Skip to main content

Managing IRS: Actions Needed to Assure Quality Service in the Future

GGD-89-1 Published: Oct 14, 1988. Publicly Released: Oct 14, 1988.
Jump To:
Skip to Highlights

Highlights

GAO evaluated the Internal Revenue Service's (IRS) management systems and administrative support functions to determine its effectiveness in: (1) preparing for the future; (2) providing quality service in an effective manner; (3) maintaining workforce quality during a period of rapid change; and (4) ensuring a strong system of clear management accountability for its actions.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Internal Revenue Service To enhance IRS efforts to effectively prepare for the future, the Commissioner of Internal Revenue should institutionalize the link between the Strategic Business Plan (SBP) and budget development. IRS needs to clearly establish priorities and make a concerted effort during the budget process to make decisions consistent with SBP strategies and priorities. Also, because IRS has not yet used SBP to formulate a budget, it should formalize its procedures connecting the two.
Closed – Implemented
Although IRS considers this recommendation implemented, GAO assessments of the IRS budget request for fiscal years 1991 and 1992 provided little evidence of a substantial link between SBP and the budget. Budget proposals are justified in terms of their relationship to SBP, but GAO fails to see the kind of SBP-booked priority setting that was intended by the recommendation.
Internal Revenue Service To enhance IRS efforts to effectively prepare for the future, the Commissioner of Internal Revenue should assess the 1987 reorganization. This reassessment should be initiated in the fall of 1988, allowing the reorganization to be in place about a year.
Closed – Implemented
GAO and IRS conducted a joint assessment of the reorganization. A GAO report was issued March 1990.
Internal Revenue Service To enhance IRS efforts to effectively prepare for the future, the Commissioner of Internal Revenue should examine service center and district office compliance roles.
Closed – Implemented
IRS has been and will be reexamining its traditional compliance roles as it proceeds with tax system modernization. Although it will be several years before the results of this reexamination are known, GAO believes there is sufficient evidence of IRS seriousness in this matter to warrant closing the recommendation.
Internal Revenue Service To enhance SBP, the Commissioner of Internal Revenue should familiarize other key organizations with IRS plans. To facilitate the development and implementation of IRS action plans, IRS should explain and seek acceptance of its plans from the Department of the Treasury, the Office of Management and Budget (OMB), and its congressional oversight committees.
Closed – Implemented
IRS has, in recent months, made a concerted effort not only to familiarize its external shareholders, OMB, Treasury, practitioner groups, states, etc., with SBP, but also to get their input in revising it.
Internal Revenue Service To enhance SBP, the Commissioner of Internal Revenue should establish measures of accomplishment within the planning process. All SBP strategies should be supported by a set of clearly defined measures of accomplishment written in their supporting work plans. In addition, IRS also should use such measures to hold its executives and managers accountable for program performance.
Closed – Implemented
IRS has a process for annually assessing field office performance in support of SBP. IRS has begun developing measures to use in those assessments and has begun steps to hold managers accountable.
Internal Revenue Service To enhance SBP, the Commissioner of Internal Revenue should implement an effective feedback mechanism to provide top executives with nationwide evaluative feedback implementation of SBP strategies, action plans, and accomplishments.
Closed – Implemented
IRS has implemented a business review process that provides the kind of feedback mechanism called for in the recommendation.
Internal Revenue Service The Commissioner of Internal Revenue should assess the new organizational structure for technology management and consider establishing a third Deputy Commissioner whose sole responsibility is managing information technology before major modernization investments are undertaken.
Closed – Implemented
In October 1989, Treasury approved the IRS proposal to establish a new Chief Information Officer position. A person was selected to fill that position in March 1990. He reports directly to the Commissioner/Senior Deputy Commissioner and thus is at an organizational level consistent with the recommendation.
Internal Revenue Service The Commissioner of Internal Revenue should consolidate below the Deputy Commissioner the responsibility and accountability for managing the IRS telecommunications program.
Closed – Implemented
Telecommunications functions (voice/data) in the national office were consolidated under the Assistant Commissioner for Information Systems Development. In the regions, they were consolidated under the Assistant Regional Commissioner for Data Processing.
Internal Revenue Service The Commissioner of Internal Revenue should develop and implement, as a high-priority initiative, a strategy for providing additional technical training and expertise to the Deputy Commissioners and their senior management teams. In addition, the succession planning system should establish a career path to create a pool of technically qualified executives to meet future needs in critical senior-level technical positions.
Closed – Implemented
IRS has developed an executive and management technical expertise strategy which, according to IRS, includes an assessment of the technical skills of executives and managers. IRS also established a new Training Branch to assist Information Systems functions in designing and developing training programs and addressing technical training issues.
Internal Revenue Service The Commissioner of Internal Revenue should assess the current technology vision and information system strategy and initiatives for redesigning the tax processing system to ensure that they adequately support the objectives specified in SBP and accomplish the expected results.
Closed – Implemented
The Information Systems Plan is a subset of SBP, is concurrent with SBP, and shares its same strategies, thereby achieving consistency. Senior IRS officials are satisfied that this assessment has been made and IRS has developed the Information Systems Plan as part of the SBP.
Internal Revenue Service The Commissioner of Internal Revenue should monitor implementation of actions to build and maintain the competence of contract administration staff in price evaluation and to develop new management information software.
Closed – Implemented
IRS has established a separate cost/price analysis branch and, in July 1992, issued new policies and procedures for cost/price analyses.
Internal Revenue Service In order to help correct the IRS accounting and financial systems problems and provide a sound basis for guiding its systems development efforts, the Commissioner of Internal Revenue should designate and support a Chief Financial Officer.
Closed – Implemented
In October 1989, Treasury approved the IRS proposal to designate the Deputy Commissioner (Planning and Resources) as the Chief Financial Officer. In addition, a new Assistant Commissioner (Finance/Comptroller), who is responsible for developing and promulgating servicewide financial standards, systems, and controls, and for managing appropriated funds, was selected in April 1990.
Internal Revenue Service In order to help correct the IRS accounting and financial systems problems and provide a sound basis for guiding its systems development efforts, the Commissioner of Internal Revenue should develop an overall financial management improvement plan as part of SBP, to assist in setting priorities, fixing accountability and responsibility, monitoring financial systems operations and improvements, and providing a strategy for attracting and retaining accounting staff.
Closed – Implemented
The most recent IRS SBP, which runs through 1996, includes objectives and strategies directed at improving the use of financial resources. One strategy calls for developing a restructured financial management system by the end of fiscal year (FY) 1993. This meets the intent of the recommendation.
Internal Revenue Service In order to help correct the IRS accounting and financial systems problems and provide a sound basis for guiding its systems development efforts, the Commissioner of Internal Revenue should arrange for IRS financial statements, prepared in accordance with Title 2 requirements, to be independently audited.
Closed – Implemented
Internal Audit filled a position to coordinate financial audit responsibilities. GAO provided technical support and staff training to Internal Audit to assist in its effort to certify IRS FY 1991 financial statements. The Chief Financial Officers Act of 1990 calls for an audit of IRS financial statements for FY 1992. Since this audit is now a legislative mandate, the recommendation is closed.
Internal Revenue Service In order to help correct IRS accounting and financial systems problems and provide a sound basis for guiding its systems development efforts, the Commissioner of Internal Revenue should monitor the Automated Accounting and Budget Execution System (AABES) to determine that its internal controls and accounting processes protect the government's interests.
Closed – Implemented
Operating accounting stations are alerted to any unusual conditions in monthly statements, while senior management is advised of any serious recurring operating problems. The Standard General Ledger was implemented in the AABES at the beginning of FY 1990. A self-study course for accounting technicians was developed.
Internal Revenue Service In order to help correct the IRS accounting and financial systems problems and provide a sound basis for guiding its systems development efforts, the Commissioner of Internal Revenue should designate a project director to manage day-to-day efforts to develop the Automated Financial System and ensure that sufficient staff resources are devoted to the project.
Closed – Implemented
A project office with a GM-15 project manager was established and will report directly to the Assistant Commissioner. Project office staffing has been significantly enhanced since the report.
Internal Revenue Service In order to help correct the IRS accounting and financial systems problems and provide a sound basis for guiding its systems development efforts, the Commissioner of Internal Revenue should identify present and future staffing needs for accounting operations and look into alternatives for filling staffing requirements in this area, such as seeking increased salary levels for accountants, complementing their ranks with contractor staff, and expanding a career path for employees doing accounting work.
Closed – Implemented
In a March 1990 report, an IRS task force identified staffing needs within the Controller's organization and specified various actions IRS would have to take to fill those positions.
Internal Revenue Service In order to help correct the IRS accounting and financial systems problems and provide a sound basis for guiding its systems development efforts, the Commissioner of Internal Revenue should require, in the long term, that a comprehensive cost accounting system be developed to account for all IRS costs and identify them with the organizational components and functions to which they relate.
Closed – Implemented
IRS has begun developing activity-based costs.
Internal Revenue Service In order to help correct the IRS accounting and financial systems problems and provide a sound basis for guiding its systems development efforts, the Commissioner of Internal Revenue should include in the IRS Federal Managers' Financial Integrity Act (FMFIA) report its serious problems in accounting for and controlling accounts receivable.
Closed – Implemented
IRS problems in accounting for and controlling accounts receivable were included in FMFIA reports since FY 1988.
Internal Revenue Service To ensure that the quality improvement process is maintained and adopted as a means of doing business, the Commissioner of Internal Revenue should build quality into IRS services using preventive and quality assurance approaches.
Closed – Implemented
Improved quality is one of three IRS business objectives and one of its long-term strategies for achieving that goal is to fundamentally change the way it does business. This is a neverending process. GAO sees enough movement in the right direction to warrant closing this recommendation.
Internal Revenue Service To ensure that the quality improvement process is maintained and adopted as a means of doing business, the Commissioner of Internal Revenue should develop an agencywide performance measurement system containing measures of quality, timeliness, and efficiency that are consistently used throughout the organization.
Closed – Implemented
IRS has made much progress in developing performance measures. One significant new development is the IRS attempt to break away from a functional orientation. IRS has developed agencywide measures that can be used to assess its performance in increasing compliance, reducing taxpayer burden, increasing customer satisfaction, and improving quality-driven productivity. Although there is still much work to be done, enough progress has been made to warrant closing this recommendation.
Internal Revenue Service To ensure that the quality improvement process is maintained and adopted as a means of doing business, the Commissioner of Internal Revenue should develop reward and recognition systems for quality management.
Closed – Implemented
The intent of this recommendation was to involve all employees in the IRS quality improvement process. IRS has done a good job of involving its employees and recognizing their contributions through awards, local newsletters, pamphlets, etc.
Internal Revenue Service To ensure that the quality improvement process is maintained and adopted as a means of doing business, the Commissioner of Internal Revenue should strengthen productivity through quality by sustaining recent initiatives to increase the overall awareness of the effort and by improving the documentation of individual projects as well as improving the dissemination process.
Closed – Implemented
The service strengthened the program through increased publicity for FY 1988 award winners. As a result, both award nominations and savings ratios have increased during the past year.
Internal Revenue Service To ensure that the quality improvement process is maintained and adopted as a means of doing business, the Commissioner of Internal Revenue should coordinate the productivity management program with the quality improvement process.
Closed – Implemented
According to IRS, coordination between the two efforts includes: (1) awards to quality improvement teams; (2) productivity enhancement funding for unique ideas of quality improvement teams; and (3) tracking efficiency and timeliness measures under the President Productivity Improvement Program and sharing this information with the quality improvement staff.
Internal Revenue Service The Commissioner of Internal Revenue should coordinate human resource planning efforts through establishing an agencywide human resources plan. This plan should be an integral part of SBP.
Closed – Implemented
IRS has developed a draft "Plan for Human Resources Issues". Its SBP for FY 1993 and beyond calls for finalizing and implementation of the plan by October 30, 1992. Sufficient progress has been made to warrant closing this recommendation.
Internal Revenue Service The Commissioner of Internal Revenue should establish an agencywide strategy to develop, accumulate, and use information on employee quality throughout the IRS human resource management processes.
Closed – Implemented
The IRS draft plan for human resources issues includes a recommendation directed at gathering periodic data on, among other things, employee training and performance outcomes to be used as a basis for better targeting recruiting resources.
Internal Revenue Service The Commissioner of Internal Revenue should establish clear accountability for the development and maintenance of an agencywide human resources plan.
Closed – Implemented
This responsibility has been assigned to the Assistant Commissioner for Human Resources.
Internal Revenue Service The Commissioner of Internal Revenue should reformulate the current human resource management evaluation strategy to explicitly link it to the new agencywide human resources plan. The evaluation strategy should provide effective feedback to management on the status of planned actions.
Closed – Implemented
According to IRS, this will be included in the development of the human resource management plan. This plan is effectively linked to SBP. Actions and critical success factors are developed and evaluated as part of the service's business review process.
Internal Revenue Service The Commissioner of Internal Revenue should strengthen the information systems project approval process by requiring the identification of human resource requirements and issues when the project receives conceptual approval. These requirements should be specified in the prospectus for all projects.
Closed – Implemented
IRS is now conducting organizational impact analyses, which are studies of the human and organizational dimensions of planned automation projects. According to IRS, the studies are done early in the life of a project.
Internal Revenue Service The Commissioner of Internal Revenue should require the Assistant Commissioner for Human Resource Management and Support to comment on the human resource systems project prospecti and make any recommendations believed to be appropriate regarding the human resource issues involved, including the need for an HRMS liaison.
Closed – Implemented
The Assistant Commissioner, HRMS, review of information systems project prospecti is an integral part of the system development methodology and is included in the project manager's guide.
Internal Revenue Service The Commissioner of Internal Revenue should integrate results of the executive attribute study into executive succession planning system design. Because succession planning will be initiated before executive attributes have been fully defined, IRS must ensure that the results of this research, which could have an impact on the entire system, are subsequently integrated into the new planning system.
Closed – Implemented
According to IRS, the individual progression planning process has been revised to include the executive output/competency profile. IRS plans to use this revised process in developing its 1991 succession plan.
Internal Revenue Service To strengthen the effectiveness of the major IRS evaluation processes, the Commissioner of Internal Revenue should improve IRS annual, nationwide assessments of its field operations.
Closed – Implemented
A new business review process has been developed. Procedures were issued in October 1989, and the first reviews of all regional offices were completed in 1990.
Internal Revenue Service To make the NORP process more useful to IRS top management, the Commissioner of Internal Revenue should implement an annual IRS-wide NORP assessment schedule as soon as possible. This schedule should provide top executives with IRS-wide assessments to be used in annual budget proceedings.
Closed – Implemented
IRS began making annual assessments of each regional office in 1990.
Internal Revenue Service To make the NORP process more useful to IRS top management, the Commissioner of Internal Revenue should develop detailed, standard NORP guidelines outlining minimum evaluation scope and methodology and addressing functional as well as cross-functional issues.
Closed – Implemented
Business review guidelines were published on October 1, 1989.
Internal Revenue Service To make the NORP process more useful to IRS top management, the Commissioner of Internal Revenue should use performance measures agreed upon throughout the organization for NORP.
Closed – Implemented
Critical success factors which incorporate performance measures are being developed and will be applied uniformly to all regions. IRS, as part of its SBP, has developed critical success factors which became the basis for assessing regional office performance. It is also in the process of developing various measures of quality, accuracy, timeliness, etc.
Internal Revenue Service To make the NORP process more useful to IRS top management, the Commissioner of Internal Revenue should provide a full-time management function to ensure consistent evaluation, appropriate independence, and sustained leadership. This evaluation function should also synthesize NORP and Regional Office Review Program (RORP) results to identify programmatic and cross-functional issues of nationwide importance.
Closed – Implemented
The Deputy Assistant Commissioner (Planning, Finance, and Research) has been designated Business Review Executive. The business review executive reports directly to the Commissioner on the results of the process.
Internal Revenue Service To make the NORP process more useful to IRS top management, the Commissioner of Internal Revenue should ensure relative independence to enhance the credibility of NORP results to outside groups and to avoid duplication with other management analyses functions.
Closed – Implemented
By designating a Business Review Executive in the Office of the Assistant Commissioner for Planning, IRS has separated responsibility for the review process from the programs/functions being reviewed.
Internal Revenue Service To make the NORP process more useful to IRS top management, the Commissioner of Internal Revenue should employ rigorous follow-up procedures to ensure prompt and sufficient implementation of NORP recommendations.
Closed – Implemented
The business review process includes procedures for following up on prior recommendations.
Internal Revenue Service To ensure that both the Regional Commissioners, the primary RORP customers, and IRS senior management receive sufficient information on field performance, the RORP process should employ NORP measures and consistent IRS-wide methodology. This will require: (1) using the same performance measures and evaluation standards applied in NORP; (2) maintaining RORP with an appropriate level of independence; and (3) developing a coordinated NORP/RORP evaluation plan nationwide.
Closed – Implemented
IRS issued regional business review procedures in November 1990 that appear to meet the criteria set out in the recommendation.
Internal Revenue Service To make the NORP process more useful to IRS top management, the Commissioner of Internal Revenue should balance IRS-wide/local needs with the need for a more structured RORP process to feed into NORP evaluations.
Closed – Implemented
According to IRS, this will be included when a district/service center methodology based on the business review process is developed. IRS issued regional business review procedures in November 1990 that appear to satisfy this recommendation.
Internal Revenue Service To improve the usefulness of the IRS internal audit activities, the Commissioner of Internal Revenue should independently evaluate strategic management and NORP efforts. This should include reviewing the effectiveness of business plan strategies and their supporting action plans, the implementation of strategic initiatives, and the extent to which SBP is driving IRS budget decisions.
Closed – Implemented
Internal Audit has incorporated SBP into the universe of activities, functions, and programs subject to audit coverage.
Internal Revenue Service To improve the usefulness of the IRS internal audit activities, the Commissioner of Internal Revenue should provide staff and funds for broader internal audit coverage.
Closed – Implemented
IRS increased its internal audit staffing by about 37 percent, from about 520 staff years in 1988 to an expected level of about 710 in 1991, and requested another increase of 36 positions in its FY 1992 budget.

Full Report

Office of Public Affairs

Topics

Chief information officersCompensationErrorsGeneral management reviewsInternal controlsPersonnel managementSystems conversionsTax administration systemsTax lawTax returns