GAO Finds Huge Gaps in IRS Records : Government: Audit shows agency cannot determine its collections, budget or if information it gives Congress is true.

From Bloomberg Business News

The Internal Revenue Service has no accurate idea of how much it collects in certain taxes, the General Accounting Office said, and, as a result, billions of dollars of federal spending based on those taxes is going astray.

That's just one of the problems the GAO, the investigative arm of Congress, found when it looked over the IRS' 1992 financial statements. The IRS prepared the statements in accordance with the Chief Financial Officer's Act of 1990.

Among other things, the GAO said the IRS had no idea how much money it spent out of its $6.7-billion operating budget or what its property and equipment were worth. It wasn't sure whether it actually holds $797 million worth of assets it has seized. It's not even sure the information it provides the President, Congress and the Office of Management and Budget is correct.

The GAO couldn't even offer an opinion on the reliability of the IRS financial statements because "critical supporting information was not available," Charles A. Bowsher, the GAO's comptroller general, said in a letter sent to Speaker of the House Thomas S. Foley (D.-Wash.) and Vice President Al Gore Jr.

"Internal controls were not properly designed and implemented to effectively safeguard assets or provide a reasonable basis for determining material compliance with laws governing the use of budget authority and other relevant laws and regulations," Bowsher said.

The information the IRS lacks includes such basic data as how much money it has collected for different excise taxes. Those taxes are earmarked for trust funds that are dedicated to specific purposes, such as building highways or cleaning up toxic wastes. Lacking IRS information on how much has been collected, the GAO said, the money the Treasury Department forwards to the trust funds is based on IRS assessments, not actual collections.

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