While the Internal Revenue Service has made "great strides" in addressing financial management challenges and internal control deficiencies, a report from the Government Accountability Office stated that the service still faces substantial hurdles in that area. Citing audits of the IRS's 2004 and 2005 financials, the GAO report said that the service had to rely heavily on "resource-intensive compensating processes to prepare its financials," as a result of its inability to maintain effective internal controls.

Over 2005, the IRS implemented its new Integrated Financial System, which is designed to provide improved audit trails and more up-to-date information on such activities as travel, goods and services purchases, and budgeting.

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