GAO Results in Brief United States General Accounting Office Accounting and Information B-272945 September 9, 1996 The Honorable Ted Stevens Chairman The Honorable John Glenn Ranking Minority Member Committee on Governmental Affairs United States Senate OCT 9 6 LIBRARIES As you requested, this report offers an overall perspective on opportunities to improve the Internal Revenue Service's (IRS) business operations and is based on our recent reports and related testimonies on this topic.1 These testimonies and related reports extensively describe the substantial problems IRS has experienced in fulfilling its business vision, overcoming management and technical weaknesses in its tax systems modernization (TSM) efforts, and improving the reliability of its financial management systems used to account for hundreds of billions of dollars in taxpayer monies and to measure IRS' performance. We are not making any new recommendations in this report. As detailed in our recent studies, IRS has initiated actions that begin to implement the dozens of recommendations we have previously made in these areas. But to date, IRS has not fully implemented our recommendations, which offer a framework for correcting its management and technical problems. This report identifies pivotal actions that IRS should take to fully implement our recommendations and improve its business practices. These steps include: limiting funding for TSM to critical priorities; • developing an effective implementation strategy for achieving IRS' business vision that includes an agreed upon set of performance measures, which is imperative to changing the way IRS operates and serves customers; developing the capacity to make sound investments in information technology, which will be heavily relied upon to achieve IRS' business strategy and measure performance; 'Tax Systems Modernization: Management and Technical Weaknesses Must Be Overcome To Achieve building the necessary technical foundation for TSM information systems projects, which will provide the overall blueprints for developing systems, and the disciplined processes needed for completing information systems projects timely and economically, and ensuring that information systems concepts are transformed into practical tools that perform as intended; and addressing serious and persistent financial management problems, which affect the credibility of financial information, such as over $1 trillion in monies collected from American taxpayers and billions of dollars in delinquent taxes owed to the government. The success of these critical efforts hinges on IRS, the Department of the Treasury, the Office of Management and Budget (OMB), and congressional initiatives to ensure that recommendations in these areas are promptly and fully implemented. Historically, IRS has not been highly responsive in fixing business operation problems and implementing our recommendations. Treasury, in particular, has become more active in oversight and, while that is a positive development, the department's continued focus on monitoring IRS' corrective actions will be a key factor in ensuring progress. OMB needs to emphasize its leadership and oversight roles in resolving these matters as well. The Congress has legislatively established management tools it can use to closely monitor IRS' progress and hold IRS accountable for improving its business operations. These laws include (1) the Chief Financial Officers Act of 1990, (2) the Government Performance and Results Act of 1993, (3) Title V of the Federal Acquisition Streamlining Act of 1994, (4) the Paperwork Reduction Act of 1995, as amended, and (5) the Information Technology Management Reform Act of 1996. Through this legislation, the Congress has provided an excellent framework for (1) overseeing IRS' efforts to improve financial management operations and modernize tax processing with more effective technology and (2) measuring IRS' performance in meeting its business vision. In addition, the new National Commission on Restructuring IRS, legislated by the Congress, will have a principal role over the next year in conducting a broad-based evaluation of IRS' operations and recommending changes to IRS' organizational structure, management practices, and operating procedures. |