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IRS Gets Audited: Software Licenses a Huge Issue

August 30, 2013

It's not every day that we hear about the Internal Revenue Service (IRS) getting audited, and it's also not every day that the IRS gets called on the carpet, either. But a recent audit of the IRS showed that it's got some very big problems...in terms of keeping up its software licenses.

The audit, conducted by the Treasury Inspector General for Tax Administration, showed that the IRS did not have the proper software licensing available for fully 24 out of 27 different software products currently in use at the agency. The software was found on laptops and desktops alike, and served a variety of purposes.

Moreover, not only were most of the licenses found to be missing in action, but there were also other serious problems found within the agency's management of the software. First, the audit found that there was no accurate database established to keep track of software licenses, and there was also no policy in place—either on a local or an agency-wide level—relating to software license management. There were no tools in place to deploy licenses, which also would have been found to keep track of licenses about to expire, and neither was there an inventory of current licenses.

Although the IRS did have a database in place, the IRS Application Registration Database, to track licenses, there were issues inherent in the database itself. The audit noted that the Application Registration Database “cannot be confirmed as complete and accurate.” While the database is designed to test new software, it isn't always updated after initial testing, leading to the conclusion noted previously.

Further, the Inspector General around the audit, J. Russell George, issued a statement further summing up some of the IRS' issues in regard to software licensing, saying “Efficient and cost-effective management of the IRS' software assets is crucial to ensuring that information technology services continue to support the IRS' business operations. Our recommendations are intended to help the IRS provide efficient service to taxpayers.”

Recommendations as a result of the audit included the establishment of better policies around software licensing, as well as the addition of a software management tool and regular updating of the database. The IRS reportedly agreed to make these changes, and would likely start moving in that direction soon.

Mistakes can be made in any system created by human beings, and reacting to those mistakes with an eye toward improvement is always laudable. While some might choose to dun the IRS over its clear mistakes—especially in light of its reactions to taxpayers who make mistakes—it's always worth recognizing positive effort, and the IRS is clearly out to make just that kind of effort. Software licensing issues have been trouble for many companies in the past—it's easy to waste money buying too many licenses for a company's needs, or otherwise get hit with surprise charges when a true-up arrives—and it seems to be no different for the IRS.

Edited by Blaise McNamee
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