Office of Audit
STATUS OF THE IMPLEMENTATION OF THE FEDERAL FINANCIAL
MANAGEMENT IMPROVEMENT ACT
Final Report issued on August 29, 2016
Highlights of Reference Number: 2016-10-063 to the Internal Revenue Service Chief Financial Officer.
IMPACT ON TAXPAYERS
The Federal Financial Management Improvement Act (FFMIA) remediation plan is a critical part of the IRS’s efforts to bring its financial management systems into compliance with the FFMIA and to provide reliable and timely financial data. Complete and reliable financial information is critical to the IRS’s ability to accurately report on the results of its operations to both internal and external stakeholders, including taxpayers.
WHY TIGTA DID THE AUDIT
The overall objectives of this review were to determine any instances of and reasons for missed intermediate target dates established in the IRS’s September 30, 2015, FFMIA remediation plan, and to determine whether the IRS has taken adequate corrective actions on TIGTA’s Fiscal Year 2014 audit findings related to the FFMIA remediation plan.
WHAT TIGTA FOUND
During Fiscal Year 2015, the IRS made progress on addressing certain aspects of its internal control weaknesses that affect its financial reporting. For example, the IRS closed four of 13 open remediation actions related to the Unpaid Tax Assessments material weakness and did not miss any intermediate target dates for the corrective actions. However, the IRS did not properly document all of the Government Accountability Office (GAO) recommendations within its Fiscal Year 2015 remediation plan. TIGTA found three out of five open GAO recommendations were not included in the quarterly remediation plan. Also, the IRS continues to include limited cost information in its quarterly remediation plan.
In addition, as previously recommended, TIGTA continues to believe that including implementation steps associated with the Customer Account Data Engine 2 Transition State 2 (CADE 2 TS2) would improve the remediation plan. As of the September 2015 remediation plan, the IRS stated that it anticipates it will be unable to fully address the Unpaid Tax Assessments material weakness until implementation of the CADE 2 TS2 in November 2020, but the IRS does not list all the actions needed to fully implement the CADE 2 TS2 in the remediation plan.
WHAT TIGTA RECOMMENDED
TIGTA recommended that the Chief Financial Officer include all open GAO recommendations in the remediation plan and ensure that all recommendations are reconciled and linked to the related corrective actions as required.
In their response, IRS management agreed with our recommendation that GAO recommendations be reconciled and linked to the related corrective actions as required.
READ THE FULL REPORT
To view the report, including the scope, methodology, and full IRS response, go to:
Phone Number / 202-622-6500
E-mail Address / TIGTACommunications@tigta.treas.gov
Website / https://www.treasury.gov/tigta