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GAO-02-1084R 1 (2002-09-24)

handle is hein.gao/gaobaambz0001 and id is 1 raw text is: £ Accountability * Integrity * Reliability United States General Accounting Office Washington, DC 20548 September 24, 2002 The Honorable Michael M. Reyna Chairman of the Board and Chief Executive Officer Farm Credit Administration Subject: Farm Credit Administration: Compliance with the Inflation Adjustment Act Dear Mr. Reyna: Earlier this year, we initiated a governmentwide review of the implementation of the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended (Inflation Adjustment Act).' The Inflation Adjustment Act required each federal agency to issue a regulation adjusting its covered maximum and minimum civil monetary penalties for inflation by October 23, 1996, and requires them to make necessary adjustments at least once every 4 years thereafter. During our review, we determined that the Farm Credit Administration (FCA) had adjusted its civil penalties in a manner inconsistent with the requirements of the statute. This report is intended to bring this matter to your attention and to recommend corrective action. FCA's Method of Rounding Is Inconsistent with the Requirements of the Inflation Adjustment Act Under the Inflation Adjustment Act, FCA (like other covered federal agencies) was required to publish a regulation by October 23, 1996, adjusting its maximum civil penalties for inflation. The amount of this adjustment was to be based on changes in the Consumer Price Index (CPI) from June of the calendar year in which FCA's penalties were last set or adjusted through June of the year prior to the adjustment (i.e., June 1995 for adjustments made in October 1996). However, the statute limited the first adjustments of an agency's penalties to 10 percent of the penalty amounts. On October 22, 1996, FCA published a final rule adjusting its civil penalties for inflation.2 In the rule, the agency noted that two provisions of section 5.32(a) of the 'The Inflation Adjustment Act is codified at 28 U.S.C. 2461 note. The 1990 act was amended in 1996 by the Debt Collection Improvement Act, which added the requirement for agencies to adjust their civil penalties by regulation (Pub. L. 104-134, Sec. 31001, 110 Stat. 1321-373). 2See 61 Fed. Reg. 54728. GAO-02-1084R FCA Penalty Adjustments

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