Clarification No. 3 — Ministry of Finance and Planning (Ramallah): Clearing Revenues

· The reservations set out below... regarding Clarifications No. (3) recur in every report of the State Audit and Administrative Control Bureau (SAACB) in all previous years...! Why this negligence in implementing the SAACB’s remarks on public performance and the management of public funds?

- We begin by quoting the text of the reservations of the State Audit and Administrative Control Bureau (SAACB) in Palestine in its annual report for 2021 on (the attached clarifications), regarding the financial statements of the Final Account of the State of Palestine for the years 2018 and 2019, which were submitted by the Ministry of Finance and Planning.

· Reservations on Clarification No. 3 - Clearing Revenues -:

- The total clearing revenues disclosed in the final accounts in Clarification No. (3) amounted to 8,095,444,000 sheqel in 2018, and 8,622,246,000 sheqel in 2019. The value of the deductions from clearing disclosed in the final accounts in Clarification No. 3 amounted to 1,509,577,000 sh in 2018, and 2,449,663,000 sheqel in 2019.

- The Bureau’s reservation on Clarification No. 3 regarding clearing for the following reasons:

1- The absence of supporting documentation for some financial transactions related to the clearing revenues disclosed in the final accounts, in Clarification of Clearing Revenues No. (3) — the recognition, through clearing sessions, of a revenue due in favor of the General Treasury, namely income tax withheld from the wages and salaries of Palestinian workers employed in the territories of 1948 — without details about the individuals on whose behalf the amounts were transferred, and without settlement of these amounts with the Israeli side, or determination of the actual amounts due to be transferred, through coordination between the Ministry of Finance and the Ministry of Labor..!

2- The incompleteness of the accounting records related to the clearing revenues and deductions, and therefore the inaccuracy of the presentation and disclosure in Clarification No. 3, Clearing Revenues, in the final accounts for 2018 and 2019.

3- The incompleteness of the presentation of the clearing clarification in terms of the value of actual revenues, and the value of deductions related to collection fees, by failing to disclose the amount of the 3% collection fee deduction under the clearing deductions item such as water, electricity, hospitals and other items, in addition to the absence of accounting records concerning them in the accounting records..!

4- The Bureau’s reservations on deductions related to treatment inside Israeli hospitals, and the procedures of the Ministry of Health in this regard: the Palestinian Ministry of Health did not form a medical team to follow up on the medical cases that were referred to Israeli hospitals, with the aim of determining the medical needs of the patients, and whether the patient needs to remain for treatment with the Israeli side, or whether it is possible to complete the treatment in Palestinian hospitals... in addition to the Ministry of Health’s failure to verify that all invoices and claims issued by the Israeli side relate to Palestinian patients who were admitted to the Israeli hospitals based on a medical referral issued by the Purchasing Department in the Ministry of Health.

5- The deduction of the value of transfer invoices amounting to 534,361,501 sheqel during 2018 and 2019.. without the Ministry of Finance coordinating with the Ministry of Health to audit and review the correctness of the amounts being deducted monthly and to verify the validity of the invoices and financial claims issued by the Israeli hospitals.

6- The Ministry of Finance’s failure to follow up on certain amounts that were deducted from clearing revenues by the Israeli side, and its failure to provide the Ministry of Finance with the necessary supporting documentation for the deducted amounts.

- ...a deduction of 3,050,730 sheqel during the years 2018 and 2019 from the clearing for the Israeli water company (Mekorot), for an invoice for the electricity expenses powering the wells belonging to it, which pump water to the West Bank Water Department, and the electricity consumption of those wells was not verified to ensure the correctness of the deduction..!

- A deduction of 203,181,377 sheqel by the Israeli side for the treatment of wastewater flowing from the West Bank, including the settlements located on West Bank lands, without a reference that clarifies how the deducted amounts were calculated and the legality of those calculations.. noting that the treated water is exploited by the Israeli side for the benefit of the Israeli agricultural sector, without realizing any economic benefits for the Palestinian side...!

- A deduction of 27,398,988 sheqel during 2018 and 2019 by the Israeli side as a replacement for the salaries of Civil Administration employees working in the water sector in the West Bank, where the West Bank Water Department was not provided with the numbers of employees and their job descriptions, and their monthly salary amounts were not provided, and the Bureau was not provided by the Water Authority with the agreement signed between the parties that allows the Israeli side to charge the water bill for the salaries of Civil Administration employees, in addition to the Ministry of Finance not being provided with the agreement as stated in their response..!

- A deduction of 837,938 sheqel during 2018 and 2019 by the Israeli side in favor of Mekorot - the Israeli water company – as late payment interest on water bill payments, while the invoices that are deducted from clearing revenues are deducted monthly...!!