Oversight Of Internal Revenue Services Fiscal Year 1998 Financial Statements PDF Download

This report is a follow-on to our report on the results of our audit of the financial statements of the Internal Revenue Service (IRS) for fiscal year 1998.' Because of insufficient evidence about the reliability of fund balance with Department of the Treasury and accounts payable as well as evidence that led us to conclude that property and equipment was likely materially understated, we issued a qualified opinion on IRS' September 30,1998, balance sheet. In addition to the balance sheet issues, insufficient evidence about nonpayroll expenses and budgetary balances also prevented us from rendering an opinion on the statements of net cost, changes in net position, budgetary resources, and financing. As we pointed out in the financial statement report and in subsequent congressional testimony,2 pervasive weaknesses continue to exist in the design and operation of IRS' financial management systems, accounting procedures, documentation, recordkeeping, and internal controls over its administrative operations. The matters addressed in this follow-on report relate to IRS' activities associated with its fiscal year 1998 appropriations of $7.9 billion-referred to as IRS' administrative activities. Issues relating to IRS' collection of federal tax revenue, refunding of overpayments of taxes, and unpaid tax assessments-referred to as IRS' custodial activities-are covered in a separate report. The matters in this report deal with IRS' reconciliation of fund balance with Treasury accounts, recording certain expenditures against appropriations, maintaining adequate transaction detail needed to monitor its liabilities and obligations, accounting for and controlling property and equipment, and the financial reporting process.