Internal Revenue Service:

Need to Improve the Revenue Accounting Control System

IMTEC-88-41: Published: Jun 17, 1988. Publicly Released: Jun 17, 1988.

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GAO reviewed the Internal Revenue Service's (IRS) Revenue Accounting Control System (RACS) to: (1) determine the extent to which IRS automated its revenue accounting procedures; (2) assess RACS analysis and reporting capability; and (3) obtain IRS plans for improving RACS.

GAO found that RACS was inefficient and susceptible to errors because: (1) IRS had to manually enter, balance, and reconcile the RACS account files with information in files maintained in other IRS systems, which resulted in errors in classifying tax revenues; (2) RACS did not have the capability to identify categories of errors that occurred repeatedly, or analyze the growing accounts-receivable balance; and (3) at the time RACS became operational, IRS was reluctant to modify other systems to interface with it and did not think that some balancing functions were necessary. GAO also found that IRS: (1) recognized the problems and initiated a two-stage approach to improve RACS; (2) established computer tape interfaces with another automated system to record transactions affecting revenue receipts; (3) planned additional tape interfaces to reduce the need for manual data input; (4) drafted a proposal to replace RACS with a fully operational system by 1992 and to consolidate and automate all manual subsidiary files into one computer system by 1995; (5) planned to redesign the entire tax processing system, including revenue accounting functions, but did not determine how the functions would fit into the overall redesign; and (6) had not determined the requirements for data interchange, balancing and reconciling, and reporting, or identified the changes needed to ensure compatibility between the replacement systems and other systems.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: IRS completed the requirements and compatibility analysis. IRS stated that any eventual replacement systems will include error detection and other recommended programs.

    Recommendation: In reviewing the IRS plan for replacing RACS, the Commissioner of Internal Revenue should ensure that it is supported by a thorough requirements and compatibility analysis that clearly specifies actions to reduce manual data input, reduce manual balancing and reconciliation, and improve RACS capability to identify and track errors.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  2. Status: Closed - Implemented

    Comments: IRS completed the requirements and compatibility analysis. IRS stated that plans for replacing RACS include requirements for compatibility with all interactive systems.

    Recommendation: In reviewing the IRS plan for replacing RACS, the Commissioner of Internal Revenue should ensure that it is supported by a thorough requirements and compatibility analysis that identifies changes needed to ensure compatibility between RACS and other automated systems with which it interacts.

    Agency Affected: Department of the Treasury: Internal Revenue Service

 

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