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GAO-17-454R 1 (2017-05-17)

handle is hein.gao/gaobaakus0001 and id is 1 raw text is: GAO U.S. GOVERNMENT ACCOUNTABILITY OFFICE 441 G St. N.W. Washington, DC 20548 May 17, 2017 The Honorable John Koskinen Com missioner of Internal Revenue Management Report: Improvements Are Needed to Enhance the Internal Revenue Service's Internal Control over Financial Reporting Dear Mr. Koskinen: On November 10, 2016, we issued our report on our audit of the Internal Revenue Service's (IRS) fiscal years 2016 and 2015 financial statements,1 which included our opinion that IRS's internal control over financial reporting was not effective as of September 30, 2016, because of a continuing material weakness in internal control over unpaid assessments.2 The purpose of this report is to present (1) a new control deficiency related to the material weakness reported in our 2016 report and (2) other new control deficiencies that we identified during our fiscal year 2016 testing of IRS's controls, along with our recommended corrective actions related to all of these deficiencies.3 This report also presents the status, as of September 30, 2016, of IRS's corrective actions taken to address our recommendations detailed in our previous management reports that remained open at the beginning of our fiscal year 2016 audit (see enc. 1).4 This report is intended for use by IRS management. Results in Brief During our audit of IRS's fiscal years 2016 and 2015 financial statements, we identified a new control deficiency involving changes to masterfile programs that contributed to IRS's continuing material weakness in internal control over unpaid assessments as of September 30, 2016. 1GAO, Financial Audit. IRS's Fiscal Years 2016 and 2015 Financial Statements, GAO-i 7-140 (Washington, D.C.: Nov. 10, 2016). 2,An unpaid assessmentis a legallyenforceable claim against a taxpayer and consists oftaxes, penalties, and interestthat have not been collected orabated (i.e., reduced by IRS). Internal Revenue Manual (IRM) § 1.34.1.2 (June 23, 2009). 3We plan to issue a separate reporton the information securtyissues identified during ourfiscal year 2016 audit, including the previouslyunresolv/ed and new issues that collectiely contributed to a significantdeficiencyin internal control oer financial reporting systems as of September 30,2016, along with associated new recommendations for corrective actions. 4GAO, Management Report.- Improvements Are Needed to Enhance the Internal Revenue Service's Internal Control over Financial Reporting, GAO-16-457R (Washington, D.C.: May 18,2016). GAO-17-454R IRS Management Report Page 1

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