More internal control problems at Fannie Mae

For the second year in a row, Fannie Mae is postponing the filing of its annual report with the U.S. Securities and Exchange Commission. Fannie Mae is also likely to issue a management report, stating that its internal controls over financial reporting were ineffective as of the end of 2005.

The company is still working on its review of accounting policies, and says that it is has made significant progress toward completing the work. Some accounting errors that weren’t disclosed until recently include accounting for some investments at the incorrect cost basis, accounting for some guaranty fees in connection with some mortgage backed securities trusts, and some loan-related accounting issues.

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