Administration of the $6.6 billion Farm Management Deposit Scheme "has not been fully effective", according to a review of the scheme.The Australian National Audit Office has released a review of the scheme, which makes a number of recommendations. These include calls for: a broad evaluation of the extent to which the scheme assists primary producers; a risk assessment; and a review of the quality of data provided by financial institutions.The scheme, established in 1999, was set up to help primary producers deal more effectively with fluctuations in the cash flow by allowing them to set aside cash earned during high-income years for use in low-income years.It is open to individuals carrying on primary production business, including partners in a partnership and beneficiaries of a trust. It is not open to companies or trusts.Users of the scheme are able to defer income tax on amounts deposited in FMD accounts at authorised deposit-taking institutions. Deposits reduce a primary producer's taxable income in the year they are made, while amounts withdrawn from FMDs are included in assessable income in the year they are withdrawn.There are about 45,000 primary producers with FMDs and the value of deposits was $6.6 billion in June last year.The scheme is jointly administered by the Department of Agriculture, the Australian Taxation Office and Treasury.The scheme was changed in 2016, when the deposit limit was increased from $400,000 to $800,000, primary producers experiencing severe drought were allowed to access funds within 12 months of deposit without losing tax concessions, and FMDs could be used to offset a debt relating to the account holder's business.In its review, the ANAO says risk identification and compliance arrangements to support the integrity of the scheme have not been fully effective. The last time a major risk assessment was done was in 2012.It says the ATO has undertaken minimal specific compliance activity. "There has been little substantive compliance checking by the ATO, including to determine whether holders of FMDs meet eligibility requirements," it says.The FMD data provided to the Department of Agriculture and the ATO relies heavily on the integrity of the financial institutions' data collection and reporting systems. None of the data is verified against the financial institutions' source documentation."Agriculture and the ATO are aware of problems with the FMD data provided by financial institutions, including inconsistent reporting of deposits, repayments and transfers, missing transaction dates and inconsistent reporting of personal identification," the ANAO says.