IRS financial computers in dire need of upgrades

The top financial administrator at the Internal Revenue Service told Congress today that the agency's financial reporting system cannot reliably track federal tax revenue, tax refunds and prepare other key financial statements.

Donna Cunninghame, chief financial officer at the IRS, told the House Subcommittee on Government, Management, Information and Technology that computer systems which date back to the 1960s and 1970s continue to plague the IRS' ability to adequately track the agency's financial statements, including budgetary resources.

"The extremely fragmented nature of IRS technology creates many problems," Cunninghame said. "The IRS must replace nearly its entire inventory of computer applications and convert its data on every taxpayer to new systems."

Cunninghame's comments were in response to a General Accounting Office audit, the findings of which were basically accurate, she said. The hearing on the audit is the first in a series of hearings the subcommittee will conduct to examine the auditing of financial statements of selected federal agencies. In the late 1980s, Congress recognized that one of the root causes of waste in the federal government was poor financial management leadership, policies, systems and practices. Today is the deadline for the GAO audit statements.

Rep. Steve Horn (R-Calif.), chairman of the subcommittee, said the IRS' outmoded computer systems have contributed to some financial waste at the agency, including $17 million in fraudulent refunds, a misplaced government vehicle and misplaced government computers and printers. Horn said he hopes to see a better audit next year from the IRS.

Paul Cosgrave, chief information officer at the IRS, told the subcommittee that the agency is working with the private sector to upgrade its financial management system under the multibillion-dollar Prime systems integration contract, which IRS awarded to Computer Sciences Corp. in December. Prime will provide the program management and systems integration needed to improve the IRS' ability to process the more than 200 million tax filings it receives each year. But Cosgrave said the process to upgrade the financial system will take years, because the agency's top priority is fixing computers for the Year 2000 problem.