Lindenstrauss bemoans financial reporting of funds

The report said the Accountant General's Office had not distinguished between different types of funds and deposits.

lindenstrauss 88 (photo credit: )
lindenstrauss 88
(photo credit: )
State Comptroller Micha Lindenstrauss harshly criticized the management and quality of reporting of the financial funds and deposits operated by the Finance Ministry and the General Accountant's Office in his annual report Tuesday. "Our inspection found that the balance of the Bank of Israel reported in the state's balance sheet as of 31.12.06 is inconsistent and is short of NIS 4 billion from the correct balance," the report said. "The Accountant General's Office needs to make a correction to the balance of deposits, including the correction of this mistake. To improve the supervision and control of the balances deposited at the Bank of Israel, the Accountant General's Office should improve its correspondence with the bank." Shortcomings were found in the process of reporting and accounting of financial funds and third-party deposits in banks and funds during the inspected period in the months of April to November last year. The balance of funds managed by the Accountant General's Office as of 31.12.06 amounted to a total of NIS 7 billion, not including funds paid to government workers. "In the financial statement, the Accountant General's Office did not provide explanation or details about the types of funds it manages for purposes of proper disclosure," the report said. "Essential information is missing about the system of registration and reporting of these funds, as well as details about transactions regarding the balance or excess funds of each of them." The report said the Accountant General's Office had not distinguished between different types of funds and deposits; as a result, proper supervision and inspection of state finances were curtailed. Lindenstrauss called upon the Accountant General's Office to clearly define and distinguish between funds, budgetary funds and non-budgetary funds. In addition, he bemoaned the finding that the required accounting distinction between deposits and cash, and cash equivalents, was not kept by government offices. "Therefore, the total balance of the deposits included under the paragraph 'balances in the banks and funds' reported in the financial statements is not correct," the report said. Concerning deposits of other countries' binational funds, Lindenstrauss said the Accountant General's Office had not followed clear guidelines regarding the supervision of the balance of deposits and the interest rate the Accountant General's Office is paying for them. For example, it was found that the finances of two binational funds were deposited in special accounts at the Bank of Israel. But the transaction was not presented in the financial statements as part of the funds' finances. Lindenstrauss called upon the Accountant General's Office to publish orders and guidelines for the registration and management of funds and deposits to third parties such as banks, as well as for their supervision and inspection. Furthermore, a special funds paragraph should be included in the financial statements for proper reporting and disclosure on all the funds, the report said.