what lessons FSA can learn from  its experience with the previous crop disaster programs for managing its  new crop disaster program. To assess the reliability of these data, we    obtained and reviewed the available documentation about the data  elements in the data files;    performed electronic testing on the data elements that we used;  reconciled the two sources of crop disaster program payment data— Producer Payment Reporting System and crop disaster program payment  history records—by matching common data elements including FSA state  code, FSA county code, and tax identification number;    worked with FSA Application Development Center staff to determine how  to merge all of the data files because FSA did not have written business  rules or overall system documentation;   discussed our results from merging these data files with officials in FSA’s  Production, Emergency, and Compliance Division and in FSA’s  Application Development Center, which administers and oversees the crop  disaster program payments; and   compared the results of merging all data files to FSA county office hard  copy payment records that contain the calculations for the statutory  payment cap. Therefore, the reliability of FSA’s electronic data  files for the purpose of assessing whether a crop disaster payment  complied with a statutory cap is undetermined. 8.
Why GAO Did This Study

The U.S. Department of Agriculture's (USDA) Farm Service Agency (FSA) provides programs to help farmers recover financially from natural disasters. Congress has historically supplemented these programs with ad hoc programs that pay farmers who experienced crop losses. The 2008 farm bill established a program through 2011 to pay farmers who lose crops. To receive these payments, farmers must purchase coverage under federal crop insurance or the Noninsured Crop Disaster Assistance Program, and receive claims payments for losses. GAO was asked to evaluate (1) how FSA administered the crop disaster programs for losses from 2001 through 2007 and the results of payments under these programs and (2) what lessons FSA can learn from the previous crop disaster programs to manage its new crop disaster program. GAO reviewed statutes, regulations, and guidance; analyzed USDA data; and interviewed USDA officials.

What GAO Found

FSA largely used crop insurance data from USDA's Risk Management Agency (RMA) to calculate nearly $7 billion in crop disaster payments under the 2001 through 2007 ad hoc crop disaster programs. FSA made about $395 million in payments under these programs to 8,463 farmers who RMA identified as having received suspicious crop insurance claims payments in those same years. Almost half of crop disaster payments for farmers RMA identified as having suspicious crop insurance claims payments were in five states. RMA provides its annual list of suspicious claims payments to FSA state and county offices and to the insurance company selling the policy to the farmer for appropriate follow-up action. However, GAO previously reported that few suspicious claims payments resulted in a conviction for fraud. As reported, the factors considered when accepting a case for investigation and prosecution include sufficiency of the evidence, complexity of the case, whether the fraudulent activity is part of a pattern or scheme, and workload and resources that would be needed to investigate and prosecute the case. For 2001 through 2007, GAO could not use FSA's electronic data files to determine whether crop disaster payments complied with a statutory cap because the reliability of these files is undetermined for the purpose of assessing whether a crop disaster payment was in compliance with the cap. However, in using hard copy files to determine compliance with the cap, GAO found that payments to selected farmers were in compliance. Furthermore, FSA officials did not provide systems documentation, such as specifications and business rules on how FSA used data in its systems to calculate crop disaster payments. FSA's experience with ad hoc crop disaster programs shows that a lag--as much as 4 years--between the occurrence of a disaster-related crop loss and the application for a disaster payment for that loss prevented FSA county officials from verifying the cause of the loss. Under the new program, there will still be a lag before farmers can apply for a payment; in contrast, farmers have to file a crop insurance claim immediately after a loss and be subject to insurance verification. Without more timely eligibility determinations for the new crop disaster program, FSA county officials will be unable to verify that applicants experienced losses due to an eligible cause. In addition, insufficient documentation of the data systems FSA used for calculating and issuing payments under the ad hoc programs makes it difficult to validate the accuracy of those payments. A similar lack of documentation under the new program could hamper FSA officials' efforts to track payments and ensure the payments adhere to statutes, regulations, and FSA guidelines.