Review of the Internal Revenue Service’s Year 2000 Efforts to
Inventory Telecommunications and commercial Off-the-Shelf Products
February 1999
Reference Number: 092402
February 10, 1999
MEMORANDUM FOR cOMMISSIONER ROSSOTTI
FROM: Lawrence W. Rogers /s/Lawrence W. Rogers
Acting Treasury Inspector General for Tax Administration
SUBJEcT: Review of the Internal Revenue Service’s Year 2000 Efforts to Inventory Telecommunications and commercial Off-the-Shelf Products
This report presents the results of our initial assessment of the Internal Revenue Service’s (IRS) Year 2000 (Y2K) efforts to inventory telecommunications and commercial off-the-shelf products. Technical expertise for this review was acquired under contract from Pricewaterhousecoopers.
The IRS had significant work to accomplish in order to complete the telecommunications inventory. At the time we issued a draft of this report, IRS management had initiated several actions to complete and correct the telecommunications inventory. Accordingly, we did not make any recommendations on this issue in our report. We are presently conducting a review to assess the adequacy of management's actions in the telecommunications area.
Our audit work also identified a need for the IRS to improve its guidance on how these products are to be reported in the inventory and to re-examine the completeness of its commercial off-the-shelf product inventory. The Director, Office of Information Resources Management agreed with the facts and is taking appropriate actions. Management will issue updated guidelines on how products should be defined and will task a contractor to verify that the inventory of commercial off-the-shelf products is complete for all Tier I systems. Management’s response to the findings has been incorporated into the report where appropriate. In addition, the complete text of IRS management’s response is presented as an attachment to this report.
copies of this report are also being sent to IRS managers who are affected by the report recommendations. Please call me at (202) 622-6500 if you have any questions, or your staff may contact Maurice S. Moody, Acting Assistant Inspector General for Audit at (202) 622-8500.
Improvements are still needed in the inventory of cOTS products on the Masterfile system
Detailed Objectives, Scope and Methodology
Major contributors to this Report
Masterfile cOTS Products Absent From INOMS
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).
Results
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.
A significant amount of telecommunications equipment sampled from the floor of IRS sites could not be located on the corresponding inventories.
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.
Improvements are still needed in the inventory of cOTS products on the Masterfile system .
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.
Summary of Recommendations
To minimize the risks associated with inaccurate or incomplete inventories, we recommended that the cDc Project Office management:
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.
The overall objective of this review was to provide a preliminary assessment of the adequacy of the IRS’ efforts in two areas: (1) the inventory of telecommunications equipment and (2) the inventory of system software and commercial off-the-shelf (cOTS) products. The scope of this work was limited to a preliminary assessment of the adequacy of these inventories. Two sites were examined for telecommunications equipment, the Tennessee computing center (Tcc) and the cleveland customer Service Site. We further examined the Tier I Masterfile system at the Martinsburg computing center (Mcc) for system software and cOTS products.
The review was conducted in accordance with generally accepted government auditing standards. Attachment I contains the detailed objectives, scope and methodology for the review. Management’s response to a draft of this report is included as Attachment III.
The list of major contributors to this report is presented in Attachment II.
Background
The IRS has undertaken a major effort to inventory and convert, upgrade or replace all computer-related equipment and software so that all automated data processing functions continue uninterrupted into the Year 2000 (Y2K). To control this effort, the IRS established the century Date change (cDc) Project Office. The cDc Project Office is responsible for the oversight of all Y2K-related efforts. Among these are the efforts to catalog and convert all telecommunications equipment and all cOTS products.
The cDc Project Office has determined that the IRS will identify all telecommunications equipment and ensure that equipment will either operate in a Y2K environment or that it will be upgraded or replaced. The cDc Project Office has established similar goals for the IRS’ inventory of system software and cOTS products. We initiated this review to assess the progress in the telecommunications and system software/cOTS areas.
Technical expertise for this review was acquired under contract from Pricewaterhousecoopers (formerly coopers & Lybrand). The vendor completed the majority of the work on this review with oversight from our office.
The IRS still has significant work to accomplish to complete the telecommunications inventory. We also identified the need for IRS to re-examine the completeness of its cOTS inventory.
A significant amount of telecommunications equipment sampled from the floor of IRS sites could not be located on the corresponding inventories
Our work in this area was performed at two sites, the Tennessee computing center (Tcc) and the cleveland customer Service Site. Our visit to Tcc occurred after the initial site survey by the Telecommunications Project Office, but before the 100 percent site survey that was conducted in June 1998. At both sites a significant amount of the equipment on the floor could not be located on inventories used by the IRS and the Telecommunications Project Office to control the Y2K effort. We concluded that a significant amount of work remains to be done to complete the inventory at both of these sites.
At Tcc we compared a sample of telecommunications equipment found on-site with the inventory information stored on the Integrated Network and Operations Management System (INOMS). We also compared a sample of INOMS telecommunications inventory records to the physical pieces of equipment. For this part of our review, fax machines and modems were not included. Our results were as follows:
At the cleveland customer Service Site, we compared a sample of telecommunications equipment found on-site with inventory information from the consolidated Inventory. The consolidated Inventory is a collection of inventory data from numerous sources including INOMS and the Treasury communications System (TcS). Only 6 of 55 items selected could be found on the consolidated Inventory.
Without a complete and accurate telecommunications inventory, the IRS faces the risk that parts of its networks will fail after January 1, 2000, because of unidentified equipment that needs replacing or upgrading. Our audit work sought to gauge the magnitude of the tasks that the IRS will face in making its telecommunications environment Y2K compliant after it has completed its inventory. From a sample of 44 items:
This information suggests that the IRS will have a relatively short time frame to assess, test and replace a significant number of telecommunications equipment items.
Although we performed limited audit work at two sites, we believe the significant understatement in inventory at these two sites warrants further work by management. When we met with the Acting National Director, Telecommunications and Operations Division, in June 1998 to discuss these issues, he agreed that more work needed to be done to produce an accurate inventory. Site surveys, during which all telecommunication equipment was inventoried, have been completed at all computing and service centers. As of September 9, 1998, plans were in place to perform a complete telecommunications inventory at each of the 805 IRS sites. In addition, the IRS' Executive Steering committee receives a regular report on the status of these activities. Because of the recent management initiatives to correct these problems, we are making no recommendations at this time. We are currently conducting another review in which we will further assess the adequacy of management's actions.
Improvements are still needed in the inventory of cOTS products on the Masterfile system
As part of the IRS' Y2K efforts, organizations were asked to certify their inventories of cOTS products as shown on the INOMS inventory. To initially gauge the effectiveness of this effort, we reviewed the Masterfile system at the Mcc. We identified cOTS products resident on the Masterfile system from three sources by:
"cA-Examine" was used to identify key operating system libraries that could include clues to the existence of cOTS products. "SoftAudit" analyzes the system's library structure and compares this with an internal knowledge base to identify cOTS products.
The initial results of this work showed that 255 cOTS products on the Masterfile system were not reflected on the INOMS inventory. After we provided a memorandum to Mcc management with a listing of the 255 cOTS products, we worked with their staff to identify 7 products that could not be accounted for on INOMS. These seven products are shown in Attachment IV.
Management provided various reasons why most of the products could not be located on INOMS, including:
For software products that are bundled under some broader product category, it is not currently possible to ensure that they have been treated consistently throughout the IRS. For example, some of the products reported by Mcc on INOMS as being integral parts of another product were reported separately on INOMS for other systems. This inconsistency makes it difficult for management to accurately track Y2K progress for cOTS products.
Also, since Mcc has already undertaken several efforts to complete its cOTS inventory, the problems cited in this report raise serious concerns about the IRS' ability to complete the cOTS inventory on its major systems. Since a complete inventory is a requirement for the IRS' 14-step process for Y2K conversion, an incomplete inventory could have a serious, negative impact on the success of the IRS' efforts to convert cOTS products.
Recommendations:
Management Response: The ADP Property Management Section (IS:O:O:TA) is responsible for providing guidance/direction to system owners (users) on the status of unused ADP property. A memorandum will be distributed by the Deputy chief Information Officer (Operations) IS, emphasizing the removal of all unused products by January 31, 1999.
Management Response: The ADP Property Management Section has reviewed existing guidelines and will issue updated guidelines on how products should be defined and identified. A memorandum will be distributed by the Deputy chief Information Officer (Operations) IS, emphasizing the adherence to the issued guidelines.
Management Response: The IRS already has procedures to ensure the accuracy and integrity of the INOMS inventory. Responsibility for administration of this program belongs to the Director, Telecommunications and Operations Division. Responsibility for following the procedures promulgated by the Director, Telecommunications and Operations Division, falls to site executives identified in the INOMS inventory.
As an additional measure, the cDc Project Office will task the contractor to verify that the INOMS inventory of cOTS products is complete for all Tier I systems. The ADP Property Management Section will assist the cDc Program Office with this verification effort. They will continue to work very closely to provide consistent direction to system users and to ensure that recorded data for all tiers and categories is correct on INOMS.
Attachment I
Detailed Objectives, Scope and Methodology
The overall objective of this review was to provide a preliminary assessment of the IRS' Year 2000 (Y2K) efforts in completing a Y2K inventory of its cOTS products and system software, and of its telecommunications equipment. Specifically, we:
A. Making a preliminary assessment of whether all cOTS products and
system software have been captured on the INOMS inventory system
for the Masterfile system at the Martinsburg computing center.
fully assess the accuracy and completeness of the cOTS and system
software inventory for the Masterfile system.
Attachment II
Major contributors to this Report
Michael Phillips, Acting Director, Office of Audit Projects
Vincent Dell’Orto, Audit Manager
Scott Rehrig, Senior Auditor
Pricewaterhousecoopers
Attachment IV
Masterfile cOTS Products Absent From INOMS
The following products are present on the Masterfile System, but have no corresponding record on INOMS.
Attachment V
Deputy commissioner for Modernization c:DM
Deputy commissioner for Operations c:DO
chief Information Officer IS
Deputy chief Information Officer, Systems IS
Deputy chief Information Officer, Operations IS
Assistant commissioner, National Operations IS:O
Assistant commissioner, Systems Development IS:S
Director, Martinsburg computing center IS:O:M
Director, Tennessee computing center IS:O:T