A gap in accountability that allowed a former health executive to rack up hundreds of thousands of dollars in questionable expense claims still exists at Alberta Health Services, according to a report released Tuesday by Alberta’s auditor general.
The audit found the board of Alberta Health Services has not made the AHS chief financial officer responsible for ensuring public money spent on expense claims, purchasing cards and travel payments are valid expenses.
"The audit and finance committee does not receive regular compliance reporting from the chief financial officer on the integrity of the processes," says the report by Auditor General Merwan Saher.
"Nor does the committee receive confirmation from AHS internal audit on the effectiveness of the processes to ensure that services are obtained cost effectively."
Alberta Health Services asked the auditor general to review its policies and practices in the wake of an expense scandal involving Allaudin Merali, its former chief financial officer.
Alberta Health Minister Fred Horne said the recommended changes — including stronger guidelines, improved staff training, clear expense documentation, and improved monitoring and reporting — will be in place by the end of February.
"Expenses like travel and accommodation are a normal part of doing business, especially for a province-wide health system," Horne said in a news release.
"By acting on the Auditor General’s recommendations, Alberta Health Services is putting safeguards in place that will make sure expense and travel claims are appropriate and handled with a high level of transparency and accountability."
Deb Rhodes, senior vice-president of finance and acting chief financial officer at AHS, said her organization has made big strides over the past six to 12 months to improve its policies and procedures.
AHS implemented a new travel, hospitality and hosting policy in October and started posting its executives' expenses online.
Rhodes said that AHS is close to implementing one of Maher's most important recommendations.
"The end of February, our first monitoring reports go to the audit and finance committee and then they will go through to the board at their March board meeting," she said.
"So our first set of compliance and monitoring reports will go to the board in the next six weeks."
Audit found need for improved oversight
AHS fired Merali in August after a CBC News investigation revealed Merali had filed hundreds of thousands of dollars of questionable expense claims while he was chief financial officer of Capital Health.
Merali’s expenses were approved by former Capital Health chief executive officer Sheila Weatherill, who resigned from the AHS board a day after the story appeared.
Don Sieben now chairs the AHS audit and finance committee and he was also chair of Capital Health’s audit and finance committee when Merali was spending public money on high-end restaurants, a private golf club membership and expensive repairs and accessories for his Mercedes Benz sedan.
"The committee is not receiving reporting on expenses for senior staff and staff who spend at higher levels," the report states.
In November, it was revealed that president Dr. Chris Eagle expensed the cost of attending a Premier’s dinner fundraiser in Calgary in 2011, including a limousine and airfare.
The expense was approved by former AHS board chair Ken Hughes, who is now energy minister. Hughes publicly apologized for approving the expense, but didn’t explain why he thought this use of public money was appropriate.
Sieben declined a request by CBC News for comment.
People should lose their jobs, Wildrose says
This audit did not look at the expenses of individuals but rather the entire system of accounting at AHS. Generally, the auditor general found AHS accounting systems had improved since 2008 but more tightening needed to be done.
The report says AHS needs its staff to provide better documentation for expenses.
AHS spent about $100 million on expense claims, including travel and purchasing card expenses, between April 2011 and August 2012.
Saher stressed the AHS expenses must be considered in the context of it being a huge, complex organization. But he said every government department could learn from this audit report.
"There's actually a message for the whole of the public service," he said.
"That message really is that boards and management have to be able to assert publicly that we being the board, we being the organization, have policies and procedures to ensure that our expenses are for business purposes only, and that they are economical.
The AHS budget for 2011-2012 was about $12 billion and it employs about 100,000 people.
Of the expense statements reviewed by the auditor general, seven per cent of expense claims and two per cent of purchasing card statements and one per cent of travel claims either didn’t have adequate documentation or were ineligible charges.
Expenses flagged in the report include fares of over $300 paid by an unnamed health facility which used taxis to take patients home.
In another case, an employee claimed $116,390 in real estate commissions, an amount well in excess of the maximum relocation expense of seven per cent of the value of a home
The auditor general discovered a Calgary long-term care facility bought Flames season tickets and hundreds of Calgary Stampede tickets at public expense.
The audit found gift shops in Carewest facilities bought two Flames season tickets and playoff tickets for the last NHL season and two season tickets for the current season.
The non-profit facility also bought 275 gate-admission tickets for both the 2011 and 2012 stampedes, plus 40 grandstand show passes and 10 rodeo tickets for the 2012 stampede.
Carewest told the auditor general it resold all the tickets to staff and residents. Nonetheless "AHS internal audit plans to examine Carewest’s records to confirm that there was no net cost to Carewest except for the tickets for volunteers who accompanied residents."
Saher said if AHS had a proper accounting system, it would know if the Flames and Stampede tickets were appropriate expenses.
"That's our whole point," Saher told reporters in a teleconference call.
"A proper system would have ensured that if it was necessary to buy these items, and that they did have a business purpose, that it would be absolutely clear what that business purpose was."
The report says the recommendations to tighten the AHS accounting system must be implemented because "without effective control processes to monitor compliance with policy, AHS may pay more for expenses than its policies allow. And it may reimburse employees or pay for expenses that have no business purpose."
Saher's revelations prompted Wildrose Leader Danielle Smith to call on AHS to fire some of its financial officers.
"I'm calling for the people who've been identified time and time and time again that they are not able to keep a proper watch on taxpayer dollars to be removed from their positions," she said.
"This is getting ridiculous that we continue to see these kinds of expense scandals over and over and over again and there's no accountability for the people who are signing off on the cheques."