Brennan Report - Department of Health and Children

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Report of the Commission on Financial Management and Control Systems in the Health Servicerecords of each board. They include the mandatory design of the basic annual accountstogether with a very large number of ancillary financial management accounting schedules oraccounts which altogether form the package of financial figures that are called the AnnualFinancial Statements (AFS).The annual preparation of the entire financial package, which is required to be completed andsigned off by the CEO and the Chairman/member of the health board and submitted to theMinister and the Comptroller and Auditor General not later than 1 April following the yearof the accounts to 31 December previously, presents difficulties for the health boards. We haveascertained that the accounts presented for audit have at times contained accounting errorsand other issues identified during the course of an audit, which subsequently become either:(a)(b)The subject of an unsatisfactory report (known as a Section 6(4) Report) by theComptroller and Auditor General where these issues are considered so significant as torequire such a report, orThe subject of a letter issued to the CEO of the health board by the Comptroller andAuditor General after completion of the audit which is referred to as a "ManagementLetter".Table 2.8 summarises the number of satisfactory and unsatisfactory section 6(4) audit reportsfor the three years 1998 to 2000. Of the eight health boards (then in existence), all but onereceived an unsatisfactory audit report at least once in the three-year period we reviewed. Inthe case of one of the eight health boards, its audit report was unsatisfactory in all three yearsexamined.At the date of completing this report (January 2003) the year 2000 audit report forthe Eastern Regional Health Authority is not yet to hand. By statute, the audit should have beencompleted by 30 September 2001.The issue of timeliness of audits is discussed in more detailin Chapter 8.Table 2.8: Comptroller and Auditor General Audit Reports for the Health BoardsFinancial year ended 1998 1999 2000Satisfactory Section 6 audit report 3 4 5Unsatisfactory Section 6 audit report 5 4 2Audit report not yet available - - 18 8 836
Chapter 2 Overview and IssuesTable 2.9: Examples of Issues Highlighted by Section 6(4) ReportsYear Agency Problem Identified1998 Eastern Health Board Persistent delays in the submission of accounts by the Eastern Health Boardresulted in statutory deadlines for audits not being achieved.Audit backing documentation was not available to substantiate a debtor of£356,541 and its related bad debt provision of £273,730.At 31 December 1998, cheques totalling £273,732 drawn by the board andrecorded as expenditure in the board’s financial statements had not beenissued to payees.Errors in accounting for fixed assets and maintenance expenditure.The 1998opening ledger balances for debtors and creditors did not agree with the1997 audited closing balances.(C&AG Annual Report 1998)1999 Western Health Board Expenditure incurred by the Board during the year in excess of its approvedallocation. (C&AG Annual Report 1999)2000 Western Health Board There were serious inaccuracies in the financial statements as presented.The identification and correction of these deficiencies meant that there wasa very significant delay in completing the audit of accounts. (C&AG AnnualReport 2000)2001 Western Health Board Failure to submit board certified accounts by 1 April 2002 in accordance withsection 1.1.1(3) of the Health Board Accounting Standards. These accountswere submitted on 4 November 2002. (Dept of Health and Children)2001 Eastern Regional Failure to submit board certified accounts by 1 April 2002 in accordance withHealth Authoritysection 1.1.1(3) of the Health Board Accounting Standards. These accountswere submitted on 13 December 2002. (Dept of Health and Children)In a management letter, the Comptroller and Auditor General seeks explanations from theCEO or the health board’s Director of Finance of certain items (e.g. the financial treatment ofcertain items; the deficiency of financial records; general administration issues; other lessmaterial items) which have come to the attention of the Comptroller and Auditor General’sstaff in the course of the audit.The letter requires a meaningful response, which will include anundertaking to ensure that such errors or deficiencies will not recur in following years. Thus,there is an expectation of financial risk control flowing from this discipline, if the partiesstringently adhere to it.The facts, however, demonstrate that there is at times a lax regard forthe objectives of this control mechanism.The management letters (issued by the Comptroller and Auditor General to health boards) forthe financial year ended 31 December 2001 have not been issued at the date of preparation ofthis report. The effectiveness of such letters when they are issued must be extremely doubtful.Table 2.10 shows selected examples of the many matters which were to be found in themanagement letters, issued on the dates indicated by the Comptroller and Auditor General, inregard to the 2000 accounts, to the health boards indicated.37
Page 1 and 2: Commission onFinancial Managementan
Page 3 and 4: TABLE OF CONTENTSEXECUTIVE SUMMARY
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Page 9 and 10: Executive SummaryWe do not underest
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Chapter 7 Accountability - Employme
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Chapter 8 Audit ReformCHAPTER 8AUDI
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Chapter 8 Audit ReformRecommendatio
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Chapter 8 Audit Reformoutsourcing)
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Chapter 8 Audit Reformaudit reports
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Chapter 8 Audit Reformas relating t
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Chapter 8 Audit Reform●●Penalti
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Chapter 9 External Reporting Proced
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Chapter 10 Information SystemsStrat
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Chapter 11 ImplementationRecommenda
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Chapter 11 Implementationbeing brou
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Appendix 1Appendix 1COMMISSION MEMB
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Appendix 1He has held this position
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Appendix 2SIPTU*South Eastern Healt
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Appendix 3Name of AgencyBord na Rad
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Appendix 3Name of AgencyIrish Blood
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Appendix 3Name of AgencyWomen’s H
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Appendix 4Department of Health and
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Appendix 4collated and assessed by
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Appendix 4The most detailed element
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Appendix 4Ratifying and Submitting
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Appendix 4changes to the Service Pl
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Appendix 4advised of their existenc
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Appendix 4Approvals Required in lin
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Appendix 5Appendix 5DIAGNOSIS RELAT
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Appendix 5Figure: Ax.1 Casemix Adju
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Appendix 6Appendix 6AUDIT OF STRUCT
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Appendix 7(vii)(viii)(ix)participat
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Appendix 8Appendix 8 - Integrated M
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ADDENDUMNumber Recommendation IT Ti
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Number Recommendation IT TimeframeR
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Brennan Report - Department of Health and Children

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