GAO Spots Trouble with IRS IT Project Reporting

GAO monitors IRS reporting on IT projects on a routine basis, because of its dependence on IT systems to collect tax revenue and its hefty $2.4 billion annual IT budget.  In the latest report, GAO set out to evaluate IRS’s implementation of prior recommendations and status of plans for selected investments.  GAO also provided reported cost, schedule and performance summaries of major IRS IT investments by interviewing program officials, reviewing quarterly reports and analyzing investment documentation.

GAO concluded that the IRS has made limited progress in fulfilling GAO’s prior recommendations for improving Congressional reporting on IT investments.  Specific progress for GAO’s five prior recommendations is shown in the table below:

According to GAO 11 out of 17 IRS IT investments were reported as meeting costs goals between October 2013 and September 2014, achieving within 10% of cost estimates.   And 13 out of 17 were reported as meeting schedule goals, finishing within 10% of schedule estimates.  However, IRS does not deliver these ratings for six investments for which it provides separate detailed reporting to Congress.  GAO recommends that providing summary-level risk assessments for all major IT investments side-by-side would improve visibility and provide Congress with more contextual information for decision making.    

Because IRS does not provide cumulative reporting to Congress for investments as recommended by GAO, current quarterly reporting may be misleading or provide a false sense of project timeliness and/or cost containment.  Several investments have experienced cost, schedule and scope variances that are not readily apparent via current reporting methods.  For example, the Return Review Program has not yet delivered any functionality and is $86.5M over budget and the Customer Account Data Engine 2 (CADE 2) is $183.6M over budget and 10 months behind schedule, but congressional reporting did not clearly show these variances.

GAO recommends that the IRS Commissioner direct the CTO to take the following actions:  

• For major investments included in congressional reporting, disclose instances where cost and schedule performance information reported to Congress is not updated.   
• Provide summary-level Chief Technology Officer risk assessment ratings for all major investments in the quarterly reporting to Congress.
• Modify reporting of ACA testing status to senior management to include a comprehensive report on all impacted systems—including an explanation for why impacted systems were not tested at a particular level—and ensure this reporting is aligned with the manner in which testing is being performed.