Federal Housing Finance Agency: Improvements Needed in Certain Internal Controls over Financial Reporting

Fast Facts

Each year, we audit the Federal Housing Finance Agency's financial statements.

During our 2024 audit, we found that FHFA doesn't have sufficient guidance to determine and review its accounts payable accruals—expenses incurred but not yet paid. Also, FHFA lacks guidance for communicating between its accounting office and business units. This guidance is necessary to ensure that the accounting office has the information it needs to meet financial accounting and reporting requirements.

Our 4 recommendations address these issues. We also determined that FHFA is still addressing recommendations from our April 2023 and May 2024 reports to management.

Highlights

What GAO Found

During GAO's audits of the Federal Housing Finance Agency's (FHFA) fiscal year 2024 financial statements, GAO identified deficiencies in FHFA's internal controls. Although these control deficiencies did not affect GAO's overall audit opinion on FHFA's financial statements or internal controls over financial reporting, they nonetheless warrant the attention of FHFA management.

Of the control deficiencies identified, GAO considered one—which was related to FHFA not having sufficient guidance for the determination and supervisory review of accounts payable accruals—to be a significant deficiency. GAO identified another deficiency that while less significant, still warrants the attention of FHFA management. This deficiency was related to FHFA's communication of financial accounting requirements between its accounting office and business units. By addressing these deficiencies, FHFA can make it more likely that agency management and employees will prevent, or detect and correct, misstatements in financial reporting.

Why GAO Did This Study

In November 2024, GAO reported on the results of its audits of FHFA's fiscal year 2024 financial statements and identified deficiencies in FHFA's internal controls. This report presents (1) the internal control deficiencies GAO identified during its fiscal year 2024 audit, (2) recommendations to address the new internal control deficiencies identified, and (3) the status of FHFA's corrective actions to address open recommendations related to internal control deficiencies identified in prior reports.

To evaluate FHFA's internal control over financial reporting during its fiscal year 2024 audit, GAO reviewed FHFA policies and procedures; interviewed FHFA management and staff; observed controls in operation; and conducted tests of controls to determine whether controls were designed, implemented, and operating effectively. GAO also determined the status of FHFA's efforts to address recommendations related to internal control deficiencies that GAO identified in prior reports, and that remained open as of September 30, 2023.

Recommendations

GAO is making four recommendations to FHFA to reasonably assure that (1) accounts payable accruals are materially accurate and (2) its accounting office effectively communicates with its business units to obtain required information for financial reporting. FHFA agreed with GAO's four recommendations and described actions it plans to take to address each recommendation.

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Recommendations

GAO is making four recommendations to FHFA to reasonably assure that (1) accounts payable accruals are materially accurate and (2) its accounting office effectively communicates with its business units to obtain required information for financial reporting. FHFA agreed with GAO's four recommendations and described actions it plans to take to address each recommendation.