Federal Housing Finance Agency 

Office of Inspector General

For Fiscal Year 2019, FHFA Did Not 

Always Follow its Policy for 

Employee Reimbursements and 

Stipends; FHFA’s Practice for 

Calculating Employee Travel 

Stipends Was Not Stated in its Policy 

Nor Consistently Followed

Audit Report • AUD-2020-007 • March 26, 2020
AUD-2020-007

March 26, 2020

Executive Summary

The Federal Housing Finance Agency (FHFA or Agency) provides 

reimbursements and stipends to its employees for job-related expenses

including, among other things, professional licensing and certification, 

professional liability insurance, gym membership, expedited clearance 

through airport security, frequent official travel, and home office expenses. 

For fiscal year 2019, FHFA made 1,153 reimbursements and stipend 

payments totaling $1,054,618. 

In this audit, we sought to determine whether (1) FHFA’s controls over 

the reimbursements and stipends program were operating effectively and 

(2) program payments were supported. The scope of the audit focused on 

the Agency’s policy and procedures over its reimbursements and stipends 

program, and FHFA’s program payments between October 1, 2018, and 

September 30, 2019 (fiscal year 2019). 

We found that FHFA’s controls over its reimbursements and stipends program 

during fiscal year 2019 were not fully effective. We found non-systemic 

exceptions related to non-authorized reimbursements for multiple professional 

licenses or prohibited membership fees, unsupported gym memberships, and 

over- and underpayments of travel stipends; out-stationed stipends paid to 

employees without approved out-station agreements and a miscalculated 

Examiner-in-Charge (EIC) stipend. Additionally, we found that FHFA’s 

practice for calculating travel stipends was neither stated in its policy nor 

consistently followed. 

We make three recommendations in this report to address these shortcomings. 

In a written management response, FHFA agreed with our recommendations. 

This report was prepared by Heath Wolfe, Director of Audit Operations, with 

the assistance of Bob Taylor, Senior Advisor. We appreciate the cooperation 

of FHFA staff, as well as the assistance of all those who contributed to the 

preparation of this report. 

This report has been distributed to Congress, the Office of Management and 

Budget (OMB), and others, and will be posted on our website, 

www.fhfaoig.gov, and posted on www.oversight.gov. 

Marla A. Freedman, Deputy Inspector General for Audits /s/
OIG • AUD-2020-007 • March 26, 2020 3

TABLE OF CONTENTS ................................................................ 

EXECUTIVE SUMMARY .............................................................................................................2

ABBREVIATIONS .........................................................................................................................4

BACKGROUND .............................................................................................................................5

FHFA’s Guidance for Its Reimbursements and Stipends Program ..........................................5

FHFA’s Fiscal Year 2019 Reimbursements.............................................................................5

FHFA’s Fiscal Year 2019 Stipends ..........................................................................................6

FACTS AND ANALYSIS...............................................................................................................7

FHFA’s Policy and Procedures for its Reimbursements and Stipends Program Were 

Not Always Followed and, for the Travel Stipends, a Stated Practice Not in Policy 

Was Not Consistently Followed ...............................................................................................7

Professional Licensing and Certification Reimbursements (Six Transactions) ................8

Gym Membership Reimbursements (Three Transactions) ...............................................8

Travel Stipends (Eight Transactions) ...............................................................................8

Quarterly Out-Stationed Employee Stipends (Four Transactions) ...................................9

EIC Stipends (One Transaction) .......................................................................................9

FINDING .........................................................................................................................................9

FHFA Did Not Always Follow its Written Policy for Employee Reimbursements and 

Stipends; FHFA’s Practice for Calculating the Travel Stipend Was Not Stated in its

Policy Nor Consistently Followed ............................................................................................9

CONCLUSION ..............................................................................................................................10

RECOMMENDATIONS ...............................................................................................................10

FHFA COMMENTS AND OIG RESPONSE ...............................................................................11

OBJECTIVES, SCOPE, AND METHODOLOGY .......................................................................12

APPENDIX: FHFA MANAGEMENT RESPONSE ....................................................................14

ADDITIONAL INFORMATION AND COPIES .........................................................................16
OIG • AUD-2020-007 • March 26, 2020 4

ABBREVIATIONS ....................................................................... 

DBR Federal Housing Finance Agency Division of Federal Home Loan 

Bank Regulation 

EIC Examiner-in-Charge 

Fannie Mae Federal National Mortgage Association

FHFA or Agency Federal Housing Finance Agency 

Freddie Mac Federal Home Loan Mortgage Corporation 

GAO Government Accountability Office 

OHRM Federal Housing Finance Agency Office of Human Resources 

Management

OIG Federal Housing Finance Agency Office of Inspector General 

OMB Office of Management and Budget

Policy 113 FHFA’s Reimbursements and Stipends Policy 

TSA Transportation Security Administration
OIG • AUD-2020-007 • March 26, 2020 5

BACKGROUND .......................................................................... 

FHFA provides reimbursements and stipends to its employees for certain job-related 

expenses. The Agency’s Office of Human Resources Management (OHRM) manages the 

reimbursements and stipends program. 

FHFA’s Guidance for Its Reimbursements and Stipends Program

OMB Circular A-123, Management’s Responsibility for Enterprise Risk Management and 

Internal Control, defines management’s responsibility for internal control in federal agencies. 

The circular emphasizes the need to integrate and coordinate risk management and strong and 

effective internal control into existing business activities. It also establishes an assessment 

process based on the Government Accountability Office’s (GAO) Standards for Internal 

Control in the Federal Government (also known as the Green Book) that management must 

implement to assess and improve internal controls. The Green Book provides an overall 

framework for establishing and maintaining an effective internal control system. Among other 

things, it states that management should implement control activities through documented 

policies.

FHFA has implemented this guidance through written policy and procedures for its 

reimbursements and stipends program: FHFA Policy No. 113, Reimbursements and Stipends 

Policy (Policy 113) and OHRM’s Reimbursements and Stipends Processing Standard 

Operating Procedure.

FHFA’s Fiscal Year 2019 Reimbursements

Policy 113 authorizes FHFA to provide the following categories of reimbursements to its 

employees during fiscal year 2019: 

• Professional licensing and certification – FHFA reimburses employees for 

professional organization membership fees when the membership is required to obtain 

and hold the license or certification. The Agency will not reimburse employees for: 

(1) membership fees when the membership is not required to obtain and hold required 

licenses and certifications; (2) discretionary fees, such as optional local and state 

chapter dues, or optional donations or memberships in professional organizations; 

and (3) obtaining the same type of license or certification from more than one state or

licensing body. For example, if an employee is an FHFA practicing attorney and is a 

member of the bar in two or more states, FHFA will reimburse licensing fees for one 

state and section only. The reimbursement is based on actual cost to the employee, not 

to exceed $500. 
OIG • AUD-2020-007 • March 26, 2020 6

• Professional liability insurance – FHFA reimburses executives and managers for 

professional liability insurance to be used for covered costs associated with actions 

arising from the conduct of their official duties. The reimbursement is based on actual 

cost to the employee not to exceed $500. 

• Gym membership – FHFA reimburses employees who are stationed at Fannie Mae or 

Freddie Mac facilities for fitness center access fees. The reimbursement is based on 

actual cost to the employee not to exceed $300. 

• Transportation Security Administration (TSA) PreCheck program – FHFA reimburses 

employees who are expected to travel on official business 10 or more times per fiscal 

year $85 for the cost of TSA’s PreCheck program, which allows expedited clearance 

through airport security while on official travel. 

Employees must provide documentation to support claims for reimbursement. 

FHFA’s Fiscal Year 2019 Stipends 

Policy 113 authorizes FHFA to provide the following categories of stipends to its employees 

during fiscal year 2019: 

• Life cycle – Annually, FHFA provides employees a one-time payment of $1,000 to 

defray the costs related to maintaining a healthy lifestyle and work-life balance that 

are not covered by employees’ health insurance or a federal spending account. 

• Travel – To help offset expenses associated with frequent overnight work-related 

travel, FHFA pays employees who travel at least 50 nights per year an annual stipend

of $2,000. The Agency also pays an additional $50 per night stipend for each night 

over 50 nights the employee spends away from home for work. After the end of each 

fiscal year, the Agency’s Office of Budget and Financial Management provides 

OHRM a report detailing the number of travel nights out for each FHFA employee for 

the fiscal year. 

• Out-stationed employees – FHFA pays a one-time home office set-up stipend of 

$1,600 to employees who work from home and who are not provided FHFA office 

space or supplies. In addition, the Agency pays these employees a quarterly stipend 

of $500 for expenses related to working from home (e.g., office supplies and internet 

access). Employees must complete an Out-Stationed Employee Agreement and the 

Agreement must be approved by the employee’s supervisor and OHRM to be 

effective. FHFA prorates the payments based on the number of days the employee 

worked in a quarter. 
OIG • AUD-2020-007 • March 26, 2020 7

• EIC – FHFA provides an annual stipend of $5,000 to non-executive EICs in the 

Division of Federal Home Loan Bank Regulation (DBR) in recognition of the extra 

duties associated with this position. The stipend is prorated based on the number of 

days the DBR employee held the position of EIC, as a non-executive, during the prior 

fiscal year. 

***** 

During fiscal year 2019, FHFA paid $1,054,618 in reimbursements and stipends to its 

employees as follows: 

FIGURE 1. FHFA’S REIMBURSEMENTS AND STIPENDS PAID - FISCAL YEAR 2019

Reimbursement/Stipend Number Amount Paid

Reimbursements

Professional licensing and certification 126 $ 32,770

Professional liability insurance 58 21,523

Gym membership 40 11,233

TSA PreCheck program 28 2,530

Stipends

Life cycle 595 595,000

Travel 56 203,900

Initial out-stationed employee 3 5,167

Quarterly out-stationed employee 233 120,981

EIC 14 61,514

Totals 1,153 $1,054,618

FACTS AND ANALYSIS ............................................................... 

FHFA’s Policy and Procedures for its Reimbursements and Stipends Program Were Not 

Always Followed and, for the Travel Stipends, a Stated Practice Not in Policy Was Not 

Consistently Followed

For our audit, we selected and reviewed 717 reimbursements and stipends totaling $732,530 

paid by FHFA during fiscal year 2019. Our selection consisted of all 595 life cycle stipend 

transactions totaling $595,000, and a random sample of 122 transactions totaling $137,530 of 

reimbursements and other types of stipends. For 675 of the 717 reimbursements and stipends 

tested, we found that they met the requirements for which we tested. We found no exceptions 
OIG • AUD-2020-007 • March 26, 2020 8

for the tested professional liability insurance reimbursements, TSA PreCheck program 

reimbursements,1 life cycle stipends, and initial out-stationed employee stipends. The 

following summarizes the exceptions identified in the other 22 reimbursements and stipends 

tested. During our audit, we provided FHFA management with the details of each exception 

identified.

Professional Licensing and Certification Reimbursements (Six Transactions)

Policy 113 authorizes reimbursement to fees charged by one state or licensing body for the 

same type of license or certification and prohibits discretionary membership fees. For 6 of 37 

tested professional licensing and certification reimbursements, the employees were paid for 

multiple licenses or membership fees outside the authority of Policy 113. The total amount of 

these exceptions was $785. 

Gym Membership Reimbursements (Three Transactions)

Policy 113 requires FHFA employees stationed at Fannie Mae or Freddie Mac facilities to 

submit paid receipts to OHRM in support of their claim for their fitness center access fees. 

For 3 of 10 tested reimbursements totaling $900, the FHFA employees did not submit 

receipts. For one of the exceptions, the employee submitted a credit card receipt, but the 

vendor’s name was not included nor was there a detailed description of the fees charged. 

Travel Stipends (Eight Transactions) 

As discussed earlier, Policy 113 authorizes FHFA to pay employees who travel at least 50 

nights per year an annual stipend of $2,000; it allows FHFA to pay an additional $50 per night 

stipend for each night over 50 nights the employee spends away from home for work. 

Although not stated in policy, we were informed, in writing, by a senior Agency official that 

FHFA, in calculating the travel stipends, excludes nights out for external training from the 

calculation. For 3 of 11 tested travel stipends, we found that this practice was not followed: 

nights out for external training were included in the stipend calculation. The stipend amounts 

paid to the affected employees for these nights out were $150, $400, and $450. We also found 

that 6 stipends were miscalculated, resulting in overpayments of $1,900 and underpayments 

of $200.2

1 Of the six tested TSA PreCheck program reimbursements, three were for the Global Entry program, a 

separate TSA expedited traveler screening program that costs nominally more ($15) than TSA PreCheck. We 

consider these reimbursements not to be exceptions.

2 A stipend for one employee included both nights out for external training and a miscalculation of the other 

nights out.
OIG • AUD-2020-007 • March 26, 2020 9

Quarterly Out-Stationed Employee Stipends (Four Transactions) 

For 3 of 24 tested quarterly out-stationed employee stipends, FHFA was unable to provide a 

copy of the required properly executed Out-Stationed Employee Agreement.

3 In addition, 

FHFA did not provide documentation to support how it prorated another out-stationed 

employee stipend. 

EIC Stipends (One Transaction)

For 1 of 5 tested EIC stipends, we found one employee was overpaid $484 for the EIC stipend 

in fiscal year 2019 for her tenure as a non-executive EIC during the prior fiscal year. FHFA’s 

Policy 113 requires the Agency to prorate the EIC stipend based on the number of days the 

employee held the position of a non-executive EIC during the prior fiscal year, which for the 

affected employee was October 1, 2017, to April 14, 2018. The Agency paid $3,149 for the 

EIC stipend. However, based on our recalculation of the prorated stipend, the amount should 

have been $2,685. 

FINDING ................................................................................... 

FHFA Did Not Always Follow its Written Policy for Employee Reimbursements 

and Stipends; FHFA’s Practice for Calculating the Travel Stipend Was Not Stated 

in its Policy Nor Consistently Followed

We found the following exceptions to FHFA’s Policy 113 for the tested reimbursements and 

stipends during fiscal year 2019: 

• Six professional licensing and certification reimbursements totaling $785 included 

reimbursements for licenses or membership fees not authorized by Policy 113; 

• Three gym membership reimbursements totaling $900 were not supported by written 

receipts;

• Six travel stipends were miscalculated resulting in overpayments of $1,900 and 

underpayments of $200; 

3 FHFA did provide us with copies of the three employees’ SF-50, Notification of Personnel Action, that 

supported the employees’ duty station as the same city as the employees’ residence, so we did not consider 

these exceptions to be overpayments. However, an SF-50 is not the documentation required by FHFA’s Policy

113 and OHRM’s Reimbursements and Stipends Processing Standard Operating Procedure to support the 

stipend. Two of the three stipends related to the same employee.
OIG • AUD-2020-007 • March 26, 2020 10

• Three quarterly out-stationed employee stipends were paid without the required, 

properly executed Out-Stationed Employee Agreement and the calculation of a 

prorated quarterly out-stationed payment was not supported; and 

• One EIC stipend was miscalculated resulting in an overpayment of $484. 

We determined that these exceptions were not systemic.

We found for the travel stipend, FHFA’s practice was not stated in its Policy 113, and that 

practice was also not consistently followed. Specifically, the Agency’s practice, not stated in 

policy, was to reduce employees’ travel stipends for nights out for external training. This 

practice was applied in most, but not all, of the travel stipends we tested. 

CONCLUSION ............................................................................ 

We found that during fiscal year 2019, FHFA’s controls over its reimbursements and stipends 

program were not always effective. While we identified a number of exceptions to FHFA’s 

written Policy 113, we determined that the exceptions were not systemic. In our view, these 

exceptions occurred with sufficient frequency to warrant heightened management attention to 

program requirements. 

We have no view about the terms that FHFA puts in place for its travel stipend regarding 

nights out for external training. Whatever practice FHFA adopts, however, should align with 

its written policy.

RECOMMENDATIONS ............................................................... 

We recommend that FHFA:

1. Reinforce FHFA’s reimbursements and stipends program policies and procedures 

through a reminder to FHFA staff and supervisors involved in initiating, reviewing, 

and approving reimbursements and stipends to: 

• Reimburse employees for only eligible job-related expenses with required, 

supporting documentation, 

• Calculate travel and EIC stipends correctly, and

• Maintain properly executed out-stationed employee agreements. 
OIG • AUD-2020-007 • March 26, 2020 11

2. Update Policy 113 to align with management’s intent and practice. 

3. Determine and take appropriate action to address the exceptions cited in this report for 

which the details were separately provided to FHFA management during the audit, 

e.g., reimburse employees who were underpaid based on Policy 113, seek 

reimbursement from employees who were overpaid based on Policy 113, and/or obtain 

the necessary documentation for reimbursements and stipends that lacked the proper 

support. 

FHFA COMMENTS AND OIG RESPONSE ..................................... 

We provided FHFA an opportunity to respond to a draft of this audit report. In its 

management response, which is included in the Appendix to this report, FHFA agreed with 

our three recommendations. As corrective actions, FHFA plans to: 

1. Remind FHFA staff and supervisors who are involved in initiating, reviewing, and 

approving reimbursements and stipends about the applicable program policies and 

procedures by December 31, 2020. 

2. Review Policy 113 and update it or issue additional guidance as appropriate by 

December 31, 2020. 

3. Review the individual instances cited in the report and decide if action is appropriate 

by July 30, 2020. If action is warranted, OHRM will complete the appropriate 

transactions by September 30, 2020. 

We consider FHFA’s planned corrective actions responsive to our recommendations. 
OIG • AUD-2020-007 • March 26, 2020 12

OBJECTIVES, SCOPE, AND METHODOLOGY ............................... 

The objectives of our audit were to determine whether (1) FHFA’s controls over the 

reimbursements and stipends program were operating effectively and (2) program payments 

were supported. The scope of the audit focused on FHFA’s policy and procedures over its 

reimbursements and stipends program and FHFA’s program payments between October 1, 

2018, and September 30, 2019 (fiscal year 2019).

To address our objectives, we: 

• Researched applicable policies and procedures applicable to FHFA’s reimbursements 

and stipends program; 

• Reviewed OMB Circular A-123, Management’s Responsibility for Enterprise Risk 

Management and Internal Control and GAO’s Standards for Internal Control in the 

Federal Government; 

• Determined the dollar amounts, number of transactions, and other relevant data for 

FHFA’s reimbursements and stipends program for fiscal year 2019; 

• Interviewed FHFA’s OHRM staff and other appropriate officials responsible for 

FHFA’s reimbursements and stipends program about (a) the nature and extent of 

monitoring they perform over the program and (b) whether and how management 

communicates to employees and approving officials its views on the proper use of 

Agency funds for the program;

• Determined whether FHFA and/or a third-party service provider conducted any 

compliance testing of FHFA’s reimbursements and stipends program; 

• Reviewed GAO’s report on its audit of FHFA’s financial statements for fiscal year 

2019 and inquired of its staff about the scope and results of any testing of the program 

done for the audit; 

• Selected all 595 life cycle stipend transactions totaling $595,000, and randomly 

selected a sample of 122 transactions totaling $137,530 of reimbursements and other 

types of stipends from the universe of 558 such reimbursements and stipends totaling

$459,618 that were paid by FHFA for fiscal year 2019. For the 717 selected 

reimbursements and stipends, we tested for compliance with applicable provisions of 

FHFA’s Policy 113; 
OIG • AUD-2020-007 • March 26, 2020 13

• Assessed the reliability of data received for this audit by (1) reviewing the data 

for obvious errors and incompleteness, (2) reviewing existing information about 

the data and the systems that produced them, and (3) interviewing agency officials 

knowledgeable about the data. We determined that the data were sufficiently reliable 

for the purposes of this report; and 

• Assessed the Agency’s internal controls related to the reimbursements and stipends 

program. Specifically, we evaluated the program’s control activities and monitoring. 

We conducted this performance audit between October 2019 and March 2020 in accordance 

with generally accepted government auditing standards. Those standards require that we plan 

and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis 

for our findings and conclusions based on our audit objectives. We believe that the evidence 

obtained provides a reasonable basis for our findings and conclusions based on our audit 

objectives.
OIG • AUD-2020-007 • March 26, 2020 14

APPENDIX: FHFA MANAGEMENT RESPONSE ............................. 
OIG • AUD-2020-007 • March 26, 2020 15
OIG • AUD-2020-007 • March 26, 2020 16

ADDITIONAL INFORMATION AND COPIES ................................. 

For additional copies of this report: 

• Call: 202-730-0880 

• Fax: 202-318-0239 

• Visit: www.fhfaoig.gov

To report potential fraud, waste, abuse, mismanagement, or any other kind of criminal or 

noncriminal misconduct relative to FHFA’s programs or operations: 

• Call: 1-800-793-7724 

• Fax: 202-318-0358 

• Visit: www.fhfaoig.gov/ReportFraud

• Write:

FHFA Office of Inspector General

Attn: Office of Investigations – Hotline

400 Seventh Street SW 

Washington, DC 20219