The agency that requires millions of Americans to submit accurate annual tax information has itself neglected to prepare financial statements with sufficient internal controls, leading to inaccuracies on its payroll, among other areas, the Government Accountability Office determined.
The Internal Revenue Service’s “significant” bookkeeping omissions in its fiscal 2013 statement also affect procurement, as well as the agency’s performance in ongoing efforts to reduce payments to deceased taxpayers, the watchdog said in a report released July 2.
In one instance involving employee time cards, managers failed to note that two employees had booked hours while furloughed during last October’s 16-day government shutdown. Managers did “not identify the errors before approving the employees’ time cards,” the report said. IRS officials stated that more than 800 employees appeared on an “exception report” for the pay period, “which they noted was an unusually high number in part because of the furlough, and that the timekeeping staff missed these two employees’ accounts because of human error.”
GAO’s audit identified eight new “internal control deficiencies” at IRS. In the administrative area, they include problems with monitoring of internal controls at outside organizations that service IRS financial systems; processing of time cards; receipt and acceptance of goods and services; monitoring of assets acquired and disposed of to ensure they don’t contain sensitive taxpayer information; and monitoring collection of fees for agreements with taxpayers who pay off tax debts in installments.
In the performance area, “the IRS did not have sufficient controls in place to reasonably assure that refunds disbursed on behalf of deceased taxpayers were valid prior to disbursement,” GAO wrote, and “IRS’ controls were not operating effectively to reasonably assure that refunds were not disbursed to deceased taxpayers who did not have a personal representative or surviving spouse identified.”
Auditors summarized the tax agency’s corrective actions on past recommendations in their letter to Commissioner John Koskinen, noting that it had completed 26 of 60 fixes in the financial management area. GAO added 17 new recommendations in the latest report, to which the agency agreed.
The IRS stated that by September 2014, it will, among other actions, “issue a reminder to managers and employees responsible for time and attendance of their responsibility to review records for accuracy, ensure compliance with policy, and enforce IRS policy related to regular work hours authorized and when more than 80 hours of work is reported in a pay period.”