Freddie Mac 2015 Annual Report Download - page 334

Controls and Procedures
Freddie Mac 2015 Form 10-K 332
our business that, if known to management, would require consideration for disclosure or reflection in our
financial statements, but that FHFA, for regulatory reasons, may be constrained from communicating to
management. As a result of these considerations, we have concluded that this control deficiency
constitutes a material weakness in our internal control over financial reporting.
Because of this material weakness, we have concluded that our internal control over financial reporting
was not effective as of December 31, 2015 based on the COSO criteria (2013 Framework).
PricewaterhouseCoopers LLP, an independent registered public accounting firm, audited the
effectiveness of our internal control over financial reporting as of December 31, 2015 and also determined
that our internal control over financial reporting was not effective. PricewaterhouseCoopers LLP’s report
appears in “Financial Statements and Supplementary Data — Report of Independent Registered Public
Accounting Firm.”
Evaluation of Disclosure Controls and
Procedures
Disclosure controls and procedures include, without limitation, controls and procedures designed to
ensure that the information we are required to disclose in reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported within the time periods specified by the
SEC’s rules and forms and that such information is accumulated and communicated to management of
the company, including the company’s Chief Executive Officer and Chief Financial Officer, as appropriate,
to allow timely decisions regarding required disclosure. In designing our disclosure controls and
procedures, we recognize that any controls and procedures, no matter how well designed and operated,
can provide only reasonable assurance of achieving the desired control objectives, and we must apply
judgment in implementing possible controls and procedures.
Management, including the company’s Chief Executive Officer and Chief Financial Officer, conducted an
evaluation of the effectiveness of our disclosure controls and procedures as of December 31, 2015. As a
result of management’s evaluation, our Chief Executive Officer and Chief Financial Officer concluded that
our disclosure controls and procedures were not effective as of December 31, 2015, at a reasonable level
of assurance, because we have not been able to update our disclosure controls and procedures to
provide reasonable assurance that information known by FHFA on an ongoing basis is communicated
from FHFA to Freddie Mac’s management in a manner that allows for timely decisions regarding our
required disclosure under the federal securities laws. As discussed above, we consider this situation to be
a material weakness in our internal control over financial reporting. Based on discussions with FHFA and
the structural nature of this continuing weakness, we believe it is likely that we will not remediate this
material weakness while we are under conservatorship.