Our reporting on the various audits into the affairs of the Public Hospitals Authority (PHA) appears to have sped up the PHA board's consideration of those findings.
Many who have followed this story fear that those audits may, in the end, amount to a waste of public funds if they do not lead to any action or improvements in procurement and other procedures.
But some are hopeful that real action will be taken to address the concerns raised by various auditors.
While the initial reaction by some was to attack the messenger -- John Bain of UHY Bain and Associates -- several other audits have also sounded the alarm on the PHA.
Bain's forensic audit into the PHA's pharmaceutical and medical supplies was completed seven months ago.
Yet the PHA board, headed by Frank Smith, has only now formally accepted it.
According to an inside PHA source, this now clears the way for the board to carefully consider the findings of that report and the other audits completed by several firms.
In a recent letter to the editor, Nathaniel N. McKenzie -- a former lead forensic auditor for Medicaid fraud in the United States, an $85 billion subsidy to the state of Florida's health plan -- explained that, in a forensic audit, a conclusion is reached when there is an abundance of evidence and every rock gets turned over.
McKenzie explained that a financial audit, or a financial statement audit, on the other hand, is a process that provides the business owner with assurance that the business's financial statements fairly represent the business's financial position, during the time period being investigated.
The auditor who conducts a financial audit looks over the financial statements for any signs of financial statement fraud.
But the forensic audit, like the one Bain completed, is a thorough investigation into the business' system of internal controls in order to determine whether anyone within the company has misused the entity's funds for personal gain.
This type of audit is used when asset-theft fraud is suspected, according to McKenzie. Forensic audits should only be performed by certified public accountants who are also certified fraud examiners, he noted.
Bain is a paid professional whose qualifications are not in dispute.
As opposed to seeking to denigrate his work and questioning his integrity, those who insist there is nothing to be concerned about as it relates to the PHA's tendering for contracts and accountability of public funds should provide a believable defense so we can all be comforted.
Bain is one of few Bahamians with certifications in both the United States and United Kingdom.
He has carried out forensic work in The Bahamas and the Caribbean.
He received the 2007 Lifetime Achievement Award from the Association of Chartered Certified Accountants (ACCA), the global professional accounting body offering the Chartered Certified Accountant qualification.
So, again, his qualifications are not in dispute -- neither are the professionalism and qualifications of the other professionals who carried out several audits on the PHA.
A separate audit was conducted by HLB Galanis Bain into the PHA's human resources. Another was completed by Grant Thornton into the PHA's receivables, and the fourth into the PHA's information technology was completed by Providence Technologies.
Multiple concerns
Much of the furor surrounding our reporting on the PHA has centered around Bain's conclusion that there was a $10 million difference in pharmaceutical inventory between the physical count and what is reflected in the Princess Margaret Hospital's (PMH) computer system.
It was the same conclusion reached by the hospital's internal auditor.
Are we to believe that multiple auditors got it wrong in their conclusions?
According to The Tribune, PHA Finance Director Daniel Knowles said he found it "difficult to believe" that internal auditors, who originally raised the alarm on the unaccounted for inventory, did not recognize clerical errors, given that the authority's total yearly inventory had never exceeded $4 million.
According to The Tribune, Knowles addressed a letter to PHA Managing Director Herbert Brown on the matter after The Nassau Guardian's initial reporting on the Bain report.
If this is indeed the first explanation regarding the $10 million difference in pharmaceutical inventory then it is quite unfortunate that it has taken so long for Brown or the board to receive such an explanation.
We are left to wonder where this process would have been had the report not been leaked to the media.
The Tribune also reported that management at the Public Hospitals Authority claimed that the forensic audit conducted on pharmaceutical drugs and medical supplies did not follow best practices or industry standards and exposed the agency to civil litigations.
If the board of the PHA is serious about following through on ensuring that the authority is adhering to high standards with clearly defined procedures regarding the expenditure of public funds, then it ought not let another seven months pass before seriously addressing the many issues raised in the various audits.
While the $10 million inventory issue sparked great public discussion, there are many other very serious concerns noted by the auditors who examined the affairs of the Public Hospitals Authority.
As we have reported, Bain's audit raised concern about the formation of what the forensic accountant said appears to be a shell company "quickly established for the purpose of transacting" with the Bahamas National Drug Agency (BNDA), which is administered and governed by the PHA.
Grant Thornton found that there had been a personal bank account established at the Royal Bank of Canada in the name of the Public Hospitals Authority.
Crown Agents
From as far back as November 2008, the global consultants, Crown Agents, highlighted that "inventory management systems are weak".
But Crown Agents recognized that there were initiatives to improve the inventory management capacity in the health sector.
That particular report also notes "there are limited controls over expiration-date management".
The consultants wrote that, "There is an unclear view of the waste and potential risks due to expiration-date management. In part, this is due to weak inventory systems. However, a regulator consolidated date collection and reporting mechanism was not identified."
Crown Agents said this posed a risk to value for money.
In response, PHA's management said new software will allow for virtual inventory statistics to be available.
Additionally, the consultants note that "disclosure policies and common tools to prevent irregularities are inconsistent and/or in need of augmentation.
"It was observed in the assessment that there was less than optimal documented disclosure to help preclude ethical or conflict of interest irregularities.
"Specifically, no disclosure was reported as required from PHA board members involved in the oversight of public funds."
According to Crown Agents, this included no current requirement for written conflict of interest statements and/or statements committing to high standards of ethical behavior.
"In addition, and of significant concern, is that no hotline or whistleblower policy was reported to be in place at any institution within the Ministry of Health," the report says.
"While written statements do not always preclude irregularities, they have been shown to promote a standard of behavior and directly contribute to a demonstrative and positive 'tone at the top'."
The PHA board committed in 2009 to implement a conflict of interest policy to be signed by board members, senior executives and vendors commencing July 1, 2009.
We have no confirmation whether this was ever implemented.
We also know of no whistleblower hotline or policy within the Ministry of Health or within the wider public service.
It would seem proper for Minister of Health Dr. Perry Gomez -- who has so far remained silent in the face of revelations on the PHA -- at the appropriate time (sooner rather than later) to provide to Parliament and the Bahamian people a full reporting into the affairs of the PHA, and any action taken and/or improvements implemented in the wake of the various audits.
We also hope that the integrity of the PHA's files is kept sound as the board follows up on the findings and makes determinations on how best to proceed.
While being careful not to associate sinister motives with any PHA official or employee, one professional accountant explained to us recently that quick action is important to avoid possible destruction or disappearance of files following a forensic accountant's findings.
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