Magazine article The CPA Journal

GAO Still Not Happy with IRS

Magazine article The CPA Journal

GAO Still Not Happy with IRS

Article excerpt

The GAO recently issued its report on its examination of the IRS's fiscal year 1994 financial statements. The report includes comments on the financial statements, material weaknesses in internal control, and tax return processing.

The GAO has been trying since 1992 and is still unable to render an opinion on the IRS's financial statements. It combines its reasons into two categories-- revenue and administrative expense. The GAO was unable to either verify or reconcile revenue to detailed records, could not substantiate the type of revenue recorded, and could not verify the IRS's estimate (yes, estimate!) of its accounts receivable. The main problems on the administrative expense side were the inability to reconcile to Treasury accounts and the lack of documentation of nonpayroll expenses.

The report lists a number of matters the GAO considers material weaknesses. They include matters related to the contingent liability of the IRS for claims for refunds, the processing of refunds (where the GAO sees the possibility of taxpayers receiving multiple refunds), and problems with taxpayers' claims for the earned income credit. …

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