Financial Analysis of Palestinian Local Government

Abstract

This study aims to examine the major merits of the Palestinian accounting and budget systems as well as to identify major financial problems and obstacles facing the Palestinian municipalities in order to recommend reforms and point out the best choices of increasing internal revenues. The study used both financial analysis of actual and budgeted data as well as a survey instrument; thus a special questionnaire was articulated to collect the perceptions of the financial managers of the Palestinian local governments. The study found that about 85% of the Palestinian local government are using cash basis, 64% of the accounting systems in the municipalities are using the same chart of account for both actual financial accounts and budget statements. Only 42% are using profit centers, the accuracy of estimated budget figures are so far from that actual revenues and expenditures at the end of the fiscal years. Moreover, there is a high percentage of debt due on the municipal residents, low share of taxes to the total revenues of municipalities, and a weak accounting transparency system.

Keywords: Accounting; Financial Analysis, Local government, Palestine

JEL Classification: H7, M4