In carrying out its  mission, IRS annually collects over $2 trillion in taxes from millions of  individual taxpayers and numerous other types of taxpayers and  manages the distribution of more than $300 billion in refunds. IRS’s fiscal year 2014 budget was $11.3 billion. Of this amount, IRS  expected to spend about $2.4 billion on IT investments. IRS Has Made Limited Progress in Implementing Prior Recommendations to Improve Reliability and Reporting of Cost, Schedule, and Scope Information

IRS has made limited progress in improving the reliability and reporting of  cost, schedule, and scope performance information: it has partially  implemented two of our five related recommendations and not yet  addressed the remaining three. IRS’s implementation of these  recommendations is critical in ensuring that Congress receives the  reliable information it needs for effective oversight and decision making. Table 2 identifies the status of IRS’s efforts to address the  recommendations. It is  important to note that the cost and schedule information was not updated  for two investments however, IRS did not consistently indicate so in its  reports to Congress. IRS also reported “green” ratings for investments instead of their previous  “yellow” ratings for Chief Technology Officer summary-level risk  assessments. However, IRS does not provide these ratings for the six  investments for which it provides detailed information in the quarterly  reports to Congress. Providing summary-level risk ratings for all major  investments would improve the visibility into changes in investment risk,  and provide Congress with the information to more easily determine the  investments requiring greater attention. Most Investments Were Reportedly Within Cost and Schedule Goals

According to IRS, 11 of 17 IT investments were within 10 percent of cost  estimates between October 2013 and September 2014, and 13 of 17  investments were within 10 percent of schedule estimates between  October 2013 and September 2014. While the detailed information on the 6  investments is consistent with congressional reporting requirements,  supplementing it with Chief Technology Officer summary-level risk  assessment ratings would improve the visibility into risks faced by these  investments, and provide Congress with the information to more easily  determine the investments requiring greater attention. Variances from Selected Investments’ Initial Cost, Schedule, and Scope Goals Have Not Been Transparent and Reporting of ACA Testing Status Is Not Comprehensive

Selected investments experienced variances from initial cost, schedule,  and scope goals that were not transparent in congressional reporting  because IRS has yet to address our prior recommendations for reporting  at the investment level and on progress in delivering scope. Specifically,  RRP has so far exceeded planned costs by $86.5 million and has yet to  deliver functionality that was scheduled for September 2012, in large part  due to the need to implement new technology and a lack of adequate  resources, including contracting expertise and staff; a key phase of CADE  2 was developed 10 months late and at $183.6 million more than  planned; and the IRDM Case Management project was cancelled. In addition, the reports on the status of testing for the ACA  investment are not comprehensive, making it difficult to determine  whether all required testing is being performed. Accordingly, we believe our  recommendation is still warranted. Appendix I: Objectives, Scope, and Methodology

Our objectives were to (1) evaluate IRS’s efforts to address our  recommendations for improving the reliability and reporting of cost,  schedule, and scope information; (2) summarize the reported cost,  schedule, and performance of IRS’s major IT investments; and (3) assess  the status and plans of selected investments. We assessed a recommendation as being fully addressed if IRS provided  evidence that it fully addressed our recommendation; partially addressed  if IRS provided evidence that it addressed our recommendation to some  extent; and not addressed if IRS did not provide any evidence that it  addressed our recommendation.
Why GAO Did This Study

IRS relies extensively on IT systems to annually collect more than $2 trillion in taxes, distribute more than $300 billion in refunds, and carry out its mission of providing service to America's taxpayers in meeting their tax obligations. For fiscal year 2014, IRS expected to spend about $2.4 billion on IT. Given the size and significance of IRS's IT investments and the challenges inherent in successfully delivering these complex IT systems, it is important that Congress be provided reliable cost, schedule, and scope information to assist with its oversight responsibilities.
Accordingly, GAO's objectives were to (1) evaluate IRS's efforts to address prior GAO recommendations for improving the reliability and reporting of cost, schedule, and scope information; (2) summarize the reported cost, schedule, and performance of IRS's major IT investments; and (3) assess the status and plans of selected investments.
To do so, GAO analyzed quarterly reports and reviewed information on cost and schedule from October 2013 to September 2014, interviewed program officials, and analyzed documentation for selected investments.

What GAO Found

The Internal Revenue Service (IRS) has made limited progress in improving the reliability and reporting of cost, schedule, and scope performance information–the agency has partially implemented two of GAO's five prior recommendations, but not yet addressed the remaining three (see table). IRS's implementation of these recommendations is critical in ensuring that Congress receives the reliable information it needs for effective oversight and decision making.
Key: ● Fully—the agency provided evidence that it fully addressed the recommendation. ◐ Partially—the agency provided evidence that it has addressed the recommendation to some extent. ◌ Not addressed—the agency did not provide any evidence that it addressed the recommendation.
Most of IRS's major information technology (IT) investments were reported as meeting cost and schedule goals. Specifically, 11 of 17 investments were reportedly within 10 percent of cost estimates, and 13 were within 10 percent of schedule estimates between October 2013 and September 2014. In addition, the agency reported “green” ratings for investments instead of their previous “yellow” ratings for Chief Technology Officer summary-level risk assessments. It is important to note that these ratings are not provided for 6 investments for which IRS provides detailed reporting to Congress. Providing summary-level risk ratings for all major investments would improve the visibility into changes in investment risk, and provide Congress with the information to more easily determine the investments requiring greater attention.
Selected investments experienced variances from initial cost, schedule, and scope plans that were not transparent in congressional reporting because IRS has yet to address GAO's prior recommendations. Specifically, the Return Review Program has so far exceeded planned costs by $86.5 million and has yet to deliver functionality that was scheduled for September 2012, and a key phase of Customer Account Data Engine 2 was developed 10 months late and at $183.6 million more than planned. However, none of these variances were clearly identified in congressional reporting. In addition, the consolidated reports on the status of testing for the Affordable Care Act Administration investment are not comprehensive, making it difficult to determine whether all required testing is being performed.

What GAO Recommends

GAO is making three recommendations to improve the reliability and reporting of investment performance information and management of selected investments. IRS agreed with two recommendations but disagreed with the third related to the reporting of test results. GAO continues to believe it is still warranted.