Auditor queries health authority profit

The Health Services Authority posted a net profit of $6.2 million for the 2009/2010 financial year, but the auditor general has disclaimed an audit opinion on the accounts because there were incomplete records to back up the annual report figures.

In an annual report tabled in the Legislative Assembly last week, Auditor General Alistair Swarbrick raised five issues, which he said made him “unable to obtain sufficient appropriate audit evidence to provide a basis for 
an audit opinion”.

He said his office could not test the completeness of patient revenues on the statement of revenues and expenses because he was not provided with 
enough information.

“Because I have not been provided with records necessary for my audit of revenues, I therefore was unable to determine that the reported amount for gross patient services fees of $67 million is complete,” he said.

He was also unable to determine “the completeness, existence and valuation” of patient-related accounts receivable that were reported on the Health Services Authority’s balance sheet, and therefore was “not able to test the reasonableness of the allowance f
or bad debts”.

The auditor general said the Health Services Authority had failed to carry out a revaluation of its lands and 
buildings as required by the International Financial Reporting Standards.

He also questioned the circumstances under which the authority had paid for medical bills of its retirees whose coverage had been dropped by the Portfolio of the Civil Service.

“I have not been provided with management’s evaluation of the nature and extent of its obligations under this medical plan, and consequently, was not provided with estimates and supporting calculations of such liabilities,” he said, adding an independent valuation was also not provided.

Also, because he had disclaimed an audit opinion on the 2008/2009 financial statements, he was unable to determine if the beginning balances used in the latest financial statements were correct.

Minister of Health Mark Scotland, who tabled the financial reports in the Legislative Assembly on Wednesday, 16 November, acknowledged the auditor general’s findings and said steps were being taken to address the issues raised.

He said the authority has shown revenues of more than $84 million and had ended the 2009/2010 financial year with a positive cash balance of $5.2 million.

Mr. Scotland said the profit and positive cash balance had been made possible by “an improved system of collections, a reduction in bad debts and a capital injection by year end from committed vendors”.

Government had also injected $2.2 million into the authority for capital purchases.

Addressing the auditor general’s concerns over insufficient records relating to patient revenues, Mr. Scotland said the Health Services Authority had implemented new policies and procedures with the help of its audit committee and had also recruited an internal auditor in January this year to work with all the authority’s revenue centres to develop “critical check points”.

Those measures would also address the issue of incomplete records of patient-related accounts 
receivable, he said.

Mr. Scotland said the valuation of the Health Services Authority’s land and buildings had been done by DDL Studio in June 2011 and its fixed assets had been restated as of 30 June, 2010. The 2009/2010 financial report stated as of 30 June, 2010, the total value of fixed assets were $48.5 million.

To deal with the issue of the medical costs of retirees, the minister said the authority was seeking to place its local and international medical care with an insurance company in order to cap exposure.


  1. Reminds me of the children’s party game, pin the tail on the donkey except in the Auditor’s case, somebody hid the 6.2 million ‘donkey’.

Comments are closed.