Fannie Mae 2008 Annual Report Download - page 225

Fannie Mae management in addressing disclosure and accounting issues, and reviewing drafts of periodic
reports before we file these reports with the SEC. For example:
• During February 2009, members of the Board and the Audit Committee reviewed and discussed with
management the disclosures contained in our annual report on Form 10-K for the year ended
December 31, 2008, including the audited financial statements contained therein.
• The Audit Committee reviewed and oversaw the process by which Fannie Mae’s Chief Executive Officer
and Chief Financial Officer certified the annual report on Form 10-K for the year ended December 31,
2008. Pursuant to this process, management reported to the Audit Committee in February 2009 on our
material weaknesses in internal control over financial reporting as of December 31, 2008.
• All members of the Board of Directors approved and signed the 2008 Form 10-K prior to filing.
Accordingly, Fannie Mae management believes it now has in place the appropriate governance structure to
provide oversight of our financial and accounting matters.
Changes in Management
During the fourth quarter of 2008, we appointed David M. Johnson as our new Chief Financial Officer and
David C. Hisey as our Deputy Chief Financial Officer. For more information regarding these officers, refer to
“Part III—Item 10—Directors, Executive Officers and Corporate Governance—Executive Officers.”
Identification of Material Weakness
During the first quarter of 2009, management identified an additional material weakness in our internal control
over financial reporting as of December 31, 2008 relating to the design of our controls over certain inputs to
models used in measuring expected cash flows for the other-than-temporary-impairment assessment process
for private-label mortgage-related securities. This material weakness is described above under “Management’s
Report on Internal Control Over Financial Reporting—Description of Material Weaknesses.” We are currently
taking steps to remediate this material weakness, which we intend to complete by September 30, 2009.
MITIGATING ACTIONS RELATING TO MATERIAL WEAKNESSES
Disclosure Controls and Procedures
As described above under “Management’s Report On Internal Control Over Financial Reporting—Description
of Material Weaknesses,” we have not remediated the material weakness in our internal control over financial
reporting relating to our disclosure controls and procedures as of December 31, 2008 or as of the date of filing
this report. However, during the fourth quarter of 2008 and the first two months of 2009, we and FHFA have
engaged in the following practices intended to permit accumulation and communication to management of
information needed to meet our disclosure obligations under the federal securities laws:
• FHFA has established the Office of Conservator Affairs, which is intended to facilitate operation of the
company with the oversight of the conservator.
• We have provided drafts of our SEC filings to FHFA personnel for their review and comment prior to
filing. We also have provided drafts of external press releases, statements and speeches to FHFA
personnel for their review and comment prior to release.
• FHFA personnel, including senior officials, have reviewed our SEC filings prior to filing, including our 2008
Form 10-K, and engaged in discussions regarding issues associated with the information contained in those
filings. Prior to filing our 2008 Form 10-K, FHFA provided Fannie Mae management with a written
acknowledgement that it had reviewed the 2008 Form 10-K, was not aware of any material misstatements or
omissions in the 2008 Form 10-K, and had no objection to our filing the 2008 Form 10-K.
• The Director of FHFA and our Chief Executive Officer have been in frequent communication, typically
meeting (in person or by phone) on a weekly basis.
• FHFA representatives have held frequent meetings, typically weekly, with various groups within the
company to enhance the flow of information and to provide oversight on a variety of matters, including
accounting, capital markets management, external communications and legal matters.
220