Fannie Mae 2004 Annual Report Download - page 215

• EUC version control; and
• data change control.
Independent Model Review Process
A corporate model policy was approved in September 2005 that established an independent model review
process that assesses on a regular basis whether the models and assumptions were appropriate and whether
outputs were calculated accurately according to the model specifications. We have established an independent
model review function that reports directly to the Chief Risk Officer. Many of the models that resulted in
errors in the past are no longer being used to generate financial data. As of the date of this filing, we have
reviewed our most critical financial models pursuant to our new independent model review process.
Treasury and Trading Operations
We have redesigned our process for authorizing, approving, validating and settling trades, including segregat-
ing duties among trading, settlement and valuation activities within both our treasury and trading operations.
In addition, with the assistance of an independent consulting firm, we have assessed the organizational design
of our treasury and trading operations, and we are in the process of implementing changes in those functions.
Pricing and Independent Price Verification
We have redesigned our process for pricing our financial instruments. The process includes supervisory review
over data inputs, model outputs and computational accuracy. In addition, we have implemented independent
validation controls over methodologies and verification of pricing using risk-based statistical sampling
techniques.
Wire Transfer Controls
We have redesigned our process and controls over financial reporting related to our wire transfer activity.
Specifically, we implemented system changes, developed multiple department policies and created a cross
functional team to develop enhancements to our wire transfer process and controls. As a result, we have
enhanced our access controls by segregating the wire initiation and wire system access functions, implemented
a periodic access review process and strengthened our access approval procedures. We have eliminated manual
wires from our standard procedures and have reduced our list of approved wire counterparties. We have also
increased business unit staffing levels and hired an external consultant to provide best practice and industry
standards guidance.
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