The IRS Oversight Board has improved its internal financial management, but more needs to be done, according to a new government report.

The report, by the Treasury Inspector General for Tax Administration, found that while the board has implemented financial procedures and controls, it is not adequately following them. The board did not identify approximately $2.2 million in potential excess funds for fiscal years 2005 through 2009 in a timely manner. In addition, the board is still not certifying the accuracy of costs associated with board activities submitted to the IRS for reimbursement to ensure that all the expenses are reasonable and necessary.

The IRS Oversight Board is an independent body that is responsible for providing the IRS with long-term guidance and direction. TIGTA assessed the actions taken by the board in response to an earlier TIGTA report in 2005 that found significant financial management control deficiencies.

“It is critical that the IRS Oversight Board maintain proper financial controls over its own budgetary process and ensure the proper stewardship of taxpayer funds,” said TIGTA Inspector General J. Russell George in a statement. “As the board is responsible for overseeing the IRS in its administration, management and application of the internal revenue laws, it must also ensure that its own financial house is in order.”

The board has implemented a new process to administer travel by board members, but it was not consistently followed, the report found. As a result, TIGTA identified certain travel expenses that did not comply with established travel guidelines but were reimbursed by the government.

TIGTA recommended that the board follow its stated policies for tracking spending and verifying the accuracy of expense information prior to reimbursement. TIGTA also recommended that the board develop procedures for arranging and processing board travel-related transactions, train all board members and staff on travel-related procedures, and require that the incorrectly reimbursed expenses be repaid to the federal government.

In response to the report, the board agreed with TIGTA’s recommendations. The board has updated its procedures to identify and release excess funds, and will work with the IRS chief financial officer to certify billings before payment. It has also developed its own travel guide tailored to the needs of board travelers, and plans to train all members and staff through an annual distribution of the guide. Finally, all travel funds that have been incorrectly reimbursed have been repaid. 

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