State Audit and Administrative Control Bureau (SAACB) audit of Al-Quds Open University for 2020/2021

-       The SAACB appreciates the University's adoption of an open education system and blended learning, which aim to deliver knowledge and education to all segments of Palestinian society, and the University awards the bachelor's degree in 36 majors, distributed across seven colleges, and the master's degree in eleven majors from the Deanship of Graduate Studies and Scientific Research, in addition to awarding the diploma degree in three educational majors and eight vocational majors, and the existence of a number of scientific and educational centers.

-       The State Audit and Administrative Control Bureau (SAACB) conducted a financial and compliance audit of the activities of Al-Quds Open University for the year 2020/2021, and among the most important findings reached in the audit process, we list below some observations and violations as follows:

●      Observations related to governance

-       The Board of Trustees did not exercise some of the powers granted to it, such as ratifying the appointment of vice presidents and branch directors, amending internal regulations, and the organizational structure.

-       No plan was prepared to unify all efforts to confront and reduce the deficit existing in the budget estimate and the University's financial position... despite the existence of some measures taken by the University to reduce the deficit.

-       There is no regulatory manual or job description that provides explanations of the structure at each administrative level, so as to include the tasks and responsibilities of directorates, departments and units, areas of responsibility, and the tools and channels of communication.

-       The Internal Audit Department did not fully perform some of the tasks entrusted to it, as no audit by the department was evident on some matters of importance in the University such as the companies affiliated with the University.

-       The University’s audit firm was contracted with and the firm was renewed each year directly, without tendering that contract.!

-       The University's computerized financial system is weak and not flexible to keep pace with developments in accounting standards and regulations, and the required reports for audit and preparation of the financial statements are not issued!

-       There are no general procedures and policies for archiving the University's documents and records, including financial data and academic documents, student data and curricula, contrary to accepted principles.

-       There is no Code of Conduct at the University that sets out other principles not contained in laws and regulations, explaining how to deal with administrative levels, employees and students.

●      Observations related to the University's financial matters

-       The Bureau issued a qualified opinion on the consolidated financial statements of Al-Quds Open University as at 31/8/2021, and its financial performance and cash flows for the year then ended, in accordance with International Financial Reporting Standards for the following reasons:

1-   The University's consolidated financial statements did not include the financial statements of the Amman office, and the Bureau was not provided with its financial and administrative data and transactions for 2021.

2-   The University's consolidated financial statements did not disclose all vehicles, including the Amman office vehicles, a vehicle of the Tubas branch, and the vehicles of companies in which the University contributes or controls.

3-   All bank accounts were recorded in Jordanian dinar currency only, and there is no separate ledger bank account for each currency.. revenues are received in dinars and recorded in the accounting software at more than one exchange rate.

4-   Inaccuracy in calculating depreciation, and inconsistency in the procedures and methods used by the University in recording its financial transactions, especially the depreciation expense for assets.

5-   Not all lands owned by the University were disclosed in the consolidated financial statements.

6-   Approval of the annual budget with a cumulative deficit without putting forward solutions to confront and reduce the deficit, and without providing clarifications for the items that were estimated, which indicates the absence of sound and serious procedures to reduce this deficit.

7-   There is no study of the University's cash flows and its need for credit facilities.

8-   Donations for the Nablus building were not recorded in the University's financial system, as the donations were recorded in the branch’s accounting department through a (Excel file) list without being entered into the software, and no receipt vouchers were issued for the amounts collected.

9-   Although there is an austerity policy at the University, which manifested in forming some committees, the presence of an objective in the (unapproved) strategic plan and many decisions taken by the University Council and executive management, administrative and general expenses increased during 2020/2021 by 8%, while educational expenses and costs of educational materials increased by 11%, which indicates a failure in implementing the austerity policy.

10-                   There is a lack of supporting documents for some disbursement transactions, such as the absence of a tax invoice.

11-                   There is no special lease committee to study the need, rents and offers, and to negotiate with landlords, which may lead to renting premises unsuitable for the University's needs, where the value of amounts paid during 2021 for rent of the headquarters and branches amounted to 809,828 dinars (eight hundred nine thousand eight hundred twenty-eight Jordanian dinars).

12-                   The University and its companies deal with external financial and legal consultants to organize their legal and financial affairs without organizing requests for quotations, and without an agreement or contract that specifies the work performed by the consultants, or a report of achievement, and without issuing a report on agreed-upon financial data.

·       These observations indicate the existence of deficiencies in financial management and compliance with international standards

●      Salaries

-       There is no schedule of data and reasons for receiving the Jerusalem allowance, which does not provide confirmation of the correctness of its calculation.

-       An allowance of 75 dinars was paid as a medicine allowance to some employees without any legal basis or reference for paying these amounts.

-       There are increases in administrative allowances paid at rates ranging from 60%–120% over the unified cadre.

-       A technical allowance was paid to some employees without entitlement, contrary to the system applied at the University.

-       An additional burden allowance is paid without a legal basis for payment.

-       Allowances and payments are disbursed without a written system and instructions and on a monthly basis.

-       There are discrepancies in calculating the end-of-service gratuity for some employees due to the University’s failure to adhere to the calculation bases adopted in the cadre agreement.

-       Not all University vehicles registered with the Palestinian Ministry of Transport and Communications were recorded in the financial statements, and the vehicles owned by companies controlled by the University did not appear in the consolidated financial statements of Al-Quds Open University as of 31-8-2021.

-       Lands appeared in Appendix No. 7 of the University's financial statements as investments, without showing a clear basis on which these lands were converted into investment lands, which does not provide confirmation of the correctness and soundness of the procedures for classifying these lands as investments.

-       The Jericho land and the Salfit land did not appear in the financial statements or the notes attached to the financial statements as properties or investments, although they appeared in the University's land valuation report dated 22-2-2018, and title deeds for the land were not provided to us.

·      These observations indicate a lack of transparency and of the procedures followed in managing salaries and assets.

●      Companies in which the University contributes or controls:

-       The Board of Trustees of Al-Quds Open University, nor the University's financial or legal advisers, prepared the necessary financial, economic and legal studies before founding the companies in which the University contributes or controls, and the Board of Trustees did not issue any regulations indicating how to manage and follow up the work of those companies.

-       The Board of Trustees did not review or discuss the financial statements, the report of the statutory auditor, nor the appointment of a new auditor.

-       The SAACB did not find a clear objective for the existence of the companies that were established in providing services to the University.

-       No financial or administrative system was demonstrated for the companies that were established to determine authorities for disbursement, procurement and hiring!

-       Al-Quds Open Media Production Company and Al-Quds Open Company for Continuous Vocational Training did not issue audited financial statements from their establishment in 2017 through 2021.

-       The companies did not keep organized and evidential accounts showing their revenues and expenses, receivables and liabilities, and their assets and properties.

-       The Board of Trustees did not request or review the financial statements of Al-Quds Open Media Production Company and Al-Quds Open Company for Continuous Vocational Training prior to deciding to liquidate them.

- The statutory auditor, the liquidator of the aforementioned companies, was appointed by a decision of the General Assembly of the companies, and he is the same companies’ auditor!

- There is no activity or tasks being carried out by the Amman office, which indicates mismanagement of the university’s assets, which led the university to incur expenses without justification!

●      Administrative matters and human resources

- The number of employees at the university (administrative and academic) decreased in 2021 by 16% compared with previous years, despite the payroll and allowances bill increasing by 18% during the same year compared with previous years,

- Some employees working at the Open University of Jerusalem and its affiliated companies also work at governmental institutions and ministries (dual employment), which may lead to the employee failing to perform the duties assigned to him, and thus the university’s rights may be lost

- There is no needs assessment before hiring that shows the vacant position and the specialty of the vacancy and the reason for the vacancy, and we found that most of the hires audited are not needed!!

- Employees are being hired with specialties that do not correspond to the nature of the university’s work, and there is no need for these specialties; for example, Nursing specialty, Primary Stage Teacher specialty, and Civil Aviation specialty!

- There are no competitive procedures in hiring processes, which indicates that proper and legal hiring procedures are not being followed, and it also suggests that some of the procedures followed for hiring are merely formal!

- Some employees did not have their attendance proven during certain periods without justification, and no action was taken regarding them, in addition to paying them their full salary, which indicates leniency by the university administration in dealing with these cases,

- Absence of the principle of transparency and the principle of equal opportunities in the university’s scholarship (study abroad) procedures,

·       In my opinion... The Open University of Jerusalem’s mission is a noble mission: it serves all sectors of Palestinian society in education and qualification on an ongoing basis; however, the observations of the State Audit and Administrative Control Bureau (SAACB) cited above in the Bureau’s audit report on the university’s operations for the years 2020/2021 showed that there are risks that may weaken the ability of the university administration in all its departments to fully achieve the intended objectives correctly. Therefore, the university administration, led by the University Council of Trustees, must review, direct, and follow up on the correction and rectification of the mentioned weaknesses, especially in the financial and administrative fields. Wishing you success.