A General Auditing Commission (GAC) audit report on John F. Kennedy Medical Center (JFKMC) recently released has revealed several financial malpractices and discrepancies in the accounting system at the hospital.
The audit conducted by the Commission covers the fiscal years July 1, 2012 to June to June 30, 2015. The report has been submitted to the Legislature.
For the periods under audit, the Dr. Wvannie Scott-McDonald served as General Administrator and Chief Executive Officer while Ms. Munah Tarpeh was the Deputy for Administration of the JFK Medical Center.
The audit report uncovered discrepancy in the revenue receipt resulting to a variance of US$ 1,776,672.00 between the total amounts disbursed to JFKMC as per the Fiscal Outturn Report and the total amount received as per the financial report prepared by the JFKMC, which could not be justified.
GAC noted that the inconsistencies between the JFKMC Financial Report and the MOF Fiscal Outturn Report could cast doubt on the reliability of the financial report and recommended that the hospital provides justification.
Responding to this discovery, the hospital management told the auditors that during the period 2014/2015, the total amount of US$6,518,784 was approved in the National Budget for the Medical Center.
However, it said the hospital received the total amount of US$5,868,435 from the Ministry of Finance and Development Planning.
Due to the decrease in the entity's budget, a shortfall in subsidy by US$650,349 during the period 2014/2015 was experienced.
The management further explained that it was not aware of the variance of US$459,785 reported cash receipt and payment during the period 2014/2015.
The variance of US$459,785 above their financial report for 2014/2015 could validate by the MFDP, because they reported the figure, the management said.
However, GAC said the justification provided by the JFKMC is not backed by any documentary evidence.
"A letter of request to MFDP does not suffice for the evidence of the payments that were made on behalf of JFKMC. Therefore, JFKMC should liaise with the MFDP to ensure that difference is supported. Therefore, Management is in breach of financial discipline in line with Regulation A.20 of the PFM Act of 2009," the GAC noted.
The audit also uncovered that JFKMC Management expended US$3,374,589.00 above its approved budget without the approval by the Board of Directors.
According to the GAC, over expenditure is a violation of the Budget Law which could lead to misapplication of the JFKMC resources.
But the management of the hospital argued that during the fiscal period 2014/2015, its budget was reduced by the Ministry of Finance and Development Planning by US$650,349.
This shortfall, management said, in addition to other activities of the Medical Center was covered by the Center's internally generated funds from operational revenue in order to pay employees and purchase life-saving drugs and medical consumables.
"Due to the shortfall, the Board of Directors authorized the Management of JFKMC to use the internally generated revenue to help meet its full operations as budgeted.
So, the JFKMC total expenditure per the financial report exceeded the Approved Budget due to the utilization of the internally generated revenue in addition to the GOL subsidy received through the MFDP," JFKMC reacted to the findings," the management said.
But in reaction, the Auditor General noted that GAC was not questioning the usage of the internally generated revenue of the JFKMC.
"If the initial budget were revised to reflect the existing realities at that time, the Board of Directors of the JFKMC should have approved the revised budget. This certainly did not happen. The Management expended above the approved budget without approval by the Board of Directors. Therefore, Management should be held liable for breach of Chapter 60.5 Count 4 of the JFKMC Act of 2013," the Auditor General noted.
The hospital management was also questioned over the US$ 2,222,064.00 and L$ 204,000,026.00 reported as internally generated revenue which could not be supported by adequate ledgers and other documentation.
In response, the management said it collected the US$178,163 for Quarter one, US$174,492 for Quarter two, US$280,015 for Quarter three and US$346,227 for Quarter four.
The justification provided by the JFKMC, according to the GAC, is inadequate and does not address the issue raised.
"Therefore, the Management of the JFKMC is in breach of financial discipline in line with Regulation A.20 of the PFM Act of 2009," the GAC stated in the report.
GAC audit report further revealed that there was discrepancy in financial reporting resulting to variances of US$771,327.92 and L$48,598,333.36 between the total expenditure as per the Bank Statements of the JFKMC and the total Expenditure as per the financial report prepared by JFKMC, which could not be justified.
Further, the bank reconciliation statement could not explain the variances.
JFKMC in reaction said, the total expenditure per the financial report for the period 2014/2015 could not agree with the expenditure as per the bank statement, primarily due to the Ebola Virus Disease Crisis which led the MFDP Financially incapacitated to provide the subsidy due the Medical Center for the months of May and June 2015 for employees' salaries.
"The variance between the expenditure per bank statement and the expenditure per financial report can largely be attributed to the usage of the Internally Generated Revenue for payment of employees' salaries for the months of May and June 2015," the hospital's management said in the report.
The GAC noted that the justification provided by the JFK Management is inadequate and does not address the issue raised.
"In the absence of evidence of bank reconciliation statements for the period, the assertions by the JFKMC Management cannot be supported. Therefore, the Management of the JFKMC is in breach of financial discipline in line with Regulation A.20 of the PFM Act of 2009," the Auditor General indicated.
GAC further said JFK Management made several payments amounting to US$ 2,900,446.26 and LD$182,071,228.08 68 for professional fees, drugs and medical supplies, travels and various goods, works and services without adequate supporting documents for which Management has been held accountable by the GAC.
But JFKMC said all payments made for professional service, drugs and medical supplies, fuel, travels, petty cash and various goods, works and services were supported by the appropriate documentation. For petty cash request made by heads of various departments, such request or its replenishment is accompanied by a petty cash replenishment summary.
However, the Auditor General noted that the documentation provided by the JFKMC Management could only support US$84,355.00 and L$4,087,437.98 respectively; thereby leaving the amounts of US$760,356.56 and LD$36,020,653.80 expended without adequate documentation to be accounted for by Management. Further, the JFKMC Management is in breach of financial discipline in line with Regulation A.20 of the PFM Act of 2009.
The report said the Chief Financial Officer, Ms. Serina Gbaba was absent from job for one year ( June 2014 to June 2015) without evidence of an approval by the JFKMC Management even though she was paid salary that amounted to US$41,280 and L$1,388,910.
The Hospital could not provide any justification for the payments to Ms. Gbaba while she was off the job.
GAC recommended that the amounts should be refunded to the hospital.