(Contributed by the Inernational Affairs Department, Ministry of Finance)

Accountant General Ms Michal Abadi-Boiangiu, CPA, today published the Government of Israel’s 2011 financial statements. The financial statements were signed on April 30, 2012 by the Accountant General, who is responsible for the preparation of the Government of Israel’s consolidated financial statements, and by the Chief Accountant, Yali Rothenberg, CPA, who prepared the financial statements. Every year, the Government of Israel submits a financial report on its activity to the Chairman of the Knesset and the State Comptroller.

The financial statements include information about the implementation of the State budget, statements of financial position (assets and liabilities), a statement of financial performance (profit and loss statement), a statement of changes in net assets/equity, a concise financial analysis and notes to the financial statements. The financial statements offer the Government of Israel, the Knesset and the general public a comprehensive picture, with the aim of achieving transparency and accountability towards the general public regarding the manner in which the executive branch manages all the public resources entrusted to it.

The financial statements were prepared in accordance with accounting standards based on the International Financial Reporting Standards (IFRS), and for the first time include financial data audited by external accountants in respect to 51 government offices and supporting units with a budget representing 37% of the expense budget of all government offices, compared to 44 government offices and supporting units accounting for 34% of the budget last year.

The 152 entities included in the financial statements include all units in all the branches of the Government, the National Insurance Institute and the government companies. The total revenues of all of its branches amounted to around NIS 364 billion. The Government’s revenues from taxes amounted to around NIS 265 billion. The expenditures of all Government branches, subsidies, allocations and transfers amounted to around NIS 200 billion. The Government’s financial deficit for 2011 amounted to around NIS 112.9 billion, compared to a budget deficit of around NIS 28.7 billion.

The Accountant General's Department has promoted in recent years significant reforms in the Government’s financial reporting, with the aim of improving the quality and reliability of the reporting and increasing the relevance of the information presented in the statements. This has included the adoption of accounting standards based on International Financial Reporting Standards (IFRS) and a significant expansion of the external control over the financial statements in the Government offices. Reliable financial statements are a key source of information on the assets and liabilities of the State of Israel and serve as a basis for improving various critical processes based on a long-term view.

Minister of Finance Dr. Yuval Steinitz congratulated the Accountant General for the innovative work on the subject: “In light of the economic collapse of important European countries, we decided to improve the financial statements of the State of Israel in order to give ourselves and the world as a whole a fuller and more complete picture of our financial position, beyond the ongoing issues of the magnitude of the budget and the debt. This is an innovative move that will be expanded gradually in the years ahead and will improve the ability of the outside world and the rating agencies to accurately evaluate the overall economic position of the State of Israel.

For the first time, and after in-depth work on the subject, the financial statements present some material data pertaining to each and every citizen in the State of Israel, such as: An estimate of the value of the Government’s land, the asset value of some of the gas reservoirs, etc. The State’s liabilities in respect to budgetary pensions and the Government debt are also presented. A perusal of these financial statements reflects the status quo of the Government’s budgetary and accounting deficit and makes it possible to perform trend analyses and draw conclusions with regard to development over time. All this constitutes an additional element in the State’s implementation of public transparency and accountability towards citizens and policymakers alike and in spearheading a responsible and fair economic policy.”

The Accountant General, Ms Michal Abadi-Boiangiu, Attorney at Law and CPA: “The disclosure regarding the lands owned by the Government represents an estimated value of over NIS 300 billion, the scope of assets in respect to projects in cooperation with the public sector stands at around NIS 19 billion and fixed assets stand at around NIS 290 billion in 2011. The purpose of the financial statements, like those of any economic entity, is to provide financial information that will be useful for a wide range of users for purposes of evaluation and decision-making. Despite the great improvement in the quality of information, we are still a long way from the goal of financial statements that fully reflect the financial position and all the economic activity of the State and its entities. The main lack is in the area of the State’s assets.”

The Chief Accountant at the Accountant General’s Department, Yali Rothenberg, CPA, who prepared the financial statements: “Financial statements provide a complete and comprehensive picture of the Government’s financial position, and one can learn from them about its stability, weak points, advantages, trends and more. For example – the scope of the Government’s liabilities in respect to employee rights stands at around NIS 581 billion, and its liabilities for supporting pension funds at around NIS 118 billion. Financial statements that are prepared in accordance with generally accepted accounting principles, and accompanied by proper notes, together with a financial analysis of the statements, are a valuable tool for decision-making and in determining economic policy. Furthermore, the financial statements have a structured, prescribed and fixed format that provides a common basis for comparing between the data of different governments. Presenting the financial position of the Government and the results of its operations in a consolidated format provides users of the statements with economic information on the activity of the extended government, including all its branches, in conformity with international standards of financial reporting.”