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This report presents the results of our audit of FHA’s principal financial statements and notes for the fiscal years ending September 30, 2019 and 2018, including our report on FHA’s internal control and test of compliance with selected provisions of laws, regulations, contracts, and grant agreements.

In our opinion, FHA’s fiscal years 2019 and 2018 financial statements were presented fairly, in all material respects, in accordance with the U.S. generally accepted accounting principles for the Federal Government. Our opinion is reported in FHA’s Fiscal Year 2019 Annual Management Report. The results of our audit of FHA’s principal financial statements and notes for the fiscal years ending September 30, 2019 and 2018, including our report on FHA’s internal control and test of compliance with selected provisions of laws, regulations, contracts, and grant agreements applicable to FHA, are presented in this report. Our audit disclosed one significant deficiency in internal controls and no instances of noncompliance with applicable laws, regulations, contracts, and grant agreements, which are discussed further in the body of this report.

Recommendation Status Date Issued Summary
2020-FO-0001-001-A Closed November 14, 2019 Ensure that the HECM cash flow model assumptions capture all valid assignments or provide an analysis showing that the model results are not biased due to the exclusion of valid HECM assignments.
2020-FO-0001-001-B Closed November 14, 2019 Document and implement policies and procedures to ensure that data observations for key assumptions that are inconsistent with FHA’s understanding of program operations are researched and further analyzed and that all results are concurrently documented and included in the model documentation.
2020-FO-0001-001-C Closed November 14, 2019 Update the posting models to ensure that refunds relating to payments made in prior years are properly recorded in accordance with OMB Circular A-11.
2020-FO-0001-001-D Closed November 14, 2019 Correct the programming error in the HERMIT system to ensure that the correct insurance-in-force balances are reported on the note disclosures.
2020-FO-0001-001-E Closed November 14, 2019 Develop policies and procedures to ensure that the line items in the required note disclosures are understood, properly calculated, and properly disclosed in the financial statements in accordance with OMB Circular A-136.