Appendix IV

Comments From the Department of
Commerce

Mr. Gene L. Dodaro

Page 2

uncovered. That effort, in conjunction with the Inspector General's findings, will also enable us to determine if the situation warrants identification as a material weakness under the Federal Managers' Financial Integrity Act.

As for your other three recommendations concerning cost issues related to the Cyberfile Project, our report will describe our decisions and their rationale in detail. We agree that late payment penalties and the associated surcharge should not have been charged to the Project, and NTIS is rescinding the $2,276 in charges. NTIS is also working to identify all costs that can be avoided while Cyberfile is suspended. However, the decision to use NTIS for Cyberfile-related purchases was made by IRS for it own convenience, with full understanding that the NTIS fee would be assessed.

The Honorable Ted Stevens
Chairman

Committee on Governmental Affairs
United States Senate

Dear Mr. Chairman:

Enclosed is our report entitled
Internal Revenue Service: Business
Operations Need Continued

Improvement. As you requested,
this report provides our overall
perspective on opportunities to
improve IRS' management practices
and computer modernization efforts.
It summarizes and updates our
recent reports and testimonies
before your committee. We are
providing the report to interested
committees as well as the National
Commission on Restructuring the
Internal Revenue Service.

Sincerely yours,

Gene L. Dodaro

Assistant Comptroller General

Enclosure

GAO

Results in Brief

United States

General Accounting Office
Washington, D.C. 20548

Accounting and Information
Management Division

B-272945

September 9, 1996

The Honorable Ted Stevens

Chairman

The Honorable John Glenn

Ranking Minority Member

Committee on Governmental Affairs

United States Senate

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. 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.

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
Success (GAO/T-AIMD-96-75, March 26, 1996), Tax Systems Modernization: Progress in Achieving IRS
Business Vision (GAO/T-GGD-96-123, May 9, 1996), Financial Audit: Actions Needed to Improve IRS
Financial Management (GAO/T-AIMD-96-96, June 6, 1996); and Tax Systems Modernization. Actions
Underway But IRS Has Not Yet Corrected Management and Technical Weaknesses (GAO/AIMD-96-106,
June 7, 1996).