Internal Revenue Service

GAO reviewed the Internal Revenue Service's (IRS) Revenue Accounting Control System (RACS) to: (1) determine the extent to which IRS automated its revenue accounting procedures; (2) assess RACS analysis and reporting capability; and (3) obtain IRS plans for improving RACS.

GAO found that RACS was inefficient and susceptible to errors because: (1) IRS had to manually enter, balance, and reconcile the RACS account files with information in files maintained in other IRS systems, which resulted in errors in classifying tax revenues; (2) RACS did not have the capability to identify categories of errors that occurred repeatedly, or analyze the growing accounts-receivable balance; and (3) at the time RACS became operational, IRS was reluctant to modify other systems to interface with it and did not think that some balancing functions were necessary. GAO also found that IRS: (1) recognized the problems and initiated a two-stage approach to improve RACS; (2) established computer tape interfaces with another automated system to record transactions affecting revenue receipts; (3) planned additional tape interfaces to reduce the need for manual data input; (4) drafted a proposal to replace RACS with a fully operational system by 1992 and to consolidate and automate all manual subsidiary files into one computer system by 1995; (5) planned to redesign the entire tax processing system, including revenue accounting functions, but did not determine how the functions would fit into the overall redesign; and (6) had not determined the requirements for data interchange, balancing and reconciling, and reporting, or identified the changes needed to ensure compatibility between the replacement systems and other systems.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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