Management Report:

Improvements Needed in IRS's Internal Controls

GAO-06-543R: Published: May 12, 2006. Publicly Released: May 12, 2006.

Additional Materials:

Contact:

Cheryl E. Clark
(202) 512-9521
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

In November 2005, we issued our report on the results of our audit of the Internal Revenue Service's (IRS) financial statements as of, and for the fiscal years ending, September 30, 2005 and 2004, and on the effectiveness of its internal controls as of September 30, 2005. We also reported our conclusions on IRS's compliance with significant provisions of selected laws and regulations and on whether IRS's financial management systems substantially comply with requirements of the Federal Financial Management Improvement Act of 1996. A separate report on the implementation status of recommendations from our prior IRS financial audits and related financial management reports, including this one, will be issued shortly. The purpose of this report is to discuss issues identified during our audit of IRS's financial statements as of, and for the fiscal year ending September 30, 2005, regarding internal controls that could be improved for which we do not currently have any recommendations outstanding. Although not all of these issues were discussed in our fiscal year 2005 audit report, they all warrant management's consideration.

During our fiscal year 2005 audit, we identified a number of internal control issues that adversely affected safeguarding of tax receipts and information, and the reliability of expense, and property & equipment (P&E) records. These issues concern (1) taxpayer receipts and data transmittal documents, (2) physical security controls at taxpayer assistance centers, (3) the roles and responsibilities of security guards, (4) candling procedures, (5) timely processing of large remittances at lockbox banks, (6) access to tax return processing facilities, (7) juvenile hiring policy, (8) classification of procurement transactions as P&E or expense, and (9) recording P&E disposals.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To assure proper accounting treatment of expense and P&E transactions and reliable financial reporting, IRS should enforce its property and equipment capitalization policy to ensure that it is properly implemented to fully achieve management's objectives, including recognizing assets when its capitalization criteria is met and recognizing expenses when it is not.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: According to IRS, IRS implemented a dollar threshold for the ongoing monthly review of P&E transactions beginning in March 2006. In addition, the CFO and Chief, Agency-Wide Shared Services, jointly issued a memorandum to all executives entitled, "Internal Transaction Control and Accuracy Improvement," emphasizing responsibility for accurate transaction coding, in April 2006. Also, the CFO and procurement offices jointly completed a review of material code descriptions and implemented appropriate changes in the requisition tracking system and IFS; implemented a process to review the material group assigned to transactions at the point of requisition to drive the transaction coding as either P&E or expense; and initiated a feedback process regarding material group coding errors found after receipt and acceptance. On the basis of our fiscal year 2006 testing of P&E and nonpayroll expenses, we confirm that IRS has improved the accuracy and reliability of its P&E records by enhancing accounting code definitions in its new financial management system to make it easier for users to select the proper accounting codes for recording transactions, improving coordination among units involved in processing P&E activity, and streamlining its analysis of P&E transactions most susceptible to misclassification.

    Recommendation: IRS shouldrevise the physical security procedures contained in the IRM to require that all SCCs and any respective annex facilities processing taxpayer receipts and/or information perform and document monthly tests of the facility's intrusion detection alarms. At a minimum, these procedures should (1) outline the type of test to be conducted, (2) include criteria for assessing whether the controls used to respond to the alarm were effective, and (3) require that a logbook be maintained to document the test dates, results, and response information.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: GAO verified that IRS revised its Internal Revenue Manual to include requirements to perform and document monthly tests of intrusion detection alarms, including guard responses to alarms. Also, IRS's Audit Management Checklist contains review steps for physical security analysts to determine whether SCCs and respective annex facilities that process taxpayer receipts and/or information perform and document monthly tests of intrusion alarms.

    Recommendation: IRS should refine the scope and nature of its periodic security reviews to encompass (1) testing the effectiveness of controls intended to ensure that only individuals with proper credentials are permitted access to SCCs and lockbox banks, and (2) reviewing the integrity of perimeter security at SCCs.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: As of January 1, 2007, IRS revised Lockbox Security Guidelines (LSG) section 2.2.3.1(6) k to restrict access of all delivery personnel. The IRS Lockbox Security Review Team observed the Lockbox Site's process of delivery personnel while on site to ensure compliance with the LSG requirement. In addition, section 2.2.2.13.1 (closed-circuit television (CCTV) Cameras) (2)g of the LSG was revised to add that cameras must capture images of all persons entering and exiting perimeter doors and other critical ingress/egress points to include but not be limited to the computer room and closets containing main utility feeds. Agency Wide Shared Services (AWSS) continues to complete compliance reviews, risk assessments, and quarterly Audit Management checklist reviews. Since April 2006, the service center campuses have been providing quarterly verification that all guards have been reminded to inspect and scrutinize all badges of personnel accessing IRS facilities. During the past year, IRS has accessed CCTV capabilities and is currently taking corrective actions to allow the unobstructed surveillance of campus fence lines and the facility perimeters. GAO verified that IRS refined the scope and nature of its periodic security reviews by (1) performing periodic tests of whether lockbox personnel are only allowing authorized individuals to access the facility and verifying that CCTVs are capturing key areas and (2) conducting quarterly assessments of the integrity of perimeter access controls.

    Recommendation: IRS shouldrefine the scope and nature of its periodic reviews of lockbox banks to include high dollar remittances to better monitor adherence to the requirement that they are processed immediately and deposited at the first available opportunity.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: IRS added a review checkpoint to the Processing Internal Controls Data Collection Instrument (DCI) which was implemented during the April 2006 on-site review performed by the Lockbox Field Coordinators (LFC). The review requires the LFC to ensure that there is an internal control in place to expedite remittances of $50,000 and over; and that lockbox management is ensuring these remittances are collected from all areas at the end of each shift and prior to breaks, then batched and sent for processing. GAO verified that a review checkpoint was added to the Processing Internal Controls DCI for lockbox banks to ensure that remittances of $50,000 or greater are processed expeditiously and not to be left unattended, including disruptive times such as shift changes, breaks, and meetings. During GAO's audit of IRS's fiscal year 2006 financial statements, it found no instances of remittances of $50,000 or more that were not processed immediately or deposited at the first available opportunity.

    Recommendation: IRS should enforce its existing policies and procedures at lockbox banks to ensure that all remittances of $50,000 or more are processed immediately and deposited at the first available opportunity.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: On April 13, 2006,IRS reported distributing the Lockbox Electronic Bulletin (LEB) 200613 (Remittances of $50,000 or more) throughout the Lockbox Network. The LEB updated Lockbox Processing Guidelines (LPG) to state the following: "If 50,000 or more is discovered in any type of work, it should be expedited and deposited on the first available deposit." In addition, the bulletin noted that lockbox management must ensure remittances of $50,000 or more are not left unattended, including disruptive times such as shift changes, breaks, and meetings. These remittances must be collected and then batched for expedited processing. Additionally, IRS noted that management will continue to provide training reminders and actively monitor the work in process for compliance with high-dollar procedures. GAO verified that the LPG requires remittances $50,000 or greater are not to be left unattended, including disruptive times such as shift changes, breaks, meetings, and are to be expedited and deposited on the first available deposit. Also, GAO verified that a review checkpoint was added to the Processing Internal Controls DCI for lockbox banks to ensure that remittances of $50,000 or greater are processed expeditiously and not left unattended, including disruptive times such as shift changes, breaks, and meetings. During GAO's audit of IRS's fiscal year 2006 financial statements, it found no instances of remittances of $50,000 or more that were not processed immediately or deposited at the first available opportunity.

    Recommendation: IRS should refine the scope and nature of its periodic reviews of candling processes at SCCs to ensure they (1) encompass tests of whether envelopes are properly candled through observation of candling in process and inquiry of employees who perform initial and final candling, and (2) document the nature and scope of the test and observation results.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: IRS reports using the Security Review Check List to document the effectiveness of the initial and final candling process, and to talk to employees who perform initial and final candling as part of the Monthly Campus and National Office Security Reviews. GAO verified that IRS revised its Security Review Checklist to document, through observation, the effectiveness of the initial and final candling process. During GAO's audit of IRS's fiscal year 2007 financial statements, it found no instances where IRS's reports did not document the number of employees who were questioned about their knowledge of candling procedures and the responses received from the employees.

    Recommendation: IRS shouldrevise its lockbox bank's security review checklist to ensure that it encompasses reviewing security incident reports to validate whether security personnel are providing corrective actions related to the incidents cited.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: IRS reported a Security Review Checklist was updated June 5, 2006 and all follow-up actions have been completed by the Lockbox Security Team. Submission Processing worked with IRS Mission Assurance and Financial Management Service to ensure the physical security review checklist was updated to include reviews of the security incident reports and to validate that the security personnel are providing corrective actions related to the incidents that were cited. GAO verified that the lockbox bank physical security Data Collection Instrument had been updated to include a review to ensure that security incidents are documented.

    Recommendation: IRS should reemphasize the need for the security guards at all TACs to ensure that key posts of duty, such as entrances to facilities, are not left unattended.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: IRS reported Wage and Investment (W&I) issued a memorandum on April 5, 2007 to address this issue. Additionally, a letter was issued to the Director, Security and Law Enforcement of Homeland Security to ensure security officers are aware of their duties and responsibilities at key post of duties. GAO did not identify any instances where key posts of duty were left unattended by security guards during our fiscal year 2007 audit.

    Recommendation: IRS should enforce the requirement that all security or other responsible personnel at SCCs and lockbox banks record all instances involving the activation of intrusion alarms regardless of the circumstances that may have caused the activation.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: In September 2009, IRS revised the Internal Revenue Manual (IRM) to require campuses to record all instances involving the activation of any alarm, regardless of what may have caused the activation, and to require that all instances be recorded in a Daily Activity Report/Event Log or other log book and maintained for a period of two years. In January 2008, IRS revised its Lockbox Security Guidelines (LSG) to require that all instances involving the activation of intrusion alarms, regardless of the circumstances that may have caused the activation, be recorded and maintained in the Daily Activity Report (DAR) or other incident logbook. On April 27, 2009, representatives from IRS's Business Support Management met with lockbox bank guard staff to address these requirements and emphasized the requirement for the full completion of the Daily Activity Report as detailed in the LSG, Standard Operating Procedures (SOP), and Post Orders. In addition, the Business Support Management team will monitor the full completion of the DAR, on a daily basis, and provide feedback to the guards, as necessary. During GAO's audit of IRS's fiscal year 2009 financial statements, it verified that IRS revised the IRM and LSG to require all instances involving the activation of intrusion alarms be recorded at SCCs and lockbox banks and that Business Support Management staff met with guards to address requirements and instituted controls to monitor full completion of the Daily Activity Reports at lockbox banks. GAO did not identify any instances where the activation of intrusion alarms were not recorded during its audit of IRS's fiscal year 2009 financial statements.

    Recommendation: IRS should document supervisory visits by offsite managers to TACS not having a manager permanently onsite. This documentation should be signed by the manager and should (1) record the time and date of the visit, (2) identify the manager performing the visit, (3) indicate the tasks performed during the visit, (4) note any problems identified, and (5) describe corrective actions planned.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: Wage and Investment (W&I) Field Assistance implemented the TAC Security and Remittance Review Database (TSRRD) to document supervisory reviews of all TACs, including those performed by offsite managers. The TSRRD documents (1) the time and date of the review; (2) the name of the manager performing the review; (3) the task performed during the review; (4) any problems or questions identified; and (5) planned corrective actions. These reviews are all conducted onsite. IRS's actions meet the intent of GAO's recommendation.

    Recommendation: IRS should connect duress alarms to a central monitoring station or local police department or institute appropriate compensating controls when these alarm systems are not operable or in place.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: IRS reported its Mission Assurance and Security Services (MA&SS) has coordinated with Agency-Wide Shared Services/Real Estate and Facilities Management and Wage and Investment to ensure duress alarms for 387 (97 percent) of the 400 Taxpayer Assistance Center (TAC) offices are currently connected to a central monitoring station and will work in partnership to address reported deficiencies. MA&SS and Field Assistance have determined that testing of duress alarms will be not less than once each calendar quarter (3-months) and results will be reviewed and documented. Plans to connect the remaining 13 offices are in progress and are being tracked until complete (status report provided as supporting documentation). Each of these 13 offices are currently equipped with duress alarms that annunciate locally and compensating control procedures are in place to ensure 911 is contacted for emergency assistance. The Internal Revenue Manual has been revised to set forth alarm testing procedures and to ensure TAC personnel are aware to contact 911 when alarms are not operable or in place. During GAO's audit of IRS's fiscal year 2006 financial statements, it verified that IRS revised its policy, which outlines duress alarm testing requirement at TACs as well as guidelines for employees to follow when working with duress alarms particularly at TACs with non-operable duress alarms.

    Recommendation: IRS should quip all TACs with adequate physical security controls to deter and prevent unauthorized access to controlled areas or office space occupied by other IRS units, including those TACs that are not scheduled to be reconfigured to the "new TAC" model in the near future. This includes appropriately separating customer service waiting areas from controlled areas by physical barriers such as locked doors marked with signs barring entrance by unescorted customers.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Open

    Comments: IRS stated that it continues to use several solutions to help secure non-model TACs, including using theater rope or other barriers, signage, and other minor alterations. IRS also stated that it continues to identify priority locations for TAC model build out by evaluating TAC sites and customer feedback. Priority status goes to sites with security, safety and environmental health concerns. Of the 397 TAC locations, IRS stated that 293 have the model TAC with another 10 scheduled for completion prior to the 2013 filing season. IRS plans to continue to build out all TACs in compliance with the security guidelines by October 2014. However, IRS reports that this action is highly dependent on continued funding and overcoming scheduling complexities.

    Recommendation: IRS should amend its policy to require that a completed form 13094 with a positive recommendation be provided for every juvenile hired to any position that will allow access to taxpayer receipts and/or taxpayer information.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: IRS amended its policy to require that all juveniles being considered for employment with the IRS complete Form 13094 (Recommendation for Juvenile Employment with the IRS) with a positive recommendation. This requirement is mandatory for employment with the IRS. During GAO's audit of IRS's fiscal year 2006 financial statements, it verified that IRS amended its juvenile hiring policy to ensure that only those juveniles receiving positive recommendations will be permitted access to taxpayer receipt and information.

    Recommendation: IRS shouldrequire IRS personnel to verify the information on the form 13094 by contacting the reference directly.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: IRS amended its policy to establish procedures that require IRS personnel to verify all completed forms with a positive recommendation by contacting the reference directly. During GAO's audit of IRS's fiscal year 2006 financial statements, it verified that IRS amended its juvenile hiring policy to ensure that IRS personnel verify the information provided on Form 13094 via direct contact with the reference.

    Recommendation: IRS shouldestablish procedures for hiring juveniles who do not have a current teacher, principal, counselor, employer or former employer, and clarify that IRS's current policies and procedures should not be interpreted to mean that such juveniles should be allowed access to taxpayer receipts and information without a form 13094 or its equivalent. These procedures could include a list of acceptable alternatives that may serve as references for juveniles who do not have a current teacher, principal, or guidance counselor.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: IRS modified Form 13094 with the following sentence added, "Form should be completed by a person who has personal knowledge of the applicant's character and trustworthiness. If the applicant is attending school or has graduated, this form must be completed and signed by the current or former school official (i.e., principal, guidance counselor, or teacher). If the applicant is not in school and is currently employed or unemployed, the form must be completed and signed by either a current or former employer." The revised Form 13094 is available on the IRS' publication website. During GAO's audit of IRS's fiscal year 2006 financial statements, it verified that IRS amended its juvenile hiring policy to provide accepted alternative references if the juvenile does not have a current teacher, principal, or guidance counselor.

    Recommendation: IRS shouldrevise the form 13094 to require the reference to describe his/her relationship with the juvenile, including extent of first-hand contact, to allow IRS to review the forms and assess whether the referencer has sufficient basis to recommend that juvenile to a position of trust.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: IRS modified Form 13094 to include two additional boxes for the reference to include their relationship to the juvenile and the number of years they have known the juvenile. The revised Form 13094 is available on the IRS' publication website. During GAO's audit of IRS's fiscal year 2006 financial statements, it verified that IRS amended its juvenile hiring policy to require that the references indicate how well they know the potential juvenile hire.

    Recommendation: IRS shouldrequire IRS personnel to verify the information on the form 13094 by contacting the reference directly.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: IRS amended its policy to establish procedures that require IRS personnel to verify all completed forms with a positive recommendation by contacting the reference directly. During GAO's audit of IRS's fiscal year 2006 financial statements, it verified that IRS amended its juvenile hiring policy to ensure that IRS personnel verify the information provided on Form 13094 via direct contact with the reference.

    Recommendation: IRS shouldrevise the physical security procedures contained in the IRM to require that all SCCs and any respective annex facilities processing taxpayer receipts and/or information perform and document monthly tests of the facility's intrusion detection alarms. At a minimum, these procedures should (1) outline the type of test to be conducted, (2) include criteria for assessing whether the controls used to respond to the alarm were effective, and (3) require that a logbook be maintained to document the test dates, results, and response information.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: GAO verified that IRS revised its Internal Revenue Manual to include requirements to perform and document monthly tests of intrusion detection alarms, including guard responses to alarms. Also, IRS's Audit Management Checklist contains review steps for physical security analysts to determine whether SCCs and respective annex facilities that process taxpayer receipts and/or information perform and document monthly tests of intrusion alarms.

    Recommendation: IRS shouldrefine the scope and nature of its periodic reviews of lockbox banks to include high dollar remittances to better monitor adherence to the requirement that they are processed immediately and deposited at the first available opportunity.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: IRS added a review checkpoint to the Processing Internal Controls Data Collection Instrument (DCI) which was implemented during the April 2006 on-site review performed by the Lockbox Field Coordinators (LFC). The review requires the LFC to ensure that there is an internal control in place to expedite remittances of $50,000 and over; and that lockbox management is ensuring these remittances are collected from all areas at the end of each shift and prior to breaks, then batched and sent for processing. GAO verified that a review checkpoint was added to the Processing Internal Controls DCI for lockbox banks to ensure that remittances of $50,000 or greater are processed expeditiously and not to be left unattended, including disruptive times such as shift changes, breaks, and meetings. During GAO's audit of IRS's fiscal year 2006 financial statements, it found no instances of remittances of $50,000 or more that were not processed immediately or deposited at the first available opportunity.

    Recommendation: IRS shouldrevise its lockbox bank's security review checklist to ensure that it encompasses reviewing security incident reports to validate whether security personnel are providing corrective actions related to the incidents cited.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: IRS reported a Security Review Checklist was updated June 5, 2006 and all follow-up actions have been completed by the Lockbox Security Team. Submission Processing worked with IRS Mission Assurance and Financial Management Service to ensure the physical security review checklist was updated to include reviews of the security incident reports and to validate that the security personnel are providing corrective actions related to the incidents that were cited. GAO verified that the lockbox bank physical security Data Collection Instrument had been updated to include a review to ensure that security incidents are documented.

    Recommendation: IRS should direct Facilities Management Branch managers to research and resolve the aging reports.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: IRS reported implementing procedures requiring Facilities Branch Managers to regularly research and follow-up on disposal actions by routinely reviewing system generated aging reports. These procedures help ensure that property and equipment disposals are recorded timely in its inventory records. In fiscal year 2008, IRS implemented a new wizard tool that caused a system glitch which prevented IRS from updating all disposals within 10 work days as required. During fiscal year 2009, IRS corrected the system glitch. GAO verified during the fiscal year 2009 audit that IRS staff routinely researched and resolved the aging reports, thereby promptly recording disposals of property and equipment in its inventory records. In addition, GAO's testing of property disposals as part of its audit of IRS's fiscal year 2009 financial statements did not identify any situations where IRS did not timely update disposal transactions.

    Recommendation: IRS should generate aging reports when an asset remains in pending disposal status for longer than a specified period of time.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: During fiscal year 2006, IRS re-engineered the P&E disposal process. The new process, which includes performing the necessary research to resolve aging transactions during the disposal process, generates exception reports that enable management to monitor the aging of transactions during the disposal process. GAO's fiscal year 2007 review of P&E internal controls showed that anomaly (exception) reports were being generated when an asset remains in a disposal code for an extended period of time. IRS's actions have helped to reduce the risk of loss, or theft of its property and equipment.

    Recommendation: To assure proper accounting treatment of expense and P&E transactions and reliable financial reporting, IRS should enforce its property and equipment capitalization policy to ensure that it is properly implemented to fully achieve management's objectives, including recognizing assets when its capitalization criteria is met and recognizing expenses when it is not.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: According to IRS, IRS implemented a dollar threshold for the ongoing monthly review of P&E transactions beginning in March 2006. In addition, the CFO and Chief, Agency-Wide Shared Services, jointly issued a memorandum to all executives entitled, "Internal Transaction Control and Accuracy Improvement," emphasizing responsibility for accurate transaction coding, in April 2006. Also, the CFO and procurement offices jointly completed a review of material code descriptions and implemented appropriate changes in the requisition tracking system and IFS; implemented a process to review the material group assigned to transactions at the point of requisition to drive the transaction coding as either P&E or expense; and initiated a feedback process regarding material group coding errors found after receipt and acceptance. On the basis of our fiscal year 2006 testing of P&E and nonpayroll expenses, we confirm that IRS has improved the accuracy and reliability of its P&E records by enhancing accounting code definitions in its new financial management system to make it easier for users to select the proper accounting codes for recording transactions, improving coordination among units involved in processing P&E activity, and streamlining its analysis of P&E transactions most susceptible to misclassification.

    Recommendation: IRS shouldestablish procedures for hiring juveniles who do not have a current teacher, principal, counselor, employer or former employer, and clarify that IRS's current policies and procedures should not be interpreted to mean that such juveniles should be allowed access to taxpayer receipts and information without a form 13094 or its equivalent. These procedures could include a list of acceptable alternatives that may serve as references for juveniles who do not have a current teacher, principal, or guidance counselor.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: IRS modified Form 13094 with the following sentence added, "Form should be completed by a person who has personal knowledge of the applicant's character and trustworthiness. If the applicant is attending school or has graduated, this form must be completed and signed by the current or former school official (i.e., principal, guidance counselor, or teacher). If the applicant is not in school and is currently employed or unemployed, the form must be completed and signed by either a current or former employer." The revised Form 13094 is available on the IRS' publication website. During GAO's audit of IRS's fiscal year 2006 financial statements, it verified that IRS amended its juvenile hiring policy to provide accepted alternative references if the juvenile does not have a current teacher, principal, or guidance counselor.

    Recommendation: IRS shouldrevise the form 13094 to require the reference to describe his/her relationship with the juvenile, including extent of first-hand contact, to allow IRS to review the forms and assess whether the referencer has sufficient basis to recommend that juvenile to a position of trust.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: IRS modified Form 13094 to include two additional boxes for the reference to include their relationship to the juvenile and the number of years they have known the juvenile. The revised Form 13094 is available on the IRS' publication website. During GAO's audit of IRS's fiscal year 2006 financial statements, it verified that IRS amended its juvenile hiring policy to require that the references indicate how well they know the potential juvenile hire.

    Recommendation: IRS should require that managers or supervisors document their reviews of document transmittals to ensure that taxpayer receipts and/or taxpayer information mailed between IRS locations are tracked according to guidelines.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: IRS revised its IRM policy IRM 1.4.11 to require that TAC managers use a Follow-up Review Log to document their review of document transmittals.

    Recommendation: IRS should provide instructions to document the follow-up procedures performed in those cases where transmittals have not been timely acknowledged.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: IRS issued procedures and reminder memos to the field on the responsibilities for using receipt transmittals including the establishment of a follow-up system for unacknowledged 3210s, and annually reminding LMSB employees through executive memorandum of Form 3210 procedures and responsibilities. IRS also created a closing checklist to assist employees when transmitting cases. Further, IRS reports Form 3210 procedures and responsibilities are included in revenue agent training materials. Also, as of December 2006, the LMSB Human Capital Office requires that Industry Territory Managers review Form 3210 utilization and follow-up procedures during operational reviews. Furthermore, IRS revised its Internal Revenue Manual to provide procedures for requiring Taxpayer Assistance Centers (TAC) to follow-up with Submission Processing Centers when acknowledgments are not received within 10 days. During GAO's audit of IRS's fiscal year 2007 financial statements, it verified that the IRM includes procedures for LMSB and TE/GE units to follow-up with the destination sites if remittance transmittals are not returned within 10 days or if all remittances were not marked with a distinctive checkmark. Also, GAO verified that the IRM contains Field Assistance (TAC) procedures for monitoring document transmittal acknowledgments.

    Recommendation: IRS should enforce compliance with existing requirements that all IRS units transmitting taxpayer receipts and information from one IRS facility to another, including service center campuses (SCCs), Taxpayer Assistance Centers (TACs), and units within Large and Mid-Size Business and Tax-Exempt and Government Entities, establish a system to track acknowledged copies of document transmittals.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Open

    Comments: During fiscal year 2012, IRS updated guidance on the use of TAC Follow-up Review Logs used for tracking acknowledged/unacknowledged document transmittal forms. However, at several of the TACs we visited during our fiscal year 2012 audit, we continued to find issues with incomplete or inaccurate tracking of transmittals of documentation. IRS plans to continue TAC reviews through September 2013 to enforce completion of the logs. GAO will continue to evaluate IRS's actions during its audit of IRS's fiscal year 2013 financial statements.

    Recommendation: IRS should require that Refund Inquiry Unit managers or supervisors document their review of all forms used to record and transmit returned refund checks prior to sending them for final processing.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: We verified that IRS included requirements that Refund Inquiry Unit managers document their review of all forms used to record and transmit returned refund checks prior to sending them for final processing.

    Apr 21, 2014

    Apr 17, 2014

    Apr 8, 2014

    Feb 19, 2014

    Dec 18, 2013

    Nov 6, 2013

    Sep 23, 2013

    Jul 1, 2013

    Jun 17, 2013

    Looking for more? Browse all our products here