Auditor general calls for tighter control of Alberta Health Services expenses

EDMONTON – Alberta Health Services needs to beef up controls over expense and travel claims, a process that includes better training for staff and tougher board scrutiny, says the province’s auditor general.

“Albertans are entitled to assurance that public servants are not rewarding themselves at public expense,” Auditor General Merwan Saher says at the beginning of his report, released Tuesday morning. “Recently there has been increased public disclosure of the travel, meal and hospitality expenses incurred by the public service.

“We believe that public disclosure is useful, but Albertans need more,” Saher wrote.

Tighter control on Alberta Health Services expenses is one of 28 new recommendations and five repeated recommendations in the report.

Other recommendations are tied to its study of the Office of the Public Trustee, a followup report on select payments to MLAs, an update to previous audits of financial controls of post-secondary institutions and a commentary on the information that the Alberta Treasury Board and Finance include in its quarterly fiscal updates.

“The repeated recommendations have been made because we do not believe there has been sufficient action taken to implement our previous recommendations,” the report said.

The auditor general’s report on AHS controls is the latest tied to executive expense claims. The issue flared into a major controversy last summer after more than $350,000 worth of claims made by former AHS executive Allaudin Merali during his time as chief financial officer of the former Capital Health Authority became public.

An external audit commissioned by AHS released in December raised questions about some of those expenses, including some for which there was no documentation. But it also noted that the health region’s policies put no limits on how much could be billed for a wide range of hospitality expenses.

In a written statement in December, Merali defended his expenses and said inferences that he “lived a high life at taxpayers’ expense is an invention of sheer malice.”

The auditor general advised AHS to three steps:

– improve the analysis and document that support the business reasons for – and the cost effectiveness of – these expenses;

– improve education and training of staff of their responsibilities for complying with policies;

– monitor expenses and reporting results to the board.

The report says AHS spent $100 million during 17 months on travel, purchase card transactions and other travel expenses. “If it does not implement this recommendation, it may pay expenses that do not comply with policies,” the report said.

In other areas, Saher revisited a 2008 audit that criticized the delayed release of a report that outlines how much MLAs are paid. That audit found the Report of Selected Payments to Members was typically delayed by more than a year after the fiscal year-end because of inadequate internal processes.

He found the issues have been addressed and the report is now tabled six months after fiscal year-end.

Saher also found that Alberta’s Office of the Public Trustee has “inadequate systems” to safeguard the assets of the vulnerable Albertans it administers.

“We are concerned about the lack of proper management oversight in the administration of the client files,” Saher wrote. “Overall … many files were poorly organized and lacked adequate supporting documentation. … In effect, the Public Trustee does not have the necessary assurance that its clients’ interests are being safeguarded.”

The audit was launched after the trustee’s office learned that a senior trust officer had misappropriated more than $120,000 from a client in 1997 and 1998. The employee was fired.

In October 2012, Ned Ephraim Frohlich, 57, was charged with theft and fraud over $5,000 from his client, William Vincent Thompson, and theft and fraud over $5,000 from the Government of Alberta. He also faces three counts of uttering forged documents. On Jan. 9, he was ordered to stand trial but a trial date has not been set.

Finally, Saher made no findings with respect to whether the government broke its own laws by releasing a skimpy first-quarter update in 2012, which was much shorter than previous quarterly statements and lacked data on capital planning and financial assets. It also gave a range for the projected deficit, rather than a specific number.

The government also eliminated the typical briefing for journalists who report on the update.

The Canadian Taxpayers Federation and others complained at the time the government had breached the Government Accountability Act, which it said requires more fulsome reporting.

“Given different interpretations are possible, we cannot conclude on whether the fiscal updates meet the legal reporting requirements of the legislation,” Saher wrote. “In such cases, the law may remain uncertain unless settled by judicial interpretation or resolved through legislative amendments.”

More to come …
 

Auditor General AHS Report