OFHEO IDs 70 Flawed Acc'ting Systems at GSE

The chief regulator of Fannie Mae says the mortgage giant uses more than 70 flawed accounting systems in its financial reporting division, a unit that was responsible for a $1.1 billion accounting mistake back in October.In a Feb. 24 letter to Fannie Mae chairman Franklin Raines, the Office of Federal Housing Enterprise Oversight asks the company to correct the problem and submit a remediation plan. "The lack of a fully automated SFAS 149 accounting process as well as the total number of other end user computing systems at Fannie Mae raise concern," OFHEO Director Armando Falcon writes in the letter. (SFAS 149 is an accounting rule.) Fannie's $1.1 billion accounting error, which did not affect earnings, was the result of what the agency calls a "computational miscalculation contained in a spreadsheet formula." The error occurred because a Fannie Mae employee made an unapproved change to a formula in an Excel spreadsheet. A Fannie spokesman said the company is "comfortable" that it will be able to respond to OFHEO's request.