TREASURY INSPECTOR GENERAL
FOR TAX ADMINISTRATION
THE INTERNAL REVENUE SERVICE NEEDS TO STRENGTHEN THE CONTROLS OVER THE YEAR 2000 CONVERSION OF ITS TELECOMMUNICATIONS EQUIPMENT
Reference No. 2000-20-030
An accurate inventory of telecommunications equipment is critical to ensure the Internal Revenue Service (IRS) identifies and updates components affected by the Year 2000 (Y2K) date change and thus assures that its networks and phone systems will operate correctly in a Y2K environment. 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. Previous audit work has identified serious deficiencies on the INOMS database.
Since it is projected that the IRS will receive over 120 million telephone calls from taxpayers in Fiscal Year (FY) 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. If there is slow response time on the telecommunications network, customer service employees will have to wait for information to come up on their computer screens, thus answering fewer taxpayer telephone calls. If the network goes down, thousands of employees may not have on-line access to taxpayer data.
The objective of this review was to assess the effectiveness of the IRSí Y2K telecommunications products implementation processes, particularly managementís progress in providing oversight and ensuring goals and objectives are being met. We obtained our results by conducting audits on-site at 21 IRS field locations. The majority of the audit work was conducted under contract by PricewaterhouseCoopers.
While the inventory statistics showed improvement since the completion of audit work conducted for our previous audit report, The Internal Revenue Service Needs to Significantly Improve the Inventory Used to Monitor Its Year 2000 Conversion Efforts (Reference Number 2000-20-021, dated December 22, 1999), there were still significant problems with the completeness of the telecommunications inventory as of November 1, 1999. IRS management used our interim results to begin taking corrective actions to improve the inventory, including a wall-to-wall inventory at major IRS sites as well as other efforts directed at verifying the inventory. These efforts do not, however, include many other IRS sites and will leave these IRS sites with unvalidated inventory information.
Our review identified two other areas of concern:
Because of the time sensitivity of the Y2K issue, we shared the issues and recommendations in this report with IRS management before issuing the draft report so they could begin addressing these issues.
The Internal Revenue Service Continues to Experience Inaccuracies in Its Inventory of Telecommunications Equipment
The Century Date Change Project Office has established the INOMS database as the tool used to manage the Y2K conversion of the telecommunications inventory. The IRS uses the Treasury Communications System (TCS) contract for a significant part of its data communications needs, including telecommunications equipment and services. Although the TCS contractor maintains its own inventory of TCS equipment, the IRS decided to include all of the TCS equipment on the INOMS, as a way to provide overall control over its Y2K conversion efforts. The IRS does not, however, consistently use the INOMS to manage its information technology inventory. Local telecommunications specialists are using various databases and spreadsheets to monitor the inventory, but they are not reconciling the information on these listings to the INOMS. As a result, information that may be in the databases and spreadsheets is not entered onto the INOMS.
In the 21 IRS field sites visited, we performed a verification of a physical sample of equipment to the INOMS inventory and found that only 65 percent of voice and data telecommunications equipment and 87 percent of the local area network servers were recorded on the INOMS. We also found that only 57 percent of TCS equipment was captured on the INOMS database. Telecommunications equipment is heavily integrated in computer application systems (data) and telephone and message routing systems (voice). Failure to identify and assure Y2K readiness of all telecommunications equipment may lead to system failures that could prevent critical customer service functions from operating, such as responding to taxpayer questions and accessing taxpayer data while the taxpayer is on the telephone.
The Internal Revenue Service Does Not Have an Effective Method of Assuring That Only Year 2000 Compliant Telecommunications Equipment Is in Production
Configuration management is defined as the continuous control of changes made to a system throughout the development and operational life of the system. The IRS does not have an effective method for maintaining configuration management over its telecommunications equipment. Although in July 1999, the IRS reported that over 97 percent of its telecommunications inventory was Y2K compliant, our results indicate this figure is significantly overstated. For the 21 IRS sites visited, we sought IRS documentation on the Y2K compliance of 618 pieces of voice and data equipment and were unable to determine if the IRS had assessed the compliance status of 120 (19 percent) of those pieces. Our sample also identified that 17 of the remaining 498 items did not meet the IRS standard for Y2K compliance. The disparity between the figures reported and the actual status of the inventory indicates the IRS lacks a workable configuration management process for assuring the Y2K readiness of telecommunications equipment.
The IRS faces the risk that many of its telecommunications products will be non-compliant on January 1, 2000. This could result in lengthy efforts to fix or replace this equipment during the 2000 filing season. Since it is projected that the IRS will receive over 120 million telephone calls from taxpayers in FY 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.
The Internal Revenue Service Needs a Process to Forecast the Effects of Growth on Future Network Performance and Capacity
The IRS does not currently have a process to measure and monitor growth in its telecommunications needs and to forecast the effects of such growth on the performance of its networks. Such a process requires the systematic collecting of network performance and other data over time and the use of modeling to analyze such historical data. The goal of establishing and using such a model is to identify future network capacity and performance problems and deal proactively with them. Several current and future initiatives will add to the demands on the network. Although factors affecting network performance are not exclusively Y2K issues, the IRS faces the risk of inadequate network performance during the 2000 filing season. Network failures can result in thousands of IRS employees being unable to perform their jobs due to IRS reliance on data and telecommunications networks. For example, there was a network failure in the area served by the Cincinnati Service Center in July 1999 and employees could not use the Integrated Data Retrieval System for two to three days.
Summary of Recommendations
The Chief Information Officer (CIO) should ensure the final Y2K planning efforts include strategies to mitigate the risk of telecommunications failures at local IRS sites with unvalidated inventories. The CIO should assure that the Y2K assessment is complete for the 120 items whose compliance status we could not determine and should also assure that the assessment process is completed for all other telecommunications equipment. We also recommended that the CIO develop and implement an interim configuration management process for assuring the Y2K readiness of its telecommunications environment. If this is not possible, the CIO should ensure the final Y2K planning efforts mitigate the risk that non-Y2K compliant equipment is in production on January 1, 2000.
The CIO should also develop a process to monitor and manage the traffic over the IRS data networks. As an initial step, the CIO needs to prepare a documented plan for this development effort. The development and implementation of this plan should be tracked and monitored through the Combined Management Program for Century Date Change and Filing Season Executive Steering Committee process since changes or upgrades to the network could adversely affect IRS network performance next year.
Managementís Response: A draft copy of this report was sent to IRS management for comment on December 17, 1999, with the response due within 30 calendar days. As of the date of this final report, IRS was in the process of developing a response outlining the actions it has taken or will take to address the issues in this report.