Conclusions

Many of the issues presented throughout this report have existed for  several years, and IRS has noted that the ultimate solution to many of these  issues is modernization of its systems. As part of this modernization  initiative, IRS plans to implement a new financial system that includes a  cost accounting module as well as integrated administrative and custodial  general ledgers that are supported by subsidiary ledgers containing the  transactional details for key accounts such as taxes receivable and  property and equipment. IRS continues to make progress in addressing its financial management  challenges. The strong commitment and dedication to financial  management reform by IRS senior management has played a crucial role in  the progress the agency has made to date and is critical for future  improvements. IRS has developed many workaround processes that resulted in its ability  to produce reliable financial statements for fiscal year 2000. However,  these processes take considerable time, effort, and expense and do not fix  many of the fundamental financial management issues that continue to  plague the agency. IRS made these  adjustments to its fiscal year 2000 financial statements.
What GAO Found

This is a follow-on to GAO's report on its audit of the Internal Revenue Service's (IRS) fiscal year 2000 financial statements. Many of the issues raised in this report have persisted for years. IRS believes that the solution to many of these issues may lie in systems modernization. IRS plans to implement a new financial system that includes a cost accounting module as well as integrated administrative and custodial general ledgers that are supported by subsidiary ledgers containing the transactional details for key accounts, such as taxes receivable and property and equipment. IRS continues to make progress in addressing its financial management challenges. The strong commitment by IRS senior management to financial management reform has played a crucial role in the agency's progress so far and is critical for future improvements. IRS has developed many workaround processes that allowed it to produce reliable financial statements for fiscal year 2000. However, these processes take considerable time, effort, and expense and do not fix many of the fundamental financial management issues that continue to plague IRS.