Establish audit trails to ensure that supporting documentation can be easily traced and verified to the recorded transactions in the general ledger.
Publication Report
2020-FO-0002 | February 07, 2020
Audit of the Government National Mortgage Association’s Financial Statements for Fiscal Year 2019
This report presents the results of our audit of Ginnie Mae’s fiscal year 2019 financial statements, including our report on Ginnie Mae’s internal control and test of compliance with selected provisions of laws, regulations, and contracts applicable to… moreRelated Recommendations
Government National Mortgage Association
Test whether a cumulative housing price appreciation (HPA) variable should be added to the probability of prepayment, probability of default, foreclosure timeline, buyout time models, and cure rate assumptions. Ginnie Mae should provide an analysis if it believes that adding an HPA variable would not be appropriate to support its position.
Develop and implement policies and procedures to require a sufficiently granular decomposition analysis that can adequately explain the impact of all the model changes made.
Develop and implement policies and procedures or enhance or clarify, as appropriate, existing policies and procedures that will require additional analyses whenever thresholds are breached or other analyses indicate potential modeling issues.
Document the economic rationale behind unintuitive model coefficients to support that the unintuitive relationships are appropriate.
Document all model assumptions that are undocumented, providing the basis for any assumptions or decisions made when developing each model assumption.
Develop and implement policies and procedures to ensure compliance with model risk management guidance regarding adequate and well-documented model assumptions.
Develop and implement controls that ensure the updating of model documentation when model changes are made.
Improve model documentation by addressing the model documentation deficiencies cited in this report and narrowing or consolidating them into fewer pieces of documentation, as appropriate.
Formalize and define coding best practices within Ginnie Mae’s model governance framework.
Apply coding best practices during model development processes and add a control for reviewing model code for compliance with best practices.
Ensure that documentation is maintained to support reimbursable cost receivables recorded on Ginnie Mae’s financial statements or write off the reimbursable costs receivables that are not valid or cannot be supported.
Establish and implement remedial action plans to document the implementation testing of the effectiveness of its internal control over financial reporting in accordance with OMB Circular A-123, appendix A.
Update its internal controls descriptions to reflect controls in place and implement monitoring activities to ensure that it carries out the controls and documents their performance and results.
Resolve the issues identified with the mastersubservicers to improve the data quality and timing of the raw data received for SLDB monthly processing and minimize manual adjustments.
Modify the standing operating procedures for the SLDB data quality checks that address mastersubservicer data deficiencies, data quality rules, and severity levels, to include periodic assessments of the appropriateness of the severity levels.
Review VAPE data validation procedures to improve preventive controls to determine the reasonableness of the inbound VAPE data before SLDB processing.
Implement the planned SLDB code fixes and enhancements to reduce future manual adjustments.