TREASURY INSPECTOR GENERAL
FOR TAX ADMINISTRATION
THE INTERNAL REVENUE SERVICE NEEDS TO SIGNIFICANTLY IMPROVE THE INVENTORY USED TO MONITOR ITS YEAR 2000 CONVERSION EFFORTS
Reference No. 2000-20-021
An accurate inventory of all hardware and software is critical to ensure the Internal Revenue Service (IRS) identifies and updates components affected by the Year 2000 (Y2K) date change. The IRS relies on its inventory system, the Integrated Network and Operations Management System (INOMS), as the primary tool to manage and report on the progress of its Y2K conversion efforts.
The objective of this review was to determine whether the IRS has completely and accurately inventoried its telecommunications equipment, network operating systems (NOS), and commercial-off-the-shelf products (COTS) as part of its Y2K conversion efforts. We obtained our results by conducting audits on-site at the IRSí 3 computing centers, 5 of its centers for processing tax returns, and 16 other locations. The majority of the audit work was conducted under contract by PricewaterhouseCoopers.
The IRS still has a significant amount of work remaining to sufficiently address the Y2K issues related to the telecommunications equipment inventory, mid-range computer commercial software products inventory, and NOS inventory. Due to the importance of the inventory in the overall Y2K conversion effort, the IRS should take immediate action to correct the incompleteness and inaccuracies in its inventory database.
The Inventory Significantly Understates the Amount of Telecommunications Equipment in Use Throughout the Internal Revenue Service
When we compared samples of telecommunications equipment located at 24 IRS sites to the inventory information maintained on the INOMS database, only 45 percent of the items at the sites were included in the inventory. There was a substantial variation in the completeness of the inventory, depending on the type of IRS facility. The IRSí computing centers had the most complete inventories at approximately 74 percent, while local offices had the lowest completeness rate at 20 percent.
The significant understatement in the amount of telecommunications equipment used in IRS offices and operations poses a significant risk that some IRS offices may not be able to operate correctly on and after January 1, 2000. Since it is projected that the IRS will receive over 120 million telephone calls from taxpayers in Fiscal Year 2000, its telecommunications equipment and networks must be Y2K ready to assure there is no significant disruption in the telephone systems and access to taxpayer data.
A variety of factors have contributed to the incompleteness of the IRSí telecommunications inventory:
The Inventory of Mid-Range Computer Commercial Off-the-Shelf Software Products Has Significant Completeness and Accuracy Deficiencies
Our review of the mid-range computer (Tier II) COTS software products (such as Unix operation systems and Oracle database products) inventory identified significant disparities between the COTS installed on computers and the corresponding inventory records. At each site, we requested high-level documentation, independent of the INOMS, regarding each systemís characteristics for comparison to the INOMS. Only 51 percent of Tier II COTS products listed in the system documentation were entered on the INOMS database. Also, only 33 percent of Tier II COTS products on the INOMS database were found on the system documentation provided by the site personnel.
Without a complete inventory of Tier II COTS on the INOMS, the IRS may not identify and correct potentially serious Y2K problems. The inaccuracies may also lead to misguided renovation efforts, neglect of major issues, and inefficient use of resources.
The Inventory of Network Operating Systems Is Substantially Understated
Our review also identified a significant discrepancy on the number of NOS installed at IRS sites and the number of NOS listed on the INOMS inventory. A NOS, such as Microsoftís Windows NT, is used to control the access to stored data, the flow of input and output information, and the scheduling and execution of multiple concurrent tasks on a local area network (LAN). Of the 244 LAN servers we sampled, only 60 had an associated NOS on the INOMS database. There should be a one-to-one relationship between NOS and servers. A review of the entire INOMS database shows that there are only 742 NOS records on the INOMS, while the IRS uses an estimated 2,500 to 3,000 LAN servers to conduct operations.
The complete and accurate inventory of all NOS is a critical aspect of the IRSí Y2K efforts. Since the IRS is dependent on its local area networks to perform a significant part of its tax administration work, the Century Date Change (CDC) Project Office and NOS Program Office must identify the existence and location of each NOS and conduct the necessary research and testing to assure that any NOS, unable to process past the year 2000 is updated or replaced before January 1, 2000. A NOS that does not process the century date correctly can cause disruption for all the workstations residing on a given LAN. If a large number of NOS remain non-compliant, there is a potential that workstations in several locations will be disrupted.
Summary of Recommendations
To minimize the Y2K-related risks associated with inaccurate or incomplete inventories, we recommended that the Chief Information Officer (CIO) develop and implement specific inventory processes and procedures to be followed by system managers and administrators at the field offices to ensure a comprehensive inventory. Also, the CIO should conduct independent assessments of the inventory at critical IRS installations to ensure INOMS accuracy and completeness for Y2K efforts. Over the longer term, we also recommend that the IRS evaluate and implement automated inventory and network management tools.
Managementís Draft Response: As of the date of this report, a final management response had not been received due to the extensive efforts underway to prepare for Y2K. However, we summarized below a draft response from the CDC Project Office and incorporated a more detailed description of the response in the body of the report.
The CDC Project Office initiated a wall-to-wall inventory reconciliation process to be completed at critical IRS sites by December 31, 1999. The wall-to-wall inventory started August 2, 1999. The scope of the wall-to-wall inventory encompasses telecommunication hardware and COTS software. The inventory teams physically reconcile the INOMS database with inventory found or not found on the floor and update the INOMS to reflect the results of the physical inspection and software interrogation.
Information Systems (IS) is revamping the entire inventory process to sustain the wall-to-wall effort after Y2K through the Single Point Inventory Function (SPIF). As planned, the new SPIF will provide guidelines and procedures that establish accountability in receipt, distribution, excessing, and disposal of ADP hardware, software, and telecommunications inventory throughout the various IRS locations. IS will update the guidelines as required to incorporate the new procedures and update the existing inventory and property management documents to reflect the newly developed organizational structure and policies.
IS also established the Asset Management Modernization Project Office to modernize the IRS Asset Management Program. The prime vendor responsible for the IRS modernization initiative is addressing the concerns raised in our report and the inventory management processes in its deliverables. IS expects incremental enhancement of the INOMS including new scanner technology by September 2000. The delivery date for the prototype of the modernized system, Information Technology Asset Management System, is scheduled for March 2001.