As a result, IRS relied without much success on alternative sources, such as Treasury schedules, to obtain the summary total by type of tax needed for its financial statement presentation. These discrepancies also further reduce our confidence in the accuracy of the amount of total revenues collected. Beginning with our audit of IRS’ fiscal year 1992 financial statements, we have made recommendations to correct weaknesses involving IRS’ revenue accounting system and processes. Accounts Receivable Could Not Be Verified

We could not verify the validity of either the $113 billion of accounts receivable or the $46 billion of collectible accounts receivables that IRS reported on its fiscal year 1995 financial statements. This is not a new problem, as we first identified IRS’ accounts receivable accounting and reporting problems in fiscal year 1992 and again in each subsequent fiscal year’s financial audit. Figure 3 shows IRS’ reported inventory of uncollected assessments for June 30, 1991, and each fiscal year from 1992 through 1995.
Why GAO Did This Study

GAO discussed its financial audits of the Internal Revenue Service for fiscal years 1992 through 1995.

What GAO Found

GAO noted that: (1) IRS relied on alternative sources to obtain revenue totals by type of tax for its financial statements; (2) IRS financial statements include various discrepancies that cannot be explained because of weaknesses in IRS information and collection systems; (3) the validity of IRS accounts receivable and collectible accounts receivable can not be verified; (4) many uncollected compliance assessments and financial receivables are uncollectible; (5) IRS has been unable to accurately account and report its total inventory of accounts receivable; (6) while IRS has made some improvements in accounting and reporting on its operating costs, significant problems remain; (7) IRS can not confirm when and if goods and services were received; and (8) the accuracy of the IRS Fund Balance with Treasury accounts cannot be verified.