Auditor’s report finds problems with AHS books

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A new report from Alberta’s Auditor General found huge errors in the way Alberta Health Services’ (AHS) board is managing its finances.

Auditor General Merwan Saher identified problems with the accounting systems the super board uses and how it relates to the systems of the nine former health regions and three boards that were blended into it.

These problems resulted in $500 million in misallocated funds and $420 million in expenses that were omitted.

In another major oversight, Saher also found a new assisted-living facility was nearly completed before the government signed an agreement on how to pay for construction with a private company.

AHS initially announced it would spend $12 million to help open a new assisted-living facility with Covenant Health called Villa Caritas. The bulk of the funding was supposed to be provided by Covenant with the government then paying the company over a number of years.

AHS changed the facility’s role from an assisted-living centre to a geriatric mental health building. Because no deal was in place before the change, AHS had to come up with an additional $40 million.

As a result of that situation, Saher recommends the board have an agreement in place before construction and update it if the purpose of the facility changes.

“We recommend that Alberta Health Services ensure that funding agreements are signed prior to commencement of construction of capital projects.”

The $500 million in expenses that were misallocated stems from the way AHS has managed its books since the transition. The former regional health authorities now transfer their accounting from systems they used before the merger to a broader system that tracks spending and revenue for the entire superboard.

Since the different regions tracked spending and expenses in different ways, there was no standard approach. When the numbers were brought together, more than 1,300 changes had to be made manually.

The manual changes ate up man-hours and were also part of the reason the board had to amend its budget three times last year.

Opposition parties have said the report is a clear indication that the government rushed in amalgamating all the different health regions together.

Local MLA Ken Allred said the government was right to bring the board together and some challenges are to be expected in such a large organization.

“I think you sort of have to draw a line in the sand and just do it, otherwise it gets sort of drawn out,” he said. “Quite often these things happen when big changes are made.”

Bringing the boards together is going to allow the government to find savings over the long term, he said.

“We have to get rid of a lot of inefficiencies that is really what we have to do and that is going to be a continual process.”

On the issue at Villa Caritas, Allred said he suspects someone at AHS is going to have to account for the oversight, but he believes it is a chance to do better.

“I do agree that people have to be held responsible, but I think we are going to have to learn from our mistakes.”

AHS has committed to implementing all of Saher’s recommendations.

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