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GAO-24-106472 1 (2023-11-09)

handle is hein.gao/gaopji0001 and id is 1 raw text is: U.S. GOVERNMENT ACCOUNTABILITY OFFICE 441 G St. N.W. Washington, DC 20548 November 9, 2023 The Honorable Janet L. Yellen Secretary of the Treasury Financial Audit: IRS's FY 2023 and FY 2022 Financial Statements Dear Madam Secretary: This report transmits the GAO auditor's report on the results of our audits of the fiscal years 2023 and 2022 financial statements of the Internal Revenue Service (IRS), which is incorporated in the enclosed IRS Fiscal Year 2023 Agency Financial Report. As discussed more fully in the auditor's report that begins on page 54 of the enclosed financial report, we found IRS's financial statements as of and for the fiscal years ended September 30, 2023, and 2022, 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, 2023; and no reportable noncompliance for fiscal year 2023 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 information system controls. These significant deficiencies merit attention by those charged with governance of IRS.1 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 also requires audited financial statements of components of executive agencies as designated by the Director of the Office of Management and Budget (OMB). IRS is one of these designated components. In connection with fulfilling our requirement to audit the consolidated financial statements of the U.S. government, and consistent with our authority to audit statements and schedules prepared by executive agency components, we have audited IRS's financial 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-24-106472 IRS's FY 2023 and FY 2022 Financial Statements Page 1

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