Fannie Mae 2010 Annual Report Download - page 198

Item 9A. Controls and Procedures
OVERVIEW
We are required under applicable laws and regulations to maintain controls and procedures, which include
disclosure controls and procedures as well as internal control over financial reporting, as further described
below.
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Disclosure controls and procedures refer to controls and other procedures designed to provide reasonable
assurance that information required to be disclosed in the reports we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified in the rules and forms of the
SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to provide
reasonable assurance that information required to be disclosed by us in the reports that we file or submit under
the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and
Deputy Chief Financial Officer, who is acting as our chief financial officer, as appropriate, to allow timely
decisions regarding our required disclosure. In designing and evaluating our disclosure controls and procedures,
management recognizes that any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving the desired control objectives, and management was required to
apply its judgment in evaluating and implementing possible controls and procedures.
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15 under the Exchange Act, management has evaluated, with the participation of our
Chief Executive Officer and Deputy Chief Financial Officer, the effectiveness of our disclosure controls and
procedures as in effect as of December 31, 2010, the end of the period covered by this report. As a result of
management’s evaluation, our Chief Executive Officer and Deputy Chief Financial Officer concluded that our
disclosure controls and procedures were not effective at a reasonable assurance level as of December 31, 2010
or as of the date of filing this report.
Our disclosure controls and procedures were not effective as of December 31, 2010 or as of the date of filing
this report because they did not adequately ensure the accumulation and communication to management of
information known to FHFA that is needed to meet our disclosure obligations under the federal securities laws.
As a result, we were not able to rely upon the disclosure controls and procedures that were in place as of
December 31, 2010 or as of the date of this filing, and we continue to have a material weakness in our
internal control over financial reporting. This material weakness is described in more detail below under
“Description of Material Weakness.”
Based on discussions with FHFA and the structural nature of the weakness in our disclosure controls and
procedures, it is likely that we will not remediate the weakness in our disclosure controls and procedures
relating to information known to FHFA while we are under conservatorship.
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Overview
Our management is responsible for establishing and maintaining adequate internal control over financial
reporting. Internal control over financial reporting, as defined in rules promulgated under the Exchange Act, is
a process designed by, or under the supervision of, our Chief Executive Officer and Deputy Chief Financial
Officer and effected by our Board of Directors, management and other personnel to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external
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