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GAO-12-499R 1 (2012-05-16)

handle is hein.gao/gaobacgbo0001 and id is 1 raw text is: Accountabiliy - Integrity - Reliability United States Government Accountability Office Washington, DC 20548 May 16, 2012 Mr. Edward J. DeMarco Acting Director Federal Housing Finance Agency Subject: Management Report: Opportunities for Improvement in the Federal Housing Finance Agency's Internal Controls Dear Mr. DeMarco: In November 2011, we issued our opinion on the Federal Housing Finance Agency's (FHFA) fiscal years 2011 and 2010 financial statements. Our report also included our opinion on the effectiveness of FHFA's internal control over financial reporting as of September 30, 2011, and our evaluation of FHFA's compliance with provisions of selected laws and regulations for the fiscal year ended September 30, 2011.1 The Housing and Economic Recovery Act of 2008 (HERA) created FHFA and assigned it responsibility for, among other things, the supervision and regulation of the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), the 12 federal home loan banks, and the Office of Finance.2 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 financial reporting-related internal control issue we identified during our audit of FHFA's fiscal year 2011 financial statements and to provide our recommended action to address that issue. This report also discusses a continuing issue with respect to FHFA's information security that resulted in new weaknesses in information security control areas. In addition, we are providing an update on the status of recommendations we made to address internal control issues identified during our audits of FHFA's fiscal years 2010 and 2009 financial statements as reported in our related management 1GAO, Financial Audit. Federal Housing Finance Agency's Fiscal Years 2011 and 2010 Financial Statements, GAO-12-161 (Washington, D.C.: Nov. 15, 2011). 2 Pub. L. No. 110-289, 122 Stat. 2654 (July 30, 2008). GAO-12-499R Page 1

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