TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION
Customer Account Data Engine Project Management Practices Have Improved, but Continued Attention Is Needed to Ensure Future Success
September 11, 2008
Reference Number: 2008-20-151
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 |
202-622-6500
Email Address
| inquiries@tigta.treas.gov
Web Site |
http://www.tigta.gov
September 11, 2008
MEMORANDUM FOR CHIEF INFORMATION OFFICER
FROM: Michael R. Phillips /s/ Michael R. Phillips
Deputy Inspector General for Audit
SUBJECT: Final Audit Report – Customer Account Data Engine Project Management Practices Have Improved, but Continued Attention Is Needed to Ensure Future Success (Audit # 200820008)
This report presents the results of our review of the
development and capabilities of the Customer
Account Data Engine (CADE). The
overall objectives of this review were to determine the status of management’s
implementation of corrective actions to our previous CADE report[1]
and to assess efforts to improve CADE customer service capabilities. This review was part of our Fiscal Year 2008
audit plan for reviews of the Internal
Revenue Service’s (IRS) Business Systems Modernization Program efforts.
Impact on the Taxpayer
The IRS has developed a strategy for a phased replacement of its computer
systems to better support today’s tax laws, tax policies, and taxpayer
needs. As the centerpiece of the IRS modernization program, the CADE is an essential project in this
strategy. It is being developed
in incremental releases and will eventually replace the existing Master File[2] processing systems, which are the IRS’
official repositories of taxpayer information.
However, long-term objectives and the ability to adjust for unplanned
initiatives have challenged the IRS’ ability to meet the goal of having the
CADE perform as the modernization program’s centerpiece. The modernized CADE database will allow the
IRS to update taxpayer accounts, support account settlement and maintenance,
and process refunds daily, which will contribute to improved service to
taxpayers.
Synopsis
In July 2007, we
reported[3] a continuing pattern by the CADE
project team of deferring requirements to later releases and missing release
deployment dates. This occurred, in
part, because the IRS and the PRIME contractor agreed to an unrealistic scope
of work and did not assign adequate PRIME contractor staffing to the
project. We also reported that 1) the
approach taken to implement the CADE architectural design would not support
long-term goals and objectives and 2) alternative
design approaches might be needed to meet the CADE computer processing demands. The
Chief Information Officer agreed with the recommendations in our prior audit
report and outlined corrective actions to address the findings.
IRS executives and
managers have initiated efforts to integrate the CADE with other tax processing
systems. For example, in October 2007,
the Account Management Services system successfully processed the first transactions
updating taxpayer accounts on the CADE using the Enterprise Architecture
Integration Broker. With the addition of
this capability, the number of accounts retained in the CADE will increase over
time while the number of accounts returned to the current processing
environment will decrease.
Another effort involves
retaining in the CADE those taxpayer accounts that require issuance of selected
notices to the taxpayers. To accomplish
this, the CADE sends taxpayer notice data to the Notice Services program to
initiate the correspondence process with taxpayers. This business process changed from a weekly
to a daily process because the CADE has daily processing capabilities.
Long-term issues continue to challenge the CADE project. The ability of the CADE to access historical taxpayer account information currently residing on the Individual Master File must be resolved to enable requirements for soon-to-be developed CADE releases. In addition, with the expectation of significant increases in the CADE taxpayer population, processing capacity and data storage require consideration to meet future operational needs.
The processing of
payments related to the Economic Stimulus Act of 2008[4] put the CADE Release 4 Project Schedule at
risk. In
January 2008, the IRS engaged the PRIME contractor to conduct an impact
analysis and develop a preliminary design assessment for the work needed for
the CADE to process economic stimulus payment checks. The project team included the work related to
this effort in the scope of Release 4 with a task order modification.
However, the IRS did not have
funds appropriated for this additional work until the effort was already
underway. Adding programming for the
economic stimulus payments into the Release 4.1 project schedule stressed
resources and affected delivery of several notices and the overall project
schedules for Releases 4.1 and 4.2. CADE
officials stated that the economic stimulus effort eliminated all reserve time
built into the Release 4 project schedule and increased the overall project
schedule by 5 weeks.
As the IRS continues to modernize its databases, the ability
to provide immediate access to integrated account data, enable real-time
transaction processing, and ensure daily account settlement is critical to
improving customer service and business results.
Recommendations
The Chief Information Officer should 1) ensure that a Historical Data Conversion solution is in place to enable the CADE to process transactions related to issues such as balance-due conditions, 2) develop an updated estimate of the processing and storage requirements–including the related costs–to support the long-term objectives and goals of CADE operations, and 3) use a standardized process–including measurement and reporting to appropriate parties–to determine the effect on the CADE project’s scope, cost, and delivery schedules when unplanned initiatives are mandated for implementation.
Response
The Chief Information Officer agreed with our recommendations. Planned corrective actions include developing a decision paper to assess how to proceed with the Historical Data Conversion as it relates to the CADE’s continued development, updating CADE end-state processing and storage design estimates, and reviewing current procedures for assessing the effects and risks in response to unplanned initiatives affecting the CADE, and filling any gaps in these procedures. Management’s complete response to the draft report is included as Appendix XI.
Copies of this report are also being sent to the IRS managers affected by the report recommendations. 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.
The Internal Revenue
Service Has Taken Actions to Address Previously Recognized Project Shortcomings
The Customer Account
Data Engine Is Successfully Integrating With Other Processing Systems
Long-Term Issues Continue
to Challenge the Customer Account Data Engine Project
Processing of Economic
Stimulus Payments Put the Release 4 Project Schedule at Risk
Appendices
Appendix
I – Detailed Objectives, Scope, and Methodology
Appendix
II – Major Contributors to This Report
Appendix III – Report Distribution List
Appendix
IV – Customer Account Data Engine Project Costs
Appendix V – Customer Account
Data Engine Release Schedules
Appendix
VI – Preliminary Designs for Improving Daily Processing Routines
Appendix
VII – Taxpayer Notices Aligned With Release 3.2
Appendix
VIII – Enterprise Life Cycle Overview
Appendix
IX – Corrective Actions to Prior Recommendations
Appendix
X – Glossary of Terms
Appendix
XI – Management’s Response to the Draft Report
Abbreviations
|
BSMO |
Business Systems Modernization Office |
|
CADE |
Customer Account Data Engine |
|
CP |
Computer Paragraph |
|
EIC |
Earned Income Credit |
|
EIN |
Employee Identification Number |
|
IRS |
Internal Revenue Service |
The Customer Account
Data Engine (CADE) is the centerpiece of the Internal Revenue Service (IRS)
modernization program. The CADE project
is building a modernized database that will replace the existing Master File[5] processing systems, which are the IRS’
official repositories of taxpayer information.
To accomplish this, the IRS is
developing applications that will update taxpayer accounts, support account
settlement and maintenance, and process refunds daily.
The IRS initiated the CADE project in September 1999 and has delivered the following releases of the project:
· Release 1.1 deployed in August 2004 and Release 1.2 deployed in January 2005 provided processing for Income Tax Returns for Single and Joint Filers With No Dependents (Form 1040EZ).
· Release 1.3.1 deployed in September 2005 and Release 1.3.2 deployed in January 2006 provided processing for U.S. Individual Income Tax Returns (Forms 1040 and 1040A) with no schedules.
· Release 2.1 deployed in September 2006 added several new schedules to the CADE, including Form 1040 Itemized Deductions (Schedule A), Form 1040 Interest and Ordinary Dividends (Schedule B), and Form 1040 Credit for the Elderly or the Disabled (Schedule R). Release 2.2, which completed deployment in May 2007, added additional schedules and filing statuses.
· Release 3.1 deployed in August 2007 (coordinated with the Account Management Services project) added the address change customer service capability, and Release 3.2 deployed in January 2008 added new tax law changes, several new schedules, and the capability for direct deposit of a refund to more than one account.
In July 2007, we reported[6] a continuing pattern by the CADE project team of deferring requirements to later releases and missing release deployment dates. This occurred, in part, because the IRS and the PRIME contractor agreed to an unrealistic scope of work and did not assign adequate PRIME contractor staffing to the project. We also reported that 1) the approach taken to implement the CADE architectural design would not support long-term goals and objectives, and 2) alternative design approaches might be needed to meet the CADE computer processing demands.
The IRS Information Technology Modernization Vision and Strategy effort revalidated the need for modernized tax administration capabilities. As the IRS continues to modernize its databases, the abilities to provide immediate access to integrated account data, enable real-time transaction processing, and ensure daily account settlement are critical to improving customer service and business results. Realization of these capabilities requires implementation of tools that allow for the retention of taxpayer accounts in the modernized CADE database through online access, monitoring, and adjustment.
The Corporate Notices initiative will enable the CADE to support and manage taxpayer accounts that require generation of notices to the taxpayers. The CADE sends taxpayer notice data to the Notice Services program, which then generates composed notices, forwards a sample of selected notices to quality review, and submits composed notices to the Correspondence Production Services function for printing and mailing. This business process changed from a weekly to a daily routine. Future releases of the Corporate Notices initiative will address the migration of approximately 125 notices to the modernized processing environment.
This review was performed at the Modernization and
Information Technology Services organization in New Carrollton, Maryland,
during the period February through May 2008.
We conducted this performance audit in accordance with generally
accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our findings
and conclusions based on our audit objectives.
We believe that the evidence obtained provides a reasonable basis for
our findings and conclusions based on our audit objectives.
This review was part of our Fiscal Year 2008 audit plan for
reviews of the Modernization and Information Technology Services organization and contributes to the Treasury Inspector General for Tax
Administration’s efforts to
address the Fiscal Year 2008 Major Management Challenge to assess the progress
of the “Modernization of the IRS Computerized Systems.” Detailed
information on our audit objectives, scope, and methodology is presented in
Appendix I. Major contributors to the
report are listed in Appendix II.
The Internal Revenue Service Has Taken Actions to Address Previously Recognized Project Shortcomings
In July 2007, we reported that the IRS needed to
negotiate a reasonable scope of work
for future CADE releases and ensure that the amount of staffing assigned to a specific release was adequate to
accomplish the scope of projected work.
The report also stated that the IRS had not completed 1) addressing the
need to include a database that stores historical account data, 2) essential
processing requirements deferred since Release 1 (first planned for
implementation in January 2002), and 3) a process to improve the efficiency of
the daily processing cycle.
The Chief
Information Officer agreed with the recommendations from our prior audit and
outlined corrective actions to address the findings.[7] As of
May 2008, the IRS had adequately addressed all but one of the corrective
actions. The open corrective action focuses on the exploration of alternative design
approaches for the CADE to reduce future processing costs. This correction action is planned for
completion in July 2008.
The
project team has made progress to ensure that CADE releases contain a
reasonable scope of work and sufficient staffing
The CADE requirements management process is transitioning
from the PRIME contractor to the CADE Project Office and the Wage and
Investment Division business owners. To ensure a reasonable scope of work, the
CADE project implemented use of a formal Business Systems Requirements Report
that incorporates IRS processes in the Business Rules and Requirements
Management Division, which will conduct detailed requirements identification
and development. Using these processes
helps to define the scope of work, clarify business needs, and document clearly
defined requirements within established release boundaries.
The PRIME contractor
documented Release 3 requirements in a Business Systems Requirements Report and
is responsible for the content and management of those requirements. While the IRS played a lead role in
development of the Release 4 Business Systems Requirements Report, the PRIME
contractor is responsible for the content and management of the
requirements. With
Release 5, the Applications Development organization and the Business Rules and
Requirements Management Division worked with the Wage and Investment Division
business owners to develop the requirements contained in the Business Systems
Requirements Report.
This change in
requirements ownership is an effort to ensure that a manageable scope of work
is undertaken in the Detailed Design and System Development Phases of the
Enterprise Life Cycle.[8] The CADE project team is aggressively
tracking staffing levels weekly by analyzing resource use reports provided by
the PRIME contractor. The team also
conducts staffing review sessions to reduce any potential resource contention.
Current measures provide CADE project managers and business executives with data sufficient to proactively identify staffing issues.
The
IRS now requires the PRIME contractor to provide a list of the employees who
support each CADE release. The CADE
project managers review and analyze the resources listed to ensure that
adequate support is provided by the PRIME contractor. The project
managers and the PRIME contractor have
used these lists to develop and progressively update measures to capture weekly
staffing levels to better forecast current and future needs. These measures provide high-level indicators
of potential problems (i.e., yellow, red)[9] that also provide information about a
specific release and area within that release that are of concern. When the scope of
work is properly defined, the project managers and business executives can effectively estimate the resources needed to deliver
the requirements agreed to during the contract negotiation process. Appendix IV presents an
analysis of the Project release costs through Fiscal Year 2008, which total
about $270.9 million.
Appropriate
actions were taken to deliver essential processing requirements
The project established the
CADE Independent Requirements Project to implement six essential processing
requirements deferred from the January 2002 Release 1 plans. These requirements were deferred because they
were not needed to meet the release delivery goals. For example, the Release 1 requirement to
process prior year tax returns for accounts currently residing on the CADE
database is scheduled for delivery with Release 4.1.
One of the six essential
processing requirements was delivered with Release 2.2, and three requirements
were delivered with Release 3.2. The
remaining two requirements were moved to Release 3.2, and again deferred to Release 4.1
because adequate staffing was not available for their development due to
a change in the contract structure.
The contract for the CADE
Independent Requirements Project was originally structured using a cost-plus
task order. In April 2007, as part of
the Release 3 renegotiation process, the CADE Independent Requirements Project
was changed to a fixed-price agreement.
In September 2007, Release 3.2 fell behind schedule and was in jeopardy
of not being completed in time for the upcoming filing season, and the PRIME
contractor could not guarantee on-time delivery for the CADE Independent
Requirements Project. During subsequent
negotiations, the IRS agreed to move two requirements to Release 4.1 to
maintain the integrity of the fixed-price agreement. At that point, staffing resources were
transferred from the CADE Independent Requirements Project to work on Release
3.2.
In response to our prior
audit, the CADE project team is implementing new requirements management and
staffing processes that were not in place in September 2007 to overcome the
staffing imbalances experienced. The new
processes will help to ensure that a similar situation will be less likely to
occur in the future.
Preliminary
designs have been developed to enable more efficient daily processing of tax
return account information
Several
preliminary designs have been developed to improve daily processing routines.
The basic unit of work performed by the CADE is the daily processing cycle, and each of these cycles must be successfully completed before any significant processing can be started for the next daily cycle. As more complex functions and processing needs are added to each release, the CADE’s ability to complete each daily processing cycle is affected.
The IRS and the PRIME
contractor have developed several preliminary designs to improve daily
processing routines. For example, one
design will allow the CADE to execute bulk data transfers at any time
concurrent with real-time, on-demand transactions. Another design will allow recovery of
specific transactions without having to rerun an entire day’s processing.
Each preliminary design addresses previously identified
problems that the IRS repeatedly postponed addressing. The CADE project team’s driving concern was
to make the current release operational and to process as many tax returns as
possible. However, as CADE volume
increased, resolving these issues has become an important if not immediate
concern. Appendix VI presents a
description of the preliminary designs intended to provide the CADE with the
tools necessary to successfully process the taxpayer account volume contained
in the Individual Master File.
Current release capabilities were delivered in a timely manner
The IRS and the
PRIME contractor began using a biannual release approach in September
2005. One release in June each year will
add complex capabilities, and another release in January each year will include
filing season updates. Appendix V
presents the prior and current biannual CADE release schedules. The current release schedule was updated in
November 2006.
The IRS delivered
CADE Release 3.1 in August 2007 and Release 3.2 in January 2008. In addition to new tax law changes, several
new schedules were added to the CADE, including Earned Income Credit (Schedule
EIC), Child and Dependent Care Expenses (Form 2441), Child and Dependent Care
Expenses for Form 1040A Filers (Schedule 2), and Direct Deposit of Refund to
More Than One Account (Form 8888). The
CADE can now process address changes using the Enterprise Application Integration Broker and, for the first time, is processing three taxpayer notices.
As of May 30, 2008, the CADE had processed more than 30 million tax returns and generated almost $44 billion in refunds. This is a significant increase over the 11.2 million tax returns processed in Calendar Year 2007 that generated approximately $11.6 billion in refunds. In addition, the CADE processed more than 17.7 million payments related to the Economic Stimulus Act of 2008[10] that generated refunds totaling more than $14 billion during this same period in Calendar Year 2008.
The Customer Account Data Engine Is Successfully Integrating With Other Processing Systems
The IRS has
initiated efforts to integrate the CADE with other processing systems to
expedite taxpayer account updates and information notice issuance.
IRS executives and managers
have taken the lead in directing future efforts for integrating the CADE with
other tax processing systems. For
example, in October 2007, the Account Management Services system successfully
processed the first transactions updating taxpayer accounts on the CADE through
the Desktop Integration application.
This was accomplished using the Enterprise
Application Integration Broker. With the
addition of this capability, the number of accounts retained in the CADE will
increase over time, while the number of accounts returned to the current
processing environment will decrease.
Another effort involves
retaining in the CADE those taxpayer accounts that require issuance of selected
notices to the taxpayers. The CADE sends
taxpayer notice data to the Notice Services program, which then generates
composed notices, forwards a sample of selected notices to quality review, and
submits composed notices to the Correspondence Production Services function for
printing and mailing. This business
process changed from a weekly to a daily process.
In February 2007, the IRS aligned 13 notices with CADE Release 3.2 and the Notice Services program (see Appendix VII for a list of the 13 notices). The Wage and Investment Division business owners subsequently limited Release 3.2 to eight notices that did not require processing through the Notice Review Processing System. The IRS planned to deliver the remaining five notices with Release 4.2.
In February 2008, Release 3.2 began processing two
mathematical error notices and one Earned Income Credit (EIC) information
notice. As of May 27, 2008, the CADE had
processed more than 56,000 mathematical error notices and 122,000 information
notices. For 2008, the business owners estimate that the CADE will process more
than 93,000 mathematical error notices and almost 168,000 information notices.
The
IRS rescheduled delivery of two notices
Two refund notices originally planned for delivery with Release 3.2 were inadvertently omitted from the task order. Upon discovery of this oversight, the IRS prepared work requests to develop and implement the notice processing. However, once the work requests were approved, CADE and business executives determined that development and testing of the processing for these notices was not cost efficient at that time.
The decision to not include these two refund notices with Release 3.2 was reasonable given the circumstances. These notices have been rescheduled for Release 4.1, which is planned for delivery in July 2008.
Precautions
taken during testing of notices were reasonable
In February 2008, CADE and business executives decided to prevent issuance of two EIC mathematical error notices and one EIC information notice. The project team needed additional time to test a sufficient number of taxpayer accounts before the notices were put into production. Issuing these notices during the middle of the filing season without the assurance that notices were generated only when appropriate could have jeopardized the entire Release 3.2 deployment, potentially returning thousands of accounts from the CADE database to the Individual Master File. The IRS has not rescheduled issuance of these three notices.
Long-Term Issues Continue to Challenge the Customer Account Data Engine Project
The ability of the CADE to access historical taxpayer
account information currently residing on the Individual Master File must be
resolved to enable requirements for soon-to-be developed CADE releases. Further, with the expectation of significant
increases in the CADE taxpayer population, processing capacity and data storage
require consideration to meet future operational needs.
The Historical Data
Conversion Project has been delayed, adding risk to the deployment of future
CADE releases
The IRS currently stores all relevant historical taxpayer
data such as prior year tax assessments and outstanding tax liabilities on the
Individual Master File. The CADE project team planned to build a
database in 2002 to store historical account data in a modernized format as
part of Release 1. However, this requirement was deferred because the task
was complex and its necessity was not immediate to releases that did not
require reference to these data.
Currently, the CADE does not store historical taxpayer account data
in a modernized format. It stores only the taxpayer account data used
in processing the current year returns.
The IRS has
a requirement to convert historical data from the Individual Master File data
to storage on the CADE because the data on the Individual Master File are not
compatible with the CADE.
As corrective actions to our
prior report, the IRS planned to align the Historical Data Conversion Project
with CADE Release 3. However, the
Project development has been rescheduled to allow the IRS to coordinate its
delivery strategy with the Individual Master File to Database 2 initiative and
the Enterprise Data Strategy.
This setback
occurred in part because the foundation for designing a CADE database capable
of supporting all current and future business requirements (i.e., the “end
state” Logical Data Model) is incomplete.
This issue was not adequately addressed when identified in August 2006
by the CADE Data Study. As a result, the
contracted work for Release 3 agreed to by the IRS and the PRIME contractor
supported only Release 3.2 data elements and did not include more than 10,000
data elements needed to successfully deliver the Historical Data Conversion
Project.
The IRS has tentative plans to implement a Historical Data
Integration process with CADE Release 5.1 in July 2009. The process will allow the CADE to
efficiently use the taxpayer and tax return data once the data are converted
from the Individual Master File format into the CADE modernized data
structure. However, until a long-term
Historical Data Conversion solution is implemented, the CADE will be unable to
efficiently retain the increasing number of CADE-eligible taxpayer accounts in
its database.
The
need to explore alternative design solutions still exists
The IRS still needs to decide whether to reduce CADE capabilities because of capacity constraints or to continue development with the expectation of using new technology or alternative resources to satisfy its computer processing demands. The CADE processing demands are quickly reaching the capacity of the current system, both in the storage and retrieval of data and the processing speed for daily transactions. If the IRS does not identify new technology to more efficiently perform computer processing, CADE costs might be prohibitive.
The IRS engineering staff have determined that use of external sources such as supercomputing centers for additional processing capacity is impractical for several reasons. Barriers to using external sources for data management include the size of the data transfers, compatibility type database issues, account balancing, and security. The engineering staff performed the last formal study of CADE processing capacity in 2004 and have not determined the long-term CADE processing capacity needs.
The absence of a comprehensive direction in designing and developing efficient computer processing will affect the CADE project’s ability to deliver intended capabilities. Unless sufficient time and effort are provided to deliver the capabilities needed to support the long-term objectives and goal, the CADE will be unable to process tax returns for all individual and business taxpayers as planned. In addition, the longer these decisions are delayed, the greater the risk of costly rework.
Recommendations
The Chief Information Officer should:
Recommendation 1:
Ensure that a Historical Data Conversion solution is in place to enable
the CADE to process transactions related to issues such as balance-due
conditions.
Management’s Response: The Chief
Information Officer agreed with this recommendation and will have the
CADE Project Office partner with key stakeholders to develop a decision paper
to assess how to proceed with the Historical Data Conversion as it relates to the
CADE’s continued development. The CADE
Project Office will develop a plan and schedule for the Historical Data
Conversion based on the decision paper.
Recommendation 2: Develop an updated estimate of the processing and
storage requirements, including the related costs, to support the
long-term objectives and goals of CADE
operations.
Management’s Response: The Chief
Information Officer agreed with this recommendation and will have the Enterprise Services organization update the CADE end-state
processing and storage design estimates.
Estimates will include direct costs associated with processing and
storage requirements. Indirect costs
such as software license fees, professional services, labor charges, and
maintenance fees will not be included in cost estimates.
Processing of Economic Stimulus Payments Put the Release 4 Project Schedule at Risk
In
February 2008, the 2008 Legislative Economic Stimulus initiative[11] went into effect.
This initiative was designed to stimulate consumer spending by providing
payments of up to $1,200 to qualifying taxpayers. At the time, the CADE did not have the
capability to process these payments, so in order to issue the payments to
taxpayers whose accounts resided on the CADE, the IRS would have had to
transfer all of the accounts back to the Individual Master File. In January 2008, the IRS proactively engaged
the PRIME contractor to conduct an impact analysis and develop a preliminary
design assessment for the work needed for the CADE to process the economic
stimulus payments. The project team
included the work related to this effort in the scope of Release 4 with a task
order modification. Because the IRS took
these steps, more than 17 million taxpayers received the benefit of
expedited payments by remaining in the CADE
database. In addition, the IRS did not
have to move all of the accounts to the Master File to process the payments and
then move the accounts back to the CADE.
However,
the IRS did not have funds appropriated for this additional work until the
effort was already underway. Adding
programming for the economic stimulus payments into the Release 4.1 project
schedule stressed resources and affected delivery of several notices and the
overall project schedules for Releases 4.1 and 4.2. CADE officials stated that the economic
stimulus effort eliminated all reserve time built into the Release 4 project
schedule and increased the overall project schedule by 5 weeks.
Recommendation
Recommendation 3: The Chief Information Officer should use a standardized process to determine the effect on the CADE project’s scope, cost, and delivery schedules when unplanned initiatives are mandated for implementation. These effects should be measured to the extent possible and reported to the IRS Commissioner and other stakeholders as a means for communicating the consequences to previously planned CADE capabilities.
Management’s Response: The Chief
Information Officer agreed with this recommendation and will review
current procedures for assessing the effects and risks in response to unplanned
initiatives affecting the CADE as described in the CADE and the Modernization and
Information Technology Services organization Change Control Board processes and
the Executive Steering Committee governance procedures. If it is determined that there are gaps in
these procedures, the Modernization and Information Technology Services organization
will update the procedures. As events
such as the 2008 Legislative Economic Stimulus initiative occur, the
Modernization and Information Technology Services organization will ensure that
organizational decisions are made with knowledge of the potential effect on the
project and ensure that these are appropriately documented. However, there is no commitment that all such
decisions will be elevated to the IRS Commissioner.
Appendix I
Detailed Objectives, Scope, and Methodology
The overall objectives of this review were to determine the status of management’s implementation of corrective actions to our previous CADE report[12] and to assess efforts to improve CADE customer service capabilities. This review was part of our Fiscal Year 2008 audit plan for reviews of the IRS’ Business Systems Modernization efforts and contributes to our efforts to address the Fiscal Year 2008 Major Management Challenge to assess modernization of the IRS’ computerized systems.
To accomplish our objective, we identified the internal control systems used as guidance for the CADE’s development. These systems include the Enterprise Life Cycle[13] and the Internal Revenue Manual. We assessed the adequacy of CADE development activities in relation to the guidance provided by these internal control systems. We also assessed the adequacy of CADE development and program plans by reviewing Business Systems Modernization Program and project documentation and data provided by the IRS and by interviewing personnel in the Applications Development and Enterprise Services organizations. Specifically, we:
I. Evaluated the effectiveness of the corrective actions related to the design, development, and delivery of new CADE releases.[14]
A. Reviewed CADE Project Office activities to determine whether 1) future releases will have a reasonably achievable scope of work, and 2) each release will be sufficiently staffed to deliver planned requirements on schedule.
B. Reviewed CADE Project Office activities related to plans and actions to develop previously deferred essential CADE requirements.
C. Assessed CADE Project Office actions taken to deliver the Historical Data Conversion Project.
D. Reviewed CADE Project Office activities related to improving daily processing routines and meeting long-term CADE computer processing and storage demands.
II. Determined the status of IRS efforts to enable the CADE to improve customer service by evaluating the effectiveness of current activities taken to ensure that it will be able to manage taxpayer accounts requiring issuance of selected notices, such as mathematical error notices and information notices.
Appendix II
Major Contributors to This Report
Margaret E. Begg, Assistant Inspector General for Audit (Information Systems Programs)
Preston B. Benoit, Acting Assistant Inspector General for Audit (Information Systems Programs)
Scott A. Macfarlane, Director
Edward A. Neuwirth, Audit Manager
Bruce Polidori, Senior Auditor
Suzanne Noland, Auditor
Linda Screws, Auditor
Appendix III
Commissioner C
Office of the Commissioner – Attn: Chief of Staff C
Deputy Commissioner for Operations Support OS
Associate Chief Information Officer, Applications Development OS:CIO:AD
Associate
Chief Information Officer,
Director, Procurement OS:A:P
Director, Stakeholder Management OS:CIO:SM
Deputy Associate Chief Information Officer, Applications Development OS:CIO:AD
Deputy Associate Chief Information Officer, Business Integration OS:CIO:ES:BI
Deputy Associate Chief Information Officer, Systems Integration OS:CIO:ES:SI
Director, Test, Assurance, and Documentation OS:CIO:AD:TAD
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 Internal Control OS:CFO:CPIC:IC
Audit Liaisons:
Associate Chief Information Officer, Applications Development OS:CIO:AD
Director, Procurement OS:A:P
Director,
Program Oversight OS:CIO:SM:PO
Appendix IV
Customer Account Data Engine Project Costs
Table 1: Project Task Order[15] Costs Through Release 3
|
Task Order Number |
Period of Performance |
Cost |
|
0019 |
1999 – 2000
(specific dates not available) |
$2,166,234 |
|
0037 |
April 24, 2000 –
August 31, 2000 |
$3,011,000 |
|
0054 |
September 1, 2000 –
April 30, 2001 |
$13,971,165 |
|
0069 |
June 1, 2001 –
August 31, 2001 |
$5,700,000 |
|
0071 |
May 1, 2001 – June
30, 2001 |
$1,534,012 |
|
0073 |
September 1, 2001 –
August 31, 2004 |
$60,458,154 |
|
0123 |
October 1, 2004 – June 8, 2006 |
$78,862,590 |
|
0132 |
May 2, 2006 – April 15, 2008 |
$39,143,554 |
|
Total |
|
$204,846,709 |
Source: CADE
contract task orders from the IRS Procurement office.
Table 2:
Estimated Project Costs and Schedule Through Release 3
|
Release Project Phases |
Completed/Scheduled |
Cost/Estimate |
|
Milestone 1 |
December 31, 1999 |
$5,116,000 |
|
Milestones 2 and 3 |
June 30, 2001 |
$19,267,000 |
|
Milestone 4 |
July 30, 2004 |
$58,838,000 |
|
2003/2004 Filing Seasons
(Release 1.1) |
August 5, 2004 |
$24,550,000 |
|
2005 Filing Season (Release
1.2) |
December
31, 2004 |
$23,403,000 |
|
Milestone 5 |
June 30, 2005 |
$17,450,000 |
|
2006 Filing Season (Release
1.3) |
December 31, 2005 |
$28,300,000 |
|
2007
Filing Season (Release 2) |
May 30, 2007 |
$56,959,000 |
|
2007
Filing Season (Release 3) |
January
14, 2008 |
$37,000,000 |
|
Total |
|
$270,883,000 |
Source: Business Systems Modernization Expenditure
Plans for Fiscal Year 2004 through Fiscal Year 2008.
Table 3: Project Cost and Schedule Variance Summary
|
Release |
Milestone |
Cost Variance |
Cost Variance Percentage |
Schedule Variance |
Schedule Variance |
|
1 |
Operations
and Maintenance[16] |
$7,510,000 |
43% |
0 |
0% |
|
1.2 |
2005
Filing Season[17] |
$10,000 |
0% |
0 |
0% |
|
1.3.1 |
2006
Filing Season |
$668 |
3% |
2 |
20% |
|
1.3.2 |
2006
Filing Season[18] |
$66 |
0% |
0 |
0% |
|
2.1 |
Mid-year
Release |
$4,190 |
15% |
0 |
0% |
|
2.2 |
2007
Filing Season |
$3,777 |
15% |
5 |
65% |
|
3.1 |
Mid-year
Release |
$0 |
0% |
0 |
0% |
|
3.2 |
2008
Filing Season |
$0 |
0% |
0 |
0% |
|
Program |
Calendar
Year 2005 |
$1,935,000 |
24% |
Not |
Not |
|
Calendar
Year 2006 |
$0 |
0% |
Not |
Not |
Source: Business Systems Modernization Expenditure
Plans for Fiscal Year 2004 through Fiscal Year 2008, and the Business Systems
Modernization Monthly Performance
Measures Reports.
Appendix V
Customer Account Data Engine Release
Schedules
Table 1 presents
the historical development of the CADE and the original CADE release[19] schedule. The names
of the tax forms planned for CADE processing are presented below Table 1. All tax forms and schedules listed in Tables
1 and 2 are available at the public IRS web site (IRS.gov).
Table 1: Original CADE
Release Schedule
|
|
RELEASE |
RELEASE |
RELEASE |
RELEASE |
RELEASE |
RELEASE 3 |
RELEASE |
RELEASE 5 |
|
Tax Return Types |
Form 1040EZ; Single
filing status; |
Release 1.1/1.2 plus
address change |
Release 1.3.1 plus |
Form 1040EZ; Form 1040
Schedules A, B, and R; Form 1040A Schedules 1
and 3 |
Release 2.1 plus |
All |
All Form 1040 family
and supporting forms with an EIN; refund, fully paid, |
All remaining
individual tax returns |
|
Filing Status |
Single |
Single |
Single |
Single; Married; Head
of Household, limited dependents |
Single; Married; Head
of Household, limited dependents |
All (including Head of
Household) |
All |
All |
|
Account Characteristics |
No account issues (open
or closed) |
No account issues (open
or closed) |
No account issues (open
or closed) |
No account issues (open
or closed) |
Married once; no open
account issues |
No open account issues;
EIC |
Power of Attorney;
Centralized Authorization File; no open account issues |
All accounts not
included in previous releases |
|
|
RELEASE |
RELEASE |
RELEASE |
RELEASE |
RELEASE |
RELEASE 3 |
RELEASE 4 |
RELEASE 5 |
||
|
Number
of Returns Original
estimate Revised
Estimate - February 2005 |
3 million 2 million |
2 million |
To Be Determined |
To Be Determined |
35 million 33 million |
76 million 50 million |
110 million 80 million |
122 million 140 million |
||
|
Estimated
Delivery: As of
As of January 2004
As of December 2004
As of February 2005 |
January 2002 August 2004 August 2004 August 2004/
January 2005 |
July 2005 July 2005 |
January 2006 January 2006 January 2006 |
August 2002 To Be Determined July 2006 July 2006 |
To Be Determined January 2007 January 2007 |
July 2003 To Be Determined To Be Determined Releases 3.1/3.2 |
July 2004 To Be
Determined To Be
Determined Releases 4.1/4.2 |
July 2005 To Be
Determined To Be
Determined July 2009 |
||
Source: CADE
Individual Master File Release Content Master Plan Updates, dated June 5, 2003,
and
February 11, 2005.
Form 720 – Quarterly Federal Excise Tax Return
Form 940 – Employer’s Annual Federal Unemployment (FUTA) Tax Return
Form 941 – Employer’s QUARTERLY Federal Tax Return
Form 1040 – U.S. Individual Income Tax Return
Form 1040A – U.S. Individual Income Tax Return
Form 1040EZ – Income Tax Return for Single and Joint Filers With No
Dependents
Form 2688 – Application for Additional Extension of Time To File U.S.
Individual Income Tax Return
Form 4868 – Application for Automatic Extension of Time To File U.S.
Individual Income Tax Return
Schedule A (Form 1040) – Itemized Deductions
Schedule B (Form 1040) – Interest and Ordinary Dividends
Schedule C (Form 1040) – Profit or Loss From Business
Schedule D (Form 1040) – Capital Gains and Losses
Schedule E (Form 1040) – Supplemental Income and Loss
Schedule F (Form 1040) – Profit or Loss From Farming
Schedule H (Form 1040) – Household Employment Taxes
Schedule R (Form 1040) – Credit for the Elderly or the Disabled
Schedule 1 (Form 1040A) – Interest and Ordinary Dividends for Form
1040A Filers
Schedule 2 (Form 1040A) – Child and Dependent Care Expenses for Form
1040A Filers
Schedule 3 (Form 1040A) – Credit for the Elderly or the Disabled for
Form 1040A Filers
Table 2
presents the first biannual CADE release schedule. The names of additional tax forms planned for
CADE processing are presented below Table 2.
Table
2: First Biannual CADE Release Schedule
|
January and June |
2004 RELEASE 1.1 |
2005 RELEASE 1.2 |
2006 RELEASE 1.3.2 |
2007 RELEASE 2.2 |
2008 RELEASE 3.2 |
2009 RELEASE 4.2 |
2010 RELEASE 5.2 |
2011/2012 RELEASE 6.2 |
|
Tax Return Types |
Form 1040EZ |
1.2 &
1.3.1 1.3.1
only |
1.3.2 |
2.2 |
3.2 Form 1040 decedent returns; Form 1040 fully paid with remittance;
Form 1040 with credit elect; |
4.2 Balance-due returns; mathematical error
returns; |
5.2 Form
1040 Schedules C, E, and F with an EIN and supporting schedules including
Schedule SE; Forms 940 and 720 payroll, unemployment, and excise tax returns
for Form 1040 |
6.2 Additional Form 1040 schedules and forms 7.2 Form 1040NR; |
|
Filing Status |
Single |
Single |
2.1 |
3.1 |
4.1 |
5.1 |
6.1 |
7.1 |
|
January and June |
2004 RELEASE 1.1 |
2005 RELEASE 1.2 |
2006 RELEASE 1.3.2 |
2007 RELEASE 2.2 |
2008 RELEASE 3.2 |
2009 RELEASE 4.2 |
2010 RELEASE 5.2 |
2011/2012 RELEASE 6.2 |
|
Account Characteristics |
Refund or even-balance returns; no
account issues (open or closed) |
Refund or even-balance returns; no
dependents; |
Refund or even-balance returns; no
dependents; |
2.2 Married once; no open account issues 3.1 No open account issues; EIC |
3.2 No open account issues; EIC 4.1 Power of Attorney; Centralized
Authorization File; |
No open account issues; EIC |
Power of Attorney; Centralized
Authorization File; |
All accounts not included in previous
releases |
|
Estimated |
Not applicable |
Actual 1,423,517 |
Actual 7,372,572 |
2.2 33 million |
3.2 50 million |
4.2 70 million |
5.2 90 million |
6.2 110 million 7.2 135 million |
Source:
Customer Relationship Management Executive Steering Committee, approved
October 18, 2005.
Form 1040-ES – Estimated Tax for Individuals
Form 1040NR – U.S. Nonresident Alien Income
Tax Return
Form 1040-V – Payment Voucher
Form 1040X – Amended U.S. Individual Income
Tax Return
Form 6251 – Alternative Minimum
Tax–Individuals
Schedule EIC (Form 1040 or 1040A) – Earned
Income Credit
Schedule
SE (Form 1040) – Self-Employment Tax
Table 3 presents the revised biannual CADE release schedule as of November 16, 2006. The names of additional tax forms planned for CADE processing are presented below Table 3.
Table
3: Second Biannual CADE Release Schedule
|
January and June |
2007 RELEASE |
2008 RELEASE |
2009 RELEASE |
2010 RELEASE |
2011 RELEASE |
2012 RELEASE |
|
Tax Return Types |
2.2 Form 1040 3.1 |
3.2 Form 1040 decedent returns; Form 4868 with remittance and without
remittance 4.1 |
4.2 Form 1040X; Form 6251 5.1 |
5.2 None 6.1 |
6.2 None 7.1 Form 1040-SS self-employed Forms 940 and 720 payroll, unemployment,
and excise tax returns for |
7.2 None |
|
Filing Status |
Not included in plan |
Not included in plan |
Not included in plan |
Not included in plan |
Not included in plan |
|
|
Account Characteristics |
2. 2 3.1 |
3.2 4.1 |
4.2 5.1 |
5.2 6.1 |
6.2 7.1 |
7.2 |
|
January and June |
2007 RELEASE |
2008 RELEASE |
2009 RELEASE |
2010 RELEASE |
2011 RELEASE |
2012 RELEASE |
|
Estimated |
Not included in plan |
Not included in plan |
Not included in plan |
Not included in plan |
Not included in plan |
Not included in plan |
Source: The IRS
Applications Development organization.
Form 1040-SS – U.S. Self-Employment Tax
Return (Including the Additional Child Tax Credit for
Bona Fide Residents of Puerto Rico)
Form 8880 – Credit for Qualified Retirement
Savings Contributions
Appendix
VI
Preliminary Designs
for Improving Daily Processing Routines
Continuous Online Processing
Objectives: 1) Eliminate constraints imposed by the
current application architecture to allow the CADE to support 24-hour by 7-day
batch-input and on-demand transactions, and 2) improve CADE transaction
throughput by supporting a 20-hour to 24-hour day enabling the CADE to spread
the peak processing over more hours, thereby dramatically reducing the
processing capacity requirements.
Tentative Delivery:
Release 5.1
Transaction-Based
Recovery
Objective: Provide the ability to recover CADE processing at the
transactional level rather than cycle[20] level to maximize the
system’s availability and enable continuous online (transactional) processing.
Tentative
Delivery: Release 5.1
CADE
Initialization Approach
Objective: Provide
an approach to bring taxpayers into the CADE from the Individual Master File
that is not affected by annual end-of-year and beginning-of-year
time-constrained processing. The
approach needs to increase the frequency with which taxpayers can be moved from
the Individual Master File into the CADE, such that there is no need for a
large initialization effort during the ending/beginning of the year. The target state is for all taxpayers (or at
least the overwhelming majority) to permanently reside in the CADE, which would
eliminate the need for extensive initialization processing.
Tentative
Delivery: Release 5.2
Return to the Current
Processing Environment Enhancement
Objectives:
Improve the CADE architecture by 1) enhancing the communication to the
current processing environment architecture by reducing process inefficiencies
and system resource consumption, and 2) providing a more scalable and
maintainable return to current processing environment approach that will handle
increased volumes in the future and improve performance.
Tentative Delivery: Release 5.2
Archiving and Restore
From Archive
Objective: Reduce and remove unneeded data
from the active CADE database for all active taxpayers by transferring it to
specific types of long-term storage.
Tentative Delivery: Release 7
Thread-safe Transaction
and Customer Information Control System Transaction Server Open Transaction Environment
Objective: Identify viable
software approaches to increase CADE system performance by making the computer
code more efficient.
Tentative Delivery: Release 6
Incremental Database
Improvements
Objective: Implement
incremental database improvements to satisfy the business and technical needs
identified for each release.
Tentative Delivery: Releases 4.2 through 6.2
Appendix
VII
Taxpayer Notices Aligned With Release 3.2
In Production: Release 3.2
Computer Paragraph (CP)-12: Math Error, overpayment of $1.00 or more.
CP-13: Math Error, balance due less than $5.00, overpayment less then $1.00.
CP-27: EIC potential for taxpayer without qualifying children.
Planned Delivery: Release 4.1
CP-08: Informs recipient that he or she might qualify for the Additional Child Tax Credit.
CP-53: Notifies taxpayer an electronic funds transfer was not honored.
Planned Delivery: Release 4.2
CP-09: Notifies taxpayer of possible eligibility for the EIC.
CP-10: Math Error with reduced credit elect.
CP-24: Estimated tax discrepancy, overpayment of $1.00 or more.
CP-25: Estimated tax discrepancy, balance due less
than $5.00, overpayment less
than $1.00.
CP-45: Credit elect change.
Planned Delivery: To be
determined
CP-10A: EIC Math Error with reduced credit elect.
CP-12A: EIC Math Error, overpayment of $1.00 or more.
CP-13A: EIC Math Error, balance due less than $5.00, overpayment less than $1.00.
Appendix
VIII
Enterprise Life Cycle
Overview
The Enterprise Life Cycle is the IRS’ standard approach to business change and information systems initiatives. It is a collection of program and project management best practices designed to manage business change in a successful and repeatable manner. The Enterprise Life Cycle addresses large and small projects developed internally and by contractors.
The Enterprise Life Cycle includes such requirements as:
·
Development of
and conformance to an enterprise architecture.
·
Improving
business processes prior to automation.
·
Use of
prototyping and commercial software, where possible.
·
Obtaining early
benefit by implementing solutions in multiple releases.
·
Financial
justification, budgeting, and reporting of project status.
In addition, the Enterprise Life Cycle improves the IRS’
ability to manage changes to the enterprise; estimate the cost of changes; and
engineer, develop, and maintain systems effectively. Figure 1 provides an overview of the phases
and milestones within the Enterprise Life Cycle. A
phase is a broad segment of work encompassing activities of similar scope,
nature, and detail and providing a natural breakpoint in the life cycle. Each phase begins with a kickoff meeting and
ends with an executive management decision point (milestone) at which IRS
executives make “go/no-go” decisions for continuation of a project. Project funding decisions are often
associated with milestones.
Figure
1: Enterprise Life Cycle Phases and
Milestones
|
Phase |
General
Nature of Work |
Milestone |
|
Vision
and Strategy/ Enterprise Architecture Phase |
High-level direction
setting. This is the only phase for
enterprise planning projects. |
0 |
|
Project
Initiation Phase |
Startup of development
projects. |
1 |
|
Domain
Architecture Phase |
Specification of the operating
concept, requirements, and structure of the solution. |
2 |
|
Preliminary
Design Phase |
Preliminary design of all
solution components. |
3 |
|
Detailed
Design Phase |
Detailed design of solution
components. |
4A |
|
System
Development Phase |
Coding, integration, testing,
and certification of solutions. |
4B |
|
System
Deployment Phase |
Expanding availability of the
solution to all target users. This is
usually the last phase for development projects. |
5 |
|
Operations
and Maintenance Phase |
Ongoing management of
operational systems. |
System Retirement |
Source:
The Enterprise Life Cycle Guide.
Appendix
IX
Corrective Actions to
Prior Recommendations
Table 1 presents the
findings reported by the Treasury Inspector General for Tax Administration and
the IRS’ subsequent planned corrective actions and implementation status. The report titles are presented below Table
1.
Table 1: Status of Treasury
Inspector General for Tax Administration Report Findings and IRS Corrective
Actions Related to the CADE Project
|
Report Number |
Finding and Recommendation |
Corrective Action |
Status |
|
2003-20-018 November 2002 |
1. The Pilot Plan Needs to Include Adequate
Defect Reporting Procedures. To ensure that
the defect reporting databases provide reliable information for the pilot
defect reports, the Business Systems Modernization Office (BSMO) should
require the PRIME contractor[21] to provide written procedures directing
that the IRS approve defect report resolution actions prior to defect report
closure. |
The IRS monitors Information Technology Asset
Management System use and requires the PRIME contractor to develop procedures
to include defect report resolution.
Under the draft procedures, the PRIME contractor initiates the
recommendation to close in the Information Technology Asset Management
System, and the IRS is responsible for the final closure. Those procedures are currently under
review. Approval and distribution of
the procedures is planned for November 30, 2002. |
Closed |
|
|
2. The Pilot Plan Needs to Include Adequate
Defect Reporting Procedures. To ensure that the defect
reporting databases provide reliable information for the pilot defect
reports, the BSMO should require the PRIME contractor to provide detailed
procedures for reconciling defect reports in the ClearQuest®
database and the Information Technology Asset Management System. |
The PRIME contractor has drafted procedures that document the process
the IRS will use when interfacing defect reporting information between the
ClearQuest® database and the
Information Technology Asset Management System defect tracking tools. These procedures contain specific
information on the reconciliation of these reports. The procedures are currently under review
and are scheduled to be approved and distributed by November 30, 2002. |
Closed |
|
2003-20-089 March 2003 |
1. File and Job Names Need to Be Compatible
With Current Tax Processing Systems. The Deputy Commissioner for
Modernization and Chief Information Officer needs to ensure that development
of job and file naming standards is expeditiously completed by the IRS
Enterprise Operations Services organization. The BSMO needs to work with the
PRIME contractor to ensure that these naming standards are used in the
development of future CADE releases and all other IRS modernization projects. |
The BSMO is developing naming standards. Key naming standards will be published and
available for use by the current processing and modernization environments by
August 1, 2003. |
Closed |
|
|
2. The Balancing, Control, and Reconciliation
Process Needs to Be Completed and Tested Prior to Release 1. The BSMO
should monitor the completion of the remaining work contained in the detailed
schedule to assess the progress in completing the balancing, control, and
reconciliation process development. |
The BSMO will continue to monitor the actions taken in
balancing, control, and reconciliation in preparation for CADE Release 1
deployment. |
Closed |
|
3. Improvements to the Computer Handbook Will
Help to Ensure an Effective Release 1 Deployment. The BSMO
should work with the PRIME contractor to incorporate minimum documentation
standards and the Documentation Task Force’s findings into CADE Release 1 and
future releases. |
The BSMO will work with the PRIME contractor to
incorporate minimum documentation standards and the Documentation Task
Force’s findings into the CADE. |
Closed |
|
|
|
4. Improvements to the Computer Handbook Will Help
to Ensure an Effective Release 1 Deployment. The BSMO should work with the
PRIME contractor to incorporate these documentation standards into the
Enterprise Life Cycle. Incorporating
standards into the Enterprise Life Cycle will provide guidance in developing
documentation for current and future CADE releases, as well as all other IRS
modernization projects. |
The BSMO is working with the PRIME contractor and Information
Technology Service organization as a task group to define standard
deliverables that will facilitate improved transition of modernization
systems into the current processing environment. The computer operations handbook subtask
group is working to define gaps and requirements for standard deliverables
needed by the Information Technology Service organization for operations and
maintenance support. |
Closed |
|
|
5. The Balancing, Control, and Reconciliation
Process Needs to Be Completed and Tested Prior to Release 1. The BSMO should require the
PRIME contractor to complete the remaining work on the balancing, control,
and reconciliation process and fully test these processes to ensure that they
meet the design requirements. |
The BSMO will continue to work with the PRIME contractor to ensure
that the remaining work for the balancing, control, and reconciliation
process for |
Closed |
|
2005-20-005 November 2004 |
1. Significant Software Changes Were Added to
CADE Release 1.1. The Chief Information Officer
should direct the BSMO to work with the PRIME contractor to ensure that
future project development changes undergo appropriate performance testing,
simulating high-volume processing, before deploying the system. |
The BSMO is planning semiannual releases of the CADE in July and
January of each year. The July
delivery will involve higher risk, more complex functionality, and the
January delivery will include filing season changes combined with additional
changes as capacity permits. Because
the returns from earlier in the filing season will be available for testing,
the IRS can conduct performance testing on the July release using the highest
volume periods. The IRS will determine
whether to conduct additional performance testing on the January release
based on the likelihood of the changes affecting performance. |
Closed |
|
|
2. The CADE Program Does Not Have a Dedicated
System Architect. The Chief Information Officer
should ensure that the BSMO makes the system architecture resources being
acquired available to the CADE program on a |
Over the last year, the BSMO has been actively searching for qualified
engineering resources. While the BSMO
has had success in recruiting a few candidates (some of whom are dedicated to
the CADE), it is very difficult to attract qualified individuals to work for
the Federal Government. The BSMO’s
recruiting efforts will continue. In
the interim, MITRE Corporation employees and members from the Enterprise
Architecture team are providing CADE engineering and architecture
support. The PRIME contractor is
continuing to provide full-time architecture support to the CADE project. |
Closed |
|
|
3. Disaster Recovery Capabilities Were Not
Tested Prior to CADE Release 1.1 Implementation. To ensure the ability of the
IRS to restore the CADE after a disaster with the least disruption to the IRS
mission, the Chief Information Officer needs to ensure that disaster recovery
capabilities for future releases of the CADE are fully tested prior to
implementation. |
Disaster recovery for the CADE needs to be periodically tested. However, it should be part of an enterprise
disaster recovery and testing strategy for mainframe computing operations and
databases at the Enterprise Computing Center.
The IRS generally deploys major functionality enhancements for future
CADE releases in July and deploys filing season changes and smaller system
enhancements as part of CADE filing season releases in January. The Systems Integration Enterprise
Architecture Office will work with the Enterprise Operations Service
organization and the Enterprise Computing Center to ensure that CADE disaster
recovery testing is included in the annual disaster recovery testing
performed each fall. Because most new
functionality will be deployed in the July release, the fall testing would be
timely prior to the start of the new filing season when the IRS will be
encountering high volumes. |
Closed |
|
|
4. Improvements to the CADE Operator’s Guide
Need to Be Completed. The Chief Information Officer
should direct the BSMO to ensure that pilot and production operational
documentation for future CADE releases is reviewed, tested, and approved
before both the pilot test and live production are allowed to proceed. This review should also ensure that the
corrective action to our March 2003 report is incorporated in this review and
that the IRS’ minimum documentation standards are completed and met in
current and future CADE releases. |
The BSMO made the required changes to the operational documentation
for CADE |
Closed |
|
5. Manual Processes Within CADE Release 1.1
Need to Be Automated for Future Releases. The Chief Information Officer
should direct the BSMO to ensure that inefficient manual processes are
automated in future CADE releases. |
Changes will be included in the January 2005 and July 2005 deliveries
addressing the specified operational inefficiencies. |
Closed |
|
|
|
6. Disaster Recovery Capabilities Were Not
Tested Prior to CADE Release 1.1 Implementation. To ensure that the IRS can
restore the CADE after a disaster with the least disruption to the IRS
mission, the Chief Information Officer needs to ensure that all aspects of
the CADE disaster recovery capabilities are tested during the Annual IRS
Disaster Recovery Test. |
The Director, |
Closed |
|
2006-20-076 June 2006 |
1. The PRIME Contractor’s Inadequate Testing
Resulted in Reduced Capabilities for CADE Release 1.3. The IRS and the PRIME
contractor agreed to defer eight Release 1.3.2 requirements to help ensure
that the CADE would process tax returns in time for the 2006 Filing Season. This occurred because the PRIME contractor
did not effectively and efficiently use computer language (coding
practices). Also, the PRIME
contractor’s unit testing did not adequately identify programming defects. |
Prior to Federal Government testing, the PRIME contractor will be required to provide the IRS with notification regarding the completion of unit testing. The CADE project team has placed this requirement of formal notification regarding the completion of unit testing in the CADE Release 2 task order and will continue to do so in future task orders. This corrective action will be incorporated into the ongoing Test Process Improvement Project, which addresses corrective actions from a prior Treasury Inspector General for Tax Administration audit report.[22] The Test Process Improvement Working Group of Stakeholders will review existing test guidance and make the appropriate modification to ensure that unit testing was adequately performed by the PRIME contractor and that the application being provided to the IRS is ready for integration and testing. The recommendations of the Working Group will be vetted through the formal IRS document review processes, and revised guidance will be posted to the Process Asset Library after executive approval. |
Closed |
|
2. Successful Development of the CADE Is
Dependent Upon Its Ability to Serve As an Efficient and Effective Foundation
for Modernized Systems and Applications. The CADE’s design for managing
taxpayer accounts is not fully developed to provide a foundation for the IRS’
current and planned modernized systems.
In |
The Modernization and Information Technology Services organization
will review the deliverables of the CADE Data Study to serve as the basis for
developing data models that will guide the logical and physical designs for
CADE Releases 3 |
Closed |
|
|
|
3. Controls to Manage CADE Requirements Do Not
Allow Ready Access for Project Team Use. Adequate procedures were not
in place to ensure that all CADE release requirements are controlled in a
timely manner. As of |
As an interim measure, a project repository has been developed within the CADE to track and control requirements for each release. This vehicle will remain in place until implementation of the planned Enterprise Services organization repository. |
Closed |
|
|
4.
Defining CADE Project Release Requirements Will Help Enable the Use of
Fixed-Price Contracts. The BSMO implemented
contracting guidance on |
The projects will continue to
work with the IRS Procurement office to ensure that the task orders awarded
are segregated to include Milestones 2, 3, and 4A as well as separate task
orders for Milestone 4B. This
separation of the 4B task order gives the IRS the ability to award firm The CADE, in conjunction with the IRS Contracting
Officers, |
Closed |
|
2008-20-080 July 2007 |
1. Plans for Deploying CADE Releases Have Not Been Achieved. The Chief Information Officer
should 1) ensure that the IRS negotiates a reasonable scope of work,
2) ensure that the amount of
staffing is adequate to accomplish the scope of projected work, |
The IRS
has implemented a formal Business Systems Requirements Report document using
IRS processes in the Business Rules and Requirements Management Division to
address scope concerns. CADE release
managers review and analyze contractor-provided resource lists to ensure that
adequate support is provided for each release. The IRS agreed to follow Enterprise Life
Cycle guidance for required reviews after completion of the Design Phase for
each major release segment and to not allow the PRIME contractor to exit the
Preliminary Design Phase without identifying all of the work related to the
release requirement. |
Closed |
|
2. The Approach Taken to Implement the
Architectural Design Will Not Support CADE Project Long-Term Goals and
Objectives. The Chief
Information Officer should limit future CADE delivery to essential
capabilities and filing season updates.
Further, the Chief Information Officer should consider postponing new
capabilities until key business decisions are made and the following
requirements are implemented: historical
data are stored, requirements identified by the CADE Independent Requirements
Project are developed and implemented, and daily processing routines are
improved. |
The IRS
initiated tasks to develop the historical data store and the requirements
that are captured in the CADE Independent Requirements Project. The IRS has also undertaken efforts to
determine what improvements can be made to daily processing. As part of re-scoping Releases 3, many new
capabilities were deferred to ensure that the |
Closed |
|
|
|
3. Implementing Current Technology to Support the CADE’s Ultimate Computer Processing Demands May Be Cost Prohibitive. The Chief Information Officer
should partner with the Wage and Investment Division Business Modernization
Office to jointly review alternative design solutions and identify process
improvements for the CADE. Alternative
design solutions need to be explored
to ensure that the CADE can operate as efficiently and effectively as
possible. |
The
Chief Information Officer will continue to work with the Submission
Processing organization to identify alternatives for processing tax returns
on high-volume days, and the Wage and Investment Division Business
Modernization Office will continue to work with the |
Open |
Source:
Treasury Inspector General for Tax Administration audit reports and IRS
management responses.
2003-20-018 - Improvements
in the Customer Account Data Engine Pilot Plan Need to Be Considered to Help
Ensure the Pilot’s Success (Reference Number 2003-20-018, dated November
2002).
2003-20-089 - Adhering to
Established Development Guidelines Will Help to Ensure the Customer Account
Data Engine Meets Expectations (Reference Number 2003-20-089, dated March
2003).
2005-20-005 - To Ensure the
Customer Account Data Engine’s Success, Prescribed Management Practices Need to
Be Followed (Reference Number 2005-20-005, dated November 2004).
2006-20-076 - Focusing
Management Efforts on Long-Term Project Needs Will Help Development of the
Customer Account Data Engine Project (Reference Number 2006-20-076, dated
June 2006).
2008-20-080 - Vital Decisions Must Be Made to Ensure Successful Implementation of Customer Account Data Engine Capabilities (Reference Number 2007-20-080, dated July 13, 2007).
Appendix
X
|
Term |
Definition |
|
Account Management
Services |
A project that
provides an integrated approach to view, access, update, and manage taxpayer
accounts. |
|
Best Practice |
A technique or methodology that, through experience and research, has proven to reliably lead to a desired result. |
|
Business Rule |
A statement that defines or constrains some aspect of
the business. |
|
Business
Rules and Requirements Management Division
|
Provides the IRS with a quality requirements baseline that reflects the needs of the business and its customers and results in the development of solutions that meet those needs. |
|
Business
Systems Requirements Report |
The primary reference for all project requirements needed to complete design and development of the business solution. |
|
CADE Independent Requirements Project |
A project with the objective of completing requirements the PRIME contractor was unable to deliver in prior CADE releases. |
|
Centralized Authorization File |
Contains information about the types of authorizations taxpayers have given their representatives for their tax returns. |
|
Clean Dependent |
A dependent with the following characteristics for acceptance in CADE tax return processing: the dependent was claimed on the Calendar Year 2005 tax return submitted by the taxpayer and was also claimed on the taxpayer’s Calendar Years 2004 and 2003 tax returns. The dependent must have a valid Taxpayer Identification Number. |
|
ClearQuest® |
A defect and change tracking system that captures and manages all types of change requests throughout the development life cycle, helping organizations quickly deliver higher quality software. |
|
Corporate Notices |
A project that
enables the CADE to support and manage taxpayer accounts that require generation
of notices. |
|
Correspondence
Production Services |
Generates and mails taxpayer notices. |
|
Credit Elect |
A taxpayer request to the IRS to change a credit to a
refund. |
|
Cycle |
A 7-day processing period (usually from Sunday to Saturday) measurement used by the IRS. |
|
Desktop Integration |
Provides integrated access to multiple systems using
only |
|
|
A commercial
off-the-shelf solution that enables data communication and transformation
among systems and applications. |
|
Enterprise
Computing Center |
Supports tax processing and information management through a data processing and telecommunications infrastructure. |
|
Enterprise
Data Strategy |
A strategy to develop integrated data solutions and retire duplicate systems while maintaining the business functionality. |
|
|
A
structured business systems development method that requires the preparation
of specific work products during different phases of the development process. |
|
Executive Steering
Committee |
Oversees
investments, including validating major investment business requirements and
ensuring that enabling technologies are defined, developed, and implemented. |
|
Filing Season |
The
period from January through mid-April when most individual income tax returns
are filed. |
|
Firm
Fixed-Price Contract |
Sets a price that is not subject to any adjustment
because of cost overruns incurred by the contractor. |
|
Forms 1040,
1040EZ, and 1040A |
The
series of IRS forms that include individual income tax returns. |
|
Individual Master
File |
The IRS database that maintains transactions or
records of individual tax accounts. |
|
Individual
Master File to Database 2 Initiative |
Will convert all Individual Master File data into a Database 2 format similar to that used by the CADE. |
|
Information
Technology Asset Management System |
Delivers an inventory system that enables tracking, reporting, and management of information technology assets. |
|
Information
Technology Modernization Vision and Strategy |
Establishes a
5-year plan that drives investment decisions; addresses the priorities around
modernizing front-line tax administration and supporting technical
capabilities; and leverages existing systems (where possible) and new
development (where necessary) to optimize capacity, manage program costs, and
deliver business value on a more incremental and frequent basis. |
|
Infrastructure |
The fundamental structure of a system or organization. The basic, fundamental architecture of any system (electronic, mechanical, social, political, etc.) determines how it functions and how flexible it is to meet future requirements. |
|
Item Tracking
Report and Control System |
An information system used to track and report on issues,
risks, and action items in the modernization effort. |
|
Level of
Effort Contract |
A contract form that describes the scope of work in general terms and requires the contractor to provide a specified level of effort (number of hours or percentage of effort) over a stated period of time. |
|
Logical Data
Model |
A foundation for designing a database that supports the business requirements. It also facilitates data re-use and sharing and provides documentation of the information requirements of the business area for ongoing impact analysis. Each business process is tied to the logical data model to assure that all data and process model components have been discovered. |
|
Logical Design |
Describes the functions required of a system; that is,
what is to be done, not how it will be done.
Logical design is concerned with the processes to be performed. |
|
Master File |
The IRS database that stores various types of taxpayer
account information. This database
includes individual, business, and employee plans and exempt organizations
data. |
|
Milestone |
Provides for a “go/no-go” decision point in
a project and is sometimes associated with funding approval to proceed. |
|
MITRE Corporation |
Hired by the IRS as
a Federally Funded Research and Development Center to assist with the IRS
systems modernization effort. |
|
Notice |
A computer-generated message resulting from an
analysis of the taxpayer’s account on the Master File. |
|
Notice Review
Processing System |
Matches
notices with Individual Master File unpostable and re-sequencing
transactions. |
|
Notice
Services Program |
Has capabilities to support notice issuance directly
from the CADE database to enhance notice processing, notice management, and
taxpayer services. |
|
Physical Design |
Describes how
the processing will be performed; for example, whether data are input by a
person or read by a bar code reader or whether a file is electronic or
print. Tools to represent the physical
design include system flowcharts and structure charts. |
|
PRIME Contractor |
The Computer
Sciences Corporation, which heads an alliance of leading technology companies
brought together to assist with the IRS’ efforts to modernize its computer
systems and related information technology. |
|
Process Asset
Library |
A web-based
repository that contains process content for the IRS. The contents include policies, directions,
procedures, templates, and standards used by the IRS to define, implement,
and manage business change for the IRS Business Systems Modernization
Program. |
|
Release |
A specific edition of software. |
|
Task Order |
An order for services planned against an established
contract. |
|
Unit Testing |
Ensures that
program modules perform in accordance with requirements. |
|
Vision and Strategy |
The phase that translates the fundamental business strategy into a transformation strategy for business processes, information technology, and organizational change. |
|
Wage and Investment
Division Business Owners |
Includes, but is not limited to, the Business
Modernization Director for the CADE, the Business Leader for the CADE, and
the Business Requirements Director for the CADE. |
Appendix XI
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.
[1] Vital Decisions Must Be Made to Ensure Successful Implementation of Customer Account Data Engine Capabilities (Reference Number 2007-20-080, dated July 13, 2007).
[2] See Appendix X for a glossary of terms.
[3] Vital Decisions Must Be Made to Ensure Successful Implementation of Customer Account Data Engine Capabilities (Reference Number 2007-20-080, dated July 13, 2007).
[4] Pub. L. No. 110-185, 122 Stat. 613.
[5] See Appendix X for a glossary of terms.
[6] Vital Decisions Must Be Made to Ensure Successful Implementation of Customer Account Data Engine Capabilities (Reference Number 2007-20-080, dated July 13, 2007).
[7] See Appendix IX for IRS corrective actions to our prior recommendations.
[8] Appendix VIII presents an overview of the Enterprise Life Cycle.
[9] A “yellow” designation signifies that the issues are documented in the Item Tracking Reporting and Control system and the project is proceeding. A “red” designation signifies that the issues are documented in the Item Tracking Reporting and Control system and the project is in jeopardy.
[10] Pub. L. No. 110-185, 122 Stat. 613.
[11] Pub. L. No. 110-185, 122 Stat. 613.
[12] Vital Decisions Must Be Made to Ensure Successful Implementation of Customer Account Data Engine Capabilities (Reference Number 2007-20-080, dated July 13, 2007).
[13] Appendix VIII presents an overview of the Enterprise Life Cycle.
[14] See Appendix X for a glossary of terms.
[15] See Appendix X for a glossary of terms.
[16] CADE Release 1 (Operations and Maintenance) was initially referred to as “CADE Release 1, Milestone 5” in the Business Systems Modernization Expenditure Plan.
[17] CADE Release 1.2 was initially referred to as “CADE Filing Season 2005” in the Business Systems Modernization Expenditure Plan. The IRS did not provide cost and schedule data for this Release in subsequent Expenditure Plans.
[18] CADE Releases 1.3.1 and 1.3.2 were initially combined and referred to as “CADE Filing Season 2006” in the Business Systems Modernization Expenditure Plan.
[19] See Appendix X for a glossary of terms.
[20] See Appendix X for a glossary of terms.
[21] See Appendix X for a glossary of terms.
[22] System Requirements Were Not Adequately Managed During the Testing of the Custodial Accounting Project (Reference Number 2007-20-019, dated December 2004).