Zimpapers Logo

Thandeka Moyo-Ndlovu, Senior Health Reporter 

BULAWAYO’s referral hospitals, Mpilo Central Hospital and the United Bulawayo Hospitals (UBH) are among the country’s health institutions still using flawed and manipulative accounting systems blamed for its loopholes and compromising service delivery.

This was revealed in the 2021 report by the Auditor-General Mrs Mildred Chiri on State Owned Enterprises and Parastatals.

Mrs Chiri said due to the loopholes in the two hospitals’ accounting systems, there has been several anomalies on their financial statements. 

The audit report shows that the accounting system at the two referral hospitals was virtually non-existent. Auditors said officials abused resources and funds without accountability.

Mrs Chiri said management should take action to strengthen controls around the inventory, particularly at Mpilo Central Hospital, which failed to account for $4 billion worth of drugs and other medical accessories. 

She said Mpilo Central Hospital and UBH failed to present themselves in an acceptable manner in regards to International Financial Reporting Standards (IFRSs) and the requirements of the Health Service Act.

At Mpilo Central Hospital, the major discrepancy was in drugs and medical supplies that were expected to be in the hospitals inventory, but could not be accounted for when the audit was carried out.

Mrs Chiri noted that the hospital did not make any progress in terms of addressing audit findings and recommendations raised in her 2020 report.

For UBH, the AG was not happy with accounting processes, which she said were not aligned to the new developments of the accounting framework. 

As a result, there were key accounting processes that were not done in line with the new developments.

UBH’s procurement management unit was not advising finance on the tax status of suppliers in order to facilitate the deduction of withholding tax. 

As a result, payments to suppliers without valid tax clearance certificates were being made in full as withholding tax was not being deducted.

“There were discrepancies between the physical quantity of inventory (stocks) counted and the records of inventory at Mpilo Central Hospital. Quantities that were confirmed were less than what was in the records leaving a variance of inventory worth $3,4 billion which management had not investigated to determine the reasons for the discrepancies,” said Mrs Chiri.

“In addition, the hospital’s stores department did not make use of issue vouchers during the year when consumables were being requested by user departments. As a result, the stores department and accounts departments were not reconciling issues and receipts between these two departments. Hence, I could not verify the completeness of consumables expenses amounting to $7 765 351.” 

The report listed 15 types of drugs including Nifedipine, Fentanyl and Indomethacin. 

Mpilo Central Hospital was also found in possession of a stock of 100 units of medium sized latex gloves while the inventory valuation report revealed that there were 27 917 boxes. 

There is a variance of 27 817 units which translated to $633 678 826 worth of latex gloves unaccounted for.

Mpilo also has a stock count of 1 529 units of the 25mg drug while the inventory valuation report noted that they should have had a stock count of 4 677. They noted a variance of 3148 units missing, translating to $47 795 911.

“Over $1 billion worth of Nifedipine is unaccounted for by the hospital and there is a quantity variance of 21 330 valued at $1 173 704 580. The institution had stock 3 492 of when the report was compiled while records show that they were supposed to have 24 040 leaving a variance of 20 548 units costing more than $582 million,” said Mrs Chiri.

Nifedipine is a common drug used to treat hypertension and chest problems while Indomethacin is a pain reliever. 

“Looking at the completeness and valuation of donations in kind, during the year ended 31 December, 2020, the hospital recognised donations amounting to $174 392 457. The hospital management could not provide supporting schedules and assumptions to substantiate the valuation of donations in kind,” said the Auditor-General.

She said the hospital failed to provide a sequentially numbered donations register where these were recorded. 

“As such, we could not satisfy ourselves on the valuation and completeness of donations and determine if any adjustments were necessary to the statement of profit or loss and other comprehensive income and statement of financial position accordingly,” said Mrs Chiri.

She recommended that UBH consider putting in place a new accounting development tracking system that facilitates adjustment of records in line with the new standards.

“For instance, UBH did not perform a revaluation exercise to establish the fair values property, plant and equipment in line with its accounting policy. In addition, the allowance for non-recovery of debts was not calculated in line with the provisions of financial instruments,” said Mrs Chiri.

“These two key accounting requirements were therefore not adhered to the requirements of International Accounting Standards.”

Mrs Chiri said the provisions of International Accounting Standards (IAS) 16- “Property, Plant and Equipment” states that revaluation of assets should be carried out regularly. 

This is aimed at making sure that the carrying amount of an asset does not differ materially from its fair value at the date of financial statements.

The report also stated that UBH on the contrary failed to comply with the above requirement of the International Accounting Standards.

“There was no evidence that UBH performed a revaluation assessment exercise either by engaging an independent valuer expert or management professional judgement to present assets at their values at the prevailing environment. As a result, I could not substantiate the extent of understatement in the financial statements from UBH,” said Mrs Chiri.

She recommended that UBH should engage the Health and Child Care Ministry over inadequate accommodation for doctors which is affecting service delivery to members of the public. 

This is in light of an increase in the number of students enrolling at local universities to study medicine. – @thamamoe