Government and Politics Issues

GAO Report: IRS Balancing Books, Finally

After years of shabby accounting practices, the Internal Revenue Service has finally reconciled the $1.6 trillion in revenue reported in fiscal 1997 with taxpayer records, according to the General Accounting Office.

But the GAO also found serious flaws persist in the IRS's accounting systems.

  • The GAO reported IRS financial management systems "are not in compliance with applicable federal accounting standards."

  • Between 1995 and 1997, IRS employees embezzled about $4.6 million, according to the report.

  • The IRS allowed service center workers to open mail unobserved and said taxpayer payments were not always logged at the point of receipt.

"The procedures were in place," explains John Ressler, IRS executive officer for service center operations, "but we got a little sloppy."

Next up: completing IRS computer renovations by January 1999. Unless repairs are effected, the agency might not be able to process returns, issue refunds or correctly calculate interest and penalties.

Source: Kerry Hannon, "Audit: IRS Finally Can Balance Its Books," USA Today, March 12, 1998.

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