State Audit and Administrative Control Bureau (SAACB) Annual Report for Palestine, 2021

The State Audit and Administrative Control Bureau (SAACB) annual report for 2021 was published on the Bureau’s website on 27-7-2022, comprising 242 pages. The number of times the report has been viewed online up to the time of writing is 275 views according to the Bureau’s page. It is worth noting that the State Audit and Administrative Control Bureau (SAACB) is the sole entity that remains alone in carrying out administrative and financial oversight over most sectors of public work and centers of responsibility. The Bureau submits its supervisory report annually primarily to the Legislative Council (not currently in existence). A copy of the report is also delivered to the President, and a copy is delivered to the Prime Minister, despite his being the highest representative of the executive authority whose majority of sectors and centers of responsibility are subject to the Bureau’s oversight. Although the Bureau performs its work in a highly professional, responsible manner and in accordance with international standards, in order to “make a difference in the citizen’s life,” according to what the Bureau’s annual message reveals, its powers are not as extensive as required by its mission and mandate. The Bureau responds within the limits of its competencies. Some centers of responsibility regard the Bureau’s reports as entirely non-binding recommendations.

The executive summary of the report stated that the Bureau issued during 2021 a number of audit reports totaling 106 audit reports. The number of entities subject to the Bureau’s oversight exceeds 4,000 entities.

The number of entities subject to the Bureau’s annual report for 2021 in the economic sector amounted to 6 entities; the governance and security sector 12 entities; the social and cultural services sector 13 entities; the non-governmental organizations sector 12 entities; the infrastructure sector 10 entities; performance audit 3 entities; information technology audit 32 entities; and in the local governance sector the number reached 47 entities.

The executive summary of the report stated that the Bureau received a number of complaints in 2012 totaling 274 complaints.

The percentage of compliance with responding to the observations and recommendations contained in the Bureau’s annual report was 68% for responses received within the legal period. The compliance rate for responses after the legal period expired was 13%. The percentage of entities that did not respond at all to the report was 19%.

Given the importance of the SAACB annual report for 2021 to all segments of society, experts, followers, and many other parties, I will present in successive installments summaries of some of the Bureau’s reports in some of the sectors mentioned above. In the following episode No. 2 I will include a summary of the State’s final accounts report for 2018 and 2019 and the Bureau’s reservations on some of the Ministry of Finance explanations attached to the final accounts, as stated in the SAACB 2021 report.

The Bureau began its annual audit report with the final account submitted by the Ministry of Finance and Planning. First: the State’s final account for 2018 and 2019, issued by the Ministry of Finance.

From the Bureau’s reservations on the irregularities contained in the notes attached to the final account, it appeared that the Ministry of Finance and Planning continues to violate public sector international accounting standards concerning the submission of the State’s current account to the State Audit and Administrative Control Bureau (SAACB) late beyond the specified deadlines for submitting such state financial statements. The SAACB showed in its 2021 annual report that the time period according to the State Audit and Administrative Control Bureau Law No. 15 of 2004, Article 34, is one year from the end of the financial year whose financial data are submitted for delivery of the draft final account to the Bureau by the Ministry of Finance on the basis of preliminary accounts. The SAACB affirmed in its report on this subject (submission of the State’s final account), which appears on page 42 of the report, that “the usefulness of financial information diminishes if it is not made available to users within a reasonable period after the reporting date.” The Ministry of Finance provided the financial statements for 2018 and 2019 in mid-current year (2022) on a preliminary basis, and the Bureau’s report, including the subject of the State’s final account, was issued after its audit on 27-7-2022. I see that the existence of financial data pertaining to a financial year and their submission to the Bureau 4 years after the end of the relevant year greatly reduces the value and scope of the audit after such a long period, which the law organized, as we noted earlier, to be at most one year from the end of the relevant financial year.

The State Audit and Administrative Control Bureau (SAACB) audited the consolidated cash receipts and cash payments data of the State of Palestine, the accounting policies and explanatory notes, and the comparative schedules between budgeted amounts and actual amounts as of 31-12-2018 and 2019. These financial statements do not include all public sector institutions and centers of responsibility, since there are institutions that by law are independent of the budget sector and are not included in the Authority’s budget, and their accounting operations are outside the unified financial system (Bisan), so they are not included in the final account report (according to the Bureau’s note). These institutions are: the Palestinian Investment Fund, the Palestine Monetary Authority (PMA), the Palestine Capital Market Authority, the Palestinian Pension Authority. By virtue of their legal status these institutions are tasked with preparing their final financial statements independently, and the Ministry of Finance is not responsible for these financial statements.

The Bureau issued a qualified opinion regarding the audit results of these financial statements, stating in its opinion: “In our opinion, except for the reservations referred to in the Basis for Qualified Opinion paragraph of this report, the accompanying financial statements for the years 2018 and 2019 present fairly, in all material respects, the consolidated cash receipts and cash payments data of the State of Palestine,” and the comparative schedules between budgeted amounts and actual amounts for the financial years ended 31-12-2018 and 2019, and the notes on these financial statements, and a summary of the main accounting policies, in accordance with the International Public Sector Accounting Standards on a cash basis.

I reviewed all the SAACB’s reservations on these data and felt concerned by the substance of these reservations, knowing that these reservations appeared from the Bureau’s audit of an accounting sample of these financial statements. Therefore, the reservations would be much greater if the entirety of the financial statement aspects were audited. It also appeared to me that there are many and complex accounting errors at the Ministry of Finance in the final account report it submitted to the Bureau as we noted, not to mention the facts of the reservations, which should not occur in a ministry such as the Ministry of Finance and Planning. I feel that there is evident negligence, as the Bureau’s reservations in the Ministry of Finance and Planning’s work clearly indicate, which I find surprising, especially given its repetition every year.