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Saturday, July 28, 2007
'Ignored' audit rules brought about hospital mess
By Karlon N. Rama
CEBU CITY -- Money bled out at the Vicente Sotto Memorial Medical Center (VSMMC) in 2006 because audit rules, put in place to safeguard against misappropriations, were largely ignored.
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The Commission on Audit (COA) report earlier sent to Health Secretary Francisco Duque cites:
• how cash advances were made beyond the ceiling to pay for medicines bought without bidding;
• how the hospital pharmacy failed to make certain reports over its sales;
• how money earned as professional fees weren’t turned over to the Bureau of Treasury and were instead used to pay off employee benefits; and
• how almost P1 million was paid to employees for overtime that may have been unnecessary.
The audit, Sun.Star Cebu learned recently, was conducted by lawyer Eva Cabrera and began immediately after she assumed as the resident auditor of VSMMC last August 2006, although COA Regional Cluster Director Jose Desamparado signed it.
Referrals
Other than detailing procedural lapses, it revealed the estimated loss of some P40 million in projected income.
This resulted from the unauthorized practice of referring patients to private diagnostic clinics for services that the hospital could otherwise provide, not to mention earn from, and the allegedly questionable procurement, without bidding, of some P60 million in equipment and supplies.
According to the report, money advanced from the hospital’s petty cash account and a special allocation from the Priority Development Assistance Fund of a congressman were used to buy medicines that could have otherwise been bought via a public bidding.
The justification was that it’s faster to take money from the petty cash fund to pay the suppliers, than to go through the whole process of purchase requests and bidding because of the “unreasonable delay” in the processing of documents at the Property Section.
But, said COA, in the desire to speed up payments to suppliers, “the objective of procuring suppliers and other items at prices most advantageous to the government could not be guaranteed.”
Advances
“Initially, these cash advances were set up for procurement of drugs and medicines not in stock in the hospital’s pharmacy but immediately needed by admitted patients. However, in the course of the auditor’s examination, it was noted that the drugs and medicines procured out of the cash advances drawn against the general fund could no longer be considered as emergency in terms of amount and quantity,” the report read.
The total cash advances made by the hospital pharmacy for 2006 have reached an estimated P1 million from the petty cash account and P600,000 from the congressional allocation.
But, per COA Circular 90-331, payment out of cash advances shall be allowed only for amounts less than P5,000 per transaction.
COA wants the hospital to limit the cash advance ceiling of the pharmacy to P50,000.
It also wants the hospital to look into the procurement system followed by the property section to verify “unreasonable delays” in the processing of documents.
If so, recommends COA, the system should be fine-tuned.
Cheap drugs
COA also wants the hospital to find out what happened to the P1,032,746.43 the VSMMC pharmacy earned from the sale of Pharma 50 drugs it received from the Department of Health (DOH).
The program made cheap medicines available at the hospital pharmacy and the income generated through its sale was supposed to be remitted to the health department, so more medicines could be bought.
But, said COA, the pharmacy failed to submit a report of the sale to the accounting section.
“Unless a report is submitted, the net income from the sale could not be computed and, consequently, remitted to the DOH, thus defeating the objective of the program,” the report read.
COA wants to find out what happened to the money.
“We recommend that a memorandum be issued to the pharmacist requiring the immediate submission of the report necessary for the remittance of the income… appropriate sanctions have to be imposed in case of failure to do so,” the report added.
But money did flow in.
Fees
The hospital, for example, earned exactly P13,957,550.50 from Philhealth professional fees.
The problem is that the hospital spent it as employee benefits and, in so doing, committed a violation of Joint Circular 2003-1. The provision states that employee benefits may be paid out of the general funds only.
“The logic is that the nature of the funds when received by the hospital from Philhealth is that of a trust fund. Trust funds cannot be used to pay for employees benefits,” the COA findings said.
Based on the rules, the hospital should have remitted the amount to the Bureau of Treasury.
If it wanted money to spend, it should have filed a request with the Department of Budget and Management to release the funds through a notice of cash allocation.
“When the funds are released by DBM, then that would be the time the agency can expend the amount as benefits to employees,” the report explained.
Emergency only
The VSMMC spent P706,609.95 in 2006 for overtime services. But the overtime wasn’t backed up by work plans and reliable accomplishment reports pursuant to Budget Circular 10. This, according to COA, made the payment “irregular.”
As a policy, according to the report, overtime should be avoided by adequate planning of work activities, and limited to cases of “unforeseen events and emergency situations.”
The bulk of the P706,609.95 expenditure went to the maintenance and engineering department: P436,453.16.
“Yet upon inspection and examination of the documents supporting the payment, no work programs were attached. The accomplishment reports that were submitted were not very specific as to the quantity of accomplished work. And considering that there were no work programs, it cannot be determined whether or not the works intended to be done were indeed accomplished,” the COA added. (Sun.Star Cebu)For more Philippine news, visit Sun.Star Zamboanga. (July 28, 2007 issue)
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