TREASURY INSPECTOR GENERAL
FOR TAX ADMINISTRATION
THE INTERNAL REVENUE SERVICE'S OVERSIGHT OF THE YEAR 2000 CONVERSION CAN BE STRENGTHENED
Reference No. 200020007
The Year 2000 (Y2K) presents a significant challenge to Internal Revenue Service (IRS) operations. The IRS Chief Information Officer created the Century Date Change (CDC) Project Office to ensure that all current and future IRS information systems will be operational and functioning as intended on January 1, 2000. The overall objective of this review was to assess the CDC Project Office’s effectiveness in providing management oversight to ensure that the goals and objectives of the Y2K conversion effort will be met.
Management controls established by the CDC Project Office provide an appropriate control framework to ensure that the objectives and goals of the IRS’ Y2K conversion effort will be met. The CDC Project Office provides guidance and direction and monitors the status of Y2K conversion efforts assigned to various project owners and responsible executives. However, the effectiveness of management oversight by the CDC Project Office can be strengthened through its independent validation and verification of information reported by the working groups; its establishment of a control technique to identify schedule slippage and eliminate what could become crisis management; and its timely identification of risk implications associated with requests to delay conversion decisions.
Controls Are Needed to Ensure the Reliability of Information Used to Manage the Conversion
The CDC Project Office does not independently validate or verify inventory information reported on the Integrated Network and Operations Management System (INOMS). This inventory information is used by the CDC Project Office to monitor the conversion effort. The Treasury Inspector General for Tax Administration (TIGTA) has made reference in a number of reports that the INOMS inventory is incomplete or inaccurate, and reliance on this information could cause risk to the conversion effort. However, IRS management does not believe that the independent validation and verification of conversion status information is part of the CDC Project Office’s responsibilities, thereby solely relying on the INOMS information received from the working groups. Further, IRS management relies too heavily on external auditors, such as the General Accounting Office and TIGTA to report issues and concerns with the conversion effort. Independent validation and verification of reported information strengthens management oversight and helps ensure that inaccurate information will be prevented or detected and corrected.
The Century Date Change Project Office Needs to Develop a Control Technique to Identify Interdependencies Among Events, Activities, and Schedule Slippage
The CDC Project Office does not have a technique to identify critical schedule slippage and the possible impact on the overall conversion. Between now and December 31, 1999, the CDC Project Office must oversee a number of significant conversion events and activities, many of which have interdependencies among them. Although the CDC Project Office schedules provide specific conversion information, they do not provide how milestone delays may affect the overall project. The lack of an integrated master schedule of all critical Y2K activities does not afford the CDC Project Office the IRS-wide perspective needed to steer the project partners, anticipate changes in Information Systems resources, develop alternative conversion and testing schedules, and help eliminate what may become crisis management.
The Impact of Delaying Year 2000 Conversion Decisions for Certain Components Should be More Timely Assessed
The CDC Project Office is unable to timely evaluate requests for waivers and identify the potential impact on end-to-end testing and/or contingency planning. The CDC Project Office initially established the waiver process to evaluate any system or component requiring an exemption from conversion and which would remain in-service after December 31, 1999. In August 1998, the CDC Project Office expanded the waiver process to include the movement to Phases 6 and 7 of components to be retired after January 31, 1999; components to be converted but not completed by January 31, 1999; or new developments. The result was a significant increase in the number of waiver requests received near the end of Phase 5. As of March 15, 1999, the CDC Project Office had 135 open waivers that had not been reviewed or approved. This number equates to a workload of approximately 19 weeks to complete the review for potential risks and impact. In February 1999, Booz-Allen Hamilton was contracted by the CDC Project Office to assist in the waiver review process.
Summary of Recommendations
To strengthen management oversight of the Y2K conversion effort, the CDC Project Office should: ensure the accuracy and reliability of information used to manage the conversion effort; identify interdependencies among events, activities and schedule slippage to better manage delays within the overall Y2K project; and continue to use contractor support to evaluate waiver requests. In addition, the CDC Project Office should prioritize non-compliant systems and focus resources on the highest priority projects requiring contingency planning.
Management’s Response: IRS management generally agreed with the facts cited in the report and is taking appropriate corrective action. Management’s comments are included in the body of the report, where appropriate, and a complete text appears as Appendix IV.