GAO: IRS should improve IT investment reporting

The Internal Revenue Service could do a better job of reporting cost, schedule and scope information on its major IT investments, according to a Government Accountability Office report.

GAO auditors found significant cost and schedule variances in 13 of 19 major IT projects evaluated between June 2013 and April 2014. Eight of the 13 are listed as below cost or ahead of schedule, three as behind schedule, and two as over cost.

Being below cost and ahead of schedule appears to be good news, but the report points out that appropriators require accurate information about projected spending so they can allocate funds accordingly. The IRS received $2.4 billion in IT funding for fiscal 2014, according to the recently updated federal IT Dashboard. The Obama administration had requested $2.6 billion for IRS IT for 2015 -- about 20 percent of the agency's overall appropriation.

The GAO report recommends that the IRS' chief technology officer make quarterly reports to Congress on overall IT investment and schedules and monthly reports on schedule variances and changes in the scope of IT investments.

The report is especially critical of the IRS for not using a quantitative measure of scope, something GAO has suggested several times in the past.

GAO has long asserted that quantitative information on the functionality delivered by IT projects would go a long way toward answering the question of whether an agency is getting what it paid for. In the absence of such a measure, GAO advocates some kind of qualitative analysis of functionality to "help IRS provide Congress a complete picture of the agency's performance in managing its major investments."

In its reply comments, IRS officials indicated that they are providing information about the scope of IT projects in the mandatory Exhibit 300 filings with the Office of Management and Budget.

Although the accounting dispute might be somewhat obscure, the underlying projects are not. The IRS is in the midst of several high-profile, long-term, high-dollar IT projects to improve electronic tax filing, prepare the systems to manage subsidy calculations and penalties under the 2010 health care law, and modernize its central taxpayer database and processing system.

The success or failure of those projects will affect the government's ability to collect taxes and distribute refunds efficiently and accurately.