In its recent audit of the IRS’s Fiscal Years 2006 and 2005 Financial Statements, the U.S. General Accounting Office (GAO) found “serious internal control and financial management systems deficiencies.”  Because of these flaws, the IRS did not “maintain effective internal controls over financial reporting (including safeguarding of assets) or compliance with laws and regulations, and thus did not provide reasonable assurance that losses, misstatements, and noncompliance with laws material….to the financial statements would be prevented or detected on a timely basis.”

Importantly, the IRS “agreed with the report’s findings and that it fairly presents IRS’s progress and challenges…in addressing financial management issues.”  To read the highlights of GA0-07-136, click here.  A copy of the full GAO report is here.