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Federal Housing Finance Agency passes inspection

“OIG promotes the economy, efficiency, and integrity of FHFA programs and operations, and deters and detects fraud, waste, and abuse, thereby supporting FHFA’s mission,” the office wrote on its website. “We accomplish our mission by conducting independent oversight activities of the Agency’s programs and operations, engaging in robust enforcement efforts to protect the interests of the American taxpayers, and keeping our stakeholders fully and currently informed of our work.”

Responding to potential fraud and wasteful spending

Inspectors conducted an audit in response to allegations of potential fraud and wasteful spending in expense reimbursements at a Federal Home Loan Bank centered on the bank’s management team. As found in the report, the objective was to determine whether the Division of Federal Home Loan Bank Regulation (DBR) conducted effective oversight of the banks’ employee expense reimbursement processes and whether those presented significant risk to the Federal Home Loan Banks system, inspectors wrote.

Auditors found the DBR’s examinations were sufficient for overseeing employee expense reimbursement processes, and no risk to the Federal Home Loan Banks system was determined, according to the report. However, while DBR’s oversight was effective for examination periods within the audit scope, auditors found the division lacked documented guidance for examining bank employees’ expense reimbursement processes.

While no fraud or wastefulness was uncovered, auditors detected a problem of perception. Even prevailing concerns of such “…pose a risk to the public’s perception of integrity and trust in the FHLBank System,” auditors wrote. “Without established guidance, DBR’s examiners may face challenges in completely and consistently evaluating whether an FHLBank’s management maintains effective internal controls over employee expense reimbursements that prevent, deter, and detect fraud or possible fraud,” the report found.

As a result of their findings, two recommendations were made:

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