Home Breaking News Audit shockingly discovers $400 a pillow sold to NRH during COVID

Audit shockingly discovers $400 a pillow sold to NRH during COVID

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An audit into the Ministry of Health and Medical Service on the use of COVID-19 funds has revealed ignorance over basic controls over procurement as it uncovered that a hospital worker had over charged the government a huge $400 just for a pillow, which should only worth between $5 to 6 AUD or SBD$30.

The audit which was released today identified a common thread of internal control failures when auditing three ministries that were key to the country’s COVID19 preparedness and response plans during the 2020 State of Public Emergency (SOPE).

The ministries are Health & Medical Service, Infrastructure Development and the National Disaster Management Office (NDMO) through the Ministry of Environment, Climate Change, Disaster Management and Meteorology.

The Auditor General, David Dennis said there was a common theme of a lack of transparency and a lack of required documentation across all three audits.

As in the case of the Ministry of Health and Medical Services, the audit found it had spent over $11 million of its Covid 19 related expenditure through imprest accounts. This enabled the Ministry to ignore even basic controls over procurement.

One example demonstrates the risks associated with avoiding the usual internal controls with overcharging of pillows for the hospital during COVID-19.

In a case to show abuse of imprest, the auditors found that on 25 May 2020, Company A provided an Invoice for $99,500 to the National Referral Hospital. The invoice was for 200 Pillows with Mactinosh material at $400 each and 150 blankets at $130 each. Macintosh pillow cases are a pillow case designed for re-use in health settings. They are made of a breathable PVC-fabric material as used in Macintosh raincoats. They are available from health service suppliers in Australia for $AUD5-6 or around $30 SBD.

They are not a PPE item, just normal hospital equipment.

OAG (auditors) noted that in a transaction reviewed while auditing NDMO, another supplier provided pillows at supplier to NDMO for quarantine sites at $35 each. Even assuming a 100% freight charge for importing the Macintosh pillow cases into the Honiara, the total cost of a pillow with a case made of Macintosh material should be less than $100, not $400. Another business provided blankets for quarantine sites at $87 each, so the blankets provided to MHMS in this case were 50% more expensive.

The OAG said the audit trail for the transaction does not provide evidence of robust control. Following receipt of the Invoice/Statement from Company A, on 16 June a letter was sent by a single officer requesting Pillows and Blankets for the NRH 50 bed Isolation facility and Triage facilities as well as for 45 beds in Honiara City Council’s 9 clinics.

“This letter was accompanied by the Company A’s invoice/statement. There is no explanation as to why Company A had been selected at this stage and no analysis of the bid or the prices to be paid. This letter has been endorsed on 18 June 2020,” the audit report, said.

“There was no indication that any other supplier was approached to see if they could source these items at a less exorbitant price. At no stage did anyone in the process seem to notice that paying $400 for a simple pillow with a PVC-material cover was excessive,” the report, stated.

The audit report said the company does not seem to be in the business of providing medical supplies so it is not known how it just happened to have 200 Macintosh fabric pillow covers lying around waiting to be purchased.

“There was no indication that any other supplier was approached to see if they could source these items at a less exorbitant price. At no stage did anyone in the process seem to notice that paying $400 for a simple pillow with a PVC-material cover was excessive,” the report, stated.

The OAG said that major purchases were made from standing imprest accounts, even above the tender threshold, which resulted in significantly reduced accountability and transparency.

They recommended to the MHMS should ensure that standing imprest accounts are only used for small, frequent purchases as specified in the Financial Instructions and not used for larger procurements particularly those which would normally go to tender.

The report stated that the person who owned the company had worked at the hospital as a casual that time.

In response, the ministry has agreed to the recommendation and has proposed to do the following:

  • The ministry will ensure stringent check on payments through the office of the Financial Controller and Imprest Officer.

  • Any payments that would normally go through tender will have to go to tender following the procurement process relating to it.

-The responsible authorising ministries must ensure updated controls and compliance check for use of imprest account is clearly articulated.

News@SBMOnline2022

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