Management of the George-town Public Hospital Cor-poration (GPHC) was yesterday taken to task over the entity’s continued spending of earnings, instead of placing same into the Consolidated Fund.
GPHC Chief Executive Officer Michael Khan, along with a team of officers, yesterday appeared before the National Assembly’s Public Accounts Committee (PAC), where spending by the agency was scrutinised as part of the examination of the 2009 Auditor General (AG) report.
PAC Chair Volda Lawrence called on Khan to address the spending of generated revenue, while noting that it was not in keeping with the requirements of the Fiscal Management and Account-ability Act (FMA) 2003. According to the 2009 report, the GPHC “is a separate entity, which was established under the Public Corporation Act 1988 No 3 of 1999, but continued to receive appropriations instead of a subvention from the government. This practice is not in keeping with the requirement of the FMA Act Part XII Sections 79 and 80. Such legislation requires the entity to keep separate books of accounts to record assets and liabilities as well as income and expenditure and to have separate financial reporting and audit.”
The report further stated that according to the corporation’s records, during 2009 amounts totalling $13.459 million were collected as revenue, of which only $6.073 million were paid into the Consolidated Fund for the period under review.
The corporation continued to make payments from its revenue during 2009. Similarly, the report noted that during 2008, amounts totalling $14.443 million were collected as revenue and the full amount was expended. The report reiterated that the corporation was in receipt of an appropriation instead of subvention and as such it ought not to incur expenditure out of its revenue. Revenue must be deposited promptly into the Consolidated Fund in accordance with Section 46(1) of the FMA Act, the report stated.
The hospital, in response to the report’s findings, stated, “We recognise our limitations in resolving the issue of funding and reporting, being a corporation. However, this issue was brought to the attention of the board of directors and also to the subject minister by the chief executive officer.” The subject minister has since made the necessary submission to Cabinet for consideration, the corporation stated.
As regards the findings of the AG report, Khan acknowledged them but stated in response that expenditures made from the revenue earned were approved by the hospital’s board and that the corporation was in the process of returning funds to the Consolidated Fund.
When questioned yesterday whether separate records are kept for income derived by the corporation, Finance Administrator of the GPHC Mohammed Kharamulla stated that establishment of separate financial statements require a “different system” when compared to the Inte-grated Financial Management and Accounting System (IFMAS) system. He said that books and records are kept by the Ministry of Finance, while adding that monies go to the Consolidated Fund and are then requested by the agency.
Auditor General Deodat Sharma stated that the issue surrounds the entity being “separate” and added that the GPHC does not keep separate financial statements for the records of revenue received. He said what is audited by the Audit Office are the appropriations passed by parliament and the revenue statement prepared by the hospital of spending of funds generated by the hospital.
Lawrence noted, however, that a clear view was not made by the AG’s statements in the 2009 report and she described same as “collective.”
She said, “That’s a big, big, big issue,” while questioning how the revenue the agency garnered in 2009 was spent. She also queried why the Audit Office arrived at a difference in figures as regards the 2009 records of sums placed into the Consolidated Fund, when the total sum should have been placed into the fund.
Sharma stated that what is audited at the GPHC are receipts and vouchers for payments and according to him a 25% audit on vouchers is undertaken on a risk basis and test check basis.
Kharamulla later explained that what belongs to the Consolidated Fund goes into it at the end of the year and he said this year the agency plans to make payments on a monthly basis. He said the agency experiences problems with its service providers, as on occasions clients would be frustrated and request refunds and “sometimes we have all sorts of problems”.
Lawrence disagreed, noting, “the law is the law and you need to follow the law.”
Khan said that spending of revenue garnered by the hospital is being dictated by the board of directors and at the board’s monthly meetings, financial statements are presented and the funds, for tasks such as training, would be approved.
Lawrence questioned why the Audit Office never audited the financial statements and Khan said the AG office never asked for them. Sharma said that the office never asked for the statements since they were not “the normal statutory statements required of the corporation.”
Lawrence stated, “This is in total breach of the [FMA] and I get the impression that nothing will be done because people will come to public accounts and say AG already audit it.” Emphasising the fact that there is no trail with regard to how the money collected is expended, she added, “I don’t think that John Public will accept this.”
She recommended that the officials discuss the issue with the GPHC’s subject minister to have it dealt with at the level of Cabinet.
