Mortgage giant Fannie Mae's chief federal regulator this week gave the company 30 days to submit its remediation plan for its financial reporting and end user systems. The Office of Federal Housing Enterprise Oversight conducted a special review of the company's accounting policies after it reported a $1 billion mistake in its third quarter earnings last year. "OFHEO's review has raised concerns about the extensive reliance of Fannie Mae on manual systems (otherwise known as end user computing systems)," OFHEO Director Armando Falcon wrote in a letter to Fannie's Chief Exec. Franklin Raines. The end user computing systems carry a significant risk of error. The $1 billion error in third quarter occurred in one of Fannie's end user applications, according to OFHEO. Fannie Mae relies on more than 70 of these end user systems in its financial reporting. OFHEO identified other flaws associated with the systems as a lack of technical and user documentation, insufficient testing and ina...
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