R -- Special Review of Fannie Mae Accounting Policies and Practices

OFHEO is seeking an accounting firm to assist in conducting a special examination of the Federal National Mortgage Association (Fannie Mae). The purpose of the examination is to identify weaknesses in accounting policies and internal controls with an emphasis on critical accounting policies and practices, unusual transactions and sensitive accounting estimates. Specific attention should be paid to: (1) policies and transactions that relate to the timing of income recognition; (2) policies and transactions that relate to derivative financial instruments and securitizations; (3) transactions that do not appear to have a valid business or risk management purpose; (4) transactions that have been executed without appropriate authorization; (5) process management uses to formulate sensitive accounting estimates; and (6) estimates, judgments and uncertainties and how they are determined and subsequently monitored. The accounting firm will assist in the planning, of the investigation, conducting or assisting in interviews, preparation of interim reports and assist in the preparation of the final report. They will also assist in document control, including overseeing the scanning of documents, indexing and organizing the documents. OFHEO does not know the actual level of effort that will be required. That will be determined by the initial review (Phase I) of accounting policies and internal controls. Phase II would be comprehensive study of the questionable policies and transactions discovered in Phase I. The accounting firm will furnish all necessary personnel, materials, equipment, services and facilities to perform the work. Skills/abilities required: Experience with Fortune 500 financial service companies Demonstrated ability to work with: (1) complex derivatives instruments (FAS 133); (2) valuation and hedging activities; (3) securitizations transactions (FAS 140); (4) credit and reserve methodologies; and (5) retained interest valuation issues.