A special investigation into the financial operations and functioning of the Georgetown Public Hospital Corporation (GPHC) over the period January 2012 to May 2015 blamed the hospital’s management for not tackling minor deficiencies which resulted in millions in losses.
“In our view, Management did not allocate the necessary resources to curb deficiencies which could have been easily corrected. Instead the deficiencies continued and cost the hospital millions of dollars which could have been [put] to better use,” the report by accounting firm Ram and McRae says. The investigation covered the period January 2012 to May 2015. The report, seen by Stabroek News, was submitted to the Ministry of Finance on July 21.
The review revealed a number of issues, primarily in the areas of management of the hospital, awarding of contracts, and lack of proper internal controls and maintenance of adequate financial systems.
The report highlighted concerns about the accuracy of “a manual system of bin cards and stock ledger utilised for the management of inventories and postings” which were found to be as much as six months in arrears in some cases. “Two offsite bonds were utilised over the period of review and unconfirmed allegations have been made that staff were requested by the CEO not to disclose information about one of the bonds to the Auditor General. No indication was given by the staff as to why the CEO would have given such instructions,” the report says.
This is one of several allegations levelled against the CEO Michael Khan by staff over the purchasing and distribution of drugs.
Chief Pharmacist and Head of the Pharmacy Department June Barry is recorded as having made several “strong assertions and accusations” about a bond at Farm against the CEO who has provided “equally strong denials.” It is this bond which staff were allegedly asked to keep auditors out of.
According to the report, Barry related being told in early 2014 by Khan that Infusion Inventories were being stored at the Farm Bond until space became available at the Ruimveldt Bond. However, this was denied by Khan.
She also reportedly submitted a report to the Chairman of the Board of Directors in which she claimed that when she asked Khan if the Farm Bond should be audited by the state auditors he said “do not say anything to the auditors about it.” This was also denied by Khan.
This particular bond has no bin cards to record inventory with a special audit initiated by Barry and carried out by the hospitals Internal Audit Department (IAD) noting that “as it relates to the offsite Farm Bond, GPHC, no Bin Cards and Inventory Count Sheets were found for the period under review (January 3, 2014 to April 16, 2015) even though Goods Receipt Notes and Movement Notes seen by the IAD would have indicated the existence of the Bond in January 2014.”
The Internal Audit report concluded that it was “unable to determine the exact value of the loss to the GPHC since the discovery of the suspected irregularity and the time of the audit and also because of the numerous limitations of scope such as bin cards not being made available from the commencement of the two offsite bonds and the possibility of receipts and issues being skewed.”
Meantime, the report said that during the period of the audit, a number of persons, including the CEO, were paid substantial amounts in responsibility allowance. It pointed out that Khan received a responsibility allowance from January 2011 to September 2014 which was paid without the deduction of taxes in contravention of the Income Tax Act. Total such allowances collected by the CEO was $4.4 million attracting taxes of approximately $1.4 million.
It also highlighted that during 2013, allegations of fraud by a cashier were investigated by the Auditor-General who found misappropriation totalling $5.1 million. “We were unable to find evidence that the findings were pursued by the CEO, Board, Guyana Police Force or the Director of Public Prosecutions. During the October 24, 2013 Board meeting, Directors debated on action against the CEO, however, no decisions were made or actions taken,” the report said.
Further, it said that with respect to fixed assets, the master register is not adequately maintained and differences in excess of $472 million were noted between additions stated in the Integrated Financial Management System (higher) and the register over the years 2012 to 2014.
Other issues noted include delays in posting cash receipts, onerous banking arrangements, excessive unclaimed and over-claimed leave and lack of vehicle log books.
The report also highlighted that the GPHC and especially the finance department were overwhelmed by the extent of manual records and the corresponding absence of digitization and computerization. “Manual records are susceptible to manipulation, misplacement and re-creation. As a corporation operating by way (of) appropriation the hospital was required to maintain accounting records manually. Now that the corporation is a subvention agency we recommend that the hospital embark on a process of progressive computerization within a period of two to three years,” the report said.
