The reasons of the fraud are results from privileges that both Fannie Mae and Freddie Mac are granted from the U.S. Congress. They are government-sponsored enterprises which are chartered by the Congress, enjoy special privileges from the Federal Government such as exemption from federal and state income state, credit support from the U.S. Treasury; moreover, they are not subject to standard financial disclosures. Lack of effective and sufficient internal control is also another reason for this accounting fraud in 2003.
The accounting scandal of Freddie Mac and Fannie Mae is strongly related to two of the three main points of the fraud triangle, which are opportunity and rationalization. The fact that these two enterprises are implicitly backed
The accounting scandal of Freddie Mac and Fannie Mae is strongly related to two of the three main points of the fraud triangle, which are opportunity and rationalization. The fact that these two enterprises are implicitly backed