State comptroller attacks government's lack of financial scrutiny

"For years, the consolidated financial statements of the State of Israel have not been presented or discussed by decision-makers, policymakers, or the Knesset and its committees."

By EYTAN HALON
Blue and White leader Benny Gantz (L) and Prime Minister Benjamin Netanyahu (C) sit in an empty hall in front of President Reuven Rivlin and Knesset Speaker Yuli Edelstein at the swearing in of the 23rd Knesset, March 16, 2020 (photo credit: HAIM ZACH/GPO)
Blue and White leader Benny Gantz (L) and Prime Minister Benjamin Netanyahu (C) sit in an empty hall in front of President Reuven Rivlin and Knesset Speaker Yuli Edelstein at the swearing in of the 23rd Knesset, March 16, 2020
(photo credit: HAIM ZACH/GPO)
Israel’s annual national accounts have not been scrutinized by the government or Knesset in years, the State Comptroller’s Office said Monday. As a result, there is a lack of accountability regarding an important source of information for policy makers, it said.
“For years, the consolidated financial statements of the State of Israel have not been presented or discussed by decision makers, policy makers or the Knesset and its committees,” State Comptroller Matanyahu Englman’s office said in an annual report that focused on the 2018 national accounts. “This is different than the financial reports of a commercial company, which are approved by the board of directors and are presented before a general meeting of shareholders.”
As of December 31, 2018, Israel’s cumulative current-account deficit was NIS 1,961 billion ($557b.). The country’s long-term financial commitments, described as “significant threats to the State of Israel,” were valued at NIS 2,387b. ($678b.).
There were significant gaps in the national accounts, including a failure to include the government’s land assets (valued at NIS 523b.) and intangible assets (NIS 5.3b.), the report said. In addition, financial reports of 67 of 202 government bodies included in the report were not audited by external accountants, it said.
“The financial reports are one of the main channels for transferring information about the state to the public to identify financial trends and risks, and they are a primary management tool for policy-making and implementation,” the report said.
“Decision makers must strive to obtain complete and reliable government account reports to increase transparency, enable control and increase the accountability of relevant officeholders.”
To increase accountability, the finance minister and accountant-general should consider presenting the financial reports to the Knesset and government on an annual basis and to create a legislative mechanism that requires ministers and government ministries to debate their findings, the report said.
The report also criticized the absence of a national investment strategy, which would enable government ministries to prioritize projects and support the government’s ability to develop vital infrastructure for economic growth.
The publication of a 2017 list of planned multiyear infrastructure projects by the Prime Minister’s Office was a welcome move, the State Comptroller’s Office said. The Finance Ministry, together with other government ministries, should advance the formulation of a national investment strategy, it added.
Based on that strategy, the government will subsequently be able to develop action plans for investment in public-private partnership (PPP) infrastructure projects and present the action plan once a year to ministers to understand its significant budgetary impact, the report said.
“Establishing orderly working principles for carrying out projects will enable greater investment in infrastructure projects, while creating diverse investment channels in the economy and assisting the country’s economic growth for years to come,” the State Comptroller’s Office said.


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