TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION

 

 

Improved Cellular Telephone Inventory Controls Resulted in Significant Savings

 

 

December 2005

 

Reference Number:  2006-20-025

 

 

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.

 

 

Phone Number   | 202-927-7037

Email Address   |  Bonnie.Heald@tigta.treas.gov

Web Site           | http://www.tigta.gov

 

 

December 19, 2005

 

 

MEMORANDUM FOR CHIEF INFORMATION OFFICER

                                        

FROM:                            Michael R. Phillips /s/ Michael R. Phillips

                                         Deputy Inspector General for Audit

 

SUBJECT:                    Final Audit Report – Improved Cellular Telephone Inventory Controls Resulted in Significant Savings (Audit # 200620004)

 

This report presents the results of our follow-up review of the cellular telephone inventory controls.  The overall objective of this review was to evaluate the effectiveness of corrective actions taken by the Internal Revenue Service (IRS) in response to a recommendation in a prior Treasury Inspector General for Tax Administration (TIGTA) report that the IRS complete a physical inventory of its cellular telephones and ensure service is immediately discontinued for cellular telephones that are not registered in the IRS’ national cellular telephone inventory database.[1]

Synopsis

The Enterprise Networks organization is responsible for providing all forms of electronic communications (e.g., voice, data, video, and wireless) in the most efficient and effective manner.  Since 1993, several audits of the IRS’ telecommunications program conducted by the TIGTA, formerly the Inspection function of the IRS, reported control weaknesses with the management of the cellular telephone inventory.[2]  In September 2004, we recommended the IRS establish a complete and accurate inventory of its cellular telephones and ensure service is immediately discontinued for unregistered cellular telephones.  IRS management responded that service for unregistered cellular telephones would be terminated as of December 31, 2004, and cellular telephones will be validated annually.  At the conclusion of the 2004 annual validation process, the IRS terminated service for 2,908 cellular telephone numbers that were not validated.  The validation process resulted in cost savings of approximately $1.4 million annually in cellular telephone service charges to the IRS (see Appendix IV).  On October 17, 2005, the Chief Information Officer announced the 2005 annual validation of cellular telephones.  This validation process is to be conducted annually to maintain a complete and accurate inventory and ensure the efficient use of resources.

Recommendations

Because the corrective actions taken by the IRS addressed the previously reported control weaknesses in managing the cellular telephone inventory, we are making no recommendations in this report.

Response

IRS management agreed with the discussion draft report and outcome measure.  Because the report contains no recommendations, we did not issue a draft report.  Management’s complete response to the discussion draft report is included as Appendix V.

Copies of this report are also being sent to the IRS managers affected by the report.  Please contact me at (202) 622-6510 if you have questions or Margaret E. Begg, Assistant Inspector General for Audit (Information Systems Programs), at (202) 622-8510.

 

 

Table of Contents

 

Background

Results of Review

Implemented Controls Improved Accountability of Cellular Telephones and Resulted in Significant Cost Savings

Appendices

Appendix I – Detailed Objective, Scope, and Methodology

Appendix II – Major Contributors to This Report

Appendix III – Report Distribution List

Appendix IV – Outcome Measures

Appendix V – Management’s Response to the Discussion Draft Report

 

 

Background

 

One of the Internal Revenue Service (IRS) goals in the IRS Strategic Plan 2005 – 2009 is to modernize the IRS through its people, processes, and technology.  In support of this strategy, the mission of the Enterprise Networks organization is to provide all forms of electronic communications (e.g., voice, data, video, and wireless) in the most efficient and effective manner.

Since 1993, the Treasury Inspector General for Tax Administration, formerly the Inspection function of the IRS, has performed several audits of the IRS’ telecommunications program and reported control weaknesses with the management of the cellular telephone inventory.[3]  In response, the IRS mandated that, effective August 1, 2002, all new requests for cellular telephones be made using the electronic ordering system for wireless devices to establish a current inventory of cellular telephones.  In addition, all IRS employees who were assigned a cellular telephone prior to implementation of the automated process were required to register their telephones on the Wireless web site by September 1, 2002.  Current cellular telephone holders were warned that, if they did not timely register their cellular telephones, their service would be discontinued.

However, we reported in September 2004 that, while the IRS had established an automated process to improve the management of its cellular telephone inventory, an accurate inventory of cellular telephones had still not been established and service was not being cancelled for those employees who failed to register their cellular telephones.[4] We recommended the IRS establish a complete and accurate inventory of its cellular telephones and ensure service is immediately discontinued for unregistered cellular telephones.  IRS management responded that service for unregistered cellular telephones would be terminated as of December 31, 2004, and cellular telephones will be validated annually.

This review was performed at the IRS National Headquarters in New Carrollton, Maryland, in the Enterprise Networks organization during the period October through November 2005.  The audit was conducted in accordance with Government Auditing Standards.  Detailed information on our audit objective, scope, and methodology is presented in Appendix I.  Major contributors to the report are listed in Appendix II.

 

 

Results of Review

 

Implemented Controls Improved Accountability of Cellular Telephones and Resulted in Significant Cost Savings

Office of Management and Budget Circular A-123, Management Accountability and Control, requires managers to maintain appropriate, cost-effective controls over the agency’s financial resources and assets to improve the accountability and effectiveness of Federal Government programs and operations.  Specifically, it requires agency managers to establish management controls that provide reasonable assurance that assets are safeguarded against waste, loss, unauthorized use, and misappropriation.

On August 5, 2004, the Chief Information Officer issued a memorandum requiring all users of IRS cellular telephones to validate their telephones by September 30, 2004.  To validate a cellular telephone number, each user was required to enter information on the Wireless web site, including his or her name; job title; work address; manager’s name; and the cellular telephone make, model, telephone number, and service provider.  By matching the cellular telephone numbers on the IRS’ monthly bills against the numbers in the Wireless web site inventory, the IRS would identify nonvalidated numbers and suspend service effective October 22, 2004.  If the suspended numbers were not validated by December 29, 2004, the service for the cellular telephones would be terminated.

At the conclusion of the 2004 annual validation process, the IRS terminated service for 2,908 cellular telephone numbers that were not validated by December 29, 2004, as required.  Figure 1 reflects that the IRS will save approximately $1.4 million annually as a result of the validation process (see Appendix IV).

Figure 1:  Annual Cost Savings

Source:  IRS Enterprise Networks organization.

On October 17, 2005, the Chief Information Officer announced the 2005 annual validation of cellular telephones.  This validation process is to be conducted annually to maintain a complete and accurate inventory of cellular telephones and to ensure the efficient use of resources.  The implementation of these controls by the Enterprise Networks organization has improved the accountability of the cellular telephones and resulted in significant cost savings.  Because the corrective actions taken by the IRS addressed the previously reported control weaknesses in managing the cellular telephone inventory, we are making no recommendations in this report.

 

Appendix I

 

Detailed Objective, Scope, and Methodology

 

The overall objective of this review was to evaluate the effectiveness of corrective actions taken by the Internal Revenue Service (IRS) in response to a recommendation in a prior Treasury Inspector General for Tax Administration report that the IRS complete a physical inventory of its cellular telephones and ensure service is immediately discontinued for cellular telephones that are not registered in the IRS’ national cellular telephone inventory database.[5] To accomplish this objective, we interviewed Enterprise Networks organization staff, reviewed documentation supporting that the inventory of cellular telephones was completed and service was terminated for the unregistered telephones, and identified the annual costs savings.

 

Appendix II

 

Major Contributors to This Report

 

Margaret E. Begg, Assistant Inspector General for Audit (Information Systems Programs)

Gary Hinkle, Director

Danny Verneuille, Audit Manager

Van Warmke, Senior Auditor

Olivia DeBerry, Auditor

Suzanne Noland, Auditor

 

Appendix III

 

Report Distribution List

 

Commissioner  C

Office of the Commissioner – Attn:  Chief of Staff  C

Deputy Commissioner for Operations Support  OS

Deputy Chief Information Officer  OS:CIO

Director, Stakeholder Management  OS:CIO:SM

Associate Chief Information Officer, Enterprise Networks  OS:CIO:I:EN

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:

            Deputy Commissioner for Operations Support  OS

            Associate Chief Information Officer, Enterprise Networks  OS:CIO:I:EN

            Director, Program Oversight Office  OS:CIO:SM:PO

 

Appendix IV

 

Outcome Measures

 

This appendix presents detailed information on the measurable impact that our recommended corrective action will have on tax administration.  This benefit will be incorporated into our Semiannual Report to Congress.

Type and Value of Outcome Measure:

·         Cost Savings, Recommendations That Funds Be Put to Better Use – Actual; $6,979,200 (see page 2).

Methodology Used to Measure the Reported Benefit:

In September 2004, we reported the Internal Revenue Service (IRS) had not established an accurate inventory of cellular telephones and cellular telephone service was not being cancelled for employees who failed to register their cellular telephones.[6] We recommended the IRS establish a complete and accurate inventory of its cellular telephones and ensure service is immediately discontinued for unregistered cellular telephones.  At the time the report was issued, the IRS was unable to provide information identifying the total inventory of cellular telephones, approximate number of unregistered cellular telephones, or total costs for services.  As a result, we did not claim an outcome measure in the original report.  In December 2004, the IRS completed the validation process and terminated service for 2,908 cellular telephone numbers that were not validated.  The validation process will result in cost savings of $6,979,200 (annual cost savings of $1,395,840 computed over 5 years) in cellular telephone service charges to the IRS.

 

Appendix V

 

Management’s Response to the Discussion 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.