The Accounts Management Program Has Annual Performance
Goals but Should Develop Long-Term Performance Goals
May 2005
Reference Number:
2005-40-079
This report has cleared the Treasury
Inspector General for Tax Administration disclosure review process and
information determined to be restricted from public release has been redacted
from this document.
May
6, 2005
MEMORANDUM FOR
COMMISSIONER, WAGE AND INVESTMENT DIVISION
FROM: Pamela J.
Gardiner /s/ Pamela J. Gardiner
Deputy Inspector General for
Audit
SUBJECT: Final Audit Report - The Accounts Management Program Has Annual Performance Goals but
Should Develop Long-Term Performance Goals (Audit # 200440037)
This
report presents the results of our review of the Accounts Management Program. The overall objective of this review was to determine
whether management policies and the purpose, strategies, and plans of the
Accounts Management Program were effectively designed to ensure the Program
meets the Internal Revenue Service’s (IRS) goal of improving customer service. We also determined whether the Accounts
Management Program is effectively designed to ensure it meets the requirements
of the Government Performance and Results Act (GPRA) of 1993. This review is included in our Fiscal Year (FY)
2004 Annual Audit Plan under the title Toll‑Free
Program Measures and Goals.
The IRS’ mission is to “provide
Although the Accounts Management
Program has a comprehensive strategic planning process, it does not currently
report long‑term performance goals that reflect the Program’s ability to provide top‑quality
customer service when responding to individual taxpayer inquiries
electronically through the Internet (via the IRS web site, IRS.gov), by
telephone, and through correspondence. Instead, the Accounts Management Program has
developed multiple annual goals and workload indicators that provide a sense of
how the Program is working. In addition,
the Accounts Management Program has developed a Concept of Operations that
outlines internal goals for the organization.
However, these internal goals are not provided to outside stakeholders
for use in evaluating whether the Program is operating effectively and
efficiently. We recommended the
Commissioner, W&I Division, develop long-term goals that define the level
of performance with set time periods to be achieved by the Accounts Management
Program.
Management’s Response: IRS management
agrees in concept with our recommendation; however, they state that the W&I
Division Accounts Management Program is not a budget-level program as defined
and is, therefore, not required to establish long-term goals. The
Accounts Management Program is represented by the Assistance budget activity.
However, the W&I Division is working with the Chief Financial
Officer to establish appropriate long-term goals for the Assistance budget
activity. Included for the Accounts
Management Program are targets for achievement in both Level of Service and
Accuracy of Tax Law and Accounts inquiries.
The long-term goals to be used beginning in FY 2006 will be reflected in
the IRS’ FY 2007 budget submission scheduled for delivery to the Department of
the Treasury in June 2005. Management’s
complete response to the draft report is included as Appendix VI.
Office of Audit
Comment: We are pleased that IRS management agrees in
concept with our recommendation and the W&I Division is partnering with the
Chief Financial Officer in establishing meaningful long-term goals aligned with
budget activities. We believe the
Accounts Management Program is a major function and operation of the IRS as
defined by the GPRA. As such, it is
responsible for achieving performance goals and objectives in providing key
taxpayer services and should be accountable for establishing long-term
goals.
Copies of this
report are also being sent to the IRS managers affected by the report
recommendation. Please contact me at
(202) 622-6510 if you have questions or Michael R. Phillips, Assistant
Inspector General for Audit (Wage and Investment Income Programs), at (202)
927-0597.
Long-Term Performance Goals Are Needed
Appendix
I – Detailed Objective, Scope, and Methodology
Appendix
II – Major Contributors to This Report
Appendix
III – Report Distribution List
Appendix IV
– Accounts Management Program Organization Chart Fiscal Year 2004
Appendix V –
Accounts Management Program Performance Measures
Appendix VI
– Management’s Response to the Draft Report
Taxpayers are responsible for filing tax returns that report the full amount of taxes owed and for paying any taxes due. The Internal Revenue Service’s (IRS) mission is to “provide America’s taxpayers top quality service by helping them understand and meet their tax responsibilities and by applying the tax law with integrity and fairness to all.”
The IRS accomplishes this, for example, by responding to taxpayers’ questions through
electronic media, telephone, and correspondence. Taxpayers can access the IRS web site, IRS.gov,
to review information about tax law and determine if they qualify for certain
deductions or credits. They can call the
IRS toll-free telephone numbers to ask IRS employees tax law questions or ask how
or where to file their tax returns. When
trying to resolve account-related issues, taxpayers can call the IRS toll-free telephone
numbers or write to the IRS. When
taxpayers understand their tax obligations and are given tools that make it
easier to meet their obligations, they are more likely to file their taxes and comply
with the law.
Although accessing the IRS web site is the single most frequent means of contact with the IRS for taxpayers, the second most frequent means is calling the IRS toll-free telephone assistance numbers. For Fiscal Year (FY) 2004, IRS.gov received 152.7 million visits and assistors answered over 44.6 million toll‑free telephone calls. In addition, the IRS responded to and resolved 10.3 million taxpayer written account inquiries. Figure 1 shows the number of services provided by the IRS through its various assistance channels.
Figure 1:
Services Provided by the IRS in FY 2004
Figure 1 was removed due to its size.
To see Figure 1, please go to the Adobe PDF version of the report on the
TIGTA Public Web Page.
The IRS Wage and Investment (W&I) Division is responsible for serving over 120 million individual taxpayers. W&I Division employees in the Accounts Management Program of the Customer Account Services (CAS) organization are responsible for responding to individual taxpayer inquiries through IRS.gov, by telephone, and through correspondence. Accounts Management Program employees are located in 17 sites across the nation. FY 2004 resource levels for the Program were $459.7 million, including approximately 6,861 permanent employees and 3,048 seasonal employees. For FY 2005, resource levels are estimated at $477.5 million. See Appendix IV for an organization chart of the Accounts Management Program.
The Government Performance and Results Act of 1993 (GPRA) was established to improve the confidence of the American people in the capability of the Federal Government by holding Federal agencies accountable for achieving program results. This involved the initiation of program performance reform by setting program goals, measuring program performance against those goals, and reporting publicly on the progress. In addition, the Act promotes a focus on results, service quality, and customer satisfaction and requires Federal Government managers to plan for meeting program objectives and providing information about program results and service quality. In essence, the GPRA required Federal Government agencies to establish a mission, goals, and performance measures and link goals to results.
The GPRA requires executive agencies to prepare multiyear strategic plans, annual performance plans, and annual performance reports on prior year accomplishments. Together, these elements create a recurring cycle of reporting, planning, and execution. Strategic plans have six basic requirements and are the starting point for setting goals and measuring progress toward achieving them. This review focused on the first two requirements as they relate to the W&I Division Accounts Management Program. Specifically, the strategic plan must contain:
· A comprehensive mission statement covering the major functions and operations of the agency.
· General goals and objectives, including outcome-related goals and objectives, for the major functions and operations of the agency.
The GPRA also has six basic requirements for annual performance plans. For this review, we focused on the first two requirements as they relate to the W&I Division Accounts Management Program. Specifically, the performance plan must:
· Establish performance goals to define the level of performance to be achieved by a program activity.
· Express such goals in an objective, quantifiable, and measurable form.
The President’s Management Agenda (PMA), announced in August 2001, was issued to build on the GPRA by providing for a systematic approach to accounting for performance when making budget decisions. The PMA is a strategy for improving the management and performance of the Federal Government and stresses the need to provide a greater focus on performance management. It is focused on performance-based budgeting, which means money is allocated based on results rather than perceived needs. The PMA set five Government-wide initiatives. Two initiatives that relate to this report are Improve Financial Performance and Budget and Performance Integration.
The Office of Management and Budget (OMB) assists the President in the development and implementation of budget, program, management, and regulatory policies. The OMB provides guidance to Federal Government agencies in meeting the GPRA and PMA requirements. Program performance guidance includes descriptions, overviews, and definitions of strategic plans, annual program performance reports, and performance budgets. The OMB provides the following definitions that pertain specifically to this review:
· Performance Goals – the target levels of performance expressed as a measurable objective, against which actual achievement can be compared. To be complete, performance goals should incorporate targets and time periods into performance measures.
· Performance Budget – a budget presentation that clearly links performance goals with costs for achieving a target level of performance. It links strategic goals with related long-term and annual performance goals with the costs of specific activities to influence the outcomes about which budget decisions are made.
This review was performed at the W&I Division
Headquarters in
As part of the W&I Division strategic planning process, the Accounts Management Program has a comprehensive annual strategic planning process to help ensure it manages resources and meets its annual performance goals. The Accounts Management Program’s mission, to provide top‑quality customer service by responding to taxpayers’ questions and helping them understand and meet their tax responsibilities, supports the IRS and W&I Division missions and appropriately covers the major functions and operations of the Program. In addition, the Accounts Management Program has established annual goals and objectives to ensure planning and management of the Program are focused.
The CAS organization’s strategy and planning includes the Accounts Management Program and is rolled into the W&I Division’s strategy and program plan. The Account Management Program’s mission appropriately focuses on this strategy. Recent priorities have appropriately included strategies to reduce W&I Division taxpayer burden by improving quality and efficiency. Operational priorities included:
· Providing corporate workload management for paper correspondence to increase timeliness and quality of responses through planned correspondence imaging technology.
· Identifying less-costly methods of service delivery to reduce customer dependence on traditional methods of delivery, improving quality, and using resources more efficiently.
· Developing and implementing improved tools for more efficient and accurate delivery of customer services.
To help ensure its strategic planning efforts are successful, the Accounts Management Program adequately coordinates with other organizations in the W&I Division and with other IRS business units as appropriate. It also collaborates extensively with the Joint Operations Center (JOC) function to ensure resources are available and efficiently used. Yearly meetings are held with all managers to discuss the performance goals.
Program management has filtered its mission down to the front-line staff so the employees recognize the importance of their jobs in relation to the Accounts Management Program’s mission and the IRS’ overall goal of helping taxpayers understand and meet their tax obligations. For example, interviews with staff at one site showed that all employees interviewed could verbalize (paraphrase) the mission of the Accounts Management Program and explain how the work they do fits into that mission.
As part of the strategic planning process, CAS organization management has established short-term (annual) performance measures that gauge the Accounts Management Program’s activities and productivity. To monitor activity and production, the CAS organization and Accounts Management Program management analyze information related to volumes and quality of responses in the telephone operations and paper programs. For example:
· The percentage of correct responses provided by assistors to account-related and tax law telephone inquiries.
These are valid indicators or measures to help management set goals and determine whether resources are used properly or to gauge the activity or productivity (the output) of the Accounts Management Program. They are also intended to ensure consistency throughout the W&I Division. The measures ensure data are available to provide a basis for measuring and improving work products by identifying sources of error, identifying and analyzing trends, recommending and implementing corrective actions, and following up with reviews to ensure the corrective actions were effective.
In addition, specific performance goals are set for each Accounts Management Program call site based on these strategic planning efforts. For example, based on factors such as the number of employees and employee experience, 1 call site has a tax law customer accuracy goal of 83.6 percent, while another has a tax law customer accuracy rate of 81.8 percent. One campus/call site has an adjustments closure goal of 2,103 per Full-Time Equivalent (FTE), whereas another campus/call site’s goal is to close 2,694 adjustments per FTE.
In FY 2005, the W&I and Small Business/Self-Employed Divisions CAS organizations were consolidated. Although the FY 2005 measures will remain separate for the two organizations, W&I Division CAS management has already reviewed, combined, and updated the consolidated FY 2006 Accounts Management Program performance goals and measures.
The annual comprehensive and coordinated planning and monitoring efforts used by the W&I Division, CAS organization, and Accounts Management Program office ensure the Program addresses customer and employee needs, focuses on improving its overall operations, and prioritizes its limited resources.
The Accounts Management Program does not currently report long‑term
performance goals that reflect the Program’s ability to provide top‑quality customer service when
responding to individual taxpayer inquiries electronically through IRS.gov, by telephone,
and through correspondence. Instead, the Accounts Management Program has
developed multiple annual goals and workload indicators that provide a sense of
how the Program is working. In addition,
the Accounts Management Program has developed a Concept of Operations (CONOPS)
that outlines internal goals for the organization. However, these internal goals are not
provided to outside stakeholders for use in evaluating whether the Program is
operating effectively and efficiently.
The Accounts
Management Program has established annual measures and goals that are used for
GPRA reporting purposes. These performance
measures have included:
· Toll-Free Level of Service Rate.
· Assistor Calls Answered.
· Customer Accuracy Rates.
o Toll-Free Tax Law.
o Toll-Free Accounts.
· Customer Satisfaction Rates.
o Toll-Free.
o Customer Accounts Correspondence.
In FY 2004, the Accounts Management Program developed the outcome measure, Volume of Accounts Management Customer Contacts per Staff Year. This measure, once baselined, will provide the IRS an efficiency measure to determine if the Program’s activities achieve results without wasted resources, time, effort, or money. See Appendix V for details on these measures. In addition, as part of the IRS’ Balanced Measures, the Accounts Management Program measures and reports the Employee Satisfaction Rate. Data for this measure are obtained through surveys.
In 2002, the Government Accountability Office (GAO) reported the IRS does not report cost of service measures information. The IRS agreed and is in the process of developing a mechanism that will provide cost information for performance activities.
However, the Accounts Management Program is currently not reporting long-term goals externally. The Program uses long-term goals to project to FY 2010, adjusting the goals based on mathematical algorithms rather than on a determination or analysis of actions the Accounts Management Programs has taken or plans to take to provide top-quality service. However, the goals used for GPRA reporting purposes in its annual Performance and Accountability Report include only actual results for the 3 preceding fiscal years, planned and actual results for the current year being reported, and the following year’s planned target for the measure.
The OMB states that
long-term performance measures should include two or three specific, easily
understood outcome measures that directly and meaningfully support a program’s
purpose over a long period of time, usually 5 to 10 years. The Accounts Management Program
recognizes the need for long-term goals and measures. In the past, it has focused on annual goals
and measures while working toward developing long‑term measures and goals
through its CONOPS.
The CONOPS outlines the desired future state of the Accounts
Management Program and contains specific long‑term performance measures
that focus on outcomes and reflect the
purpose of the Program. Many of the
CONOPS measures and goals are dependent on new technology and processes being
implemented timely, including implementing new computer systems as part of the
IRS’ overall modernization efforts. In
addition, the CONOPS does not provide a link between the annual goals reported
for GPRA purposes and long‑term goals established in its vision.
Federal Government agencies are expected to identify high‑quality outcome measures and accurately monitor performance of programs. The GPRA and related OMB circulars require Federal Government agencies, as part of the strategic planning process, to develop general goals and objectives, including outcome‑related goals and objectives, for the major functions and operations of the agency. Agencies must develop goals and objectives that define the level of performance with set time periods to be achieved by a program activity. Those goals should be quantifiable and measurable unless authorized to be in an alternative form.
The IRS will not be able to meet the PMA goals for improving financial performance and integrating budgeting and performance. The PMA contains five Government‑wide and nine agency-specific goals to improve Federal Government management and deliver results that matter to the American people.
As a part of the PMA, the OMB assesses performance of
program activities, focusing on their contribution to an agency’s achievement
of its strategic and program performance goals.
The assessments help link performance and budget decisions. In the case of shared measures, each program
should be able to demonstrate how it contributes to the outcome or output
measured. Figure 2 shows the relationship of the GPRA,
the PMA, and the OMB to the Accounts Management Program.
Figure 2: Relationship
of the GPRA, the PMA, and the OMB to the Accounts Management Program
Figure 2 was removed due to its size.
To see Figure 2, please go to the Adobe PDF version of the report on the
TIGTA Public Web Page.
Yet the IRS has not established long‑term goals to reflect when the Program will achieve top-quality customer service and at what level the Program is deemed successful. Not reporting long-term goals impairs management’s and the Congress’ ability to make informed decisions related to the W&I Division’s Accounts Management Program resource levels.
The Commissioner, W&I Division, should:
1. Develop long-term goals that define the level of performance with set time periods to be achieved by the Accounts Management Program.
Management’s Response: IRS management agrees in concept with our recommendation; however, they state that the W&I Division Accounts Management Program is not a budget-level program as defined and is, therefore, not required to establish long-term goals. The Accounts Management Program is represented by the Assistance budget activity.
The W&I Division is working with the Chief Financial Officer to establish appropriate long-term goals for the Assistance budget activity. Included for the Accounts Management Program are targets for achievement in both Level of Service and Accuracy of Tax Law and Accounts inquiries.
The long-term goals to be used beginning in FY 2006 will be reflected in the IRS’ FY 2007 budget submission scheduled for delivery to the Department of the Treasury in June 2005.
Office of Audit Comment: We are pleased that IRS management agrees in
concept with our recommendation and the W&I Division is partnering in the
efforts led by the Chief Financial Officer in establishing meaningful long-term
goals aligned with budget activities. We
believe the Accounts Management Program is a major function and operation of
the IRS as defined by the GPRA. As such,
it is responsible for achieving performance goals and objectives in providing
key taxpayer services and should be accountable for establishing long-term
goals.
Appendix I
Detailed
Objective, Scope, and Methodology
The overall objective of this audit was to determine whether management policies and the purpose, strategies, and plans of the Accounts Management Program were effectively designed to ensure the Program meets the Internal Revenue Service’s (IRS) strategic goal of improving customer service. We also determined whether the Accounts Management Program is effectively designed to ensure it meets the requirements of the Government Performance and Results Act of 1993.
This review followed the Office of Management and Budget’s Performance Assessment Rating Tool,
Sections 1 and 2, which provide the information necessary to determine whether
a Federal Government program has laid a solid foundation to be successful in achieving
its goals and addressing its mission. To
accomplish our objective, we:
I. Determined whether the design and purpose for the Accounts Management Program was clear and properly aligned with the mission of the Wage and Investment (W&I) Division and the IRS.
A. Contacted the IRS National Headquarters Office of Research and the W&I Division Research Office to identify current and planned research being done that would affect the goals of the Accounts Management Program.
B. Determined whether the Accounts Management Program’s purpose was clear and addressed a specific interest, problem, or need.
1. Researched the IRS Internet web site; the W&I Division, Customer Account Services (CAS) organization, and Accounts Management Program Intranet web sites; and the Internal Revenue Manual to identify the Program’s mission.
2. Interviewed the W&I Division Directors for the CAS organization and the Accounts Management Program and the appropriate Program managers to determine their interpretations of the Program’s purpose and mission.
3. Interviewed selected Atlanta Campus Accounts Management Program management, Customer Service Representatives, and Tax Examiner Technicians to determine whether the Program mission had been communicated to the front-line staff and obtained their interpretations of the Program’s purpose and mission.
C. Evaluated whether the Accounts Management Program’s mission was logical.
II. Determined whether Accounts Management Program management had set valid annual and long-term goals that focus on outcomes and reflect the Program’s purpose.
A. Reviewed annual and long-term strategic plans for the Accounts Management Program to identify its goals.
B. Evaluated long-term goals to determine whether they had the following elements:
· Outcomes that focus on the mission and the likelihood of the mission to yield intended outcomes (increased customer service).
· Established baselines.
· Clear time periods.
· Clear targets.
· Efficiency goals.
C. Determined when and how short-term goals were established and how often these goals were adjusted/revised.
D. Evaluated short-term goals to determine whether they demonstrate progress toward achieving the long-term goals and the impact of the adjustment/revision on achieving long-term goals.
E. Conducted a walk-through of the Atlanta Campus Accounts Management Program to identify how telephone and correspondence responses to customer inquiries were processed and how these processes relate to the overall Program mission.
F. Obtained Accounts Management Program documentation to identify and quantify workload inventory volumes and the resources (budget) used to run the various Program activities.
G. Determined whether Accounts Management Program management collaborated and coordinated effectively with related programs (partners) that shared similar goals and objectives by interviewing the appropriate officials.
H.
Determined how each related program’s (partner’s)
individual measurable goals were consolidated to produce IRS (
I. Determined whether the Accounts Management Program worked with outside stakeholders in identifying its long-term goals.
J. Determined whether the Accounts Management Program had taken steps to address any strategic long-term planning deficiencies.
Appendix II
Major Contributors to This
Report
Michael R. Phillips, Assistant Inspector General for Audit (Wage and Investment Income Programs)
Augusta R.
Cook, Director
Paula W. Johnson,
Audit Manager
Lynn Faulkner, Lead
Auditor
Vacenessia Daniels Brown, Auditor
Jerry G. Douglas,
Auditor
Stephanie M. McFadden,
Auditor
Appendix III
Commissioner C
Office of the
Commissioner – Attn: Chief of Staff C
Deputy Commissioner for Operations Support OS
Deputy Commissioner for Services and Enforcement SE
Director, Office of Research, Analysis, and Statistics RAS
Chief Financial Officer OS:CFO
Deputy Commissioner, Wage and Investment Division SE:W
Associate Chief Financial Officer for Performance Budgeting OS:CFO:CPB
Director, Customer Account Services, Wage and Investment Division SE:W:CAS
Director, Research, Wage and Investment Division SE:W:S:R
Acting Director, Strategy and Finance, Wage and Investment Division SE:W:S
Acting Chief, Performance Improvement, Wage and Investment Division SE:W:S:PI
Chief, Planning and Analysis, Wage and Investment Division SE:W:S:PA
Director, Accounts Management, Wage and Investment Division SE:W:CAS:AM
Director, Planning and Performance Office OS:CFO:CPB:PP
Chief Counsel CC
National Taxpayer Advocate TA
Director, Office of Legislative Affairs CL:LA
Director, Office of
Program Evaluation and Risk Analysis
RAS:O
Office of
Management Controls OS:CFO:AR:M
Audit Liaisons:
GAO/TIGTA Liaison, Chief Financial Officer OS:CFO
Acting Senior Operations Advisor, Wage and Investment Division SE:W:S
Appendix IV
Accounts
Management Program Organization Chart
The chart was removed due to its
size. To see the chart, please go to the
Adobe PDF version of the report on the TIGTA Public Web Page.
Appendix V
Accounts Management
Program Performance Measures
The following narrative explains the types of performance measures used by the Internal Revenue Service (IRS) to evaluate program activities and examples of Fiscal Year (FY) 2005 Accounts Management Program performance measures.
Outcome measures define the intended result, effect, or consequence that will occur from carrying out a program or activity. With respect to programs, an outcome is an event or condition that is external to the program or activity and is of direct importance to the intended beneficiaries and/or the public. Outcome measures may be long- or short-term.
o Toll-Free Tax Law.
o Toll-Free Accounts.
o Customer Accounts Resolved (Adjustments).
Critical measures define a single set of measures that the IRS will use with external reviewers. The IRS includes critical measures in the annual budget request; they are short-term measures.
· Customer Satisfaction and Dissatisfaction Rates.
o Toll-Free.
o Customer Accounts Resolved (Adjustments).
· Volume of Toll-Free Assistor Calls Answered.
· Volume of Customer Accounts Resolved.
Efficiency measures define the ratio of the outcome or output to the input of any program. They are a description of the level at which programs are executed or activities are implemented to achieve results while avoiding wasted resources, effort, time, and money. Efficiency measures may be long- or short-term. This is a new performance measure for FY 2005.
Balanced Program measures are used by the IRS to assess organizational performance at both the strategic and operational levels. They include business results, customer satisfaction, and employee satisfaction and may be long- or short-term.
Appendix VI
Management’s Response
to the Draft Report
The response was removed due to its
size. To see the response, please go to
the Adobe PDF version of the report on the TIGTA Public Web Page.