Modernization Program Uncertainties Are Affecting the Account Management Services Project Development
June 9, 2009
Reference Number: 2009-20-071
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
June 9, 2009
MEMORANDUM FOR CHIEF TECHNOLOGY OFFICER
FROM: Michael R. Phillips /s/ Michael R. Phillips
Deputy Inspector General for Audit
SUBJECT: Final Audit Report – Modernization Program Uncertainties Are Affecting the Account Management Services Project Development (Audit # 200820010)
This report presents the results of our review of the
Account Management Services (AMS) project release[1]
development. The overall objectives of
this review were to determine whether the AMS project management team is
following established systems development processes to ensure effective and
efficient delivery of AMS Releases 1.3 and 2.1 and to assess the adequacy of internal
controls to ensure appropriate expenditure and reporting of funds used to
support AMS system release activities. This
review was part of our Fiscal Year 2009 Annual Audit Plan under the major
management challenge of Modernization of the Internal Revenue Service (IRS).
Impact on the Taxpayer
The AMS system will provide IRS employees with immediate
access to taxpayer account data and the ability to perform instantaneous
transaction processing and daily account settlement. Although the AMS project management team
generally followed established systems development processes to deliver Releases
1.3 and 2.1, IRS management needs to decide what future project development
plans will be followed and improve project funding controls. Addressing these issues will allow the AMS
system to help meet the ongoing need to modernize tax administration processes,
applications, and technologies, and to enhance the level of service provided to
the nation’s taxpayers.
Synopsis
The AMS
project management team completed deployment of Release 1.3 on February 20,
2009. Release 2.1 is on track for its
scheduled August 5, 2009, delivery.
Our assessment of project management controls and activities in the development and deployment of AMS Releases 1.3 and 2.1 found that adequate documentation was developed and maintained to meet Enterprise Life Cycle[2] requirements for deliverables and work products, as well as project work breakdown structure schedules, task orders and modifications, and meeting minutes.
In Calendar Year 2007, the IRS conducted an extensive
technical analysis on the future of the AMS system, the Customer Account Data
Engine, and the Integrated Data Retrieval System. This analysis subsequently resulted in a decision
to modernize and reuse the Integrated Data Retrieval System, eliminating the
need to develop many of the capabilities originally planned for the AMS system.
In August 2008, the IRS Commissioner established a Program
Integration Office to manage the migration of taxpayer account processing to a
modernized environment. This Office
concluded that the original capabilities planned for the AMS system were not consistent
with revised modernization goals. A recommendation
to stop all activities on AMS Release 2.2 and future releases was approved by
the Customer Service Executive Steering Committee on September 22, 2008.
Because of these tentative plans about its future, IRS
executives need to make several strategic decisions that will affect the future
of the AMS system. The longer these
decisions are delayed, the greater the risk of costly rework.
Although contracted work for the AMS system was performance-based, timely finalized, and monitored, the contract was not developed in a manner to appropriately control spending across releases. Because of the form of the contract and the absence of key internal controls over funding, the AMS project management team experienced difficulty in managing project funding for Releases 1.3, 2.1, 2.2, and 3.1. Expenses for infrastructure were obligated from Release 1.3 to implement requirements for projected IRS users through Release 3.1. This resulted in a shortfall of available funding to complete Release 1.3 application development activities.
The AMS project management team decided to spend money across releases in order to proceed with project development. They initially approved spreading infrastructure costs across multiple releases because these costs do in fact benefit multiple releases. However, because some development work was associated with project infrastructure, budget managers began to spend development funds in the same way. Ultimately, development not associated with infrastructure was paid for by using funds from future releases to support current releases (i.e., cross-release spending). The AMS project management team agreed that formally reallocating the money through the existing governance process would have been the proper method for handling the funding shortfalls.
Recommendations
The Chief Technology Officer should ensure that AMS project management activities follow the appropriate governance process to redirect remaining AMS funding to complete Releases 1.3 and 2.1. To address the need to improve controls over project funding, the Chief Technology Officer should consider directing project management teams and contracting officers to propose modernization task orders with the ability to readily account for system development activity funding on a release basis and, for major modernization development projects, on a milestone basis. Actions should be taken to reinforce existing governance procedures to Modernization and Information Technology Services organization executives and managers about release-specific project funding. In addition, the Chief Technology Officer should provide training and desk procedures on the proper use of release-specific (and, where applicable, milestone-specific) project funding. The procedures should provide detailed steps for preparing, reviewing, and approving requisitions.
Response
The IRS agreed with our recommendations. The Account Management Services project request to realign funds to complete Releases 1.3 and 2.1 followed the governance process, received approval from governance committees, and notified external stakeholders. The Associate Chief Information Officer for Management’s Financial Management Services Business Systems Modernization team will meet with the Procurement organization and Business Systems Modernization project managers to assess current practices and determine what changes are necessary to implement our contracting recommendations. The Modernization and Information Technology Services organization will reinforce existing governance procedures to ensure that this topic is included as an agenda item for discussion at appropriate Executive Steering Committee meetings. Further, formal desk procedures, including the appropriate use of release-specific and milestone-specific project funding, are under development. Management’s complete response to the draft report is included as Appendix VI.
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, Acting Assistant Inspector General for
Audit (Security and Information Technology Services), at (202) 622-8510.
Work Has Been Suspended
on Future Account Management Services Project Releases
Adequate Project
Funding Controls Were Not Implemented
Appendices
Appendix
I – Detailed Objectives, Scope, and Methodology
Appendix
II – Major Contributors to This Report
Appendix
III – Report Distribution List
Appendix
IV – Enterprise Life Cycle Overview
Appendix
V – Glossary of Terms
Appendix
VI – Management’s Response to the Draft Report
Abbreviations
|
AMS |
Account Management Services |
|
IRS |
Internal Revenue Service |
The IRS chartered the AMS project management team to meet the ongoing need to modernize tax administration processes, applications, and technologies, and to enhance the level of service provided to the nation’s taxpayers.
The Account Management Services (AMS) system will provide Internal Revenue Service (IRS) employees in multiple business operating divisions with immediate access to taxpayer account data. The AMS system also has the ability to perform instantaneous transaction processing and daily account settlement, which are critical to improving customer service. In addition, the AMS system will provide IRS employees with the ability to access and update taxpayer accounts regardless of whether the data reside in the current Master File[3] processing environment or in the modernized Customer Account Data Engine.
Work was initiated in May 2006 to design and develop the AMS system. The AMS system plans include capabilities to 1) provide IRS employees with data presentation services to display and validate changes to update taxpayer accounts, 2) store and manage actions and activities by IRS employees, such as work assignments, transfers, case closures, and generation of letters to the taxpayer, and 3) implement applications that monitor taxpayer accounts for followup activity or deferred actions.
The
first release of the AMS system delivered the capability to update
authoritative taxpayer account data on a daily basis to more than 33,000 customer
service representatives.
Ÿ AMS Release 1.1 updated taxpayer accounts to the Customer Account Data Engine using the Enterprise Architecture Integration Broker.
Ÿ AMS Release 1.2 built the framework necessary to view and monitor taxpayer accounts, capture activity history, and automate the managing and reporting of work to an online process.
Ÿ AMS Release 1.3 merges existing IRS Desktop Integration and Correspondence Imaging System applications into the AMS system.
AMS Release 2.1 plans include extending the capabilities established by Release 1.3 and providing new enterprise-wide services that were not previously available as part of the existing Desktop Integration and Correspondence Imaging System applications. With this release, the AMS system will improve technology and business processes to address taxpayer needs more quickly, efficiently, and accurately. Specifically, Release 2.1 will:
Ÿ
Enable IRS employees
to view and access taxpayer account and image data directly from either the
current processing environment or modernized systems using a single, integrated
environment called the Virtual Case Folder.
Ÿ
Provide the ability
for online name changes to either the current processing environment or
modernized accounts.
Ÿ
Implement improvements
for electronic routing of forms and access to additional current processing
environment systems.
In Fiscal Years 2005, 2006, and 2008, the AMS Releases 1.1, 1.2, 1.3, and 2.1 obtained funding for development activities totaling more than $41 million as shown in Figure 1.
Figure
1: Account Management Services Project Funding
|
Release |
Milestone |
Fiscal Year 2005 |
Fiscal Year 2006 |
Fiscal Year 2008 |
Release |
|
1.1 |
2/3 |
$4.011 |
- |
- |
- |
|
1.1 |
4a |
$1.421 |
- |
- |
- |
|
1.1 |
4b |
- |
$2.007 |
- |
$7.439 |
|
1.2 |
2/3 |
- |
$3.489 |
- |
- |
|
1.2 |
4a |
- |
$1.793 |
- |
- |
|
1.2 |
4b |
- |
$3.463 |
- |
$8.745 |
|
1.3 |
2/3 |
- |
$2.596 |
- |
- |
|
1.3 |
4a |
- |
$1.655 |
- |
- |
|
1.3 |
4b |
- |
- |
$8.509 |
$12.760 |
|
2.1 |
2/3 |
- |
$4.949 |
- |
- |
|
2.1 |
4a |
- |
- |
$3.282 |
- |
|
2.1 |
4b |
- |
- |
$3.979 |
$12.210 |
|
Totals |
|
$5.432 |
$19.952 |
$15.770 |
$41.154 |
Source: IRS Business Systems Modernization
Expenditure Plans for Fiscal Years 2005, 2006, 2007,
and 2008.
This review was performed at the Modernization and Information Technology Services organization facilities in New Carrollton, Maryland, during the period August 2008 through February 2009. 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 included in the Treasury Inspector General for Tax Administration Fiscal Year 2009 Annual Audit Plan under the major management challenge of Modernization of the IRS. 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 Account Management Services Project Management Team Generally Followed Established Systems Development Processes
The AMS project management team completed deployment of Release 1.3 on February 20, 2009. Release 2.1 is on track for its scheduled delivery on August 5, 2009. Our assessment of project management controls and activities in development and deployment of these releases found that adequate documentation was developed and maintained to meet Enterprise Life Cycle[4] requirements for deliverables and work products, as well as project work breakdown structure schedules, task orders and modifications, and meeting minutes. The AMS project management team adequately implemented the following management controls for developing Releases 1.3 and 2.1.
Configuration Management: The configuration management plan addresses key items required by the Enterprise Life Cycle. The project management team performed the required configuration audits prior to the exit of Release 1.3 Milestone 4b, is following an appropriate formal change request process, and is using a formal process to track changes.
Risk Management: The AMS project management and risk management plans provide for comprehensive risk management activities. In addition, the project management team effectively measured the potential quantitative and qualitative effects of risks.
Requirement Development and Management: The Business Rules and Requirements Management Office led the requirements development activities and was the first approving office on the Business Systems Requirements Report, which was approved in a timely manner. Information Technology Project Control Reviews and Executive Steering Committee meetings regularly identify AMS system requirement issues and their appropriate resolution.
Requirements were documented in accordance with the
Enterprise Life Cycle guidance into the Business Systems Requirements Report. The Design Specifications Report and Business
Systems Requirements Report both provide bidirectional traceability for
requirements. Bidirectional traceability
provides assurance that the
requirements expected and approved to be deployed are the requirements that are
actually deployed.
Transition Management: The AMS transition management plan adequately addressed the topics required by the Enterprise Life Cycle and Transition Management Office Transition Management Guide. It covers the following areas as required by the Guide and template:
Ÿ Change requests.
Ÿ Impact assessments.
Ÿ User and third-party training.
Ÿ Staffing and funding.
Ÿ Operational documentation.
Ÿ Definitions of post-Milestone 5 roles, responsibilities, and changes.
Work Has Been Suspended on Future Account Management Services Project Releases
During Calendar Year 2007, the IRS conducted an extensive
technical analysis on the future of the AMS system, the Customer Account Data
Engine, and the Integrated Data Retrieval System. As part of this analysis, the IRS evaluated
the long-term modernization goals and objectives.
Under the advice of executives from the IRS business operating divisions and the Modernization and Information Technology Services organization, the IRS Commissioner subsequently decided that the IRS would pursue an approach to modernize and reuse the Integrated Data Retrieval System. This decision eliminated the need to develop many capabilities originally planned for the AMS system, such as directly updating taxpayer accounts for use by the Customer Account Data Engine. As part of the Integrated Data Retrieval System modernization and reuse strategy, the Customer Account Data Engine will link directly to the Integrated Data Retrieval System and direct access to the AMS system will no longer exist.
In August 2008, the IRS Commissioner established a Program Integration Office to manage the migration of taxpayer account processing to a modernized environment. The Program Integration Office subsequently performed a portfolio review that included an assessment of AMS Releases 2.1 and 2.2. The assessment concluded that the original capabilities planned for the AMS system were not consistent with Program Integration Office goals for the modernization of taxpayer accounts. The Program Integration Office recommendation to stop all activities on AMS Release 2.2 and future releases was approved by the Customer Service Executive Steering Committee on September 22, 2008.
Because of these tentative plans about its future, IRS
executives from the business operating divisions and the Modernization and Information
Technology Services organization need to make several strategic decisions about
the future of the AMS system. The longer
it takes to make these decisions, the greater the risk of costly rework.
Recommendation
Recommendation 1: The Chief Technology Officer should ensure that the AMS project development activities follow the appropriate governance process to redirect remaining AMS funding to complete Releases 1.3 and 2.1.
Management’s Response: The IRS agreed with this recommendation. The Account Management Services project request to realign funds to complete Release 1.3 and 2.1 followed the governance process. The request received approval from the Customer Service Executive Steering Committee on December 5, 2008, and from the Modernization and Information Technology Services Enterprise Governance Board on January 23, 2009. Notification was made to the Department of the Treasury and the Office of Management and Budget.
Adequate Project Funding Controls Were Not Implemented
The task order and related work requests for the AMS system were performance-based, timely finalized, and monitored. However, the AMS task order was not developed in a manner to appropriately control spending across the various releases, and key internal controls over AMS funding were not implemented.
The AMS project management team experienced difficulty in managing project funding for Releases 1.3, 2.1, 2.2, and 3.1. Expenses for infrastructure were obligated from Release 1.3 to provide capability to implement requirements for projected IRS users through Release 3.1. This resulted in a shortfall of available funding to complete Release 1.3 application development activities.
The Modernization and Information Technology Services organization executives and AMS project managers identified the need for additional Release 1.3 funding. However, instead of reallocating and transferring the funding through the existing governance process, they used funds from future releases for the current release (i.e., cross-release spending) to proceed with project development.
The AMS project management team decided to spend money across releases in order to proceed with project development. They initially approved spreading infrastructure costs across multiple releases because these costs do in fact benefit multiple releases. However, because some development work was associated with project infrastructure, budget managers began to spend development funds in the same way. Ultimately, development not associated with infrastructure was paid for using cross-release spending. When one release was low on funding, they procured assets and services for that release by charging the expense to other releases. The AMS project management team agreed that formally reallocating the money through the existing governance process would have been the proper method for handling the funding shortfalls.
Project development funds totaling almost $5.4 million were spent across various AMS releases. A total of 15 cross-release spending transactions were made for development costs between January 14, 2008, and November 20, 2008. Of the 15 cross-release spending transactions:
Ÿ Eight transactions totaling almost $3.2 million involved requisitions where the narrative descriptions of work to be performed clearly did not match the funding source, referred to as the internal order code. Adequate internal controls where the narrative description is compared to the internal order code would have identified these transactions as inappropriate.
Ÿ Seven transactions involved requisitions where narrative descriptions and internal order codes did not identify that another release was charged with costs.
o Two transactions totaling approximately $771,724 had narrative descriptions that matched the internal order codes. However, the development work performed for these transactions supported other releases.
o Five transactions totaling almost $1.5 million had narrative descriptions that did not clearly identify the release supported by the transaction.
The IRS informed us about the specific releases these seven transactions actually supported and confirmed that the transactions involved cross-release spending. An adequate internal control would require a review by the project manager to assure that the work requisitioned is clearly and completely described in the requisition narrative description and that the work supports the appropriate release activity.
A total of approximately $17.4 million was spent across AMS releases, comprised of almost $5.4 million of development costs discussed previously, and about $12 million of infrastructure and project management costs. These infrastructure and project management costs did benefit multiple releases. However, allocation of these funds to multiple releases did not go through the Modernization and Information Technology Services organization’s governance process for approval. Figures 2 through 5 present a breakdown of the cross-release spending transactions.
Figure 2: Total AMS Cross-Release Spending From All Releases
Figure 3 was removed due to its size. To see Figure 3, please go to the Adobe PDF
version of the report on the TIGTA Public Web Page.
Figure 4: Release 2.1 Obtained $2,262,730 in Project Development
Funding From 4 Different Releases
Figure 4 was removed due to its
size. To see Figure 4, please go to the
Adobe PDF version of the report on the TIGTA Public Web Page.
Figure 5 was removed due to its size. To see Figure51, please go to the Adobe PDF
version of the report on the TIGTA Public Web Page.
While the cross-release spending occurred with management’s knowledge, several internal controls that could have prevented it were not in place.
AMS system contract work was not release-specific
As required by Congress and the Government Accountability Office, the Modernization and Information Technology Services organization reports on modernization project costs and deployment schedules in the Business Systems Modernization Expenditure Plan. The Expenditure Plan reports project costs and schedules by system, release, and milestone. However, the AMS project development task order was not release- or milestone-specific. Neither the task order nor 14 of 15 modifications limited contracted work to an individual AMS project release.
With a contract of this scope, control over spending for each release can be difficult. The absence of a release-specific contract contributed to cross-release spending. A release-specific contract may have provided improved controls for employees, including requisition preparers, approving officials, the financial plan manager, and management, to prevent cross-release spending.
The
existing governance process was not used to reallocate funds across releases
Existing procedures provide for formal reporting and reallocation of funds through the governance process. As discussed previously, the Modernization and Information Technology Services organization and the AMS project management team chose not to report shortfalls to the Customer Service Executive Steering Committee and the Modernization and Information Technology Services Enterprise Governance Committee. Instead, they chose to alleviate funding shortfalls through cross-release spending.
Employees
were not properly trained and there were no written procedures for preparing, reviewing,
or approving requisitions
Our review of questionable development requisitions found cross-release spending transactions containing narrative descriptions and coding that could have identified the transaction as potentially inappropriate. However, employees and managers working with AMS project requisitions did not identify the transactions as inappropriate because they were not properly trained and did not have written operating procedures.
Funding for
modernization projects is unique compared to funding for the remainder of IRS
operations.
Modernization funding is controlled through the Business Systems Modernization Expenditure Plan. A proposed modernization project’s budgets and status are presented in the Expenditure Plan with details at the project release and milestone levels. Before funding is made available, the Expenditure Plan must be reviewed by the Government Accountability Office and approved by Congress. To enable proper reporting, all expenditures must be accounted for at the project release and milestone levels. In addition, modernization funding is made available on a schedule that does not mirror the IRS fiscal year.
Many of the employees or managers involved in the requisition development and approval process had prior training or experience with IRS budgeting, funding, and requisitions. However, no formal training is available for working with Business Systems Modernization requisitions, expenditures, and accounting.
None of the employees we interviewed that were responsible for preparing and approving AMS project requisitions had any written procedures on how to properly 1) work with Business Systems Modernization accounting codes and expenditures or 2) prepare, review, and approve Business Systems Modernization requisitions. In addition, they were not instructed to compare the requisition coding to the narratives to determine the accuracy of expenditures.
The Chief Financial Officer developed a detailed list of release-specific accounting codes and updates it quarterly. The list is available to IRS employees on the Chief Financial Officer’s web site for reference. However, other than the AMS project’s Budget Manager, project employees, and managers working with AMS project requisitions were unaware that these codes were available for reference.
Most of the employees and managers interviewed were
unfamiliar with release-specific accounting codes. Some did not know that project expenses were
tracked down to the release level. Most
were unaware of rules and procedures regarding cross-release spending and how
to prepare, review, or approve a transaction in a way that would prevent such
spending. Adequate training and formal
procedures for preparing, reviewing, or approving requisitions would have
helped employees identify and possibly prevent most of the AMS project
cross-release spending.
Management
Actions:
As a result of the identification of the cross-release spending, Modernization and Information Technology Services organization management took the following steps to properly execute budget allocation and funding actions that required Customer Service Executive Steering Committee approval:
Ÿ Allocated architecture costs across all available releases.
Ÿ Allocated infrastructure expenses benefiting multiple releases.
Ÿ Identified required realignment actions to continue funding the development of Releases 1.3 and 2.1 in excess of original planned amounts.
To implement the budget allocation and change actions, the Modernization and Information Technology Services organization:
Ÿ Obtained Customer Service Executive Steering Committee concurrence with architecture and infrastructure funding approaches.
Ÿ Obtained Customer Service Executive Steering Committee approval of AMS project budget realignments.
Ÿ Used incremental funding to begin procurement actions to avoid a work stoppage.
Ÿ Temporarily used the Business Systems Modernization management reserve account to fund the AMS project realignment change request.
Ÿ Obtained Modernization and Information Technology Services organization Enterprise Governance Committee approval and provided notification to external stakeholders.
Ÿ Submitted change requests for the Business Systems Modernization Expenditure Plan.
Ÿ Approved the Corrective Action Plan for the Exhibit 300 Capital Asset Plan and Business Case.
In addition, Modernization and Information Technology Services
organization management informed us that they had instituted a control to
prevent inappropriate funding from releases and milestones that have not been
initiated. The control denies access to
release and milestone funds through the Integrated Financial System until the
project starts work related to those particular releases or milestones.
Recommendations
The Chief Technology Officer should:
Recommendation 2: Direct project management teams and contracting officers to propose modernization task orders with the ability to readily account for system development activity funding on a release basis and, for major modernization development projects, on a milestone basis. Designating contract activities for specific release and milestone capital development activities will provide clear funding and reporting traceability and more accessible assessments of contract funding progress.
Management’s
Response: The
IRS agreed with this recommendation. The Associate Chief Information Officer for Management’s
Financial Management Services Business Systems Modernization team will meet
with:
Ÿ The Procurement organization to discuss how the recommendation can be incorporated with Procurement guidelines.
Ÿ Business Systems Modernization project managers to assess current practices and determine what changes are necessary to ensure implementation of our recommendations, amended if necessary by Procurement’s input.
Based on the results of these discussions, the Financial Management Services Business Systems Modernization team will issue budgetary guidelines. IRS management does not believe there is a governance impact to Recommendation 2.
Recommendation 3: Reinforce existing governance procedures to Modernization and Information Technology Services organization executives and managers about release-specific project funding, the need to gain approval of funding reallocations, and requirements to communicate these changes to stakeholders.
Management’s Response: The IRS agreed with this recommendation. The Associate Chief Information Officer for Management’s Financial Management Services Business Systems Modernization team will review current policies/procedures regarding Business Systems Modernization release-specific project funding, parameters around funding reallocations, and external stakeholder notifications to ensure they reflect the latest guidance. The team will then reissue existing policies/procedures to information technology executives and managers. In addition, the team will partner with the Enterprise Services’ Program Governance Office to reinforce existing governance procedures and to ensure that this topic is included as an agenda item for discussion at appropriate Executive Steering Committee meetings.
Recommendation 4: Provide training and desk procedures on the proper use of release-specific (and, where applicable, milestone-specific) project funding. The procedures should provide detailed steps for preparing, reviewing, and approving requisitions. The procedures should include, at a minimum, the following controls:
1) When requisitions are initiated, requisition preparers, financial plan managers, and approvers must:
a) Verify that the narrative describing the work to be performed in the requisition is clear and identifies the project release supported.
b)
Compare the internal order code to the narrative to
ensure that the correct release is being charged for the expense.
2) Before requisitions are executed, the project manager must verify that the actual work requisitioned supports the release to be charged for the cost.
Management’s Response: The IRS agreed with this recommendation. The suggested controls have been discussed with Applications Development organization requisition preparers, reviewers, and approvers and are now in place. Formal desk procedures, including the appropriate use of release-specific and milestone-specific project funding, are under development.
Appendix I
Detailed Objectives, Scope, and
Methodology
The overall objectives of this review were to determine whether the AMS project management team is following established systems development processes to ensure effective and efficient delivery of AMS Releases[5] 1.3 and 2.1 and to assess the adequacy of internal controls to ensure appropriate expenditure and reporting of funds used to support AMS project release activities. This review was part of our Fiscal Year 2009 Annual Audit Plan under the major management challenge of Modernization of the IRS.
To accomplish our objectives, we identified the internal control guidance for the AMS system’s development. This guidance includes the Enterprise Life Cycle[6] and the Internal Revenue Manual. We assessed the adequacy of AMS project development activities in relation to the guidance provided by these internal control systems. We also assessed the adequacy of AMS project development and program plans by reviewing Business Systems Modernization program and project documentation and data provided by the IRS, the Business Systems Modernization Expenditure Plans, and the Exhibit 300, Capital Asset Plan and Business Case, required by the Office of Management and Budget. We supported this work by interviewing Applications Development organization and Enterprise Services organization personnel. Specifically, we:
I. Determined whether the AMS project management team followed established systems development processes to ensure the timely delivery of AMS Release 1.3 with all planned capabilities.
A.
Obtained
the AMS project configuration management plan and interviewed AMS project
management to assess project configuration management activities.
B. Obtained relevant Item Tracking Reporting and Control System reports to determine whether AMS project risk management processes were sufficient.
C. Interviewed AMS project management and obtained relevant requirements management documentation to assess project requirements development and management efforts.
D. Determined the adequacy of contract management for Release 1.3 by reviewing the relevant task orders and work requests.
E. Determined the adequacy of transition management activities to assess IRS readiness to accept Release 1.3.
F.
Determined the adequacy of the Release 1.3 Pilot
Plans.
II. Determined the status of the AMS project management team members’ and Wage and Investment Division managers’ efforts to deliver new capabilities with AMS Release 2.1 in a timely manner. We accomplished this through interviews and by reviewing electronic AMS project documentation.
A. Determined the adequacy of efforts to deliver Virtual Case Folder capabilities.
B. Reviewed efforts to move the AMS system to the Employee User Portal and the decision to suspend the New Portal Implementation Project.
C. Determined the adequacy of the AMS project management team’s efforts to deliver the online capability to update taxpayer names.
D. Assessed the status of the design and development work on the AMS system enhancements scheduled for delivery with Release 2.1.
E. Assessed the adequacy of Release 2.1 project management controls.
1. Assessed the adequacy of controls concerning management of project resources such as personnel, funding, facilities and tools, and stakeholder coordination and involvement.
2. Assessed the adequacy of controls to manage project requirements.
3. Assessed the adequacy of controls to manage identified project risks and issues.
III. Assessed the adequacy of internal controls that ensure appropriate expenditure and reporting of funds used to support AMS project release activities.
A. Reviewed criteria and assessed the adequacy of controls for the initiation, approval, expenditure, and reporting of modernization project costs. For this subobjective, we analyzed financial data provided by the IRS. We did not independently test the validity of these data.
B. Reviewed criteria and assessed the adequacy of controls for transferring funds between releases within a modernization project.
Appendix II
Major Contributors to This Report
Margaret E. Begg, Acting Assistant Inspector General for Audit (Security and Information Technology Services)
Scott A. Macfarlane, Director
Edward A. Neuwirth, Audit Manager
Charlene L. Elliston, Senior Auditor
Bruce Polidori, Senior Auditor
Glen J. Rhoades, Senior Auditor
Appendix III
Commissioner C
Office of the Commissioner – Attn: Chief of Staff C
Deputy Commissioner for Operations Support OS
Chief Information Officer OS:CIO
Commissioner, Wage and Investment Division SE:W
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:
Commissioner, Wage and Investment Division SE:W
Associate Chief Information Officer, Applications Development OS:CIO:AD
Acting Director, Procurement OS:A:P
Director,
Program Oversight OS:CIO:SM:PO
Appendix IV
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:
|
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
Appendix V
|
Term |
Definition |
|
Business
Systems Modernization |
A
complex effort that began in Calendar Year 1999 to modernize IRS technology
and related business processes. |
|
Capital Asset Plan and Business Case |
Also known as Exhibit 300, it is used as a one-stop document for a myriad of information technology management issues such as business cases for investments, agency modernization efforts, and overall project management. The Office of Management and Budget requires each agency to submit an Exhibit 300 twice each year for each major information technology investment. |
|
Correspondence Imaging System |
Captures and stores images of correspondence from taxpayers including letters, returned notices, and standard forms. |
|
Customer Account Data Engine |
Consists of databases and related applications that will replace the IRS official repository of taxpayer information (the Master File) and provide the foundation for managing taxpayer accounts to achieve the IRS modernization vision. |
|
Customer Service
Executive Steering Committee |
Has the responsibility for ensuring the successful implementation and integration of modernization projects and related program activities within its portfolio by overseeing investments, including validating major investment business requirements and ensuring that enabling technologies are defined, developed, and implemented. |
|
Desktop
Integration |
Provides integrated access to multiple systems using
only |
|
Employee User Portal |
A web-hosting infrastructure that supports an Intranet portal that allows IRS employees to access business applications and data. |
|
|
A commercial off-the-shelf solution that will be used to enable the communication and data transformations between components of the AMS system, the current processing environment, and the Customer Account Data Engine. |
|
|
A
structured business systems development method that requires the preparation
of specific work products during different phases of the development process. |
|
Governance |
An IRS designed enterprise governance model that assigns all information technology projects to an appropriate executive oversight body. |
|
Infrastructure |
The fundamental structure of a system or organization. The basic, fundamental architecture of any system (electronic, mechanical, social, political, etc.) that determines how it functions and how flexible it is to meet future requirements. |
|
Integrated
Data Retrieval System |
An IRS mission-critical system consisting
of databases and programs supporting IRS employees working active tax
cases. It manages data retrieved from
the Master File allowing IRS employees to take specific actions on taxpayer
account issues, track status, and post updates back to the Master File. |
|
Integrated Financial
System |
The
IRS’ administrative financial accounting system. |
|
Item Tracking
Reporting and Control System |
An information system used to track and report on issues, risks, and action items in the modernization effort. |
|
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 |
Milestones
provide for “go/no-go” decision points in a project and are sometimes
associated with funding approval to proceed. |
|
Modernization and Information Technology Services |
The highest level recommending and decision-making body to oversee and enhance enterprise management of information systems and technology. It ensures strategic modernization and information technology program investments, goals, and activities are aligned with and support 1) the business needs across the enterprise and 2) the modernized vision of the IRS. |
|
New
Portal Implementation Project |
A project to establish a portal system to provide better access to information, services, and applications for all internal and external IRS user communities. |
|
Online Name Changes |
Allows IRS employees to make online updates to taxpayer names through a common interface to update the Customer Account Data Engine. |
|
Release |
A specific edition of software. |
|
Requirement |
A formalization of a need and the statement of a capability or condition that a system, subsystem, or system component must have or meet to satisfy a contract, standard, or specification. |
|
Requisition Tracking
System |
A web-based application that allows IRS personnel to
prepare, approve, fund, and track requests for the delivery of goods and
services. |
|
Task Order |
An order for services planned against an established
contract. |
|
Virtual Case Folder |
A means for the customer service desktop application to provide a view of taxpayer account and case information to authorized users. |
|
Work Breakdown
Structure |
A deliverable-oriented grouping of project elements that organizes and defines the total scope of a project. A project schedule used to manage the tasks, task relationships, and resources needed to meet project goals. |
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.
[1] See
Appendix V for a glossary of terms.
[2] See Appendix IV for an overview of the Enterprise Life Cycle.
[3] See Appendix V for a glossary of terms.
[4] See Appendix IV for an overview of the Enterprise Life Cycle.
[5] See Appendix V for a glossary of terms.
[6] See Appendix IV for an overview of the Enterprise Life Cycle.