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GAO-12-683R 1 (2012-06-25)

handle is hein.gao/gaobacgfb0001 and id is 1 raw text is: GAO Acona ity * Integrity * Reliability United States Government Accountability Office Washington, DC 20548 June 25, 2012 The Honorable Douglas H. Shulman Commissioner of Internal Revenue Subject: Management Report: Improvements Are Needed to Enhance the Internal Revenue Service's Internal Controls and Operating Effectiveness Dear Mr. Shulman: In November 2011, we issued our report on the results of our audit of the financial statements of the Internal Revenue Service (IRS) as of, and for the fiscal years ending, September 30, 2011, and 2010, and on the effectiveness of its internal control over financial reporting as of September 30, 2011.1 We also reported our conclusions on IRS's compliance with selected provisions of laws and regulations and on whether IRS's financial management systems substantially comply with the requirements of the Federal Financial Management Improvement Act of 1996. In March 2012, we issued a report on information security issues identified during our fiscal year 2011 audit, along with associated recommendations for corrective actions.2 The purpose of this report is to present internal control deficiencies identified during our audit of IRS's fiscal year 2011 financial statements for which we do not already have any recommendations outstanding. Although most of these deficiencies were not discussed in our report on the results of our fiscal year 2011 financial statement audit because they were not considered material weaknesses or significant deficiencies, they nonetheless warrant IRS management's attention.3 This report 1GAO, Financial Audit: IRS's Fiscal Years 2011 and 2010 Financial Statements, GAO-12-165 (Washington, D.C.: Nov. 10, 2011). 2GAO, Information Security: IRS Needs to Further Enhance Internal Control over Financial Reporting and Taxpayer Data, GAO-12-393 (Washington, D.C.: Mar. 16, 2012). 3A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit the attention of those charged with governance. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. Materiality represents the magnitude of an omission or misstatement of an item in a financial report that, when considered in light of surrounding GAO-12-683R IRS Management Report

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