Mpilo fails to account for over $4bn drugs: AG

Robin Muchetu, Senior Reporter

MORE than $4 billion worth of drugs and other medical accessories could not be accounted for at Mpilo Central Hospital with management failing to come clean with an inventory of what was received versus what was disbursed for use at the region’s referral hospital. 

This was revealed in a 2021 report by the Auditor-General Mrs Mildred Chiri on State Owned Enterprises and Parastatals where she recommended that management should take action to strengthen controls around the inventory.

The AG said despite the disturbances that came with Covid-19 world over, and also affected the institution, Mpilo Central Hospital failed to present itself in an acceptable manner in regards to International Financial Reporting Standards (IFRSs) and the requirements of the Health Service Act.

The AG noted that the major discrepancy was in drugs and medical supplies that were expected to be in the hospitals inventory but could not account for when the audit was carried out.

“There were discrepancies between the physical quantity of inventory (stocks) counted and the records of inventory. 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,” she noted.

The AG noted that this was largely as a result of the failure of the institution to use vouchers to distribute stocks as and when they were requested by the departments.

“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,” said the AG.

She recommended that reconciliations should be done between physical and theoretical stock. The report listed 15 types of drugs and latex gloves. The institution was 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.

The AG’s report highlighted that the institution has a stock count of 1529 units of the 25mg drug while the inventory valuation report noted that they should have had a stock count of 4677. They noted a variance of 3148 units missing, translating to $47 795 911. 

 

It also noted that over $1 billion worth of nifedipine is unaccounted for by the hospital. Nifedipine is a common drug used to treat (Hypertension) high blood pressure and heart related chest pain. There is a quantity variance of 21 330 as it was noted that they must have 22 624 in their inventory but upon investigation the AG revealed that there were only 1294 available in stock. The total variance value for nifedipine is $1 173 704 580.

Fentanyl, a chronic pain relief drug that has been often abused is also a cause for concern as raised by AG. 

The hospital had a stock count of 250 while the institution inventory states that they were supposed to have a stock of 3 400, the quantity variance of 3 150 has a total cost of over $550 million in total. 

Indomethacin, another pain reliever has also been significantly tampered with as the report states that the institution has 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.

Mpilo Central Hospital management highlighted that the issues raised in the audit report were also a “major concern” to them.

“This is a major concern to management. The inventory variances are being investigated. Decongestion due to Covid-19 resulted in some procedures not being done. Management will implement the recommendations so that the discrepancies noted are investigated on time,” said the management.

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

“They also could not provide a sequentially numbered donations register where these were recorded. As such, I 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.”

The AG also noted that the hospital did not make any progress in addressing audit findings and recommendations raised in her 2020 report.

“I raised four audit findings and one was partially addressed whilst the other three were not addressed as indicated; Noncompliance with IAS 16 ‘Property, plant and equipment ‘, the recommendation was partially implemented. Management is aware of this issue; letters have been written to the Ministry of Local Government and CMED to assist the management with the revaluation exercise,” she said.

The AG recommended that a Board of Management be put in place and the recommendation has not been implemented since as the board has not been appointed. She also recommended that staff shortage be addressed but this has not been done. Furthermore, she recommended on financial instruments saying the use of a manual accounting system had limitations as it could not ensure the segregation, aging and profiling of debtors. – @NyembeziMu.