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In accordance with the Government Corporation Control Act as amended (31 U.S.C. 9105), the Office of Inspector General engaged the independent certified public accounting firm of CliftonLarsonAllen LLP (CLA) to audit the fiscal years 2013 and 2012 financial statements of the Federal Housing Administration (FHA). The contract required that the audit be performed according to Generally Accepted Government Auditing Standards (GAGAS).

CLA is responsible for the attached auditors’ report dated December 9, 2013 and the conclusions expressed in the report. Accordingly, we do not express an opinion on FHA’s financial statements or conclusions on FHA’s internal controls or compliance with laws and regulations and government-wide policies. Within 60 days of this report, CLA expects to issue a separate letter to management dated December 9, 2013 regarding other matters that came to its attention during the audit.

This report includes both the Independent Auditors’ Report and FHA’s principal financial statements. Under Federal Accounting Standards Advisory Board (FASAB) standards, a general-purpose federal financial report should include as required supplementary information (RSI) a section devoted to Management’s Discussion and Analysis (MD&A) of the financial statements and related information. The MD&A is not included with this report. FHA plans to separately publish an annual report for fiscal year 2013 that conforms to FASAB standards.

The report contains one significant deficiency in FHA’s internal control and two reportable instances of noncompliance with laws and regulations. The report contains 11 new recommendations. Within 120 days of the report issue date, FHA is required to provide its final management decision which includes the corrective action plan for each recommendation. As part of the audit resolution process, we will record 11 new recommendation(s) in the Department’s Audit Resolution and Corrective Action Tracking system (ARCATS). We will also endeavor to work with FHA to reach a mutually acceptable management decision prior to the mandated deadline. The proposed management decision and corrective action plan will be reviewed and evaluated with concurrence from the OIG.