The State of Public Finances in the State Audit and Administrative Control Bureau (SAACB) 2018 Report

Financial violations in the Ministry of Finance and Planning — the state's final account 2013

In the State Audit and Administrative Control Bureau (SAACB) report for 2018..

I reviewed the aforementioned State Audit and Administrative Control Bureau (SAACB) report — 2018 — which is 212 pages long... and which is clearly very late in addressing and writing a report on the state's final accounts for fiscal year 2013. This delay weakened the ability to amend, correct, hold accountable, exercise transparency, and follow up on corrections in a timely manner. In any case, the report on the final account for fiscal year 2013 should have been written in the following year, i.e., in 2014... not in 2018. However, in order to show the multiple violations that were committed and as the Bureau presented in its latest 2018 report... by many centers of responsibility across many sectors of public work, including the economic sector represented by the Ministry of Finance and Planning, one of its most important institutions... you will be presented with a summary of the most important violations in subsequent reports on this page...

Although the Bureau’s reports were delayed, as noted above, the Bureau’s continuing reports reveal many varied and repeated violations by centers of responsibility... and, as the Bureau stated in its 2018 report, the response rate to its observations and recommendations from these centers reached about 70–75%. Although these centers responded and replied to the SAACB’s recommendations and observations, the Bureau considered most of the justifications from the audited centers for the violations to be insufficient and unacceptable — justifications that attempt to absorb the embarrassment faced by these centers when they respond that they will work to avoid the violations and comply with the Bureau’s recommendations — and they stop at these hollow phrases in weak responses from centers of responsibility across all sectors of the state within the Bureau’s mandate. The evidence of the lack of seriousness in most responses is that the violations recur in subsequent years, and the responses are repeated. In fact, the SAACB’s observations and recommendations, according to the law establishing it, are essentially only recommendations coming from its audit work to perform its mission, which always emphasizes the Bureau’s keenness to make a difference in citizens’ lives and to enhance good governance in public work.

The SAACB report provided an indication of the number of reports it issued in 2018, totaling 139 audit reports. Local government reports accounted for more than 51% of the total reports. However, in reading and studying the full report, I noted the seriousness of violations mentioned in the economic sector, the civil and security governance sector, the services sector, non-governmental organizations, etc., which include the Ministry of Finance and Planning, the Public Petroleum Authority and some public funds among the centers I will inform you about in later articles on my page as I indicated — about the most important issues and violations in which public funds were squandered and public responsibility was not exercised in accordance with supervisory rules and regulations. In addition to violations committed by local government institutions that also recur every year without any effective and decisive progress in addressing them — most recurring violations by municipalities and local councils in their performance and discharge of responsibilities toward citizens will also be provided to you.

In the next article you will be provided with the most important reservations that the SAACB revealed after it audited the financial statements of the State of Palestine for fiscal year 2013, which consist of the “Budget versus Actual comparative schedule” and the “Unified statement of cash receipts and payments” as of 31-12-2013...
- The State Audit and Administrative Control Bureau (SAACB) in Palestine usually, pursuant to the law establishing it in 2004, submits its annual report to the President of the State, the Legislative Council and the Council of Ministers... noting that some observations and recommendations related to certain centers of responsibility are usually excluded because they would cause public controversy if published openly, and which are certainly addressed... one way or another..

Although many years passed before the SAACB audited in 2018 (Part Two, No. 1), these financial and administrative violations continue to recur in many centers of responsibility in public work. This is evident in the Bureau’s 2017 and 2018 reports. Although the Bureau’s reports are considered only observations and recommendations!! they remain the only tool citizens have to oversee the executive authorities, and they often contain indications and signs of points of failure and violations... even if subtle, they are understandable..!

In its 2018 annual report, after examining the state's final account for fiscal year 2013, the SAACB raised reservations about many violations, including:

The existence of 3,655 bounced checks, with a value not less than 12 million shekels, returned to the Income Tax Department, which were not pursued by the department for approximately 77% of the value of the returned checks... which leads to difficulty in collection due to the statute of limitations having passed on them.

The Ministry of Finance had no reconciliation between amounts transferred from value-added tax revenues in clearing sessions and the detailed amount due for the value-added tax on the invoices that were settled, which led to the inaccuracy of amounts due in favor of the public treasury.

Weak procedures to follow up on differences in clearance invoices (P), where the Ministry of Finance and Planning did not take the necessary measures to pursue collection of these differences and to reduce them, which the Israeli side deducted contrary to the invoice value declared to the Palestinian tax departments by the Palestinian taxpayer. It was found that there were 1,292 clearance invoices (P) during 2013 that were deducted by the Israeli side in clearing sessions contrary to the declared invoice value, which resulted in an excess deduction of 13 million shekels above the declared value in these invoices — the amount was deducted from clearing revenues due to the public treasury without verification. In addition, there were 983 clearance invoices (P) outstanding with the Israeli side amounting to about 15 million shekels during 2013.

The Israeli side charged the water invoice during 2013 with more than 8 million shekels for salaries of the functioning Civil Administration in the West Bank Water Department and about 1 million shekels as late payment interest on water bill payments, without the Water Authority and the Ministry of Finance following up on such amounts and the resulting increase in the cost of water purchase and deductions of amounts without justification, and thus the loss of these amounts to the state treasury.

The West Bank Water Department and the Ministry of Finance did not follow up on the indebtedness of local bodies and individual subscribers for water purchases, whose balance amounted to 572 million shekels according to the West Bank Water Department records as of 31-12-2013, which led to depriving the treasury of its financial resources resulting from collections from the sale of water to local bodies, institutions and subscribers.

Failure to pursue collection of amounts due on direct water subscriptions from the Israeli Mekorot company for Palestinian individuals and institutions that the Israeli company supplies with water directly from clearing revenues, which led to Mekorot supplying water subscriptions to individuals and institutions and deducting the amounts due on these subscriptions from clearing revenues — which amounted on 31-12-2013 to more than 6 million shekels — and the Ministry of Finance and the West Bank Water Department did not follow up on collecting these amounts...

The Israeli side deducted 241 million shekels from clearing revenues during 2013 in favor of Israeli hospitals without financial claims for these amounts being available at the Ministry of Health and without review and audit procedures for the treatment invoices; the ministry does not have schedules or financial claims from the Israeli hospitals regarding treatment invoices in 2013 that would ensure provision of the treatment specified according to the referral.