Summary: Significant weaknesses exist in the systems that the Internal Revenue Service (IRS) uses to manage, spend, account for, and report on its operating funds; GAO was unable to audit $4.3 billion of the $6.7 billion in operating funds that IRS reported spending in fiscal year 1992 because IRS could not account for all of the money. Significant control weaknesses included the following: (1) managers lacked current, reliable information on available budget authority, (2) some types of expenditures were recorded only after lengthy delays, and (3) reports used to monitor compliance with laws governing the use of budget authority contained unauthorized adjustments. In addition, IRS reports misclassified expenditures. Further, IRS did not periodically review and adjust its records to reflect changes in obligations and remove canceled appropriations or resolve billions of dollars in discrepancies between its records and those of the Treasury Department. Also, IRS could not ensure that outlays for goods and services were proper because of fundamental control weaknesses in its payment processes, including a lack of proper review and approval of payments.
