COMMITTEE ON GOVERNMENT ONE HUNDRED FOURTH CONGRESS SECOND SESSION SEPTEMBER 19, 1996 Printed for the use of the Committee on Government Reform and Oversight 44-755 CC U.S. GOVERNMENT PRINTING OFFICE For sale by the U.S. Government Printing Office Superintendent of Documents, Congressional Sales Office, Washington, DC 20402 ISBN 0-16-055860-3 COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT WILLIAM F. CLINGER, JR., Pennsylvania, Chairman BENJAMIN A. GILMAN, New York DAN BURTON, Indiana J. DENNIS HASTERT, Illinois PETER BLUTE, Massachusetts WILLIAM J. MARTINI, New Jersey MICHAEL PATRICK FLANAGAN, Illinois ROBERT L. EHRLICH, JR., Maryland CARDISS COLLINS, Illinois ROBERT E. WISE, JR., West Virginia JOHN M. SPRATT, JR., South Carolina PAUL E. KANJORSKI, Pennsylvania CAROLYN B. MALONEY, New York THOMAS M. BARRETT, Wisconsin BARBARA-ROSE COLLINS, Michigan ELEANOR HOLMES NORTON, District of Columbia JAMES P. MORAN, Virginia BERNARD SANDERS, Vermont JAMES L. CLARKE, Staff Director WILLIAM F. CLINGER, JR., Pennsylvania CARDISS COLLINS, Illinois MARK STEPHENSON, Minority Professional Staff Member NGOS 95-133971 03-31-98 (II) App, Steven O., Deputy Chief Financial Officer, Department of the Treas- ury; and Anthony Musick, Chief Financial Officer, Internal Revenue Dodaro, Gene L., Assistant Comptroller General, Accounting and Infor- Letters, statements, etc., submitted for the record by: App, Steven O., Deputy Chief Financial Officer, Department of the Treas- Page 14 Dodaro, Gene L., Assistant Comptroller General, Accounting and Infor- mation Management Division, General Accounting Office, prepared Maloney, Hon. Carolyn B., a Representative in Congress from the State Musick, Anthony, Chief Financial Officer, Internal Revenue Service, pre- (III) IRS FINANCIAL MANAGEMENT: HAS THERE BEEN ANY IMPROVEMENT? THURSDAY, SEPTEMBER 19, 1996 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, INFORMATION, AND TECHNOLOGY, COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT, Washington, DC. The subcommittee met, pursuant to notice, at 10:35 a.m., in room 210, Cannon House Office Building, Hon. Stephen Horn (chairman of the subcommittee) presiding. Present: Representatives Horn, Maloney, and Davis. Staff present: J. Russell George, staff director; Anna Miller, professional staff member; Erik Anderson, clerk; and Liza Mientus, Matt Pinkus, and Mark Stephenson, minority professional staff members. Mr. HORN. The Subcommittee on Government Management, Information, and Technology will come to order. This morning we are holding an oversight hearing to assess the Internal Revenue Service's ability to improve its financial management systems so that it can receive an unqualified opinion from its auditors on its financial statements. On November 14, 1995, this subcommittee held a hearing on financial management systems. At that session the subcommittee received testimony from the Office of Federal Financial Management and Office of Management and Budget, who told of a question asked of the Chief Financial Officer of the Internal Revenue Service. "Why are these IRS financial statements so terrible?" was the question, the response to which was, "Because they were never designed to be audited." This colloquy gave rise to a column by the humorist Dave Barry in which he talked about not paying his taxes this year because his tax return was never designed to be audited. If the agency that impacts the lives of most Americans cannot get its financial house in order, it diminishes both its credibility and tax-paying citizens' voluntary compliance with the tax laws. This state of affairs is intolerable in an agency that expects every American family to justify its own financial status. And as was noted by my colleagues, Mr. Traficant and Mr. Hefley, on the floor this morning, the burden of proof is on the citizen when it comes with the IRS, not on IRS. That is certainly one thing that needs to be changed. The hearing this morning is a followup to the subcommittee's March 6th hearing on the Internal Revenue Service's inability to (1) |