GAO: IRS lacks strong internal controls
GAO report on IRS financial audits, reports
Despite clean audits and steps forward in improving financial management, deficiencies in internal controls still plague the Internal Revenue Service, according to a Government Accountability Office report released June 6.
The GAO said at the beginning of the audit of IRS' fiscal 2005 financial statement, 84 financial management-related recommendations from prior audits remained open because the IRS had not adequately addressed them. During the audit, the GAO was able to close 34; however, the GAO made 22 new recommendations.
Through the analysis, the GAO found that 29 recommendations, or 40 percent of the open cases, related to the IRS' lack of effective controls over safeguarding and securing assets, the report states. To do so, the GAO recommends keeping physical control over vulnerable assets and controlling information processing. It also recommends restricting and making people accountable for resources and records.
In all, 26 recommendations centered on proper documenting and recording of transactions, and 17 regarded effective management review and oversight, according to the report.
Regarding information technology, the GAO closed out a recommendation about lockbox management after finding that the boxes’ guards were responsive to alarms, according to the report. The GAO also did not close an IT-related recommendation about appropriate employee cross-training. GAO auditors believe the IRS needs more people who are trained to extract files so the agency can continually develop reliable balances for financial reporting purposes.
“It is essential that [the recommendations] be fully addressed and resolved to strengthen IRS’ overall financial management and to assist it in achieving its goals and mission,” the report states.