Major Management Challenges and Program Risks

This publication is part of GAO's performance and accountability series which provides a comprehensive assessment of government management, particularly the management challenges and program risks confronting federal agencies. Using a "performance-based management" approach, this landmark set of reports focuses on the results of government programs--how they affect the American taxpayer--rather than on the processes of government. This approach integrates thinking about organization, product and service delivery, use of technology, and human capital practices into every decision about the results that the government hopes to achieve. The series includes an overview volume discussing governmentwide management issues and 20 individual reports on the challenges facing specific cabinet departments and independent agencies. The reports take advantage of the wealth of new information made possible by management reform legislation, including audited financial statements for major federal agencies, mandated by the Chief Financial Officers Act, and strategic and performance plans required by the Government Performance and Results Act. In a companion volume to this series, GAO also updates its high-risk list of government operations and programs that are particularly vulnerable to waste, fraud, abuse, and mismanagement.

GAO noted that: (1) the Internal Revenue Service (IRS) faces formidable challenges as it attempts to fulfill its mission while addressing major organizational, management, and performance issues; (2) these issues include the need for: (a) restructuring IRS' organization and business practices to better balance its efforts between taxpayer assistance and enforcement; (b) correcting management and technical weaknesses in its systems modernization efforts; (c) resolving financial management and control weaknesses that affect its ability to adequately manage its financial operations; (d) addressing problems relating to its ability to collect federal tax receivables and other unpaid assessments; (e) assessing the impact of various efforts it has under way to reduce filing fraud; (f) improving security controls over information systems to address weaknesses that place taxpayer data at risk to both internal and external threats; and (g) modifying information systems to properly function in the year 2000; (3) the Customs Service has made significant improvements in its financial management; as a result, GAO has removed it from its list of high-risk federal government programs; (4) however, Customs still needs to address certain challenges related to controlling access to sensitive data in its automated systems and maintaining complete and reliable information in its core financial systems; (5) in addition, GAO's recent work has shown that an incomplete systems architecture has hindered Customs' management of major technology investments, such as its Automated Commercial Environment System; (6) Treasury's Financial Management Service (FMS) faces challenges in addressing several financial management issues; (7) FMS' ability to prepare reliable consolidated financial statements for the U.S. government is primarily hindered by other federal agencies' weaknesses in recordkeeping, documentation, and internal controls; (8) general computer control weaknesses at FMS and its contractor data centers place the data in its financial systems at significant risk of unauthorized modification, disclosure, loss, or impairment; (9) FMS has experienced some difficulties in effectively fulfilling Treasury's responsibilities under the Debt Collection Improvement Act; (10) at the departmental level, Treasury's financial management weaknesses hinder its ability to maintain reliable financial records on the results of its operations; and (11) the Department's financial management systems did not comply with federal requirements.