The Government Accountability Office has once more canned the Internal Revenue Service for its sloppy internal controls, legacy systems and dodgy Information Security.

In its report, the GAO said the IRS had made significant progress but there was still a long way to go. In other words, it was coming off a low base so whatever it had achieved so far was not good enough.

The GAO found that the legacy financial management systems were a significant problem which, it pointed out, meant it was difficult to determine whether the taxman was right.

"These challenges adversely affect IRS's ability to fulfill its responsibilities as the nation's tax collector because it is unable to routinely obtain comprehensive, timely, accurate, and useful information for day-to-day decision making. In addition, as IRS continues to progress toward ever more automated financial management processes, the presence of material weaknesses in controls over these systems, especially in the area of information security, could have serious implications for our ability to determine whether IRS's financial statements are fairly stated."

Another big problem identified was the lack of adequate information security. This increased the risk of unauthorized individuals accessing, altering, or abusing proprietary IRS programs and electronic data and taxpayer information.

"The persistent, serious deficiencies in information security increase the risk that confidential IRS and taxpayer information will be compromised, and have serious implications related to the reliability of financial management information produced by IRS's systems. As IRS continues to increase the automation of accounting and reporting processes, the need for effective security over the data these systems process becomes increasingly more critical. Absent effective information security, confidential taxpayer records will remain at risk and we, as IRS's auditors, will continue to be unable to rely on the automated controls built into these systems to obtain assurance that the reported balances generated by them are reliable."

Among the material weaknesses it identified were question marks about controls over unpaid tax assessments and over tax revenues due the federal government and tax refunds. Potentially, this could result in lost revenue to the federal government and billions of dollars in improper tax refund payments.