TREASURY INSPECTOR GENERAL FOR TAX
ADMINISTRATION
THE INTERNAL REVENUE SERVICE’S
FEDERAL FINANCIAL MANAGEMENT IMPROVEMENT ACT REMEDIATION
Issued on March 28, 2008
Highlights
Highlights of
Report Number: 2008-10-096 to the Internal Revenue Service Chief Financial
Officer.
IMPACT ON TAXPAYERS
Our analysis of the December 31, 2007, Federal Financial
Management Improvement Act (FFMIA) remediation plan indicated that the
intermediate target dates for 10 (29 percent) of 35 remedial actions open at
yearend were extended by 6 months to 18 months.
Although the Internal Revenue Service (IRS) has reasonable explanations
for the extended dates, these delays further hinder the IRS’ ability to address
its noncompliance with the FFMIA in a timely manner. In addition, the IRS is still in the process
of updating the remediation plan with specific actions to develop timely and
reliable cost accounting information. Complete
financial information is critical to the IRS’ ability to accurately report on
the results of its operations to both internal and external stakeholders,
including taxpayers.
WHY TIGTA DID THE AUDIT
The
overall objective of this review was to report to Congress any instances of and
reasons for missed intermediate target dates established in the IRS’
remediation plan. TIGTA also
evaluated whether, in general, the IRS was meeting its responsibilities in
fulfilling the intent of the FFMIA.
WHAT
TIGTA FOUND
During Calendar Year 2007, the IRS reported that it resolved
a key component of one of the material weaknesses associated with its ongoing
noncompliance with the FFMIA. The
resolved issue related to the IRS’ financial reporting material weakness
area.
The IRS also reported that it canceled 2 and added 6
remedial actions to the 51 open remedial actions in its December 31, 2006,
remediation plan. The two canceled
remedial actions were related to the Custodial Detail Data Base. These two actions were replaced by six new
expanded remediation actions for the same project. This change did not materially affect the
completion date of remedial actions related to the Custodial Detail Data
Base. The expanded actions were added to
allow the IRS to better track enhancements affecting its various payment
systems.
Also during Calendar Year 2007, the IRS reported that it
completed 20 remedial actions, leaving 35 open remedial actions in its December
31, 2007, remediation plan. All of the
open actions were associated
with four major financial management projects or issues.
Our review of the 35 open remedial actions indicated that the IRS missed
no intermediate target dates. However,
it extended target dates related to 10 of the 35 open remedial actions. The extensions ranged from 6 months to 18
months. Although the IRS has reasonable explanations
for the extended intermediate target dates, these delays could further hinder
the IRS’ ability to make timely resolutions of the reported issues that cause
its noncompliance with the FFMIA.
In addition, while the IRS completed development of a cost
accounting policy in August 2007, it is still in the process of updating the
remediation plan with the specific actions it plans to take to develop timely
and reliable cost accounting information.
Until the IRS updates the remediation plan with these actions, TIGTA
continues to be unable to fully assess its progress in resolving this
longstanding financial weakness area.
Finally, TIGTA had previously reported that some resources
listed in the December 31, 2006, remediation plan were not verifiable to
supporting documentation and recommended that the IRS Associate Chief Financial
Officer for Corporate Planning and Internal Control review resources listed in
future plans for accuracy. Our review
indicated that the IRS has taken effective steps to address this finding.
WHAT TIGTA RECOMMENDED
TIGTA made no specific remediation plan recommendations as a
result of the analyses performed during this audit. However, key IRS management officials
reviewed the report prior to issuance and agreed with the facts and conclusions
presented.
READ THE
FULL REPORT
To view the report,
including the scope and methodology, go to
http://www.treas.gov/tigta/auditreports/2008reports/200810096fr.html.
Email Address: inquiries@tigta.treas.gov
Phone Number: 202-622-6500
Web Site:
http://www.tigta.gov