Monday, November 17, 2008

IRS Financial Reporting Suffers from Serious Internal Control Issues.

The GAO (Government Accountability Office) has reported, with an obvious sense of irony, that the IRS financial statement process is in need of work. According to the GAO report “serious internal control and financial management systems deficiencies continued to make it necessary for the IRS to rely on resource-intensive compensating processes to prepare its financial statements.” Moreover, the internal controls used by the IRS do not give sufficient assurances that losses, misstatements, and noncompliance with the law would be prevented or detected on a timely basis.

What this means is that the IRS is spending extra manpower, time and taxpayer dollars to make sure that its financial statements are correct. While the GAO noted a number of strides the IRS has made to update the process, the outdated and obsolete systems used “could have serious implications on [the GAO’s] ability to determine whether IRS’s financial statements are fairly stated.”

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