Advances and Loans in the Military Financial Administration in Palestine in 2016

The State Audit and Administrative Control Bureau (SAACB) conducted an audit of the Central Financial Administration’s operations for the fiscal year 2016, stating below the most material observations:

·       The general annual budget and bank reconciliations

1-    Annual budgets specific to each unit are not approved within the Central Financial Administration’s budget; rather, a monthly cash advance for operating expenses is approved for each unit by the Minister of Interior, based on a kashf issued by the Payments Department and endorsed by the Director General of the Central Financial Administration.!

2-   There are outstanding items in bank reconciliations continuing since 2012 for some bank accounts, which have not been settled in the accounting records.!

3-   There are large outstanding advances for some units that have not been closed, and the Central Financial Administration has no clear mechanism to follow up on unclosed advances.!

·       Financial advances

4-    The Minister of Finance closed an amount of 133,300 shekels under the "Employees" item for advances from prior years (2011-2014), as an exception by the Ministry of Finance, without referring to the Central Financial Administration as is the usual practice.!

5-   The monthly advances for the security agencies are not closed in accordance with the items specified for them at the time of disbursement, contrary to the provisions of Article (100) of the Palestinian Financial System.!

6-   All advances disbursed to the external arenas were closed under the item (Permanent Employees) in the amount of 87,112,612 shekels... (exceptionally, and (without attaching supporting documents)), by decision of the Minister of Finance, at the request of the former Director General of the Central Financial Administration and the Director General of Military Audit in the Ministry of Finance, contrary to the provisions of the Palestinian Financial System..!

·       Exceptional monthly decisions:

7-    The Minister of Finance approved exceptional disbursement for some monthly decisions, at the request of the Director General of the Central Financial Administration in 2016, in an annual amount exceeding 17 million shekels.

·       Accounting entries:

8-    The Central Financial Administration performed netting of amounts with institutions that operate under its responsibility center, yet the accounting entries were not made to reflect the netting, so it does not appear in the trial balance.!

9-   The Central Financial Administration does not pay the water and electricity invoices due by it and by the security institutions in the governorates to the supplying water and electricity companies; instead it deducts the amounts withheld by the Israeli side from the Ministry of Finance, and the necessary accounting entries are not made to show the netting, so it does not appear in its financial statements.!

·       The entity’s response to the report:

-       The Central Financial Administration did not respond to the Bureau’s report, and the preliminary report was considered a final report)!

·       (And I say, commented) on the foregoing, that it is clear there are violations and deficiencies in the execution of financial operations in the Central Administration in accordance with the laws and regulations governing them: from the advance system instead of approving annual budgets specific to each unit, in accordance with the legislation and regulations; from the existence of advances that remain unclosed...!..and there is no one willing to follow them up! according to the system and principles; passing through the closure of all advances for the external arenas amounting to more than 87 million shekels without attaching any supporting documents to clarify and prove their nature!; ...and from the Central Financial Administration’s failure to pay water and electricity invoices due by it and by the security institutions in the governorates to the supplying water and electricity companies, relying on Israeli-side deductions from the Palestinian clearance revenues – the Ministry of Finance and Planning, ("net lending") and from carrying out netting by this Central Financial Administration on departments that operate and report to its responsibility center without making any accounting entries!....to the note of exceptional decisions by the Minister of Finance...in many cases, to disburse advances..and without referring in some of them to the competent financial administration as usual...!

·       In addition to something that caught our attention and made matters worse!: that despite all these violations committed by the Central Financial Administration and its departments and sections subject to its responsibility center...which appeared in the SAACB report as above,..the Central Financial Administration did not respond and did not answer the Bureau’s report..and gave no heed to a supervisory bureau that helps with its financial and administrative oversight to implement public work in accordance with the laws, legislation, regulations, procedures and policies...that were enacted in legislative and parliamentary councils or were approved and have the force of law from the presidency....and which serve the public interest..in the field of organizing work in public finance, in order to preserve and protect it from waste and loss resulting from neglect or omission or corruption...in the course of public work.!

·       The State Audit and Administrative Control Bureau (SAACB) has the authority to audit governance departments, sections and directorates (civilian and security)...and therefore no one should fall outside this protective ring, which represents the set of laws and regulations that constitute a constitution for the public employee in all his positions and across all grades of his post..even exceptions have provisions, laws and regulations that must not be departed from.

·       The failure to respond to the Bureau’s report is a bad omen; it should not pass without examining the reasons, in order to correct the violations and to act in accordance with the laws and regulations governing all levels of public work, civil and security (..without exception)...!

·       On 17-11-2020