Audit of the IZS Raises Some Questions

IZS founders circumvented procedures and withdrew substantial amounts of money by means of credit cards issued to them, a 2009 audit found.

The president of the IZS, attorney Yoel Golovensky, is also the chairman of NGO Monitor, which advocates transparency and responsibility by NGOs. Against this background, it’s interesting to see how the association he heads operates. At the request of the Registrar of Nonprofit Associations, an in-depth audit was made of the IZS from March to August 2009. The subsequent report, which appeared the following year, showed that the IZS founders circumvented procedures and withdrew substantial amounts of money by means of credit cards issued to them.

“The chairman Israel Harel and the president, Yoel Golovensky, hold credit cards in order to make payments,” the report noted. “In accordance with the provisions for proper management issued by the Registrar of Associations, credit cards may not be used to make payments, as [such] payments are made with one signature only, contrary to the provisions which necessitate two signatures for every payment. The amount of the payments in 2007 was approximately NIS 113,000, which accounts for some 39 percent of all the association’s expenditures ‏(excluding salaries, rent and amortization‏). A sample check we carried out showed that invoices are missing for a substantial part of the purchases, nor is it clear, in regard to a substantial part of the purchases, whether they were intended to advance the association’s aims or were private outlays. The association withdraws cash from the bank by means of credit cards. In response to the draft of the report, the association noted that it had stopped withdrawing cash by means of magnetic cards.”

Yoel Golovensky. IZS president.Tomer Appelbaun and Moti Milrod

The report recommended that the IZS audit committee draw up a special report regarding all the purchases made by credit cards in 2006-2008. “Regarding purchases for which no appropriate documents exist or which were not made as part of the association’s aims, the card holders must be debited.” The report notes two unusual expenditures that appeared in the association’s accountancy file: NIS 8,100 for “dinner 12/11” and NIS 5,800 for drinks.

The use of credit cards was not the only problem addressed in the report. The audit also showed that in 2006 Golovensky made three trips to the United States for fund-raising. “According to the travel report,” the audit stated, “the traveler was Mr. Yoel Golovensky, whereas the document from a travel agency shows that there were two travelers. As for the type of ticket, the association stated that it was a ‘regular ticket,’ whereas according to the travel agency document it was in business class. The audit believes that it is inappropriate to travel business class. In response to the draft of the audit report, the association noted that there had never been a business-class trip at the association’s expense and there will not be [one in the future]. This response contradicts the documents that were sent to the auditors.” In May 2010, the association conveyed its response to the Registrar, stating that it would work to implement the recommendations.

Did the association’s audit committee draw up a special report about the purchases made by credit cards? And were funds that were spent on purchases not made to promote the association’s aims returned?
The Institute for Zionist Strategies said in reply: “If the reporter had bothered to dig a little deeper, he would have discovered that a large number of the institute’s activists, including its heads, work on a voluntary basis, and that a second audit by the Registrar of Associations resulted in a confirmation of proper management, after all the allegations were addressed. Not one penny was spent for personal needs, the upgrading of the plane ticket was paid for by the traveler at his expense, and the dinner and the drinks were served as part of a conference that was held at the Hebrew University.”