What Is an In-Depth Israeli Amuta Audit?
Maintaining proper financial management of your Israeli non-profit organization will help ensure that any potential in-depth Israeli amuta audit will go smoothly. There is no way to know when or how often the audit will take place. This article explains a little about the in-depth audit.
This Series of Posts
Our legal team works in various legal fields, including Israeli non-profit organization law. This article is one in a series focusing on what you need to know about non-profits or charitable organizations in Israel. This series addresses various issues that may be helpful to you as you administer your Israeli non-profit organization. Israeli amutot fall under the jurisdiction of the Israeli Corporations Authority, and you can read about this authority in our article on the topic or by going directly to their unit page under the Ministry of Justice.
Who Carries Out the In-Depth Israeli Amuta Audit?
The government periodically conducts in-depth audits of non-profit organizations. The auditing is outsourced by auction to accounting firms. The auditing process is intense and has significant legal consequences.
It is important to thoroughly prepare the organization’s documents and procedures before the audit happens. Sometimes audits hit the organization by surprise, which may be very problematic for the organization’s development and ability to function.
The auditing process is costly in terms of time, often amounting to hundreds of hours for the auditing body and the organization under scrutiny. During the audit accountants track the use of funds, receipts, protocols to authorize the transactions and expenses, the use of funds to support the official legal objectives of the organization, proper conduct and adherence to legal regulations and proper management guidelines, and more.
Organizations That Are Not Audited
If a non-profit organization has not attained proper management status, it will not be audited. Because the auditing process is costly for the government, it does not bother to audit new organizations that do not yet have a certificate of proper management or organizations that did not receive proper management status by choice. The certificate of proper management shows organizations have the government’s stamp of approval in terms of its management and operations, and it also enables the organization to apply for tax benefits and various grants.
The Organization Responsible for the Israeli Amuta Audit
Within the government there are several bodies that may order the audit of an organization. The Registrar of Amutot, within the Corporations Authority of the Ministry of Justice, is the body that handles basic legal reports of non-profit corporations and matters of proper management.
Additionally, the joint tax authorities, that is the Israel Tax Authority, which includes national insurance, VAT, income tax, and other institutions, can order an audit. When the Israel Tax Authority orders an audit, it will first consider when and if an audit was already conducted by the Corporations Authority.
The Ministry of Finance manages the Accountant General’s office. This division handles the budget of the government and has a representative in each government office, as well is in municipal offices. The function of the General Accountant is to account for, balance, and oversee the use of government funds. When a non-profit applies for and is granted direct funding from the government through one of the offices or a municipality, then the General Accountant will order an audit. At the same time, the General Accountant will take previous audits into consideration and will scrutinize the organization’s liability and actions with regard to regulations and the use of government funds precisely for the project the funds are intended.
If you have questions about financial management, an in-depth amuta audit, or any other matter related to managing an Israeli amuta, please contact us.
Advocate Joshua Pex specializes in Israeli non-profit law and would be happy to discuss the needs of your non-profit organization with you.