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GAO-23-105564 1 (2022-11-10)

handle is hein.gao/gaonwc0001 and id is 1 raw text is: GAOU.S. GOVERNMENT ACCOUNTABILITY OFFICE 441 G St. N.W. Washington, DC 20548 November 10, 2022 The Honorable Janet L. Yellen Secretary of the Treasury Financial Audit: IRS's FY 2022 and FY 2021 Financial Statements Dear Madam Secretary: This report transmits the GAO auditor's report on the results of our audits of the fiscal years 2022 and 2021 financial statements of the Internal Revenue Service (IRS), which is incorporated in the enclosed IRS Fiscal Year 2022 Agency Financial Report. As discussed more fully in the auditor's report that begins on page 42 of the enclosed financial report, we found IRS's financial statements as of and for the fiscal years ended September 30, 2022, and 2021, are presented fairly, in all material respects, in accordance with U.S. generally accepted accounting principles; although internal controls could be improved, IRS maintained, in all material respects, effective internal control over financial reporting as of September 30, 2022; and no reportable noncompliance for fiscal year 2022 with provisions of applicable laws, regulations, contracts, and grant agreements we tested. During our audit, we continued to identify significant deficiencies in internal control over financial reporting concerning IRS's unpaid assessments and financial reporting systems.1 Specifically, with respect to the significant deficiency related to financial reporting systems, continuing information system security control deficiencies in such areas as encryption and configuration of security settings increase the risk of unauthorized access to, modification of, or disclosure of sensitive financial and taxpayer data and disruption of critical operations. These significant deficiencies merit attention by those charged with governance of IRS. Under current law, executive agencies, including the Department of the Treasury of which IRS is a component, must annually prepare audited organization-wide financial statements.2 The law 1A 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. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, 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 over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. 2See 31 U.S.C. § 3515. GAO-23-105564 IRS's FY 2022 and FY 2021 Financial Statements Page 1

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