Financial Audits: CFO Implementation at IRS and Customs

GAO discussed the Internal Revenue Service's (IRS) and the Customs Service's compliance with the Chief Financial Officers (CFO) Act's financial reporting requirements. GAO noted that: (1) although it was unable to provide an opinion on IRS and Customs' fiscal year 1993 financial statements because of continuing financial management problems, IRS and Customs have made significant improvements to their financial management operations; (2) CFO audits have helped IRS and Customs develop effective financial management systems and internal controls; (3) improvements to IRS and Customs' financial management systems and internal controls should enhance these agencies' ability to fulfill their mission requirements more effectively and efficiently; (4) IRS and Customs have developed and implemented methodologies that more accurately report their collectible accounts receivable, reviewed their physical inventory and internal controls over seized assets, conducted physical inventories of their fixed assets, and implemented integrated accounting and budgeting systems; and (5) IRS and Customs need to improve their guidance and oversight, develop additional reconciliation and approval procedures, and improve financial management information reporting so that they can effectively carry out their missions and reliably report on their operations.