Washington (June 2, 2003) -- The IRS is exposed to potential loss due to errors or theft and an impaired reliability of current financial information needed to make decisions, according to the General Accounting Office's audit of the Internal Revenue Service.

The GAO report, issued as part of its annual audit of IRS financial statements, makes recommendations to address any new weaknesses and also follows up on open weaknesses identified in previous audits.

The GAO says that of 78 'open' recommendations, the majority relate to one of two broad issues: a material weakness in IRS's property and equipment management, and a weakness in controls intended to safeguard taxpayer receipts and data.

Although the IRS continues to make progress in addressing property and equipment issues, the GAO said, a number of them can only be resolved through implementation of an integrated property management system. The IRS said it expects to implement such a system by March 2005.

The weaknesses in controls to safeguard taxpayer receipts and data, although short-term in nature, "expose IRS to unnecessary risk of loss and increase taxpayer exposure to losses from financial crimes committed by individuals who inappropriately gain access to confidential personal information," the report found.

-- WebCPA staff

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