Freddie Mac 2009 Annual Report Download - page 209

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Freddie Mac:
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of
cash flows, and of equity (deficit) present fairly, in all material respects, the financial position of Freddie Mac, a
stockholder-owned government-sponsored enterprise (the “Company”), and its subsidiaries at December 31, 2009 and 2008,
and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2009 in
conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company
did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2009, based
on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO) because a material weakness in internal control over financial reporting related to
disclosure controls and procedures that do not provide adequate mechanisms for information known to the Federal Housing
Finance Agency (“FHFA”) that may have financial statement disclosure ramifications to be communicated to management,
existed as of that date. A material weakness is a deficiency, or a combination of deficiencies, in internal control over
financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or
interim financial statements will not be prevented or detected on a timely basis. The material weakness referred to above is
described in the accompanying Management’s Report on Internal Control Over Financial Reporting. We considered this
material weakness in determining the nature, timing, and extent of audit tests applied in our audit of the 2009 consolidated
financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting
does not affect our opinion on those consolidated financial statements. The Company’s management is responsible for these
financial statements, for maintaining effective internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting included in management’s report referred to above. Our
responsibility is to express opinions on these financial statements and on the Company’s internal control over financial
reporting based on our audits (which was an integrated audit in 2009). We conducted our audits in accordance with the
standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement
and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the
financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included
performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a
reasonable basis for our opinions.
We have also audited in accordance with the standards of the Public Company Accounting Oversight Board (United
States) the supplemental consolidated fair value balance sheets of the Company as of December 31, 2009 and 2008. As
explained in “Note 18: Fair Value Disclosures”, the supplemental consolidated fair value balance sheets have been prepared
by management to present relevant financial information that is not provided by the historical-cost consolidated balance
sheets and is not intended to be a presentation in conformity with accounting principles generally accepted in the United
States of America. In addition, the supplemental consolidated fair value balance sheets do not purport to present the net
realizable, liquidation, or market value of the Company as a whole. Furthermore, amounts ultimately realized by the
Company from the disposal of assets or amounts required to settle obligations may vary significantly from the fair values
presented. In our opinion, the supplemental consolidated fair value balance sheets referred to above present fairly, in all
material respects, the information set forth therein as described in “Note 18: Fair Value Disclosures”.
As explained in Note 2 to the consolidated financial statements, in September 2008, the Company was placed into
conservatorship by the FHFA. The U.S. Department of Treasury (“Treasury”) has committed financial support to the
Company and management continues to conduct business operations pursuant to the delegated authorities from FHFA during
conservatorship. The Company is dependent upon the continued support of Treasury and FHFA. As discussed in Note 1 to
the consolidated financial statements, the Company adopted as of April 1, 2009 an amendment to the accounting standards
for investments in debt and equity securities which changed how it recognizes, measures and presents other-than-temporary
impairment for debt securities and, as of January 1, 2008, changed how it defines, measures and discloses the fair value of
assets and liabilities and elected to measure certain financial instruments and other items at fair value that are not required to
be measured at fair value.
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