- § 36.2 Audit Procedures
§ 36.2 AUDIT PROCEDURES
p. 1011. Insert following third complete paragraph, before heading:
(f) Government Accountability Office 2015 Report
The Government Accountability Office (GAO), in a report issued in July 2015, concluded that there are “several areas” where the Exempt Organizations (EO) Division's controls intended to enable it to properly select tax‐exempt organizations for examination “were not well designed or implemented.”40.1 The GAO stated that the “control deficiencies GAO found increase the risk that [the EO Division] could select organizations for examination in an unfair manner—for example, based on an organization's religious, educational, political, or other views.”
In other instances, the GAO reported, the EO Division maintains “well‐documented procedures for several examination selection processes” in the Internal Revenue Manual (IRM). IRS staff can deviate from the procedures that are part of the IRM only with executive management approval. One of the examples of “internal control deficiencies” the GAO found was that procedures for some audit processes are not included in the IRM, as required by IRS policy. Then, said the GAO, IRS staff can sidestep procedures without approval, increasing the “risk of unfair selection of organization's returns for examination.” ...