Treasury
Inspector General for Tax Administration
Office of Audit
THE INTERNAL REVENUE SERVICE OVERSIGHT BOARD HAS TAKEN ACTIONS TO IMPROVE ITS FINANCIAL MANAGEMENT, BUT CONTINUING WEAKNESSES WERE IDENTIFIED
Issued on June 18, 2010
Highlights
Highlights of Report
Number: 2010-10-052 to the Chairperson, Internal
Revenue Service Oversight Board.
IMPACT ON TAXPAYERS
The Internal Revenue Service (IRS)
Restructuring and Reform Act of 1998 called for the creation of the IRS Oversight
Board (Board), which is an independent body responsible for providing the IRS
with long-term guidance and direction.
The Board is responsible for overseeing the IRS in its administration,
management and application of the Internal Revenue laws, as well as budgetary
oversight. As a result, it is important
that the Board maintain proper financial controls over its own budgetary
process and ensure proper stewardship of taxpayer funds.
WHY TIGTA DID THE AUDIT
This audit is a followup review to
determine whether the Board adequately addressed significant financial
management control deficiencies previously identified by TIGTA in Fiscal Year
2005. The overall objective of this
review was to evaluate the effectiveness of actions taken by the Board to resolve
conditions reported in our prior audit, which found that the Board did not have
adequate internal controls and some controls that were in place were not
followed. Also, the manner in which the
Board’s annual budget was determined may give the appearance that the Board is
not independent from the IRS.
WHAT
TIGTA FOUND
Our review
identified that while procedures and controls have been implemented since our
last audit, not all procedures and controls are being adequately followed. TIGTA determined that the Board does not
effectively monitor its financial activities and did not timely identify
approximately $2.2 million in potential excess funds for Fiscal Years 2005
through 2009. In addition, the Board is
still not certifying the accuracy of costs associated with Board
activities submitted to the IRS for reimbursement to ensure that all expenses
are reasonable and necessary. However,
TIGTA did not identify any misclassified or unreported transactions for Fiscal Year
2009. Further, the Board has implemented
a new process to administer travel performed by Board members; however, it was
not consistently followed. As a result,
TIGTA identified certain travel expenses that did not comply with established
travel guidelines but were reimbursed by the Government.
WHAT TIGTA RECOMMENDED
TIGTA recommended that the
Chairperson, IRS Oversight Board, ensure established policies are followed to
track and analyze unliquidated obligations to determine whether funding levels
are on target. TIGTA also recommended that
the Board take action to receive billing information as required and coordinate
to ensure reimbursement from the IRS is not requested until the Board certifies
the accuracy of expense information.
Additionally, the Board should develop detailed procedures related to
arranging and processing Board travel-related transactions, provide all Board
members and staff with annual training on travel-related procedures, and
require that the expenses incorrectly reimbursed be repaid to the Federal
Government.
In their response to the report, the Board agreed with
our recommendations. Specifically, the
Board has updated its procedures to identify and deobligate excess funds and
will work with the IRS Chief Financial Officer to certify billings before
payment, has developed its own travel guide tailored to the needs of Board
travelers, and plans to train all members and staff via an annual distribution
of the guide. Finally, all travel funds
incorrectly reimbursed have been repaid.
READ THE
FULL REPORT
To view the report,
including the scope, methodology, and full IRS response, go to:
http://www.treas.gov/tigta/auditreports/2010reports/201010052fr.html.
Email Address: inquiries@tigta.treas.gov
Phone Number: 202-622-6500
Web Site:
http://www.tigta.gov