When Need Comes Before Building the System

Post Office Bank and the disbursement of allowances to prisoners and martyrs' families

The Ministry of Telecommunications and Digital Economy established a Post Office Bank department at the beginning of 2021 to address the crisis of disbursing allowances to released prisoners and the families of martyrs and the wounded after previous disbursement channels stopped. The State Audit and Administrative Control Bureau (SAACB) audited the work of the General Directorate of Post during 2021 in the northern governorates, with the aim of assessing the soundness of the financial, administrative and supervisory procedures related to disbursement operations.

The following are some of the most significant substantive observations the SAACB recorded:

·        Financial observations:

-        The SAACB concluded that it does not possess sufficient supervisory assurances regarding the accuracy, completeness and validity of disbursement operations, as a result of the weak internal control system, the lack of adequate computerized reports, and the absence of independent receivable accounts for each beneficiary, which limits the ability to verify the correctness of financial operations. The report also noted the weak expertise of management in allocating liquidity to branches due to the absence of accurate data on the needs of each post office, which affected the efficiency of cash management!

-        The report recorded cases of allowances being disbursed from branches different from the beneficiaries' places of residence, in addition to disbursing allowances to people outside Palestine through the ministry’s headquarters, and the accumulation of some beneficiaries' allowances for more than a month before being disbursed from the ministry’s headquarters or the Ramallah branch, which reflects shortcomings in follow-up mechanisms!

-        The report also indicated that the ministry does not possess an integrated banking system linking post offices similar to banks, which hindered the transfer of funds between branches, and in some cases led to delays in disbursement operations and the occurrence of crowding and chaos.!

-        Among the most prominent financial violations was the ministry’s recording of these allowances under the item of financial advances instead of classifying them as current expenditures in accordance with the Palestinian Financial System, with the advances remaining open without settlement since the start of operations at the Post Office Bank, which complicates the follow-up of funds and the reconciliation of accounts!

·        Weak oversight of financial transfers:

-        The report revealed the transfer of an amount of 320,700 shekels to an exchange company in the Gaza Strip and then its return to the Ramallah Post account in two installments, without evidence confirming that the funds were actually transferred to the Gaza Strip, reflecting weak oversight of transfer operations.!

-        It also recorded financial transfers to the Hashemite Kingdom of Jordan and the Gaza Strip totaling 273,763 shekels, without available data clarifying the source of these transfers or the branches that issued them!

-        The SAACB also pointed to the use of bank accounts designated for disbursing allowances for other purposes, such as transfers for the Central Elections Commission, operating expenses and petty cash funds, which weakened the transparency of operations and increased the difficulty of financial oversight

·        Cash management shortcomings:

-        The SAACB observed the lack of formal documentation of cash inventory operations, the absence of clear policies to regulate the transfer of cash between post offices, in addition to carrying out cash transfer operations without justifications or official documents, and the lack of judicial guarantees for those tasked with transporting funds, which raises the level of financial risk.

·        Deficiencies in disbursing allowances in the Gaza Strip:

-        The report confirmed that disbursement of allowances in the Gaza Strip is not conducted through the Post Office Bank, but rather by an exchange company, which reduces the ministry’s ability to oversee and audit! The SAACB also pointed to the absence of a supervisory system that ensures funds reach beneficiaries, and the lack of data from the exchange company that would enable verification of the validity of disbursement operations, and therefore the SAACB reserved judgment on the correctness of those operations due to the lack of sufficient supervisory evidence!

·        Weak ATM security:

-        The report noted noncompliance of ATMs with security and safety requirements, as they were not equipped with reinforced rooms, nor connected to alarm systems or to the police, and anti-card data theft protection systems were not activated (Anti-Skimming), which increases security risks!

·        Electronic system deficiencies:

-        The SAACB found that the system used in the Post Office Bank does not meet the requirements for managing modern financial operations, as it does not support dual control over operations, and allowance data are uploaded via Excel files, which grants the responsible employee broad powers to modify data without adequate oversight. Also, there is no independent database for each post office, which limits the ability to accurately trace financial operations!

·        Absence of separation of authorities:

-        The report noted that "the 'teller'" employees were granted broad powers including changing card PINs, resetting input attempts, and activating and deactivating cards without appropriate oversight!.

-        It also noted that system and database privileges were concentrated with a single employee, which increases operational risks and contravenes the principles of governance and internal control!

·        The SAACB’s main recommendations:

-        The SAACB recommended reclassifying the allowances as current expenditures, in accordance with the Palestinian Financial System, strengthening financial and administrative oversight of disbursement and cash management operations, developing an integrated electronic system that links financial operations with bank accounts, improving inventory and bank reconciliation procedures, providing ATM security requirements, applying the principle of separation of authorities, and reassessing the agreement with the exchange company in the Gaza Strip while establishing supervisory mechanisms that ensure funds reach rightful recipients with transparency and efficiency. The report indicated that the Ministry of Telecommunications and Digital Economy showed a positive response and confirmed its commitment to taking the SAACB’s recommendations and working to implement them!