**CHAPTER 300 - AUDITING**

**(300)-90** **Reporting Audit Results**

##  {#section .unnumbered}

90.1 [Overview]{.underline}.

The Office of Audit (OA) performs its audits in accordance with the
generally accepted ***[Government Auditing Standards]{.underline}***
(*GAGAS*) issued by the Comptroller General of the United States. These
standards provide guidelines for the form, content, presentation and
distribution of written audit reports and require that we provide timely
feedback to management. The Audit Manager and staff will ensure that the
audit was performed in accordance with the *GAGAS*. The referencer
should confirm this assertion.

A statement that the audit was conducted in accordance with the *GAGAS*
will be included in the report and confirmed by a referencer. When
specific auditing standards are not met, exceptions should be noted in
the report.

Auditing and reporting should not be considered separate activities. The
audit team should begin visualizing the draft report early in the audit.
To achieve this, the OA uses a "planning for results" approach that is
communicated to Internal Revenue Service (IRS) management early in an
audit. Auditors explain how audit results or outcomes will be attained
and measured. Feedback is presented in memoranda and other interim
documents throughout the audit, as appropriate. All documents are
referenced before issuance.

Up-front discussions, at every auditor level, regarding what the report
should convey allows for a better quality product. The Assistant
Inspectors General for Audit (AIGA) will participate in these
discussions to ensure concurrence and "buy in" at every level.
Documentation of the AIGA's involvement in message conferences will be
maintained in the audit workpapers. This "frontloading" practice is also
required to ensure the report information provides the proper tone and
factual presentation. This message conference is required unless the
AIGA decides that one is not necessary and this decision is documented
in the workpapers. The method or techniques used to meet the message
conference requirement will be left to the respective AIGA's discretion.
Documents prepared for discussion in the message conference may be
deemed by the AIGA to be sufficient and a meeting will not be required.
If a meeting is not deemed necessary by the AIGA, this decision must be
documented and will satisfy the message conference requirement.

Audit reporting is a function of audit communication during all phases
of the audit. The value of our service to IRS management is greatly
dependent on the effectiveness of our application of reporting
principles from the earliest stages of planning through the issuance of
the audit report and any follow-up reviews. We must consider the
potential substance and message of our reports as soon as we identify an
area for review. The OA and IRS management communication occurs at the
following points:

-   Audit planning.

-   Opening conference.

-   Interim discussions of results with IRS management.

-   Closing conference.

-   Agreement to findings and recommendations.

-   Issuance of a final report with IRS management's comments, when
    possible.

-   Feedback on the effectiveness of corrective actions (audit
    follow-up).

At the beginning of each audit, an audit plan will be prepared which
outlines the purpose of the audit, the expected deliverables, the
expected outcomes, and the milestones by which we will issue draft and
final reports. Timeliness of reporting to IRS management is a critical
part of the audit process.

Depending on an audit's scope and results, there may be one or more
reports issued from a single audit. Issues reported must be from
essentially the same audit work and be based on the original audit plan.
While the content of each report may be similar, findings and
recommendations in each would be directed to the IRS management official
with the authority to correct specific problems.

IRS management will respond to audit memoranda and draft reports in
accordance with procedures coordinated between the IRS Commissioner and
the Treasury Inspector General for Tax Administration (TIGTA).

As required by the IRS Restructuring and Reform Act of 1998 (RRA 98),
all final reports of audits conducted by the OA shall be timely
submitted to the IRS Commissioner and the IRS Oversight Board.
Additionally, several Congressional committees are entitled to regularly
receive OA audit reports. Most audit reports will be made available to
the public via the TIGTA Internet Website.

Because of their wide distribution, all reports must be written in plain
language to effectively communicate audit results to the broadest
possible audience.

###  {#section-1 .unnumbered}

90.2 [Guidance Documents]{.underline}.

The OA uses guidance documents/templates to improve document quality and
establish standards for consistency.

The guidance documents/templates show basic organizational and layout
principles to prevent reinventing report organization for each new
project. All auditors have access to model guidance documents. Use of
these guidance documents and adherence to the prescribed formatting is
required.

While guidance documents/templates provide valuable guidelines, they
should not prevent creative solutions and variations (within the body of
the documents) when appropriate to enhance the delivery of the message.

For guidance in preparing and formatting draft and final reports,
auditors should refer to the *Format Handbook for Audit Report
Packages*, which is maintained on the OA web page under the Policy and
Guidance section.

The report template for draft and final reports is on the network
located under File/New/Audit Forms/Audit Report Template.dot.

This template should be used when a new discussion draft/draft report is
prepared and should be saved as a discussion draft or draft report file
as appropriate. Once the draft report is issued and management's
response is received, the same draft report file should be used when
preparing the final report. This file should then be saved as the final
report file.

When preparing a final report, make all necessary changes from a draft
to a final report, including incorporating management's response,
removing the "Draft" designation, and typing the final report
transmittal text over the draft report transmittal text.

90.3 [Office of Audit Reporting Documents]{.underline}.

OA audit results are reported to IRS management in memoranda and/or
audit reports.

These documents are written communications to IRS executive management
describing:

-   The scope of audit work performed.

-   Significant results of the review, including accomplishments,
    program effectiveness, problems, conditions, and conclusions.

-   Proposed recommendations and corrective actions.

OA documents may identify program and operational deficiencies as well
as ways to improve operations. Causes of deficiencies, including
mismanagement and accountability issues, need to be properly reported.
Likewise, reports should acknowledge operations that are determined
proper, efficient, and effective. Documents should be complete,
accurate, objective, convincing, clear and concise. They should have the
following characteristics:

-   Balanced in content and tone.

-   Fair and not misleading.

-   Audit results in perspective.

-   Evidence presented in a supported, unbiased manner so that readers
    can be persuaded by the facts and encouraged to act on findings and
    recommendations.

-   Results presented impartially, without exaggeration or overemphasis
    on deficient performance. Needed improvements emphasized rather than
    past performance criticized.

-   Supported by sufficient, documented evidence in workpapers.

-   Referenced before issuance.

    If an audit is terminated prior to its completion and enough work is
    completed to render an opinion, the results should be communicated
    in an audit report. While issuance of a report will normally occur,
    in some instances the audit team may decide to issue a memorandum
    notifying management of the termination of the project. Auditors
    will also prepare a memorandum for the signature of the respective
    AIGA, summarizing the results of the audit work and explaining why
    the audit was terminated without a report being issued.

    90.4 [Issuance of TIGTA 7-Day Letter Reports]{.underline}.

The Inspector General Act of 1978 provides that the Inspector General
shall immediately report to the Secretary of the Treasury any
particularly serious or flagrant problems, abuses, or deficiencies in
the administration of IRS programs or operations. In those instances,
the Secretary is required to transmit such reports, together with a
report containing any agency comments, to the appropriate committees or
sub-committees of the Congress within 7 calendar days.

While this type of report is seldom used, the AIGAs are responsible for
identifying the need for such a report and recommending to the Deputy
Inspector General for Audit (DIGA) and the Inspector General that such a
report be issued. This process could be used, for example, when
management does not allow auditors access to certain records.

90.5 [Reporting on Compliance with Laws and Regulations and Certain
Illegal Acts]{.underline}.

Auditors should report all significant instances of noncompliance and
abuse discovered during an audit. All illegal acts should be referred
directly to TIGTA's Office of Investigations (OI).

Noncompliance is defined as a violation of laws and regulations or a
violation of provisions of contracts or grant agreements. Abuse occurs
when the conduct of a government function falls far short of societal
expectations for prudent behavior.

Auditors should report significant instances of noncompliance in
perspective. The instances of noncompliance should be related to the
universe of the number of cases examined and quantified in dollar terms,
if applicable. **A court of law is the final determination if an illegal
act has occurred; therefore, auditors should take care to conclude that
illegal acts likely occurred and not imply in the report that they have
made a legal determination**. Reports that include potential issues
relating to noncompliance/illegal acts should be reviewed by personnel
in the Office of Chief Counsel for the Inspector General (OCC), prior to
any report being issued to the IRS, to ensure the conclusions reached
are accurate and the issues properly presented.

If auditors communicate noncompliance in a memorandum to IRS management,
they should refer to that memorandum in the audit report. Workpapers
should document all communications to the auditee about noncompliance.

When auditors conclude that an illegal act has likely occurred, a
referral to the OI will be prepared. The OI will also be asked to
determine if reporting certain information about the illegal act would
compromise investigative or legal proceedings. Auditors should limit
their reporting to matters that would not compromise these proceedings,
such as information that is already part of the public record.

90.6 [Indexing of OA Documents]{.underline}.

The purpose of indexing is to ensure that supportable, factual
statements contained in OA documents can be traced to original
supporting workpapers and/or detailed schedules. Indexing also
facilitates the independent review conducted by the referencer.

The TeamMate Product Manager and volunteer support staff have developed
an Indexing & Referencing toolbar to be used in Microsoft Word to
simplify the indexing and referencing tasks. This toolbar provides
single click buttons that:

-   Create the reference page.

-   Enter the reference page header information.

-   Insert endnotes.

-   Set endnote numbering to TIGTA standard.

-   Insert referencer tic marks.

-   Insert referencer's, Manager's and Director's comments in
    appropriate fonts.

-   Delete all endnotes (for preparing report for issuance).

An Endnote listing will be maintained at the end of the document
following the last line of text. To separate this listing from the body
of the document, the indexer should place a Page Break immediately
following the last entry of text. See [**Exhibit
(300)-90.1**](../chapter300-90.doc#ExhibitIndexingExample).

The indexer should enter the following information at the top of the
reference page:

-   Referencer: Audit Manager:

-   Senior Auditor: Director:

-   Date Referenced: (Can be entered at the end upon completion)

The indexing and referencing toolbar in Word accomplishes this by
clicking on "Reference/Comment Page Setup," then clicking "Insert
Reference Page Header Text." A series of four prompts appear, asking for
user entry of the header information. This results in the following
text:

## **TIGTA -- Audit Reporting Document Reference Page** {#tigta-audit-reporting-document-reference-page .unnumbered}

**Referencer:** *[Lname, Fname]{.underline}* **Lead Auditor:** *[Lname,
Fname]{.underline}*

**Audit Manager:** *[Lname, Fname]{.underline}* **Director:** [*Lname,
Fname*]{.underline}

The toolbar does not put the "Date Referenced" in the header. The
referencer should type/insert the appropriate date on a line following
the header.

The indexer should place an Endnote at the end of each statement or
figure requiring supporting documentation. The indexer should then type
the applicable information to support the statement (e.g., workpaper
location, opinion, conclusion, etc.) on the Endnote listing. The indexer
should use *Text -- Normal; Font -- Times New Roman; Font Size -- 10;
and Font Color -- Black*.

The indexer should use TeamMate hyperlinks and type in the appropriate
page, worksheet and cell, or other precise reference. This will assist
the referencer in finding the precise location to reference in the
document.

Once indexing is completed, documents are ready for referencing. The
Senior Auditor will acknowledge the completion of the indexing process
by signing off on the Referencer's Checklist. The template for the
Referencer's Checklist is located in **File/New/Audit Forms/Draft Report
Referencer Checklist.dot** and **Final Report Referencer
Checklist.dot**.

90.7 [Referencing of Office of Audit Documents]{.underline}.

All documents slated for external distribution must be indexed and
referenced before issuance. Audit Managers and Directors share the
responsibility to ensure that the referencing process is one of the last
of several effective quality control processes for memoranda, reports,
briefing papers, and all other documents issued to management. They
should assure that time for referencing is appropriately factored into
the audit costing process.

All OA documents issued to external parties reflect our professionalism.
The indexing and referencing processes are designed to ensure
consistency among supporting workpapers, document text, and related
attachments before distribution. This process is in keeping with *GAGAS*
3.50, which provides "Each audit organization performing audits...must
establish a system of quality control that is designed to provide the
audit organization with reasonable assurance that the organization and
its personnel comply with professional standards and applicable legal
and regulatory requirements."

OA offices will index and reference documents electronically. TeamMate
software provides all the tools necessary to accomplish this. In
addition, if the referencing and subsequent reviews are done in TeamMate
(on the Master or using replicas), the integrity of all the hyperlinks
will be preserved.

Generally, one auditor references all documents associated with a single
OA endeavor. Directors will make all referencer assignments and should
consider the difficulty of the topic and the extent of Electronic Data
Processing (EDP) analysis involved when selecting a referencer. To help
ensure professionalism and impartiality, auditors selected as
referencers should:

-   Be grade GS-12 or higher.

-   Have sufficient experience to reference properly.

-   Not have participated in the activities related to the documents
    being referenced.

-   Have prior experience in the area audited, when possible.

There may be instances when situations such as logistics and/or resource
availability dictate that a document be referenced by a member of the
controlling Audit Manager's staff. In these instances, the Audit Manager
should ensure that the individual selected to serve as referencer was
not previously involved in the activities related to the documents being
referenced. In addition, the respective Director will provide
direction/instructions to the referencer, manage the referencing
process, and oversee the resolution of all referencing remarks. As such,
the referencer's comments will be reported directly to the Director.

#### 90.8 [Referencer's Responsibilities]{.underline}. {#referencers-responsibilities. .unnumbered}

In accordance with the *GAGAS* on professional judgment, the referencer
should assure that findings and conclusions in the reports are fully
supported by sufficient, competent, and relevant evidence obtained and
developed during the audit. The referencer should also assure that
findings and conclusions are based on an objective evaluation of
pertinent evidence. The referencer is not expected to re-conduct the
audit.

Referencers are fully responsible for evaluating all aspects of
documents assigned. It is critical that the "substance" of every
document be carefully evaluated during the referencing process. The
referencer's responsibilities include:

-   Validating that factual statements are adequately supported.

-   Validating methodologies, logic, and assumptions and ensuring they
    are based on sound authority, principles, and evidence.

-   Ensuring the document's objectives and scope tie back to the audit
    methodology; sub-objectives and tests; and supporting workpapers
    that are sufficient, competent, and valid.

-   Ensuring audit work mentioned in the Detailed Objectives, Scope, and
    Methodology of a report is commented on in the report.

-   Evaluating the consistency of the message with supporting audit work
    performed.

-   Evaluating the appropriateness of outcome measures claimed as a
    result of IRS management action on audit recommendations.

-   Verifying the computation of outcome measures, once they are
    determined appropriate for inclusion in a report.

-   Evaluating methods to validate and verify data in accordance with
    Government Accountability Office (GAO) requirements.

-   Ensuring the document states in the appropriate report section the
    source of data and methods used to determine the data's reliability.

-   Evaluating the appropriateness and consistency of recommendations,
    opinions, and conclusions.

-   Evaluating the premise of reported findings, recommendations, and
    projections.

-   Commenting on whether footnotes were indexed and referenced.

When referenced information has been prepared using a computer, the
referencer is responsible for attesting to the factual accuracy of the
data, the same as if the information had been manually entered on
workpapers. Audit trails must be provided for electronic workpapers and
indexed to:

-   Procedures used to process data.

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-   Micro-/mini-computer programs and formulas.

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-   Source documents or files.

Data validation is the responsibility of the Audit Manager and audit
team. The steps used to validate data should be clearly documented in
the workpapers. Referencers should comment on the adequacy of the data
validation procedures; **however, referencers are not expected to
validate the data if this documentation is not present.** If validation
procedures are not contained in the workpapers, the referencer should
note this as a referencing comment**.**

Referencers should not have to ask questions of audit staffs that
prepared documents. All documents submitted for referencing should stand
alone. A referencer should:

-   Carefully read documents to evaluate clarity, consistency, and flow
    of information. Referencers should not be concerned primarily with
    word choices, except when clarity, understanding, and tone are
    affected. The audit team and proofreader have primary responsibility
    for grammar and spelling.

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-   Use the Referencer Checklist located in **File/New/Audit Forms/Draft
    Report Referencer Checklist.dot** or **Final Report Referencer
    Checklist.dot** as a guide during his or her referencing assignment.
    This checklist should be retained as part of the workpapers.

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-   Record the results of his or her review on the "Endnote listing"
    immediately following the index information. See **[Exhibit
    (300)-90.1](../chapter300-90.doc#ExhibitIndexingExample).**

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-   Note his or her agreement (******) or disagreement () for each
    item verified in the OA document. The referencer will place the
    (******) or () immediately following the index information. The
    Indexing & Referencing toolbar provides the "**Ref Tic Mark**"
    (******) and "**Ref Comment:**" buttons to meet these requirements.
    **Do not** go to the next line. For any disagreement, the referencer
    should click on the "Ref. Comment:" button which enters "***Ref
    Comment: ...*** "on the page. The referencer can then double click
    on the three periods (which sets the appropriate font attributes)
    and enter comments. The referencer should use Text -- Italic & Bold;
    Font - Arial; Font Size -- 12; and, Font Color - Red. These font
    criteria should also be used if the referencer wants to make any
    comments following the (******).

Frequently, opinions, conclusions, and recommendations cannot be readily
referenced back to specific supporting documentation, since they are
judgments made as a result of a sum total of audit work. Therefore, they
must be evaluated in light of all supporting evidence. Instead of
repetitious statements about opinions and conclusions, referencers
should make one overall statement at the beginning or end of the Endnote
listing to this effect. However, if the referencer does not agree with
some of the opinions/conclusions, he or she should note this in the
applicable endnote **and** in the overall statement. For example, the
referencer could state, "The referencer is in agreement with the
opinions, conclusions, and recommendations stated in this report except
where otherwise noted."

Each referencer should notify the responsible Audit Manager when he or
she has completed the referencing assignment. At this point, the
referencer should sign off on the Referencer's Checklist acknowledging
completion of the assignment.

After the Audit Manager addresses the referencer's comments, the
referencer should review these comments. If the referencer originally
disagreed ("***Ref Comment: ...**"*) with an index but, based on the
Audit Manager's response, subsequently agrees with the index, he or she
should then place a (![](media/image1.wmf)) immediately following the
Audit Manager's comment. In order to maintain a "trail" for the
referenced document, the referencer **should not** delete the
disagreement mark ("***Ref Comment: ...**"*) or the comment. If he or
she cannot agree to all actions, the referencer should raise the issues
to the Director, as appropriate.

#### 90.9 [Manager's Responsibilities]{.underline}.  {#managers-responsibilities. .unnumbered}

Audit management can facilitate the referencing process by practicing
the following actions:

-   Build sufficient staff and calendar days into estimated audit costs.

-   Set reasonable deadlines for the referencer to complete his or her
    task.

-   Ensure documents are completely indexed prior to referencing.

-   Discuss the audit with the referencer to ensure he or she has a good
    understanding of the audit's intent or message.

-   Use the same referencer for memoranda and draft reports.

Audit Managers are responsible for:

-   Addressing all the referencer's comments (on the Endnote listing)
    and determining whether to make changes, provide additional
    information, or pass. **All decisions to pass must be justified.**
    The Audit Manager should note any decisions made immediately
    following the referencer's comments. Do not go to the next line. The
    manager should use *Text - Bold; Font - Arial; Font Size - 12; and,
    Font Color -- Blue.* (The Indexing & Referencing Toolbar uses the
    "**Mgr/Lead Response:**" button to insert "**Mgr/Lead Response:
    ...**" in the text and to set the font attributes). See [**Exhibit
    (300)-90.1**](../chapter300-90.doc#ExhibitIndexingExample). Although
    this responsibility may be delegated to Senior Auditors, Audit
    Managers must review the actions taken by the Senior Auditor and are
    ultimately responsible for all decisions and actions taken.

-   Ensuring all the referencer's comments are satisfactorily resolved.
    Documents may change several times after initial referencing. **At a
    minimum, the last version of each document must be re-referenced
    before it is issued to an external user.** Although re-referencing
    may require focusing only on selected portions of a document, the
    entire document must be evaluated to ensure consistency in content,
    style, and narrative flow.

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-   Providing timely feedback to the referencer's immediate manager for
    evaluative purposes, since referencing is an important assignment
    and expectation for an auditor.

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-   Signing off on the Referencer's Checklist once the referencing
    assignment is completed.

Directors should:

-   Assign referencing jobs. When possible, referencers should not be
    selected from auditors within the issuing group. Exceptions can be
    made when compliance with this policy will severely affect limited
    travel resources or the ability to timely accomplish the OA mission.
    In these instances, the Director will manage/oversee the referencing
    process.

-   Quality review and sign off on referencer comments using the
    Referencer's Checklist [before]{.underline} audit memoranda,
    discussion draft reports, draft reports, and final reports are
    issued.

-   If the referencer does not agree with the Audit Manager's action to
    the comments, the Director will take the appropriate action to
    resolve the issues. The Director should insert his or her decisions
    in the Endnote listing directly after the referencer's
    comment/disagreement mark ("***Ref Comment: ...**"*) with the Audit
    Manager's action. The Director should use *Text - Bold; Font -
    Arial; Font Size - 12; and Font Color - Green* to make any comments
    within the Endnote listing. (The Indexing & Referencing Toolbar uses
    the "**Director Response:** " button to insert "**Director Response:
    ...**" in the text and to set the font attributes). See **[Exhibit
    (300)-90.1](../chapter300-90.doc#ExhibitIndexingExample).**

90.10 [Relying on the Work of Others]{.underline}.

Frequently, auditors must rely on the work of OA personnel in other
offices during the audit, e.g., collateral requests, support work on
audits of national issues, or audit work that will be reported on in a
roll-up report to management. If the "work relied on" is reported in a
memorandum or audit report, the original issuing office is responsible
for indexing and referencing the written document prior to its issuance
to management, unless the control office makes other arrangements during
initial audit planning.

In preparing roll-up reports, control office Audit Managers should
request from support offices referencing documentation of documents
already issued. Thus, the control Audit Manager and referencer can be
assured that substantive issues were appropriately evaluated during the
earlier referencing process.

90.11 [Interim Reporting Documents - Memoranda and Discussion Draft
Reports]{.underline}.

OA memoranda are used to promptly advise IRS operational management in
writing of significant problems or adverse conditions. They should
closely reflect what has been discussed orally and be referenced prior
to issuance. Memoranda will be issued to the head of office or IRS
executive (e.g., Chief Financial Officer; Commissioner, Wage and
Investment Division; Director, Compliance, etc.) most responsible for
taking corrective action on the issues covered in the document.
Memoranda may be used to:

-   Clearly and concisely show problem areas with their conditions,
    criteria, causes, and effects.

-   Secure agreements to facts, which expedites the issuance of audit
    reports.

-   Advise auditees when an audit is being terminated prior to
    completion of audit work or issuance of a formal report.

Discussion draft reports are used to provide IRS management with timely
information regarding audit issues identified. These documents are to be
provided to IRS executive management prior to the exit conference and
must be referenced prior to issuance. The discussion draft report is
intended to apprise IRS management of the audit issues and
recommendations that will be reported to the IRS Commissioner and to
obtain their concurrence with the facts and recommendations. However,
complete concurrence is not required before issuing a draft report.

All memoranda and discussion draft reports will be issued and signed by
the appropriate AIGA. Copies of memoranda must be sent to the DIGA at
least 3 workdays before issuance of the document on audits where the
issues are contentious or have significant impact on tax administration
or program operations. Under certain circumstances, the DIGA may decide
to issue the memorandum.

Audit memorandum will stipulate the type of response required and the
date the response is due (usually within 15 calendar days of the
memorandum issuance date). The issuing OA official and responsible IRS
management official will communicate directly with each other relating
to memoranda. These documents will not normally be routed through the
IRS Commissioner's office. If responses are not timely received, the
DIGA may advise the IRS Commissioner's office of the delay.

Memoranda and associated responses issued during the audit period should
be included in the appendices of the discussion draft/draft report.

Electronic copies of all memoranda and discussion draft reports should
be provided to the Office of Management and Policy's (OMP) **\*TIGTA
Audit PGP1** email address within 2 workdays of issuance. The template
for an audit memorandum is included under **File/New/Audit Forms/Audit
Memo Template.dot.**

90.12 [Audit Reports]{.underline}.

To ensure their maximum usefulness to IRS management and other
interested parties, audit reports must be issued timely. A report may be
of little value to decision-makers if the audit report is issued too
late for corrective action to be taken.

OA reports generally contain the following sections:

-   Title Page.

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-   Transmittal Document (Draft and Final Reports).

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-   Table of Contents.

-   Abbreviations

-   Background.

-   Results of Review.

-   Appendix I -- Detailed Objective(s), Scope, and Methodology.

-   Appendix II -- Major Contributors to This Report.

-   Appendix III -- Report Distribution List.

-   Appendix IV -- Outcome Measures.

-   Management's Response (For a discussion draft/draft report, include
    any memorandum(a) issued and "Management's Response to
    Memorandum(a)." For final reports, also include "Management's
    Response to the Draft Report.").

-   Other Appendices as needed.

The template for draft and final reports is located on the network under
**File/New/Audit Forms/Audit Report Template.dot**. For information on
preparing audit reports using a PowerPoint template, please see
**[Section (300)-90.21](../chapter300-90.doc#PowerPointtemplate).**

The DIGA's secretary will ensure the electronic versions of draft and
final reports are provided to the **\*TIGTA Audit PGP1** email address
at the time the report is signed. However, issuing offices must send all
other required documents (e.g., Outcome Measure Summary (OMS), Audit
Plan Addendum, the Department of the Treasury's Joint Audit Enterprise
Management System (JAMES) Corrective Action Forms (CAF), etc.) to the
**\*TIGTA Audit PGP1** email address within 2 workdays of report
issuance.

90.12.1 [Title Page]{.underline}. All reports contain a title page.
Report titles should reflect the overall message to be conveyed to IRS
management, rather than simply identify what office, system, etc. was
reviewed. The word "DRAFT" should be centered under the title for draft
reports. For final reports, the month and year of report issuance should
be centered under the title. The Reference Number (200x-xx-xxx) should
be centered under the month and year, with the words spelled out and
followed by a colon. The Report Title, Date, and Reference Number should
be visually presented to fit the window of the report cover.

The title page for discussion draft, draft and final reports should
include the statement: "This report remains the property of the Treasury
Inspector General for Tax Administration (TIGTA) and may not be
disseminated beyond the Internal Revenue Service without the permission
of the TIGTA." This phrase will be revised by personnel in the OMP when
the final report is prepared for public issuance.

90.12.2 [Transmittal Documents]{.underline}. The draft report
transmittal is part of the draft report. The office initiating the
report will prepare the draft report transmittal using the format
provided in the draft report template. The DIGA will sign all draft
reports and the appropriate AIGA will be identified as the additional
point of contact.

Overall, the transmittal should highlight the significance of the
review, including a description of the audit topic and impact written in
clear, understandable language. It should also provide an impact
statement, concise synopsis of the audit purpose, significance, results
and impact, recommendations, management response (if applicable), and
disagreements between IRS management and the OA. The transmittal should
also identify the overall objective. This section should be limited to
three pages.

The *Impact on the Taxpayer* section should be placed after the opening
paragraph(s) and before the *Synopsis* section in the draft and final
report transmittal. The section should relate the audit results to
taxpayers, where possible. The narrative should be brief -- about three
sentences in length. While these sentences do not need to be repeated
verbatim in the report body, they must be adequately supported by the
audit report as a whole. The first sentence should include background
about the area audited, for context. The second sentence should state
the audit's overall results. The third sentence should state why or how
the audit's results are important to taxpayers in general.

The DIGA may waive the requirement for an impact section subject to
concurrence with the audit team's justification for excluding it. For
those reports without an impact statement, a brief justification for
exclusion should be provided along with the report when it is
transmitted to the DIGA for review and signature.

In addition, certain statutorily required audits will not have a clear
or significant link to a taxpayer impact. In these situations, the
report transmittal should clearly state, in the first paragraph
following the statement on the audit objective, that the audit was
statutorily required. By doing so, the auditor is informing the reader
that OA is required to perform the audit and that, in effect, is the
significance of the audit.

The *Synopsis* section should state the overall results of the audit,
including a conclusion on the audit objective and a summary of
significant findings (both positive and negative). The Synopsis does not
need to discuss each finding or details about each finding. Because the
purpose of the transmittal is to appeal to a wide audience, the Synopsis
should not simply be a copy and paste of details from the audit report
body. Instead, the Synopsis should be clear and concise and avoid the
use of numerous abbreviations, technical terms/language, calculations,
and footnotes. Auditors need to think of the transmittal as having its
own set of readers who are less technically informed than the readers of
the report body.

Auditors are encouraged to use "pulled quotes" text boxes within the
Synopsis section. However, auditors should ensure these "pulled quotes"
are concise and focus on the most important message they want
communicated. In designing a "pulled quote," the auditor should ask the
question: What are the most important audit results I want an outside
reader to know about assuming the reader will not read anything else in
the report?

When an audit involves 1 or 2 operating divisions or separate IRS
entities, the DIGA will transmit the **draft** report to the
Commissioner of the appropriate IRS operating division(s) so it may be
tracked to ensure responses are sent to the Inspector General within 30
calendar days. The appropriate Deputy Commissioner should be listed as a
recipient on the Report Distribution List. However, if there are 3 or
more operating divisions or separate IRS entities involved, the report
will be addressed to the appropriate Deputy Commissioner and the
Commissioner of the operating division involved will be listed on the
Report Distribution List. The words "Response Date" and an applicable
date should be shown in the upper right hand corner of each draft report
transmittal. Some instances may require a shorter response time;
therefore, the transmittal should clearly stipulate the response date.
Draft reports issued during December may be granted a 45-day response
period. Please refer to the Audit Product Distribution Procedures matrix
in [**Exhibit (300)-90.5**](../chapter300-90.doc#ExhibitDistribMatrix)
for the correct distribution of reports.

The management assistant for the AIGA, Security and Information
Technology Services will provide electronic copies of the draft report
to the Director, Office of Legislative Affairs, for appropriate
distribution. The respective AIGA's staff will be responsible for
providing copies of draft reports to local IRS management officials that
may have input to the IRS response, concurrent with issuance to the
operating division Commissioner or Deputy Commissioner. The IRS
executives and managers receiving copies of the report should be
reflected in Appendix III, Report Distribution List. For more
information on preparing Appendix III and specific requirements for
Sensitive But Unclassified (SBU) reports, please see [**Section
90.12.9**](../chapter300-90.doc#ReportDistribution), Report Distribution
List. The OMP will distribute SBU reports to the appropriate management
officials.

The audit number must be included in the subject line of the draft and
final report transmittals.

The draft report transmittal will also include a separate paragraph that
calls attention to any Outcome Measures included in Appendix IV of the
report. This paragraph is necessary so that IRS management is provided
the opportunity to agree to or dispute the proposed outcome measures.
The required paragraph is shown in the draft report template. If the
report does not contain quantifiable outcome measures, this paragraph is
not required in the draft audit report transmittal, and Appendix IV is
not necessary.

To help ensure restricted information is not released to the public and
to solicit management's input on what may constitute restricted
information, draft report transmittals will contain the following
paragraph:

> "It is our policy to make all Inspector General audit reports
> available to the public. Accordingly, we are also asking you to review
> the draft report from a disclosure perspective. If you identify any
> information in the report that would warrant protection under the
> Freedom of Information Act or other applicable laws, please advise us
> in your response as to the material needing protection and the
> exemption your office would apply. You should respond to the
> disclosure review separately so that any discussion of sensitive
> information is not included in your response to the findings and
> recommendations that will be included in the final report. We will
> consider your proposed restrictions before releasing the report to the
> public."

The **final report** transmittal is part of the final report. The
issuing office will prepare the final report transmittal using the
format provided in the final report guidance document. The final report
guidance document can be found on the OA intranet web page under
**Policy and Guidance**. The DIGA will sign all final reports and the
appropriate AIGA will be identified as the additional point of contact.

Reasonable efforts should be made to obtain responses to our reports.
However, when IRS management does not respond timely to our draft
reports, the OA will issue the report without a response. The final
report transmittal will include the wording, "Management's response was
due on **x date**. As **of y date**, management had not responded to the
draft report." This wording should also be included after the first
recommendation in the report. It is not necessary to repeat this
statement after each recommendation section of the report.

The management assistant for the AIGA, (Security and Information
Technology Services) will provide electronic copies, and a sufficient
number of hard copies of the final report, if requested, to the
Director, Office of Legislative Affairs, for appropriate distribution.
Legislative Affairs personnel will distribute the report to the
respective National Headquarters officials. The respective AIGA's staff
will bind and distribute final reports to local IRS management. The IRS
executives and managers receiving copies of the report should be
reflected in Appendix III, Report Distribution List. The Director,
Office of Legislative Affairs; the Office of Internal Control (OIC);
Chief Counsel; the Director, Office of Program Evaluation and Risk
Analysis; and the National Taxpayer Advocate should be included on the
Distribution List for all final reports except for SBU and Defense
Contract Audit Agency (DCAA) reports. For SBU reports, the IRS
Commissioner should be included on the Distribution List.

Reports that are designated as SBU must follow the guidelines provided
in [**Section (300)-90.20**](../chapter300-90.doc#LOUReports).

For guidance on the use of "Office of Audit Comments" in the transmittal
and body of the report, please see [**Section
(300)-90.12.11**](../chapter300-90.doc#OAComment).

90.12.3 [Table of Contents]{.underline}. All reports will contain a
Table of Contents. All major words in the Table of Contents and the
finding headings should be capitalized. These headings should be
verbatim throughout the entire report and should not contain acronyms or
abbreviations.

The Table of Contents should refer to the Appendix page number and not
the Appendix number. Each appendix should not begin with page one. Page
numbering for the entire report will be consecutive.

90.12.4 [Abbreviations]{.underline}. This section provides a list of
abbreviations used in the report and spells out the abbreviation. All
abbreviations used in the report will be consolidated on this page
immediately following the Table of Contents. Abbreviations will not have
to be identified in multiple sections of the report. Also, readers will
know where to locate abbreviations.

Abbreviations should be used to make the report more easily understood
and to avoid the need to spell out terms or titles multiple times. As a
general guidance, if an abbreviation is used four or more times in a
report, it should be spelled out. The following factors should be used
in deciding whether to abbreviate a term: the frequency with which an
abbreviation is used, the overall number of abbreviations in a report
section, and the span between the uses of an abbreviation. Auditors
should look for opportunities to reduce the number of abbreviations
used.

Recognizing that the distribution of our reports includes the general
population and media who may not have technical knowledge, auditors
should be cognizant of the degree to which they use technical language
and/or details in reports. Where possible, auditors should substitute
less technical terms with more commonly known terms. In addition,
auditors should attempt to strike a balance in providing detailed
information by assessing whether the details are needed for clarity and
support.

90.12.5 [Background]{.underline}. This section should provide a
historical context for the report and information necessary to
understand the report. If extensive detailed information is necessary,
the background information may be placed in an appendix to the report.

The background section of information technology, financial, and
Government Performance and Results Act of 1993 (GPRA) audit reports
should identify other related audits being performed by the GAO and
attempt to identify both the similarities and differences between our
audit and the GAO's. If there is no current or recent GAO audit work in
the area being reviewed, no comment is necessary.

The Background section also contains:

-   A statement that the audit was made in accordance with the *GAGAS.*
    If there is an impairment to auditor independence on an audit, the
    staff member should be reassigned and any audit work completed by
    the staff member up to the time of reassignment should be thoroughly
    reviewed for evidence of bias or other improprieties. If these are
    found, another staff member should repeat the work, if possible. If
    repeating the work is not possible, the impairment should be
    disclosed in the final report.

-   A statement on where and when the audit was conducted.

-   A statement that detailed information on the objective(s), scope,
    and methodology is provided in Appendix I. This Appendix should
    further explain the audit objectives and the scope of review.

-   A statement that major contributors to the report are listed in
    Appendix II.

When the necessary scope of work has been limited or a specific *GAGAS*
standard was not followed, the report should disclose this limitation
and explain why it occurred (e.g., time and resource constraints,
reliance on internal controls, etc.) The report should also discuss any
known effect of scope limits or of not following a specific *GAGAS*
standard. If this information is too voluminous (i.e., over three
sentences) it should be included in Appendix I to the report.

A statement as to when the audit was conducted will be included in the
report. It may read, "The audit began in MMYY and was completed in
MMYY."

The Audit Manager and staff will ensure that the audit was performed in
accordance with the *GAGAS.* The referencer should confirm this
assertion.

90.12.6 [Results of Review]{.underline}. This section provides concise
information addressing audit findings. All elements of a finding must be
included for each issue identified in the report. In addition, positive
comments/findings should be included, when appropriate, to ensure
balance in the report. (For positive findings, only the condition and
criteria need to be reported.) These sections also report the status of
uncorrected significant findings and recommendations from prior audits
that affect the objectives of the current audit. This section:

-   Briefly contains the source of any computer-generated data evaluated
    and the methods used to determine their validity and reliability.
    These statements may be placed in the Detailed Objective(s), Scope,
    and Methodology section, depending upon the nature, size, and
    sensitivity of the condition or recommendation the data support.

-   Describes the audit work conducted on internal controls and any
    significant weaknesses identified during the audit. When evaluating
    internal controls, significant weaknesses found would be considered
    deficiencies and identified in the audit report. The controls that
    were reviewed should be identified to the extent necessary to
    clearly present the objectives, scope, and methodology of the audit.
    Auditors may report significant weaknesses as the cause of deficient
    performance.

-   Describes any internal control weaknesses that permit integrity
    breaches to occur. Information on these weaknesses should be
    included, to the extent possible, even when integrity referrals to
    the OI are pending. The OI should be consulted to ensure information
    reported will not jeopardize an ongoing investigation.

-   Presents recommendations on actions management may take to correct
    the deficiencies cited.

-   Includes a summary of IRS management's response to the
    recommendations made after each finding area. For reports with
    significant disagreed findings or recommendations, auditors should
    reflect in the final report the basis for management's disagreement
    and the OA's response/rebuttal. The OA response should include a
    convincing rebuttal to management's position and state why the
    findings and recommendations are still valid. If management's
    position is valid, then this condition should be acknowledged and
    the report revised. For additional guidance on the use of "Office of
    Audit Comments" in the transmittal and body of the report, please
    see [**Section (300)-90.12.11**](../chapter300-90.doc#OAComment).

The results and basis for assessing the reliability of
computer-processed data must be documented in the workpapers **and** the
audit report. See [**Section
60.3.3**](../../300-60/chapter300-60.doc#EvaluatingReliabilityofComputerData)
for more information on assessing the reliability of computer-processed
data. The reporting requirements for documenting the assessment of
computer-processed data follow.

If computer-processed data are used or included in the audit report,
Appendix I (Detailed Objective(s), Scope, and Methodology) must discuss
whether the auditors established the reliability of the data. The audit
report should accurately report the scope and results of the assessment.
The data sources and the methods used to determine data reliability must
be clearly stated in the report. If data reliability could not be
determined, or was not established to the extent normally desired, the
report should contain a clear statement to that effect including the
impact on the audit results. **If the team did not assess the
reliability of the computer-processed data, a statement should be
included in the report on why and how not assessing the reliability of
the data will affect the results contained in the report.** Further, a
statement of an exception to the *GAGAS* should be included. Finally, if
the computer-processed data are used or included in the report for
background or informational purposes, the source of the data (e.g., name
of a database, system, or application) will be cited in the report. The
requirement for commenting on the source of computer-processed data and
audit tests performed to assess the validity and reliability applies to
deficiencies and to computer-processed data used to report positive
findings, conclusions and opinions.

The report language will vary depending on whether the data are (1)
sufficiently reliable, (2) not sufficiently reliable, or (3) of
undetermined reliability. In addition, the report may need to discuss
the reliability of the data in other sections of the report, depending
on the importance of the data to the message.

-   [Sufficiently Reliable Data]{.underline} -- Present the basis for
    assessing the data as sufficiently reliable, include what kind of
    assessment was relied upon, explain the steps in the assessment, and
    disclose any data limitations.

-   [Not Sufficiently Reliable Data]{.underline} -- Present the basis
    for assessing the data as not sufficiently reliable and include what
    kind of assessment was relied upon, with an explanation of the steps
    in the assessment. The report should (1) describe the problems with
    the data and why using the data would probably lead to an incorrect
    or unintentional message and (2) state that the data problems are
    significant or potentially significant. In addition, if the report
    contains a conclusion and/or recommendation supported by evidence
    other than these data, state that fact. Finally, if the data
    assessed are not sufficiently reliable, the audit team should
    include this finding in the report and recommend that the audited
    entity take corrective action(s).

-   [Data of Undetermined Reliability]{.underline} -- Present the basis
    for assessing the reliability of the data as undetermined. Include
    such factors as short time periods, the deletion of original
    computer files, or the lack of access to needed documents. Explain
    the reasonableness of using the data. For example, these are the
    only available data on the subject, the data are widely used by
    outside experts or policymakers, or the data are supported by
    credible corroborating evidence. In addition, the report should make
    the limitations of the data clear so incorrect or unintentional
    conclusions will not be drawn from the data. For example, the report
    should indicate how the use of these data could lead to an incorrect
    or unintentional message. Finally, if the report contains a
    conclusion or recommendation supported by evidence other than these
    data, state that fact.

90.12.7 [Detailed Objective(s), Scope and Methodology]{.underline}. All
reports will contain a Detailed Objective(s), Scope, and Methodology
appendix. This appendix should provide sufficient information to enable
the reader to identify the scope and extent of testing, including the
evidence gathered, the analysis techniques used, and a description of
any sampling techniques used.

While the sampling method selected by auditors depends on a variety of
factors, it is important that the auditors allocate sufficient time to
the selection of an appropriate method to ensure that the sampling
objective is achieved. In addition, when describing the chosen sampling
method, OA audit reports should consistently provide the same type of
information for each respective method.

In summary, OA auditors may use a judgmental, random, or statistically
valid sampling method, as appropriate. Regardless of the method used,
audit reports must state the basis for the chosen method, the sample
size, and the population size. A statistically valid method must include
additional attributes that are described later.

The following sections describe the OA sampling method, examples where
their use would be appropriate, and the corresponding terminology and
sampling attributes that should be described in the audit reports.

[Judgmental sample]{.underline} - A sample selection method in which
every item did not have an equal chance of being selected. Typically,
judgmental samples are used when staff or time resources are limited or
there is no need to generalize about a population. For example, a
judgmental sample may be sufficient to show a control weakness or prompt
management to take corrective action.

However, because the auditor's discretion was used to select the items
to be sampled, there is no way to know if the sample results reflect the
characteristics of the population. The use of this term suggests to the
reader that a bias may exist. Therefore, audit results and corresponding
outcome measures cannot be projected.

The audit report must describe the reason for selecting a judgmental
sample, the criteria for sample selection, and the population[^1] and
sample sizes. This information is usually presented in Appendix I. For
example, an audit step in Appendix I may state:

> "Selected a sample of 100 taxpayer accounts that contained transaction
> code (TC) 844 from the population of 4,573 taxpayer accounts
> containing TC 844. We judgmentally selected the 100 taxpayer accounts
> because, due to time constraints, we wanted to focus on those accounts
> with erroneous refunds of over \$7,000."

In this example, the reason for selecting a judgmental sample was time
constraints, and the criteria for the sample selection were taxpayer
accounts with a TC 844 and the dollar amount of the erroneous refund
over \$7,000. The population and sample sizes were 4,573 and 100,
respectively.

[Random sample]{.underline}[^2] - A sample selection method in which
each member of the population has an equal chance of being selected.
This method ensures no bias is used in the sample selection. However, a
random sample, without additional attributes, does not imply a
"statistical sample" and, accordingly, audit results and corresponding
outcome measures cannot be projected to the population. A random,
nonstatistical sampling method would typically be used as a way of
emphasizing that the audit results were not biased or exaggerated by
selecting, for example, known cases of noncompliance.

The audit report must describe the reason for selecting the sampling
method, the criteria for sample selection, and the population and sample
sizes. This information is usually presented in Appendix I. For example,
an audit step in Appendix I may state:

"Selected a random sample of 100 taxpayer accounts that contained
transaction code (TC) 844 from the population of 4,573 taxpayer accounts
containing TC 844. We used a random sample to ensure each account had an
equal chance of being selected, which enabled us to obtain sufficient
evidence to support our results."

In this example, the reason for selecting the random sample was to
ensure each account had an equal chance of being selected, and the
criterion was taxpayer accounts with a TC 844. The population and sample
sizes were 4,573 and 100, respectively.

[Statistically valid sample]{.underline} - A sampling method that
combines the use of a random sample method with additional criteria
including confidence level, expected error rate, and precision. This
method is used when the auditors want to make a statement about the
population from which the sample was selected. Using this method,
outcome measures can be projected to the population.

The audit report must describe the reason for using a statistical
sample, criteria for the sample selection, the projected number or
amount, the sample reliability (confidence level, expected error rate,
and precision), and the population and sample sizes. This information
must be included in the body of the report, Appendix I, and/or Appendix
IV, as appropriate. This information must be presented so that the
reader can determine the extent to which the results are representative
of the population. For example, if a sample size is too small, the
resulting precision could be so wide as to call into question the
usefulness of the projection.

For example, an audit step in Appendix I may state:

> "Selected a statistical sample of 191 accounts from the population of
> 3,532 accounts on which collection action was resumed to determine the
> timeliness of the action. Our sample size was determined based on a 95
> percent confidence level, an expected error rate of 4 percent, and
> precision of plus or minus 3 percent. A statistical sample was taken
> because we wanted to estimate the number of taxpayer accounts in the
> population for which collection action was not timely resumed."

In this example, the reason for using a statistically valid sample was
to enable the projection of sample results to the entire population. The
criteria for the sample selection were accounts on which collection
action was resumed and the various parameters (e.g., confidence level)
identified in the audit step. The confidence level, expected error rate,
and precision were 95, 4, and 3 percent, respectively. The population
was 3,532 and the sample size was 191.

Using the above example, the report body and/or Appendix IV may state:

> "We project that collection action was not timely resumed on 889
> taxpayer accounts. Our projection is based on a statistically valid
> sample with a 95 percent confidence level and a precision of plus or
> minus 3 percent."

As with any audit procedure, auditors need to exercise professional
judgment in the selection of the sampling method that provides the best
balance among the achievement of desired audit and sampling objectives,
any time constraints, and the desire to quantify audit results.

For additional information on sampling, please refer to [Section
(300)-80.4](../../300-80/chapter300-80.doc#Sampling).

In reporting the scope of the audit, auditors should describe the audit
work conducted to accomplish the audit's objectives and should report
any significant constraints imposed on the audit by data limitations or
scope impairments. Audit reports should avoid any misunderstanding by
the reader concerning the work that was and was not done to achieve the
audit objectives.

The Detailed Objective(s), Scope, and Methodology section will be
Appendix I for all reports. This section should be prepared in outline
format and identify all audit tests conducted to accomplish the
objective(s).

90.12.8 [Major Contributors to This Report]{.underline}. Appendix II of
all reports will be the Major Contributors to This Report. This Appendix
will identify all major contributors who worked on the review and their
position titles.

This Appendix is single-spaced and should include the AIGA, Director,
Audit Manager, audit team, referencer (by position title, not role as
referencer), EDP personnel who assisted with data files/analysis, and
any other individuals who made a significant contribution to the audit
(e.g., Investigations personnel, other TIGTA personnel, IRS personnel,
etc.). The Lead Auditor\'s name and the title \"Lead Auditor\" should
follow the Audit Manager\'s name (when applicable); then the other staff
members should be listed in alphabetical order within titles (e.g.,
Senior Auditors, Auditors, Information Technology Specialists).

90.12.9 [Report Distribution List]{.underline}. Appendix III will be
included in all reports and contain a list of all IRS executives,
managers, and liaisons who will receive the report. The officials
receiving copies of the report should be listed alphabetically by order
of rank. This list is single-spaced and should include the titles and
symbols for each person listed.

The Director, Office of Legislative Affairs, should be included on all
draft and final report distribution lists, except for SBU and DCAA
reports. The OIC; Chief Counsel; the Director, Office of Program
Evaluation and Risk Analysis; and the National Taxpayer Advocate should
be included on the distribution list for final reports, except SBU and
DCAA reports. The Deputy Chief Financial Officer, Department of the
Treasury, will be included on the distribution list for final SBU
reports. The IRS Audit Liaison will be included on the distribution list
for SBU reports if he or she was involved in preparing the management
response.

For draft reports, the Director, Office of Legislative Affairs, should
be the last recipient listed before the Audit Liaison(s). For final
reports, the five required recipients should be listed last before the
Audit Liaison(s) and should be in alphabetical order, by order of rank.

Please refer to the Audit Product Distribution Procedures in [**Exhibit
(300)-90.5**](../chapter300-90.doc#ExhibitDistribMatrix) for which IRS
executive to include on the distribution list when one or more operating
divisions are involved.

90.12.10 [Outcome Measures]{.underline}. We must communicate with IRS
management on those outcome measures that we expect to result from our
audit activities. Appendix IV should be titled "Outcome Measures" and
should include the measurable impact that our recommended actions will
have on tax administration. These benefits will be incorporated into our
Semiannual Report to the Congress (SAR). This appendix is included in
the report and is designed to include the type and value of outcome
measure and the methodology used to quantify the reported benefit for
each finding and recommendation that contains an outcome measure.

In the Type and Value of Outcome Measure Section provide specific page
references (in parentheses) for the finding from which the outcome
measure is identified. In reports in which either the Outcome Measure
appendix or a finding in the report body that contains an outcome
measure is lengthy, the Methodology Used to Measure the Reported Benefit
Section may include a reference to the specific page number in the
report on which the outcome is discussed.

Appendix IV is not needed when a report does not contain quantifiable
outcome measures. However, it is expected that the qualitative impact of
any significant finding will be included in the appropriate finding
section within the report body.

[**Section
(300)-90.26**](../chapter300-90.doc#IdentifyingOutcomeMeasures) includes
details on identifying and reporting outcome measures.

90.12.11 [Management's Response to the Draft Report]{.underline}. For
discussion draft/draft reports, include as appendices any memoranda
issued during the audit. Appendices should also be included for IRS
management's responses to the memoranda.

Standards require auditors to include the views of the auditee
concerning the findings, conclusions, recommendations, and corrective
actions in the report. One of the most effective ways to ensure that a
report is fair, complete, and objective is to obtain comments from the
auditee. Including the views of management produces a report that shows
not only what was found and what the auditors think but also what the
auditee thinks about the report and how they plan to correct the
problems identified in the report.

A synopsis of the IRS management response to the draft report will be
included in the final report. A complete copy of IRS management's
response to the draft report will be included as an appendix to all
final reports. This appendix should be the last appendix in the final
report. However, there may be instances where a final report must be
issued without the response of IRS management.

Responses received from the IRS will be scanned by the DIGA's office and
then emailed to the AIGA responsible for the audit report. The AIGA's
office will incorporate the response into the final report. The original
paper version of the response will be maintained in the OMP.

Whenever the IRS' response is not timely received, the final report
should be issued without management's comments. However, reasonable
efforts should be made to obtain a response. Decisions to issue reports
without management's comments will be made by the AIGA. On those
occasions in which a response cannot be received within the required
time period, the IRS should request in writing from the DIGA an
extension to the response date.

When a response to a report that has been issued without IRS
management's comments is subsequently received, the respective AIGA's
staff will assess the adequacy of the response and submit a copy of the
accepted response, along with a revised JAMES CAF and updated OMS
document, **to both the \*TIGTA Audit Reports** email address and the
**\*TIGTA Audit PGP1** email address within 2 workdays of response
receipt. OMP personnel will ensure that the response is cleared through
the OCC's Disclosure Branch, that the revised JAMES CAFs are sent to the
OIC, and that the Integrity Data System (IDS) is updated. Naming
conventions used in these updated documents should follow the examples
in [**Exhibit
(300)-130.2**](../../300-130/chapter300-130.doc#ExhibitNamingConventions).

OA and IRS management are responsible for discussing issues throughout
the audit to obtain management input and agreement to the facts;
however, complete concurrence with corrective actions is not required.
While the OA strives for agreement up front on all reported issues and
recommendations, it is impractical to think that agreement will always
be obtained. If the Director does not agree with IRS management's
response, auditing standards require that the report include the reasons
why auditees' comments or responses were rejected. Despite efforts to
resolve all issues before the issuance of the final report, the
following scenarios may occur:

-   Management responds that they agree with a finding and
    recommendation but cannot implement corrective action due to
    resource constraints (e.g., budget, Information Systems change) and
    will accept the risk.

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-   Management responds that they do not agree with a finding or
    recommendation and will not implement any corrective action.

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-   Management responds that they agree with a finding but will
    implement a corrective action different from the one recommended by
    the OA.

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-   Management responds that they agree with a condition but do not
    agree that there is a risk involved and will not implement
    corrective action.

In each of the above cases, the Director will assess the specific
information provided and determine if the additional information would
result in any change to the findings or recommendations made in the
draft report. If necessary, the report will be revised.

When the OA receives a response to a final report that was previously
issued without the IRS response and areas of disagreement cannot be
resolved with IRS management, the respective AIGA should develop a
memorandum to the IRS to be signed by the DIGA. This memorandum should
briefly describe the recommendation, management's response, and the OA's
rebuttal/comments. When warranted, the OA memorandum will also invoke
additional processing procedures regarding the referral of major
disagreements to the Department of the Treasury. The OA memorandum and a
copy of the late IRS report response should be sent **to both the
\*TIGTA Audit Reports** email address and **\*TIGTA Audit PGP1** email
address (along with the updated JAMES CAF and OMS document) for review
and signature by the DIGA. The OMP will forward the response documents
to the OCC's Disclosure Branch.

When the TIGTA issues a final report [with major disagreements on
significant recommendations and findings]{.underline}, the transmittal
memorandum for the final report will indicate that the appropriate IRS
operating division Commissioner is responsible for assuring that the IRS
Commissioner submits a written reply to the Assistant Secretary for
Management and Chief Financial Officer of the Treasury within 30
calendar days of the final report issuance date. This reply will explain
the IRS' reasons for the lack of agreement with the recommendations
and/or findings contained in the audit report. The IRS Commissioner will
provide a copy of the reply to the TIGTA. The respective AIGA will
advise the SAR Coordinator that a significant issue has been elevated to
the Department for resolution.

If a copy of the IRS Commissioner's reply is not received within 30
days, the respective AIGA should follow up with the appropriate IRS
operating division Commissioner to assure the IRS Commissioner submitted
a written reply to the Department of the Treasury. The responsible AIGA
will forward a copy of the Commissioner's reply to the SAR Coordinator
upon its receipt. Departmental resolution shall be made within a maximum
of 6 months after issuance of a final TIGTA audit report, in accordance
with Office of Management and Budget (OMB) Circular A-50. If a
Departmental response is not received, the SAR Coordinator will be
responsible for following up with the Department Chief Financial
Officer's staff to assure resolution to obtain appropriate documentation
and to provide feedback to the DIGA and affected AIGA. Significant
disagreed findings or recommendations will be highlighted in the SAR. If
the disagreement is significant enough to merit elevating it to the
Assistant Secretary, then the final report transmittal should indicate
that we plan to elevate the disagreement for resolution.

The "Office of Audit Comment" should be used so that an outside reader
will get a more complete understanding of the TIGTA's position on
management's disagreement or alternative corrective action. The
following three scenarios provide details on how the "Office of Audit
Comment" should be used in the report body and transmittal:

-   [IRS Management Disagrees With the Recommendation or Finding, and
    the TIGTA Disagrees With the Disagreement]{.underline}

In accordance with our existing policy, the "Office of Audit Comment" in
the report body should contain a convincing rebuttal to IRS management's
disagreement. The transmittal should contain an "Office of Audit
Comment" statement indicating that the TIGTA does not agree with the
IRS' disagreement. In addition, when the disagreement is significant
(i.e., TIGTA plans to elevate the disagreement to the Department of the
Treasury), the transmittal should state the IRS Commissioner is to
submit a written reply to the Assistant Secretary for Management and
Chief Financial Officer of the Department of the Treasury within 30
calendar days of the final report issuance date. Please note that the
elevation/nonelevation language is limited to the TIGTA's disagreements
with IRS management over findings and recommendations. While report
transmittals should specify the outcome measures the TIGTA will report
in its Semiannual Report to the Congress, the transmittals **should
not** mention elevating or not elevating to the Department of the
Treasury any disagreements with IRS management over outcome measures.

-   [IRS Management's Corrective Action Is Different From the
    Recommendation, and the TIGTA Agrees With the Alternate
    Action]{.underline}

In this situation, the "Office of Audit Comment" in the report body
should indicate that the TIGTA agrees with the alternate action and why
we believe the action will address the concerns raised in the report.
The transmittal should also contain a statement indicating that the
TIGTA agrees with and accepts the IRS' alternate corrective action for
the recommendation. A separate "Office of Audit Comment" section in the
report transmittal is not required but may be used depending on the
degree of IRS management disagreement and complexity of the issues.

-   [IRS Management Disagrees With the Recommendation, and the TIGTA
    Agrees With the Rationale]{.underline}

In this situation, the "Office of Audit Comment" in the report body
should indicate that the TIGTA agrees with the rationale for IRS
management's disagreement and why the IRS' rationale is accepted. The
transmittal should also contain a statement indicating that the TIGTA
accepts IRS management's rationale for disagreeing with the
recommendation. A separate "Office of Audit Comment" section in the
report transmittal is not required but may be used depending on the
degree of IRS management disagreement and complexity of the issues.

In addition to or in combination with the three scenarios previously
described, IRS management may also disagree with some or all of the
outcome measures presented in the draft report. When this situation
occurs, an "Office of Audit Comment" should be used in the report body
following the first recommendation involving the outcome measure. The
"Office of Audit Comment" section should describe the outcome measure
disagreed with by IRS management, management's rationale, and the
TIGTA's position regarding whether the outcome measure will be sustained
or adjusted. In addition, any outcome measure adjustments should be made
in Appendix IV, Outcome Measures. The "Additional Comment" box in the
Outcome Measure Summary should also include a brief reference regarding
IRS management's disagreement with the outcome measure. The report
transmittal should also describe IRS management's disagreement with some
or all of the outcome measures, management's rationale, and the TIGTA's
position. A separate "Office of Audit Comment" section is not required
in the transmittal. However, if the outcome measure disagreement occurs
in combination with scenario 1 above, then include the outcome measure
discussion under the "Office of Audit Comment" section that will already
be in place.

90.12.12 [Other Appendices as Needed]{.underline}. Occasionally,
additional information will be presented in audit reports to clearly
convey the message of the report. Auditors can present this information
in appendices to the report.

Appendices I through IV (Detailed Objectives, Scope, and Methodology;
Major Contributors to This Report; Report Distribution List; and Outcome
Measures, if applicable) will be the same in all reports.

90.13 [Recommendations]{.underline}.

Auditors will include recommendations for actions to correct problems
and to improve operations when appropriate. Constructive recommendations
encourage improvements in government operations. They are most helpful
when they are practical, cost-effective, and directed at addressing the
cause of the underlying problem. Each recommendation should be numbered
sequentially throughout the report.

90.14 [Audit Highlights Document]{.underline}.

An Audit Highlights document will be required for each final audit
report, except DCAA and SBU reports. This document will allow the TIGTA
to advise the public, in a one-page format, of the impact of the audit
on taxpayers, why we conducted the audit, what we found, and what we
recommended. The Highlights document does not replace the report
transmittal. It is a separate document that will be prepared in addition
to the report transmittal. The Highlights document will be posted to the
TIGTA Internet website in along with the final audit report.

The audit team will include a Highlights document with applicable final
audit reports submitted to the OMP for review. The Highlights document,
like the final audit report, will be indexed and referenced prior to its
submission to the OMP. While the information in the Highlights document
should be supported in the final audit report, its main purpose is to
provide information that can be easily understood by an outside
(average) reader. Thus, the document should minimize the use of
abbreviations and have no footnotes.

A general description of what should be included in each section of the
document follows.

-   **IMPACT ON TAXPAYERS** -- this section should include a synopsis of
    the impact stated in the ***Impact on the Taxpayer*** section of the
    final audit report transmittal.

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-   **WHY TIGTA DID THE AUDIT** -- this section should provide enough
    information to justify/explain why the audit was worth doing, a
    limited amount of background information, and the audit's
    objective(s).

-   **WHAT TIGTA FOUND** -- this section should include a brief summary
    of the most significant conditions/issues noted in the audit report.

-   **WHAT TIGTA RECOMMENDED** -- this section should include a synopsis
    of recommendations made, a general statement about Internal Revenue
    Service (IRS) management's agreement (or not) to the
    recommendations, and a general statement that IRS management has
    taken and/or will take appropriate corrective actions. However, if a
    report includes many recommendations, list only those
    recommendations the audit team deems to be the most important to
    keep within the one-page space limitation. If the audit team desires
    and space allows, this section can include [brief]{.underline}
    statements regarding both IRS management's basis for disagreement
    with any recommendation(s) and the Office of Audit's rebuttal
    (comments).

The Audit Highlights document should not contain any sensitive wording
that would require redactions. If TIGTA's OCC determines that a final
report requires redactions and this affects the Audit Highlights
document, the OMP will work with the business unit to reword the
document to eliminate the need for redactions.

The template for the Audit Highlights document is on the network located
under **File/New/Audit Forms/Audit Highlights Document.dot.** The
template is also included in TeamMate.

90.15 [Preparing Reports]{.underline}.

The Director, Audit Manager, and audit team responsible for an audit
will meet during the fieldwork phase to discuss the audit findings and
the report concept. Based on this meeting, the audit team and Audit
Manager will prepare the discussion draft/draft report and forward it to
the Director for review. Audit reports will be issued in draft version
to enable the OA to receive written feedback on the factual
representation of information presented in the audit document. OA
employees are required to encrypt all SBU reports using secure messaging
when transmitting them within the TIGTA.

After the audit team and Director concur on the discussion draft/draft
report and the OMS document, the documents will be referenced. See
[**Section 90.7**](../chapter300-90.doc#Referencing) for more
information on referencing. The Director will forward the referenced
documents to the respective AIGA.

The AIGA will review the discussion draft/draft report. If changes are
requested, the report will be returned to the audit team for revision.
Substantive changes made to the report and/or the OMS document must be
re-referenced. The revised documents will then be forwarded to the AIGA
for another review.

The AIGA will forward approved **draft** reports and OMS documents to
the OMP's **\*TIGTA Audit Reports** email address for a quality
assurance review. (Note: Discussion draft reports will be issued by the
respective AIGA.) However, since the **\*TIGTA Audit Reports** mailbox
cannot open encrypted files, SBU reports sent to the OMP for review
should be sent directly to the Audit Manager for quality assurance. In
addition, an informational email message should be sent to the **\*TIGTA
Audit Reports** mailbox stating that the SBU report was sent to the
Audit Manager. All hidden text and comments added to the report using
the comments menu option, workpaper indexes, referencer comments/end
notes, macros, or any other text/formatting that is not considered part
of the report, must be removed before the report is submitted for
review. Also, review comments added using "tracked changes" must be
removed (i.e., accept or reject the changes).

The OMP will serve as the DIGA's quality control point and review each
**draft** report for conformance with the TIGTA's report format and
reporting standards outlined in the *GAGAS,* as well as for clarity. In
addition, these reviews will assess whether audit reports follow the
rules for grammar, punctuation, and style outlined in the Shipley
Associates *Style Guide*. OMP personnel will also review the **initial
version of the draft report for potential disclosure issues**. These
reviews are not intended to circumvent line-management controls or to
validate the accuracy of reported issues. Audit team members, Audit
Managers, Directors, and AIGAs are responsible for providing quality
products timely.

It is anticipated that these pre-issuance reviews will take 7-10
workdays. While this time frame should be considered when establishing
target dates for completion of fieldwork and issuance of the draft
report, this process is not intended to delay efforts to discuss audit
issues with IRS management. If initial feedback is not provided within
the 7-10 workday time frame, the respective AIGA should contact the
Director, OMP.

Once the pre-issuance review has been completed, the Director, OMP, will
forward the draft report and/or the OMS document, along with substantive
comments/requested changes, to the appropriate AIGA, Director, and Audit
Manager for report revision. (If the report requires editorial changes
only, OMP personnel will make the changes and provide a copy of the
report to the DIGA for review.) The AIGA should review the comments and
ensure the appropriate revisions are made. After all comments by the OMP
have been addressed, the AIGA should submit the revised report to the
DIGA for review and signature. However, if the OMP previously commented
on outcome measures/potential outcome measures, the draft report and OMS
document will be resubmitted to the **\*TIGTA-Audit Reports** email
address. The OMP will conduct a second review of the draft report that
is limited to outcome measures and return the "report package" to the
AIGA for reconsideration, if necessary, and submission to the DIGA. If
the DIGA has additional substantive comments/changes, the report will be
returned to the AIGA for revision and resubmission. Changes made to the
report must be re-referenced.

The approved **draft report** will be signed by the DIGA, who will issue
the report to the Commissioner of the appropriate IRS operating division
when 1 or 2 business units are involved or to the appropriate Deputy
Commissioner when 3 or more business units are involved, so it may be
tracked to ensure the response is sent to the TIGTA within 30 calendar
days.

A synopsis of management's response to the draft report will be included
in the final report. A copy of the full response will be included as an
appendix to the report.

Responses to memoranda and draft reports specify:

-   The OA recommendations.

-   Actions management has taken or plans to take to address the
    reported conditions.

-   Dates of completed management corrective actions and estimated
    completion dates for planned corrective actions.

-   The official responsible for completing the corrective actions.

-   Agreement to the expected outcome measures included in the report.

-   The official responsible for tracking and evaluating the
    effectiveness of corrective actions.

All final reports and the Audit Highlights document will be subject to a
pre-issuance review by the AIGA's designated reviewer prior to being
provided to the Quality Assurance section of OMP for review. Final
reports that have been reviewed and cleared by the OMP will be forwarded
to the DIGA for signature.

The Director will approve and forward referenced final reports (and
updated OMS documents) to the AIGA. The AIGA will review and approve the
final report (and updated OMS documents). If changes are requested, the
report will be returned to the audit team for revision. Changes made to
the documents must be re-referenced and the revised documents forwarded
to the AIGA for another review.

Once the final report (and updated OMS document) has been reviewed and
approved, the AIGA will forward the documents to the OMP for review.
After any OMP-suggested changes have been made, the Director, OMP, will
forward the final report to the DIGA and the Special Assistant to the
Inspector General. The Inspector General has **5** business days to
review the report and provide comments, after which the DIGA will then
sign the final report. If changes are requested by the DIGA and/or
Inspector General, the report and/or updated OMS document will be
returned to the AIGA for revision. Any changes made to the documents
must be re-referenced. The revised report will then be forwarded by the
AIGA to the DIGA. The filenames for revised discussion draft, draft, and
final reports should follow the naming conventions identified in
[**Exhibit
(300)-130.2**](../../300-130/chapter300-130.doc#ExhibitNamingConventions),
which also shows when various electronic files should be sent to the
**\*TIGTA Audit PGP1** email address for inclusion on the IDS.

When 1 or 2 operating divisions are involved, the approved **final**
report will be signed by the DIGA and addressed to the Commissioner of
the appropriate IRS operating division(s). When 3 or more operating
divisions are involved, the signed report will be addressed to the
appropriate Deputy Commissioner. The IRS Commissioner and the
Commissioner's Chief of Staff will be listed on the Report Distribution
List for all final reports, except DCAA reports. The Director, Office of
Legislative Affairs, will be listed for all final reports, except SBU
and DCAA reports.

The management assistant for the AIGA, (Security and Information
Technology Services) will provide the final reports to the IRS
Commissioner and the Director, Office of Legislative Affairs, as
appropriate, for distribution to National Headquarters officials. The
OMP will also distribute copies of each report's title page and
transmittal to Congressional committees and place a copy on the TIGTA
Internet Website for public dissemination. The OMP will provide a
sufficient number of hard copies of each final OA report to meet the
demand of interested Congressional oversight committees.

If the OA subsequently determines that the substantive information
published in a final report is incorrect, an amended report that clearly
highlights the information being corrected will be issued. The corrected
information may have an effect on auditors' recommendations,
management's action, or both. The amended audit report will be
distributed to all management officials who received the original audit
report.

90.16 [Disclosure of Information]{.underline}.

The Freedom of Information Act (FOIA) requires agencies to make
available to the public all records that are not specifically exempt
from release under the Act. All TIGTA reporting documents and workpapers
are subject to FOIA requirements, and portions could be released by the
OCC in response to a valid FOIA request. For a complete discussion of
the FOIA, see [**Chapter
(700)-60**](../../../chapter700-counsel/700-60/700-60.doc#FOIA) of the
TIGTA Manual.

TIGTA final audit reports will be made available to audiences outside
the IRS. As such, reports should be written in a manner that will
facilitate public issuance without requiring redaction. In addition,
reports should be written to have the widest possible distribution to
IRS executives, the IRS Oversight Board, Congressional committees, and
the public. The reports should require no (or minimal) removal of
information that is prohibited from general disclosure when released
outside of the IRS.

All correspondence should be written with the intent of expediting
public distribution. However, distribution of memoranda, discussion
draft reports, and draft reports should be limited to IRS officials.

Draft reports should be written with the intent that they could be
issued directly to the public once IRS management's response is received
and incorporated into the final report. However, the TIGTA continues to
be responsible for providing IRS management with information in
sufficient detail to ensure that they can recognize problems and
identify appropriate corrective actions. As such, the OMP will review
the **initial version of the [draft report]{.underline} for disclosure
purposes**. This pre-issuance review will provide the issuing office
advice on where potentially restricted material can be minimized by
removing or "writing around" it. These reviews will be performed
concurrently with the quality assurance pre-issuance report reviews, and
any information identified as potentially restricted or classified will
be brought to the attention of the issuing office as part of the OMP
pre-issuance review feedback process.

The OCC's Disclosure Branch will review all final OA reports and will
make the official final determination regarding release of information
to the public. Once the report is cleared for release, it will be made
available to the public via the TIGTA Internet Website.

If classified or restricted information (e.g., information subject to
restrictions imposed by the Privacy Act of 1974 or Internal Revenue Code
(I.R.C.) § 6103 and/or information that could impair tax administration
or an ongoing investigation) is found in a report, it will be redacted
by the OCC before the report is made available to the public. However,
inclusion of such information will not affect issuance of the final
report to IRS recipients.

Revisions made to 26 CFR § 301.6103(k)(6)-1(a)(3), which governs the
circumstances under which TIGTA employees may identify themselves, their
organizational affiliation, and the nature of their investigation, may
affect certain OA practices. Neither the kind of protected data that can
be disclosed nor the purpose for which information can be disclosed has
changed. The revised regulations in no way affect the actual return
information that may be disclosed for investigative purposes. The
section has been revised to clarify that IRS and TIGTA employees may
identify themselves, their organizational affiliation, and the nature of
their investigation when making any oral, written, or electronic contact
with a third-party witness. The revisions are intended as a
clarification rather than a change in the effect of the regulations.
TIGTA's OCC should be consulted if there are any questions regarding the
disclosure of return information.

If a particular audit report requires the inclusion of a significant
amount of information that the issuing office determines must be
restricted from public release, that information should be placed in an
appendix to the report. In accordance with the *GAGAS* on reporting, the
issuing office will identify the information to be restricted from
public release and cite the requirements that make the restriction
necessary. Reports with appendices of this nature will probably be few,
but they are appropriate when circumstances dictate such restrictions.

If for some reason the use of an appendix with the classified or
restricted information would be impractical, the decision to write a
report that will not be made public must be approved by the AIGA.

[**Exhibit (300)-90.2**](../chapter300-90.doc#ExhibitInforNotinReports)
provides examples of restricted or confidential information that should
be avoided in report writing, if possible.

### 90.17 [Citations for Legal Authorities Commonly Used in Reports]{.underline}.  {#citations-for-legal-authorities-commonly-used-in-reports. .unnumbered}

See [**Exhibit (300)-90.3**](../chapter300-90.doc#ExhibitCitations) for
a list of commonly cited statutes. If you have any questions regarding
the proper citation form, please contact TIGTA's OCC.

### 90.18 [OA Report Numbering System]{.underline}. {#oa-report-numbering-system. .unnumbered}

The OA Report Numbering System provides control and accountability over
audit reports and recommendations issued by OA offices to internal and
external users.

Reference numbers are assigned on a fiscal year basis to every final OA
report. To ensure the accuracy of the reference numbering system, the
OMP will assign all report numbers. As such, audit report numbers should
be obtained from the OMP Technical Assistant.

OA report reference numbers consist of nine digits with hyphens after
the fourth and sixth digits (e.g., 2006-40-001) as follows:

-   The first four digits of the report reference number refer to the
    fiscal year in which the final report is issued. For example, a
    final report dated December 5, 2005 (Fiscal Year 2006), would have
    "2006" as the first four digits.

-   The fifth and sixth digits identify the OA Business Unit and any
    special (alpha) identifier that may be needed for unique reports
    (e.g., DCAA).

-   The seventh, eighth, and ninth digits represent the sequential
    number of the report. **All** OA final reports will be sequentially
    numbered.

OA report reference numbers are clearly printed on final OA report title
pages. They should not be confused with TeamCentral Management
Information System (TCMIS) numbers.

In addition, Inspector General testimony documents will be made
available to the public via the TIGTA Internet Website. As such, these
documents will be accounted for in the OA report numbering sequence. In
these instances, the fifth and sixth digits normally used to represent
the OA Business Unit will be replaced with "OT."

While Inspector General testimony documents will be reflected in the SAR
to the Congress and the TIGTA Monthly Performance Report, they will not
be counted toward the OA's performance goals.

90.19 [Preparing Joint Audit Management Enterprise System Corrective
Action Forms]{.underline}.

The JAMES replaced the Inventory Tracking and Closure System (ITCS) in
FY 2003. This Internet-accessible system has been designed to provide
more informative, timely, and accurate tracking and reporting of audit
recommendations. Each OA Business Unit has a JAMES user with "read-only"
system query capability who can provide feedback on the status of
individual open or closed audit reports.

The JAMES requires that corrective actions applicable to individual
audit recommendations and audit findings be tracked separately using a
JAMES CAF. If a report does not include findings or recommendations, a
JAMES CAF is not required. For follow-up audits, a JAMES CAF is not
required when IRS management took effective corrective action. However,
the auditor must prepare an OMS document showing any financial
accomplishment identified as an outcome measure.

To meet the requirements of the JAMES, auditors should:

-   Clearly identify and number individual recommendations related to
    findings. For example, a recommendation for finding 1 would be
    identified as Recommendation 1, etc.

-   Briefly identify applicable monetary benefits by type.

Information needed for the JAMES should be included in management's
response to our reports and memoranda.

The OA will have responsibility for completing an input document that
will be used to add TIGTA audit report data to the JAMES. The template
for the JAMES CAF is located on the network under **File/New/Audit
Forms/JAMES CAF.dot**. The JAMES CAF template is used for all reports.
When preparing a JAMES CAF for a SBU report, you should not include an
annotation that this is a SBU report. The information provided should
not include any sensitive information and should be as generic as
possible. A JAMES CAF must be completed for each audit report
recommendation. This form must be referenced and reviewed and approved
by both the applicable Director and AIGA. This form will be provided by
the OMP to the OIC for input into the JAMES.

Each JAMES CAF should contain:

-   *Report Identification Bureau* - (Enter Internal Revenue Service.)

-   *Report Title -* (Title of report should be in bold and in caps.)

-   *Report Number -* (The report number in Fiscal Year, Office Number,
    Sequential Number format, e.g., 2009-XX-XXX.)

-   *Report Date -* (Use the date from the report transmittal letter in
    MM/DD/YYYY format.)

-   *TCMIS Number*

-   *Monetary Benefits* - (If potential monetary benefits will not be
    calculated until a follow-up audit is conducted, leave this field
    blank. If a report does not contain findings, yet the audit achieved
    a monetary benefit, such as tax payments received in response to a
    confirmation program, complete Part 1 of the CAF, except for the
    responsible official. Enter the category of benefit and dollar
    amount for each outcome measure that has a monetary benefit. Select
    the category from: Cost Savings-Questioned Costs, Cost
    Savings-Unsupported Costs, Cost Savings-Funds Put to Better Use, or
    Increased Revenue. (Note: Revenue Protection is not reported for
    JAMES purposes.) These measures are defined in
    [**Section**](../chapter300-90.doc#DefinitionsAuditOutcomes)
    **(300)-90.26.1.**

-   *Responsible Official* - (The IRS executive or head of office that
    is charged with consolidating the overall response to the audit
    report. Use the position title, not proper names, and do not name
    the Commissioner as the responsible official.)

-   *Finding Number and Description -* (Enter the finding title in CAPS,
    using the heading from the report. Provide a brief synopsis of the
    finding; however, substitute "TIGTA" and "IRS" for "we" and "they.")
    If this is a repeat finding wherein the corrective action for the
    prior finding has not yet been completed, cite this and provide the
    prior report number and the open finding and corrective action
    numbers. Providing this data will permit IRS' OIC to "subsume" the
    currently open data into the new audit finding.

-   *Recommendation Number and Description -* (Use the exact wording of
    the numbered recommendation from the body of the audit report.)

-   *Bureau visibility* - (This should be "2" for reports issued to the
    IRS.)

-   *Corrective Action Number and Description* - (Management's
    corrective action must be inserted verbatim. If the response is too
    long for the JAMES, the OIC will edit the text. Each recommendation
    requires its own CAF. If there are multiple corrective actions for a
    given recommendation, repeat this section for each action. If there
    is no response received, state this.)

-   *Employee Responsible* - (The title of the function identified in
    management's response that is responsible for implementing the
    specific corrective action. This should be at the Director level
    \[formerly the Assistant Commissioner/ National Director\]. If the
    official responsible for the report identified a function outside of
    the official's area as being responsible, the original function
    remains responsible for each corrective action, even if it requires
    assistance from outside its area, unless it shows the assisting
    function accepted responsibility for the corrective action. Evidence
    includes a memorandum to the responsible official or a response to
    the report from outside the function.)

-   *Original Due Date -* (Use the proposed implementation date in
    MM/DD/YYYY format.)

-   *Office of Audit's Comments* - (Provide a brief summary of the OA's
    disagreement to management's response when applicable.) A checkbox
    should be checked if the comments express disagreement with
    management's response to an audit finding, recommendation, or IRS
    corrective action, and that these comments should be recorded on the
    JAMES.

-   *Repeat Findings* -- If this is a repeat finding for which
    management has not yet completed all applicable corrective actions,
    enter the prior report number, report date, finding number and
    recommendation number.

An electronic copy of each JAMES CAF should be consolidated into a
single file which is then to be provided to the OMP's **\*TIGTA Audit
PGP1** email address within 2 workdays of report issuance.

When a management response is subsequently received after the final
audit report has been issued, the response should be sent to **both the
\*TIGTA Audit Reports** and **\*TIGTA Audit PGP1** email addresses along
with the updated OMS document and JAMES CAF. Initially submitted CAFs
must be updated to include management's corrective action, the proposed
corrective action implementation date, and the responsible management
official. As with the originally submitted CAFs, the OMP will review
updated CAFs only for financial accomplishment data before submitting
the forms to the OIC for input into the JAMES. It is the responsibility
of the respective Business Unit to ensure the submitted CAFs
appropriately and adequately address management's corrective actions and
related implementation efforts.

As part of the semiannual reporting requirements, the Inspector General
Act of 1978 requires Inspectors General to provide a description and
explanation of the reasons for any significant revised management
decision made during the 6-month reporting period. As such, the OA will
comment on IRS management requests to either modify or cancel a specific
corrective action.

To ensure information on IRS management requests to revise corrective
actions is readily available for inclusion in the SAR, the OMP will be
responsible for controlling and coordinating such requests. The OMP will
forward IRS management requests for cancellation/modification of a
corrective action to the appropriate AIGA office for comment. AIGA
offices should return their comments to the OMP, which will draft the
DIGA's response. When approved, the adjustment will be submitted to the
OIC for updating the JAMES.

90.20 [Reports Requiring Sensitive But Unclassified (SBU)
Designations]{.underline}.

The OA will use the SBU designation on audit reports that contain
taxpayer data or information that, if made public, could impose harm to
the IRS' tax administration efforts.

This SBU designation will be used primarily when:

-   A report contains a significant amount of taxpayer data or
    information that, if disclosed, could impair the IRS' tax
    administration efforts and the redaction of such information would
    affect the presentation of the issue to such an extent that the
    reader would not be able to understand the information being
    reported.

-   IRS management requests that the report not be made public because
    it contains sensitive information that affects tax administration
    and the respective AIGA agrees with the IRS' assertion. However, the
    IRS must provide, in writing, a sound business reason for limiting
    access to the report and the AIGA must make the decision to issue
    the report as SBU only.

For reports designated as SBU, the transmittal for both the draft and
final reports should include a separate paragraph explaining why the
report needs restricted access. The current privacy paragraph used in
report transmittals should be replaced with the following paragraph:

> The Treasury Inspector General for Tax Administration has designated
> this audit report as Sensitive But Unclassified pursuant to Chapter
> III, Section 23 of the Treasury Security Manual (TD P 71-15) entitled,
> "Sensitive But Unclassified Information." Because this document has
> been designated Sensitive But Unclassified, it may be made available
> only to those officials who have a need to know the information
> contained within this report in the performance of their official
> duties. This report must be safeguarded and protected from
> unauthorized disclosure; therefore, all requests for disclosure of
> this report must be referred to the Disclosure Branch within the
> Treasury Inspector General for Tax Administration Office of Chief
> Counsel.

In the draft and final report, the report header and footer should
contain the words "Sensitive But Unclassified" on every page. This
phrase will replace the statement, "This report remains the property of
the Treasury Inspector General for Tax Administration (TIGTA) and may
not be disseminated beyond the Internal Revenue Service without the
permission of the TIGTA" on the title page of draft reports.

Reports designated as SBU must have green covers imprinted with the
phrase "Sensitive But Unclassified."

SBU final reports will include the Deputy Chief Financial Officer,
Department of the Treasury, on Appendix III (Report Distribution List).
The IRS Audit Liaison will be included on the distribution list for SBU
reports if he or she is involved in preparing the response.

Only the title page and Appendix II (Major Contributors to This Report)
of each SBU final report will be published on the TIGTA's Internet
Website. Each title page will indicate that the report is for SBU and
will include the following statement:

> The Treasury Inspector General for Tax Administration has designated
> this audit report as Sensitive But Unclassified pursuant to Chapter
> III, Section 23 of the Treasury Security Manual (TD P 71-15) entitled,
> "Sensitive But Unclassified Information." Because this document has
> been designated as Sensitive But Unclassified, it may be made
> available only to those officials who have a need to know the
> information contained within this report in the performance of their
> official duties. This report must be safeguarded and protected from
> unauthorized disclosure; therefore, all requests for disclosure of
> this report must be referred to the Disclosure Branch within the
> Treasury Inspector General for Tax Administration Office of Chief
> Counsel.

If the TIGTA receives a request for any audit report designated SBU, the
Disclosure Branch within the OCC will contact the OMP to obtain the OA's
review and disclosure recommendations. Requests for copies of SBU
reports within the TIGTA must be made by the Director of the requesting
employee to the Director who issued the report. A business reason must
be provided to obtain a SBU report because just as with outside
requestors, such as the Congress, internal requestors must have a "need
to know" the contents of the report. The issuing Director may provide a
copy of the report if the need is justified. SBU reports must be
encrypted when sent in emails.

See Sections [90.19](../chapter300-90.doc#PreparingITCSForms) and
[90.27](../chapter300-90.doc#AuditProjectSummaryandImpactAssess) for
preparing JAMES CAF and OMS documents for SBU reports. See [Section
90.15](../chapter300-90.doc#PreparingReports), Preparing Reports, for
requirements for encrypting and transmitting SBU reports within the
TIGTA.

90.21 [Reports Using the PowerPoint Template]{.underline}.

The PowerPoint report format should be used when the audit topic and
results lend themselves to a less formal presentation of the audit
issues and recommendations. These situations include:

-   On-line audits such as those for the filing season or modernization
    initiatives.

-   Audits with a limited scope.

-   Repeat audits such as those for periodic reviews of Taxpayer
    Assistance Centers or statutorily required audits.

-   Audits where there is an immediate need to report issues to IRS
    management.

The PowerPoint report format must be approved by the respective AIGA.
The normal *GAGAS* and OA reporting standards apply to reports using the
PowerPoint format. This format may be used for SBU reports, follow-up
reports, and internal peer review reports. The normal audit report
template should be used to present audit results that are technical
and/or sensitive in nature and considered highly visible.

The PowerPoint template/presentation can be used when briefing IRS
management on the audit results and recommendations. When requesting a
formal response from IRS management, a draft report package will need to
be prepared. To prepare a draft report package, a transmittal should be
prepared according to the current draft report standards, an Executive
Summary (limited to three pages) should be prepared, and the PowerPoint
presentation should be included as the report body.

To prepare the final report package, the transmittal should be written
in accordance with current final report standards; management's comments
should be incorporated into the PowerPoint presentation and the
Executive Summary where necessary. A copy of management's response
should be scanned into the report as an additional attachment.

The PowerPoint report template is located on the network in PowerPoint
under File/New/Audit Forms/PowerPoint Audit Report Template.pot.
Detailed instructions for inserting PowerPoint presentations into draft
and final audit report files are included in [Exhibit
(300)-90.4](../chapter300-90.doc#ExhibitPowerPointInstructions)

90.22 [Positive Reports]{.underline}.

On occasion, audit tests identify no problems in any areas reviewed.
Depending upon the amount and extent of testing, the OA will usually
issue a positive report or, in some instances, a memorandum. Approvals
and distribution will be the same as for other memoranda and reports.
The positive memorandum or report should include findings containing the
condition and criteria.

-   A memorandum is issued to advise management of results when testing
    has been limited (e.g., survey activities), but there is not enough
    work completed to issue a report.

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-   A report is issued when completed testing is sufficient for
    rendering an opinion on the state of the reviewed activities and no
    problems are identified.

90.23 [Roll-Up Reports]{.underline}.

OA audit emphasis areas are developed in line with the IRS' strategic
objectives and built around defined outcome measures that strike a
balance among revenue, costs, deterrence, and taxpayer burden, rights,
and privacy. Some emphasis areas may contain a broad focus of audit work
that needs to be addressed in a multi-year approach. Other emphasis
areas are more time sensitive and will be completed in a fiscal year or
shorter period.

Roll-up reports may be prepared from issues reported in reports that
supported the emphasis area. The roll-up reports will provide
information concerning an audit emphasis area and include our collective
assessment of key processes, tax administration outcomes, and standards
of control.

The purpose of the roll-up report is not to simply restate all findings
and recommendations of the individual audits in the emphasis area.
Rather it should interpret the overall assessment of how well a program
worked. When rolling the results together and providing an
interpretation, the report will provide a more global picture of the
program rather than what the individual results reported.

90.24 [Financial Statement Audit Reports]{.underline}.

For financial statement audits, refer to **[Section
(](../../300-40/chapter300-40.doc#financialstatementaudits)300)-40.5.1**.

90.25 [Reports on Follow-Up Audits]{.underline}.

Normal audit reporting standards apply to reports prepared on follow-up
audits. A report is issued when the effectiveness of all or selected
corrective actions have been evaluated. If IRS management has not, or
will not, develop a system to measure the effectiveness of certain
corrective actions, we will determine if, when, and how we will follow
up on these situations. If a follow-up audit is conducted, normal
reporting procedures are followed. Since all corrective actions relating
to a previous audit may not be completed concurrently, we will report
interim results as corrective actions are completed and tie all results
together in a report.

Memoranda will be issued during follow-up reviews if warranted by the
significance of the results.

A separate OA report will be prepared for each audit when all corrective
actions have been evaluated. More than one report may be issued
depending on the results of the follow-up audit. The report will:

-   Be completed within 30 workdays after completion of all follow-up
    work.

-   State whether corrective actions were implemented and were
    effective.

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-   Provide additional recommendations, if appropriate.

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-   Include quantifiable benefits, highlight benefits that cannot be
    determined or reliably estimated, and highlight other actions that
    improve government operations but yield no quantifiable benefits.

-   Contain the scope of the follow-up work performed.

Follow-up reports will be approved and distributed the same as other
reports.

90.26 [Identifying and Reporting Outcome Measures]{.underline}.

Audit outcome measures assess the impact or value that audit products
and services have on tax administration or business operations.
Specifically, the OA must show the degree to which its recommended
corrective actions will alleviate reported conditions, which can either
improve existing operations or prevent an adverse impact. These measures
should be quantifiable to the maximum extent possible, linked directly
to the audit finding based on transaction or case analyses or
statistical projections, and expressed in monetary or other measurable
units such as hours spent in performing an activity or units of
production.

If specific transactions cannot be identified during the audit, then the
audit report should provide perspective of the findings' significance by
describing the value of the entity, operation, or process audited. For
example, if an audit identifies a weak control environment, the audit
report should identify the number of items at risk, such as dollars or
taxpayer accounts, when describing the audit finding.

Potential audit outcome measures should be identified during the risk
assessment process described in
[**Section**](../../300-50/chapter300-50.doc#MacroRiskAssessment)
**(300)-50.4**. The outcome measures are further refined during the
planning of an audit. The audit plan should include a description of the
potential outcome measure(s), including the data and tests needed to
support projections and calculations. When practical, the OA should use
its EDP capabilities to calculate quantifiable audit outcomes.
Professional judgment should be exercised when evaluating the potential
benefits of the audit outcome against the audit costs to quantify such
an outcome. In most instances, the audit planning will identify ways
(either through the IRS' systems or ad hoc analyses) to cost-effectively
derive an audit outcome that is based on sound, relevant, and competent
audit evidence.

Ideally, outcome measures contain all transactions meeting the condition
described in a reportable finding. However, OA personnel must consider
the time and cost needed to identify all relevant transactions when
developing audit tests. The following table lists the hierarchy that
should be considered when developing reportable outcome measures:

-   Identify all adverse transactions in the relevant universe. This
    usually will result from analysis completed through the use of
    computer extracts.

-   Use a statistically valid sample to project/approximate the number
    of adverse transactions. Statistical methods are used when it is not
    practical or cost effective to identify all actual transactions.
    However, care must be exercised to ensure that the sampling is
    properly conducted. Specifically, the sampling plan must identify
    the proper universe and an appropriate sampling method. Projections
    can be made only to the population from which the sample was
    extracted.

-   Estimate the outcome measures based on known, reliable data. For
    example, when determining the additional revenue that may be gained
    if additional staff is hired to conduct tax examinations, IRS data
    can be used to approximate the increased tax collections based on
    dollars assessed per hour and the rate at which taxes are collected
    after an assessment is made.

-   Use a judgmental sample if time or cost constraints preclude the use
    of the first three methods. However, the reportable outcome measure
    is limited to the actual number of transactions identified during
    the testing.

Regardless of the methods used, applicable audit outcomes should be
included in the audit report to facilitate understanding with the
auditee. The methodology and calculations used to develop the outcomes
should be appropriately disclosed in Appendix IV.

The audit report should clearly identify whether an OA outcome is
expressed as an actual or potential audit impact or value.

-   [Actual]{.underline} outcomes should be based on historical
    evidence, such as the dollar results of a recovery program.

-   [Potential]{.underline} outcomes are based on projection of
    historical results to future events, provided we are relying on
    sufficient, competent, and reliable evidence and procedure and have
    properly identified the population.

-   Most outcomes will initially fall under the potential category since
    the corrective action would not have taken place at the time of the
    final audit report or our audit tests and data were compiled before
    the corrective action was implemented.

-   The Inspector General (IG) community currently is not required to
    convert potential to actual (except for questioned costs disallowed
    versus not disallowed).

When recommending additional or alternative programs or procedures, the
auditor should consider the additional costs of such programs or
procedures and reduce any benefits accordingly.

-   For example, if the OA recommends a recovery program to notify
    taxpayers of potential unclaimed credits that they are entitled to,
    the auditor should reduce the calculated taxpayer entitlements by
    the cost of the additional notices and staff needed to execute the
    recovery program. This will serve to ensure that recommendations are
    cost effective or that the OA has at least recognized the costs and
    determined that the intangible benefits (such as goodwill) are more
    important than the costs.

-   As with any audit procedure, we should balance the additional time
    and audit effort needed to determine these alternative program costs
    with the added value of making this determination. If we are unable
    to calculate such costs, the auditor should, at a minimum, disclose
    in the audit report that additional costs may be incurred for
    alternative programs or procedures.

Some benefits extend beyond the reporting period in which the corrective
action is implemented. This often occurs when making systemic
recommendations, such as increases to tolerances below which taxpayers
or the IRS no longer have to file or process a form. Currently, the IG
community does not have a standard for how many years these recurring
benefits can be claimed as an audit outcome. Recurring benefits should
be claimed up to the lesser of 5 years or the life of the benefit. The
auditor should use present values to state the multiple-year benefit in
current dollars or units.

90.26.1 [Definitions and Examples of the Eight Audit
Outcomes]{.underline}.

[Increased Revenue/Revenue Protection]{.underline}

-   [Definition]{.underline}: Assessment or collection of additional
    taxes (increased revenue) or proper denial of claims for refund,
    including recommendations that prevent erroneous refunds or efforts
    to defraud the tax system (revenue protection). This measure should
    be expressed in both dollars and number of taxpayer accounts
    affected.

-   [Example]{.underline}: The IRS could collect more than \$436 million
    in additional revenue over 5 years if it uses a risk-based approach
    to selecting high-priority returns rather than trying to work all
    delinquent returns in a low-yield program (Increased Revenue).

-   [Example]{.underline}**:** The IRS erroneously allowed taxpayers to
    receive the benefit of both the tuition/fees deduction and education
    which potentially lowered the tax for these individuals by \$3
    million (Revenue Protection).

[Cost Savings]{.underline}

-   [Definition]{.underline}: Reductions in the acquisition, deployment,
    or price for labor, real property, equipment, supplies, or services,
    expressed in either dollars (preferred) or unit counts. The
    Inspector General Act of 1978, as amended, requires further
    breakdowns of this category to be included in the SAR. Cost savings
    consist of:

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-   [Questioned Costs]{.underline}

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-   Costs that cannot be reimbursed because they represent a violation
    of law, regulation, or contract. For example, a vendor charged
    travel above the reimbursement rate allowed by the contract and
    Federal travel regulations. The outcome measure is derived by
    computing the difference between the costs charged and the allowable
    amount.

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-   The expenditure is not reasonable or necessary to accomplish the
    intended purpose. For example, the IRS reimbursed a contractor
    \$3,000 for hardship travel pay. The Defense Contract Audit Agency
    found that the contractor's travel policy was unreasonable and the
    cost expense was disallowed.

-   Questioned costs have an additional sub-category called [unsupported
    costs]{.underline}, which are shown separately in the SAR.
    Unsupported costs are costs that are appropriate but for which the
    vendor cannot provide proof that the cost was incurred. For example,
    the vendor charges for supplies as stipulated in the contract but
    does not have receipts or other evidence to support the transaction.

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-   [Recommendations That Funds Be Put to Better Use]{.underline}. Funds
    could be used more efficiently or effectively if management took
    actions to implement recommendations, including:

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-   Reductions in outlays.

-   Deobligation and reprogramming of funds from programs or operations.

-   Costs not incurred by implementing improvements to operations.

-   Ending a program.

-   Avoidance of unnecessary expenditures identified during pre-award
    contract reviews.

-   Prevention of erroneous payments of the following refundable
    credits: Earned Income Tax Credit (EITC) and Child Tax Credit.

-   Any other savings that are specifically identified.

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-   [Example:]{.underline} Improper calculation of office space led to
    more than \$193 million of unneeded rent costs.

-   [Example]{.underline}: Refundable credits, such as the EITC, are
    paid to taxpayers even if there are no income taxes to offset the
    credit. Congress appropriates refundable credits in the budget.

[Taxpayer Rights and Entitlements]{.underline}

-   [Definition]{.underline}:

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-   [Rights]{.underline} concern the protection of due process that is
    granted to taxpayers by law, regulation, or IRS policies and
    procedures. These rights most commonly arise in the performance of
    filing tax returns, paying delinquent taxes, and examining the
    accuracy of tax liabilities.

-   [Entitlements]{.underline} involve the acceptance of claims for and
    issuance of refunds relating to instances when taxpayers have a
    legitimate assertion to overpayments of tax, expressed either in
    dollars or units such as the number of taxpayer accounts.

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-   [Example 1]{.underline}: Determining the number of taxpayer accounts
    where notices of Federal tax liens were filed improperly (the
    taxpayer had already fully paid the account, the supervisor did not
    approve the lien filing as required, etc.). Improper lien filings
    can adversely affect a taxpayer's financial profile and specifically
    violate a taxpayer's rights.

-   [Example 2]{.underline}: Not taking into account during the
    underreporter program those taxpayers who did not claim all the
    withholding they were apparently entitled to, thus denying refunds
    to those taxpayers.

[Taxpayer Burden]{.underline}

-   [Definition]{.underline}: Decreases by individuals or businesses in
    the need for, frequency of, or time spent on contacts, record
    keeping, preparation, or costs to comply with tax laws, regulations,
    and IRS policies and procedures.

-   [Example]{.underline}: As a result of the implementation of a new
    threshold, 1.7 million taxpayers no longer have to file a complex
    form with their tax return when claiming small amounts of foreign
    income tax credit on certain types of income, thus saving 10.2
    million hours of burden. \[Note: The IRS also saves transcription
    time, error correction, etc., which could also be calculated and
    included in cost savings.\]

[Taxpayer Privacy and Security]{.underline}

-   [Definition]{.underline}:

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-   [Privacy]{.underline} concerns the protection of taxpayer financial
    and account information.

-   [Security]{.underline} involves related processes and programs to
    provide protection of tax administration and account information.

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-   [Example]{.underline}: Number of taxpayer accounts vulnerable to
    unauthorized disclosure or access because of electronic files left
    unprotected on an unsecured personal computer.

[Protection of Resources]{.underline}

-   [Definition]{.underline}: Safeguarding human and capital assets,
    used by or in the custody of the organization, from inadvertent or
    malicious injury, theft, destruction, loss, misuse, overpayment, or
    degradation.

-   [Example]{.underline}: Value of sensitive investigative equipment
    vulnerable to loss or theft due to poor controls over procuring,
    recording, and storing of Criminal Investigation Division assets.

[Inefficient Use of Resources]{.underline}

-   [Definition]{.underline}: The value of efficiencies gained from
    recommendations to reduce cost while maintaining or improving the
    effectiveness of specific programs. These cost savings would not
    lower the total operational cost of the agency; rather, the
    resources saved will be available to other IRS programs.

-   [Example]{.underline}: Management agrees to automate a research
    function, thus making staff available for other programs. While the
    IRS would continue to incur the labor costs, the staff would be
    reassigned to another program of value to the agency.

-   The value of internal control weaknesses that resulted in an
    unrecoverable expenditure of funds by the IRS with no tangible or
    useful benefit in return. The measure will place a monetary value on
    the shortcomings of past management decisions as part of TIGTA's
    recommendations to correct the systemic weaknesses.

-   [Example]{.underline}: The IRS spent more than \$3 million on a
    database that was not used by its employees, who relied instead on
    information available from other sources. While the IRS would not be
    able to recover the costs of the database, following OA's
    recommendations will help management improve its process for more
    precisely determining its needs in the future.

[Reliability of Information]{.underline}

-   [Definition]{.underline}: Ensuring the accuracy, validity,
    relevance, and integrity of data, including the sources of data and
    the applications and processing thereof, used by the organization to
    plan, monitor, and report on its financial and operational
    activities.

-   [Example]{.underline}: The value, expressed in units or percentages,
    of an overstatement in the number of customer service telephone
    calls answered in a given fiscal year, thus distorting a key
    performance measure that is reported to the Congress. \[Note: If
    this resulted in procuring unnecessary extra phone lines or
    equipment, we may also have potential cost savings.\]

Note: Protection of resources and reliability of information measures
will be expressed as an absolute value (i.e., without regard to whether
a number is positive or negative) of overstatements or understatements
of amounts recorded on the organization's documents or systems.

90.27 [Outcome Measure Summary Document]{.underline}.

Quantified outcome measures must be reported on a separate OMS document.
This document is designed both to capture the impact of the TIGTA on tax
administration and to facilitate preparation of the monthly performance
report and the Inspector General's SAR.

The OMS document must be submitted with the **draft** report package
when it is forwarded for review. The OMP's review will ensure that the
outcome measures reflected in the report are accurately presented,
classified, and quantified in the OMS document, as well as ensure
consistency in the reporting of outcomes. An updated, referenced OMS
document must also be submitted with the **final** report and again, if
applicable, when a management response is received after a final report
has been issued. This will assist the OMP in its compilation of report
data for the monthly performance report and SAR.

The preparer must ensure that the OMS document is complete and accurate.
The information captured in the document should also be reflected in the
corresponding audit report. When preparing an OMS document for a SBU
report, do not include an annotation that this is a SBU report. The
information provided should not include any sensitive information and
should be as generic as possible.

For guidance on preparing the OMS when IRS management disagrees with
some or all of the outcome measures presented in the report, please
refer to **[Section
(300)-90.12.11](../chapter300-90.doc#outcomedisagree).**

There may be a rare instance in which a reportable outcome is not
included in the audit report. For example, during audit planning, an
analysis of a computer download identifies a condition outside the audit
scope that is referred to management. If management takes action,
include the resulting measure in the OMS document and annotate the
circumstances relevant to the outcome so appropriate footnotes can be
added to the SAR.

The OMS document, and any subsequent updates thereto, must be referenced
and approved by the respective AIGA prior to submission. Referencers
must ensure that the document is fully supported by the facts developed
during the audit and that the outcome measures are consistently
presented in the OMS document and the audit report.

The OMS document includes two tables that are used to describe the
quantifiable outcome measures: "Table I: Description Of Monetary
Measures;" and "Table 4: Description Of Other Measures." Each table
identifies the finding and provides detailed information for each
measure. The qualitative value of the audit is not required to be
included in the OMS document. Therefore, the OMS document should be
submitted to the OMP only when an audit results in the identification of
quantifiable outcome measures.

A follow-up audit may describe a positive finding and still yield
quantifiable measures. This occurs when auditors determine that
management's corrective action was effective and resulted in an actual
benefit. An OMS document should be prepared and include the quantifiable
measures.

An OMS document should also be submitted at the conclusion of any other
project, such as EDP requests or integrity assignments, which results in
an outcome measure. These data will be used in the SAR.

A template for the OMS document is located on the network under
**File/New/Audit Forms/Outcome Measure Summary Template.dot**.

90.28 [OA Process for Following Up on Audit Reports with Questioned
Costs and/or Recommendations That Funds Be Put to Better
Use]{.underline}.

The OA needs to monitor the status of management action on "questioned
costs" and/or recommendations that "funds be put to better use" when
these issues have not been resolved during the prior semiannual
reporting period. All unresolved issues related to monetary measures
must be reported in future SARs. This requires that the OA ensure IRS
management has made a "management decision" for all monetary measures.
The term "management decision" means the evaluation by management of the
findings and recommendations included in an audit report and the
issuance of a final decision concerning its response to such findings
and recommendations, including actions concluded to be necessary.

To ensure that all "open" findings with monetary measures are monitored
for resolution, the OMP will use a spreadsheet that will identify
"unresolved" monetary measures issued from prior semiannual reporting
periods. This spreadsheet will be provided to the AIGAs on a periodic
basis so that they can ensure the respective audit teams follow up with
IRS management. It is not necessary for management to have completed the
corrective action. The open monetary benefit-related issues are
considered resolved when management decides to take an action on the
recommendations.

When an audit team determines that a "management decision" has been
reached, "Table 2: Management Decision On Questioned Costs" of the OMS
document should be updated to identify the value of disallowed costs
and/or the value of costs not disallowed for audit reports with
questioned costs.

For audit reports with recommendations that funds be put to better use,
"Table 3: Management Decision On Funds Put To Better Use" of the OMS
document should be updated to show the value of recommendations agreed
to by management based on management or legislative action, as well as
the value of recommendations not agreed to by management. This
information must be referenced and submitted through the respective AIGA
to the **\*TIGTA Audit Reports** email address. The OMS document should
also be annotated to indicate that changes have been made to reflect a
"management decision" regarding monetary measures.

90.29 [OA Process for Tracking Erroneous/Improper Payments Identified in
Audit Reports]{.underline}.

The OA will track erroneous/improper payments identified during the
course of audit work. Since erroneous payments can span several outcome
measure categories\
(e.g., increased revenue/revenue protection, taxpayer rights and
entitlements, questioned costs, etc.), this will not be a separate
outcome measure category. Rather, erroneous/improper payments actually
made by the IRS will be annotated on the respective audit's OMS document
and tracked by the OMP.

Erroneous or improper payments are those that should not have been made
or were made for an incorrect amount. The GAO defines improper payments
to include "inadvertent errors such as, duplicate payments and
miscalculations; payments for unsupported or inadequately supported
claims; payments for services not rendered; payments to ineligible
beneficiaries; and payments resulting from outright fraud and abuse by
program participants and/or Federal employees."[^3] Furthermore, the OMB
notes that covered payments include "overpayments and underpayments made
by the Federal government, its direct contractors...or other grant
recipients administering Federal programs."[^4]

90.29.1 [Procedures for Identifying Erroneous/Improper
Payments]{.underline}. The OMS document contains a check box entitled
"Erroneous/Improper Payment Identified." The audit team will check this
box to indicate that the audit identified erroneous/improper payments
made by the IRS. In addition, the "Additional Comments" box in the OMS
document should include details of the erroneous/improper payments so
the OMP can track these payments. Comments should identify the outcome
measure that contains the erroneous/improper payment, the exact amount
of the payment, and any necessary explanation of the nature of the
payment.

Erroneous/improper payments must have been an amount actually overpaid
or underpaid to taxpayers, contractors, employees, or other recipients.
For purposes of reporting erroneous/improper payments, the check box
should not be checked if the OA's finding prevented the IRS from making
improper payments or if the OA could not determine if the
erroneous/improper payments were actually made (potential outcome
measures).

Examples of erroneous/improper payments are provided below.

-   [Revenue Protection]{.underline}

> Erroneous refunds that represent an overpayment actually received by a
> taxpayer. For example, refunds actually received by taxpayers for a
> tax credit that they were not eligible for. The cause of the
> overpayment could be taxpayer fraud or ineffective controls over
> return processing.
>
> The Department of the Treasury is specifically tasked with reporting
> on tax refunds issued on improperly claimed or unsupported EITCs.

-   [Taxpayer Rights and Entitlements]{.underline}

> Erroneous refunds that represent underpayments actually received by
> taxpayers. For example, understated refunds that were actually sent to
> taxpayers because the IRS used an incorrect rate for computing the
> credit.

-   [Questioned Costs]{.underline}

> Payments made to a contractor or employee that were found to include
> unsupported or unnecessary expenses, violated the terms of the
> contract, or were not permitted by law and regulation. The amount
> could be overstated or understated. Further, the erroneous payment
> could be due to fraud or a simple miscalculation.
>
> Examples include payments made to a contractor who submitted an
> invoice that contained the wrong rates in the contract or travel
> expenses paid to an employee for a trip that was not actually taken.

[Exhibit (300)-90.1]{.underline}

[Indexed and Referenced Document Example]{.underline}

**The following information is an excerpt from a draft report
transmittal.**

Attached for your review and comments are two copies of the subject
draft audit report. The overall objective of this review was to
determine whether statute expiration dates are properly administered by
the XYZ District.

[Summary]{.underline}

Federal statutes generally limit the period of time in which the
Internal Revenue Service (IRS) can assess new taxes (3 years), and can
collect taxes owed (10 years). To administer these processes, the IRS
identifies assessment statute and collection statute expiration dates
(ASEDs and CSEDs) to show when assessment and collection efforts must
legally cease.^1^

Our tests showed that XYZ District management effectively ensured that
the Government's interest was protected in making tax assessments and
collecting taxes owed within the statutory time limits. We identified no
erroneously expired assessment or collection statutes during the period
reviewed.^2^

Examination and Collection field groups followed procedures that ensured
imminent statutes were adequately protected.^3^ Specifically, managers
effectively used the Examination Table 4.1 "List of Returns With Statute
Date Pending" and the Collection "Delinquent Account Investigation
Listing" (DIAL) to monitor the handling of the listed imminent statute
cases.^4^ Managerial oversight ensured that cases with an imminent
statute expiration were either closed, or an extension of the statutory
period of assessment and/or collection was secured from the taxpayer.^5^

We noted several areas in which controls could be strengthened to ensure
that:

-   Imminent Examination (page 3) and Collection (page 5) ASED cases are
    more timely and completely resolved to reduce last second case work,
    and improve customer service.^6^

-   Adequate separations of duties exist in the authorizing of
    Examination employees with Integrated Data Retrieval System (IDRS)
    update command codes (page 6).^7^

Closed Collection case files shipped to support functions are timely
received, and properly handled (page 7).^8^

[Exhibit (300)-90.1 (cont'd)]{.underline}

[Indexed and Referenced Document Example]{.underline}

#  {#section-2 .unnumbered}

## TIGTA -- Audit Reporting Document Reference Page

**Referencer:** *[Lname, Fname]{.underline}* **Lead Auditor:** *[Lname,
Fname]{.underline}*

**Audit Manager:** *[Lname, Fname]{.underline}* **Director:** [*Lname,
Fname*]{.underline}

Date Referenced: October 30, 2003

**^1^** [C.2.PS.]{.underline} ***Ref Comment: ... Please indicate on
workpaper cited the support for the IRS' identification of assessment
statute and collection statute expiration dates (ASEDs and CSEDs) to
show when assessment and collection efforts must legally cease. Mgr/Lead
Response: ... See workpapers C-Crit/8 p.1, 2; E-Vol 1 CRIT/2 p.4 for
further support. ***

**^2^** [A.1.PS.]{.underline}, ADMIN/24 ***Ref Comment: Workpaper OV/5
cites workpapers OV/2p.5 and OV/4p.4 for additional support for the
statement that I.A. identified no erroneously expired assessment or
collection statutes during the period reviewed. The spreadsheets
contained in workpapers OV/2p.5 and OV/4p.4 show expired ASEDs and
CSEDs.*** **Mgr/Lead Response: Statement regarding fact that the indexed
analysis detail expired statutes is true. However, report states
"erroneously expired." IA notes added to analysis OV/2 p.5 & OV/4 p.4 to
clarify that the statutes expired after the TFRP was assessed and after
accounts were closed currently not collectible.** ******

**^3^** [A.1.PS.]{.underline} ******

**^4^** [B.3.PS.]{.underline} ******

**^5^** [C.3.PS.]{.underline}, [B.5.PS.]{.underline} ***Ref Comment:
Referencer cannot locate support from the spreadsheets OV/2 p.5 and OV/4
p.4 for the statement that managerial oversight ensured that cases with
imminent statutes were closed or an extension was secured from
taxpayer.*** **Mgr/Lead Response: IA notes added to workpapers to
provide clarification.** ******

**^6^** ***Ref Comment: ...*** ***No cross-references.*** **Mgr/Lead
Response: ... See ADMIN/23 & OV/7** ***Ref Comment: ...*** ***Workpaper
OV/7 does not provide support about ASED cases are to be more timely and
completely resolved to reduce last second case work and improve customer
service.*** **Director Response: ... Instructed audit staff to research
for appropriate support. Resolution -- OV/9 pages 1-3 provide adequate
support.**

**^7^** E-Vol 7, [PA1.g.]{.underline} ******

**^8^** [B.3.PS]{.underline}.; Vol 3 II-A-1/4; Vol 3 II-A-1/5; Vol 3
II-A-1/3 ******

**[Exhibit (300)-90.2]{.underline}**

# [Examples of Information That Should Not Be Included in Inspector General Reports]{.underline} {#examples-of-information-that-should-not-be-included-in-inspector-general-reports .unnumbered}

-   Taxpayer identity information including data such as name, Social
    Security Number, Employer Identification Number, mailing address,
    and any other unique identifiers associated with that taxpayer.

-   Return information such as liability amounts; tax type and status;
    the nature, source, or amount of income, receipts, deductions,
    exemptions, credits, liabilities, net worth, tax liability, tax
    withheld, deficiencies, overassessments, or tax payments.

-   Information about whether a taxpayer's return was, is being, or will
    be examined or subject to other investigation or processing.

-   Statements which could compromise taxpayer privacy (e.g., a large
    dollar taxpayer in the X District).

-   Document Locator Numbers.

-   Informant names or other unique identifiers.

-   Any items that describe criminal law enforcement techniques which,
    if disclosed, might hinder law enforcement activities, including the
    nature and direction of the government's case, type of evidence
    relied upon, specific transactions being investigated, and scope and
    limits of the government's investigation.

-   Recommendations of specific wording to change law or law tolerances.

# Information concerning tolerance levels the IRS uses in applying the tax laws (e.g., an income tax examination will result in a "no change" if the tax due is less than \$XX, the RWMS cutoff scores for individual districts, the cutoff dollar threshold for processing certain information returns). 

-   Sensitive computer command codes and their use (e.g., IDRS command
    codes that provide employees the capability to update information on
    the AIMS) and information contained in data processing manuals.

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```
-   Standards used for the selection of returns for examination, or data
    used for determining such standards, including scoring formulas, and
    the DIF scores of tax returns.

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```
-   Information contained in the Law Enforcement Manual**.**

**[Exhibit (300)-90.2 (cont'd)]{.underline}**

# [Examples of Information That Should Not Be Included in Inspector General Reports]{.underline} {#examples-of-information-that-should-not-be-included-in-inspector-general-reports-1 .unnumbered}

-   Information related to the IRS' data processing practices and
    procedures that may allow a taxpayer to alter his or her filing
    practices or avoid the payment of taxes.

-   Tax treaty information with foreign countries.

-   Information concerning Federal contractors including trade secrets
    and confidential business information. A trade secret is a
    commercially valuable plan, formula, process, or device.
    Confidential business information is any information that would
    likely harm the competitive position of the company if the
    information was publicly released. Examples of confidential business
    information include a company's marketing plans, profits or costs,
    computer software, and operating manuals.

-   Identification of employee information below the senior official
    level (generally defined as heads of office). Personal identifiers
    even of senior officials, such as Social Security Numbers, should be
    withheld on privacy grounds.

-   Grand Jury information.

-   Bank Secrecy Act information (for Currency Transaction Reports
    (CTRs) and Currency and Monetary Instrument Reports (CMIRs). See
    generally 31 U.S.C. § 5319 (1998).

-   Information that could compromise the physical security of IRS
    personnel and facilities.

**[Exhibit (300)-90.3]{.underline}**

[Citations for Commonly Used Legal Authorities]{.underline}

-   Age Discrimination in Federally Assisted Programs Act, 42 U.S.C.A.
    §§ 6101-6107 (West 2003).

-   Age Discrimination in Employment Act of 1967 (ADEA), 29 U.S.C. §§
    621-634 (2000).

-   Americans With Disabilities Act of 1990 (ADA), 42 U.S.C. §§
    12101-12213 (2000).

-   American Jobs Creation Act of 2004, Pub. L. No. 108-357, 118 Stat.
    1418.

-   Bank Secrecy Act, Pub. L. No. 91-508, 84 Stat. 1114 to 1124 (1970)
    (codified as amended in scattered sections of 12 U.S.C., 15 U.S.C.,
    and 31 U.S.C.). Regulations for the Bank Secrecy Act, and other
    related statutes, are 31 C.F.R. §§ 103.11-103.77 (2007).

-   Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, 109
    P.L. 8, 119 Stat. 23.

-   Chief Financial Officers Act of 1990, Pub. L. No. 101-576, 104 Stat.
    2838 (codified as amended in scattered sections of 5 U.S.C., 31
    U.S.C., and 42 U.S.C.).

-   Civil Rights Act of 1964, Pub. L. No. 88-352, 78 Stat. 241 (codified
    as amended in scattered sections of 2 U.S.C., 28 U.S.C., and 42
    U.S.C.).

-   Clinger-Cohen Act of 1996 (Federal Acquisition Reform Act of 1996)
    (Information Technology Management Reform Act of 1996), Pub. L. No.
    104-106, 110 Stat. 642 (codified in scattered sections of 5 U.S.C.,
    5 U.S.C. app., 10 U.S.C., 15 U.S.C., 16 U.S.C., 18 U.S.C., 22
    U.S.C., 28 U.S.C., 29 U.S.C., 31 U.S.C., 38 U.S.C., 40 U.S.C., 41
    U.S.C., 42 U.S.C., 44 U.S.C., 49 U.S.C., 50 U.S.C.).

-   Computer Security Act of 1987, Pub. L. No. 100-235, 101 Stat.
    1724 (1988) (codified as amended in scattered sections of 15 U.S.C.
    and 40 U.S.C.).

-   Economic Growth and Tax Relief Reconciliation Act of 2001, Pub. L.
    No. 107-16, 115 Stat. 38.

-   Employee Retirement Income Security Act of 1974 (ERISA), Pub. L. No.
    93-406,\
    88 Stat. 829 (codified as amended in scattered sections of 5 U.S.C.,
    18 U.S.C.,\
    26 U.S.C., 29 U.S.C., and 42 U.S.C.).

-   Energy Policy Act of 2005, 109 P.L. 58, 119 Stat. 594.

**[Exhibit (300)-90.3 (cont'd)]{.underline}**

[Citations for Commonly Used Legal Authorities]{.underline}

-   Federal Acquisition Regulation (FAR), 48 C.F.R. ch. 1 (2006).

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```
-   Federal Employees' Compensation Act, ch. 458, 39 Stat. 742 (1916)
    (codified as amended in scattered sections of 1 U.S.C., 5 U.S.C.,
    and 18 U.S.C.).

```{=html}
<!-- -->
```
-   Federal Financial Management Improvement Act of 1996, Pub. L. No.
    104-208, 110 Stat. 3009.

```{=html}
<!-- -->
```
-   Federal Information Security Management Act (FISMA), Pub. L. No.
    107-347, Title III, 116 Stat. 2946 (2002).

-   Federal Managers' Financial Integrity Act of 1982, 31 U.S.C. §§
    1105, 1113, 3512 (2000).

-   Federal Unemployment Tax Act (FUTA), 26 U.S.C. A. §§ 3301-3312 (2002
    & 2006 Supp.).

-   Freedom of Information Act (FOIA), 5 U.S.C.A. § 552 (West 2007).

-   Government Performance and Results Act of 1993 (GPRA), Pub. L. No.
    103-62,\
    107 Stat. 285 (codified as amended in scattered sections of 5
    U.S.C., 31 U.S.C., and 39 U.S.C.).

-   Improper Payments Information Act of 2002, Pub. L. No. 107-300, 116
    Stat. 2350.

-   Inspector General Act of 1978, 5 U.S.C.A. app. 3 (West 2007).

-   Internal Revenue Code: In citations to the Internal Revenue Code
    (the Code), "26 U.S.C." may be replaced with "I.R.C." A provision of
    the Code may be cited simply as "I.R.C. § ##." Note that no date
    need be used when using this cite form for [*current*]{.underline}
    versions of the Code. However, when reference is made to a prior
    version of the Code, a date must be used. For example, if you stated
    \"I.R.C. § 6103 is a confidentiality provision that prohibits the
    disclosure of tax returns and return information,\" a legal citation
    is required in either of the following formats: I.R.C. § 6103 (no
    date if quoting the current Code) **or** 26 U.S.C. § 6103 (date).
    When reference is made to the entire I.R.C., a legal citation is
    [not required]{.underline}. For example, if you stated, \"The
    Internal Revenue Code (I.R.C.) contains all the laws related to the
    payment of taxes in the United States,\" a legal citation would not
    be required.

**[Exhibit (300)-90.3 (cont'd)]{.underline}**

[Citations for Commonly Used Legal Authorities]{.underline}

-   Internal Revenue Service Restructuring and Reform Act of 1998 (RRA
    98),\
    Pub. L. No. 105-206, 112 Stat. 685 (codified as amended in scattered
    sections of\
    2 U.S.C., 5 U.S.C. app., 16 U.S.C., 19 U.S.C., 22 U.S.C., 23 U.S.C.,
    26 U.S.C.,\
    31 U.S.C., 38 U.S.C., and 49 U.S.C.).

-   Job Creation and Worker Assistance Act of 2002, Pub. L. No. 107-147,
    116 Stat 21 (codified in scattered sections of 26 U.S.C., 29 U.S.C.,
    and 42 U.S.C.).

-   Jobs and Growth Tax Relief Reconciliation Act of 2003, Pub. L. No.
    108-27, 117 Stat. 752.

-   Katrina Emergency Tax Relief Act of 2005, Pub. L. No. 109-73, 119
    Stat. 2016 (to be codified in scattered sections of 26 U.S.C.).

-   Omnibus Taxpayer Bill of Rights (TBOR), Pub. L. No. 100-647, 102
    Stat. 3730 (1988) (codified as amended in scattered sections of 5
    U.S.C. and 26 U.S.C.).

-   Privacy Act of 1974, 5 U.S.C. § 552a (2000).

-   Rehabilitation Act of 1973, Pub. L. No. 93-112, 87 Stat. 355
    (codified as amended in scattered sections of 15 U.S.C., 20 U.S.C.,
    29 U.S.C., 36 U.S.C., 41 U.S.C., and\
    42 U.S.C.).

-   Tax Reform Act of 1986, Pub. L. No. 99-514, 100 Stat. 2085 (codified
    as amended in scattered sections of 16 U.S.C., 19 U.S.C., 25 U.S.C.,
    26 U.S.C., 28 U.S.C., 29 U.S.C., 42 U.S.C., 46 U.S.C., and 49
    U.S.C.).

-   Taxpayer Bill of Rights 2 (TBOR2), Pub. L. No. 104-168, 110 Stat.
    1452 (1996) (codified as amended in scattered sections of 26
    U.S.C.).

-   Taxpayer Bill of Rights 3 (TBOR3), Pub. L. No. 105-206, 112 Stat.
    726 (1998) (codified as amended in scattered sections of 26 U.S.C.).

-   Taxpayer Browsing Protection Act, 26 U.S.C.A. §§ 7213, 7213A, 7431
    (West 2006).

-   Taxpayer Relief Act of 1997, Pub. L. No. 105-34, 111 Stat. 788
    (codified as amended in scattered sections of 5 U.S.C., 19 U.S.C.,
    26 U.S.C., 29 U.S.C., 31 U.S.C., 42 U.S.C., and 46 U.S.C. app.).

**[Exhibit (300)-90.3 (cont'd)]{.underline}**

> [Citations for Commonly Used Legal Authorities]{.underline}

-   Title IX of the Education Amendments of 1972, 20 U.S.C.A. §§
    1681-1688 (West Supp. 2006).

-   Treasury and General Government Appropriations Act, 2002, Pub. L.
    No. 107-67, 115 Stat. 514 (2001).

-   Treasury Regulations are cited "Treas. Reg. § 301.6103 (date)." For
    multiple, consecutive sections of the regulations (or an Act) cite
    as "Treas. Reg. §§ 301.6103 -- 6104 (date)."

[Exhibit (300)-90.4]{.underline}

[Instructions for Inserting PowerPoint Presentations into Audit
Reports]{.underline}

# **[Issuance of Draft Reports]{.underline}** {#issuance-of-draft-reports .unnumbered}

The best method of getting the PowerPoint (PPT) presentation into the
draft report is to insert it as an "Object" at the end of the Executive
Summary. If the PPT presentation is inserted as an "Object," it can
either be run as a slide show or opened to edit or insert comments
(during the pre-issuance report review process). The following steps
should be used when inserting the PPT presentation into the audit
report:

-   Ensure the "Show/Hide" button is depressed in the tool bar.

-   At the end of the Executive Summary, insert a break by selecting
    "Insert" from the Menu bar, selecting "Break," and choosing "Next
    Page" from the choices.

-   Ensure the cursor is at the beginning of where the "Next Page" break
    was inserted, select "Insert" from the Menu bar, then select
    "Object."

-   Select the "Create from File" tab, then click on the "Browse" button
    to find the PPT presentation file. Make sure the "Display as Icon"
    box is checked.

-   Highlight the PPT presentation file in the "Browse" window and
    select "OK." The PPT icon should appear at the end of the Executive
    Summary.

-   Once the PPT icon is inserted, double-click on the icon to run the
    PPT slide show or right-click on the icon to bring up a menu that
    allows you to edit the presentation or insert comments. When editing
    the presentation, it is recommended that you use textboxes or a
    different color for the text, as PPT does not have a "Track Changes"
    feature.

-   This version of the audit report should be saved and used by each
    level of management (the Audit Manager, Director, AIGA, and OMP) in
    the review process. Once changes have been made, this same version
    should be saved again and submitted to the DIGA for approval and
    signature.

Once the draft report has been signed by the DIGA, OMP staff will ensure
an electronic version is provided to IRS Legislative Affairs personnel
as well as to the respective OA Business Unit. The Audit Manager should
ensure the audit team saves this as the final version of the draft
report.

**[Exhibit (300)-90.4 (cont'd)]{.underline}**

# [Instructions for Inserting PowerPoint Presentations into Audit Reports]{.underline} {#instructions-for-inserting-powerpoint-presentations-into-audit-reports .unnumbered}

# **[Issuance of Final Reports]{.underline}** {#issuance-of-final-reports .unnumbered}

If/when a response is received, the final report package should be
prepared using the following steps:

-   Using the signed version of the draft report, change the transmittal
    in accordance with the current final report standards.

-   Incorporate management's comments into the Executive Summary and the
    PPT presentation, where necessary.

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-   Insert a copy of management's response into the report as an
    additional attachment (after the PPT presentation icon). To do so,
    ensure the "Show/Hide" button is depressed in the tool bar. After
    the PPT presentation icon, insert a break by selecting "Insert" from
    the Menu bar, selecting "Break," and choosing "Next Page" from the
    choices. Ensure the cursor is at the beginning of where the "Next
    Page" break was inserted and select "Insert" from the Menu bar; then
    select "File." Select the file (the scanned version of the
    Management Response from the DIGA's Executive Assistant) and select
    "OK."

-   Once all of the above changes have been made, save this as the final
    report/presentation to be submitted for review. This version of the
    audit report should be used by each level of management (the Audit
    Manager, Director, AIGA, OMP, and DIGA) in the review process.

Once the final report has been signed by the DIGA, OMP staff will ensure
an electronic version (as well as the appropriate hard copies) is
provided to IRS Legislative Affairs personnel and placed on the TIGTA
Internet Website.

When a hard copy of a draft or a final report needs to be printed, open
the PPT presentation (right-click on the icon, select "Presentation
Object" from the menu, then select "Open" or "Edit") and print out the
slides. The slides can then be inserted with the document after the
Executive Summary. When printing the slides, select the "Handout - Two
Slides per Page" option from the "Print" menu. Also ensure the "Black
and White" box is checked, unless you are printing on a color printer.

**Exhibit (300)-90.5**

Audit Product Distribution Procedures

## **Audit Product Distribution Procedures** {#audit-product-distribution-procedures .unnumbered}

  -------------- ------------------ -------- ------------------- -------- ---------------- -------------------- ------------- -------------
  **Product**    **Operating                 **Deputy                     **IRS            **Office of the      **Office of   **Product
                 Division                    Commissioner(s)**            Commissioner**   Commissioner-Attn:   Legislative   Forwarded by
                 Commissioner(s)/                                                          Chief of Staff**     Affairs**     OA Mgt
                 Entities**                                                                                                   Assistant**

  **Engagement   **Memo \"To\"      **Memo   **Memo \"To\"       **Memo   **Memo "CC"      **Memo \"CC\" Line** **Memo \"CC\" 
  Letters**      Line**             \"CC\"   Line**              \"CC\"   Line**                                Line**        
                                    Line**                       Line**                                                       

  1\. Audit      **X**              ** **    ** **               **X**    **X**            **X **               **X (2)**     **X (1)**
  involves                                                                                                                    
  either 1 or 2                                                                                                               
  Operating                                                                                                                   
  Divisions or                                                                                                                
  separate IRS                                                                                                                
  Entities.                                                                                                                   

  2\. Audit      ** **              **X**    **X**               ** **    **X**            **X**                **X (2)**     **X (1)**
  involves                                                                                                                    
  either 3 or 4                                                                                                               
  Operating                                                                                                                   
  Divisions or                                                                                                                
  separate IRS                                                                                                                
  Entities.                                                                                                                   
  -------------- ------------------ -------- ------------------- -------- ---------------- -------------------- ------------- -------------

  ------------- ------------------ ---------- ------------------- ---------- ---------------- -------------------- ------------- -------------
  **Product**   **Operating                   **Deputy                       **IRS            **Office of the      **Office of   **Product
                Division                      Commissioner(s)**              Commissioner**   Commissioner-Attn:   Legislative   Forwarded by
                Commissioner(s)/                                                              Chief of Staff**     Affairs**     OA Mgt
                Entities**                                                                                                       Assistant**

  **Draft       **Transmittal      **Report   **Transmittal       **Report   **Report         **Report Appendix    **Report      
  Reports**     \"To\" Line**      Appendix   \"To\" Line**       Appendix   Appendix III**   III**                Appendix      
                                   III**                          III**                                            III**         

  1\. Audit     **X**              ** **      ** **               **X**                                            **X**         **X (3) (4)**
  involves                                                                                                                       
  either 1 or 2                                                                                                                  
  Operating                                                                                                                      
  Divisions or                                                                                                                   
  separate IRS                                                                                                                   
  Entities.                                                                                                                      

  2\. Audit     ** **              **X**      **X**               ** **                                            **X**         **X (3) (4)**
  involves                                                                                                                       
  either 3 or 4                                                                                                                  
  Operating                                                                                                                      
  Divisions or                                                                                                                   
  separate IRS                                                                                                                   
  Entities.                                                                                                                      
  ------------- ------------------ ---------- ------------------- ---------- ---------------- -------------------- ------------- -------------

**Exhibit (300)-90.5**

Audit Product Distribution Procedures

**[Audit Product Distribution Procedures]{.underline}**

+------------+-----+-----+------+-----+-------+-------+------+------+
| *          | **  |     | **De |     | **IRS | **O   | **Of | *    |
| *Product** | Ope |     | puty |     | Comm  | ffice | fice | *Pro |
|            | rat |     | C    |     | issio | of    | of   | duct |
|            | ing |     | ommi |     | ner** | the   | Leg  | F    |
|            | Di  |     | ssio |     |       | Com   | isla | orwa |
|            | vis |     | ner( |     |       | missi | tive | rded |
|            | ion |     | s)** |     |       | oner- | A    | by   |
|            | C   |     |      |     |       | Attn: | ffai | OA   |
|            | omm |     |      |     |       | Chief | rs** | Mgt  |
|            | iss |     |      |     |       | of    |      | Ass  |
|            | ion |     |      |     |       | St    |      | ista |
|            | er( |     |      |     |       | aff** |      | nt** |
|            | s)/ |     |      |     |       |       |      |      |
|            | E   |     |      |     |       |       |      |      |
|            | nti |     |      |     |       |       |      |      |
|            | tie |     |      |     |       |       |      |      |
|            | s** |     |      |     |       |       |      |      |
+------------+-----+-----+------+-----+-------+-------+------+------+
| **Final    | *   | **  | *    | **  | **R   | **R   | **Re |      |
| Reports**  | *Tr | Rep | *Tra | Rep | eport | eport | port |      |
|            | ans | ort | nsmi | ort | App   | App   | Appe |      |
|            | mit | Ap  | ttal | Ap  | endix | endix | ndix |      |
|            | tal | pen | \"   | pen | III** | III** | I    |      |
|            | \"T | dix | To\" | dix |       |       | II** |      |
|            | o\" | II  | Li   | II  |       |       |      |      |
|            | Lin | I** | ne** | I** |       |       |      |      |
|            | e** |     |      |     |       |       |      |      |
+------------+-----+-----+------+-----+-------+-------+------+------+
| 1\. Audit  | **  | **  | *    | **  | **X** | **X** | **X  | **X  |
| involves   | X** |  ** | * ** | X** |       |       | (    | (3)  |
| either 1   |     |     |      |     |       |       | 2)** | (    |
| or 2       |     |     |      |     |       |       |      | 4)** |
| Operating  |     |     |      |     |       |       |      |      |
| Divisions  |     |     |      |     |       |       |      |      |
| or         |     |     |      |     |       |       |      |      |
| separate   |     |     |      |     |       |       |      |      |
| IRS        |     |     |      |     |       |       |      |      |
| Entities.  |     |     |      |     |       |       |      |      |
+------------+-----+-----+------+-----+-------+-------+------+------+
| 2\. Audit  | **  | **  | *    | **  | # **  | **X** | **X  | **X  |
| involves   |  ** | X** | *X** |  ** | X** { |       | (    | (3)  |
| either 3   |     |     |      |     | #x .u |       | 2)** | (    |
| or 4       |     |     |      |     | nnumb |       |      | 4)** |
| Operating  |     |     |      |     | ered} |       |      |      |
| Divisions  |     |     |      |     |       |       |      |      |
| or         |     |     |      |     |       |       |      |      |
| separate   |     |     |      |     |       |       |      |      |
| IRS        |     |     |      |     |       |       |      |      |
| Entities.  |     |     |      |     |       |       |      |      |
+------------+-----+-----+------+-----+-------+-------+------+------+

(1) Appropriate OA Business Unit Management Assistant will distribute
    Engagement Letter to all indicated parties except the IRS
    Commissioner and the Commissioner's Chief of Staff.

(2) Legislative Affairs will forward engagement letters and final
    reports (except SBU reports) to the IRS Commissioner and to the
    Commissioner's Chief of Staff-- Attn: Kevin Brown.

(3) Legislative Affairs will not be involved in SBU distribution
    process. OA Management Assistant (Security and Information
    Technology Services) will distribute all SBU reports until Secure
    Messaging is fully implemented.

(4) OA Management Assistant (Security and Information Technology
    Services) will forward the signed electronic report to Legislative
    Affairs for their distribution in accordance with the Memorandum
    "To" line and Appendix III.

[^1]: If auditors cannot determine the population after making a
    reasonable attempt, then a judgmental sample can still be performed.
    The report should provide the reason why the population could not be
    determined.

[^2]: Stratified, cluster, discovery, or acceptance samplings are other
    acceptable methods to ensure each member of the population has an
    equal chance of being selected.

[^3]: Defined in GAO's Testimony [**,"Financial Management Challenges
    Remain in Meeting the Requirements of the Improper Payments
    Information Act,**](http://www.gao.gov/new.items/d06482t.pdf)" March
    9, 2006 (GAO-06-482T)

[^4]: Defined in [**Implementation Guidance for the Improper Payments
    Information Act of 2002, P.L.
    107-300**](http://www.whitehouse.gov/omb/memoranda/m03-13-attach.pdf)
    attached to OMB Memorandum M-03-13, "Improper Payments Information
    Act of 2002 (Public Law 107-300)," May 21, 2003.