11.51.1 TIGTA and GAO Audit Program Process at the LMSB Division188.8.131.52 TIGTA and GAO Audits184.108.40.206.1 TIGTA Background220.127.116.11.2 GAO Background18.104.22.168 Audit Program Oversight22.214.171.124.1 Role of Legislative Affairs in the Audit Process126.96.36.199.2 Role of the Planning, Quality, Analysis, and Support Function inthe Audit Process188.8.131.52.3 Role of the LMSB TIGTA/GAO Audit Program Liaison in the Audit Process184.108.40.206.4 Role of LMSB Executives in the Audit Process220.127.116.11.5 Role of LMSB Program Managers in the Audit Process18.104.22.168 Audit Process for LMSB Primary Open Audits22.214.171.124.1 Audit Planning and Research Activities126.96.36.199.2 Engagement Letter/Study Notification188.8.131.52.2.1 Opening Conference184.108.40.206.2.2 Disclosure of Taxpayer Information to the TIGTA220.127.116.11.2.3 TIGTA Investigations of IRS Employees18.104.22.168.2.4 Disclosure of Taxpayer Information to the GAO22.214.171.124.2.5 GAO Personnel Designated to Have Access to Taxpayer Information126.96.36.199.2.6 Accounting for Disclosure of Tax Return or Return Information tothe GAO188.8.131.52.2.7 GAO Investigations of IRS Employees184.108.40.206.3 Audit Research/Data Collection220.127.116.11.4 Discussion Draft Report (TIGTA) or Statement-of-Facts Briefing Paper(GAO)18.104.22.168.4.1 Closing Conference22.214.171.124.5 Draft Audit Report126.96.36.199.5.1 Management Response to the Draft Report188.8.131.52.5.2 Distribution of the Management Response184.108.40.206.6 Final Report220.127.116.11.6.1 60-Day or Congressional Letter18.104.22.168 Audit Process for LMSB Nonprimary Audits22.214.171.124 TIGTA/GAO Internal Control Program Background126.96.36.199 Role of the Internal Control Coordinator in the Audit Process188.8.131.52 GAO/TIGTA Audit Recommendation and Corrective Actions Follow-UpProcess184.108.40.206.1 Audit Verification Using the Joint Audit Management Enterprise System(JAMES)220.127.116.11.2 Corrective Action Status Updates18.104.22.168.3 Change/Cancellation of Corrective Actions22.214.171.124.4 Transfer of Corrective Actions Part 11. Communications and LiaisonChapter 51. 1 Large Business and International CommunicationsSection 1. TIGTA and GAO Audit Program Process at the LMSB Division 11.51.1 TIGTA and GAO Audit Program Process at the LMSB Division 126.96.36.199 (06-12-2008) TIGTA and GAO Audits The Treasury Inspector General for Tax Administration (TIGTA) and the Government Accountability Office (GAO) regularly monitor the Internal Revenue Service (IRS) to ensure the IRS: Carries out its operations effectively and efficiently Follows reliable financial reporting Complies with tax laws and regulations As per Congressional requests or annual audit plans, the TIGTA and the GAO frequently review operations at the IRS and issue audit reports with recommendations for improvements, which they usually publish in their Web sites for public access. They also share these reports with the Congress and other federal agencies as needed. Because the IRS works to successfully administer the tax laws and maintain the highest level of integrity and fairness to taxpayers, it gives TIGTA and GAO reviews high priority. These reviews help identify operational and administrative weaknesses and improve tax administration. 188.8.131.52.1 (06-12-2008) TIGTA Background The Internal Revenue Service Restructuring and Reform Act of 1998 (RRA 98) established the TIGTA to provide independent oversight of IRS activities. As mandated by RRA 98, the TIGTA assumed most of the responsibilities of the IRS’s former Inspection Service. The TIGTA consists of mainly auditors and investigators who focus on the duties and responsibilities of an Inspector General for Tax Administration. Organizationally, the TIGTA is placed within the Department of the Treasury, but it is independent of the Department and all other Treasury offices, including the Treasury Office of the Inspector General (OIG). The TIGTA focuses on all aspects of tax administration. Its audit activities: Promote economy, efficiency, and effectiveness in administering the Nation’s tax system. Detect and prevent fraud, abuse, and deficiencies in IRS programs and operations. Result in recommendations about existing and proposed legislation and regulations related to the IRS programs and operations. Ensure compliance with applicable laws and regulations. Inform the Secretary of the Treasury and the Congress of problems and the progress the IRS is making to resolve them. The Office of Audit identifies opportunities to improve tax administration by conducting comprehensive, independent performance and financial audits of IRS programs, operations, and activities. The Audit Program consists of reviews mandated by statute or regulation, as well as reviews identified through the annual audit planning and evaluation process. The Office of Audit strategically evaluates IRS programs, activities, and functions so the IRS can direct its resources to the areas of highest vulnerability. The TIGTA presents its Audit Program in the Annual Audit Plan, which it publishes at the beginning of each fiscal year.For additional information see the TIGTA's Web site www.treas.gov/TIGTA. 184.108.40.206.2 (06-12-2008) GAO Background The GAO is an independent, nonpartisan agency that works for the Congress. It gathers information to help the Congress determine how well executive branch agencies are doing their jobs. The GAO answers questions such as whether government programs are meeting their objectives or providing good service to the public. Ultimately, the GAO ensures that the government is accountable to the American people. To that end, the GAO provides senators and representatives with the best information available to help them make informed policy decisions. The GAO supports congressional oversight by: Evaluating how well government policies and programs are working Auditing agency operations to determine whether federal funds are being spent efficiently and effectively Investigating allegations of illegal and improper activities Issuing legal decisions and opinions The GAO's "blue book" or final reports meet short-term needs for information on a wide range of government operations. These reports also help the Congress better understand emerging, long-term issues with potentially far-reaching effects. The GAO's work results in legislative actions, improvements to government operations, and billions of dollars in financial benefits for the American people. The Budget and Accounting Act of 1921 created the GAO, originally named the General Accounting Office. The intent of the Congress was to improve federal financial management after World War I. Wartime spending had increased the national debt, and legislators saw the need for better information and control over expenditures. Effective July 7, 2004, the GAO's legal name became the Government Accountability Office. The change is a provision of the GAO Human Capital Reform Act of 2004. The GAO has focused on governmental accountability since it began operations on July 1, 1921. Its mission and organization have greatly changed since 1921 to keep up with Congressional and national needs. Headquartered in Washington, DC, the GAO has offices in several major cities across the country. The Comptroller General, who serves a 15-year term, heads the agency. Its more than 3,000 employees include experts in program evaluation, accounting, law, economics, and other fields. For additional information see the GAO's Web site at www.GAO.gov. 220.127.116.11 (06-12-2008) Audit Program Oversight The following sections describe the roles of the Office of Legislative Affairs (Chief, Communication and Liaison); the Planning, Quality, Analysis, and Support function; the Audit Program Liaison; executives; and managers in the TIGTA and GAO open audit process at the LMSB Division. 18.104.22.168.1 (06-12-2008) Role of Legislative Affairs in the Audit Process The Office of Legislative Affairs is the primary contact for open audits. This office coordinates all incoming documents related to research projects and audits with functional areas within the IRS. The Legislative Affairs’ role in the audit process is to: Provide oversight of the TIGTA and the GAO Audit Program. Share research project and audit notifications with the responsible functions. Identify audit lead stakeholders and assign audits to them as appropriate. Issue memoranda transmitting engagement, study notification letters, and audit reports to the appropriate offices. Provide support to IRS functional areas during the audit process. Track, maintain the open audit inventory, and issue weekly audit inventory reports. Coordinate resolution of audit problems with Audit Program liaisons, managers, and TIGTA and GAO auditors. Review management responses to audit reports. Maintain the Legislative Affairs' GAO/TIGTA Audit Resource Center Web site http://cl.no.irs.gov/la/BranchC/GAOTIGTA/ARC/Audit%20Resource%20Center.htm. 22.214.171.124.2 (06-12-2008) Role of the Planning, Quality, Analysis, and Support Function in the Audit Process The TIGTA/GAO Audit Program is in the Planning, Quality, Analysis, and Support (PQAS) function of the LMSB Division. The Audit Program Liaison in PQAS is the primary contact for open audits in LMSB. In addition, the LMSB Division Commissioner, Deputy Commissioners, and other LMSB executives, including the Director, PQAS, periodically meet with the TIGTA to discuss the progress of open audits and topics such as the TIGTA Audit Plan, suggestions for new audits, and audit process concerns. The Audit Program Liaison coordinates and attends these meetings and shares audit inventory reports with LMSB participants in preparation for the meetings. 126.96.36.199.3 (06-12-2008) Role of the LMSB TIGTA/GAO Audit Program Liaison in the Audit Process The TIGTA/GAO Audit Program Liaison is responsible for managing the LMSB inventory of TIGTA and GAO research projects and open audits and coordinating audit work with pertinent functional areas within and outside LMSB, including Legislative Affairs. The Audit Program Liaison also coordinates requests for suggestions for the TIGTA’s Annual Audit Plan with managers in LMSB, which the Director, PQAS, forwards to the LMSB Commissioner and Deputy Commissioner (Operations) for review and submission to the Office of the Deputy Commissioner, Services and Enforcement. The Audit Program Liaison’s role is to: Act as the primary point of contact for the LMSB Division during the open audit process and track all research projects and audit inquiries from auditors. Forward engagement letters, briefing or audit reports, and any other audit-related documents such as inquiries received from the TIGTA, the GAO, or Legislative Affairs to the appropriate offices within and outside LMSB to request responses and/or status updates. Schedule and participate at audit opening, progress update, and closing meetings. Ensure the executive owner(s) and Program Manager(s) for each audit attend the opening and closing conferences to fully address concerns with the audit findings and recommendations early in the audit process and provide comments before the TIGTA or the GAO issues the draft reports. Help ensure timely management responses to auditors’ inquiries and draft audit reports by answering or forwarding the inquiries to the appropriate managers and reviewing responses to draft audit reports before forwarding them to Legislative Affairs for review about five days before their due dates. Answer inquiries from managers, other Audit Program liaisons, and Legislative Affairs about the status of open audits. Maintain a database to track the open audit inventory and keep detailed information on the audit progress. Maintain a file on each open audit with related documents, including the engagement letter, draft report, and management response to the draft report. Forward periodic or monthly open audit inventory reports to pertinent offices within LMSB. Act as liaison between management and Legislative Affairs on resolution of problems encountered during the course of the open audits. Provide Audit Program guidance to managers and other LMSB Audit Program liaisons. Brief executives on the status of the open inventory (e.g., through the quarterly Business Performance Review (BPR) and audit inventory reports). Maintain the LMSB Division's TIGTA/GAO Audit Program Web site http://lmsb.irs.gov/hq/pqa/TIGTA_GAO/home.asp. 188.8.131.52.4 (06-12-2008) Role of LMSB Executives in the Audit Process The role of the LMSB executives in the audit process is to: Become familiar with the open audits. Attend audit opening and closing conferences and stay involved in the audit process as needed. Assume a proactive approach during the audit process (e.g., brief the auditors early in the audit process on the programs under review). Reach agreement with the auditors on early findings and/or recommendations in discussion draft reports (TIGTA) or statement-of-facts briefing papers (GAO). Designate an LMSB Program Manager within his/her functional area for each audit to coordinate the audit work within and outside the LMSB Division. Help resolve any cross-functional issues. Review, approve, and sign responses to draft audit reports. 184.108.40.206.5 (06-12-2008) Role of LMSB Program Managers in the Audit Process The LMSB Program Manager's role is to: Become familiar with the issues addressed during the open audits and in discussion draft reports (TIGTA) or statement-of-facts briefing papers (GAO). Participate at audit opening, progress update, and closing meetings and stay involved in the audit process. Answer auditors’ inquiries and provide documents as requested during the course of the audit, with copies to the Audit Program Liaison. Identify opportunities to address or clarify issues before the TIGTA or the GAO issues the draft reports. Stay in contact with the auditors during the audit to ensure the audit is progressing smoothly, request audit progress updates from the TIGTA or the GAO Audit Team, and share them with the Audit Program Liaison. Reach agreement with the Audit Team on early findings, recommendations, and any monetary benefits in discussion draft reports (TIGTA) or statement-of-facts briefing papers (GAO), and draft reports. Provide written comments on discussion draft reports (TIGTA) or statement-of-facts briefing papers (GAO) to the Audit Team and the Audit Program Liaison. Prepare responses to draft audit reports and ensure the reports provide accurate information. Ensure timely responses to auditors' inquiries and discussion draft reports (TIGTA) or statement-of-facts briefing papers (GAO) by promptly providing the information requested and starting to write management responses when the audit teams issue the preliminary audit reports. Identify and coordinate cross-functional issues within and outside LMSB during the drafting of management responses to ensure adequate coordination when developing responses to the discussion draft reports (TIGTA) or statement-of-facts briefing papers (GAO) and draft audit reports. Recommend the adoption or rejection of audit recommendations based on strategic LMSB goals and objectives by assessing the merits of the recommendations and potential corrective actions based on their effect on the LMSB Division’s business goals, priorities, and resources available for implementation. The final decision on the implementation of recommendations is reached by the executive owner for the audit. Develop practical corrective action plans for audit recommendations, including achievable implementation dates. Provide periodic updates on the progress of open audits to the Audit Program Liaison. Bring audit concerns to the attention of the executive owner of the audit and the Audit Program Liaison. 220.127.116.11 (06-12-2008) Audit Process for LMSB Primary Open Audits The following are the steps in the audit process from audit planning and preliminary research activities to the tracking and implementation of corrective actions addressing audit recommendations. 18.104.22.168.1 (06-12-2008) Audit Planning and Research Activities Activities such as research projects, information gathering for Congressional requests, and annual audit planning do not require a formal engagement letter from the Audit Team. However, auditors must report the scope of the preliminary audit work or research projects, offices and personnel involved, and estimated time frame to Legislative Affairs by electronic mail. The Audit Program Liaison alerts pertinent managers about the planed research projects and coordinates requests for information. Managers should refer the auditor(s) to the Audit Program Liaison when auditors contact them directly for taxpayer information, tax return information, or other sensitive information during audit research activities. The Audit Program Liaison will verify whether the: Inquiry is related to a research project, an on-going audit, or a new audit Auditors have assigned an audit/job code number Auditors have notified Legislative Affairs The RRA 98 gave the TIGTA authority to access taxpayer information needed to conduct their reviews. As long as auditors show proper credentials (e.g., identification badge), they have access to such information. However, they should follow the procedures the TIGTA and Legislative Affairs have established. For more information on IRS guidelines on the TIGTA and GAO audit process access the Legislative Affairs' Audit Resource Center Web site at http://cl.no.irs.gov/la/BranchC/GAOTIGTA/ARC/Audit%20Resource%20Center.htm . For information on TIGTA guidelines, see a TIGTA memorandum of July 23, 1999, found in the LMSB Division's TIGTA/GAO Audit Program Web site at http://lmsb.irs.gov/hq/pqa/TIGTA_GAO/home.asp , under Link to Zip File (file 1). Managers should immediately notify the Audit Program Liaison if GAO analysts request information and Legislative Affairs has not yet received a formal study notification or had the opening meeting. In addition, contractors accompanying GAO analysts to an audit site should not have access to tax return information. Additional information on disclosure of taxpayer information to the GAO and the TIGTA is in sections 22.214.171.124.2.2 through 126.96.36.199.2.7 of this IRM. 188.8.131.52.2 (06-12-2008) Engagement Letter/Study Notification The TIGTA and the GAO issue formal engagement letters to inform the IRS of their plans to begin new audit work. Legislative Affairs designates lead stakeholders for the new audits and sends the audit engagement letters from the TIGTA or the study notifications from the GAO, with cover memoranda, to the Audit Program liaisons by electronic mail. Legislative Affairs tracks the progress of the audits. In addition, the TIGTA usually sends the engagement letters by electronic mail to the appropriate heads of offices and Audit Program liaisons. Once the TIGTA notifies the LMSB Division about a new audit, the Audit Program Liaison does not have to wait for the engagement letter from Legislative Affairs to start planning for the opening meeting. The engagement letter consists of: Audit objectives Audit sites Estimated completion dates for the draft and final reports (TIGTA reviews) Request for contacts and documents needed Names of auditors and other higher level contacts The GAO study notification letters do not provide estimated completion dates for discussion draft or draft reports. However, the timetables are usually discussed at the opening or entrance conferences. The Audit Program Liaison should: Designate a lead stakeholder function within LMSB, based on what function handles the program under review, to work with the Audit Team and coordinate the audit with functions within and outside LMSB, as necessary. Forward by electronic mail the engagement letter or study notification and the cover memorandum from Legislative Affairs to the appropriate offices (pertinent directors and their executive assistants, program managers, and Audit Program liaisons) within and outside the LMSB Division when other functional areas are involved. Add the details of the engagement or study notification letter to the TIGTA/GAO Audit Program database to start tracking the progress of the audit. Create files for the audit (both electronic and hard-copy files). Examples of an engagement letter (TIGTA) and a study notification (GAO) are provided in the LMSB Division's TIGTA/GAO Audit Program Web site at http://lmsb.irs.gov/hq/pqa/TIGTA_GAO/home.asp , under Link to Zip File (files 2 and 3, respectively). 184.108.40.206.2.1 (06-12-2008) Opening Conference Once Legislative Affairs has designated the LMSB Division as the lead stakeholder for a new audit, the LMSB Division holds the opening conference (usually a one hour meeting) within one or two weeks after receipt of the engagement letter. For cross-functional GAO reviews, Legislative Affairs or the Audit Program Liaison at the LMSB Division schedules the opening conference. The TIGTA auditors may begin fieldwork before the opening conference takes place. Opening conference participants usually include appropriate LMSB executive-level officials; program managers and their pertinent staffs, staffs from affected functions outside LMSB; Legislative Affairs; and TIGTA or GAO officials, depending on the audit type. At the opening meeting, auditors discuss the audit objectives, audit sites, and the information the auditors need, such as names of contacts and documents. To expedite the research process, the engagement letter usually includes a list of the documents the Audit Team would like to receive at the opening conference or shortly thereafter. The Audit Program Liaison should: Schedule the opening conference with the TIGTA or the GAO and coordinate the meeting with affected functions within and outside LMSB, as needed. Request meeting space via electronic mail using the "+LMSB HQ Conf Rm Reservations" address. The request for a conference room should include the following information: Meeting date Meeting time Point of contact Subject matter Number of Participants (estimate) Room number, if a specific one is preferred Special room needs (e.g., polycom equipment for the conference call) Arrange a conference call for those who cannot participate in person at the opening meeting. Prepare and share a meeting roster with expected participants before the opening meeting. Participate at the opening conference. The designated LMSB Administrative Assistant in charge of meeting rooms reserves meeting space upon request from the Audit Program Liaison. The designated LMSB Program Manager for the new audit, or designated representative from his/her staff, is responsible for taking notes during the opening meeting and sharing them with the Audit Program Liaison and other meeting participants, as needed. 220.127.116.11.2.2 (06-12-2008) Disclosure of Taxpayer Information to the TIGTA Treasury Order 115-01 establishes the functions of the TIGTA. Section 5d states, "In carrying out their official duties, the TIGTA personnel shall have the full cooperation of employees of the Department of the Treasury and shall have full and prompt access to all facilities of the IRS and related entities, including computer facilities and computer rooms, electronic databases and files, electronic and paper records, reports and documents, and other material available to the IRS and related entities, which relate to their programs and operations; and, when access is necessary to execute a function of the TIGTA pertaining to a matter within the jurisdiction of the TIGTA, all similar facilities throughout the Department." For TIGTA audits or investigations, two statutes allow disclosure of tax and related tax return information: Title 26 of the U.S. Code (Internal Revenue Code) section 6103 – if the data requested is tax information (in case of an audit of the IRS) Title 5 of the U.S. Code section 552a (The Privacy Act of 1974) – if the data requested are personnel records or other records retrieved by an identifier such as Standard Employee Identification (SEID) or Social Security Number (SSN). Both statutes have provisions allowing disclosure to the TIGTA under certain conditions. IRC section 6103(h)(1) allows the IRS to disclose information to Treasury employees with a "need to know" for tax administration purposes. The authority for releasing information covered by the Privacy Act is 5 USC 552a (b)(1). It is also governed by the "need to know " conditions with respect to performance of auditor duties. The legislative history of RRA 98 states, "The Treasury Inspector General (IG) for Tax Administration has the same access to taxpayer returns and return information as does the Chief Inspector under present law." In addition to the above statutes, Legislative Affairs and the LMSB Division have Audit Program guidelines that managers and their employees must follow when working on audits. Employees can find these guidelines in the IRM 11.5.1, Audit Process for GAO and TIGTA (Servicewide guidelines), and the Legislative Affairs' Web site under the TIGTA/GAO Audit Resource Center at http://cl.no.irs.gov/la/BranchC/GAOTIGTA/ARC/Audit%20Resource%20Center.htm . Employees can also find LMSB Audit Program guidelines in IRM 11.51.1 and the LMSB Division's TIGTA/GAO Audit Program Web site at http://lmsb.irs.gov/hq/pqa/TIGTA_GAO/home.asp. 18.104.22.168.2.3 (06-12-2008) TIGTA Investigations of IRS Employees Besides conducting comprehensive performance and financial audits of IRS programs, operations, and activities, TIGTA conducts investigations of IRS employees. In RRA 98, the Congress gave TIGTA all powers and responsibilities of the IRS Inspection Service except for conducting background checks and providing physical security. TIGTA was also granted sole jurisdiction and responsibility to enforce criminal law as it pertains to IRS operations including IRS employee misconduct and external attempts to corrupt tax administration. The TIGTA's Office of Investigations (OI) has the responsibility to conduct investigations that proactively and reactively protect the Treasury’s ability to collect revenue. The OI conducts investigative programs that: Protect IRS employees from external threats. Protect the integrity of the IRS. Detect and prevent fraud and abuse. Investigate allegations of IRS employee misconduct. TIGTA investigations may involve violations of federal criminal statutes and/or standards of ethical conduct. Examples of investigations include: Attempts to interfere with the administration of Internal Revenue laws (threats, harassment and assaults against IRS personnel) Bribery of public officials and witnesses Theft and embezzlement of government money or property Conspiracy to commit offense or defraud the United States False personation Unauthorized inspection and/or disclosure of tax information The OI also operates a toll-free hotline where anyone can anonymously report allegations of fraud, waste, abuse, or mismanagement in IRS programs and operations. Complaints can be submitted to the hotline by various methods provided on the TIGTA’s Web site. The TIGTA’s investigatory review procedures are also in its Web site. For additional information see the TIGTA's Web site at http://www.treas.gov/TIGTA/. The TIGTA may contact IRS managers or employees to gather information in connection with a planned investigation or research. The investigation or research could be result of a telephone call from a taxpayer, practitioner, or employee alleging misconduct at the IRS, or research work before an audit. LMSB employees should consult with their managers (for investigations), the Audit Program Liaison (for audits), or the LMSB Disclosure Technical Advisor for disclosure guidance. After verifying proper TIGTA identification (credentials/badge if the contact is in person), employees must cooperate as fully as possible with an investigation. Title 5 U.S.C. section 552a (b)(1) provides for disclosure to employees within the agency (i.e., Department of the Treasury) if they have a need for the record in the performance of their duties. Neither the tax code nor the Privacy Act requires a written request, and no IRM procedure requires the TIGTA to make written requests during investigations. See IRM 22.214.171.124, Disclosure to Federal Officers and Employees for Tax Administration Purposes (TIGTA). When releasing tax data in connection with an investigation, IRS employees should prepare a record of the disclosure by using Form 11377 (Taxpayer Data Access) to document they accessed confidential data at the request of a TIGTA agent. Employees must file the form with their managers daily. Employees who need further guidance when responding to a TIGTA agent's request for information about an employee or taxpayer investigation, should contact their managers. Managers can contact the LMSB Disclosure Technical Advisor for disclosure guidance. 126.96.36.199.2.4 (06-12-2008) Disclosure of Taxpayer Information to the GAO Shortly after the Office of Legislative Affairs receives the GAO study notification letter, it prepares a transmittal or cover memorandum addressed to the official(s) designated as lead stakeholder(s) for the new audit (e.g., Division Commissioner). The memorandum transmitting the GAO study notification is known as the "disclosure memorandum" because it authorizes managers to allow access to tax return and information return documents to the GAO Team in connection with the new review. The memorandum, which is forwarded with the GAO study notification to managers involved in the review, provides instructions to managers on how to handle GAO requests for taxpayer information and account for disclosure of such information based on IRM 11.3.23, Disclosure to the GAO. The opening conference with the GAO to discuss the new study should not take place until the designated lead stakeholder receives the disclosure memorandum from Legislative Affairs. Managers should not provide taxpayer or return information to the GAO before Legislative Affairs issues the disclosure memorandum. Legislative Affairs issues a disclosure memorandum for each of the GAO study notifications when the Congress authorizes access to taxpayer records to the GAO based on authority granted by the Internal Revenue Code (IRC) section 6103(f)(4). The designated lead executive(s) and pertinent Program Manager(s) should become familiar with the disclosure memorandum and discuss with the Audit Team at the opening meeting what IRS records and taxpayer information the GAO needs. The lead stakeholder(s) should negotiate with the auditors during the audit the extent of the records requested, either paper or electronic, especially if the requests for information seem unreasonable (e.g., request for an entire database containing taxpayer information). The lead stakeholder(s) or Program Manager(s) can contact the Audit Program Liaison to request a copy of the disclosure memorandum before the opening meeting, if Legislative Affairs or the Audit Program Liaison did not provide it with the study notification. Legislative Affairs notifies the appropriate functions by electronic mail or memorandum about any changes in the GAO audit plans such as access to taxpayer information, changes in audit objectives, expansion of audit sites, or closing an audit before issuing a draft report. The disclosure memorandum, addressed to the lead stakeholder(s) for the audit, provides specific disclosure instructions. It applies to managers within the IRS providing taxpayer information to GAO analysts or representatives. Employees should consult with their managers before releasing any information to the GAO in connection with an ongoing review. IRM 11.3, Disclosure of Official Information, provides that: " You and your designees are authorized to provide the GAO with access to any tax or nontax information, with the exception of the identity of an informant or any information which will tend to reveal the identity of an informant, grand jury information, and certain information obtained under tax treaty [see IRM 11.3.23, Disclosure to the GAO] that falls within the scope of this review. If information exists that would identify a confidential informant, either directly or indirectly, you should notify the appropriate Director of Investigation who will seek authorization from Headquarters to withhold the information. Similarly, if it appears that disclosure of tax information to the GAO would seriously impair a civil or criminal tax investigation, authorization to withhold such information should be sought through appropriate channels from the Office of Governmental Liaison and Disclosure." For additional information see IRM 11.3, Disclosure of Official Information. 188.8.131.52.2.5 (06-12-2008) GAO Personnel Designated to Have Access to Taxpayer Information Managers can disclose taxpayer information only to those GAO representatives whose names appear on the current list of GAO personnel designated to review IRS programs under IRC section 6103(f)(4). GAO analysts or representatives should contact the appropriate manager (e.g., the designated primary contact within the lead stakeholder area or the Audit Program Liaison) to arrange for their visits to collect taxpayer information. An updated list of GAO personnel authorized to have access to taxpayer information is available in the Legislative Affairs' Audit Program Web site at http://cl.no.irs.gov/la/BranchC/GAOTIGTA/Index.htm . If the name of the GAO representative requesting information is not in the list, managers should contact the Audit Program Liaison to request an updated list or addendum from the GAO. 184.108.40.206.2.6 (06-12-2008) Accounting for Disclosure of Tax Return or Return Information to the GAO The lead executive owner for the GAO review and/or the designated Program Manager in LMSB is responsible for reviewing and approving responses to requests for information from the GAO involving tax returns or information returns, accounting for the disclosures of taxpayer information, and coordinating with the GAO to deliver the information requested in person or by express mail. Subsection I of the Privacy Act and IRC section 6103 (p)(3)(A) govern accounting for the disclosure of tax returns and return information. Generally, managers may use Form 5466-B, Multiple Record of Disclosure, to account for tax disclosures, although in situations where managers are disclosing a large volume of records at one time (mass disclosures), they may use a narrative accounting (letter) instead. To account for the disclosure, the responsible manager(s) should use Form 5466-B, found at the following link: http://core.publish.no.irs.gov/forms/internal/pdf/63063h98.pdf , or a narrative record (letter) providing specific information as described in the IRM. See IRM 11.3.37 for IRS procedures to create a record of the disclosure (an "accounting" ). Managers should send copies of Form 5466-B or narrative (letter) to the appropriate Disclosure Office and the Audit Program Liaison for record-keeping via encrypted electronic mail or by express mail. The Privacy Act of 1974 (5 U.S.C. section 552a) and IRC section 6103 (26 U.S.C. section 6103) require the IRS to maintain an accurate accounting of the disclosure of records when the IRS discloses the information without the individual’s prior notification or consent. Subsection (b) of the Privacy Act requires an accounting for the disclosure of non-tax information about individuals (i.e., personnel records, travel vouchers, etc.). Form 5482, Record of Disclosure, is used to account for disclosure of the non-tax records (IRM 11.3.19). The narrative record of accounting letter should include: Date of disclosure Name of agency receiving the information Purpose of the disclosure (i.e., disclosure authority under IRC, Section 6103(f)(4)(A)) The category (IMF or BMF) and number of taxpayers involved in the disclosure Description of the document(s) disclosed ADP source code (128 for Business Master File taxpayers) Location of the IRS office retaining a copy of the documents disclosed Type of documents disclosed (1 for tape extracts and 2 for all other disclosures) Managers can refer questions on accounting for disclosure to the LMSB Division's Disclosure Technical Advisor. If the Disclosure Technical Advisor is not available, managers can contact the Disclosure officer serving their functional area or state. 220.127.116.11.2.7 (06-12-2008) GAO Investigations of IRS Employees Besides conducting comprehensive performance and financial audits of IRS programs, operations, and activities, the GAO may conduct investigations of IRS employee according to standards that the President’s Council on Integrity and Efficiency (PCIE) established. PCIE standards ensure that the GAO and its investigators: Possess the knowledge, skills, and abilities to perform the investigations Make impartial judgments when collecting and analyzing evidence and communicating results Exercise due professional care (e.g., thoroughness, appropriate use of investigative techniques, impartiality, objectivity, protection of individual rights, and timeliness) The Office of Special Investigations (OSI) in the GAO is staffed by criminal investigators. The OSI conducts oversight investigations of allegations of serious wrongdoing that may involve potential violations of criminal law. When OSI investigations disclose potential violations of law, the office refers the information to the appropriate law enforcement agency, such as the Office of Inspector General or the Department of Justice. The OSI seeks evidence of wrongdoing either in conjunction with or independently of audits and evaluations. The OSI investigations typically focus on allegations of: Corruption Fraud Misconduct Contract and procurement improprieties Conflicts of interest Ethics violations in federal programs or activities The OSI also engages in proactive operations that test the security of agencies’ systems, controls, and property. It also uses the GAO’s FraudNET, an automated system that allows the public an opportunity to report allegations of fraud, waste, abuse, and mismanagement of federal funds. Like other GAO units, the OSI expects that an agency will promptly comply with requests for access to its records and to agency personnel directly involved with the matter under investigation. Furthermore, no one should interfere with an investigator’s ability to obtain relevant information about an investigative matter. Investigations do not support the use of entrance or exit conferences. However, for investigations that will result in a public report or testimony, the OSI briefs agency officials after it has completed the investigation and before it makes the information public.(Source: the GAO’s Agency Protocol, October 2004 – GAO-05-35G) 18.104.22.168.3 (06-12-2008) Audit Research/Data Collection The Audit Program Liaison tracks the progress of research projects, audits, and requests for information and meetings from the auditors. After the opening conference, the auditors can directly contact the designated primary contact (e.g., Program Manager) in the lead stakeholder function within LMSB for subsequent requests for information and meetings. The auditors should send their inquiries to the designated contact by electronic mail, with a copy to the Audit Program Liaison. The meeting roster, which the Audit Program Liaison prepares and shares with all meeting participants before the opening meeting, constitutes the list of key contacts for the auditors. The lead stakeholder or executive owner for the audit in LMSB is the primary contact for the audit once the research phase starts, unless he or she delegates responsibility to the LMSB Program Manager for the program under review. The designated Program Manager must document all meetings with the auditors and should provide periodic progress reports to the Audit Program Liaison consisting of: Copies of meeting minutes, including opening and closing meeting notes Copies of electronic mail communications (requests for information or meetings from the auditors and management responses to requests for information listing the documents and/or information provided to the auditors) The designated Program Manager should provide the information above electronically. Electronic mail messages providing responses to auditors’ inquiries should include the number and title for the audits in the subject line for easy identification of the audit in question. In addition, the designated Program Manager or Audit Program Liaison in the lead stakeholder function within LMSB should save labeled and dated electronic copies of responses to requests for information from auditors for future reference. Auditors issue memoranda or electronic mail inquiries to solicit information or management action, obtain agreement to the facts, or clarify issues. Auditors address these inquiries to the managers involved in the audit process and the Audit Program Liaison. They normally do not route these inquiries through the LMSB Division Commissioner’s office. However, if responses are not timely, the auditors can advise the Audit Program Liaison or the executive owner of any delays. 22.214.171.124.4 (06-12-2008) Discussion Draft Report (TIGTA) or Statement-of-Facts Briefing Paper (GAO) After the Audit Team completes the audit’s research work, it prepares a discussion draft report (TIGTA) or statement-of-facts briefing paper (GAO). The Audit Team sends the discussion draft report or statement-of-facts briefing paper, with cover memorandum, to the appropriate IRS officials by electronic mail. The Audit Team issues the discussion draft report (TIGTA) or briefing paper (GAO) to give managers an opportunity to review findings and share concerns before the team issues the draft or final report. The GAO's briefing papers do not include audit recommendations. However, GAO shares information on planned recommendations during the closing meetings. The TIGTA's discussion draft reports include the planned recommendations. However, TIGTA can revise the recommendations based on closing meeting discussions. 126.96.36.199.4.1 (06-12-2008) Closing Conference A closing or exit conference (usually a one hour meeting) takes place at the end of an audit, usually within two weeks after the Audit Team issues the statement-of-facts briefing paper (GAO) or discussion draft report (TIGTA). The closing meeting takes place at the request of the Audit Team or the LMSB managers responsible for the audit. The purpose of the meeting is to discuss managers’ comments or reactions to the statement-of-facts briefing paper, discussion draft, or draft report (if the Audit Team did not issue a discussion draft report or briefing paper). The executive lead stakeholder, or a representative, should participate at the closing conference. LMSB managers should seek concurrence from the Audit Team on proposed revisions to the discussion draft report or statement-of-facts briefing paper and request a revised audit report before the Audit Team issues the draft report, if possible. The Audit Program Liaison should: Forward by electronic mail the statement-of-facts , discussion draft report, or draft report to appropriate offices (pertinent directors, their executive assistants, program managers, and Audit Program liaisons) within and outside the LMSB Division when other functional areas are involved, and ask for their review and written comments on the audit report by a specific due date before the closing meeting. Schedule the closing conference and coordinate the meeting with appropriate offices within and outside LMSB. Request meeting space via electronic mail using the "+LMSB HQ Conf Rm Reservations" address. Arrange a conference call for participants unable to participate in person. Prepare and share a meeting roster with expected participants before the meeting. Ensure appropriate executives attend the closing conference to provide an opportunity to address their concerns with the audit findings and recommendations. Participate at the closing conference. The LMSB Administrative Assistant in charge of meeting rooms reserves meeting space upon request from the Audit Program Liaison. The executive owner(s) of the audit and pertinent Program Manager(s) responsible for the audit should thoroughly review the discussion draft report or statement-of-facts briefing paper to ensure the report reflects: Adequate understanding of the program audited Accurate, relevant, and current facts Perspective on the extent and significance of negative findings reported Sufficient evidence to support the findings and recommendations Balanced tone, especially on titles and headings Connection between audit objectives, audit findings, and conclusions Conclusions and recommendations based on the facts presented Although the IRS does not need to issue a formal response to the discussion draft report or statement-of-facts briefing paper, this is the time to raise concerns and consider the feasibility of adopting the audit recommendations, if the report has recommendations. Managers should take advantage of this opportunity to discuss any concerns or inaccuracies with the audit report. When concerns and/or inaccuracies exist in a discussion draft report or statement-of-facts briefing paper, the lead stakeholder function should coordinate with pertinent managers within and outside LMSB, as needed, to prepare comments. Managers should provide written comments (e.g., annotated in the audit report, if possible) to meeting participants and the Audit Program Liaison before the closing meeting and a copy to the Audit Team at the closing meeting, unless the team requests a copy prior to the meeting. To follow up after the meeting, program managers should also provide consolidated comments to the Audit Team by electronic mail, with copy to the Audit Program Liaison. By providing written comments, managers ensure they address all their concerns with the report, provide the auditors specific language for revisions, and clarify any misunderstandings during the meeting. Written comments reduce the time spent taking meeting notes and help focus the closing meeting discussions on the most important issues. 188.8.131.52.5 (06-12-2008) Draft Audit Report The Legislative Affairs Office and/or the Audit Team sends a copy of the draft audit report, with transmittal memorandum, to the appropriate IRS officials by electronic mail. Legislative Affairs also creates an i-trak correspondence control to track the progress of the management response to the draft report. The i-trak correspondence control system is a Web-based Servicewide document tracking application which replaced the Executive Control Management System (ECMS). The i-trak assists the IRS leadership and business units with their ability to timely and effectively manage their responses to issues raised by taxpayers, IRS employees, the Congress, the Department of Treasury, The White House, the GAO, and the TIGTA. The Staff Assistant to the LMSB Division Commissioner or the i-trak Coordinator in the Pre-filing and Technical Guidance (PFTG) function controls the draft report in i-trak to the PQAS function. The Audit Program Liaison should: Forward the draft report to the appropriate offices (directors, their staff assistants, pertinent program managers, and Audit Program liaisons) within and outside LMSB, if cross-functional coordination is necessary. Add information from the report to the TIGTA/GAO Audit Program database to track the progress of the management response. Identify a Program Manager from the lead stakeholder function within LMSB to coordinate the management response with functions within and outside LMSB, as necessary. Develop a timetable for the management response process and share it with the lead stakeholder and other pertinent managers to alert them about key due dates. Develop and forward a management response template to pertinent managers and Audit Program liaisons to facilitate the drafting of the management response. Ask the PQAS Staff Assistant or the i-trak Coordinator from PFTG to update the i-trak correspondence control system to reassign the i-trak control to the executive owner responsible for the response to the draft report, if other than the Director, PQAS. Ensure that the Staff Assistant or the i-trak Coordinator and Legislative Affairs update the i-trak correspondence control system to show the progress of the management response to the draft report as it is delivered to reviewers and finally signed. Examples of 30-day timetables for management responses to draft audit reports are provided in the LMSB Division's TIGTA/GAO Audit Program Web site at http://lmsb.irs.gov/hq/pqa/TIGTA_GAO/home.asp , under Link to Zip File (files 4 and 5). 184.108.40.206.5.1 (06-12-2008) Management Response to the Draft Report The lead stakeholder or designated Program Manager in LMSB is responsible for coordinating the official IRS management response to the draft report with other offices within and outside LMSB. Management responses to TIGTA and GAO draft reports are usually due in 30 business days. However, if GAO needs to expedite issuance of the final report, it provides less than 30 days for the management response. Effective November 13, 2000, operating division commissioners and chief officers started signing management responses to TIGTA draft audit reports. However, if the TIGTA audit affects more than one division or has the potential to have a major impact on the IRS, the lead executive assigned responsibility for preparing the management response to the draft report has the option to ask Legislative Affairs whether the response merits signature by the IRS Commissioner or Deputy Commissioner (Services and Enforcement). The November 13 guidance memorandum is on the LMSB Division's TIGTA/GAO Audit Program Web site at http://lmsb.irs.gov/hq/pqa/TIGTA_GAO/home.asp, under Link to Zip File (file 6). The LMSB managers responsible for drafting the response to the draft audit report should: Coordinate with functional areas within and outside LMSB, as needed, when drafting the management response. Consolidate and review comments gathered for the management response. Draft the response using the response template prepared and provided by the Audit Program Liaison and follow the writing guidelines provided. An example of a management response template and writing tips for all correspondence are in the LMSB Division's TIGTA/GAO Web site at http://lmsb.irs.gov/hq/pqa/TIGTA_GAO/home.asp, under Link to Zip File (files 7 and 8, respectively). The following links from Legislative Affairs and the Congressional Correspondence Branch provide additional information on Congressional correspondence: http://cl.no.irs.gov/la/Branch%20A/Tools/Writing_Tips.doc and http://cl.no.irs.gov/la/Branch%20A/Index.htm Forward the draft response to the Audit Program Liaison by the due date provided in the response timetable. A draft management response should include: Introductory paragraph acknowledging the report (A "thank you" statement is not necessary as an introduction.) Agency message or LMSB "story" (one or two paragraphs) addressing the issue(s) covered in the report and presenting a positive picture of what LMSB has generally done to address the major issues(s) Corrective action plan for each recommendation clearly identifying responsible officials and the due date for each action Justification for each recommendation rejected Statement indicating agreement or disagreement with monetary benefits, if any Corrective actions consist of specific actions planned to address audit recommendations, including estimated dates for implementation or completed dates. When preparing responses, managers should examine the findings and recommendations in the draft report to ensure they have addressed the audit issues in their responses. Managers have to determine whether to adopt or reject the recommendations. They should consider the following factors before committing to corrective actions: Legislative mandate – Must LMSB implement the recommendations based on compliance with an existing law, rule, or regulation? If so, managers should adopt the recommendations. Duplication – Is LMSB already doing what the Audit Team recommends? If so, LMSB does not need a new corrective action. Managers should provide information on what LMSB has done or is doing to address the recommendations and the source of duplication (e.g., Federal Managers' Financial Integrity Act (FMFIA) Action Plan). Modernization plans – Are recommendations part of a current modernization effort? If so, managers do not have to provide new corrective actions. Instead, managers should provide information on the specific modernization plans addressing the recommendations. Cost/benefit factors – Does LMSB have the resources to implement the recommendations? Do they make good business sense? If not, managers should let auditors know why the recommendations are not cost effective or why they do not make good business sense. Managers should assign realistic time frames for completion of corrective actions and allocate the necessary resources to meet the time frames. Assigning a completion date to a corrective action without considering the resources needed to implement it will result in extensions of the due date or cancellation of corrective actions, which reflects poor planning. The management response should reflect a positive tone. Examples of management responses to draft audit reports are in the LMSB Division's TIGTA/GAO Web site http://lmsb.irs.gov/hq/pqa/TIGTA_GAO/home.asp , under Link to Zip File (files 9 and 10). The Audit Program Liaison reviews the draft response to ensure that managers: Shared the draft response with the executive owner for the audit (e.g., director) and other managers involved in the development of the response within and outside the LMSB Division before submitting the draft response to the Audit Program Liaison. Used the proper response format or template the Audit Program Liaison provided. Addressed findings and recommendations in the draft report. Provided an estimated implementation date or completed date for each corrective action (for TIGTA draft reports). Listed a responsible official for each corrective action (for TIGTA draft reports). Followed the recommended writing guidelines. Addressed the outcome measures in the draft report (TIGTA), if any. The Audit Program Liaison should: Ask managers to provide any missing information and edit the draft response. Send the draft response to Legislative Affairs, the Program Manager responsible for the audit, and the Internal Control Coordinator in PQAS for review on or before the due date in the Legislative Affairs' draft report transmittal memorandum. Coordinate with the Program Manager responsible for the audit, the Internal Control Coordinator in PQAS, and other pertinent LMSB functions revisions to draft management responses recommended by Legislative Affairs. Request an extension of the response due date from the Audit Team, if needed. Allow at least five days for the review by Legislative Affairs and LMSB officials. Share the revised response (final draft) with the lead stakeholder (e.g., director) in LMSB before the signature package is prepared. Forward the final draft response electronically to the Administrative Assistant to the Director, PQAS, who will review the response, prepare the signature package, including a Staff Summary Sheet, and give the package to the Audit Program Liaison for final review. Send an electronic copy of the response and the Staff Summary Sheet via electronic mail to pertinent Audit Program liaisons and/or program managers within and outside LMSB. Include the completed Staff Summary sheets from reviewers in the signature package. Forward the signature package for review and approval to higher level reviewers: Director responsible for the audit Staff Assistant to LMSB Commissioner Executive Assistant, Operations Deputy Commissioner, Services and Enforcement - electronic submission of the signature package for responses to TIGTA draft reports LMSB Deputy Commissioner (Operations) LMSB Deputy Commissioner (International), if the audit deals with international issues LMSB Commissioner Legislative Affairs, if the response requires the signature of the IRS Commissioner or Deputy Commissioner, Services and Enforcement (e.g., GAO draft reports) - handcarry the signature package to this office The Director, PQAS or the Executive Assistant, Operations, forwards the signature package to the LMSB Division’s Deputy Commissioner and/or Commissioner for review and signature. For management responses that require signature by the IRS Commissioner or the Deputy Commissioner, Services and Enforcement, the Audit Program Liaison or the Administrative Assistant handcarries the signature package to Legislative Affairs. 220.127.116.11.5.2 (06-12-2008) Distribution of the Management Response The PQAS' Administrative Assistant mails the signed management response to the TIGTA's draft report. The LMSB Audit Program Liaison sends copies to Legislative Affairs, pertinent functional areas within and outside LMSB, and the Internal Control Coordinator in PQAS. For management responses to TIGTA or GAO draft reports signed by the Deputy Commissioner, Services and Enforcement, or the IRS Commissioner, Legislative Affairs handcarries the original management responses to the TIGTA or GAO and send a copy to the Audit Program Liaison. The PQAS' Administrative Assistant should send the signed TIGTA management responses signed by the LMSB Commissioner to: Treasury Inspector General for Tax Administration, Attention: Deputy Inspector General for Audit, 1125 15th Street NW, Room 700-A, Washington, DC 20005 The Audit Program Liaison should: Send a copy of the signed response to the Audit Manager and/or the Senior Auditor by electronic mail (scanned document) or facsimile. Call the Audit Manager or the Senior Auditor to ensure that he/she received a copy of the response. Provide a copy of the response to the PQAS function's Administrative Assistant or LMSB Staff Assistant to update the i-trak control that Legislative Affairs created. The i-trak control number is located at the bottom of the routing slip in the signature package. Share an electronic copy of the signed response with pertinent managers and Audit Program liaisons within and outside LMSB, as needed, and Legislative Affairs. 18.104.22.168.6 (06-12-2008) Final Report Legislative Affairs, the TIGTA, or the GAO sends final reports, with cover memoranda, to the Audit Program liaisons in the appropriate functions by electronic mail. Legislative Affairs controls, through i-trak, final GAO reports with recommendations to the lead stakeholders. The Audit Program Liaison should: Maintain and forward copies of the final TIGTA and GAO reports to the appropriate offices (directors, their staff assistants, pertinent program managers, Audit Program liaisons, and Internal Control Coordinator) within and outside LMSB, as needed. Add information from the final reports (e.g., title, date issued, due date for 60-day letter for the GAO reports with recommendations) to the TIGTA/GAO Audit Program database and close the audits in the LMSB open audit inventory (database) when the reports have no recommendations for LMSB. Provide instructions by electronic mail to pertinent managers to prepare the 60-day letter (for GAO reports with recommendations; explained in the next section). Once the TIGTA or the GAO issues the final report, the lead stakeholder for the audit or his/her designated Program Manager should continue to coordinate the implementation of the planned corrective actions with the appropriate managers within and outside LMSB, as necessary. 22.214.171.124.6.1 (06-12-2008) 60-Day or Congressional Letter The final report procedures for the GAO audits differ slightly from the TIGTA procedures because of the statutory requirement that IRS respond to the Congress within 60 calendar days of the issuance of a GAO final report with recommendations (60-day letter). LMSB prepares the 60-day letter in addition to the management response to the GAO draft report. Legislative Affairs creates i-trak controls to track the progress of the 60-day letters required for the GAO final reports. The 60-day letter format must comply with the IRS’ Correspondence Manual IRM 1.10.1 (http://publish.no.irs.gov/IRM/P01/PDF/33092C07.PDF) and should include information on actions taken or planned to address the audit recommendations. The management response and drafting process (explained under section 126.96.36.199.5.1, Management Response to Draft Report) are very similar to the response to the GAO draft report. The designated manager should coordinate the drafting of the 60-day letter with those involved in the drafting of the management response to the draft audit report, if necessary. The 60-day letter will provide specific corrective actions, due dates, responsible officials, and action monitoring plans to address each audit recommendation. Legislative Affairs provides the list of the different Congressional committees that should receive the 60-day letter. The Program Manager drafting the 60-day letter must address eight letters to the Congressional leadership for the four different committees. An example of a 60-day Letter for a GAO final report and the list of the 110th Congress/Committee Leadership is in the LMSB Division's TIGTA/GAO Web site http://lmsb.irs.gov/hq/pqa/TIGTA_GAO/home.asp , under Link to Zip File (files 11 and 12, respectively). The Audit Program Liaison should: Develop and forward a management response template and response timetable to pertinent managers and Audit Program liaisons to facilitate the drafting of the 60-day letter. Ask the PQAS Staff Assistant or the i-trak Coordinator from PFTG to update the i-trak correspondence control system to reassign the i-trak control to the executive owner responsible for the 60-day Congressional response, if other than the Director, PQAS. Ensure that the PQAS Staff Assistant, i-trak Coordinator, or Legislative Affairs update the i-trak correspondence control system to show the progress of the 60-day Congressional response as it is delivered to reviewers and finally signed. Review the 60-day letter and coordinate any necessary changes with the pertinent Program Manager(s) and/or functions involved. Share a preliminary copy with Legislative Affairs. Prepare the signature package with Staff Summary Sheet and forward the 60-day letter (the same letter is addressed to the House of Representatives and the Senate committees) for review and approval to: Director responsible for the audit Staff Assistant to the LMSB Commissioner Executive Assistant, Operations LMSB Deputy Commissioner(s) LMSB Commissioner Submit the 60-day letter package to Legislative Affairs for review at least five days before the management response is due. Legislative Affairs handcarries the package to the Office of the Deputy Commissioner, Services and Enforcement. Once the IRS Commissioner signs the 60-day letter, Legislative Affairs gets the signature package back and mails the letter to the various Congressional committees. The Audit Program Liaison gets a copy of the signed 60-day letter and the signature package from Legislative Affairs and shares electronic copies with pertinent managers, the Administrative Assistant in the PQAS function, Internal Control Coordinator, and audit liaisons within and outside LMSB, as needed. 188.8.131.52 (06-12-2008) Audit Process for LMSB Nonprimary Audits For LMSB nonprimary audits, or audits for which LMSB is not the lead stakeholder, the audit procedures are the same as for primary LMSB audits, except that the LMSB Division is not responsible for scheduling opening, closing, or progress update meetings or for preparing final management responses to draft reports and the 60-day letters (GAO reports). Instead, the LMSB Division provides general report comments and/or specific comments on the recommendations pertaining to LMSB to the Audit Program Liaison in lead stakeholder function. The Audit Program Liaison provides consolidated comments to the lead stakeholder function through a formal memorandum prepared by the lead function within LMSB and signed by the executive owner for the audit. The Audit Program Liaison also provides an advanced copy of the response to the Audit Program Liaison in the leading function, if necessary. For minor comments (e.g., editorial changes) or negative replies, the Audit Program Liaison sends comments by electronic mail to the lead stakeholder function. Once the management response to the draft report has been drafted, the Audit Program Liaison for the leading function provides a copy of the final draft response to the LMSB Audit Program Liaison for review and approval by the Executive Owner(s) for the audit in LMSB. LMSB comments on draft audit reports and final draft management responses from other lead stakeholder functions are shared with the LMSB Commissioner and/or the LMSB Deputy Commissioners, Operations, and/or Deputy Commissioner, International, when the Executive Assistant, Operations, and/or the Executive Owner for the Audit Program (Director, PQAS), determine that review and approval by the LMSB Commissioner and/or Deputy Commissioners is necessary. The Audit Program Liaison handles all engagement letters, audit reports, and audit inquiries on non-primary audits the same as primary audits. For example, Legislative Affairs forwards copies of all engagement letters to the Audit Program liaisons for review. The cover memorandum indicates the lead stakeholder. The Audit Program Liaison reviews each engagement letter to determine if LMSB will be involved in the planned audit, and forwards copies to the appropriate offices within the LMSB Division for possible participation in the opening conference or responses to inquiries from the auditors during the audit. 184.108.40.206 (06-12-2008) TIGTA/GAO Internal Control Program Background The Department of Treasury tracks the status of its bureaus' corrective actions addressing audit recommendations from TIGTA and GAO audit reports through the Joint Audit Management Enterprise System (JAMES). JAMES tracks the progress the bureaus are making in implementing TIGTA and GAO audit recommendations based on Treasury Directive 40-03, which establishes the policies and procedures and assigns responsibilities for implementing and monitoring audit follow-up within the Department. As the IRS Audit Follow-up Officer, the Chief Financial Officer, specifically the Office of Internal Control (OIC) under the Corporate Planning and Internal Control function (OS:CFO:CPIC:IC), is responsible for evaluating the effectiveness of IRS actions taken in response to audit recommendations from the TIGTA and the GAO. This office is primarily responsible for: Maintaining and updating the JAMES tracking database Informing Treasury and the Executive Steering Committee for Financial and Management Controls (ESC FMC) about the status of the audit inventory through periodic reports Ensuring the quality and timeliness of the implementation of management corrective actions The LMSB Division's Internal Control Coordinator acts as the liaison between the OIC and the LMSB Division for tracking and reporting on TIGTA and GAO audit corrective actions. The Internal Control Coordinator is in the PQAS function (SE:LM:PQAS). 220.127.116.11 (06-12-2008) Role of the Internal Control Coordinator in the Audit Process The Internal Control Coordinator is responsible for coordinating implementation of management corrective actions in response to TIGTA and GAO audit recommendations. The coordinator should: Forward JAMES verification memoranda and any other OIC memoranda to the appropriate offices (directors, their executive assistants, and program managers) within LMSB to request verification of the information provided or responses to incoming memoranda, with copy to the Audit Program Liaison. Request status updates from program managers on the open TIGTA and GAO corrective actions. Review and consolidate Corrective Action Status Update forms received from LMSB managers. Brief LMSB managers on problems or issues dealing with updates to TIGTA and GAO corrective actions. Prepare Business Performance Review (BPR) reports on the status of open TIGTA and GAO corrective actions and provide copies to pertinent LMSB directors and managers. Prepare cover memoranda or electronic transmittals for responsible LMSB Director’s signature in response to the OIC memoranda transmitting new audit reports to LMSB. Assist managers with the preparation of concurrence memoranda for changes or closure of planned TIGTA or GAO corrective actions not implemented as planned, and forward them to the OIC. Assist managers with the preparation of corrective-action transfer memoranda to other IRS operating divisions and forward them to the appropriate offices. Answer questions from the OIC on status updates. Forward monthly JAMES reports to pertinent offices in LMSB. Provide quarterly updates to managers (listed in the Corrective Action Status Update Form) responsible for the corrective actions inventory , with copy to the executive owners. Maintain records on JAMES audit verification memoranda, management updates to corrective actions, and related documents for each of the audit reports and corrective actions (e.g., maintains a corrective actions inventory database). Act as liaison between LMSB managers and the OIC on resolution of problems encountered during implementation of actions and during verification of status updates. Provide guidance to managers on audit follow-up policy and procedures and brief heads of functional areas about the status of the open inventory, as needed. 18.104.22.168 (06-12-2008) GAO/TIGTA Audit Recommendation and Corrective Actions Follow-Up Process The following sections explain the tracking of the implementation of corrective actions addressing audit recommendations to ensure that the LMSB Division implements planned actions timely and as stated in the management responses to audit reports. 22.214.171.124.1 (06-12-2008) Audit Verification Using the Joint Audit Management Enterprise System (JAMES) Once the TIGTA or the GAO issues a final report, the OIC prepares the JAMES A6 abstracts and the Audit Verification transmittal memorandum. The abstracts contain a summary of findings, recommendations, and planned management corrective actions, including the amount of any potential monetary benefits. For GAO final reports, initial abstracts prepared after receipt of the final reports show only findings and recommendations because, unlike responses to TIGTA draft audit reports, the management responses to GAO draft reports do not include specific corrective actions, due dates, and responsible officials. The OIC forwards the JAMES audit verification memorandum transmitting the final report abstracts to the LMSB Internal Control Coordinator requesting verification that the information shown in the abstract is correct, and, if not already provided, the specific corrective actions and original due dates for each audit recommendation (for the GAO report abstracts). The OIC assigns three-digit numbers (e.g., 1-2-3) to corrective actions when developing the final report abstracts in the JAMES tracking system. The first digit represents the finding, the second the recommendation, and the third the particular corrective action number under the recommendation. Examples of Audit Verification memoranda and A6 JAMES Abstracts are in the LMSB Division's TIGTA/GAO Web site at http://lmsb.irs.gov/hq/pqa/TIGTA_GAO/home.asp , under Link to Zip File (files 13 through 16). The Internal Control Coordinator contacts the responsible LMSB Division director(s) or program managers to resolve any discrepancies and/or request information on corrective actions. In case of discrepancies in the JAMES abstracts, the Internal Control Coordinator prepares a draft response to the JAMES verification memorandum for the signature of the responsible LMSB director(s). If no changes are necessary, the LMSB Internal Control Coordinator verifies for OIC by electronic mail that the abstracts are correct. LMSB's responses to requests for verification are due within two weeks of the date of the JAMES verification request memorandum. The LMSB Internal Control Coordinator enters all new corrective actions in the LMSB Division's TIGTA/GAO database for tracking and reporting purposes. 126.96.36.199.2 (06-12-2008) Corrective Action Status Updates LMSB directors are responsible for implementing the corrective actions they agreed to in the management responses to draft audit reports. The LMSB Internal Control Coordinator is responsible for monitoring the status of all open LMSB audit corrective actions. Sixty days before the due date of a corrective action, the LMSB Internal Control Coordinator prepares a Corrective Action Status Update Form and forwards it electronically to the responsible LMSB Director and Program Manager with instructions to complete, sign, and return the form. The response date for the completed Corrective Action Status Update Form is 14 days from the corrective action due date. The LMSB Internal Control Coordinator sends a reminder 30 days before the due date of a corrective action, with a copy to the executive owner, for the completion and return of the Corrective Action Status Update Form. The LMSB Internal Control Coordinator sends another reminder if he or she does not receive the Corrective Action Status Update Form 14 days from the due date. Examples of completed status update forms for some corrective actions can be found in the LMSB Division's TIGTA/GAO Web site at http://lmsb.irs.gov/hq/pqa/TIGTA_GAO/home.asp , under Link to Zip File (file 17). Managers must provide typed updates to management corrective actions and give specific information about actions taken, including completion dates. If an action has been completed, other documentation showing that the recommendation was actually implemented should be provided and attached to the Corrective Action Status Update Form. The GAO or the TIGTA does not consider a recommendation closed simply because the JAMES report shows the IRS closed it. The auditors may request documentation as evidence that the corrective actions have been implemented. In addition, requests for extensions of due dates should provide specific reasons for delays in implementing actions. When preparing status updates, managers should look closely at the JAMES abstracts or the final report to ensure their status updates address the recommendations and planned corrective actions in the abstracts. Managers should address any identified monetary benefits in the status update, whether realized or not. For revisions of due dates, managers should set revised dates to the fifteenth of the month following the anticipated completion of the action to allow a two-week period to provide a response to the OIC and entry into JAMES. The appropriate director must sign the Corrective Action Status Update Form. Managers must list a contact person in the Corrective Action Status Update Form who is a senior manager with subject-matter expertise who can answer questions from the OIC, the TIGTA, the GAO, or high-level manager. The OIC will inform the Internal Control Coordinator of any pending actions because the status narratives were not satisfactory to either change, close, or delay the actions. Actions involving a Request for Information Services (RIS) or revisions to the Internal Revenue Manual (IRM) require full implementation of programming changes and actual IRM revisions, respectively, to close them in the JAMES tracking system. 188.8.131.52.3 (06-12-2008) Change/Cancellation of Corrective Actions To request approval (signature) to change planned audit corrective actions or to close audit corrective actions that managers could not implement as planned (e.g., programming changes could not be implemented because the RIS was not approved or because a planned project was canceled), managers must prepare and send concurrence memoranda to the OIC Desk Officer for review before submitting them to the TIGTA. When the Chief Information Officer function rejects a RIS (prepared in response to an audit recommendation), managers must ask Modernization and Information Technology Services (MITS) to provide the denial in writing, including the specific reasons. The business units must prepare and send concurrence memoranda for GAO corrective actions to the OIC to request FMC ESC approval to change the planned corrective actions or to close actions that could not be implemented as planned. The business units are responsible for preparing concurrence memoranda for their directors’ signature and for forwarding them, through their Internal Control coordinators, to OIC for the TIGTA or the GAO corrective actions. The business unit Internal Control Coordinator is also responsible for following up on these memoranda. The coordinator forwards copies of the memoranda that the TIGTA signs to the OIC with cover memorandum. Managers should request extensions of due dates for corrective actions pending responses from the TIGTA or the FMC ESC on memoranda requesting approval to close or change their planned corrective actions. 184.108.40.206.4 (06-12-2008) Transfer of Corrective Actions Transfers of corrective actions to another business unit require concurrence memoranda, with attached abstracts of the corrective actions involved, signed by the directors responsible for the audit recommendations and corrective actions, asking for concurrence signature from the appropriate directors in the receiving business unit. The LMSB Internal Control Coordinator forwards copies of the signed memoranda to the OIC and the pertinent Internal Control coordinators in the receiving business unit (both mailed and faxed hard copies).