Sunday, October 28, 2012
A TIGTA Report on IRS Contractor Payments
The Treasury Inspector General for Tax Administration (TIGTA) has released a new report titled “Deficiencies Continue to Exist in Verifying Contractor Labor Charges Prior to Payment.”
What happened is that the IRS received appropriations from the American Recovery and Reinvestment Act of 2009. You may remember this Act by another name – the “Stimulus.” TIGTA was auditing certain expenditures and also reviewing IRS internal controls over contract review, approval and payment.
TIGTA selected a statistical sample of $1 million in labor charges. What did it find?
(1) The IRS could not document $394,430 of invoiced labor hours that were paid.
(2) The labor rates paid were not verified to the contract for the qualification level of the individual paid.
(3) Although the IRS verified the qualification and experience of key contract personnel, they did not do so for other personnel. The IRS was supposed to do this by the contract.
My Take: I am glad that someone is keeping an eye on these expenditures. An error rate of 39.4% is not too reassuring, however.