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GAO-04-553R 1 (2004-04-26)

handle is hein.gao/gaocrptaqbk0001 and id is 1 raw text is: SGAO Accountability * Integrity Reliability United States General Accounting Office Washington, DC 20548 April 26, 2004 The Honorable Mark W. Everson Commissioner of Internal Revenue Subject: Management Report: Improvements Needed in IRS's Internal Controls and Accounting Procedures Dear Mr. Everson: In November 2003, we issued our report on the results of our audit of the Internal Revenue Service's (IRS) financial statements as of and for the fiscal years ending September 30, 2003 and 2002, and on the effectiveness of its internal controls as of September 30, 2003.' We also reported our conclusions on IRS's compliance with significant provisions of selected laws and regulations and on whether IRS's financial management systems substantially comply with requirements of the Federal Financial Management Improvement Act of 1996. A separate report on the implementation status of recommendations from our prior IRS financial audits and related financial management reports including this one will be issued shortly. The purpose of this report is to discuss issues identified during our fiscal year 2003 audit regarding internal controls and accounting procedures that could be improved for which we do not presently have any recommendations outstanding. Although not all of these issues were discussed in our fiscal year 2003 audit report, they all warrant management's consideration. This report contains 15 recommendations that we are proposing IRS implement in order to improve its internal controls and accounting procedures. We conducted our audit in accordance with U.S. generally accepted government auditing standards. Results in Brief During fiscal year 2003, we identified a number of internal control issues that adversely affected safeguarding of tax receipts, budgeting, operating costs, and financial reporting. These issues concern (1) enforcement of lockbox bank contractor policies, (2) courier service requirements, (3) lockbox bank management 'U.S. General Accounting Office, Financial Audit: IRS's Fiscal Years 2003 and 2002 Financial Statements, GAO-04-126 (Washington, D.C.: Nov. 13, 2003). 2Lockbox banks are financial institutions designated as depositories and financial agents of the U.S. government to perform certain financial services, including processing tax documents, depositing the receipts, and then forwarding the documents and data to IRS's service center campuses, which update taxpayers' accounts. GAO-04-553R IRS Management Report

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