The Government Accountability Office has given good marks to the Internal Revenue Service’s 2005 and 2006 financial statements, but said that the agency did have to overcome “serious internal control and financial management systems deficiencies.”

While the GAO said the statements are fairly presented in all material respects, it noted that because of the internal control issues, the IRS had to rely on “resource-intensive compensating processes to prepare its financial statements.” Without better controls in place, the GAO said that the agency’s timeliness in detecting potential problems was a risk.

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