The Results Act: Observations on the Department of the Treasury's July
1997 Draft Strategic Plan (Correspondence, 07/31/97, GAO/GGD-97-162R).
Pursuant to a congressional request, GAO reviewed the Department of the
Treasury's July 1997 draft strategic plan, focusing on: (1) whether the
draft plan complied with the Government Performance and Results Act; (2)
the plan's overall quality; (3) whether the Treasury's key statutory
authorities were reflected; (4) whether discussions about crosscutting
functions and interagency involvement were included; (5) whether the
draft plan addressed major management problems; and (6) Treasury's
capacity to provide reliable information about its operations and
performance.
GAO noted that: (1) Treasury's initial draft strategic plan is
incomplete and does not meet the requirements of the Results Act; (2) of
the six elements required by the Act, the Treasury draft plan includes
four; (3) two of those four elements could be made more specific to
better meet the purposes of the act; (4) Treasury's goals and objectives
are primarily general assertions that do not describe intended outcomes;
(5) the strategies to achieve the goals and objectives do not fully
disclose what specific actions are to be taken, and by which component,
to attain the plan's goals and objectives; (6) the strategies almost
always fail to meet the Results Act requirements that the plan describe
how the goals and objectives are to be achieved, including a description
of the processes, technology, and other resources needed to meet the
goals and objectives; (7) the draft plan appears to reflect
consideration of Treasury's major statutory responsibilities; (8)
however, the draft plan is written in such a general way that it is
difficult to determine the extent to which the plan is implementing the
specifics of any particular statutory responsibility; (9) the draft plan
does not adequately address crosscutting issues and does not mention
whether Treasury coordinated with other federal departments and agencies
where they share related functions; (10) although a major part of the
mission statement is focused on management, the draft plan does not
adequately address some of the critical management problems facing
Treasury that could affect its ability to achieve its strategic goals
and objectives; (11) while some of these issues may be addressed in
component plans, Treasury's draft plan's discussion of the management
mission is incomplete without some consideration of its role in
resolving these problems; (12) GAO and the Treasury Inspector General
have long reported on problems with the reliability of information
systems, both program-related and financial, within the Department; (13)
the draft plan identifies goals, objectives, and strategies under
Treasury's management mission that are aimed at addressing the capacity
of the Department to provide reliable data and modernize information
systems; and (14) the draft plan does not address how data reliablity
and information systems currently affect Treasury's ability to measure
performance or provide necessary information to permit Congress to
assess the Department's progress toward its goals.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: GGD-97-162R
TITLE: The Results Act: Observations on the Department of the
Treasury's July 1997 Draft Strategic Plan
DATE: 07/31/97
SUBJECT: Strategic planning
Agency missions
Interagency relations
Congressional/executive relations
Program evaluation
Public administration
Data integrity
Internal controls
Information resources management
Financial management
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Cover
================================================================ COVER
September 1997
GAO/GGD-97-162R
Treasury's Draft Strategic Plan
(268814)
Abbreviations
=============================================================== ABBREV
IG - x
IRS - Internal Revenue Service
OMB - Office of Management and Budget
Letter
=============================================================== LETTER
B-277593
July 31, 1997
The Honorable Richard K. Armey
Majority Leader
House of Representatives
The Honorable John Kasich
Chairman, Committee on the Budget
House of Representatives
The Honorable Dan Burton
Chairman, Committee on Government
Reform and Oversight
House of Representatives
The Honorable Bob Livingston
Chairman, Committee on Appropriations
House of Representatives
Subject: The Results Act: Observations on the Department of the
Treasury's July 1997 Draft Strategic Plan
On June 12, 1997, you asked us to review the draft strategic plans
submitted by the cabinet departments and selected major agencies for
consultation with Congress as required by the Government Performance
and Results Act of 1993 (the Results Act). This letter is our
response to that request concerning the Department of the Treasury.\1
Our overall objective was to review and evaluate the latest available
version of Treasury's draft strategic plan. Specifically, we (1)
assessed the draft plan's compliance with the Act's requirements and
its overall quality, (2) determined if Treasury's key statutory
authorities were reflected, (3) identified whether discussions about
crosscutting functions and interagency involvement were included, (4)
determined if the draft plan addresses major management problems, and
(5) discussed Treasury's capacity to provide reliable information
about its operations and performance.
--------------------
\1 In addition to the Treasurywide plan, 15 components within the
Department had draft strategic plans as of July 1, 1997. We only
reviewed and report here on the Treasurywide plan.
BACKGROUND
------------------------------------------------------------ Letter :1
The Results Act seeks to shift the focus of federal management and
decisionmaking away from a preoccupation with staffing, activity
levels, and tasks completed to a focus on results--that is, the real
difference that federal programs make in people's lives. Under the
Results Act, executive agencies are required to develop (1) strategic
plans by September 30, 1997; (2) annual performance plans for fiscal
year 1999 and beyond; and (3) annual performance reports beginning
March 31, 2000. The Act states that agencies' strategic plans should
cover a period of at least 5 years and that these plans should
include, among other requirements, a set of strategic goals.
Although the intent of the Results Act is to have agencies focus
their strategic goals on results to the extent feasible, the Act does
not require that all of an agency's strategic goals be explicitly
results-oriented.
As the chief financial agent of the U.S. government, Treasury
administers diverse programs that have governmentwide implications.
Treasury, among other things, produces and protects the currency;
processes tax returns; helps set tax, economic, and fiscal policies;
enforces trade agreements; regulates financial institutions; enforces
alcohol, tobacco, and firearm laws; and pursues criminals who launder
money, threaten U.S. borders, or use illegal weapons. Overall,
Treasury collects about 98 percent of the revenue for the federal
government. Because its functions are so diverse, Treasury
historically has not been managed under a unifying mission and shared
goals. Furthermore, this diversity of functions raises a number of
challenges for Treasury in developing a comprehensive strategic plan
that adequately addresses all of its responsibilities.
Organizationally, Treasury is composed of 16 major units, including
the Internal Revenue Service (IRS), the Customs Service, the Secret
Service, and the Office of the Comptroller of the Currency, and
headquarters operations. In addition to the Department's draft
strategic plan, many of the other components have developed their own
draft strategic plans. While the components' draft plans were
written before the Treasurywide draft strategic plan, Department
officials told us that the components' plans were developed under
Departmental guidance.
The Treasurywide strategic plan we reviewed is the Department's
initial draft submission. The Results Act anticipated that it may
take several planning cycles to perfect the strategic plan process,
and that strategic plans would be continually refined as various
planning cycles occur. Thus, our comments reflect a snapshot status
of the draft plan at a given point in time. We recognize that
developing a strategic plan is a dynamic process and that Treasury
officials, with input from the Office of Management and Budget (OMB)
and congressional staff, are continuing to revise the draft.
RESULTS IN BRIEF
------------------------------------------------------------ Letter :2
Treasury's initial draft strategic plan is incomplete and does not
meet the requirements of the Results Act. Of the six elements
required by the Act, the Treasury draft plan includes four. Of the
four elements, two generally meet the Act's requirements but could be
strengthened--the mission statement and key factors external to the
agency that could significantly affect achievement of the strategic
goals and objectives. The information on the two other elements in
the plan--goals and objectives and the strategies to achieve these
goals and objectives--is often too general and vague to be used
effectively by Treasury management, Congress, and other stakeholders.
Two elements--the relationship between long-term goals and objectives
and annual performance goals and a description of how program
evaluations were used to establish or revise strategic plans--were
missing from the draft plan we reviewed. Furthermore, the draft plan
does not adequately discuss critical management problems or describe
interagency coordination of crosscutting activities. Finally, our
work and that of Treasury's Inspector General (IG) raises questions
about the Department's capability to provide reliable information.
Two of the four elements that are included in the draft plan could be
made more specific to better meet the purposes of the Results Act and
to be more consistent with OMB Circular A-11, Part 2.\2 Treasury's
goals and objectives are primarily general assertions that do not
describe intended outcomes. The strategies to achieve the goals and
objectives do not fully disclose what specific actions are to be
taken, and by which component, to attain the plan's goals and
objectives. The strategies almost always fail to meet the Results
Act requirements that the plan describe how the goals and objectives
are to be achieved, including a description of the processes,
technology, and other resources needed to meet the goals and
objectives.
The draft plan appears to reflect consideration of Treasury's major
statutory responsibilities. However, we noted that the draft plan is
written in such a general way that it is difficult to determine the
extent to which the plan is implementing the specifics of any
particular statutory responsibility.
The draft plan does not adequately address crosscutting issues and
does not mention whether Treasury coordinated with other federal
departments and agencies where they share related functions, such as
law enforcement programs in the Department of Justice or programs
involving the tax expenditures administered by IRS, such as the
low-income housing and research tax credits.
In addition, although a major part of the mission statement is
focused on management, the draft plan does not adequately address
some of the critical management problems facing Treasury that could
affect its ability to achieve its strategic goals and objectives. In
recent years, we and others have reported on many management
challenges facing IRS and other components of Treasury. For example,
our most recent high-risk series of reports identified eight Treasury
management problems. The draft plan could be improved if it more
specifically addressed some of these major management problems. In
another example, the National Commission on Restructuring the IRS
identified problems with Treasury's oversight of IRS. Again, the
draft plan does not provide specifics on how the problems are to be
resolved. While some of these issues may be addressed in component
plans, Treasury draft plan's discussion of the management mission is
incomplete without some consideration of its role in resolving these
problems--some of which are long-standing.
We and the Treasury IG have long reported on problems with the
reliability of information systems--both program-related and
financial--within the Department. The draft plan identifies goals,
objectives, and strategies under Treasury's management mission that
are aimed at addressing the capacity of the Department to provide
reliable data and modernize information systems. The draft plan does
not address how data reliability and information systems currently
affect Treasury's ability to measure performance or provide necessary
information to permit Congress to assess the Department's progress
toward its goals.
--------------------
\2 OMB Circular A-11, Part 2, provides guidance to agencies in
preparing and submitting strategic plans and annual performance
plans.
DRAFT STRATEGIC PLAN DOES NOT
HAVE ALL OF THE REQUIRED
ELEMENTS AND IS TOO GENERAL
------------------------------------------------------------ Letter :3
Treasury's draft strategic plan does not have all of the elements
required by the Results Act, and its usefulness is limited because it
is too general. Treasury's draft plan includes two elements--mission
statement and key external factors that may impact on achieving the
plan's goals and objectives--that generally meets the Results Act's
requirements but could be strengthened. The information provided in
the draft plan on two other elements--goals and objectives and the
strategies for achieving the goals and objectives--is too general to
achieve the purposes of the Results Act. The draft plan is also
missing two of the required six elements--a discussion on how
Treasury's strategic goals and objectives and annual performance
goals will be linked and a description of how program evaluations
were used to establish strategic goals.
TWO ELEMENTS GENERALLY MEET
THE RESULTS ACT'S
REQUIREMENTS BUT COULD BE
STRENGTHENED
---------------------------------------------------------- Letter :3.1
The draft plan's mission statement and key external factors that
could affect the plan generally meet the requirements of the Results
Act. However, some additional information would be helpful to more
fully understand the complexity and diversity of Treasury's
responsibilities.
MISSION STATEMENT
-------------------------------------------------------- Letter :3.1.1
The Results Act and Circular A-11 state that an agency's strategic
plan is to contain a comprehensive mission statement, defining the
basic purpose of the agency, with particular focus on its core
programs and activities. In addition, Circular A-11 states that the
mission statement may include a concise discussion of enabling or
authorizing legislation as well as the identification of issues that
Congress specifically charged the agency to address.
According to its draft plan, Treasury divided its mission into three
major programmatic missions, spanning the breadth of programs that it
oversees. Treasury's missions are (1) economic--to promote
prosperous and stable American and world economies, (2) financial--to
manage the government's finances, and (3) safety--to protect our
financial systems and our nation's leaders and to foster a safe and
drug free America. To help ensure its ability to accomplish the
goals and objectives for the programmatic missions, Treasury's draft
plan has a fourth mission area of managing--to continue to build a
strong institution.
The draft plan does not include a discussion of enabling or
authorizing legislation. While the three programmatic missions
generally cover Treasury's functions and responsibilities, the plan
could be made more useful if there was some linkage between these
broad missions and the missions of the Department's components or its
underlying statutory authorities.
KEY EXTERNAL FACTORS THAT
COULD AFFECT THE
ACHIEVEMENT OF GENERAL
GOALS AND OBJECTIVES
-------------------------------------------------------- Letter :3.1.2
The Results Act and Circular A-11 require that agencies identify and
discuss key factors, external to the agency and beyond its control,
that could affect its ability to achieve the goals and objectives in
its strategic plan. These factors, which can be economic,
demographic, social, or environmental, are to be described and linked
to a particular goal(s) with details on how the achievement of the
goal(s) will be affected by it.
Treasury's draft plan includes a brief discussion on some of the key
external factors for each of its 13 goals but provides little detail
on how particular factors affect the achievement of specific goals.
Between one and six factors are discussed for each of the goals. In
general, the list appears to be representative of factors that could
affect Treasury's ability to achieve its goals. To illustrate,
Treasury lists changing demographics, changing technology, and
changes in the financial services industry as among the key factors
affecting the goal to promote domestic economic growth. But the plan
provides little, if any, detail on how the factors would affect the
achievement of Treasury's goals or whether steps could be taken to
mitigate the impacts.
TWO ELEMENTS ARE TOO GENERAL
TO ACHIEVE THE PURPOSES OF
THE RESULTS ACT
---------------------------------------------------------- Letter :3.2
Treasury's draft plan includes two of the key elements--goals and
objectives and strategies for achieving those goals and objectives,
but these are stated in very general terms and thus are not as useful
as they could be to achieve the purposes of the Results Act.
GOALS AND OBJECTIVES
-------------------------------------------------------- Letter :3.2.1
According to the Results Act and Circular A-11, a strategic plan is
to contain general goals and objectives for the major functions and
operations of the agency. These goals and objectives are to
elaborate or provide greater specificity on how an agency will carry
out its mission through its programs and activities. Also, the goals
and objectives should be sufficiently detailed to guide and direct
agency staff toward actions that fulfill the mission of the agency.
Finally, the goals and objectives should often be results-oriented,
to the extent possible; that is, they should attempt to focus on
program outcomes, rather than outputs.
Although Treasury's draft plan does provide linkages among its
missions, goals, and objectives, its goals and objectives are not
specific enough to be used effectively by Treasury management,
Congress, or other stakeholders. For example, under its financial
mission, "manage the government's finances," Treasury identified as a
goal, "cost-effectively finance the Federal government's operations."
The only objective associated with this goal is to "finance the
Federal government in the most cost-effective manner over the long
term," which is a restatement of the goal. Although the goal and
objective are clearly linked to the economic part of the mission, the
general manner in which they are stated makes it difficult for
Congress and Treasury to assess the Department's progress. For
example, without a definition of the term "cost effective," it would
be difficult to determine when the goal is achieved or to measure
progress toward that end.
Furthermore, Treasury's draft plan does not precisely state which
Department bureaus have responsibility for carrying out the goals and
objectives. A clearer discussion of which bureaus are responsible
for particular goals and objectives would allow for a comparison of
the individual bureaus' strategic plans to ensure that their
missions, goals, and objectives are aligned with those of the
Department.
Finally, Treasury's draft strategic plan also includes several goals
that are not as results-oriented as they could be. For example,
Treasury has a goal to "fight violent crime," which could be made
more results-oriented by explicitly stating the outcomes that are
intended to be achieved through the Department's various efforts to
combat violent crime. Although it is not a specific requirement of
the Results Act that all goals and objectives be results-oriented, it
is clearly the intent of the Act that agencies focus on the outcome,
or impact, of their programs whenever possible.
STRATEGIES FOR ACHIEVING
GOALS AND OBJECTIVES
-------------------------------------------------------- Letter :3.2.2
Under the Results Act, strategic plans are to contain a description
of how the goals and objectives are to be achieved, including a
description of the operational processes, staff skills and
technology, and the human, capital, information, and other resources
needed to achieve the goals and objectives. This information would
be useful in showing how the agency's activities, core processes, and
resources are to be used to achieve the strategic goals. According
to Circular A-11, such strategies should also contain schedules for
significant actions and outline how the agency will communicate
strategic goals throughout the organization and hold managers and
staff accountable for achieving these goals.
Although Treasury's draft plan lists strategies for each of its
objectives, the strategies do not meet the Results Act's requirements
or reflect consistency with guidance in Circular A-11. Instead, the
draft plan's strategies are mostly general statements that do not
describe the operational processes and resources needed to achieve
the plan's goals and objectives. The strategies also do not outline
how Treasury will communicate strategic goals to its managers and
staff and hold them accountable for achieving these goals. For
example, the strategy to "help develop over the long term a secondary
market for community and economic development loans to enhance
liquidity and market performance" does not describe the operational
processes and resource requirements or give any information on how
staff are to be held accountable.
As previously mentioned, Treasury's draft plan has a management
mission area that includes goals and strategies focusing on staff,
technology, and other resource requirements to accomplish its other
three mission areas. However, the strategies in this section are too
general to be useful. This is because many strategies do not
describe the resources needed to carry them out, and none of them
schedule significant actions. In addition, the management strategies
are not clearly linked to the specific goals and objectives in the
programmatic mission areas.
Furthermore, the draft plan does not always disclose which agency or
bureau will be involved in executing its strategies or whether
interagency coordination would be involved. Thus, it is difficult to
evaluate resource requirements for carrying out particular
strategies.
TWO ELEMENTS ARE MISSING
FROM TREASURY'S DRAFT PLAN
---------------------------------------------------------- Letter :3.3
The following two elements are required by the Results Act and are
missing from the draft plan.
RELATIONSHIP BETWEEN
LONG-TERM GOALS AND
OBJECTIVES AND THE ANNUAL
PERFORMANCE GOALS
-------------------------------------------------------- Letter :3.3.1
An agency's strategic plan is to describe how the performance goals
included in its annual performance plans will be related to the goals
and objectives in the agency's strategic plan. The Treasury draft
plan we reviewed did not have information that discusses the
relationship between goals and objectives and annual performance
goals and measures. Such a discussion is important in linking an
agency's long-term goals and objectives in its strategic plan to the
goals in its annual performance plan to gauge progress. The Treasury
draft plan's overall usefulness is limited because this discussion
was not in the draft plan.
In a July 18, 1997, meeting, Treasury officials told us that
performance goals would be part of the Department bureaus' strategic
plans and not part of the Treasurywide plan. To meet the Results Act
requirements, comply with Circular A-11 guidance, and help clarify
the meaning of its strategic goals and objectives, the draft plan
could be improved if it included (1) the type, nature, and scope of
the performance goals to be included in the performance plan; (2) the
relationship between the performance goals and the long-term goals
and objectives; and (3) the relevance and use of performance goals in
helping determine the achievement of long-term goals and objectives.
PROGRAM EVALUATION
-------------------------------------------------------- Letter :3.3.2
One of the purposes of the Results Act is to enable Congress to
direct resources to the programs and agencies that use them most
effectively. Program evaluations--defined in the Results Act as
objective and formal assessments of the results, impacts, or effects
of a program or policy--are a means to determine how effectively
agencies are using their resources. According to Circular A-11, the
planned program evaluation section of the strategic plan should
briefly describe the program evaluations that were used in preparing
the strategic plan and outline (1) the general scope and methodology
for planned evaluations, (2) the key issues to be addressed, and (3)
a schedule for future evaluations.
Treasury's draft plan neither discusses how program evaluations were
used to establish general goals and objectives nor provides a
schedule for future program evaluations. Program evaluations are
particularly important for a department such as Treasury, which
shares functions with other departments and agencies.
KEY STATUTORY AUTHORITIES ARE
GENERALLY REFLECTED IN
TREASURY'S DRAFT STRATEGIC PLAN
------------------------------------------------------------ Letter :4
Treasury's draft plan appears to reflect consideration of most of the
Department's major statutory responsibilities. Consistent with your
request, we did not attempt to identify whether all of Treasury's
statutory responsibilities were reflected in the preliminary plan;
rather, we focused on whether the "major" responsibilities were
addressed. The draft plan addresses these responsibilities
generally, and it contains only a few specific references to the
statutory bases for Treasury's major functions and operations. In
fact, the draft plan does not cite Treasury's (or its bureaus')
general authorizing legislation. It does cite some of the laws that
Treasury is involved in implementing, but it does not explain how the
Department is implementing the specifics of any statutory authority.
For example, it is unclear from the draft plan how Treasury will
"centralize administrative offset of Federal payments by delinquent
debtors as mandated by the Debt Collection Improvement Act of 1996,"
even though the Department has taken steps to do so. It should be
noted that the Results Act does not require an agency's strategic
plan to contain a compilation of statutory authorities of the agency,
but Circular A-11 does state that a plan may include a concise
discussion of enabling or authorizing legislation.
Although the draft plan appears to reflect consideration of most of
Treasury's major statutory responsibilities and to be generally
consistent with them, it should be noted that the draft plan is
written in such a general way that it is difficult to determine the
extent to which the plan is implementing the specifics of any
particular statutory responsibility. The draft plan does not provide
any linkages between the stated goals and objectives and any major
statutory authorities that form the basis for them.
CROSSCUTTING ACTIVITIES ARE
INADEQUATELY ADDRESSED
------------------------------------------------------------ Letter :5
Crosscutting activities are agency activities that share a common
purpose with activities in other agencies. Treasury, because of its
broad statutory authorities, shares many responsibilities with other
executive agencies. Also, several Treasury bureaus have overlapping
programmatic responsibility. Likewise, several tax expenditures
administered by IRS share similar goals with programs administered by
other executive agencies.
Treasury's draft plan could do a better job of addressing
crosscutting program activities. In particular, the plan could
better serve the purposes of the Results Act by making it more clear
how Treasury's goals and objectives relate to those of other federal
agencies. We recognize that this is Treasury's initial plan and that
including a complete discussion on crosscutting programs is a not an
easy task considering the array of such programs in the Department.
Specifically, some crosscutting programs are not addressed in the
draft plan at all, while other crosscutting programs are discussed
very generally. The draft plan, for example, does not address how
IRS' law enforcement programs should be coordinated with law
enforcement programs in other Department components or Justice.
There is also no discussion of the crosscutting nature of many tax
expenditures administered by IRS, such as the earned income tax
credit, the low-income housing credit, and the research credit.
Where crosscutting issues are addressed, they are addressed only in a
general way. For example, Treasury lists as an objective to "disrupt
and dismantle drug smuggling operations." As a related strategy,
Treasury lists that it will "continue participation in productive
Federal, State, and local anti-drug task forces." No detail is
provided about which Treasury bureaus or other federal agencies will
participate in these task forces, nor what their respective
responsibilities will be. The draft plan does include some
discussion on crosscutting management functions within the Department
in the management mission area; however, it does not discuss how the
management functions support Treasury programs in achieving their
goals. For example, one strategy for making wise information and
technology investments is to "integrate information gathering and
storage with other agencies." No detail is provided about who at
Treasury will have lead responsibility, what agencies are included,
or what programs would operate more successfully as a result of such
integration.
TREASURY'S DRAFT STRATEGIC PLAN
DOES NOT ADEQUATELY ADDRESS
MAJOR MANAGEMENT CHALLENGES
------------------------------------------------------------ Letter :6
Over the years, we have reported on major management challenges
facing many of the agencies in Treasury. Congressional committees,
the National Commission on Restructuring the IRS, Treasury's IG and
others have also reported on similar management problems confronting
Treasury agencies. The draft plan mentions some of the major
management challenges Treasury faces under the section entitled
"Management Mission: Continue to Build a Strong Institution."
However, the draft plan could be more useful to Congress and other
stakeholders if there was a clearer presentation of the relationship
between how Treasury's critical management problems are to be
addressed and how they will facilitate the Department's achievement
of its strategic goals and objectives.
Our 1997 high-risk series of reports identified eight major
management problems affecting Treasury's operations.\3 Two of the
problems--computer security and the year 2000 conversion--are
governmentwide management challenges, four others were specific to
IRS' operations, one related to the Customs Service's financial
management problems, and one related to the control of seized assets
included in the Treasury Forfeiture Fund.\4 The draft plan could be
improved if it more specifically addressed some of these major
problems.
For example, under its objective to "make wise information technology
investments," Treasury recognizes that it needs to accomplish the
year 2000 conversion and incorporate information technology security
as an essential part of the systems development life-cycle process.
But the draft plan provides no specifics on who at Treasury would be
responsible for the success of these strategies, what resources would
be required, or how success would be measured.
While the Treasury draft plan provides strategies for achieving its
management objectives, these strategies do not have the detail
necessary to determine precisely how the Department plans to address
these challenges. This is because, in most instances, the draft plan
does not indicate which Treasury bureau would be affected. For
example, although our past work has shown that financial management
problems exist at IRS and the Customs Service, the draft plan does
not specifically address them. Furthermore, it is unclear how
Treasury's IRS Management Board will provide strategic leadership and
ensure close oversight of IRS modernization and performance
improvement efforts.
While some of these issues may be addressed in component plans, a
more explicit discussion of Treasury's role in resolving the
Department's management challenges would be helpful. It is also
unclear in many cases to what specific end Treasury efforts are
focused and how progress and success in meeting Department objectives
will be measured.
--------------------
\3 High-Risk Series: An Overview (GAO/HR-97-1, Feb. 1997).
\4 The year 2000 conversion refers to the need for computer systems
to be changed to accommodate dates beyond the year 1999.
TREASURY'S CAPACITY TO PROVIDE
RELIABLE INFORMATION ON THE
ACHIEVEMENT OF STRATEGIC AND
PROGRAM PERFORMANCE IS
QUESTIONABLE
------------------------------------------------------------ Letter :7
To efficiently and effectively operate, manage, and oversee its
diverse array of responsibilities, Treasury needs reliable data.
Treasury and its component bureaus rely on a number of automated
management information systems to carry out their roles. Our past
work and that of others has shown that in many cases a lack of
readily accessible, quality data raises questions about Treasury's
capacity to track and measure its performance in achieving its
strategic mission and goals. Treasury's draft plan could be improved
if it more clearly addressed the Department's data reliability
problems.
In its report on Treasury's fiscal year 1996 financial statements,
the Treasury IG reported that material weaknesses continued to exist
in the internal controls structures of key bureaus, and that many
component entities lacked integrated financial management systems,
which preclude the integration of financial, budgetary, and
performance data. Treasury's draft strategic plan attempts to
address this problem with a strategy to "align performance
measurement, accounting, and budgeting data to produce a cohesive
financial information framework that institutionalizes the
Departmental performance management and decision making process."
However, the strategy is not specific enough to indicate what actions
Treasury may be proposing and how the actions would affect its
ability to provide reliable information to measure the success made
relative to achieving the draft plan's strategic goals and
objectives.
Furthermore, the strategies do not specifically address the
long-standing weaknesses in Treasury's ability to provide reliable
information needed to carry out its programs that we have discussed
in our previous reports on component agencies, such as IRS and the
Customs Service. For example, IRS' ability to access accurate and
reliable information on taxpayers' accounts have long affected its
ability to collect delinquent taxes.\5
--------------------
\5 High Risk Series: Internal Revenue Service Receivables
(GAO/HR-95-6, Feb. 1995).
SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :8
We obtained a copy of the July 1, 1997, draft strategic plan that
Treasury provided to the House of Representatives staff team working
with the agency. We did not perform a comprehensive review of the
draft strategic plans of Treasury's component agencies.
Our overall assessment of Treasury's draft plan was generally based
on our knowledge of the Department's operations and programs, our
numerous past and ongoing reviews of the Department's agencies, and
other existing information available at the time of our assessment.
Specifically, the criteria we used to determine whether the draft
plan complied with the requirements of the Results Act were the
Results Act and Circular A-11. To make judgments about the overall
quality of the plan and its components, we used our May 1997 guidance
for congressional review of the plans as a tool.\6
As you requested, we coordinated our work on Treasury's key statutory
authorities and its capacity to provide reliable information with the
Congressional Research Service and the Treasury IG, respectively. We
did our work between July 2 and 28, 1997. Treasury officials
provided oral comments on a draft of this letter, which are reflected
in the Agency Comments section that follows.
A list of our major products related to selected Treasury agencies is
on pages 19 through 24.
--------------------
\6 Agencies' Strategic Plans Under GPRA: Key Questions to Facilitate
Congressional Review (GAO/GGD-10.1.16, May 1997).
AGENCY COMMENTS AND OUR
EVALUATION
------------------------------------------------------------ Letter :9
On July 28, 1997, we met with and obtained comments from Treasury
officials, including the Director of the Office of Strategic Planning
and the Deputy Chief Financial Officer. The officials generally
agreed with many of our observations. The officials pointed out that
they view the plan we reviewed, which was entitled U.S. Department
of the Treasury Draft Strategic Plan 1997-2002, as an overview plan
for the Department and that the full Treasury strategic plan consists
of the overview and the strategic plans of component bureaus and
offices. On that basis, the Director of the Office of Strategic
Planning said that the level of detailed information we envisioned
being in the plan, such as strategies on how specific objectives are
to be achieved and information on resource requirements, is better
reflected in the component plans.
The Treasury officials said that they will revise the plan in light
of many of our observations. With regards to the two elements that
were not included in the plan we reviewed, Treasury plans to include
information that would (1) more clearly show how the Department's
goals and objectives link to the goals and objectives of its bureaus
and offices and better tie this information to the components' annual
performance plan goals in the Department's budget and (2) reflect the
Department's view that program evaluations are important in making
the strategic planning process work, but that details on program
evaluations are better reflected in the plans of the components that
would be responsible for carrying them out. The revised plan is also
to include, among other things, strategies that will address all
high-risk management problems confronting Treasury and more
information on how the Department and components have coordinated
with stakeholders on crosscutting activities.
The officials also stated that Treasury should be recognized for its
overall Results Act implementation efforts. In particular, the
officials told us that Treasury has had performance plans in its
annual budgets for the past 2 fiscal years and has completed one
annual performance report based on the performance plans--far ahead
of the Act's requirements. In addition, they said that the
performance report uses a common set of performance measures, with
the key measures being included in the Departmentwide audited
financial statements of all Treasury components. The Deputy Chief
Financial Officer said that, because an increasing number of bureaus
are now receiving unqualified opinions on their financial statements,
data reliability within the Department has improved. However, he
said that additional enhancements are still needed at certain bureaus
and that the annual performance plans are a better place to address
their continuing efforts in this area.
---------------------------------------------------------- Letter :9.1
As arranged with your offices, unless you publicly announce its
contents earlier, we plan no further distribution of this letter
until 30 days from its issue date. At that time, we will send copies
of this letter to the Minority Leader of the House of
Representatives; Ranking Minority Members of your Committees; the
Chairmen and Ranking Minority Members of other Committees that have
jurisdiction over Treasury activities; the Secretary of the Treasury;
and the Director, Office of Management and Budget. Copies will be
made available to others on request.
Major contributors to this letter are listed in the enclosure.
Please contact me at (202) 512-9110 if you or your staff have any
questions concerning this letter.
Lynda D. Willis
Director, Tax Policy and
Administration Issues
Enclosure
MAJOR CONTRIBUTORS TO THIS REPORT
=================================================== Appendix Enclosure
GENERAL GOVERNMENT DIVISION,
WASHINGTON, D.C.
------------------------------------------------- Appendix Enclosure:1
Charlie W. Daniel, Assistant Director
Bryon S. Gordon, Senior Evaluator
OFFICE OF THE GENERAL COUNSEL,
WASHINGTON, D.C.
------------------------------------------------- Appendix Enclosure:2
M. Rachel DeMarcus, Assistant General Counsel
============================================================ Chapter 0
============================================================ Chapter 1
RELATED GAO PRODUCTS
============================================================ Chapter 2
INTERNAL REVENUE SERVICE
---------------------------------------------------------- Chapter 2:1
IRS MANAGEMENT
-------------------------------------------------------- Chapter 2:1.1
IRS Management: Improvement Needed in High-Risk Areas
(GAO/T-GGD-97-79, Apr. 14, 1997).
High-Risk Series: IRS Management (GAO/HR-97-8, Feb. 1997).
IRS Operations: Critical Need to Continue Improving Core Business
Practices (GAO/T-AIMD-96-188, Sept. 10, 1996).
Internal Revenue Service: Business Operations Need Continued
Improvement (GAO/AIMD/ GGD-96-152, Sept. 9, 1996).
Managing IRS: IRS Needs to Continue Improving Operations and Service
(GAO/T-GGD/ AIMD-96-170, July 29, 1996).
IRS Operations: Significant Challenges in Financial Management and
Systems Modernization (GAO/T-AIMD-96-56, Mar. 6, 1996).
TAX SYSTEMS MODERNIZATION
-------------------------------------------------------- Chapter 2:1.2
IRS Systems Security: Tax Processing Operations and Data Still at
Risk Due to Serious Weaknesses (GAO/AIMD-97-49, Apr. 8, 1997).
IRS High-Risk Issues: Modernization of Processes and Systems
Necessary to Resolve Problems (GAO/T-GGD-97-52, Mar. 4, 1997).
Tax Systems Modernization: Actions Underway But Management and
Technical Weaknesses Not Yet Corrected (GAO/T-AIMD-96-165, Sept. 10,
1996).
Tax Systems Modernization: Actions Underway But IRS Has Not Yet
Corrected Management and Technical Weaknesses (GAO/AIMD-96-106, June
7, 1996).
Tax Systems Modernization: Progress in Achieving IRS' Business
Vision (GAO/T/GGD-96-123, May 9, 1996).
Tax Systems Modernization: Management and Technical Weaknesses Must
Be Overcome to Achieve Success (GAO/T-AIMD-96-75, Mar. 26, 1996).
Status of Tax Systems Modernization, Tax Delinquencies, and the
Potential for Return-Free Filing (GAO/T-GGD/AIMD-96-88, Mar. 14,
1996).
Tax Systems Modernization: Management and Technical Weaknesses Must
Be Corrected If Modernization Is to Succeed (GAO/AIMD-95-156, July
26, 1995).
Tax Systems Modernization: Unmanaged Risks Threaten Success
(GAO/T-AIMD-95-86, Feb. 16, 1995).
FINANCIAL MANAGEMENT
-------------------------------------------------------- Chapter 2:1.3
Financial Management: Challenges Facing the IRS (GAO/T-AIMD-97-34,
Jan. 9, 1997).
IRS Financial Audits: Status of Efforts to Resolve Financial
Management Weaknesses (GAO/T-AIMD-96-170, Sept. 19, 1996).
Financial Audit: Examination of IRS' Fiscal Year 1995 Financial
Statements (GAO/AIMD-96-101, July 11, 1996).
Financial Audit: Actions Needed to Improve IRS Financial Management
(GAO/T-AIMD-96-96, June 6, 1996).
Financial Audit: Examination of IRS' Fiscal Year 1994 Financial
Statements (GAO/AIMD-95-141, Aug. 4, 1995).
Financial Audit: Examination of IRS' Fiscal Year 1993 Financial
Statements (GAO/AIMD-94-120, June 15, 1994).
Financial Audit: Examination of IRS' Fiscal Year 1992 Financial
Statements (GAO/AIMD-93-2, June 30, 1993).
COMPLIANCE ISSUES
-------------------------------------------------------- Chapter 2:1.4
Tax Administration: Earned Income Credit Noncompliance
(GAO/T-GGD-97-105, May 8, 1997).
Taxpayer Compliance: Analyzing the Nature of the Income Tax Gap
(GAO/T-GGD-97-35, Jan. 9, 1997).
IRS Tax Collection Reengineering (GAO/GGD-96-161R, Sept. 24, 1996).
Earned Income Credit: IRS' 1995 Controls Stopped Some Noncompliance,
But Not Without Problems (GAO/GGD-96-172, Sept. 18, 1996).
Tax Administration: Tax Compliance of Nonwage Earners
(GAO/GGD-96-165, Aug. 28, 1996).
Internal Revenue Service: Results of Nonfiler Strategy and
Opportunities to Improve Future Efforts (GAO/GGD-96-72, May 13,
1996).
Tax Administration: IRS Tax Debt Collection Practices
(GAO/T-GGD-96-112, Apr. 25, 1996).
IRS Efforts to Control Fraud (GAO/GGD-96-96R, Mar. 25, 1996).
Taxpayer Compliance: Reducing the Income Tax Gap (GAO/T-GGD-95-176,
June 6, 1995).
Reducing the Tax Gap: Results of a GAO-Sponsored Symposium
(GAO/GGD-95-157, June 2, 1995).
Tax Administration: Tax Compliance Initiatives and Delinquent Taxes
(GAO/T-GGD-95-74 Feb. 1, 1995).
High-Risk Series: Internal Revenue Service Receivables (GAO/HR-95-6,
Feb. 1995).
Tax Administration: Electronic Filing Fraud (GAO/T-GGD-94-89, Feb.
10, 1994).
Tax Administration: IRS Can Improve Controls Over Electronic Filing
Fraud (GAO/GGD-93-27, Dec. 30, 1992).
TAXPAYER SERVICE AND
SUBMISSION PROCESSING
-------------------------------------------------------- Chapter 2:1.5
IRS' 1996 Tax Filing Season: Performance Goals Generally Met;
Efforts to Modernize Had Mixed Results (GAO/GGD-97-25, Dec. 18,
1996).
Tax Administration: Alternative Filing Systems (GAO/GGD-97-6, Oct.
16, 1996).
The 1995 Tax Filing Season: IRS Performance Indicators Provide
Incomplete Information About Some Problems (GAO/GGD-96-48, Dec. 29,
1995).
Tax Administration: Electronic Filing Falling Short of Expectations
(GAO/GGD-96-12, Oct. 31, 1995).
Tax Administration: IRS Faces Challenges in Reorganizing for
Customer Service (GAO/ GGD-96-3, Oct. 10, 1995).
Telephone Assistance: Adopting Practices Used by Others Would Help
IRS Serve More Taxpayers (GAO/GGD-95-86, Apr. 12, 1995).
Tax Administration: Continuing Problems Affect Otherwise Successful
1994 Filing Season (GAO/GGD-95-5, Oct. 7, 1994).
TAXPAYER BURDEN
-------------------------------------------------------- Chapter 2:1.6
Tax Administration: IRS Is Improving Its Controls for Ensuring That
Taxpayers Are Treated Properly (GAO/GGD-96-176, Aug. 30, 1996).
Tax System: Issues in Tax Compliance Burden (GAO/T-GGD-96-100, Apr.
3, 1996).
Tax System Burden: Tax Compliance Burden Faced by Business Taxpayers
(GAO/T-GGD-95-42, Dec. 9, 1994).
Tax Administration: IRS Can Strengthen Its Efforts to See That
Taxpayers Are Treated Properly (GAO/GGD-95-14, Oct. 26, 1994).
U.S. CUSTOMS SERVICE
---------------------------------------------------------- Chapter 2:2
U.S. Customs Service: Oversight Issues (GAO/T-GGD-97-107, May 15,
1997).
Customs' Office of International Affairs (GAO/NSIAD-97-146R, Apr.
25, 1997).
U.S. Customs Service: Office of Regulations and Rulings Has Yet to
Establish Performance Measures (GAO/T-NSIAD-97-115, Mar. 11, 1997).
Customs Modernization (GAO/AIMD-97-43R, Feb. 21, 1997).
Customs Service: Drug Interdiction Efforts (GAO/GGD-96-189BR, Sept.
26, 1996).
Customs Service: Status of the Implementation of Blue Ribbon Panel
Recommendations (GAO/GGD-96-163, Sept. 3, 1996).
Customs Service Modernization: Strategic Information Management Must
Be Improved for National Automation Program To Succeed
(GAO/AIMD-96-57, May 9, 1996).
Customs' Reorganization (GAO/GGD-96-81R, Feb. 23, 1996).
Managing Customs: Efforts Under Way to Address Management Weaknesses
(GAO/GGD-95-73, Mar. 16, 1995).
Customs Service: Status of Reorganization and Modernization Efforts
(GAO/T-GGD/AIMD-95-70, Jan. 30, 1995).
BUREAU OF ALCOHOL, TOBACCO AND
FIREARMS
---------------------------------------------------------- Chapter 2:3
Federal Firearms Licensee Data: ATF's Compliance With Statutory
Restrictions (GAO/ GGD-96-174, Sept. 11, 1996).
Alcohol, Tobacco and Firearms: Issues Related to Use of Force,
Dealer Licensing, and Data Restrictions (GAO/T-GGD-96-104, Apr. 25,
1996).
Federal Firearms Licensees: Various Factors Have Contributed to the
Decline in the Number of Dealers (GAO/GGD-96-78, Mar. 29, 1996).
Use of Force: ATF Policy, Training, and Review Process Are
Comparable to DEA's and FBI's (GAO/GGD-96-17, Mar. 29, 1996).
FINANCIAL CRIMES ENFORCEMENT
NETWORK
---------------------------------------------------------- Chapter 2:4
Money Laundering: A Framework for Understanding U.S. Efforts
Overseas (GAO/GGD-96-105, May 24, 1996).
Money Laundering: U.S. Efforts to Combat Money Laundering Overseas
(GAO/T-GGD-96-84, Feb. 28, 1996).
Money Laundering: Rapid Growth of Casinos Makes Them Vulnerable
(GAO/GGD-96-28, Jan. 4, 1996).
National Fine Center: Implementation of Criminal Debt System
Presents Challenges (GAO/ T-GGD-95-215, Sept. 19, 1995).
Money Laundering: Stakeholders View Recordkeeping Requirements for
Cashier's Checks As Sufficient (GAO/GGD-95-189, July 28, 1995).
Money Laundering: Needed Improvements For Reporting Suspicious
Transactions Are Planned (GAO/GGD-95-156, May 30, 1995).
National Fine Center: Progress Made but Challenges Remain for
Criminal Debt System (GAO/AIMD-95-76, May 25, 1995).
TREASURY FORFEITURE FUND
---------------------------------------------------------- Chapter 2:5
Asset Forfeiture: Historical Perspective on Asset Forfeiture Issues
(GAO/T-GGD-96-40, Mar. 19, 1996).
High-Risk Series: Asset Forfeiture Programs (GAO/HR-95-7, Feb.
1995).
BUREAU OF ENGRAVING AND
PRINTING AND U.S. MINT
---------------------------------------------------------- Chapter 2:6
Coin and Currency Production: Issues for Congressional Consideration
(GAO/T-GGD-97-146, June 26, 1997).
U.S. Mint: Commemorative Coins Could Be More Profitable
(GAO/GGD-96-113, Aug. 7, 1996).
Future of the Penny: Options for Congressional Consideration
(GAO/T-GGD-96-153, July 16, 1996).
A Dollar Coin Could Save Millions (GAO/T-GGD-95-203, July 13, 1995).
1-Dollar Coin: Reintroduction Could Save Millions If It Replaced the
1-Dollar Note (GAO/T-GGD-95-146, May 3, 1995).
OFFICE OF COMPTROLLER OF THE
CURRENCY AND OFFICE OF THRIFT
SUPERVISION
---------------------------------------------------------- Chapter 2:7
Bank and Thrift Regulation: Implementation of FDICIA's Prompt
Regulatory Action Provisions (GAO/GGD-97-18, Nov. 21, 1996).
Bank Oversight Structure: U.S. and Foreign Experience May Offer
Lessons for Modernizing U.S. Structure (GAO/GGD-97-23, Nov. 20,
1996).
*** End of document. ***