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McLean, Virginia 22102-5090
(703) 883-4000

INFORMATIONAL MEMORANDUM





August 18, 1998



To: Chairman, Board of Directors
Chief Executive Officer
All Farm Credit System Institutions

From: Roland E. Smith, Chief Examiner
Office of Examination

Subject: Updated Year 2000 Work ProgramRoland E. Smith

The Farm Credit Administration (FCA), along with the regulatory agencies that comprise the Federal Financial Institutions Examination Council (FFIEC), has adopted an updated work program for conducting Year 2000 examinations. Several FCA examiners have completed training provided by the FFIEC on this work program. They found the procedures to be a valuable tool in determining whether Farm Credit System (FCS) institutions have adequately addressed the Year 2000 problems inherent in many computer software, hardware, and environmental systems. The procedures also address Year 2000 risks associated with customers of financial institutions, external parties and fiduciary activities. While some of the activities and terminology contained in this work program may not be applicable to your institution, the majority of this guidance is applicable to FCS institutions and you are encouraged to use it as a self-assessment tool. A copy of this work program, which is also available on the FFIEC web site (www.ffiec.gov), is attached.

The examination procedures are divided into six sections: General, Renovation, Validation, Implementation, Contingency Planning, and Examination Conclusions. The procedures are structured to address the varying degrees of complexity of operational systems and applications. Specific examination procedures are provided for financial institutions that rely on service providers and turnkey software vendors (e.g., most associations), as well as for large or complex financial institutions (e.g., banks, service corporations, and large or complex associations). The scope of the Year 2000 examinations will be based on the risk profile and complexity of the institution under review. The objectives of the work program are to:

· Determine whether an institution is handling Year 2000-related issues in a safe and sound manner and the project is meeting established timeframes and FCA key milestone dates.

· Follow up on results from previous Year 2000 examinations.

· Determine whether an effective plan for testing Year 2000 renovated products and implementing those projects into its production environment has been developed.

· Assess the adequacy of Year 2000 contingency plans.

· Determine whether any corrective action is necessary to assure Year 2000 readiness.

These examination procedures will be used during the remainder of 1998 and through the first few months of 1999. For further information on Year 2000 issues, please call Thomas M. Glenn, Director of Operations, Office of Examination, at (703) 883-4412. Contact may also be made at the following e-mail address: glennt@fca.gov.

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