Financial Audit:

IRS' Fiscal Year 1999 Financial Statements

AIMD-00-76: Published: Feb 29, 2000. Publicly Released: Feb 29, 2000.

Additional Materials:

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Gregory D. Kutz
(202) 512-9505
contact@gao.gov

 

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Pursuant to a legislative requirement, GAO audited the Internal Revenue Service's (IRS) fiscal year (FY) 1999 financial statements.

GAO noted that: (1) during FY 1999, IRS had made a number of improvements to address some of the management issues GAO raised in previous reports; (2) GAO noted improvements in IRS': (a) overall financial reporting; (b) records of accounts payable; (c) amounts held in suspense; (d) documentation of unpaid tax assessments; (e) reconciliation of fund balance with Treasury; (f) computer security; and (g) handling of taxpayer receipts and data, including courier security; (3) IRS senior management has clearly demonstrated a commitment to address operational and financial management issues; (4) a high level of involvement by IRS senior management has contributed significantly to actions taken to resolve some of the issues GAO raised; and (5) continued involvement at this level is critical to IRS' success in addressing the following remaining key issues: (a) an inadequate financial reporting process, resulting in IRS' inability to reliably prepare several of the required financial statements; (b) deficiencies in controls to properly manage unpaid assessments, resulting in both taxpayer burden and potentially billions of dollars in lost revenue to the government; (c) deficiencies in controls over tax refunds, permitting the disbursement of potentially billions of dollars of improper refunds; (d) the failure to reconcile IRS' fund balance with Treasury records throughout FY 1999, resulting in IRS' inability to routinely ensure accountability and proper use of its funds; (e) inadequate systems and controls that resulted in the inability to properly account for IRS' property and equipment and related costs; (f) inadequate budgetary controls, resulting in IRS' inability to assure that its budgetary resources are being properly accounted for, reported, and controlled; (g) deficiencies in computer security controls that may allow unauthorized individuals to access, alter, or abuse proprietary IRS programs and electronic data and taxpayer information; (h) deficiencies in controls over hardcopy tax receipts and taxpayer data that increase the government's and taxpayers' risk of loss or inappropriate disclosure of taxpayer data; (i) deficiencies in revenue reporting and excise tax distributions, resulting in IRS' inability to separately report revenue collected for three of the federal government's four largest revenue sources and errors in quarterly distributions of excise tax revenue to trust funds; and (j) noncompliance with selected provisions of the Internal Revenue Code and the Federal Financial Management Improvement Act of 1996.

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