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GAO-25-107930 IRS Financial Reporting
March 18, 2025
Ms. Melanie Krause
Acting Commissioner of the Internal Revenue Service
IRS Financial Reporting: Improvements Needed in Information System and Other
Controls
Dear Ms. Krause:
On November 7, 2024, we issued our auditor’s report that included the results of our audits of
the Internal Revenue Service’s (IRS) fiscal year 2024 financial statements and of its internal
control over financial reporting as of September 30, 2024, including information system controls
(fiscal year 2024 audits).
1
As we reported in connection with our audit of IRS’s internal control over financial reporting,
although it could improve certain internal controls, IRS maintained, in all material respects,
effective internal control over financial reporting as of September 30, 2024. Those controls
provided reasonable assurance that misstatements material to IRS’s financial statements would
be prevented, or detected and corrected, on a timely basis.
Our fiscal year 2024 audits identified a continuing significant deficiency
2
in internal control over
financial reporting concerning IRS’s unpaid assessments.
3
We also identified other deficiencies
in IRS’s internal control over financial reporting that we do not consider to be material
weaknesses or significant deficiencies. Nevertheless, these deficiencies warrant IRS
management’s attention.
This report is intended for IRS management’s use and presents the new control deficiencies we
identified during our fiscal year 2024 audits. Specifically, this report presents detailed
information on the new nonsensitive control deficiency we identified and our associated
nonsensitive recommendation to address it. This report also presents the results of our follow-
up on IRS’s corrective actions to address recommendations from our prior reports related to
1
Our audit report also included the results of our audit of IRS’s fiscal year 2023 financial statements and our report on
compliance with laws, regulations, contracts, and grant agreements. See GAO, Financial Audit: IRS’s FY 2024 and
FY 2023 Financial Statements, GAO-25-107202 (Washington, D.C.: Nov. 7, 2024).
2
A deficiency in internal control exists when the design or operation of a control does not allow management or
employees, in the normal course of performing their assigned functions, to prevent, or detect and correct,
misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal
control over financial reporting, such that there is a reasonable possibility that a material misstatement of the entity’s
financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a
deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a
material weakness, yet important enough to merit attention by those charged with governance.
3
An unpaid assessment is an enforceable claim against a taxpayer for which specific amounts are due, have been
determined, and the person(s) or entities from which a tax is due have been identified. See implementing guidance in
the Internal Revenue Manual 1.34.4.1.6(1) p, “Terms/Definitions” (Aug. 25, 2015).
