Implement procedures to (a) ensure all HECM loan terminations are accurately reported, (b) prevent HECM terminated loans from being included in the loans receivable balance, and (c) prevent inspections and tax payments on HECM terminated loans.
Publication Report
2026-FO-0003 | January 27, 2026
Audit of FHA’s Fiscal Year 2025 Financial Statements
We contracted with the independent public accounting firm of Sikich CPA LLC to audit the financial statements of FHA as of and for the fiscal year ending September 30, 2025, and to provide reports on FHA’s (1) internal control over financial reporting… moreRelated Recommendations
Housing
- Status2026-FO-0003-001-AOpenClosed
Implement a process and procedure to ensure a complete and accurate Missing Documents Report is submitted to the General Ledger Division for recording a monthly reclassification entry between HECM loans receivable and accounts receivable.
- Status2026-FO-0003-001-BOpenClosed
Develop a process to (1) monitor receipt of original first notes and mortgages and recorded assignments, (2) follow up with mortgagees who fail to submit documents by the required deadline, and (3) initiate repurchase requests for HECM mortgagees who fail to meet assignment requirements.
- Status2026-FO-0003-001-DOpenClosed
Implement comprehensive controls to (a) identify all Single Family partial claims related to terminated first mortgages, (b) update the system record of partial claims that will become due and payable when the refinanced mortgages are terminated, and (c) remove partial claims related to terminated mortgages from SMART.
- Status2026-FO-0003-001-FOpenClosed
Implement an enhanced review process to ensure the receipt of partial claim documents is accurately marked in SMART so that the Missing Documents Report will be accurate.
- Status2026-FO-0003-001-GOpenClosed
Determine which report accurately reflects the status of partial claims without original documentation, certify the completeness and accuracy of the identified report, and provide the report to the General Ledger Division for the reclassification entry.
- Status2026-FO-0003-001-HOpenClosed
Transmittal of Independent Public Accountant’s Audit Report on the Federal Housing Administration’s Fiscal Year 2025 Financial Statements
- Status2026-FO-0003-001-IOpenClosed
Record journal entries to reclassify the HECM cases with missing original first notes for more than 90 days from loans receivable to accounts receivable.
- Status2026-FO-0003-001-JOpenClosed
Ensure the report provided by the NSC to reclassify partial claims from loans receivable to account receivable is appropriate for financial reporting and document the decision.
- Status2026-FO-0003-001-KOpenClosed
Implement a procedure to test journal entry posting models and their effect on the financial statements and related note disclosures when there are program changes requiring new journal entries.
- Status2026-FO-0003-001-LOpenClosed
Develop a standard operating procedure that details the rationale, calculation, and underlying support needed for the amounts and narrative descriptions in the financial statement note disclosures, including borrowing authority.
- Status2026-FO-0003-001-MOpenClosed
Implement quality control checks that reconcile financial statement disclosure amounts to the general ledger and other supporting documentation as part of the financial statements review and approval process.