GAO: Improving IRS fiscal accountability hinges on new financial system

GAO: Improving IRS fiscal accountability hinges on new financial system

Until the IRS fully implements its new financial system, the tax agency must wrestle with internal control weaknesses, making it tough to safeguard assets and comply with regulations, the Government Accountability Office says.

GAO acknowledged that the IRS' fiscal 2004 financial statements were 'fairly presented.' But the 'IRS again had to rely extensively on resource-intensive compensating processes to prepare its financial statements,' comptroller general David Walker noted in a new GAO report.

For the third consecutive year, the IRS met an accelerated financial reporting date at the same time it was working to implement its new financial system. The initial release of the Integrated Financial System went live last week [see GCN story].

The IRS made progress in addressing weakness in controls over property and equipment and hard-copy taxpayer receipts and data. But GAO said controls over financial reporting, management of unpaid assessments and revenue collection of revenue and tax refund issuance remain material weaknesses.

GAO also pointed to continued and serious information security weaknesses, which could affect the reliability of financial information produced by the new system.

The IRS said it was putting programs in place to shore up security. The Integrated Financial System will help eliminate material reporting weaknesses, said John Dalrymple, IRS deputy commissioner for operations support.

About the Author

Mary Mosquera is a reporter for Federal Computer Week.

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