TREASURY INSPEcTOR GENERAL
FOR TAX ADMINISTRATION
EVALUATION OF THE SERVIcE'S EFFORTS TO IMPLEMENT
YEAR 2000 cOMPLIANcE FOR EXTERNAL TRADING PARTNERS
Reference No. 091303
Date: November 24, 1998
In 1996, the Service established the century Date change (cDc) Project Office with an objective to ensure that all current and future IRS systems are Year 2000 (Y2k) compliant prior to January 1, 2000. Bringing the IRS systems into Y2k compliance also requires close coordination with many external organizations that receive data from or provide data to the Service. External organizations interfacing with the IRS include state and local governments, banks, other Federal agencies, and foreign governments. These external organizations are known as External Trading Partners (ETPs).
We performed our audit toevaluate the Serviceís efforts to implement Y2k compliance for externally traded data files with ETPs. The review was part of Internal Auditís coordinated reviews of the Serviceís Year 2000 efforts. We conducted the audit in an on-line environment in accordance with generally accepted government auditing standards. As the audit progressed, we immediately brought issues to managementís attention. Management was responsive to our recommendations and implemented corrective actions. We will continue our on-line auditing of ETP issues as the Service continues to renovate its systems for the Year 2000.
The cDc Project Office has made considerable progress to complete an inventory of external data exchanges and to communicate theServiceís Y2k format changes with ETPs. Ensuring Y2k compliance with the Serviceís ETPs has required extensive coordination and effort by several organizations and Service functions. As a result, the cDc Project Office has encountered delays in completing several ETP activities.
Managementís continued efforts are needed to ensure that IRS systems meet Y2k compliant standards and that discrepancies in the inventory of externally exchanged data files and data exchanges are corrected. Additional details on these two critical issues are presented below. During our review, we also recommended that the cDc Project Office downgrade the ETP activity status on management information reports from green to yellow to more accurately reflect the current state of ETP activities. Management subsequently changed the project status and no further corrective action is warranted for this recommendation.
Issues that management is in the process of correcting and should continue to emphasize to minimize risks with the Y2k conversion effort.
Source code for components Supporting External Exchanges of Data Files Did Not Always Meet Year 2000 Standards
Discrepancies in the Serviceís Inventory of Externally Exchanged Data Files Impact Effective communication of the Date Standard
Managementís complete responses are shown as Attachments II-VI.