GAO Says IRS Data Security Problems Persist

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The IRS still isn't doing enough security-wise to protect the confidentially of financial and taxpayer information -- particularly from insider threats – despite repeated tries at fixing previously identified security problems, a federal watchdog agency has found.

Weaknesses continue to plague a number of Internal Revenue Service IT access-control systems that leave sensitive data vulnerable, according to a report (PDF) released this week by the Government Accountability Office (GAO), which performed a fiscal-year 2010 audit on the agency.

Though the agency noted some security improvements, it still found that 65 of 88 weaknesses previously found in IRS access-control systems -- or 74% -- remain "unresolved or unmitigated." Moreover, the GAO identified 37 new weaknesses that leave data open to a number of insider threats.

"An underlying reason for these weaknesses is that IRS has not yet fully implemented key components of its comprehensive information security program," according to the GAO. "Although IRS has processes in place intended to monitor and assess its internal controls, these processes were not always effective."

Last year around the same time, the GAO delivered a similar report, finding that 69% of 89 security deficiencies identified during a 2008 fiscal-year audit remained unsolved. According to the latest report, it seems the IRS' problem is getting worse, not better.

Systems the GAO found to be vulnerable to intrusion include ones that restrict user access to only the databases they need to perform their jobs; one the IRS uses to support and manage its computer access request, approval, and review processes; and database software residing on servers that support the agency's general ledger system, among others.

The GAO presented a host of doomsday scenarios that are possible because of the vulnerabilities that persist in how the IRS stores and transports data internally. "As a result, financial and taxpayer information are at increased risk of unauthorized disclosure, modification, or destruction; financial data is at increased risk of errors that result in misstatement; and the agency's management decisions may be based on unreliable or inaccurate financial information," according to the report.

The GAO is recommending the IRS take a series of immediate actions to remedy its data-security woes. Among them are a series of updates to risk assessments for whenever there is a change to the system, for the facilities where the systems reside, and for the mainframe environment that supports the IRS general ledger for tax-related activities and processing, according to the report.

The IRS also should update employee password control policies and procedures to ensure they are consistent, as well as perform comprehensive testing of security controls over the mainframe environment to include all portions of the operating environment, the GAO said.

The agency also made 32 separate and detailed recommendations to correct specific weaknesses identified in its latest audit that are related to the following: identification and authentication, authorization, cryptography, audit and monitoring, physical security, configuration management, and segregation of duties.

The IRS responded to the audit by acknowledging that security is "of the utmost importance" and that it will provide "a detailed corrective action" to address each of the GAO's recommendation, according to the report.