Association of Health Care Committees – Nablus

Deficiencies in the implementation of the governance system!

Episode No. (23)

·       The Association of Health Care Committees – Nablus, which is a non-profit civic association concerned with providing health services, operates by providing its services through Al-Amal Rehabilitation Hospital, and is also concerned with providing its social and educational services. It was established in 1991 in the city of Nablus, and it has branches and centers in several areas in the north of the West Bank.

·       The State Audit and Administrative Control Bureau (SAACB) conducted an audit of the Association’s work for the year ended 2022, and it was noted that the Association achieved cumulative surpluses up to the end of 2022, totaling 1,329,901 dollars. This amount is the net assets disclosed in the financial statements as of 31-12-2022, knowing that the Association owns a number of buildings and lands.

·       Despite these best practices of the Association, there are observations, violations and deficiencies in the application of the governing systems and laws.. The inspection results show that the Association suffers from weakness in the financial system and internal administration, including the absence of financial planning, weak internal controls, and the accumulation of accounting violations, in addition to the absence of proper documentation of grants and projects, which led to risks related to transparency, accountability before donor entities, and it was noted that there are financial discrepancies and irregularities in reporting, which undermines confidence in the soundness of financial management. Moreover, it was shown that there is not full compliance with legal and regulatory procedures, reflecting a deficiency in the management of the Association’s internal governance!

-        These violations and observations are the material findings reached by the Bureau in its report; they directly affect the financial and accounting aspect, where it was shown, for example but not limited to, that the Association does not apply a comprehensive computerized financial system, and relies partially on manual schedules, with weak control over petty cash and cash disbursements, including direct cash payments without original invoices or supporting documents in a number of activities!

-        In addition, it was shown that there is no complete documentation of grants and foreign assistance, which limited the Bureau’s ability to verify the proper use of funds!

-        As for the Association’s bank accounts, it was shown that there are discrepancies between bank balances in the Association’s books and those recorded in official bank statements, without updated bank reconciliations or ones approved by a certified public accountant!

·       As for the financial management and governance side: it was shown that there is an absence of an approved annual financial plan and weak internal follow-up, which indicates a weak internal control system. There is also an overlap in disbursement and signatory authorities, where cases of disbursements and approvals were observed by employees who are not officially authorized for financial signature!

·       As for funded activities and projects: it was shown that there is not full compliance with the conditions of some funded projects, weak field documentation of activities, and duplication of some expenses across more than one project!

· As for the matter of legal and regulatory compliance: it was noted that the association’s registry at the competent ministry has not been updated, and there has been a delay in holding General Assembly meetings, in addition to shortcomings in implementing the integrity and transparency system, as the financial reports are not published on the website or within public disclosure reports, which reduces the principle of transparency before funders and the community! In the same vein of weak legal and regulatory compliance, the association sold two of its properties, worth 500 thousand shekels, without announcing a public auction for the sale, and without a report by certified appraisers to estimate the approximate value of the price, which leads to not obtaining the best prices!

·        As for the Bureau’s recommendations regarding these violations and observations in the Association’s work for the year 2022, the most prominent were as follows:

-        Adopt a unified electronic financial and accounting system, that documents revenues, expenses and projects.

-        Accelerate the settlement of bank discrepancies, and the audit of accounts by a certified public accountant.

-        Activate an internal financial committee to follow up on financial performance and budgets.

-        Commit to holding general assembly meetings on time, and update legal records periodically.

-        Enhance transparency by publishing financial reports and funded activities to the public and supervisory bodies!