	IRS’ Reports Do Not Provide a Complete Picture of Mission- Critical Systems’ Status

IRS’ Year 2000 status reports do not provide a complete picture of the status of IRS’ mission-critical systems because IRS does not monitor Year 2000 status for its mission-critical systems in their entirety. Instead, IRS monitors the Year 2000 status of the components of an information system, such as the application software, systems software, and hardware for each of its three types of computers—mainframes, minicomputers/file servers, and personal computers. IRS also monitors its telecommunications networks separately. Reports Indicate That IRS Met the January 1999 Completion Goal for Some Areas but Not for Others

IRS’ reports indicate that it met the January 1999 completion goal for some areas but not for others. IRS fully implemented the Year 2000 aspects for one of its major system replacement projects. Reports Indicate That IRS Met its Goal for Application Software for Existing Systems and Telecommunications Networks

Since we testified in May 1998, IRS has continued to make progress in correcting the application software for its mission-critical systems. Reports Indicate That IRS Did Not Meet the Goal for Systems Software and Hardware

IRS’ reports indicate that IRS made significant progress in an area that in May 1998 we said was lagging—upgrading systems software and hardware for its three types of computers: mainframes, minicomputers/file servers, and personal computers. Despite this progress, IRS did not meet the January 31, 1999, completion goal for its three types of computers. As a result of the delay, some changes are not to be tested until October 1999, when the second part of the Year 2000 end-to-end test is to begin. This delay reduces the time available to make any needed corrections before January 1, 2000. Full Implementation of Year 2000 Changes Achieved for One of the Two Replacement Projects; Less Than Full Implementation Achieved for the Other

For one of IRS’ two major system replacement projects, IRS implemented the Year 2000 changes at all 10 service centers by January 31, 1999; for the other system replacement project, 6 of the 10 service centers were using the full suite of Year 2000 changes for the system by January 31, 1999. The test will involve 97 of IRS’ 133 mission-critical systems. Staggered Milestones Developed for Completing IRS’ Contingency Plans

In 1999, IRS is to complete the development of 36 contingency plans that IRS determined are needed to address various Year 2000 failure scenarios for its core business processes. One key support services contingency plan and 12 compliance contingency plans are to be completed by May 31, 1999. Other Business Initiatives Are Creating Competing Demands on Certain Staff Needed for Year 2000 Efforts

In addition to Year 2000 efforts, IRS has other ongoing business initiatives that are placing competing demands on its information systems and business staff. Over the last several months, IRS has taken various actions to address these competing demands. To date, IRS has taken actions to address these competing demands, including delaying the completion milestones for some Year 2000 activities. As IRS passes each one, it will have more information on the status of its Year 2000 effort and the amount of remaining work. The results of this test will be an indicator of the extent to which, for the work completed thus far, IRS has been successful in making its systems Year 2000 compliant.
Why GAO Did This Study

Pursuant to a congressional request, GAO discussed the Internal Revenue Service's (IRS) year 2000 efforts and the remaining challenges IRS faces in making its information systems year 2000 compliant, focusing on: (1) the extent to which IRS monitors the year 2000 status of its mission-critical systems in their entirety; (2) whether IRS met the January 31, 1999, completion goal for the areas that it monitors--application software, systems software, hardware, and telecommunications networks; (3) the status of two remaining, critical year 2000 tasks--conducting year 2000 testing and completing 36 contingency plans; and (4) the fact that other business initiatives are creating competing demands on staff needed for year 2000 efforts.

What GAO Found

GAO noted that: (1) a complete picture cannot be provided of the year 2000 status of IRS' 133 mission-critical systems because IRS does not report year 2000 status for these systems in their entirety; (2) instead, IRS monitors the year 2000 status of the components of an information system, such as the application software, systems software, and hardware, for each of its three types of computers--mainframes, minicomputers/file servers, and personal computers; (3) IRS reports that it met the January 31, 1999, completion goal for some of the areas that it monitors but not for others; (4) IRS reports that it met the January 1999 completion goal for: (a) correcting application software; (b) upgrading telecommunications networks; and (c) fully implementing one of its two major system replacement projects; (5) despite significant progress since GAO's testimony in May, IRS did not meet the goal for: (a) upgrading systems software and hardware for its three types of computers; and (b) fully implementing the other major system replacement project; (6) as a result of not meeting the goal for upgrading systems software and hardware, some changes will not be tested until late in 1999, reducing the time available to make corrections before January 2000; (7) for the replacement project, some service center staffs will have no experience before 2000 using the new system to process peak filing season volumes of remittances; (8) IRS must conduct the year 2000 end-to-end testing of its mission-critical systems; (9) testing is to begin in April 1999; (10) the second critical task is to develop 36 contingency plans that IRS has determined are needed to address various failure scenarios for its core business processes; (11) IRS is developing these plans in response to GAO's June 1998 report; (12) IRS has delayed the completion dates so that the first set of plans are to be completed by March 31, 1999, and the second set of plans by May 31, 1999; (13) as IRS continues its year 2000 efforts, it will face the challenge of how to address the competing demands on its staff; (14) these competing demands are created by IRS' other major business initiatives, such as implementing tax law changes and completing the non-year 2000 portions of one of IRS' major system replacement projects; and (15) to address these competing demands, in the past several months, IRS has: (a) transferred staff from other areas; (b) hired additional staff; and (c) delayed some activities.