Finance and Administration is also responsible for developing annual budgets and serving as the liaison with the Office of Management and Budget. Human Resource Management System Nearing Initial Implementation

By February 1995, OFHEO had substantially completed the design of its human resource management system (called the Performance Evaluation Management System, or PEMS) and established milestones for pilot testing the system. OFHEO has worked with HUD to meet its immediate needs, but OFHEO is still uncertain as to whether HUD can meet its accounting and financial systems requirements. OFHEO has used HUD’s accounting and financial systems since its inception but experienced various difficulties. OFHEO has not determined whether to continue using HUD systems, create and maintain its own, or contract those functions out to another federal agency. OFHEO has met most of its legislated requirements, including making determinations of the enterprises’ capital adequacy during the transition period prior to the release of the risk-based capital standards. For example, OFHEO did not meet the legislatively mandated deadline for issuing final regulations establishing the risk-based test of the enterprises’ capital adequacy.OFHEO has established intermediate milestones and now expects to publish proposed stress test regulations in late 1995 and final regulations in 1996. OFHEO Established Its Examination and Regulatory Oversight Function, but Has Been Unable to Meet Its Workplan

OFHEO has established its examination function, adopting a general examination methodology and setting out a 2-year workplan. OFHEO completed its first on-site examinations, focusing on the enterprises’ use of off-balance sheet financial derivatives, in November 1994. By the end of fiscal year 1994, OFHEO had hired the majority of its RACS staff and completed the design, purchase, and installation of the computer hardware and software (called the Research Systems Environment, or RSE) needed to establish the financial simulation modeling capability to run the stress test.
Why GAO Did This Study

Pursuant to a legislative requirement, GAO reviewed the status of the Office of Federal Housing Enterprise Oversight's (OFHEO) development, focusing on OFHEO progress in designing and instituting key management systems.

What GAO Found

GAO found that: (1) OFHEO has made considerable progress toward setting up its key management systems; (2) as of February 1995, OFHEO had most of its administrative structure in place with 53 of its 65 authorized staff, and had prepared for the implementation of its human resource management system; (3) although OFHEO has defined its financial and accounting system requirements and has worked with the Department of Housing and Development (HUD) to meet its immediate accounting and administrative needs, it is having difficulties using HUD systems; (4) OFHEO has not decided whether to continue to use HUD systems, create and maintain its own systems, or contract out its accounting and administrative functions to another federal agency; (5) OFHEO has begun its mission-related programs, established the fundamentals of its examination function, adopted an overall examination framework, and set a 2-year workplan; (6) OFHEO has completed its first on-site examination of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation and the design, purchase, and installation of computer software to support its financial research; (7) OFHEO has not met its legislative deadline to complete final regulations establishing the enterprises' risk-based capital stress test, but it has adopted intermediate milestones and expects to publish the regulations in 1996; and (8) although OFHEO staff is having difficulties meeting its 2-year workplan, OFHEO has generally met its legislative reporting requirements.