Department of the Treasury: Status of Achieving Key Outcomes and Addressing Major Management Challenges
Published: 2001-06-15T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: This report reviews the Department of the Treasury's fiscal year 2000 performance report and fiscal year 2002 performance report plan required by the Government Performance and Results Act.
section_title: What GAO Found
paragraphs: Specifically, GAO discusses Treasury's progress in addressing several key outcomes that are important to Treasury's mission. In general, GAO could not adequately determine Treasury's progress on five key outcomes because the fiscal year 2000 performance report lacked at least some measures needed to directly assess each of the outcomes. However, other information that GAO reviewed and GAO's past work suggest that Treasury may be at risk of not achieving these outcomes. In assessing Treasury's strategies, GAO identified shortcomings in its plans for each of the outcomes it reviewed. Chief among the limitations common to both the Treasury's fiscal year 1999 and 2000 performance reports was that the performance goals and measures of Treasury's agencies were not always directly reflected in the broader departmental goals, limiting the reports' usefulness in determining whether these agencies are making progress in meeting their strategic goals in general and the outcomes GAO reviewed in particular. Treasury improved the fiscal year 2000 report by elevating its objective of Improve Customer Satisfaction to a strategic goal and adding a strategic goal of Improve Employee Satisfaction. Treasury's performance report discussed the progress made in resolving many of its major management challenges, but it did not specifically discuss the agency's progress in resolving challenges related to strategic human capital management.

section_title: Letter
paragraphs: As you requested, we reviewed the Department of the Treasury’s fiscal year 2000 performance report and fiscal year 2002 performance plan required by the Government Performance and Results Act of 1993 (GPRA) to assess the agency’s progress in achieving selected key outcomes that you identified as important mission areas for the agency. These are the same outcomes we addressed in our June 2000 review of the agency’s fiscal year 1999 performance report and fiscal year 2001 performance plan to provide a baseline by which to measure the agency’s performance from year-to-year. These selected key outcomes are tax laws are administered effectively and fairly, less waste, fraud, and error relating to the Earned Income Tax Credit, improved delinquent tax and non-tax debt collection, reduced availability and/or use of illegal drugs, and   criminals are denied access to firearms and firearms-related crime is reduced.
As agreed, using the selected key outcomes for the Department of the Treasury as a framework, we (1) assessed the progress Treasury has made in achieving these outcomes and the strategies the agency has in place to achieve them; and (2) compared the Treasury’s fiscal year 2000 performance report and fiscal year 2002 performance plan with the agency’s prior year performance report and plan for these outcomes.Additionally, we agreed to analyze how Treasury addressed its major management challenges, including the governmentwide high-risk areas of human capital and information security, that we, Treasury’s Inspector General and the Department’s Treasury Inspector General for Tax Administration identified. Appendix I provides detailed information on how Treasury addressed these challenges. (App. II contains Treasury’s comments on a draft of our report).
subsections: section_title: Background
paragraphs: GPRA is intended to shift the focus of government decision making, management, and accountability from activities and processes to the results and outcomes achieved by federal programs. New and valuable information on the plans, goals, and strategies of federal agencies has been provided since federal agencies began implementing GPRA. Under GPRA, annual performance plans are to clearly inform the Congress and the public of (1) the annual performance goals for agencies’ major programs and activities, (2) the measures that will be used to gauge performance, (3) the strategies and resources required to achieve the performance goals, and (4) the procedures that will be used to verify and validate performance information. These annual plans, issued soon after transmittal of the president’s budget, provide a direct linkage between an agency’s longer-term goals and mission and day-to-day activities. Annual performance reports are to subsequently report on the degree to which performance goals were met. The issuance of the agencies’ performance reports, due by March 31, represents a new and potentially more substantive phase in the implementation of GPRA—the opportunity to assess federal agencies’ actual performance for the prior fiscal year and to consider what steps are needed to improve performance, and reduce costs in the future.
Treasury is responsible for a broad scope of activities that touch the lives of all Americans, including collecting taxes, managing the government’s finances, securing U.S. borders, controlling firearms-related crime, and managing seized assets.
section_title: Assessment of the Department of the Treasury’s Progress and Strategies in Accomplishing Selected Key Outcomes
paragraphs: This section discusses our analysis of Treasury’s performance in achieving its selected key outcomes and the strategies the agency has in place, particularly human capital and information technology, for accomplishing these outcomes. In discussing these outcomes, we have also provided information drawn from our prior work on the extent to which the agency provided assurance that the performance information it is reporting is credible.
subsections: section_title: Tax Law Administration
paragraphs: On the basis of information in Treasury’s 2000 performance report, we could not assess its progress in effectively and fairly administering the tax laws because the report lacked information on strategic measures directly related to this outcome. However, the results of our work and other reported information below the strategic level on the performance of Treasury’s agency responsible for relevant programs—the Internal Revenue Service (IRS)—indicated that IRS improved its performance on one key indicator while losing ground on others.
As was the case last year, neither Treasury nor IRS had any measures that were specifically linked to the outcome of effective and fair administration of tax laws. IRS is modernizing all aspects of the agency’s operations, such as its organizational structure, business processes, technology, and performance management. As part of its modernization, IRS developed three agencywide strategic goals, which we used to assess this outcome. The goals are top quality service to each taxpayer in every interaction, top quality service to all taxpayers through fair and uniform application of the law, and   productivity through a quality work environment.
In fiscal year 2000, Treasury reported that the IRS made progress in conceptualizing and identifying the measures it needs for its goals.Currently the IRS has only an employee satisfaction measure, which relates to the third goal.
While IRS-wide strategic measures to assess this outcome are not available, our work on measures dealing with collecting revenues, providing taxpayer service, and enforcing tax laws indicated mixed results. On the plus side, during fiscal year 2000, IRS issued refunds without significant problems and taxpayers had an easier time getting through to telephone assistors. On the down side, the quality of service for taxpayers who visited taxpayer assistance centers and trends in enforcement functions continue to be troubling. For example, Treasury’s fiscal year 2000 performance report listed five IRS-wide measures that Treasury designated as key performance indicators related to the outcome. The agency did not meet its target for four of the five indicators including all three measures of quality. Treasury’s explanations for not meeting its targets included reasons such as the decline “…was caused by a failure to meet any one, several, or all of the standards measured in this category, thus resulting in a lower overall composite score.” Figure 1 shows IRS’ performance over time on the five key indicators.
In its fiscal year 2002 plan for IRS, Treasury lacked specific strategies to demonstrate how it would achieve its strategic goals and objectives and, thereby, be ensured of effectively and fairly administering the tax laws. Instead, IRS’ plan included individual strategies for meeting each of the 73 measures in the plan. Of those measures, 18 are outcome-oriented and focused on quality, timeliness, customer satisfaction, or employee satisfaction. While 5 of these measures will establish baseline data, the strategies to implement the remaining 13 measures are, in general, continuations of those used in the previous year. For example, the strategy for improving field collection quality in fiscal year 2001 included using data analysis to target areas for improvement, planning training around identified needs, and delivering a redesigned, web-based manual. For fiscal year 2002, the strategy to improve quality in that area included continued data analysis and training and added a strategy to develop a system for embedding responsibilities for quality at the organizational level closest to customers. Treasury did not explain why it was likely to be more successful in fiscal year 2002 by continuing similar strategies for the five measures where the targets were not met. In February 2001, we again recommended that IRS more clearly link its measures to its goals and objectives. In response, the Commissioner of Internal Revenue stated that IRS would make such refinements as it gains more experience with modernization.
section_title: Earned Income Tax Credit Program
paragraphs: We are unable to assess progress toward achieving less waste, fraud, and error relating to the Earned Income Tax Credit (EITC) because Treasury did not report on measures for any aspect of IRS’ administration of the program, and IRS also lacked performance measures for the program. We first identified this program as a high-risk area in 1995 and, more recently, noted in our December 2000 report that the overall impact of the compliance initiative remained unclear despite its success in identifying hundreds of millions of dollars in erroneous EITC claims in fiscal year 2000. Yet, no performance measures specific to EITC activities are planned at the agency level. Although IRS already collects some data for an internal quarterly tracking report, Treasury does not plan to use that data to assess and report program performance.
Treasury plans to continue emphasizing increased customer service for and compliance activities affecting both taxpayers and preparers in its current strategy for reducing problems in the EITC program. However, Treasury’s performance plan for IRS does not include measures for those areas or others related to this outcome. The 5-year strategy for EITC, instituted in 1998, includes expanding customer service and taxpayer education, reviewing preparers’ compliance, and improving return selection methods for audits, among others. However, the strategy does not address training needs, performance management initiatives, or measurement of the strategy’s effectiveness. Without performance measures and an evaluation strategy, Treasury will not be able to assess progress.
section_title: Delinquent Tax and Non- tax Debt Collection
paragraphs: Limitations in the performance measures reported by Treasury make it difficult to gauge the progress of IRS in collecting tax debt and the Financial Management Service (FMS) in collecting non-tax debt. However, other available information showed continuing declines in most of IRS’ collection actions to collect delinquent tax debt and roughly stable collections by FMS of non-tax debts. Also, Treasury’s plans for the two agencies provided little information on how their strategies for improvement will increase debt collections.
subsections: section_title: Delinquent Tax Collection
paragraphs: On the basis of information in Treasury’s 2000 performance report, we could not assess Treasury’s progress in improving its collection of delinquent taxes because none of the performance measures were linked to this outcome. However, based on other information about collection programs at the IRS—the Treasury agency responsible for the relevant programs—we are troubled by the performance with respect to this outcome. Treasury’s performance report measures output for this effort in terms of volume of collection cases closed and timeliness of certain types of collection actions. Treasury did not report performance measures that would provide perspective on whether IRS is collecting the correct amount of taxes under proper collection procedures. For example, the performance report did not contain measures for amounts collected as a percentage of the total value of the collection cases that were closed, or at the IRS-wide level, a measure for enforcement revenue collected as a percent of unpaid taxes. Such measures, over time, would give a clearer indication than case closure data as to whether Treasury is making any headway in improving delinquent tax collections. As figure 2 illustrates, enforcement revenue collected has not kept pace with the growth in the levels of unpaid taxes.
Furthermore, our recent work showed declines in important collection actions including seizures, liens, and levies. Although the Commissioner of Internal Revenue predicted last year that the downward trends for these actions would be reversed, by and large, they were not. In addition, the reliability and accuracy of these output measures in Treasury’s performance report is questionable. Our audit of IRS’ fiscal year 2000 financial statements found that IRS was unable to provide documentation that it had performed validation and verification procedures on its key performance indicators.
Treasury’s strategy in its fiscal year 2002 IRS plan for increasing collections of tax debts focused on reducing the diversion to noncompliance duties of staff who are experienced in compliance efforts and enhancing the efficiency of the delinquent tax account management. This included (1) adopting a risk-based approach for identifying better yielding accounts for collection and examination and (2) making more effective use of technology and specialization for processing unpaid tax transactions through IRS systems. However, although these strategies potentially could improve tax debt collections, the performance plans did not contain performance measures for assessing its progress. In addition, we previously reported that IRS does not have adequate records on its unpaid assessments to properly manage its accounts receivable inventory. Without such information, IRS may not be able to successfully implement these strategies and, therefore, not achieve the desired outcome.
section_title: Non-tax Debt Collection
paragraphs: While Treasury reported that it had many significant accomplishments in improving non-tax delinquent debt collection in fiscal year 2000, the non- tax debt collections in fiscal year 2000 were about the same as in fiscal year 1999—about $2.6 billion, primarily from tax refund offsets. The performance target for fiscal year 2000 was to collect $2.08 billion. These collections came from primary collection programs administered by FMS—Treasury Offset Program and Cross-servicing. Of the total collected, about $41 million was collected through the cross-servicing program. Treasury also measured non-tax debt collection progress in terms of the amount of debt referred to FMS for collection. For example, as of September 30, 2000, agencies had referred 83 percent of delinquent debts over 180 days old reported as eligible for the Treasury Offset and Cross-servicing programs. Treasury’s fiscal year 2000 target was to refer 75 percent of the amount eligible for referral.
While the performance measure for total collections is a good indicator of the overall progress being made in collecting non-tax debt, it does not adequately capture important distinctions between the offset and cross- servicing programs. We suggested in our June 2000 report that combining the performance achievements of the two programs can mask potential performance issues with cross-servicing. By breaking out—in the performance report—the total collections amounts by the results of the offset program and the cross-servicing program would give decision- makers a better indication of the effectiveness of the two programs relative to the resources being applied to each program. Our prior report also suggested that breaking out total non-tax collections by amounts collected as a result of federal delinquent non-tax debt referrals and amounts collected for debts associated with state child support would give decision-makers more information on the types of debt that is being collected. As we previously reported, collections for child support represent a significant percentage of total collections and are forwarded to the states. Reporting such collections separately from amounts related to the collection of federal delinquent non-tax debts would provide a more accurate indication of FMS’ performance. In addition, the amount of delinquent non-tax debt that is referred to Treasury for collection as compared with the amount of delinquent non-tax debt that is eligible for referral is not fully indicative of FMS’ performance. Specifically, since the measure is an indicator of the efforts of other agencies to participate in the program, it might be unduly influenced by factors outside FMS’ full control. Therefore, it could be difficult to attribute changes in the measure to the effectiveness of FMS’ debt collection efforts.
Treasury’s fiscal year 2002 strategies in its FMS plan for increasing non-tax debt collections revolved around efforts to improve the efficiency of the cross-servicing program. For example, FMS plans to analyze the types of cross-servicing debts collected, review cross-servicing costs and fee structure, and develop a methodology to periodically evaluate the process of distributing debts to private collection agencies. FMS is also preparing audit guidance on procedures to monitor agency debt referrals. Regarding the offset program, FMS plans to expand the program by including federal salary and other payment types. However, while FMS has strategies to increase non-tax debt collections, it did not discuss a timeframe for incorporating these payments into the program. FMS’ target for total non- tax debt collections is $2.3 billion for fiscal year 2001 and $2.4 billion for fiscal year 2002. Both of these targets are less than the $2.6 billion FMS collected in fiscal years 1999 and 2000. As such, it does not appear that FMS expects its planned actions for these programs to result in increased collections.
section_title: Availability and/or Use of Illegal Drugs
paragraphs: It was difficult to fully gauge Treasury’s progress in reducing the availability and/or use of illegal drugs because some of its performance measures did not directly measure Treasury's progress toward achieving this outcome. Treasury acknowledges that some of its measures used to track performance may not provide the best performance information and indicated that it is working toward improving performance measures. Given the measures that Treasury did use, it made some progress in reducing the availability and/or use of illegal drugs. For example, the U.S. Customs Service (Customs)—the Treasury agency primarily responsible for programs related to this outcome—exceeded its targets for three of its nine measures of illegal drugs seized. For the targets that were not met, Treasury attributed this shortfall to external factors such as “an expanding cocaine market in Europe where prices and profit margins are higher than in the United States.” However, Treasury’s report did not identify actions to evaluate the effects of external factors on Treasury’s seizure targets and programs although it acknowledged that it would work with various federal, state, local, and international law enforcement agencies on this crosscutting outcome.
Measures of illegal drugs seized provided only a partial assessment of Customs’ success in reducing the availability and/or use of illegal drugs. Without an underlying measure of the amount of drugs moving into the country in total, interpretations of measures of drugs seized is problematic. This overall measure, given the clandestine and diffused nature of illegal drug traffic, is illusive even with rigorous measurement efforts. In its performance report, Treasury noted that the Office of National Drug Control Policy is developing models that will better estimate the amount of cocaine, heroin, and marijuana being smuggled into the U.S. In the meantime, Customs plans to rely on its targeting efficiency measures to quantitatively assess the effectiveness of the criteria to target potential violators—a measure applied to both air passengers and vehicles. Until better measures of Customs’ performance are developed, Treasury may want to explore the relative effectiveness of several Customs anti-smuggling programs. Customs relies on intelligence, surveillance, investigations, random inspections of incoming passengers and cargo, technology, and arrangements with exporters, importers, and carriers to increase the likelihood that it will detect drugs being smuggled into the U.S. For example, Customs could compare the difference in drug detection at different border crossings where one site had a new scanning technology and another site did not have the technology.
As we noted in our September 2000 report, agencies could use program evaluation for several purposes such as exploring the benefits of programs, measuring program performance, and explaining performance results. While program evaluations will also be hampered by the lack of underlying data about the flow of drugs, they might provide some indications of the comparative effectiveness of different interdiction programs. In addition, we noted in a March 2000 report that Treasury could improve processes related to its performance measures for target efficiency. In response to our recommendations, Customs stated it would collect more complete and accurate data on persons subjected to personal searches as well as closely monitor data on personal searches. While Treasury’s report notes that one of its actions to increase the targeting efficiency and effectiveness is to improve training, Treasury’s performance report for these measures could have included a discussion on either progress to date for collecting this data or results of its data evaluations of passengers targeted for searches in relation to its efforts to seize drugs.
Treasury’s fiscal year 2002 plan for Customs provided specific strategies and programs for fiscal year 2002 designed to help Customs reduce the availability and use of illegal drugs. For example, Customs plans to reduce the availability and/or use of illegal drugs by using air and sea interdiction units designed to protect our borders from the continually shifting narcotics and contraband smuggling threat. However, some measures for the strategies and programs that are designed to achieve this outcome provide an incomplete measure of performance. For example, the agency plans to measure the number of landings made by suspect aircraft that occur shortly before the aircraft crosses the border into the U.S., called short landings. The agency could refine its measure by using information about planes that are found after landing in the U.S. to have carried illegal drugs. In addition, Customs did not identify actions that are to be taken to mitigate the effects on its activities of external influences such as changes in drug smuggling routes in response to law enforcement pressures. The fiscal year 2002 performance plan does not discuss any human capital initiatives as strategies to support this outcome nor does it include information on technology initiatives for this outcome. The plan also described coordination efforts underway with another agency and annotated the performance goal to show where such crosscutting coordination occurred.
section_title: Firearms and Related Crime
paragraphs: As with drug flow discussed above, the clandestine nature of the underlying activities renders performance measurement in the area problematic. Thus, it is unclear whether Treasury made progress in achieving this outcome because none of the measures for this outcome directly targeted whether criminal access to firearms was reduced. For example, two measures tracked aspects of firearms-tracing activities related to crime guns—the number of firearms trace requests submitted and the average trace response time. According to the Bureau of Alcohol, Tobacco, and Firearms (ATF)—the Treasury agency responsible for programs related to this outcome—the tracing process assists law enforcement agencies in identifying possessors of recovered crime guns, and it enables ATF to develop investigative leads to identify illegal suppliers of firearms. However, neither of these measures provided an assessment of the extent to which tracing activities by ATF helped deny criminals access to firearms or reduced crime. In addition, the measures do not address one issue stated in the performance goal—community exposure to firearms-related crime. Although Treasury reported statistical data that indicated reductions in crimes committed with firearms, these data were not reported as performance measures. As discussed in an earlier section of this report, our September 2000 report noted that agencies could also use program evaluation to identify program benefits, among other uses.
Treasury’s fiscal year 2002 plan for ATF provided specific strategies and programs designed to help it reduce criminal access to firearms and related crime. For example, for the Integrated Violence Reduction Strategy (IVRS), the ATF strategy aims to remove violent firearms offenders from the community, deny criminals access to firearms, and prevent violence and firearms crimes through community outreach. However, this strategy is not currently addressed by the ATF performance measures, as none of these measures determine how successful the IVRS will be at denying criminals access to firearms and reducing related crimes. For example, one ATF performance measure tracks the number of firearm trace requests submitted during the fiscal year, a measure that does not provide sufficient information regarding IVRS’ success at helping deny access to firearms. In addition, the fiscal year 2002 performance plan strategies to achieve this outcome do not discuss human capital or information technology initiatives.
section_title: Comparison of Treasury’s Fiscal Year 2000 Performance Report and Fiscal Year 2002 Performance Plan With the Prior Year Report and Plan for Selected Key Outcomes
paragraphs: For the selected key outcomes, this section describes major improvements or remaining weaknesses in Treasury’s (1) fiscal year 2000 performance report in comparison with its fiscal year 1999 report, and (2) fiscal year 2002 performance plan in comparison with its fiscal year 2001 plan. It also discusses the degree to which the agency’s fiscal year 2000 report and fiscal year 2002 plan addresses concerns and recommendations by the Congress, GAO, the Inspectors General and others.
subsections: section_title: Comparison of Performance Reports for Fiscal Years 1999 and 2000
paragraphs: Treasury’s fiscal year 2000 performance report contained the same weaknesses that we identified in its fiscal year 1999 report and one additional limitation. However, Treasury made a few improvements.
The strategic goals and objectives of IRS, FMS, Customs, and ATF were not always directly reflected in the broader departmental goals, limiting the reports’ usefulness in determining whether these agencies are making progress in meeting their strategic goals in general and these outcomes in particular.
When measures were dropped from use, Treasury usually did not explain the reason for the changes.
When agencies did not meet their targets, Treasury provided only brief explanations for the shortfalls. In general, for fiscal year 2000, a full understanding of the reasons for the shortfalls in performance was either not provided or was speculative. For example, in explaining why IRS did not meet its target for overall quality of field examination cases, Treasury stated the obvious—that it was unable to meet new quality standards.
The reports generally did not discuss crosscutting issues or the impact of external factors on Treasury’s abilities to meet its targets. For example, Customs did not identify actions to mitigate the effects on its activities of external influences, such as changes in drug smuggling routes in response to law enforcement pressures.
The reports provided minimal assurance that the performance information and data reported was credible by inserting an overall data accuracy statement at the beginning of the report. Data accuracy is one of several important elements to consider when examining the quality of agency performance data. However, decision-makers may need more detailed explanations about such things as data validity, completeness, consistency, timeliness, and/or access. As we noted earlier in this report, our audit of IRS’ fiscal year 2000 financial statements raised questions about the reliability and accuracy of some of IRS’ performance indicator data.
Unlike the fiscal year 1999 report, the fiscal year 2000 report did not fully discuss the findings of any program evaluations performed. Instead, the report provides brief summaries of four evaluations as examples.
Treasury made two changes that strengthened its presentation of program performance data in general and also increased consistency with agency strategic goals. First, Treasury elevated its objective of Improve Customer Satisfaction to a strategic goal. Second, it added a strategic goal of Improve Employee Satisfaction.
section_title: Comparison of Performance Plans for Fiscal Years 2001 and 2002
paragraphs: Treasury’s fiscal year 2002 performance plans for its agencies contained the same weaknesses that we identified in its fiscal year 2001 report. First, the performance goals and measures of Treasury’s agencies will still not provide much results-oriented information related to broader departmental goals. Second, the performance plan sections on IRS and FMS provided minimal information on each measure’s data source, accuracy, and limitations, among other things. The sections on Customs and ATF presented more data-related information than was presented in the IRS section. However, while Customs and ATF discussed the source and accuracy of the data, they did not present complete assessments. For example, the Treasury performance plan did not discuss data collection and storage, data validation and verification, or data limitations. Under the Reports Consolidation Act of 2000 (P.L. 106-531) agencies are to assess the completeness and reliability of the performance data included in their reports. The assessments are to describe any material inadequacies in the completeness and reliability of the performance data, and the actions the agency can take and plans to take to resolve such inadequacies. Third, the sections generally did not describe program evaluations currently underway and how they would be used to assess agency performance.
Only the outcome on reducing the availability and use of illegal drugs was affected by changes in Treasury’s performance plans for its agencies. These measures attempt to better link performance with this outcome but they may not provide complete information. For example, one of these measures tracks the number of suspect aircraft that land short of the U.S. border, an indicator that Customs’ interdiction effort is successful. While the number of short landings is an indicator of successful reduction in the availability of illegal drugs, Customs should also consider measuring the number of suspect aircraft that actually make it past the border to deliver their illegal drug cargo.
section_title: The Department of the Treasury’s Efforts to Address its Major Management Challenges Identified by GAO
paragraphs: GAO has identified two governmentwide high-risk areas: human capital and information security. Regarding human capital, we found that Treasury’s performance plan had one measure related to human capital which was to measure the extent to which Treasury has implemented a new human resources system. With respect to information security, we found that Treasury’s performance plan had one related goal and measure that captured the percent of all Treasury information technology systems that are certified and accredited to operate. In addition, Treasury addressed this management challenge at the individual agency level, as discussed in app. I.
In addition, GAO has identified five major management challenges facing the Department of the Treasury. We found that Treasury’s performance report discussed the agency’s progress in resolving its challenges. Of the agency’s seven major management challenges, identified by GAO, its performance plan had (1) goals and measures that were directly related to one of the challenges, (2) had goals and measures that were indirectly applicable to five of the challenges (3) had no goals and measures related to one of the challenges, but discussed strategies to address it.
section_title: Scope and Methodology
paragraphs: As agreed, our evaluation was generally based on the requirements of GPRA, the Reports Consolidation Act of 2000, guidance to agencies from the Office of Management and Budget (OMB) for developing performance plans and reports (OMB Circular A-11, Part 2), previous reports and evaluations by us and others, our knowledge of Treasury’s operations and programs, GAO identification of best practices concerning performance planning and reporting, and our observations on Treasury’s other GPRA- related efforts. We also discussed our review with agency officials in IRS, FMS, Customs, ATF, and the Treasury’s Office of Inspector General. The agency outcomes that were used as the basis for our review were identified by the Ranking Minority Member of the Senate Governmental Affairs Committee as important mission areas for the agency and do not reflect the outcomes for all of Treasury’s programs or activities. We also used information from our January 2001 report on major management challenges and program risks for Treasury, and similar reports by Treasury’s Inspector General and the Treasury Inspector General for Tax Administration to identify challenges related to the outcomes we reviewed. We did not independently verify the information contained in the performance report and plan, although we did draw from other GAO work in assessing the validity, reliability, and timeliness of Treasury’s performance data. We conducted our review from April 2001 through June 2001 in accordance with generally accepted government auditing standards.
section_title: Agency Comments and Our Response
paragraphs: We discussed this report with Treasury officials on June 5, 2001, and received written comments on it. The full text of Treasury's written comments is in appendix II. Treasury noted that it appreciated our reviews and insight on how it can make its GPRA products more useful. Treasury divided its comments into two categories, general and specific. Regarding the general comments, Treasury expressed agreement that it needs to use program evaluation to determine the impact of its programs on outcomes. It also expects to improve the link between agency measures and Treasury goals and objectives by using information from a review of its measures that it plans to conduct as part of the fiscal year 2003 budget. While we are not recommending specific measures to Treasury at this time, we are available to work with Treasury on performance measurement issues. In addition, Treasury plans to take steps to ensure data validity for each of its performance measures by reviewing its control processes. We agree that such a step is useful. As part of that review, Treasury may also want to identify and implement changes to ensure that its performance measurement data are relevant, timely, and accurate. Treasury also noted that it continues to face conflicting pressures to keep its GPRA products streamlined and yet to include more detailed information; Treasury characterized our position as one desiring considerably more detail in their GPRA products. We agree that it is difficult to strike a balance in order to provide information that is useful and easily understood yet is sufficiently inclusive. However, we believe that it is only after Treasury establishes the information basic to a GPRA orientation such as its (1) planned outcomes, (2) actions to accomplish the outcomes, and (3) measures that are meaningful and reliable indicators of progress that presentation issues should be addressed. Producing documents that are responsive to GPRA requirements is an additional consideration.
Treasury made a number of specific comments that provide additional perspective on issues that we discuss in the report. We note below those instances where Treasury disagreed with a point we made and where we incorporated technical clarifications as appropriate.
Administration of Tax Law. Treasury agreed that it needs to further develop measures for this outcome. We recognize that development of such measures is difficult.
EITC. Treasury agreed that it lacks performance measures for the EITC program and describes other measures that it uses in managing the program. However, as we note in the report, without performance measures and an evaluation strategy, Treasury will not be able to assess progress in achieving less waste, fraud, and error in the program.
Delinquent Tax Collection. Treasury commented that IRS' reorganization, new mission, and strategic goals caused IRS to find methods of measuring success without considering dollars collected.  Treasury went on to note that for various reasons, IRS' traditional debt collection activities have declined and that with additional staffing it has been authorized, IRS believes it will realize significant improvement in critical debt collection areas by the end of fiscal year 2002.  While IRS' current performance measures provide some perspective on its collections success, we believe, as explained in our report, that some measures that consider whether IRS is collecting the correct amount of taxes under proper collection procedures would provide a more balanced performance perspective.
Non-tax Debt Collection. Treasury disagreed with our assessment that one of its measures--involving a comparison of delinquent non-tax debts referred and eligible for referral--for this outcome is not a good gauge of success. While we agree that FMS has spent considerable resources working with other agencies so that the agencies will refer their debt, it is also true that the measure is unduly influenced by factors outside FMS' full control. We modified the wording in our report to better reflect our concern about that measure.
Customs Drug Interdiction Program. Treasury disagreed with our statement that some of its performance measures were not linked directly to its goals. In response, we revised our wording to better articulate our assessment of the progress Treasury has made in achieving its outcomes.
Personal Search Data. Treasury provided additional perspective on its efforts in response to our previous recommendation related to its performance measures for target efficiency.
Short Landings. Treasury disagreed with our assessment that some of its drug interdiction performance measures do not support the outcome of reduced drug availability. It also took issue with our use of an example regarding the performance measure on the number of suspect aircraft that land shortly before crossing the border into the U.S. The intent of the example was to illustrate the need for better outcome measures, a need that Treasury acknowledged in its comments. We clarified our wording in the report.
Automated Commercial Environment (ACE). We deleted reference to the development of the ACE initiative, as suggested by Treasury.
Data Accuracy, Incomplete Assessment. At Treasury's request, we revised the report to include an example of components of an assessment of data issues.
FMS' Computer Security. Treasury provided information in its comments about the performance measures it established for its Information Technology Security Program in the Self- Assessment Framework. While that action is commendable, it does not substitute for performance measures in Treasury's performance report or plan. We clarified this point in our report.
FMS Non-compliance with the Federal Financial Management Improvement Act (FFMIA). Treasury acknowledged that its financial management systems did not comply with FFMIA and that it is addressing deficiencies through a remediation plan and corrective actions.  While those actions are commendable, they do not substitute for performance measures in Treasury's performance report or plan.
As arranged with your office, unless you publicly announce its contents earlier, we plan no further distribution of this report until 30 days after the date of this letter. At that time, we will send copies to appropriate congressional committees; the Honorable Paul H. O’Neill; and the Honorable Mitchell E. Daniels, Jr., Director, Office of Management and Budget. Copies will also be made available at www.gao.gov.
If you or your staff have any questions, please call me at (202) 512-9110. Key contributors to this report were Ralph T. Block, Kerry Gail Dunn, and Elwood D. White. Additional staff acknowledgments are listed in app. III.
section_title: Appendix I: Observations on the Department of the Treasury’s Efforts to Address Its Major Management Challenges
paragraphs: The following table identifies the major management challenges confronting the Department of the Treasury, which includes the government-wide high-risk areas of human capital and information security. The first column of the table lists the management challenges that we and/or the Department of the Treasury’s Office of Inspector General (OIG) or Treasury Inspector General for Tax Administration (TIGTA) have identified. Treasury has two offices of Inspector General— TIGTA, which covers the Internal Revenue Service and the OIG, which covers all other Treasury bureaus. The second column discusses what progress, as discussed in its fiscal year 2000 performance report, Treasury made in resolving its challenges. The third column discusses the extent to which Treasury’s fiscal year 2002 performance plan includes performance goals and measures to address the challenges that we and the two Treasury IGs identified. We found that Treasury’s performance report discussed the agency’s progress in resolving many of its challenges, but it did not discuss the agency’s progress in resolving the following challenge: Strategic Human Capital Management. Of the agency’s 16 major management challenges, its performance plan had goals and measures that were directly related to five of the challenges, goals and measures that were indirectly applicable to five of the challenges and no goals and measures related to six of the challenges, but discussed strategies to address them.
section_title: Appendix II: Comments from the Department of the Treasury
section_title: Appendix III: Staff Acknowledgments
paragraphs: In addition to those named in the report, Mark T. Bird, Charles R. Fox, Meafelia P. Gusukuma, Gary N. Mountjoy, Paula M. Rascona, Gregory C. Wilshusen, and Ellen T. Wolfe made contributions to this report.