Treasury Inspector General for Tax Administration
December 20, 2012
TIGTA - TIGTA - 2012-69
Contact: David Barnes
WASHINGTON – The Internal Revenue Service (IRS) has begun to process tax returns on a daily basis under the Customer Account Data Engine 2 (CADE 2) Program, but key developmental processes need improvement, especially in the areas of requirements management, testing and security.
Those are the findings of two reports released publicly today by the Treasury Inspector General for Tax Administration (TIGTA). Implementation of daily tax-return processing by the CADE 2 system is allowing the IRS to speed its processing of tax returns for individuals. Previously, those returns were processed on a weekly basis.
“The goal of the CADE 2 system, to provide state-of-the-art individual taxpayer account processing and enhanced IRS tax administration, is laudable,” said J. Russell George, Treasury Inspector General for Tax Administration. “However, in pursuit of that goal, the IRS must not lose sight of the importance of having complete, accurate, and secured data, which is just as important as improved processing capabilities.”
TIGTA reviewed whether the requirements and testing practices for CADE 2 Transition State 1 were performed in accordance with applicable policies and procedures necessary for developing systems. TIGTA also examined whether the IRS was meeting its Transition State 1 goals, specifically in its development and implementation of the CADE 2 database.
Since January 2012, CADE 2 has provided the IRS with the ability to update taxpayer account information on a daily basis, according to TIGTA’s report, “Customer Account Data Engine 2 (CADE 2): System Requirements and Testing Processes Need Improvements.” The CADE 2 Program is now in the initial stage of implementing its centralized database of individual taxpayer accounts, which will provide the basis for future real time tax processing and enhanced customer service functions.
TIGTA found that while the IRS conducted extensive system development testing, planned risks reduction, and implemented new controls over the CADE 2 program, enhancements to system development controls are needed to better verify that all of the IRS’s voluminous requirements are adequately addressed by the new system. TIGTA made eight recommendations to the IRS to improve its system requirements management and testing processes. The IRS agreed with five of TIGTA’s recommendations and disagreed or partially disagreed with three others.
Read the report.
In the second report, “The Customer Account Data Engine 2 Database Was Initialized; However, Database and Security Risks Remain, and Initial Timeframes to Provide Data to Three Downstream Systems May Not Be Met,” TIGTA found that testing did not provide assurance that CADE 2 database data are consistently accurate and complete.
Also, security weaknesses and poor coding practices in the CADE 2 database could result in the loss of taxpayer data. TIGTA made seven recommendations to the IRS, including that the CADE 2 Program not exit Transition Stage 1 until the database can provide accurate and complete data to three downstream systems. The IRS agreed with this and two other recommendations and partially agreed with one of the recommendations; corrective actions are planned. The IRS disagreed with three recommendations and TIGTA provided comments in the report.
Read the report.
Note: The difference between the date TIGTA issues an audit report to the Internal Revenue Service and the date TIGTA publicly releases the report is due to TIGTA's internal review process to ensure that public release is in compliance with Federal confidentiality laws.
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