In preparation for the Year 2000 (Y2K), the century Date change (cDc) Project Office has determined that the Internal Revenue Service (IRS) must identify all telecommunications equipment and commercial off-the-shelf (cOTS) products and determine whether they will operate correctly or need to be upgraded or replaced.

The overall objective of this review was to provide a preliminary assessment of the IRS' Y2K efforts in these two areas. Technical expertise for this review was acquired under contract from Pricewaterhousecoopers (formerly coopers & Lybrand).

Our review showed that the IRS still has significant work to accomplish in order to complete the telecommunications inventory. We also identified the need for the IRS to re-examine the completeness of its cOTS product inventory.

In performing on-site tests of the telecommunications inventory at the Tennessee computing center (Tcc) and the cleveland customer Service Site, we selected telecommunications equipment from the computer rooms and compared the items with the IRS' inventories of telecommunications equipment. Of the equipment we sampled from the floor, a significant amount could not be found on inventories maintained by the IRS. At Tcc, only 4 of 27 items could be found on the Integrated Network and Operations Management System (INOMS). At cleveland, only 6 of 55 items could be found on the more comprehensive consolidated inventory.

This omission of items from the inventory will hamper the IRS' efforts to furnish a telecommunications environment that will operate without problems in the Year 2000. Because IRS management has initiated several extensive actions to complete and correct the telecommunications inventory, we are not making any recommendations on this issue at this time. We are assessing the adequacy of management's actions to correct the identified problems as part of another ongoing review.

Our work on the cOTS inventory was limited to the Masterfile system at the Martinsburg computing center (Mcc). We used automated tools to identify cOTS products, which resided on this system, and compared these products with the inventory provided by the INOMS.

We were unable to locate seven Masterfile cOTS products on the INOMS inventory. In addition, we identified 24 products, which are not used, but still exist on the system in some form. This condition at Mcc may indicate that the inventory of cOTS products on other systems could be understated, jeopardizing the IRS' efforts to identify all products needing to be upgraded or replaced before the Year 2000.

To minimize the risks associated with inaccurate or incomplete inventories, we recommended that the cDc Project Office management:

• Provide guidance instructing system owners to remove all unused cOTS software products.

• Provide guidance regarding the level at which cOTS products should be reported on INOMS.

• Independently verify that the INOMS inventory of cOTS products is complete for all Tier I systems.

Management Response: IRS management agreed with the facts cited in the report and is taking the appropriate corrective actions. Management will distribute a memorandum emphasizing the removal of all unused products by January 31, 1999. In addition, management will issue updated guidelines on how products should be defined and identified, and will distribute a memorandum emphasizing the importance of adhering to the issued guidelines. The cDc Project Office will task a contractor to verify that the INOMS inventory of cOTS products is complete for all Tier I systems. Management’s comments are included in the body of this report where appropriate and a complete text appears as Attachment III.