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FHA Subsidiary Ledger

The financial feeder systems supporting the Federal Housing Administration's (FHA) insurance operations were built to support commercial, not federal, accounting standards. Two of these transaction-based systems — one for loans and one for properties that report collection and disbursement — sent data from a commercial chart of accounts to the FHA. Before the data could be uploaded into the FHA general ledger, it had to be translated into the government's standard GL reporting format. To do this, the FHA controller had been using a data warehouse and complex posting models (to receive and translate the financial information) before uploading the data into the FHA general ledger.

Translation errors — and the effort required to resolve them — produced an unending nightmare. The monthly closing typically took 10 business days; year-end closing as many as 45 days. Inefficiencies, unnecessary costs and frustrations ran high. FHA had to find a way to improve the interfaces, data management, business processes, and controls between these commercially based systems and the FHA general ledger.

Dynaxys' approach was two-fold: First, we analyzed and restructured the old "crosswalk maps" to reflect activities more accurately and, thus, improve the posting models. This step alone made it easier to close the books each month and produced fewer outlying data. In the process, we advised shifting the responsibility for creating accurate, timely data away from FHA (the recipient) and onto the data source (the sender).

Secondly, and perhaps more importantly, we used the XBRL Global Ledger framework, an open source tool, to create an interface that made daily transfer of cash management data a reality.

In the FHA project, we established a metadata structure for data exchange so that legacy data could be standardized once and reported to multiple systems. The metadata structure also provided enhanced data integrity. Data were validated before they were transmitted.

XBRL was used to standardize collecting, obligating, and disbursing data coming from the various financial feeder systems. Data were filtered or summarized based on the system they were feeding, and then sent to other systems.

With a more reliable, accurate and consistent crosswalk, the FHA improved cash management by eliminating posting errors and the subsequent rework or complicated after-the-fact adjustments. Reconciliations are now done on the spot. Month-end and year-end closing of the books takes days not weeks. And post-closing adjustments or other rework is a thing of the past. Performing full audits is relatively easy now because the audit trail for the detail is linked to the data through tags.

Today, FHA transmits clean, sound data from its legacy systems. Data validity has been consistently measured at 100%. The data warehouse middle layer is gone, and data flow directly from the source system into the general ledger, improving data management practices.

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