Restoration of the Church of the Nativity in Bethlehem

-        The State Audit and Administrative Control Bureau (SAACB) in Palestine conducted a control audit of the financial statements related to the "Project to Restore the Church of the Nativity" for the period from 25-12-2008 until 31-12-2018. The audit, which was included in the SAACB annual report for 2020, covered the following topics:

·       Financial statements

-        The project-specific financial statements, prepared for special purposes, did not present either the statement of financial position, the statement of cash flows, the statement of changes in assets, or other disclosures, which does not reflect the project's true financial position and affects users of the financial statements and decision makers.!

·       Supporting documents for disbursements:

-        The Bureau was unable to express an opinion on most of the project expenditures for the period from 25-12-2008 until 31-12-2018, amounting to 475,960 دولار. , due to the unavailability of all supporting documents for the disbursements, most importantly the interim progress reports associated with each disbursement..!

-        Not all supporting documents for disbursements were available for the period since the committee’s formation on 25-12-2008 until 31-12-2013, which affects the Bureau’s opinion on the actual occurrence of those expenditures, their accuracy, and their conformity with applicable laws and regulations...!

·       Contracting with the company C C C

-        This company was contracted to directly supervise the execution of the restoration works of the Church of the Nativity, where the value of the contract with the aforementioned company exceeds ... million dollars... taking into account all change orders from the date of contracting until the date of the audit, which does not provide assurance that the committee obtained the best prices and offers, thereby affecting the integrity and transparency of the contracting.!

·       Change orders:

-        The committee issued multiple change orders on some contracts signed with suppliers and contractors, where the value of the change orders exceeds the original contract value by multiples, contrary to the general procurement rules regarding the calling of tenders for the required works, which does not confirm that the committee obtained the best prices and offers....

·       Violation of the Income Tax Law :

-        The committee violated the Income Tax Law and its instructions by disbursing dues to the Italian company partnering in supervising the restoration works with company C, without withholding income tax at source and remitting it to the Public Treasury, which resulted in depriving the Public Treasury of the tax amount due on the amounts disbursed to the Italian supervision company.!

-        The committee incurred additional costs represented by the income tax due on the supervising engineer’s salary, contrary to the provisions of the Income Tax Law and its instructions.

·       Linking deposits:

-        The committee linked the deposits with Bank of Palestine directly, without soliciting offers for interest rates from other banks, which does not provide assurance that the committee obtained the best interest rate, and which may have led to achieving a higher financial return from placing the deposit.

·       Incorrect calculation of end-of-service provision:

-        The calculation of the provision for end-of-service compensation was incorrect, according to the agreed value of the end-of-service gratuity, which does not conflict with the Palestinian Labor Law, resulting in a reduction of the disclosed provision for end-of-service gratuity in the financial statements, and thus a reduction of the liabilities attributable to the committee, which affects the accuracy of the financial statements.!

·       Duplication in disbursing certain travel allowances:

-        There was duplication in disbursing certain travel allowances to the committee chair from project funds and from the accounts of the National Fund, as reimbursement for the chair’s two travel missions to France and Germany, according to the report prepared by the National Fund. The chair of the committee returned the amounts disbursed to him from the project funds for the two missions mentioned, noting that the amounts disbursed to the committee chair from the National Fund accounts as travel allowances for the two missions exceed the amounts that should have been disbursed according to the travel regulations and travel expenses...!

·       Some grants were not recorded:

-        The committee did not record all grants provided to the project, as it was found that there were indirect payments (third party) not recorded in the committee’s records, which affects the completeness and accuracy of the financial statements.

·       Payment of invoices issued in the name of the committee chair:

-        The committee paid invoices issued in the name of the committee chair rather than in the name of the committee, whereby the value of these invoices is settled to the committee chair personally, not to the beneficiary... in addition to the existence of many non-tax invoices. Through auditing the items included in the invoices, it was found that there are some items that may not be permitted to be covered from public institution funds.!

-        Date:  1-9-2021