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TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION

Review of the August 2010

Small Business/Self-Employed Divisions

Conference in Anaheim, California

May 31, 2013

Reference Number: 2013-10-037

This report has cleared the Treasury Inspector General for Tax Administration disclosure review processand information determined to be restricted from public release has been redacted from this document.

Phone Number | 202-622-6500

E-mail Address | [email protected]

Website | http://www.treasury.gov/tigta


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HIGHLIGHTS

REVIEW OF THE AUGUST 2010 searching for the most cost-effective location as

SMALL BUSINESS/SELF-EMPLOYED required. Instead, SB/SE Division management

DIVISIONS CONFERENCE IN approached two non-governmental event

ANAHEIM, CALIFORNIA planners to identify a suitable off-site location forthe conference. These two planners were not

Highlightsunder contract with the IRS; hence they had noincentive to negotiate a favorable room rate forthe IRS. Instead, the three hotels paid the eventplanners an estimated $133,000 commission

Final Report issued on May 31, 2013based on the cost of rooms paid for by the IRS.

Highlights of Reference Number: 2013-10-037 The IRS may have been able to negotiate ato the Internal Revenue Service Chief Financial lower lodging rate to reduce conferenceOfficer. expenses if it had not used non-governmental

event plannersand eliminated some of theIMPACT ON TAXPAYERS negotiated concessions provided by the hotels

(e.g., daily continental breakfast, a welcomeExcessive spending by Federal agencies onreception with two drink coupons for allmanagement conferences has been highlightedattendees, a significant number of suiteby recent Inspectors General reports and theupgrades). TIGTA also identified othersubject of congressional hearings. Effectivequestionable expenses related to the conferencecost management is especially important givenincluding planning trips, outside speakers, videothe current economic environment and focus onproductions, an information corridor, andefficient spending. TIGTA identified severalpromotional items and gifts for IRS employees.ways the IRS could enhance controls over

conference spending. WHAT TIGTA RECOMMENDED

WHY TIGTA DID THE AUDIT TIGTA recommended that the IRS verify thatcosts are being tracked for recent conferences;This audit was initiated to identify the IRSstrack conference attendance; ensure that

spending on conferences during Fiscal applicable IRS personnel are used to plan futureYears 2010 through 2012. Our primary focusconferences; develop procedures outlining thewas on the August 2010 Small Business/appropriate use of non-governmental eventSelf-Employed (SB/SE) Divisions All Managersplanners for IRS conferences; establishConference in Anaheim, California. Thisprocedures related to planning trips, informationconference was selected because TIGTAcorridors, videos, and other technology for futurereceived an allegation of excessive spendingconferences; evaluate whether hotel upgradesand it was the most expensive conferenceshould be used for future conferences; andduring this period.ensure that taxable travel is identified and

WHAT TIGTA FOUND Forms W-2, Wage and Tax Statement, areissued to applicable employees.

The SB/SE Division conducted a conference foran estimated 2,609 SB/SE Division executives In their response to the report, IRS management

and managersat a reported cost of $4.1 million agreed with all of TIGTAs recommendations.at the Marriott, Hilton, and Sheraton hotels The IRS plans to issue additional guidancelocated in Anaheim, California. Procedures at related to conference spending and attendance,the time of the conference did not require IRS tracking Continuing Professional Educationmanagement to track and report actual credits, the use of event planners, soliciting hotelconference costs. As a result, TIGTA could not room upgrades, video productions, planningvalidate the conference cost reported by the trips, and the conference approval process. TheIRS. IRS also stated that it plans to issue Forms W-2

to all applicable employees. TIGTA determined that the IRS did not useavailable internal personnel to assist in


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DEPARTMENT OF THE TREASURY

WASHINGTON, D.C. 20220

TREASURY INSPECTOR GENERAL

FOR TAX ADMINISTRATION

MEMORANDUM FOR

FROM: SUBJECT:


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Table of Contents

Background

Results of Review


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Appendices


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Abbreviations


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Background

Figure 1: Top Three Conferences Based on Estimated CostHeld at a Single Location During FYs 2010 Through 2012

Operating

Division Name/Purpose of Event Date Location Participants

Estimated

Cost

Source: Chief Financial Officer, November 2012.


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Promoting Efficient Spending

Management Deficiency Report: GeneralServices Administration Public Buildings Service 2010 Western Regions ConferenceDepartment of Veterans Affairs Administrative Investigation of the

FY 2011 Human Resources Conferences in Orlando, FloridaPromoting Efficient Spending to Support AgencyOperations


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Results of Review

The Anaheim Conference Was Approved by Both Internal RevenueService Deputy Commissioners

Conference Costs Were Primarily Paid Through Unused FundingOriginally Intended for Hiring Enforcement Employees


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Conference Costs Were Not Adequately Tracked and Monitored


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Recommendations

Recommendation 1:

Managements Response:Reissued Interim Guidance on the Approval Process for Event-Related Spending

Recommendation 2:

Managements Response:


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Credit for Continuing Professional Education forCertified Public Accountants.

The Process Used to Select Anaheim As the Conference Site Did NotFollow Established Guidelines

IRS personnel responsible for identifying conference space were not used


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Non-governmental event planners representing the IRS were not under contractand were paid $133,000 by the conference hotels


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Recommendations

Recommendation 3:

Hosted or Sponsored Conference Planning and Approval


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Managements Response:Acquiring Training, Meeting and ConferenceSpaceLeadership andEducation, Selection of Off-Site Locations and Facilities for Training

Recommendation 4:

Managements Response:Reissued Interim Guidance on the Approval Process for Event-Related Spending, Leadership and Education, Selection of Off-Site Locations and Facilitiesfor Training,

Planning Trips Were Made for the Conference


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Recommendation

Recommendation 5:

Managements Response:Leadership and Education, Selection of Off-SiteLocations and Facilities for Training,

Fifteen Outside Speakers Were Contracted for the Conference

Request, Authorization, Agreement & Certification of Training


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The conference featured 15 speakers at a cost of $135,350

Two keynote speakers were featured


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Figure 2: One of Six Paintings Created During the Keynote Presentation

Source: Recorded conference sessions.


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Star Trek Parody and SB/SE Shuffle Videos Were Produced for theConference


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RecommendationRecommendation 6:

Managements Response: etc.

A Substantial Number of Internal Revenue Service EmployeesReceived Hotel Upgrades


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Figure 3: A Presidential Suite at the Hilton Hotel

Source: Hilton website shown with permission from the Hilton Hotels and Resorts.


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Recommendation

Recommendation 7:

Managements Response: Leadership and Education,Selection of Off-Site Locations and Facilities for Training,

Acquiring Training, Meeting and Conference Space,

Local Employees Were Granted Authorization to Stay at theConference Hotels


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Wage and Tax Statement

RecommendationRecommendation 8:

Managements Response:

Several Meals and a Welcome Reception Were Provided During theConference


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Other Expenses Related to the Conference

An exhibitor hall was used at significant additional cost

i.e.

The exhibit featured engaging activities, such as an outer space galaxy challengegiveaway, Los Angeles Angels baseball ticket giveaway, and a time capsule (to share

visions of SB/SE in 2020), as well as booths, displays, and an assortment of information

about the work of SB/SE. The Information Galaxy was attended by over 1,800individuals who visited booths hosted by SB/SE operating units and other IRS business

units, executives, and senior managers. In addition to the Information Galaxy, it featured

networking opportunities, educational workshops and forward-looking technology.


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Promotional items/gifts were provided to IRS employees

Automated response tools were rented


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Recommendation

Recommendation 9:

Managements Response:Reissued Interim Guidance on the Approval Process for Event-Related Spending,

Leadership andEducation, Selection of Off-Site Locations and Facilities for Training,


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Appendix I

Detailed Objective, Scope, and Methodology

etc


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Internal controls methodology


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Appendix II

Major Contributors to This Report


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Appendix III

Report Distribution List


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Appendix IV

Internal Revenue Service Conferences

Held During Fiscal Years 2010 Through 20121

FY Name Division

Estimated

Cost Attendees Venue Location


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FY Name DivisionEstimated



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Grand Total Estimated Cost for 225 Conferences $48,631,799



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Appendix V

Legend for Abbreviations Listed in Appendix IV

Acronym Definition


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Acronym Definition

Source: IRS Intranet.


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Appendix VI

Internal Revenue Service Conferences

Held During Fiscal Years 2010 Through 2012

Ranked by Highest Average Cost Per Event

IRS Operating Division

Number

of Events Total Cost

Average

Cost

Per Event

Totals 225 $48,631,800 $216,141



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Appendix VII

Summary of Costs

for the Anaheim Conference

Category Cost

Total Costs $4,133,183

Source: SB/SE Division management. Costs are rounded.


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Appendix VIII

Guest Speakers Procured

for the Anaheim Conference

Guest Speaker Cost Service Provided Topic

Total Costs for Guest Speakers $135,350

Source: IRS sole-source justification documents; Standard Forms 182, Request, Authorization, Agreement &

Certification of Training; and SB/SE Division management. Total costs are rounded up.


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Appendix IX

Anaheim Conference Agenda


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Anaheim Conference Agenda

Source: SB/SE Division management.


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Appendix X

Anaheim Conference Workshops

on August 25, 2010

Workshop Title Speaker Times


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Workshop Title Speaker Times

Source: SB/SE Division management.


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Appendix XI

Managements Response to the Draft Report


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