State Audit and Administrative Control Bureau Report 2018 — Part II No. 3

·       TheGeneral Petroleum Authority

·       The General Petroleum Authority in Palestine....a very important and general center of responsibility..and a main tributary and lifeline..the public treasury of the State...it lends and does not borrow in principle...it operates according to the system and the law..however in our case here and in light of the State Audit and Administrative Control Bureau (SAACB) report for 2018, and the previous reports..it is a main competitor for obtaining bank facilities in the local market, or for borrowing from public funds...it is a burden on the public treasury. And it is not a support by any measure..for many past years..its activity did not bode well. The balance of loans granted to it reached 1.564 billion shekels, in addition to an amount of about 51 million shekels of loans from the Dar al-Aytam Institution and the Palestinian Alimony Fund as of 31-8-2019 (according to Ministry of Finance statistics in Aug 2019...). Note that I did not see any data concerning the amounts of debt on the General Petroleum Authority in the SAACB report.!! Please review some of what the State Audit and Administrative Control Bureau (SAACB) wrote..in its latest report..after auditing the activities of this Authority..which should have been a source of good for the homeland..through cooperation among all sectors of Palestinian society. With solid professionalism and transparency..!!

·       It was shown that there are material differences in the balances of some types of fuels, between the actual balance and the book balance at the end of 2016, and that fuel purchases and reconciliations were not recorded on a daily basis...also purchase invoices were posted to the accounting program after several months, which resulted in the data being inaccurate and unreliable, and in errors not being detected and corrected due to time lags between the quantities of fuel and their entry into the program and then their posting...

·       Accounts for fuel stations in the Gaza Strip were not recorded in the accounting program, nor were the Authority's sales of fuel to these stations recorded...which resulted in the inventory appearing with inflated fictitious balances that affect the accuracy of the inventory..and thus affect the Authority's financial statements..
By comparing the quantities of fuels and gas shown on delivery vouchers with the quantities actually received into the warehouses, according to the purchases details report (i.e., the invoiced quantities), differences were found between the quantities on the delivery vouchers and the quantities on the invoices..

·       The Authority acknowledged, explaining that some of the differences resulted from errors and inaccuracies in their recordings on the accounting system..

·       The SAACB audited the period from 2012 until 31-3-2018..and reached the following observations:
Balances of the Authority's accounts: it was shown that the Authority did not transfer outstanding receivable balances from fuel stations prior to 1-7-2003, amounting to approximately 84 million shekels from the old system (DOS), into the current Bisan system in use, which may lead to the loss of part of these receivables and to not knowing the balance that has not been paid by these stations..

·       The absence of legislation regulating the work of the General Petroleum Authority, in addition to weak internal control procedures and safeguards that govern its operations, which causes the Authority to perform its work in an unorganized manner..resulting in many errors, especially in the balances of receivable accounts (debts) and fuel quantity balances and others..also the current situation of considering the Authority as part of the Ministry of Finance does not conform with its operational function as a government business enterprise, since it practices commercial activities, which results in the Authority, and therefore the State treasury, incurring costs represented in interest and commissions resulting from bank facilities granted to the Authority,

·       The total receivables due to the Authority from fuel stations in both the West Bank and the Gaza Strip, according to what is posted on the Bisan program as of 31-3-2018, are: 381,292,242 shekels, 46,898 dollars, and 4,950 dinars...noting that these receivables do not include the value of checks received from these stations that have not been collected (checks for collection), because the Authority reduced the receivables by the value of checks for collection received from the stations at the time of receipt rather than when their value was collected..!! Checks for collection amounted up to 31-3-2018 to 272,243,028 shekels, and thus the actual receivables due from the stations on the mentioned date, including the checks for collection, are 653,535,270 shekels, 46,898 dollars and 4,950 dinars...

·       There was negligence by the Authority in following up the files of companies, fuel and gas stations, and the licenses related to them, and the procedures for changing their ownership, and failure to renew their licenses, which led to the transfer of ownership of some stations or the exploitation of their operating licenses by other companies/stations, without settling the receivables due on them.

·       The Authority rescheduled the debts due from some fuel stations because of their insolvency, then rescheduled them again, and each time the indebtedness increased as they were supplied with fuel, instead of taking legal measures, which led to the accumulation of the indebtedness and encouraged these stations not to settle their debts..and granted them opportunities to exploit public money..instead of collecting it, at a time when the Authority suffers from a lack of liquidity and resorts to obtaining bank facilities..from banks, which led to charging the public treasury with credit costs..

·       The Cabinet responded to the SAACB's recommendations and took many measures related to the Authority's work, such as: the decision to separate the General Petroleum Authority from the Ministry of Finance and Planning..and to work on enacting a law regulating..the Authority's work as an independent institution, and forming a Board of Directors to run the Authority's work..and soliciting fuel prices through the committee..