United States General Accounting Office GAO February 2000 Report to the Secretary of the Treasury_part2 pdf

B-282441 Page 10 GAO/AIMD-00-76 IRS’ Fiscal Year 1999 Financial Statements •the U.S. Government Standard General Ledger (SGL) at the transaction level. In its fiscal year 1999 Federal Managers’ Financial Integrity Act of 1982 (FIA) assurance statement to the Treasury, IRS also concluded that its financial management systems do not comply with FFMIA. The objective of our audit was not to provide an opinion on overall compliance with laws and regulations. Accordingly, we do not express such an opinion. Material Weaknesses During our audit of IRS’ fiscal year 1999 financial statements, we identified seven material weaknesses 7 in internal controls that may adversely affect any decision by IRS’ management that is based, in whole or in part, on information that is inaccurate because of these deficiencies. Similar to our findings and reports from previous audits, we were unable to obtain reasonable assurance that IRS’ program costs, budgetary balances, and components of net position were reliable. In addition, unaudited financial information reported by IRS, including budget and performance information, may also contain misstatements resulting from these deficiencies. Some of these material weaknesses have also allowed inappropriate refunds to be paid, reduced IRS’ effectiveness in its enforcement of the tax code, and resulted in errors in taxpayer accounts and increased taxpayer burden. The material weaknesses we have identified relate to IRS’ controls over (1) the financial reporting process, (2) management of unpaid assessments, (3) refunds, (4) fund balance with Treasury, (5) property and equipment, (6) budgetary activities, and (7) computer security. With the exception of the issue involving budgetary controls, we reported on these issues last year. 8 We discuss these weaknesses in the following sections and plan to provide more details on them, as well as recommendations for corrective actions, in a subsequent report. We will separately report in a management letter to IRS on other less significant matters involving IRS’ system of internal controls and its operation. 7 A material weakness is a condition that precludes the entity’s internal control from providing reasonable assurance that material misstatements in the financial statements would be prevented or detected on a timely basis. Reportable conditions are matters coming to our attention that, in our judgment, should be communicated because they represent significant deficiencies in the design or operation of internal controls that could adversely affect IRS’ ability to meet the objectives described in this report. 8 See GAO/AIMD-99-75, March 1, 1999. This is trial version www.adultpdf.com . security. With the exception of the issue involving budgetary controls, we reported on these issues last year. 8 We discuss these weaknesses in the following sections and plan to provide more. Integrity Act of 1982 (FIA) assurance statement to the Treasury, IRS also concluded that its financial management systems do not comply with FFMIA. The objective of our audit was not to provide. of these deficiencies. Similar to our findings and reports from previous audits, we were unable to obtain reasonable assurance that IRS’ program costs, budgetary balances, and components of