Updated 8:40 p.m. ET Friday 5/31
(CNN) – A newly obtained video has the IRS running damage control on a new front, as the embattled agency prepares for the release next week of an inspector general report that will be critical of how money was spent on staff conferences.
In the video, an apparent team-building exercise, employees are taught the Cupid Shuffle dance move as they prepare to present the dance as a group at a 2010 conference.
The IRS said Friday night the video "was unacceptable and an inappropriate use of government funds."
The video's narrator describes the group of individuals as executives from the Small Business/Self Employed (SBSE) department. They say they’re competing "to become the next great dance sensation."
The IRS said the video cost $1,600 to produce, and it played at the end of a 2010 leadership and education meeting in Anaheim for 2,600 managers in the SBSE division.
"The meeting took place at a time where the IRS needed to ensure that managers had proper training to address significant new programs, major staff turnover and a substantial increase in security threats following the suicide attack on an IRS facility in Austin earlier in the year," the IRS said in a statement.
Throughout the nearly-three minute video, the employees poke fun at each other as they try to learn the dance moves.
The new video comes as the IRS takes heat over its admitted targeting of conservative groups who sought tax exempt status.
Next week, the Treasury Inspector General for Tax Administration (TIGTA) will release an audit showing excess spending at the IRS conference.
The IRS has already come under scrutiny for Star Trek and Gilligan’s Island-themed training videos it produced that costs tens of thousands of dollars. The Star Trek video, reported earlier this year, played at the same conference as the dance video.
“And I thought doing the Star Trek video was humiliating,” one woman says in the new video.
In fact, one of the employees in the Star Trek video was also in the new dancing spot.
Acting Commissioner Danny Werfel, appointed in recent weeks, said in a statement that the report will focus on an IRS conference that took place in 2010 and labeled it an "unfortunate vestige from a prior era."
"While there were legitimate reasons for holding the meeting, many of the expenses associated with it were inappropriate and should not have occurred," he said, adding new rules have been put in place and such a conference will not happen under his watch.
Last year, the General Services Administration drew fierce congressional criticism and scrutiny for spending nearly $1 million on a conference in Las Vegas, also in 2010, that featured a controversial video and ultimately resulted in the resignation of its administrator.