Recommendation: ODCFO should update the CAP template provided in its guidance to assist components in developing CAPs to include the year deficiencies are first identified data element defined in the Implementation Guide for OMB Circular A-123. (Recommendation 1)

Agency: Department of Defense
Status: Open

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: ODCFO should update the NFR Database with a field to record the year deficiencies are first identified. (Recommendation 2)

Agency: Department of Defense
Status: Open

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: ODCFO should incorporate appropriate steps to improve its CAP review process, including ensuring that (1) data elements not included in CAPs are appropriately identified and communicated to components and resolved, (2) NFRs are appropriately linked to the correct CAPs to address them, and (3) components document their rationale for accepting the risk associated with certain deficiencies and appropriately identify such instances in the NFR Database. (Recommendation 3)

Agency: Department of Defense
Status: Open

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: ODCFO should update DOD guidance to instruct DOD and components to document root-cause analysis when needed to address deficiencies auditors identified. (Recommendation 4)

Agency: Department of Defense
Status: Open

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: ODCFO should include appropriate steps in its monthly NFR Database review process to evaluate and follow-up on previously identified exceptions to ensure that they are resolved timely. (Recommendation 5)

Agency: Department of Defense
Status: Open

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Secretary of Defense should direct the Chief Management Officer and other entities, as appropriate, to establish measures to determine if the department is succeeding in achieving its goal to improve its financial management systems. Specifically, it should document targets and time frames to define the level of performance to be achieved. It should also document how DOD plans to measure expected outcomes by identifying data sources, how it plans to measure values, and how DOD plans to verify and validate measured values. (Recommendation 1)

Agency: Department of Defense
Status: Open

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Secretary of Defense should direct the Chief Management Officer and other entities, as appropriate, to establish a specific time frame for developing an enterprise road map to implement its financial management systems strategy, and ensure that it is developed. The road map should document the current and future states at a high level, from an architecture perspective, and present a transition plan for moving from the current to the future in an efficient, effective manner. The road map should discuss performance gaps, resource requirements, and planned solutions, and it should map DOD's financial management systems strategy to projects and budget. The plan should also document the tasks, time frames, and milestones for implementing new solutions, and include an inventory of systems. (Recommendation 2)

Agency: Department of Defense
Status: Open

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Secretary of Defense should direct the Chief Management Officer and other entities, as appropriate, to develop detailed migration plans for the Air Force's General Accounting and Finance System-Reengineered, Navy's Standard Accounting and Reporting System, and Army's Standard Finance System and the Standard Operation and Maintenance Army Research and Development System. (Recommendation 3)

Agency: Department of Defense
Status: Open

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Secretary of Defense should direct the Chief Management Officer and other entities, as appropriate, to establish performance goals that include performance indicators, targets and time frames, to monitor the status of efforts to address IT-related audit findings. (Recommendation 4)

Agency: Department of Defense
Status: Open

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Secretary of Defense should direct the Chief Management Officer and other entities, as appropriate, to implement a mechanism for identifying financial management systems that support the preparation of the department's financial statements in the department's systems inventory and budget data, and identify a complete list of financial management systems. (Recommendation 5)

Agency: Department of Defense
Status: Open

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Secretary of Defense should direct the Chief Management Officer and other entities, as appropriate, to ensure that the department limits investments in financial management systems to only what is essential to maintain functioning systems and help ensure system security until it implements the other recommendations in this report. (Recommendation 6)

Agency: Department of Defense
Status: Open

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: The Under Secretary of Defense (Comptroller) should, in collaboration with the Under Secretary of Defense (Acquisition and Sustainment), develop and implement a DOD-wide strategy to remediate real property asset control issues. (Recommendation 1).

Agency: Department of Defense
Status: Open

Comments: DOD concurred with this recommendation and stated that it was committed to placing increased leadership emphasis on real property asset controls to ensure mission readiness, audit readiness, testing for existence and completeness, and maintaining internal controls.

Recommendation: The Under Secretary of Defense (Comptroller) should, in collaboration with the Under Secretary of Defense (Acquisition and Sustainment), develop department-wide instructions for performing the E&C verifications. (Recommendation 2).

Agency: Department of Defense
Status: Open

Comments: DOD concurred with this recommendation and stated that it was committed to placing increased leadership emphasis on real property asset policies and instructions to ensure consistent and repeatable existence and completeness verifications.

Recommendation: We recommend that the Secretary of the Treasury ensure that the Fiscal Assistant Secretary enhances Treasury's procedures for the aggregate analysis to consider the impact of all amounts not obtained from significant entity audited financial statements on the reliability of the CFS and use the results to determine if audit coverage is needed for any information. (Recommendation 1)

Agency: Department of the Treasury
Status: Open

Comments: In commenting on our draft report, Treasury stated that it has already taken steps to address this recommendation by updating guidance to federal entities for the preparation of the fiscal year 2020 Agency Financial Reports or Performance and Accountability Reports. In addition, Treasury stated that it has drafted a memo to the Federal Accounting Standards Advisory Board to seek clarification of existing guidance related to reporting differences for federal entities that prepare financial reports according to FASB standards.

Recommendation: We recommend that the Secretary of the Treasury ensure that the Fiscal Assistant Secretary enhances Treasury's process for revising accounting and reporting policies to reasonably assure that financial information—including the SOCNP, Funds from Dedicated Collections note, and Other Liabilities note—is prepared in accordance with U.S. GAAP and sufficiently documented to allow effective management review. (Recommendation 2)

Agency: Department of the Treasury
Status: Open

Comments: In commenting on our draft report, Treasury stated that it has already taken steps to address this recommendation by updating guidance to federal entities for the preparation of the fiscal year 2020 Agency Financial Reports or Performance and Accountability Reports.

Recommendation: We recommend that the Secretary of the Treasury ensure that the Fiscal Assistant Secretary enhances existing procedures to reasonably assure that disclosures for financial information incorporated using accounting standards issued by FASB are prepared in accordance with U.S. GAAP, such as improving (1) the quantitative analysis to consider all FASB information included in the CFS, (2) the FASB questionnaire to consider all relevant disclosures and obtain responses from all significant component entities, and (3) procedures for sufficiently documenting analyses and conclusions related to FASB information in the CFS. (Recommendation 3)

Agency: Department of the Treasury
Status: Open

Comments: In commenting on our draft report, Treasury stated that it drafted a memo to the Federal Accounting Standards Advisory Board to seek clarification of existing guidance related to reporting differences for federal entities that prepare financial reports according to FASB standards.

Recommendation: Congress should consider legislation to require each CFO at a CFO Act agency to oversee and provide leadership for all of the responsibilities necessary to effectively carry out federal financial management activities, including the formulation and financial execution of the budget, planning and performance, risk management, internal control, financial systems, and accounting. (Matter for Consideration 1)

Agency: Congress
Status: Open

Comments: A bill (S. 3287) introduced in February 2020 proposed changes to the CFO Act. Among the proposed changes was language to clarify the duties and responsibilities of the CFO, including the formulation and financial execution of the budget, planning and performance, risk management, internal control, financial systems, and accounting. We will continue to monitor the status of this bill.

Recommendation: Congress should consider legislation to require deputy CFOs in CFO Act agencies to have defined responsibilities consistent with the breadth of those of the agency CFOs. (Matter for Consideration 2)

Agency: Congress
Status: Open

Comments: A bill (S. 3287) introduced in February 2020 proposed changes to the CFO Act. Among the proposed changes was language to specify that the deputy CFO shall assist the agency CFO in the performance of each of the duties of the agency CFO. We will continue to monitor the status of this bill.

Recommendation: Congress should consider legislation to require the Director of OMB to prepare and submit to the appropriate committees of Congress a government-wide 4-year financial management plan (with timing to match the GPRA reporting requirements) and an annual financial management status report.

a. The plan should include actions for improving financial management systems, strengthening the federal financial management workforce, and better linking performance and cost information for decision-making.

b. The plan should be developed in consultation with the CFO Council, the Chief Information Officers Council, the Chief Data Officer Council, the Chief Acquisition Officers Council, CIGIE, GAO, and other appropriate financial management experts. (Matter for Consideration 3)

Agency: Congress
Status: Open

Comments: A bill (S. 3287) introduced in February 2020 proposed changes to the CFO Act. Among the proposed changes was language that calls for a government-wide 4-year financial management plan and an annual financial management status report. The plan is to address actions for improving financial management systems, strengthening the federal financial management workforce, and better linking performance and cost information for decision-making. The plan is to be developed in consultation with the CFO Council, the Chief Information Officers Council, the Chief Data Officer Council, the Chief Acquisition Officers Council, CIGIE, GAO, and other appropriate financial management experts. We will continue to monitor the status of this bill.

Recommendation: Congress should consider legislation to require each CFO at a CFO Act agency, in consultation with financial management and other appropriate experts, to prepare an agency plan to implement the 4-year government-wide financial management plan prepared by OMB. (Matter for Consideration 4)

Agency: Congress
Status: Open

Comments: A bill (S. 3287) introduced in February 2020 proposed changes to the CFO Act. Among the proposed changes was language that calls for the CFO of each CFO Act agency to prepare, in consultation with financial management and other appropriate experts, an agency plan to implement the 4-year financial management plan prepared by the Director of the Office of Management and Budget and to achieve and sustain effective financial management in the agency. We will continue to monitor the status of this bill.

Recommendation: Congress should consider legislation to require the Director of OMB to prepare comprehensive financial management performance-based metrics and use these metrics to evaluate the financial management performance of executive agencies. The metrics should be included in the government-wide and agency-level financial management plans, and agencies' performance against the metrics should be reported in the annual financial management status reports. (Matter for Consideration 5)

Agency: Congress
Status: Open

Comments: A bill (S. 3287) introduced in February 2020 proposed changes to the CFO Act. Among the proposed changes was language that calls for the Director of OMB to prepare comprehensive financial management performance-based metrics, which are to be used to evaluate the financial management performance of executive agencies. These metrics are to be included in the government-wide and agency-level financial management plans, and agencies' performance against the metrics are to be reported in annual financial management status reports. We will continue to monitor the status of this bill.

Recommendation: Congress should consider legislation to require the head of each executive agency to identify, and if necessary develop, the key financial management information, in addition to financial statements, needed for effective financial management and decision-making. (Matter for Consideration 6)

Agency: Congress
Status: Open

Comments: A bill (S. 3287) introduced in February 2020 proposed changes to the CFO Act. Among the proposed changes was language that calls for the head of each CFO Act agency to identify key financial management information needed for effective financial management decision-making. We will continue to monitor the status of this bill.

Recommendation: Congress should consider legislation to require the head of each executive agency to annually assess and separately report their conclusion on the effectiveness of internal controls of the agency over financial reporting and other key financial management information. (Matter for Consideration 7)

Agency: Congress
Status: Open

Comments: A bill (S. 3287) introduced in February 2020 proposed changes to the CFO Act. Among the proposed changes was language that calls for the head of each CFO Act agency to annually assess and separately report on the effectiveness of internal controls of the agency over financial reporting and other key financial management information. We will continue to monitor the status of this bill.

Recommendation: Congress should consider legislation to require auditors, as part of each financial statement audit of an executive agency, to test and report on internal control over financial reporting and other key financial management information. (Matter for Consideration 8)

Agency: Congress
Status: Open

Comments: A bill (S. 3287) introduced in February 2020 proposed changes to the CFO Act. Among the proposed changes was language that calls for the financial statement auditors of each CFO Act agency to report on their evaluation of internal control over financial reporting and other key financial management information. We will continue to monitor the status of this bill.

Recommendation: We recommend that the Commissioner of Internal Revenue update and implement policies and procedures for developing a courier contingency plan to prohibit managers responsible for overseeing the preparation of taxpayer receipts for deposits from also transporting them to financial institutions. (Recommendation 20-01)

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: The IRS agreed with this recommendation and stated that the Wage and Investment organization will update the Courier Contingency Plan polices and procedures to provide for appropriate segregation of duties or other curative measures.

Recommendation: We recommend that the Commissioner of Internal Revenue establish and implement manual refund procedures to direct (1) initiators to document (e.g., record on the taxpayers' accounts or annotate on the related manual refund forms) the justification for bypassing the IAT tool warning related to potential duplicate tax refunds on taxpayers' accounts and (2) managers to monitor whether such warnings were bypassed and review the justifications for reasonableness prior to approving manual refund forms. (Recommendation 20-02)

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: The IRS agreed with this recommendation and stated that the Wage and Investment organization agrees that actions need to occur to address duplicate tax refund conditions through improved manual refund procedures to require (1) initiator to document the justification for bypassing the Integrated Automated Technologies (IAT) tool warning related to potential duplicate tax refunds on taxpayers' accounts and (2) managers to review the justification documented for bypassing the IAT tool warning for reasonableness prior to approving manual refund forms. However, IRS also stated that it was unable to commit to implementing a corrective action plan at this time due to budgetary constraints on system enhancements.

Recommendation: We recommend that the Commissioner of Internal Revenue establish and implement actions to provide reasonable assurance that business units record the acceptance of goods and services in a timely manner in accordance with IRS policies and procedures. (Recommendation 20-03)

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: The IRS agreed with this recommendation and stated that the CFO organization will determine the reasons for business unit(s) non-compliance with established policies and procedures related to timely recording of receipts and acceptance of goods and services and, based on this evaluation, develop an action plan that once completed will provide additional tools to aid the business units in reasonably ensuring compliance with established requirements.

Recommendation: We recommend that the Commissioner of Internal Revenue establish and implement actions to provide reasonable assurance that the future lease payment amounts for non-cancellable operating leases are calculated correctly. (Recommendation 20-04)

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: The IRS agreed with this recommendation and stated that the CFO organization will update policies and procedures to include additional instructions needed to calculate the future lease payments due on the non-cancelable leases with terms greater than one year and will also create an automated calculation to determine the number of remaining months of lease payments.

Recommendation: The Director of DFAS should, in accordance with the FMR, implement procedures to help ensure that FBWT reconciliations are consistently performed and that all DFAS sites review and document research conducted on the causes of any differences arising from these reconciliations. (Recommendation 1)

Agency: Department of Defense: Defense Finance and Accounting Service
Status: Open

Comments: The Department of Defense (DOD) concurred with this recommendation. They stated that the Defense Finance and Accounting Service (DFAS) will update the Financial Management Regulation (FMR) and implement procedures to help ensure Fund Balance with Treasury (FBWT) reconciliations are performed consistently and appropriate research on the causes of any difference arising from these reconciliations is reviewed and documented by all DFAS sites. Further, DFAS will update internal documentation/policy to outline DFAS roles and processes for FBWT reconciliations as well as include guidance on the execution of DOD's FMR FBWT reconciliation requirements. The estimated completion date for the implementation of this recommendation is December 2020. We will continue to follow-up with DOD on the status of this recommendation.

Recommendation: The Under Secretary of Defense (Comptroller) should update the FMR to clearly define the required supporting documentation for system-generated accounting adjustments, including the required documentation of business rules driving the recording of these adjustments, such as documentation of the programming logic. (Recommendation 2)

Agency: Department of Defense: Under Secretary of Defense (Comptroller)
Status: Open

Comments: The Department of Defense (DOD) concurred with this recommendation. They stated that the Department is developing a checklist of required supporting documents for incorporation into the DOD Financial Management Regulations (FMR). They will update the DOD FMR Volume, 6A, Chapter 2 to define the required supporting documentation for system generated accounting adjustments. Additionally, the Defense Finance and Accounting Service (DFAS) will update internal documentation to include narratives outlining the business rules for system generated accounting adjustments with the required supporting documentation. The estimated completion date for the implementation of this recommendation is December 2020. We will continue to follow up with DOD on the status of this recommendation.

Recommendation: The Under Secretary of Defense (Comptroller) should perform and document a comprehensive review of the FMR accounting adjustment category codes to determine their ongoing applicability or the need for additional codes to reflect the current financial reporting environment. (Recommendation 3)

Agency: Department of Defense: Under Secretary of Defense (Comptroller)
Status: Open

Comments: The Department of Defense (DOD) concurred with this recommendation. The Department intends to collaborate with the financial community to update the category codes within the DOD Financial Management Regulations (FMR). Specifically, the Office of the Under Secretary of Defense will perform a comprehensive review of Journal Voucher Category Codes listed in DOD FMR, Volume 6A, Chapter 2 and update regulations based on feedback. The Defense Finance and Accounting Service will update internal documentation and procedures to reflect any code changes identified in the revised DOD FMR. The estimated completion date for this recommendation is July 2020. We will continue to follow-up with DOD on the status of this recommendation.

Recommendation: The Under Secretary of Defense (Comptroller) should establish procedures to help ensure the consistent implementation of the requirements of DFAS Form 9339. (Recommendation 4)

Agency: Department of Defense: Under Secretary of Defense (Comptroller)
Status: Open

Comments: The Department of Defense (DOD) concurred with this recommendation. The Department plans to update the Defense Finance and Accounting Service (DFAS) Form 9339 and develop and conduct refresher training to all users of the Form 9339. The estimated completion date for this recommendation is September 2020. We will continue to follow-up with DOD on the status of this recommendation.

Recommendation: The Under Secretary of Defense (Comptroller) should update policies and procedures to identify the causes of out-of-balance accounting adjustments and resolve the causes in a timely manner. (Recommendation 5)

Agency: Department of Defense: Under Secretary of Defense (Comptroller)
Status: Open

Comments: The Department of Defense (DOD) concurred with this recommendation. The Department is collaborating on utilizing existing data to identify and resolve out-of-balances and update DOD Financial Management Regulation, Volume 6A, Chapter 2 to include a section conveying out-of-balance accounting adjustments are not authorized. Root cause analysis efforts will be performed in conjunction with corrective action plans (CAPs) for recommendations 6--8. The estimated completion date for this recommendation is December 2020. We will continue to follow-up with DOD on the status of this recommendation.

Recommendation: The Under Secretary of Defense (Comptroller), in conjunction with the Director of DFAS, should develop and implement policies and procedures to help ensure that root cause analyses for accounting adjustments are consistently performed and documented across DOD. (Recommendation 6)

Agency: Department of Defense: Under Secretary of Defense (Comptroller)
Status: Open

Comments: The Department of Defense (DOD) concurred with this recommendation. The Department, in conjunction with the Director of Defense Finance and Accounting Service (DFAS), intends to utilize existing advanced analytics tools to research and document root cause analyses. The estimated completion date for the implementation of this recommendation is December 2020. We will continue to follow-up on this recommendation.

Recommendation: The Under Secretary of Defense (Comptroller), in conjunction with the Director of DFAS, should develop and implement policies and procedures to help ensure consistent development, implementation, monitoring, and documentation of action plans across DOD that address accounting adjustment causes that staff identified internally. (Recommendation 7)

Agency: Department of Defense: Under Secretary of Defense (Comptroller)
Status: Open

Comments: The Department of Defense (DOD) concurred with this recommendation. The Department intends to collaborate with the financial community, including the Director of the Defense Financial and Accounting Service (DFAS), and utilize existing tools for documenting and implementing consistent procedures for action plans of accounting adjustments. The analytical tool, Advana will be used to analyze the action plan code for consistent analysis to be performed across the DOD. The estimated completion date for the implementation of this recommendation is February 2021. We will continue to follow-up on this recommendation.

Recommendation: The Under Secretary of Defense (Comptroller), in conjunction with the Director of DFAS, should develop and implement procedures across DOD that include clearly defined outcomes focused on reducing accounting adjustments (supported and unsupported) with specific actionable steps and procedures for achieving stated goals. (Recommendation 8)

Agency: Department of Defense: Under Secretary of Defense (Comptroller)
Status: Open

Comments: The Department of Defense (DOD) concurred with this recommendation. The Department, in conjunction with the Director of the Defense Finance and Accounting Service, plans to utilize existing tools to define and measure the outcomes of accounting adjustments. The estimated completion date for the implementation of this recommendation is April 2021. We will continue to follow-up on this recommendation.

Recommendation: The Secretary of the Treasury should ensure that the Fiscal Assistant Secretary enhances existing procedures for Treasury management to perform additional reviews for restatements, reclassifications, and adjustments to beginning net position to reasonably assure that they are properly supported and accurately reported. (Recommendation 2)

Agency: Department of the Treasury
Status: Open
Priority recommendation

Comments: As of the completion of our fiscal year 2019 audit of the consolidated financial statements of the U.S. government (CFS), we determined that this recommendation remains open. Treasury enhanced its procedures to include additional management reviews, particularly the Financial Reports and Advisory Division Director, for restatements, reclassifications, and adjustments to beginning net position. Although FRAD took steps to enhance its review procedures, the additional review did not prevent FRAD from including descriptions in the draft CFS that were not supported by entity financial statements or from excluding some information from the CFS notes. Further steps are needed to define procedures to ensure consistent and accurate treatment of restatements, reclassifications, and adjustments to beginning net position in the CFS. We will follow-up on progress made by Treasury as part of our fiscal year 2020 CFS audit.

Recommendation: The Secretary of the Treasury should ensure that the Fiscal Assistant Secretary, working in coordination with the Controller of OMB, establishes effective processes and procedures to reasonably assure that appropriate information regarding legal contingency losses is reported in the CFS. (Recommendation 4)

Agency: Department of the Treasury
Status: Open
Priority recommendation

Comments: As of the completion of our fiscal year 2019 audit of the consolidated financial statements of the U.S. government (CFS), we determined that this recommendation remains open. Treasury and OMB (1) increased guidance to federal entities in the Treasury Financial Manual section 2-4700; (2) included an illustrative Contingent Loss Table in OMB Circular No. A-136 for agencies to use as guidance when reporting probable and reasonably possible losses; (3) provided guidance to agencies through monthly Central Reporting Team (CRT) meetings with the agencies' financial reporting staff and at the Government Financial Management Conference; (4) communicated regularly with Department of Justice officials regarding the preparation of the government-wide legal representation letter; and (5) increased the number of Treasury staff performing the legal letter analysis. However, we noted inconsistencies among the significant component entities' financial statement note disclosures, management schedules, and legal representation letters, and the legal contingency loss information reported in the CFS, as well as inconsistencies between entities' year-end management schedules/legal representation letters and the final government-wide legal representation letter. We will follow-up on progress made by Treasury as part of our fiscal year 2020 CFS audit.

Recommendation: The Commissioner of Fiscal Service should develop and implement a mechanism to reasonably assure that all the journal entries recorded in the Schedules of the General Fund general ledgers can be readily identified and traced, such as through a unique identifier, to determine the effect of a transaction on all applicable general ledger accounts and line items of the Schedules of the General Fund, including the budget deficit. (Recommendation 1)

Agency: Department of the Treasury: Bureau of the Fiscal Service
Status: Open
Priority recommendation

Comments: Fiscal Service concurred with the results of our audit. As of July 2020, Fiscal Service developed a remediation plan and efforts are underway to address this recommendation. We will continue to monitor the agency's actions to address this recommendation.

Recommendation: The Commissioner of Fiscal Service should develop and implement a mechanism to reasonably assure that payment transactions recorded in the Schedules of the General Fund general ledgers capture all of the key information needed, including payment schedules if applicable, to readily trace transactions to the information certified by the federal agency. (Recommendation 2)

Agency: Department of the Treasury: Bureau of the Fiscal Service
Status: Open

Comments: Fiscal Service concurred with the results of our audit. As of July 2020, Fiscal Service developed a remediation plan and efforts are underway to address this recommendation. We will continue to monitor the agency's actions to address this recommendation.

Recommendation: The Commissioner of Fiscal Service should develop and implement additional reporting requirements with related guidance for federal agencies that better align with the General Fund financial reporting objectives and enable Fiscal Service to capture the effect of a transaction on all applicable general ledger accounts and line items of the Schedules of the General Fund, including the budget deficit. (Recommendation 3)

Agency: Department of the Treasury: Bureau of the Fiscal Service
Status: Open
Priority recommendation

Comments: Fiscal Service concurred with the results of our audit. As of July 2020, Fiscal Service developed a remediation plan and efforts are underway to address this recommendation. We will continue to monitor the agency's actions to address this recommendation.

Recommendation: We recommend that the Commissioner of Fiscal Service develop and implement a process that would enable Fiscal Service to obtain the information necessary to effectively assess the effect of the Statement of Difference on the Schedules of the General Fund for those federal agencies that have not implemented the Central Accounting and Reporting System. (Recommendation 4)

Agency: Department of the Treasury: Bureau of the Fiscal Service
Status: Open
Priority recommendation

Comments: Fiscal Service concurred with the results of our audit. As of July 2020, Fiscal Service developed a remediation plan and efforts are underway to address this recommendation. We will continue to monitor the agency's actions to address this recommendation.

Recommendation: We recommend that the Commissioner of Fiscal Service design and implement procedures to evaluate risks and monitor internal controls over financial reporting relevant to the Schedules of the General Fund. (Recommendation 5)

Agency: Department of the Treasury: Bureau of the Fiscal Service
Status: Open

Comments: Fiscal Service concurred with the results of our audit. As of July 2020, Fiscal Service developed a remediation plan and efforts are underway to address this recommendation. We will continue to monitor the agency's actions to address this recommendation.

Recommendation: The Commissioner of Fiscal Service should develop and implement a mechanism for evaluating agencies' use of BETCs based on the enhanced guidance. (Recommendation 7)

Agency: Department of the Treasury: Bureau of the Fiscal Service
Status: Open

Comments: Fiscal Service concurred with the results of our audit. As of July 2020, Fiscal Service developed a remediation plan and efforts are underway to address this recommendation. We will continue to monitor the agency's actions to address this recommendation.

Recommendation: The Commissioner of Fiscal Service should design and implement procedures to (1) obtain and review supporting documentation for reported activity included on Agency Submission Forms and (2) assess the overall completeness of federal agency activity reported on Agency Submission Forms. (Recommendation 8)

Agency: Department of the Treasury: Bureau of the Fiscal Service
Status: Open

Comments: Fiscal Service concurred with the results of our audit. As of July 2020, Fiscal Service developed a remediation plan and efforts are underway to address this recommendation. We will continue to monitor the agency's actions to address this recommendation.

Recommendation: The Commissioner of Fiscal Service should design and implement procedures to periodically review all active Treasury accounts to determine whether they are valid and the related General Fund account balances are consistent with federal agency records. (Recommendation 10)

Agency: Department of the Treasury: Bureau of the Fiscal Service
Status: Open
Priority recommendation

Comments: Fiscal Service concurred with the results of our audit. As of July 2020, Fiscal Service developed a remediation plan and efforts are underway to address this recommendation. We will continue to monitor the agency's actions to address this recommendation.

Recommendation: The Commissioner of Fiscal Service should enhance current procedures for reviewing negative balances to include Treasury accounts with indefinite periods of availability. (Recommendation 11)

Agency: Department of the Treasury: Bureau of the Fiscal Service
Status: Open
Priority recommendation

Comments: Fiscal Service concurred with the results of our audit. As of July 2020, Fiscal Service developed a remediation plan and efforts are underway to address this recommendation. We will continue to monitor the agency's actions to address this recommendation.

Recommendation: We recommend that the Commissioner of Internal Revenue ensure that the appropriate IRS officials implement the necessary actions to effectively address the two primary causes of the significant deficiency in IRS's internal control over unpaid assessments. These actions should (1) resolve the system limitations affecting the recording and maintenance of reliable and appropriately classified unpaid assessments and related taxpayer data to support timely and informed management decisions, and enable appropriate financial reporting of unpaid assessment balances throughout the year, and (2) identify the control deficiencies that result in significant errors in taxpayer accounts and implement control procedures to routinely and effectively prevent, or detect and correct, such errors. (Recommendation 19-01)

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: IRS's actions to address this recommendation are ongoing. During fiscal year 2019, IRS documented the key management decisions in the design and use of the estimation process. This step should reduce the risk that IRS may perform sampling procedures inconsistent with management intent or plans. Continued management commitment and sustained efforts are necessary to build on the progress made to date and to fully address IRS's remaining unresolved issues concerning the management and reporting of unpaid assessments. We will assess IRS's progress in addressing these issues during our audit of IRS's fiscal year 2020 financial statements.

Recommendation: We recommend that the Commissioner of Internal Revenue ensure that the appropriate IRS officials document and implement a formal comprehensive strategy to provide reasonable assurance concerning its nationwide coordination, consistency, and accountability for internal control over key areas of physical security. This strategy should include nationwide improvements for (1) coordinating among the functional areas involved in physical security; (2) implementing and monitoring the effectiveness of physical security policies, procedures, and internal controls; and (3) ongoing communication in identifying, documenting, and taking corrective action to resolve underlying control issues that affect IRS's facilities. (Recommendation 19-02)

Agency: Department of the Treasury: Internal Revenue Service
Status: Open
Priority recommendation

Comments: IRS's actions to address this recommendation are ongoing. IRS officials stated that Facilities Management and Security Services is in the process of developing and documenting a formal, comprehensive strategy. According to IRS officials, this strategy will include different overarching goals, such as improving workforce effectiveness, ensuring appropriate monitoring functions and employee accountability, and improving coordination and communication of policies and procedures. IRS plans to complete the formal, comprehensive strategy during fiscal year 2020 and finalize the implementation of this strategy by March 2021.

Recommendation: The Commissioner of Internal Revenue should ensure that appropriate IRS officials determine the reasons staff did not consistently comply with IRS's existing requirement for maintaining an emergency contact list at all of its facilities and, based on this determination, establish a process to enforce compliance with the requirement. (Recommendation 19-03)

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: IRS's actions to address this recommendation are ongoing. During fiscal year 2019, IRS used a questionnaire survey and obtained feedback from security section chiefs and physical security specialists to determine the reasons staff did not consistently comply with IRS's existing requirement to maintain an emergency contact list at all IRS facilities. IRS officials stated that during fiscal year 2020, the Facilities Management and Security Services will establish a process to better enforce compliance with the requirement based on the results of the feedback obtained.

Recommendation: The Commissioner of Internal Revenue should ensure that appropriate IRS officials establish and implement policies and procedures requiring that corrective actions be documented in the Alarm Maintenance and Testing Certification Report for malfunctioning alarms identified in the annual alarm tests. (Recommendation 19-04)

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: IRS's actions to address this recommendation are ongoing. IRS officials stated that during fiscal year 2020, the Facilities Management and Security Services will (1) update the Internal Revenue Manual to reflect the requirement to use the Alarm Maintenance and Testing Certification Report to document alarm testing results, including any malfunctioning alarms and related corrective actions taken, as appropriate;, and (2) review the Alarm Maintenance and Testing Certification Report Form and incorporate any additional instructions and fields to document the specific alarms tested, the testing results, and related corrective actions taken, as appropriate.

Recommendation: The Commissioner of Internal Revenue should ensure that the appropriate IRS officials establish and implement policies or procedures, or both, to provide reasonable assurance that the video surveillance systems at all IRS facilities record activity at the correct time and are properly secured. The policies or procedures should include periodic checks and adjustments, as needed, as part of the annual service and maintenance of security equipment and systems. (Recommendation 19-05)

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: IRS's actions to address this recommendation are ongoing. IRS officials stated that during fiscal year 2020, the Facilities Management and Security Services will develop, document, and implement policies or procedures, or both, to provide reasonable assurance of the accuracy and physical security of the video surveillance systems at all IRS facilities by including periodic checks and adjustments, as needed, as part of the annual service and maintenance of security equipment.

Recommendation: We recommend that the Commissioner of Internal Revenue ensure that the appropriate IRS officials update and implement policies or procedures, or both, to clarify (1) who is responsible for conducting the annual review of the visitor access logs, (2) the date by which the review is to be conducted, and (3) how the review should be documented. (Recommendation 19-06)

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: IRS's actions to address this recommendation are ongoing. IRS officials stated that during fiscal year 2020, the Information Technology and the Criminal Investigation organizations will update and implement their policies or procedures, or both, to clarify (1) who is responsible for conducting the annual review of the visitor access logs, (2) the date by which the review is to be conducted, and (3) how the review should be documented.

Recommendation: We recommend that the Commissioner of Internal Revenue ensure that the appropriate IRS officials (1) identify the reason IRS's policies and procedures related to the transmittal forms were not always followed and (2) design and implement actions to provide reasonable assurance that SB/SE units comply with these policies and procedures. (Recommendation 19-07)

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: IRS's actions to address this recommendation are ongoing. IRS officials stated that the Small Business/Self-Employed (SB/SE) Field Collection organization determined that the reasons the policies and procedures were not always followed were either a lack of understanding of the requirements or a lack of consistency in adhering to them. In order to address this, in October 2019, Field Collection distributed a memorandum to its area directors, territory managers, and group managers, reminding them of the required remittance processing procedures, emphasizing the importance of following the procedures, and requesting that they distribute the information in the memorandum within their organization. IRS officials stated that the memorandum will help assure that SB/SE Field Collection units comply with the applicable policies and procedures. Since this memorandum was issued after the end of our fiscal year 2019 audit, we will review the implementation of this action during our fiscal year 2020 audit. Further, IRS officials stated that during fiscal year 2020, the SB/SE Examination organization will identify the reason that IRS's policies and procedures for transmittal forms were not followed, and based on this, it will add guidance to the applicable Internal Revenue Manual sections to clarify and supplement the service-wide guidance for the appropriate control, monitoring, and review of the forms used to transmit packages containing personally identifiable information.

Recommendation: We recommend that the Commissioner of Internal Revenue ensure that the appropriate IRS officials update and implement policies or procedures, or both, to clearly define the roles and responsibilities of second-level managers and IDRS security account administrators for validating the information on USR designation forms, including specifying how the information should be validated. (Recommendation 19-08)

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: IRS's actions to address this recommendation are ongoing. During fiscal year 2019, the Information Technology (IT) organization updated IRS's Integrated Data Retrieval System (IDRS) security policy contained in the Internal Revenue Manual to ensure that the IDRS account administration process complies with IRS's personnel security policy regarding background investigation completion dates. In addition, IRS officials stated that by November 2020, the IT organization will update the Unit Security Representative (USR) designation form, as well as policies and procedures, to clearly define the roles and responsibilities of second-level managers and IDRS security account administrators for validating the information on USR designation forms, including how the information should be validated.

Recommendation: We recommend that the Commissioner of Internal Revenue ensure that the appropriate IRS officials update and implement procedures to clearly specify the tax refund data elements that PVS COs are required to verify before certifying the tax refunds in SPS. (Recommendation 19-09)

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: During fiscal year 2019, the Information Technology organization updated its standard operating procedures to clearly specify the tax refund data elements that the Processing Validation Section Certifying Officers are required to verify before certifying the tax refunds in the Secure Payment System. Since IRS completed this action after we had already performed our fiscal year 2019 testing related to the certification of tax refunds, we will evaluate IRS's actions to address this recommendation during our fiscal year 2020 audit.

Recommendation: The Commissioner of Internal Revenue should ensure that the appropriate IRS officials establish and implement a review process to provide reasonable assurance that the RSNs that Data Conversion key entry operators enter into the ISRP system and post to the master files are correct. (Recommendation 19-10)

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: IRS actions to address this recommendation are ongoing. IRS officials stated that during fiscal year 2020, the Wage & Investment organization will establish and implement a review process to provide reasonable assurance that the Refund Schedule Numbers on manual refund forms are transcribed accurately into the Integrated Submission and Remittance Processing system.

Recommendation: The Commissioner of Internal Revenue should ensure that the appropriate IRS officials implement a validity check in the ISRP system to confirm that RSNs that Data Conversion key entry operators enter into the system have the required 14 digits. (Recommendation 19-11)

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: IRS officials stated that the Wage and Investment organization agrees that developing and implementing a Unified Work Request for programming changes is needed to systemically validate the refund schedule numbers input into the Integrated Submission and Remittance Processing system; however, IRS officials indicated that the organization is unable to commit to implementing a corrective action because of budgetary constraints. As a result, IRS will place this recommendation on hold until funds are available.

Recommendation: We recommend that the Commissioner of Internal Revenue ensure that the appropriate IRS officials update and implement policies or procedures, or both, to require that reviewers follow up with tax examiners to verify the errors that tax examiners made in working on cases related to suspicious or questionable tax returns are corrected. (Recommendation 19-12)

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: IRS's actions to address this recommendation are ongoing. IRS officials stated that by April 2020, IRS will update and implement policies or procedures, or both, requiring that reviewers follow up with tax examiners to verify that the errors tax examiners made in working a case related to suspicious or questionable tax returns are corrected.

Recommendation: The Acting Commissioner of Internal Revenue should ensure that the appropriate IRS officials, based on IRS's research and determination, design and implement the corrective actions necessary to reasonably assure that IRS effectively resolves and records unpostable transactions in a timely manner, including establishing clearly defined time frames in the Internal Revenue Manual (IRM) by which the IRS operating divisions should correct unpostable transactions and appropriate related oversight and review processes. (Recommendation 18-02)

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: IRS's actions to address this recommendation are ongoing. As of September 30, 2019, three of the four operating divisions involved in this recommendation designed and implemented the corrective actions necessary to reasonably assure that IRS effectively resolved and recorded unpostable transactions in a timely manner. In March 2019, one operating division determined that based on the research performed, no actions needed to be taken by the operating division to effectively resolve and record unpostable transactions in a timely manner. We will continue to evaluate IRS's actions to address this recommendation during our audit of IRS's fiscal year 2020 financial statements.

Recommendation: The Acting Commissioner of Internal Revenue should ensure that the appropriate IRS officials develop and implement policies in the IRM for conducting and monitoring the Submission Processing internal control review. These policies should include or be accompanied by procedures to (1) assess and update the review questions and cited IRM criteria to reasonably assure they align with the controls under review; (2) periodically evaluate and document a review of the error threshold methodology to assess its current validity based on changes to the operating environment; (3) report findings identified in the Findings and Corrective Actions Report; and (4) assess and monitor (a) safeguarding internal control activities across all work shifts, particularly during peak seasons, (b) safeguarding internal control activities for the appropriate use and destruction of hard copy taxpayer information, and (c) the results of relevant functional level reviews. (Recommendation 18-03)

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: During fiscal year 2019, IRS developed policies in the Internal Revenue Manual (IRM) for conducting and monitoring the Submission Processing internal control review. Specifically, the IRM addresses the (1) designated roles and responsibilities among IRS business units for ensuring the review questions and associated criteria are assessed and updated to align with internal controls under review; (2) requirements for periodically evaluating the error threshold methodology used in the review; (3) procedures for the review to assess and monitor (a) internal control activities across work shifts and (b) internal control activities for appropriate use and destruction of hard-copy taxpayer information. However, the IRM did not include requirements for reporting findings identified during all components of the internal control review and for assessing and monitoring results of relevant functional level reviews. Since IRS developed the relevant IRM policies and procedures after we had already performed our fiscal year 2019 internal control testing, we will evaluate IRS's implementation of the established procedures during our fiscal year 2020 audit.

Recommendation: The Acting Commissioner of Internal Revenue should ensure that the appropriate IRS officials develop and implement policies in the IRM for conducting and monitoring the Audit Management Checklist review. These policies should include or be accompanied by procedures for IRS management responsible for establishing policies related to safeguarding controls to (1) periodically monitor the results of the review; (2) clarify the minimum requirements for how frequently the review should be completed at its various facilities while considering factors that may affect the most appropriate timing of these reviews, such as changes in personnel, operational processes, or information technology; and (3) reasonably assure that corrective actions for all identified deficiencies are tracked until fully implemented. (Recommendation 18-04)

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: In September 2019, IRS notified stakeholders of the added procedures to the Internal Revenue Manual (IRM) for (1) conducting the Audit Management Checklist reviews, including how frequently the reviews should be completed; (2) developing corrective actions for deficiencies; and (3) tracking the status of the corrective actions until fully implemented. Since IRS provided us the IRM procedures after the end of our fiscal year 2019 audit, we will evaluate IRS's implementation of the established procedures during our fiscal year 2020 audit.

Recommendation: The Acting Commissioner of Internal Revenue should ensure that the appropriate IRS officials develop and implement policies in the IRM for conducting and monitoring the All Events History Report review. These policies should include or be accompanied by procedures for IRS management responsible for establishing policies related to safeguarding controls to (1) periodically monitor the results of the review and (2) reasonably assure that corrective actions for all identified deficiencies are tracked until fully implemented. (Recommendation 18-05)

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: In September 2019, IRS notified stakeholders of the added procedures to the Internal Revenue Manual (IRM) for conducting the All Events History Report reviews, including developing and monitoring corrective actions for deficiencies until fully implemented. Since IRS provided us the IRM procedures after the end of our fiscal year 2019 audit, we will evaluate IRS's implementation of the established procedures during our fiscal year 2020 audit.

Recommendation: The Secretary of the Treasury should direct the Fiscal Assistant Secretary, working in coordination with the Controller of OMB, to improve corrective action plans for (1) treaties and international agreements, (2) additional audit procedures for intragovernmental activity and balances, and (3) the Reconciliation Statements so that they include sufficient information to address the control deficiencies in these areas effectively.

Agency: Department of the Treasury
Status: Open
Priority recommendation

Comments: As of the completion of our fiscal year 2019 audit of the consolidated financial statements of the U.S. government (CFS), we determined that this recommendation remained open. Treasury believes that its current remediation plan, including its various corrective action plans (CAPs), is comprehensive, appropriate, and effective, with robust and ongoing monitoring processes in place. However, we continue to note that the CAPs in these three areas do not include sufficient steps to effectively address related control deficiencies involving processes used to prepare the CFS. We will follow-up on progress made by Treasury and OMB as part of our fiscal year 2020 CFS audit.

Recommendation: The IRS Commissioner should direct the appropriate IRS officials to strengthen the process for reasonably assuring that the Internal Revenue Manual (IRM) is reviewed annually to align with the current control procedures and guidance being implemented by agency personnel. This should include a mechanism for reasonably assuring that program owner directors (1) review their respective program control activities and related guidance annually and timely update the IRM as needed, (2) document their reviews, and (3) utilize interim guidance and supplemental guidance correctly for their intended purposes.

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: IRS's actions to address this recommendation are ongoing. During fiscal year 2018, IRS created an annual Internal Revenue Manual (IRM) review and certification requirement to reasonably assure that all IRM sections align with the current control procedures and guidance that IRS personnel are implementing. In addition, the Small Business/Self-Employed (SB/SE) and Tax Exempt & Government Entities (TE/GE) organizations developed action plans to achieve substantial compliance with this requirement. During fiscal year 2019, the SB/SE organization completed its action plan; however, IRS officials stated that the TE/GE organization will complete its action plan during fiscal year 2020. Further, in fiscal year 2019, the Large Business & International organization reviewed and analyzed the results of its involvement in the annual IRM certification process. Based on the results of its analysis, the organization developed an action plan to achieve substantial compliance with the IRM review and certification requirement, which IRS officials stated it will complete by December 2021.

Recommendation: The Secretary of the Army should direct the Accountability and Audit Readiness Directorate under the Assistant Secretary of the Army, Financial Management and Comptroller, to enhance the directorate's policies and procedures for (1) tracking and prioritizing all financial management-related audit findings and recommendations under its purview and (2) developing and monitoring CAPs for all such recommendations so that they include sufficient details, such as the criteria used to prioritize the CAPs, the recommended CAP elements, and the process for monitoring and documenting the progress and status of CAPs.

Agency: Department of Defense: Department of the Army
Status: Open
Priority recommendation

Comments: The Army concurred with this recommendation. The Army stated that the Accountability and Audit Readiness Directorate has completed actions to enhance its current standard operating procedures to include (1) updating its corrective action plan (CAP) database and reporting tool, (2) documenting its reporting procedures, and (3) updating its CAP template to include additional elements recommended by the Implementation Guide for OMB Circular A-123. In addition, the Army stated that its policies and procedures include steps to incorporate external financial management-related audit findings assigned to the Accountability and Audit Readiness Directorate by the Internal Review Directorate and that the existing process the Army uses to prioritize findings and the related CAPs and to monitor the progress and status of CAPs has been documented. We reviewed Army's documentation that was provided in January 2020. Army's documentation did not show that it has a process for ensuring that all financial management related findings and recommendations are identified and tracked. To implement this recommendations Army needs to enhance their policies and procedures related to tracking and monitoring the status of these audit findings.

Recommendation: The Secretary of the Air Force should design and document a comprehensive process to ensure that the complete universe of all financial management-related findings and recommendations from all audit sources is identified and tracked.

Agency: Department of Defense: Department of the Air Force
Status: Open
Priority recommendation

Comments: The Air Force concurred with this recommendation. In January 2018, the Air Force stated that it continues to develop a process for identifying and tracking financial management-related findings and recommendations from all audit sources by updating its process guidance. In August 2019, we received draft guidance that Air Force is developing as guidance and procedures for a universe of financial management-related findings and recommendations. In January 2020, we also received a list of the Air Force deficiencies being tracked in the Office of the Under Secretary of Defense (Comptroller) (OUSD(C)) database. After assessing the provided documentation, we found that the draft does not include procedures for identifying GAO, DODOIG, and Air Force Audit Agency (AFAA) findings and the database did not include deficiencies identified by those external auditors. As a result of our review of the documentation provided, we determined that the actions taken were not sufficient to close the recommendation.

Recommendation: The Secretary of the Air Force should update the Air Force's written policies and procedures for prioritizing financial management-related audit findings and recommendations from all audit sources and for developing and monitoring CAPs so that they include sufficient details. These procedures should include the following details: (1) The process to be followed for prioritizing the financial management-related findings and recommendations from audit sources. (2) The guidance for developing CAPs for all financial management-related audit findings and recommendations from all audit sources to include complete details, including the elements recommended by the Implementation Guide for OMB Circular A-123. (3) The process for monitoring the status of the CAPs for all financial management-related audit findings and recommendations from all audit sources, including the documentation to support any corrective actions taken, as recommended by the Implementation Guide for OMB Circular A-123.

Agency: Department of Defense: Department of the Air Force
Status: Open
Priority recommendation

Comments: The Air Force concurred with this recommendation. In January 2018, the Air Force stated that its Air Force Deficiency Remediation Tracking processes and guides were being refined. In December 2019, Air Force provided a document titled "NFR Prioritization Process." We found that this document included Air Force's priority categories. However, the document does not include information on determining the priority level or applying the priority levels when addressing the deficiencies. We also received a copy of Air Force's guide for the Corrective Action Plan (CAP) process dated July 2019. We found that this guide does not fully incorporate CAP development for deficiencies from all sources. Additionally, the guide does not provide information on the process for (1) determining resources and other requirements for remediating the deficiency, (2) conducting a cost benefit analysis, and (3) developing criteria for validating that the deficiency has been remediated. The guide also includes a template for conducting a root cause analysis. However, the instructions for conducting a root cause analysis are somewhat limited for determining the initial cause or underlying reason for the deficiency. Per the guide, the Air Force uses the Office of the Under Secretary of Defense (Comptroller) (OUSD(C)) database to monitor and report on Air Force's deficiencies and remediation CAP status. We obtained a listing of the NFRs and related CAPS in the database as of December 2019. We found that deficiencies from all audit sources were not included in the listing, only the independent public accountant's NFRs. The results of our review of a limited number of CAPs indicate that Air Force staff does not always comply with the Air Force's CAP requirements. As a result of our assessment of the Air Force documentation, we determined that the actions taken were not sufficient to close the recommendation.

Recommendation: To improve DOD management's process for monitoring the military services' audit remediation efforts and to provide timely and useful information to stakeholders as needed, the Secretary of Defense should direct the Secretary of the Army, the Secretary of the Navy, and the Secretary of the Air Force to prepare and submit to the Under Secretary of Defense (Comptroller), on at least a bimonthly basis for availability at the FIAR Governance Board meetings, a summary of key information included in the CAPs that at a minimum contains the data elements recommended by the Implementation Guide for OMB Circular A-123 for each CAP related to critical capabilities for achieving audit readiness.

Agency: Department of Defense
Status: Open
Priority recommendation

Comments: DOD concurred with this recommendation. DOD stated that it solicits input on a bi-monthly basis, on critical capability corrective action plans (CAPs) at a summary level. This information is provided routinely at regularly scheduled FIAR Governance Board meetings. DOD also stated that an updated notice of finding and recommendation (NFR) form template is being developed and will be provided to the military services to use for reporting this information so that it will include the recommended standard data elements outlined in OMB Circular A-123 to provide greater transparency into the nature of remediation plans. DOD also stated that FIAR Guidance will be updated to explicitly state that military services should include the OMB recommended standard data elements in CAPs. To implement this recommendation, DOD needs to provide documentation that shows that the military services are able to provide a summary of key information in the corrective action plans that at a minimum contains data elements recommended by the Implementation Guide for OMB Circular A-123. .

Recommendation: To reasonably assure that DOD management and external stakeholders have a comprehensive picture of the status of corrective actions needed for audit readiness throughout the department, the Secretary of Defense should direct the Under Secretary of Defense (Comptroller) to prepare a consolidated CAP management summary on a bimonthly basis that includes the data elements referred to above on the status of all CAPs related to critical capabilities for the military services and for the service providers and other defense organizations.

Agency: Department of Defense
Status: Open
Priority recommendation

Comments: DOD partially concurred with this recommendation. According to DOD, the military services already provide summary-level updates on their critical capability corrective action plans (CAPs) at FIAR Governance Board meetings. It also stated that the template that is used to present CAPs to the FIAR Governance Board meetings at the summary level has been updated to align CAPs to critical capabilities. DOD still needs to address how all of the data elements from the Implementation Guide for OMB Circular A-123 will be summarized or otherwise reported for all CAPs pertaining to critical capabilities across the Department. In addition, DOD stated that because the Under Secretary of Defense (Comptroller) takes responsibility for maintaining, monitoring, and reporting on the status of CAPs for the service providers and other defense organizations and of DOD-wide issues, the Comptroller will also summarize this information. However, DOD has not clarified what information from the military services will be summarized. To implement this recommendation, DOD needs to provide documentation that shows the Comptroller has prepared a consolidated CAP management summary on a bimonthly basis.

Recommendation: To improve the Navy's implementation of the FIAR Guidance for its General Fund FBWT FIP and facilitate efforts to achieve SBR auditability, the Secretary of the Navy should direct the Assistant Secretary of the Navy, Financial Management and Comptroller, to prepare a level I quantitative drilldown in accordance with the FIAR Guidance.

Agency: Department of Defense: Department of the Navy
Status: Open

Comments: The Navy concurred with this recommendation and stated that it has actions planned, taken, or under way to prepare a quantitative drilldown. In September 2017, Navy provided a listing of certain systems (DCAS, GLs, DDRS-B, and DDRS-AFS) it considered as Level 1 assessable units. However, the listing did not include a drilldown from the financial statement amounts through DDRS-AFS, DDRS-B, and DCAS to the receipt and disbursement source systems. In July 2020, Navy officials stated that Navy is implementing a new system that will enable them to complete a quantitative drill down for its Fund Balance with Treasury (FBWT). The new system is not expected to be fully implemented until March 2021. In the interim, certain FBWT reconciliations are performed at DFAS, that may provide a drilldown capability of FBWT as reported in financial statements to the applicable general ledger amounts.

Recommendation: To improve the Navy's implementation of the FIAR Guidance for its General Fund FBWT FIP and facilitate efforts to achieve SBR auditability, the Secretary of the Navy should direct the Assistant Secretary of the Navy, Financial Management and Comptroller, to prioritize audit readiness efforts for the key FBWT systems, prepare an audit strategy that identifies for each system (1) the Navy's plan for assessing the system to gain assurance that the system can be relied on; (2) the assessment types, including prioritizing the assessments based on qualitative and quantitative factors for each system; and (3) planned start and completion dates of these assessments for each system.

Agency: Department of Defense: Department of the Navy
Status: Open

Comments: The Navy concurred with this recommendation and stated that it has actions planned, taken, or under way to prioritize audit readiness efforts for key Fund Balance with Treasury (FBWT) systems. In September 2017, Navy provided documentation for three systems, but this documentation did not address corrective actions for ineffective controls and the expected completion dates. Further, during our audit, Navy provided a list of 22 relevant systems. In July 2020, Navy officials stated that they are preparing an audit strategy for each system, and documenting control activities and computer controls for significant systems. We will continue to follow-up on the status of this recommendation.

Recommendation: To improve the Navy's implementation of the FIAR Guidance for its General Fund FBWT FIP and facilitate efforts to achieve SBR auditability, the Secretary of the Navy should direct the Assistant Secretary of the Navy, Financial Management and Comptroller, to prepare, in accordance with FIAR Guidance, the documentation of control activities and information technology general computer controls for significant systems; system certifications or accreditations; system, end user, and systems documentation locations; and hardware, software, and interfaces.

Agency: Department of Defense: Department of the Navy
Status: Open

Comments: The Navy concurred with this recommendation and stated that it had actions planned, taken, or under way to document control activities, information technology general computer controls for significant systems, systems documentation locations, and hardware, software, and interfaces. In September 2017, Navy provided documentation for 3 systems, but the documentation did not include system certifications or accreditations; system, end user, and systems documentation locations; and hardware, software, and interfaces. Further, during our audit, Navy provided a list of 22 relevant systems. In July 2020, a Navy official told us that they are preparing an audit strategy for each system, and documenting control activities and computer controls for significant systems. We will continue to monitor Navy's progress addressing this recommendation.

Recommendation: To improve the Navy's implementation of the FIAR Guidance for its General Fund FBWT FIP and facilitate efforts to achieve SBR auditability, the Secretary of the Navy should direct the Assistant Secretary of the Navy, Financial Management and Comptroller, to prepare an internal control assessment document for each assessable unit, summarizing control activities that are appropriately designed and in place.

Agency: Department of Defense: Department of the Navy
Status: Open

Comments: The Navy concurred with this recommendation and stated that it had actions planned, taken, or under way to prepare an internal control assessment document. In September 2017, Navy provided support for actions taken to address this recommendation. However, the documentation provided did not summarize controls by assessable unit (DCAS, DDRS-B, or systems). Instead controls were listed by function (Treasury Reporting, Audit Readiness, and Departmental Reporting). In July 2020, a Navy official stated that documentation of overall Fund Balance with Treasury (FBWT) controls is in process and they are finalizing the Risk Control Matrix for FBWT to include controls at DFAS and at Treasury. The Rick Control Matrix is estimated to be completed by the end of August 2020. We will continue to monitor the progress in addressing this recommendation.

Recommendation: To provide reasonable assurance that the property, equipment, and software transactions are properly tracked and capitalized or expensed as appropriate, the Director of CFPB should direct the program offices to require vendors to provide detailed invoices with costs broken out by project.

Agency: Consumer Financial Protection Bureau
Status: Open

Comments: During our fiscal year 2019 audit, we continued to find control deficiencies over CFPB's accounting for its property, equipment, and software. CFPB was still in the process of working with its Office of Procurement and program offices to require more detailed invoices with costs broken out by project. We will continue to evaluate CFPB's actions to address this recommendation during our fiscal year 2020 financial statement audit.

Recommendation: In addition to implementing our previous recommendations, to more effectively implement security-related policies and plans, the Commissioner of Internal Revenue should update system and application audit plans based on the current version of referenced policies and guidelines and when significant changes are made to a system or application.

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: During GAO's audit of IRS' FY 2019 financial statements, IRS indicated that it had not yet implemented this recommendation. When the agency indicates that it has implemented this recommendation, we will review its actions.

Recommendation: To improve the consistency and completeness of Amtrak's financial reporting and to provide Congress with accurate information to make funding decisions, the President of Amtrak should ensure that Amtrak's depreciation expenses are appropriately allocated to its lines of business once the underlying capital asset data are determined reliable.

Agency: National Railroad Passenger Corporation
Status: Open

Comments: As of April 2020, Amtrak had not allocated its depreciation costs to its lines of business, as we recommended. In 2019, Amtrak stated that federal law required Amtrak to allocate and report its capital spending by line of business. Amtrak further stated that depreciation expense is a good proxy for capital spending and that the changed reporting requirements eliminated the need to report depreciation by line of business. In addition, although Amtrak's external auditor did not find any material weaknesses or significant deficiencies in Amtrak's fiscal year 2019 audited financial statement-the most recent available-those statements do not allocate Amtrak's depreciation costs to its various business lines. We will update this recommendation's status with any new information from Amtrak.

Recommendation: In addition, to better inform congressional decision making regarding the funding of Northeast Corridor infrastructure improvements, the Northeast Corridor Commission should work with its members to establish criteria for its members to use in selecting and prioritizing capital projects to be included in future editions of its 5-year capital plan.

Agency: Northeast Corridor Commission
Status: Open

Comments: As of April 2020, the Northeast Corridor (NEC) Commission and its members had yet to establish criteria for selecting and prioritizing capital projects in its 5-year capital plan. The Commission staff told GAO that it had developed potential criteria for selecting projects for both regional and NEC-wide priorities to be included the Northeast Corridor Capital Investment Plan, Fiscal Years 2020 - 2024, published in April 2019 and updated in December 2019. However, those potential criteria were not formally adopted by the Commission members. Specifically, the Commission's proposed criteria for selecting NEC-wide priorities included projects that would prevent the potential severing of the Northeast Corridor and advance state-of-good repair. Proposed criteria for regional priorities included projects that would increase train capacity and improve passenger access to rail services. While the proposed criteria were not used to select or prioritize projects in the Capital Investment Plan, Fiscal Years 2020 - 2024, the plan presented the proposed criteria as "benefits" for the projects in that plan. While this information may be helpful to stakeholders in understanding some of the rationale for the inclusion of projects in the plan, it does not demonstrate that the Commission and its members have established formal criteria for selecting and prioritizing projects, as GAO recommended. GAO will continue to monitor the Commission's progress in addressing this recommendation.

Recommendation: To reduce the cost of the crop insurance program and achieve budgetary savings for deficit reduction or other purposes, Congress should consider reducing premium subsidies for the highest income participants.

Agency: Congress
Status: Open

Comments: As of May 2020, Congress has not acted on this matter.

Recommendation: The Secretary of the Treasury should direct the Fiscal Assistant Secretary, working in coordination with the Controller of OMB, to establish and implement policies and procedures for accounting for and reporting all significant General Fund activity and balances, obtaining assurance on the reliability of the amounts, and reconciling the activity and balances between the General Fund and federal entities.

Agency: Department of the Treasury
Status: Open
Priority recommendation

Comments: As of the completion of our fiscal year 2019 audit of the consolidated financial statements of the U.S. government (CFS), this recommendation remained open. Over the past few years, Treasury has made progress by (1) improving the accounting for and reporting of General Fund transactions and balances, (2) working to resolve significant differences between the General Fund and federal entity trading partners, and (3) including differences involving General Fund activity and balances in the quarterly scorecard process. However, significant differences between the General Fund and federal entity trading partners existed as of the end of fiscal year 2019. Also, Treasury continues to work on obtaining audit assurance on the activity and balances. We will follow-up on progress made by Treasury and OMB as part of our fiscal year 2020 CFS audit.

Recommendation: The Secretary of the Treasury should direct the Fiscal Assistant Secretary, working in coordination with the Controller of OMB, to establish a formalized process to require the performance of additional audit procedures specifically focused on intragovernmental activity and balances between federal entities to provide increased audit assurance over the reliability of such information.

Agency: Department of the Treasury
Status: Open
Priority recommendation

Comments: As of the completion of our fiscal year 2019 audit of the consolidated financial statements of the U.S. government (CFS), this recommendation remained open. Treasury did not perform corrective actions in FY 2019 to address this recommendation. We will follow-up on progress made by Treasury and OMB as part of our fiscal year 2020 CFS audit.

Recommendation: If Congress agrees that significant paid preparer errors exist, it should consider legislation granting IRS the authority to regulate paid tax preparers.

Agency: Congress
Status: Open

Comments: Multiple bills have been introduced in the Congress that would authorize the Department of Treasury to regulate paid tax preparers, as GAO recommended in April 2014. The most recent bills include: H.R. 3157, H.R. 3330, S. 1192, and Section 5 of S. 1138. As of August 2020, no action has been taken on any of these bills. In addition, multiple other bills were introduced in both the House and Senate between 2014 and 2018 to regulate paid tax preparers. GAO testified on October 1, 2015 on improper payments and the tax gap before Senate Finance and on December 10, 2015 on GAO recommendations before the Subcommittee on Regulatory Affairs and Federal Management, Committee on Homeland Security and Governmental Affairs, US Senate. Both hearings increased attention to GAO's matter to Congress that tax preparers be regulated. Paid preparer regulation may increase the accuracy of tax returns and potentially reduce the tax gap.

Recommendation: To further improve agency controls that help prevent payments to participants whose incomes exceed eligibility limits, the Secretary of Agriculture should direct the Administrator of FSA to implement a process to verify that accountants' and attorneys' statements accurately reflect participants' incomes as reported on income tax returns and supporting documentation or other equivalent documents.

Agency: Department of Agriculture
Status: Open
Priority recommendation

Comments: The U.S. Department of Agriculture agreed with this recommendation at the time of our report but, as of April 2020, has not acted to implement it because of the sensitive nature of questioning accountants' and attorneys' professional judgment. However, we believe doing so would reduce the potential for improper payments supported by taxpayers and would be an appropriate action for the agency to take.

Recommendation: To improve the reliability of the information presented in the CFS budget statements, the Secretary of the Treasury should direct the Fiscal Assistant Secretary, working in coordination with the Controller of OMB's Office of Federal Financial Management, to establish and implement effective procedures for reporting amounts in the CFS budget statements that are fully consistent with the underlying information in significant federal entities' audited financial statements and other financial data.

Agency: Department of the Treasury
Status: Open
Priority recommendation

Comments: As of the completion of our fiscal year 2019 audit of the consolidated financial statements of the U.S. government (CFS), this recommendation remained open. Treasury continued to develop its budget deficit/surplus and cash reconciliation procedures. Specifically, Treasury performed a preliminary analysis on several federal entities' implementation of the new Statement of Federal Financial Accounting Standards No. 53, Budget and Accrual Reconciliation (BAR), and noted inconsistencies in the way each entity populated line items in the BAR. Treasury and OMB provided additional guidance for the BAR in OMB Circular No. A-136 and on the Treasury U.S. Standard General Ledger website, including a BAR crosswalk template. However, additional work is needed to reconcile line items to audited federal entity financial statements. We will follow-up on progress made by Treasury and OMB as part of our fiscal year 2020 CFS audit.

Recommendation: To improve the reliability of the information presented in the CFS budget statements, the Secretary of the Treasury should direct the Fiscal Assistant Secretary, working in coordination with the Controller of OMB's Office of Federal Financial Management, to establish and implement effective procedures for identifying and reporting all items needed to prepare the CFS budget statements.

Agency: Department of the Treasury
Status: Open
Priority recommendation

Comments: As of the completion of our fiscal year 2019 audit of the consolidated financial statements of the U.S. government (CFS), this recommendation remained open. Treasury continued to make improvements in fiscal year 2019 by implementing procedures, publishing guidance, and developing new transaction codes to improve the accounting for and reporting of General Fund transactions and balances that Treasury uses to compute the budget deficit reported in the consolidated financial statements. However, additional work is needed in determining the appropriate presentation for the reconciling items, which could affect the line items included. We will follow-up on progress made by Treasury and OMB as part of our fiscal year 2020 CFS audit.

Recommendation: The Acting Commissioner of Internal Revenue should direct the appropriate IRS officials to perform a risk assessment to determine the appropriate level of Integrated Data Retrieval System (IDRS) access that should be granted to employee groups that handle hard-copy taxpayer receipts and related sensitive taxpayer information as part of their job responsibilities.

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: IRS's actions to address this recommendation are ongoing. In October 2019, the functions within the Small Business/Self-Employed organization completed risk assessments to determine the appropriate level of Integrated Data Retrieval System (IDRS) access that should be granted to the employees who handle hard-copy taxpayer receipts and related sensitive taxpayer information as part of their job responsibilities. In addition, IRS officials stated that during fiscal year 2020, the Taxpayer Advocate Service organization, in coordination with the Information Technology organization, as necessary, will complete a risk assessment of all employee groups that handle hard-copy taxpayer receipts and related sensitive taxpayer information to determine the most appropriate level of IDRS access.

Recommendation: The Acting Commissioner of Internal Revenue should direct the appropriate IRS officials to, based on the results of the risk assessment, update the Internal Revenue Manual (IRM) accordingly to specify the appropriate level of IDRS access that should be allowed for (1) remittance perfection technicians and (2) all other employee groups with IDRS access that handle hard-copy taxpayer receipts and related sensitive information as part of their job responsibilities.

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: IRS's actions to address this recommendation are ongoing. IRS officials stated that by October 2020, the Small Business/Self-Employed, Taxpayer Advocate Service, and Tax Exempt & Government Entities organizations will work with the Information Technology organization, as necessary, to ensure that the applicable Internal Revenue Manual section(s) are revised for any policy changes on (1) risk mitigation, including specifying the appropriate level of Integrated Data Retrieval System access that should be allowed and (2) risk acceptance for affected employee groups, as needed.

Recommendation: The Acting Commissioner of Internal Revenue should direct the appropriate IRS officials to establish procedures to implement the updated IRM, including required steps to follow to prevent (1) remittance perfection technicians and (2) all other employee groups that handle hard-copy taxpayer receipts and related sensitive information as part of their job responsibilities from gaining access to command codes not required as part of their designated job duties.

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: IRS's actions to address this recommendation are ongoing. IRS officials stated that by October 2020, the Small Business/Self-Employed, Taxpayer Advocate Service, and Tax Exempt & Government Entities organizations will work with the Information Technology organization, as necessary, to establish procedures to prevent affected employees from gaining access to command codes not required as part of their designated job duties, as needed.

Recommendation: The Commission should direct the appropriate officials to establish and implement written procedures for conducting all physical inventory counts of equipment. These procedures, at a minimum, should outline the processes for (1) planning and executing the physical inventory count and (2) analyzing and documenting the results.

Agency: American Battle Monuments Commission
Status: Open

Comments: During our audit of the American Battle Monuments Commission's (Commission) fiscal year 2011 financial statements, we found that the Commission had not performed independent physical inventory of equipment owned by the Commission at the various cemeteries across the world. We found that although the Commission had a policy to perform biennial physical inventory counts of all equipment over $500, this policy was not adhered to during fiscal year 2011. Further, the policy did not explain how to plan, execute, and analyze the results of an inventory count. As a result, we recommended that the Secretary of the Commission instruct the appropriate officials to establish and implement written procedures for conducting all physical inventory counts of equipment. These procedures, at a minimum, should outline the processes for (1) planning and executing the physical inventory count and (2) analyzing and documenting the results. During our follow-up, the Commission informed us that they plan to implement procedures to address this recommendation but have not dedicated resources to it yet. We will continue to follow-up on this recommendation.

Recommendation: The Commission should direct the appropriate officials to establish a mechanism to monitor implementation of existing Commission policy to perform biennial physical inventory counts of all items of equipment with an obligated balance of $500 or more.

Agency: American Battle Monuments Commission
Status: Open

Comments: During our audit of the American Battle Monuments Commission's (Commission) fiscal year 2011 financial statements, we found that the Commission had not performed independent physical inventory of equipment owned by the Commission at the various cemeteries across the world. We found that although the Commission had a policy to perform biennial physical inventory counts of all equipment over $500, this policy was not adhered to during fiscal year 2011. As a result, we recommended that the Secretary of the Commission direct the appropriate officials to establish a mechanism to monitor implementation of existing Commission policy to perform biennial physical inventory counts of all items of equipment with an obligated balance of $500 or more. During our fiscal year 2012 audit, we found that although the Commission had performed a comparison of the equipment on hand to the data recorded in SharePoint (document management web application to share documents internally), an independent physical inventory was not performed. We determined that the Commission had not established a mechanism for performing an inventory of assets. During our follow-up, the Commission informed us that they plan to implement procedures to address this recommendation but have not dedicated resources to it yet. We will continue to follow-up on this recommendation.

Recommendation: To reduce the varying interpretations of LRRA, which have led to uncertainty and disagreements among RRGs and state insurance regulators, and at the same time continue to facilitate the formation and efficient operation of RRGs, Congress may wish to consider clarifying certain LRRA provisions. For example, clarifying whether (1) RRG registration requirements beyond those currently specified in LRRA are permitted in nondomiciliary states and (2) fees in addition to premium and other taxes could be charged to RRGs by nondomiciliary states in which they operate. Congress may also wish to consider providing a more specific definition of the types of insurance coverage permitted under LRRA.

Agency: Congress
Status: Open

Comments: As of September 2020, Congress had not taken actions to clarify the provisions we had noted within the Liability Risk Retention Act as causing some uncertainty among risk retention groups and state insurance regulators.

Recommendation: To strengthen accountability and transparency in FHA's management of the Fund, Congress may wish to consider clarifying (1) the definition of the Fund's capital ratio--specifically, whether the denominator of the ratio was intended to be the amortized insurance-in-force; (2) the definition of the phrase "established target subsidy rate" used in HERA; and (3) the nature and extent of information that FHA should be reporting on subsidy rates pursuant to HERA, recognizing that subsidy rates are generally only reestimated once a year under current budget processes.

Agency: Congress
Status: Open

Comments: As of October 2019, Congress had not acted on this matter for consideration.

Recommendation: To improve compliance with shareholder basis rules, Congress may wish to require S corporations to calculate and report shareholder's stock and debt basis as completely as possible. S corporations would report the calculation on the Schedule K-1 and send it to shareholders as well as IRS. If Congress judges that stock purchase price information that is currently only available to shareholders should not be transmitted to the S corporation due to privacy concerns, an alternative is to require that S corporations report less complete basis calculations using information already available to the S corporation.

Agency: Congress
Status: Open

Comments: As of January 2020, Congress had not enacted legislation to require S corporations--a federal business type that provides certain tax benefits like passing income and losses to shareholders' individual returns-- to calculate and report shareholder's stock and debt basis as completely as possible and report the calculation to shareholders and IRS, as GAO suggested in December 2009.

Recommendation: In order to better assess whether changes are needed in the way IRS administers activities not engaged in for profit provisions, the Commissioner of Internal Revenue should take steps to estimate the extent of activities not engaged in for profit noncompliance from its ongoing research programs.

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: IRS agreed to research sole proprietor noncompliance, as GAO recommended in September 2009. It is focusing on those who improperly claim business losses (i.e., not profits). IRS's Office of Research, Analysis and Statistics is using the reporting compliance study of Form 1040 filers to gather the data on such noncompliant business losses. This research covered sampled tax returns filed for tax years 2009, 2010, and 2011 and used audits of the sampled tax returns that are filed for each tax year. In November 2016, IRS research officials provided the initial rough estimates of the percentage of disallowed losses and associated dollar amounts for all 3 tax years but as of December 2019, they had not yet indicated how these estimates helped IRS to understand the nature of the tax noncompliance. The officials cautioned that their ability to develop the estimates depends on the number of observations that can be applied from each tax year. This research, when completed, could help IRS to identify noncompliant sole proprietor issues and take action to reduce losses.

Recommendation: To simplify the burden that the corporate exemption places on payers to distinguish payees' business status and also provide greater information reporting, Congress may wish to consider requiring payers to report payments to corporations on the form 1099 MISC, as we previously suggested and as proposed in the Bush Administration's budget.

Agency: Congress
Status: Open

Comments: No legislative action has been taken, as of March 2020, to require payers engaged in a trade or business to report on payments to corporations for services, thereby reducing these payers' burden to determine which payments require reporting, as GAO recommended in January 2009. Reporting of third-party information is a powerful compliance tool, and eliminating the reporting exemption for payments to corporations would be a cost-effective way to improve voluntary compliance.

Recommendation: To gauge the extent of 1099-MISC payer noncompliance and its contribution to the tax gap, the Commissioner of Internal Revenue should, as part of future research studies, develop an estimate of 1099-MISC payer noncompliance.

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: According to IRS, developing such an estimate requires a multi-pronged approach and a large amount of coordinated effort. One prong is to determine the extent of filing compliance among employers. A second prong would determine the extent to which 1099-MISC payers properly report their payments. Starting with the Tax Year 2001 individual income tax reporting compliance study, the National Research Program (NRP) office has been collecting some data related to Form 1099-MISC compliance, from both the payer and payee perspectives. Additional data were generated by the NRP reporting compliance study for employment tax. As part of the NRP employment tax research, IRS examiners were to review taxpayers' Form 1099 filing compliance. Data collected from these studies should shed some light on whether employers are appropriately reporting required payments on Form 1099-MISC. As of March 2020, IRS had completed its preliminary analysis and expected to complete more comprehensive analysis of the NRP employment tax data by May 2020. GAO will continue to monitor IRS's progress.

Recommendation: To gauge the extent of 1099-MISC payer noncompliance and its contribution to the tax gap, the Commissioner of Internal Revenue should, as part of future research studies, determine the nature and characteristics of those payers that do not comply with 1099-MISC reporting requirements so that this information can be factored into an IRS-wide strategy for increasing 1099-MISC payer compliance.

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: IRS researchers collected data on 1099-MISC reporting as part of its National Research Program (NRP) study on employment taxes, a program that involved examinations of a sample of tax returns for tax years 2008 through 2010. As part of the NRP employment tax research, IRS examiners were to review taxpayers' Form 1099 filing compliance. Collecting data on this issue will enable IRS to study the nature and characteristics of payers that do not comply with 1099-MISC reporting requirements. As of March 2020, IRS had completed its preliminary analysis and expected to complete more comprehensive analysis of the NRP employment tax data by May 2020. GAO will continue to monitor IRS's progress.

Recommendation: To provide clarity for which taxpayers with rental real estate activity must report expense payments on information returns and to provide greater information reporting, Congress may wish to consider amending the Internal Revenue Code to make all taxpayers with rental real estate activity subject to the same information reporting requirements as other taxpayers operating a trade or business.

Agency: Congress
Status: Open

Comments: No legislative action had been taken, as of January 2020, to make owners of rental real estate subject to the same payment reporting requirements regardless of whether they engaged in a trade or business under current law, as GAO recommended in August 2008. Changing reporting requirements and holding taxpayers with rental real estate to the same filing requirements as taxpayers whose activities are considered a trade or business would provide clarity about who is required to file, which would improve tax compliance.

Recommendation: The Secretary of the Treasury should ensure that the tax gap strategy includes (1) a segment on improving sole proprietor compliance that is coordinated with broader tax gap reduction efforts and (2) specific proposals, such as the options we identified, that constitute an integrated package.

Agency: Department of the Treasury
Status: Open

Comments: As of January 2020, Treasury has taken no action to address this recommendation and has not provided GAO with plans to do so. Treasury's tax gap strategy does not cover sole proprietor compliance in detail while coordinating it with broader tax gap reduction efforts as GAO recommended in July 2007. In March 2016, Treasury officials reported to GAO that they have implemented or proposed several actions to address the tax gap among sole proprietors, such as requiring reporting on payment card payments and improved audit selection procedures for sole proprietors. However, GAO's July 2007 report noted there are many trade offs involved in various options for improving sole proprietor compliance. GAO recommended that Treasury's strategy for reducing the tax gap include a segment on sole proprietor compliance that is coordinated with broader tax gap reduction efforts.

Recommendation: The Secretary of the Treasury should direct the Fiscal Assistant Secretary, working in coordination with the Controller of OMB's Office of Federal Financial Management, to establish written policies and procedures to help ensure that major treaty and other international agreement information is properly identified and reported in the CFS. Specifically, these policies and procedures should require that agencies develop a detailed schedule of all major treaties and other international agreements that obligate the U.S. government to provide cash, goods, or services, or that create other financial arrangements that are contingent on the occurrence or nonoccurrence of future events (a starting point for compiling these data could be the State Department's Treaties in Force).

Agency: Department of the Treasury
Status: Open
Priority recommendation

Comments: As of the completion of our fiscal year 2019 audit of the consolidated financial statements of the U.S. government (CFS), this recommendation remained open. Treasury developed guidance and formed a working group along with State Department and other federal entity representatives in fiscal year 2019. The working group was established with the Chief Financial Officer Council (CFOC) for the purpose of developing a cost-effective solution to improve the accountability and ensure completeness in the reporting of treaties and other international agreements to address GAO's five long-standing open recommendations. We will follow-up on progress made by Treasury and OMB as part of our fiscal year 2020 CFS audit.

Recommendation: The Secretary of the Treasury should direct the Fiscal Assistant Secretary, working in coordination with the Controller of OMB's Office of Federal Financial Management, to establish written policies and procedures to help ensure that major treaty and other international agreement information is properly identified and reported in the CFS. Specifically, these policies and procedures should require that agencies classify all such scheduled major treaties and other international agreements as commitments or contingencies.

Agency: Department of the Treasury
Status: Open
Priority recommendation

Comments: As of the completion of our fiscal year 2019 audit of the consolidated financial statements of the U.S. government (CFS), this recommendation remained open. Treasury developed guidance and formed a working group along with State Department and other federal entity representatives in fiscal year 2019. The working group was established with the Chief Financial Officer Council (CFOC) for the purpose of developing a cost-effective solution to improve the accountability and ensure completeness in the reporting of treaties and other international agreements to address GAO's five long-standing open recommendations. We will follow-up on progress made by Treasury and OMB as part of our fiscal year 2020 CFS audit.

Recommendation: The Secretary of the Treasury should direct the Fiscal Assistant Secretary, working in coordination with the Controller of OMB's Office of Federal Financial Management, to establish written policies and procedures to help ensure that major treaty and other international agreement information is properly identified and reported in the CFS. Specifically, these policies and procedures should require that agencies disclose in the notes to the CFS amounts for major treaties and other international agreements that have a reasonably possible chance of resulting in a loss or claim as a contingency.

Agency: Department of the Treasury
Status: Open
Priority recommendation

Comments: As of the completion of our fiscal year 2019 audit of the consolidated financial statements of the U.S. government (CFS), this recommendation remained open. Treasury developed guidance and formed a working group along with State Department and other federal entity representatives in fiscal year 2019. The working group was established with the Chief Financial Officer Council (CFOC) for the purpose of developing a cost-effective solution to improve the accountability and ensure completeness in the reporting of treaties and other international agreements to address GAO's five long-standing open recommendations. We will follow-up on progress made by Treasury and OMB as part of our fiscal year 2020 CFS audit.

Recommendation: The Secretary of the Treasury should direct the Fiscal Assistant Secretary, working in coordination with the Controller of OMB's Office of Federal Financial Management, to establish written policies and procedures to help ensure that major treaty and other international agreement information is properly identified and reported in the CFS. Specifically, these policies and procedures should require that agencies disclose in the notes to the CFS amounts for major treaties and other international agreements that are classified as commitments and that may require measurable future financial obligations.

Agency: Department of the Treasury
Status: Open
Priority recommendation

Comments: As of the completion of our fiscal year 2019 audit of the consolidated financial statements of the U.S. government (CFS), this recommendation remained open. Treasury developed guidance and formed a working group along with State Department and other federal entity representatives in fiscal year 2019. The working group was established with the Chief Financial Officer Council (CFOC) for the purpose of developing a cost-effective solution to improve the accountability and ensure completeness in the reporting of treaties and other international agreements to address GAO's five long-standing open recommendations. We will follow-up on progress made by Treasury and OMB as part of our fiscal year 2020 CFS audit.

Recommendation: The Secretary of the Treasury should direct the Fiscal Assistant Secretary, working in coordination with the Controller of OMB's Office of Federal Financial Management, to establish written policies and procedures to help ensure that major treaty and other international agreement information is properly identified and reported in the CFS. Specifically, these policies and procedures should require that agencies take steps to prevent major treaties and other international agreements that are classified as remote from being recorded or disclosed as probable or reasonably possible in the CFS.

Agency: Department of the Treasury
Status: Open
Priority recommendation

Comments: As of the completion of our fiscal year 2019 audit of the consolidated financial statements of the U.S. government (CFS), this recommendation remained open. Treasury developed guidance and formed a working group along with State Department and other federal entity representatives in fiscal year 2019. The working group was established with the Chief Financial Officer Council (CFOC) for the purpose of developing a cost-effective solution to improve the accountability and ensure completeness in the reporting of treaties and other international agreements to address GAO's five long-standing open recommendations. We will follow-up on progress made by Treasury and OMB as part of our fiscal year 2020 CFS audit.