Office of the Chief Financial Officer
Executive Summary for Closed Reports
Report No. IA:OTR:2904-C08: Review of Audit Adjustment User Rights in ITS, dated March23, 2009.
Follow-up Report: IS:0011-0088A, dated April 20, 2012. “We consider OTR's actions responsive to this recommendation; however, we recommend there be additional management review of adjustments to compare the "requested" adjustment to "actual" adjustments made in ITS. Additionally, we recommend management consider a review of adjustments on a regular basis, monthly or quarterly, to identify exceptions.”
Chief Risk Officer’s Risk Assessment
The Inherent Risk Rating for fraud risk is High. Inappropriate access and use of the system has been identified as a root cause for potential fraud risks. Therefore, particular attention is paid all recommendations from OIO.
Overview of Recommendations
OIO offered five recommendations and all five were implemented to further strengthen existing internal controls.
- The Compliance Administration has established a separate Adjustment Unit comprised of technically trained employees from the Audit and Collection Divisions. These employees began entering all reviewed and approved adjustments for the Compliance Administration on October 1, 2011.
- The Audit and Collection Divisions have written policies and procedures pertaining to the adjustment process, as well as preparation of adjustment requests that are then submitted to the CA Adjustment Unit for ITS entry. The Adjustment Unit has created a Desk Guide documenting the ITS adjustment entry process. These documents were completed in FY12.
- A series of reports are reviewed by the Adjustment Unit Manager, Audit and Collection Division Managers, and Audit and Collection Branch and Division Chiefs at various stages of case processing in order to ascertain case status, recommend and/or take follow-up actions when necessary, and to look for unusual adjustments. Compliance began implementation of these procedures in FY09, and all were fully implemented by FY11.
- Bills are examined as part of the case review and approval process, thus ensuring that assessments are accurate. The Audit Division has a 100% case review policy. This practice was in place for all of FY12.
- Since FY11, Compliance has conducted mandatory training for Audit employees. The training was developed, coordinated and facilitated by Senior Tax Auditors from Audit and Review and Conference.
Additional Work Done
In response to the follow-up report, the following work was completed:
- The Compliance Administration has established several layers of adjustment review throughout the processing of the case that ensure that adjustments entered into ITS are accurate, legitimate, and a result of an approved requested adjustment. These include reviews by all levels of management, Review and Conference, and Adjustment Unit Manager and senior employees.
- Post-Audit reviews and Quality Control sampling also focus on the accuracy of adjustments made to taxpayer accounts. These processes were fully implemented in FY12.
To view the full report, Click : Audit Adjustment User Rights Full Report