Fannie Mae 2013 Annual Report Download - page 168

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Reform Act, FHFA is limited in its ability to design and implement a complete set of disclosure controls and
procedures relating to Fannie Mae, particularly with respect to current reporting pursuant to Form 8-K. Similarly, as a
regulated entity, we are limited in our ability to design, implement, operate and test the controls and procedures for
which FHFA is responsible.
Due to these circumstances, we have not been able to update our disclosure controls and procedures in a manner that
adequately ensures the accumulation and communication to management of information known to FHFA that is
needed to meet our disclosure obligations under the federal securities laws, including disclosures affecting our
consolidated financial statements. As a result, we did not maintain effective controls and procedures designed to
ensure complete and accurate disclosure as required by GAAP as of December 31, 2013 or as of the date of filing this
report. Based on discussions with FHFA and the structural nature of this weakness, we do not expect to remediate this
material weakness while we are under conservatorship.
MITIGATING ACTIONS RELATING TO MATERIAL WEAKNESS
As described above under “Management’s Report on Internal Control Over Financial Reporting—Description of Material
Weakness,” we continue to have a material weakness in our internal control over financial reporting relating to our disclosure
controls and procedures. However, 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 Conservatorship Operations, 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 this annual
report on Form 10-K for the year ended December 31, 2013 (“2013 Form 10-K”), and engaged in discussions
regarding issues associated with the information contained in those filings. Prior to filing our 2013 Form 10-K,
FHFA provided Fannie Mae management with a written acknowledgment that it had reviewed the 2013 Form 10-K,
and it was not aware of any material misstatements or omissions in the 2013 Form 10-K and had no objection to our
filing the 2013 Form 10-K.
• The Director of FHFA and our Chief Executive Officer have been in frequent communication, typically meeting on
at least a bi-weekly basis.
• FHFA representatives attend meetings frequently with various groups within the company to enhance the flow of
information and to provide oversight on a variety of matters, including accounting, credit and market risk
management, external communications and legal matters.
• Senior officials within FHFA’s Office of the Chief Accountant have met frequently with our senior finance
executives regarding our accounting policies, practices and procedures.
In view of these activities, we believe that our consolidated financial statements for the year ended December 31, 2013 have
been prepared in conformity with GAAP.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
Management has evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, whether any
changes in our internal control over financial reporting that occurred during our last fiscal quarter have materially affected, or
are reasonably likely to materially affect, our internal control over financial reporting. There have been no changes in our
internal control over financial reporting since September 30, 2013 that management believes have materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting.