IRS financial management weaknesses linger

The IRS still has a number of problems in its financial management operations that the General Accounting Office first reported more than 10 years ago. Although IRS could fix some of the weaknesses with better management, other long-standing problems will be corrected only when the tax agency's new financial management system goes live. It has now been delayed until October.

Of 100 recommendations GAO made in its audit of fiscal 2003 financial statements, IRS had implemented 24, the audit agency said this week.

'IRS continues to exhibit a strong commitment to addressing its ongoing financial management problems and has made improvements in recent years. At the same time, the continued existence of the serious financial management weaknesses represents a serious obstacle,' GAO said in the status report (64 page PDF) to the IRS commissioner released this week.

IRS said it expects to close 37 of the remaining 76 recommendations during its 2004 audit. Some of those related to modernization efforts 'will require a longer period of time to resolve and will require our sustained commitment,' IRS commissioner Mark Everson said in response to the report.

For example, GAO recommended developing cost data for earned-income tax credit claim screening, collection of improper refunds, and the automated under-reporter and combined annual wage reporting program. IRS expects its Integrated Financial System, one of its major modernization projects, to link resource cost data to the budget process and the strategic planning goals of its business units.

GAO said it was satisfied that:
  • IRS performed sufficient supervisory reviews to ensure that transactions in inventory records were accurate and documented.

  • An electronic packing slip initiative helped establish accurate inventory records using electronic data from vendors.

  • Procedures were in place to identify potential errors and discrepancies in inventory records.

About the Author

Mary Mosquera is a reporter for Federal Computer Week.

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