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![handle is hein.gao/gaocrptarud0001 and id is 1 raw text is:
Highlights of ..O- I., I.a report to the
Committee on Finance. U.S. Senate
Why GAO Did This Study
In t he past, the Ine nRevenue
Service( (IRS) hats experienced
declineos inl en1forcementl
pr1odut-iv ity as maisured bly cases
closed per Full Timec Equiva1lent.
Increasingc enI forcement(11
produclivity thro1ugh al va.rietyv of'
en1forcement(li imlprovemlenlitw ,rjects
is onle strategy, being pur-sued by
IR'S. EvIaluatinthe benfit of'
different projects requir-es good
measuires of prodtuctivity* . in
adition, IRS',)s abitlt to correctly
mnea.sure its produnctivity* hals
imlportant11 budget imlplicat1ions.
GAO) wa Is a ske d t o illu strat Ife
ava ilable meth1ods to better
mieasureo pr1odutIivity at IR'S.
Specifically, ourl obet vwere to
(1) describe ch1allengies thiat IR'S
faces w\henl mlea-suring' produictivity,
()describe( altentv method
that fIRS canl use to imnprove its
product0iv ity\ mea~sures, an11d()
aIssess thle feasibility of uising these
alternative met0hods by illustr'ating
thirij use w ith existing' IRts data1;.
CommIl issionler of, Interna.-l Revenule
putl inl placea planl for. itro ducing
wider1 use of1atlternative meth1ods of,
those illustrat1ed inl this reoport,
taking a ccount oftheli costs of'
imiplemntning the i(nw methods.
The Commilissionler of, InternlI
Rvneagreled with) our,
recomendtionand ssigneld
responisibilty for. considering'
alternative meth0 lods of, mleasuingl'
To view the full product. including the scope
and methodology. dlick on the link above.
Fr morn information, contact James White at
(202) 512-9110 or whife] @gao.gov.
TAX ADMINSTRATION
IRS Can Improve Its Productivity
Measures by Using Alternative Methods
What GAO Found
Measuring IRS's productivity, the efficiency with which inputs are used to
produce outputs, is challenging. IRS's output could be measured in terms of
impact on taxpayers or the activities it performs. IRS's impacts on
taxpayers, such as compliance and perceptions of fairness, are intangible
and costly to measure. IRS's activities, such as exams or audits conducted,
are easier to count but must be adjusted for complexity and quality. An
increase in exams closed per employee would not indicate an increase in
productivity if IRS had shifted to less complex exams or if quality declined.
IRS can improve its productivity measures by using a variety of methods for
calculating productivity that adjust for complexity and quality. These
methods range from ratios using a single output and input to methods that
combine multiple outputs and inputs into composite indexes. Which method
is appropriate depends on the purpose for which the productivity measure is
being calculated. For example, a single ratio may be useful for examining
the productivity of a single simple activity, while composite indexes can be
used to measure the productivity of resources across an entire organization,
where many different activities are being performed.
Two examples show that existing data, even though they have limitations,
can be used to produce a more complete picture of productivity. For
individual exams, composite indexes controlling for exam complexity show
a larger productivity decline than the single ratio method. On the other hand,
for exams performed in the Large and Mid-Size Business (LSMB) division,
the single ratio understates the productivity increase shown, after again
controlling for complexity. By using alternative methods for measuring
productivity, managers would be better able to isolate sources of
productivity change and manage resources more effectively. More complete
productivity measures would provide better information about IRS
effectiveness, budget needs, and efforts to improve efficiency.
Illustrations of Exam Productivity Indexes before and after Controlling for Complexity
Individual exams Exams in LMSB
0.4
FY1997 FY1998 FY1999 FY2000 FY2001
FY2002
FY2003 FY2004
- SNgle ratio nd. .....Corosit e index
Source: GAO analysis of IRS data.
.United States Government Accountability Office
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