Financial Audit: IRS's Fiscal Years 2016 and 2015 Financial Statements
Abstract
In GAO's opinion, the Internal Revenue Service's (IRS) fiscal years 2016 and 2015 financial statements are fairly presented in all material respects. However, in GAO's opinion, IRS did not maintain effective internal control over financial reporting as of September 30, 2016, because of a continuing material weakness in internal control over unpaid assessments. GAO's tests of IRS's compliance with selected provisions of applicable laws, regulations, contracts, and grant agreements detected no reportable instances of noncompliance in fiscal year 2016. The continuing material weakness in internal control over unpaid assessments was primarily caused by financial system limitations and other control deficiencies that rendered IRS's systems unable to properly distinguish between taxes receivable, compliance assessments, and write-offs, as necessary to determine reliable balances for financial reporting purposes. These deficiencies necessitated the use of a compensating estimation process to determine the amount of taxes receivable, the largest asset on IRS's balance sheet. Through this compensating process, IRS made over $9 billion in adjustments to the 2016 fiscal year-end gross taxes receivable balance produced by its financial systems. In response to GAO's recommendations from prior audits, IRS has taken actions over the years to address this material weakness, including developing a long term corrective action plan. However, the plan does not include milestones or related completion dates for most of the actions, so it is unclear when IRS willfully address the issues that cause significant inaccuracies in the unpaid assessments information it maintains.
Document Details
- Document Type
- Technical Report
- Publication Date
- Nov 01, 2016
- Accession Number
- AD1170764
Entities
People
- Cheryl E. Clark
Organizations
- United States Government Accountability Office