State audit is distinct from other forms of public
audit in its status, aims and methods. It can be defined
as the collection of data on the activities of the organizations
it inspects, and their comparison with binding norms.
It is a process of independent evaluation of the activities
of the State, its institutions and corporations. The State
Comptroller carries out external audit on the wide range
of activities of the state administration and other public
bodies in order to assure public accountability. In carrying
out his functions, the State Comptroller enjoys unlimited
access to the accounts, documents and databases of all
the bodies subject to state audit. The principal norms
in the light of which the State Comptroller inspects the
activities of audited bodies are: legality and regularity;
economy, efficiency and effectiveness; and moral integrity.
A. Legality and Regularity - The check upon the legality
of an action taken by a public official or a person exercising
authority or expending public funds is designed to examine
whether it is within his legal authority to take the action
concerned; the review of the regularity of the action
taken or the expenditure is designed to examine compliance
with laws, regulations and procedures, and proper behavioral
norms.
B. Economy, Efficiency and Effectiveness - Economy audit
concerns itself mainly with the inputs invested in a particular
activity; efficiency audit examines the relationship between
inputs and outputs; and effectiveness audit deals with
the outputs achieved and whether the aims of the activity
have indeed been met.
C. Moral Integrity - State audit in Israel concerns itself
also with the examination of the adherence of public servants
to norms and rules of behavior, such as whether actions
were taken in which there were conflicts of interest,
irrelevant considerations, partiality, or abuse of position
or authority. In areas in which behavioral norms have
not been defined in laws or written procedures or by judicial
precedent, the State Comptroller will determine the appropriate
norm in order to prevent improper decisions and actions.
More than once the norms have been given binding force
by laws or regulations. Sometimes, in light of audit findings,
the Comptroller will recommend considering a change in
legislation.
Scope of Audit
The scope of state audit in Israel is among the most extensive
in the world. It extends to the operations of all government
ministries and state institutions, including all branches
of the defense establishment (the Ministry of Defense,
the Israel Defense Forces, military industries and even
the most secret units), and all local authorities. Among
the bodies subject to audit are scores of government corporations,
many of which play an important role in the economy of
the State, such as in the exploitation of natural resources
and infrastructures, and in providing vital public services.
Public enterprises or government companies are subject
to state audit if the government has a share in their
management but not necessarily in their capital.
Also subject to audit are all bodies declared to be so
by law, by resolution of the Knesset or by agreement between
them and the government. Government assisted bodies are
also subject to audit, but only insofar as the Knesset
State Audit Affairs Committee or the State Comptroller
so decide. In this category are large public institutions
such as the universities, the "Egged" bus cooperative
and the health insurance funds, as well as other smaller
entities. The State Comptroller may also audit any general
employees' organization, provided that the audit is not
carried out on its activities as a trade union.
In addition to the audit functions described above, the
State Comptroller has been empowered by law with the following
tasks:
(a) Under the Political Parties Financing Law, 5733-1973,
the financial management affairs of the political parties
were made subject to state audit. The law's primary aim
is to moderate their spending and prevent their dependence
on contributors with vested interests. The State Comptroller
inspects their income and expense accounts, including
current accounts and their accounts during the periods
of elections to the Knesset and local authorities. Three
aspects are examined: whether expenditures are within
the spending limits set by law; whether expenditures are
within the framework of the law's restrictions on contributions;
and whether accounts were managed in compliance with the
Comptroller's guidelines. Also audited is the use of public
funds allocated to the parties, according the rules determined
in the law. In cases where the Comptroller's report points
out irregularities, the Comptroller may impose monetary
sanctions on the parties.
(b) In accordance with the rules for preventing conflicts
of interest regarding the activities of ministers and
deputy ministers, determined by the government in 1977,
they must submit to the State Comptroller, upon entering
office and each year, a declaration on their income, assets,
occupations and functions. The rules impose duties and
limitations regarding the above, and the Comptroller is
charged with examining compliance.
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