TREASURY INSPECTOR GENERAL
FOR TAX ADMINISTRATION
INCREASED VALIDATION AND OVERSIGHT OF YEAR 2000
MINICOMPUTER CONVERSION EFFORTS ARE NEEDED TO
STRENGTHEN TESTING AND TO AVOID FURTHER DELAYS
Reference No. 199920054
One of the most critical issues the Internal Revenue Service (IRS) faces this year is the need to make its computer systems Year 2000 (Y2K) compliant. The IRS is a $1.7 trillion financial services organization dependent on its computer systems to process tax returns, issue refunds, deposit payments, and provide employee access to timely and accurate taxpayer account data. Failure to identify, renovate, and test each of these systems calculations could result in catastrophic disruption to taxpayers and the government. Our review assessed the IRSí efforts to convert its minicomputer systems.
The IRS has improved its management of the Y2K minicomputer (Tier II) conversion. The Century Date Change Project Office of the IRS Information Systems organization has taken actions to identify and convert minicomputer systems. This organization has (1) assigned responsibility for monitoring conversion of minicomputer systems, (2) identified sites where these systems are located, (3) provided guidance for converting systems, and (4) worked with site managers to develop schedules for converting production systems.
According to Information Systems management, the Tier II Program Office established a two-phased approach for tracking, monitoring, and validating the Y2K conversion effort. Phase I relied primarily on self-reporting by each system project office, while Phase II included validation activities such as independent audit and readiness verification.
The initial widespread use of self-reporting of critical conversion data, with minimal on-line validation, has resulted in weaknesses in systems testing and unmet target dates. We found the following areas where improvements are necessary.
Minicomputer Conversion Risk Continues to be High
Of the 66 minicomputer systems being monitored, at least 22 did not meet the January 31, 1999, conversion goal. Twelve of these 22 systems are considered mission critical systems. Rather than properly classifying these systems to indicate missed conversion dates, the IRS changed many of the completion dates to classify the systems as merely having minimal or moderate risk. Conversion delays were evident weeks before they were included in tracking reports. The IRS has scheduled five of the systems for conversion in either September or October 1999.
Systems Testing Did Not Consistently Address Critical Year 2000 Processing Issues
Testing of systems using year 2000 dates is critical to ensure they will remain operational into the next century. The Tier II Program Office requires testing of each system. Thorough testing, as required by the program office guidelines, was not conducted on three of the six systems we evaluated. Weaknesses included not setting system clocks ahead to year 2000 dates and not testing transactions through the complete system.
Formal Contingency Planning Procedures Are Needed for Systems That Were Not Compliant by March 31, 1999
The Office of Management and Budget (OMB) required formal contingency planning for systems that were not compliant before the end of March 1999. The purpose of contingency planning is to address the possibility that some elements of the system may not be Y2K compliant by the scheduled target date. Our audit testing, which was completed in February, identified seven systems, including two key national systems, that were not scheduled to meet this time frame and were not covered by contingency plans. Plans need to be developed to address the possibility that these systems will not be made compliant before the century date change.
Summary of Recommendations
We recommend the following:
March 31, 1999.
IRS management provided a detailed response to our report. The Tier II Program Office has identified and classified all systems applications that were not Year 2000 compliant by January 31, 1999, on the Year 2000 Risk Assessment Dashboard Report. The IRS is providing additional oversight to all of these projects. The program office will implement an Independent Audit and Readiness Verification process to validate the actions taken to renovate application systems. Through the verification process, the program office will validate the results of the integrated testing performed by application owners for Tier II systems.
The Century Date Change Project Office requested contingency plans for two key systems that were not Year 2000 compliant by March 31, 1999. The project office will continue to monitor the conversion progress and issue contingency plans as necessary.