This report presents the results of our audit of Ginnie Mae’s fiscal years 2015 and 2014 (restated) financial statements, including our report on Ginnie Mae’s internal control and test of compliance with selected provisions of laws and regulations applicable to Ginnie Mae.
For the second consecutive year, in fiscal year 2015, we were unable to obtain sufficient appropriate evidence to express an opinion on the fairness of the $ 5.4 billion (net of allowance) in nonpooled loan assets from Ginnie Mae’s defaulted issuers’ portfolio as of September 30, 2015. Ginnie Mae also continued to improperly account for the Federal Housing Administration reimbursable costs as an expense instead of capitalizing them. Further, in October 2015, Ginnie Mae made $720 million ($2,367 million increase on prior period adjustments and $1,647 million decrease in the results of operations) in net restatement adjustments to correct its fiscal year 2014 financial statements which we were unable to review for accuracy and appropriateness due to Ginnie Mae’s late notification of the adjustments to OIG. The combination of the unresolved issues in fiscal year 2014 and restatement adjustments made in fiscal year 2015 were both material and pervasive because they impacted multiple financial statement line items across all of Ginnie Mae’s basic financial statements. As a result of the scope limitation in our audit work and the effects of material weaknesses in internal control, we have not been able to obtain sufficient appropriate evidence to provide a basis for an audit opinion on Ginnie Mae’s fiscal years 2015 and 2014 (restated) statements. Accordingly, we did not express an opinion on Ginnie Mae’s fiscal years 2015 and 2014 (restated) financial statements. A combination of various financial management governance issues contributed to these deficiencies.
We identified four material weaknesses and one significant deficiency. We also have one reportable noncompliance with selected provisions of laws and regulations that are applicable to Ginnie Mae. Our audit recommendations are directed toward improving and strengthening Ginnie Mae’s governance of its financial operations.