FHFA Working to Strengthen Internal Financial Controls: GAO Audit Findings and Recommendations

The Federal Housing Finance Agency (FHFA) recently came under scrutiny after a Government Accountability Office (GAO) audit revealed a significant financial misstatement in their calculations under the Federal Employee Compensation Act. This error, totaling $1.3 million, highlighted the importance of strong internal financial control practices within government agencies.

In an interview with Anne Sit-Williams, director for financial management and assurance at GAO, she discussed the chain of events that led to this misstatement. The error was a result of a miscalculation in the worker’s compensation liability, which went unnoticed during the review process by both FHFA and the Inspector General. This oversight serves as a cautionary tale for other small agencies that rely on shared service providers for financial statements.

Additionally, the audit also identified IT access control issues within FHFA, including issues with payroll system access and access removal for separated employees. These findings are not uncommon across federal agencies, highlighting the need for improved controls in these areas.

Despite these challenges, FHFA has taken the GAO’s recommendations seriously and has already begun implementing remediation efforts to address the internal control findings. This proactive approach demonstrates their commitment to strengthening their financial practices and ensuring accuracy in their financial statements.

Overall, the FHFA’s experience serves as a valuable lesson for other agencies, emphasizing the importance of thorough reviews, proper documentation, and accountability in financial management. By learning from these mistakes and taking proactive measures to address deficiencies, agencies can avoid similar pitfalls and maintain the integrity of their financial operations.