Pursuant to a congressional request, GAO discussed the Internal Revenue Service's (IRS) year 2000 efforts and the remaining challenges IRS faces in making its information systems year 2000 compliant, focusing on: (1) the extent to which IRS monitors the year 2000 status of its mission-critical systems in their entirety; (2) whether IRS met the January 31, 1999, completion goal for the areas that it monitors--application software, systems software, hardware, and telecommunications networks; (3) the status of two remaining, critical year 2000 tasks--conducting year 2000 testing and completing 36 contingency plans; and (4) the fact that other business initiatives are creating competing demands on staff needed for year 2000 efforts.

GAO noted that: (1) a complete picture cannot be provided of the year 2000 status of IRS' 133 mission-critical systems because IRS does not report year 2000 status for these systems in their entirety; (2) instead, IRS monitors the year 2000 status of the components of an information system, such as the application software, systems software, and hardware, for each of its three types of computers--mainframes, minicomputers/file servers, and personal computers; (3) IRS reports that it met the January 31, 1999, completion goal for some of the areas that it monitors but not for others; (4) IRS reports that it met the January 1999 completion goal for: (a) correcting application software; (b) upgrading telecommunications networks; and (c) fully implementing one of its two major system replacement projects; (5) despite significant progress since GAO's testimony in May, IRS did not meet the goal for: (a) upgrading systems software and hardware for its three types of computers; and (b) fully implementing the other major system replacement project; (6) as a result of not meeting the goal for upgrading systems software and hardware, some changes will not be tested until late in 1999, reducing the time available to make corrections before January 2000; (7) for the replacement project, some service center staffs will have no experience before 2000 using the new system to process peak filing season volumes of remittances; (8) IRS must conduct the year 2000 end-to-end testing of its mission-critical systems; (9) testing is to begin in April 1999; (10) the second critical task is to develop 36 contingency plans that IRS has determined are needed to address various failure scenarios for its core business processes; (11) IRS is developing these plans in response to GAO's June 1998 report; (12) IRS has delayed the completion dates so that the first set of plans are to be completed by March 31, 1999, and the second set of plans by May 31, 1999; (13) as IRS continues its year 2000 efforts, it will face the challenge of how to address the competing demands on its staff; (14) these competing demands are created by IRS' other major business initiatives, such as implementing tax law changes and completing the non-year 2000 portions of one of IRS' major system replacement projects; and (15) to address these competing demands, in the past several months, IRS has: (a) transferred staff from other areas; (b) hired additional staff; and (c) delayed some activities.

Click here for the full GAO Report, PDF Version, 20pgs. 77K