Business Systems Modernization: IRS Has Satisfied Congressional Direction on the Custodial Accounting Project

U.S. Government Accountability Office

Business Systems Modernization:

IRS Has Satisfied Congressional Direction on the Custodial Accounting Project

GAO-01-444R: Published: Mar 16, 2001. Publicly Released: Mar 16, 2001.

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As part of its business systems modernization program, the Internal Revenue Service (IRS) is acquiring a system known as the Custodial Accounting Project (CAP). In September 2000, Congress directed that IRS limit its spending on CAP until IRS provided a compelling business case for investing in this project and started managing CAP as an integrated part of the business systems modernization program. GAO found that IRS has satisfied both of these directives. However, its business case guidance does not explicitly specify cost-effectiveness analyses as a way to economically justify proposed investments and define when and how these analyses should be prepared. As a result, IRS runs the risk of spending time and money developing future business cases for proposed system solutions that, like CAP, cannot be adequately justified on the basis of costs and benefits alone.

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Recommendations for Executive Action

Status: Closed - Implemented

Comments: IRS agreed with this recommendation and, in December 2001, IRS issued revised business case procedures that incorporated guidance on the appropriate use of cost-effectiveness analyses.

Recommendation: The Commissioner of Internal Revenue should direct the Chief Financial Officer to revise, consistent with Office of Management and Budget requirements, IRS' business case guidance to explicitly specify cost-effectiveness analyses as a method of justifying system investments that meet prescribed criteria.

Agency Affected: Department of the Treasury: Internal Revenue Service

Status: Closed - Implemented

Comments: IRS agreed with this recommendation and, since December 2001, has trained staff on the use of the revised business case guidance.

Recommendation: To ensure that the revised guidance is applied appropriately, the Commissioner of Internal Revenue should direct the Business Systems Modernization Executive to train modernization staff in its use.

Agency Affected: Department of the Treasury: Internal Revenue Service