Fannie Mae 2006 Annual Report Download - page 173

Item 9A. Controls and Procedures
OVERVIEW
This section discusses management’s identification of, and efforts to remediate, material weaknesses in internal
control over financial reporting over the period from December 31, 2005 to the date of this filing. It begins with an
overview of remediation status of each of the material weaknesses reported as of December 31, 2005, as of
December 31, 2006, and through the date of this filing. This overview is followed by a discussion of
management’s evaluation of disclosure controls and procedures, management’s report on internal control over
financial reporting, and management’s progress in remediating the material weaknesses, as set forth in the table
below.
As shown in the following table, a number of the material weaknesses reported as of December 31, 2005 were
remediated as of December 31, 2006, while others continued to be material weaknesses at such date but have
been remediated as of the date of this filing. The description of the material weaknesses identified in the table
is attached as Exhibit 99.3 hereto and is incorporated by reference herein.
Material Weakness Reported
as of December 31, 2005
Status as of
December 31, 2006
Status as of the date
of this Filing
Control Environment:
Accounting Policy Remediated *
Enterprise-Wide Risk Oversight Remediated *
Internal Audit Remediated *
Human Resources Remediated *
Information Technology Policy Remediated *
Policies and Procedures Remediated *
Application of GAAP Remediation in process Remediation in process
Financial Reporting Process:
Financial Statement Preparation and Reporting Remediation in process Remediation in process
Disclosure Controls Remediation in process Remediation in process
General Ledger Controls Remediated *
Journal Entry Controls Remediation in process Remediated
Reconciliation Controls Remediation in process Remediated
Information Technology and Infrastructure:
Access Control Remediation in process Remediation in process
Change Management Remediated *
End User Computing Remediated *
Independent Model Review Process Remediated *
Treasury and Trading Operations Remediated *
Pricing and Independent Price Verification Processes Pricing Controls -
Remediation in process Remediated
Independent Price
Verification Process -
Remediated
*
Wire Transfer Controls Remediated *
Multifamily Lender Loan Loss Sharing Modifications Remediation in process Remediation in Process
* Since remediation as of December 31, 2006 of the material weakness that existed as of December 31, 2005,
these controls have continued to be effective.
In our 2005 Form 10-K, we identified 12 material weaknesses in our internal control over financial reporting
as of December 31, 2005 relating to accounting policy, our enterprise-wide risk program, our internal audit
program, human resources, IT policies, policies and procedures, general ledger controls, IT change
management, end user computing tools, our independent model review process, treasury and trading
operations, and wire transfer controls. These material weaknesses are not described below because they were
remediated as of December 31, 2006. We describe the actions that we took during 2005 and 2006 to remediate
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