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Monday, June 27, 2011

IRS Financial Management Systems Have Problems

The Internal Revenue Service’s financial management systems are unlikely to comply with federal laws at least until 2014, according to a new report.


The report, by the Treasury Inspector General for Tax Administration, noted that the Federal Financial Management Improvement Act of 1996, or FFMIA, requires that federal financial management systems provide accurate, reliable, and timely financial management information to government managers.


In November 2010, the Government Accountability Office reported that the IRS's financial management systems do not comply with FFMIA requirements. Specifically, the IRS does not post tax-related transactions in conformance with federal government requirements, and its records lack adequate traceability for taxes receivable.

The IRS also has material weaknesses in its internal controls over both information security and unpaid assessments. The information security material weakness compromises the accuracy and availability of the IRS's financial information and places sensitive information regarding taxpayers and IRS operations at risk, TIGTA noted. The unpaid assessments material weakness affects the IRS's ability to effectively manage unpaid taxes, penalties and interest.


Another recent GAO report that was released earlier this month also found material weaknesses and deficiencies in internal controls at the IRS. The report noted, however, that the IRS has made progress in improving its internal control and financial management since the first financial statement audit in 1992.

-AccountingToday.com
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