I
105TH CONGRESS
1ST SESSION
H. R. 2587
To require the Secretary of the Treasury to cause to be conducted an
independent audit of the Internal Revenue Service.
IN THE HOUSE OF REPRESENTATIVES
SEPTEMBER 30, 1997
Mrs. MYRICK introduced the following bill; which was referred to the
Committee on Ways and Means
A BILL
To require the Secretary of the Treasury to cause to be
conducted an independent audit of the Internal Revenue
Service.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Audit of the IRS Act
of 1997’’.
SEC. 2. FINDINGS.
The Congress finds that the General Accounting Of-
fice cannot attest to the reliability of the Internal Revenue
Service’s financial statements because—
(1) the amount of total revenue and tax refunds
could not be verified or reconciled to accounting
records maintained for individual taxpayers in the
aggregate;
(2) the amounts reported for various types of
taxes collected, such as social security, income, and
excise taxes, could not be substantiated;
(3) the reliability of reported estimates for valid
accounts receivable and for collectible accounts re-
ceivable could not be determined;
(4) a significant portion of the Internal Reve-
nue Service’s reported nonpayroll operating expenses
could not be verified; and
(5) amounts reported as appropriations avail-
able for operations could not be reconciled fully with
the Treasury Department’s central accounting
records, and hundreds of millions of dollars in dif-
ferences were identified.
SEC. 3. INDEPENDENT AUDIT OF THE INTERNAL REVENUE
SERVICE.
(a) IN GENERAL.—The Secretary of the Treasury
shall cause to be conducted an audit of the Internal Reve-
nue Service. Such audit shall be conducted by an inde-
pendent external auditor selected by the Secretary in ac-
cordance with subsection (b).
(b) SELECTION OF INDEPENDENT EXTERNAL AUDI-
TOR.—The independent external auditor shall be selected
from among the large, national accounting firms deter-
mined by the Secretary to be capable of providing the
audit required by this section pursuant to a process by
which the Secretary invites such firms to submit a pro-
posal for such audit, together with a bid.
(c) INITIATION OF AUDIT.—Not later than 60 days
after the date of the enactment of this Act, the independ-
ent external auditor selected to conduct the audit required
by this section shall begin such audit.
(d) AUDITING PROCEDURES.—
(1) IN GENERAL.—The audit under subsection
(a) shall be conducted in accordance with generally
accepted auditing principles. The independent exter-
nal auditor shall consider the deficiencies described
in section 2 as well as effectiveness of accounting or-
ganizations and systems, internal audit and control,
and related administrative practices of the Internal
Revenue Service.
(2) ACCESS TO INFORMATION.—
(A) INFORMATION GIVEN BY THE INTER-
NAL REVENUE SERVICE.—The Internal Revenue
Service shall give the independent external
auditor the information such auditor requires
about the duties, powers, activities, organiza-
tion, and financial transactions of the Internal
Revenue Service. The independent external
auditor may inspect an agency record to obtain
such information.
(B) BOOKS, PAPERS, PERSONNEL, ETC.—
The independent external auditor shall have
such access to the personnel and to the books,
papers, and other information of the Internal
Revenue Service as such auditor considers nec-
essary or appropriate to conduct the audit re-
quired by this section.
(e) PROTECTION OF INFORMATION.—
(1) LEVEL OF PROTECTION.—The independent
external auditor shall maintain the same level of
confidentiality for a record made available under this
section as is required of the Director of the Internal
Revenue Service. Officers and employees of the inde-
pendent external auditor shall be subject to the same
statutory penalties for unauthorized disclosure or
use of any such record as officers or employees of
the Internal Revenue Service.
(2) PERSONNEL
PRIVACY.—The independent
external auditor shall keep information described in
section 552(b)(6) of title 5, United States Code, that
such auditor obtains in a way that prevents unwar-
ranted invasions of personal privacy.
(3) PROVIDING INFORMATION TO CONGRESS.—
This section does not authorize information to be
withheld from Congress.
(f) REPORT OF RESULTS OF AUDIT.—Not later than
one year after the initiation of the audit required by this
section, the independent external auditor shall submit a
report concerning the results of the audit conducted under
this section to the Committee on Ways and Means of the
House of Representatives and the Committee on Finance
of the Senate.
(g) FUNDING.—
(1) IN GENERAL.—Except as provided by para-
graph (2), amounts appropriated to the Internal
Revenue Service shall be available to carry out this
section.
(2) EXCEPTIONS.—Amounts made available to
the Internal Revenue Service for the following shall
not be available to carry out this section:
(A) To maintain a training program to en-
sure that Internal Revenue Service employees
are trained in taxpayers’ rights, in dealing cour-
teously with the taxpayers, and in cross-cultural
relations.