Freddie Mac 2011 Annual Report Download - page 370

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Description of Fees
The following is a description of fees billed to us by PricewaterhouseCoopers LLP, our independent public
accountants, during 2011 and 2010.
Table 96 — Auditor Fees
(1)
2011 2010
Audit Fees
(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $25,617,867 $29,484,646
Audit-Related Fees
(3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,725 18,000
Tax Fees
(4)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,040,750 3,050,000
All Other Fees
(5)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,399 148,805
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $28,678,741 $32,701,451
(1) These fees represent amounts billed within the designated year and include reimbursable expenses of $283,246 and $436,051 for 2011 and 2010,
respectively.
(2) Audit fees include fees and expenses billed by PricewaterhouseCoopers in connection with the SAS 100 quarterly reviews of our interim financial
information and the audit of our annual consolidated financial statements. The audit fees billed during 2011 include fees and expenses related to the
2010 ($7,902,260) and 2011 ($17,727,006) audits. In addition to the amounts shown above, approximately $12.3 million of fees and reimbursable
expenses will be billed in 2012 for the 2011 audit. The audit fees billed during 2010 include fees and expenses related to the 2009 ($8,839,260) and
2010 ($20,645,386) audits. Audit fees of $83,020 and $95,542 in 2011 and 2010, respectively, related to the Freddie Mac Foundation are excluded
because these fees are incurred and paid separately by the Freddie Mac Foundation.
(3) The 2011 and 2010 audit-related fees resulted from renewals of our Comperio subscription ($8,725 and $18,000, respectively).
(4) The tax fees billed in 2011 related to non-audit tax compliance services including the preparation of the company’s 2010 tax return. The tax fees
billed in 2010 covered services related to the preparation of the company’s 2009 tax returns, preparation of quarterly estimated tax calculations and
other services related to improving Freddie Mac’s annual tax compliance process ($3,000,000), as well as process documentation services and tax
accounting method change services ($50,000).
(5) All other fees for 2011 and 2010 resulted from fees and expenses billed by PricewaterhouseCoopers for the performance of non-audit advisory
services related to a preliminary assessment of certain aspects of the company’s technology implementation ($11,399) and management’s
reorganization of our Finance Division ($148,805), respectively.
Approval of Independent Auditor Services and Fees
As provided in its charter, the Audit Committee appoints, subject to FHFA approval, our independent public
accounting firm and reviews the scope of the annual audit and pre-approves, subject (as required) to FHFA approval, all
audit and non-audit services permitted under applicable law to be performed by the independent public accounting firm.
The Sarbanes-Oxley Act and related rules adopted by the SEC require that all services provided to companies subject
to the reporting requirements of the Exchange Act by their independent auditors be pre-approved by their audit committee
or by authorized members of the committee, with certain exceptions. The Audit Committee’s charter requires that the
Audit Committee pre-approve any audit services, and any non-audit services permitted under applicable law, to be
performed by our independent auditors (or to designate one or more members of the Audit Committee to pre-approve
such services and report such pre-approval to the Audit Committee).
Audit services that are within the scope of an auditor’s engagement approved by the Audit Committee prior to the
performance of those services are deemed pre-approved and do not require separate pre-approval. Audit services not
within the scope of an Audit Committee-approved engagement, as well as permissible non-audit services, must be
separately pre-approved by the Audit Committee.
When the Audit Committee pre-approves a service, the Audit Committee typically sets a dollar limit for such service.
Management endeavors to obtain pre-approval of the Audit Committee, or of the Chairman of the Audit Committee (when
the Chairman of the Audit Committee has been delegated such authority), before it incurs fees exceeding the dollar limit.
If the Chairman of the Audit Committee approves the increase, the Chairman will report such approval at the Audit
Committee’s next scheduled meeting.
The pre-approval procedure is administered by our senior financial management, which reports throughout the year to
the Audit Committee. The Audit Committee pre-approved all audit, audit-related, tax, and other services performed in
2010 and 2011.
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