Management Report: Opportunities for Improvement in the Federal Housing Finance Agency's Internal Controls and Accounting Procedures
Highlights
In November 2010, we issued our opinion on the Federal Housing Finance Agency's (FHFA) fiscal years 2010 and 2009 financial statements. Our report also included our opinion on the effectiveness of FHFA's internal control over financial reporting as of September 30, 2010, and our evaluation of FHFA's compliance with provisions of selected laws and regulations for the fiscal year ended September 30, 2010. The Housing and Economic Recovery Act of 2008 (HERA) created FHFA and gave it responsibility for, among other things, the supervision and oversight of the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), and the 12 federal home loan banks. Specifically, FHFA was assigned responsibility for ensuring that the regulated entities operate in a fiscally safe and sound manner, including maintenance of adequate capital and internal controls, in carrying out their housing and community-development finance mission. HERA requires FHFA to annually prepare financial statements, and requires GAO to audit these statements. The purpose of this report is to present additional information on the internal control and accounting procedure issues we identified during our audit of FHFA's fiscal year 2010 financial statements and to provide our recommended actions to address those issues. We are making three recommendations for strengthening FHFA's internal controls and accounting procedures. In addition, we are providing an update on the status of recommendations we made to address internal control issues identified during our audit of FHFA's fiscal year 2009 financial statements as reported in our June 3, 2010, management report on internal controls and accounting procedures and our April 30, 2010, report on controls related to information security.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Federal Housing Finance Agency | The Acting Director of FHFA should direct the Chief Financial Officer to establish a mechanism to monitor compliance with policies and procedures surrounding the proper disposal of capitalized property and equipment. |
GAO confirmed that FHFA established a mechanism to monitor compliance with policies and procedures for the proper disposal of capitalized assets.
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| Federal Housing Finance Agency | The Acting Director of FHFA should direct the Chief Financial Officer to update the Property Management Policy to include procedures for how to properly document approval before disposal of FHFA assets. |
GAO confirmed that FHFA updated its property management policy to include procedures for properly documenting approval before disposing of FHFA assets.
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| Federal Housing Finance Agency | The Acting Director of FHFA should direct the Chief Financial Officer to enhance FHFA's Invoice and Payment Desktop Procedures to include detailed instructions on how to verify the accuracy of invoice amounts prior to payment. |
During our work during the fiscal year 2013 financial audit, we evaluated the status of the recommendation we made to FHFA in GAO-10-587R. Specifically, we found that FHFA updated their Administrative Accounting Manual, including invoice and payment desktop procedures. In addition, during our testing of FHFA's non-payroll expenditures, we did not find any errors related to this issue.
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