Annapolis Valley Health Authority Responding to Financial Review
HEALTH--Annapolis Valley Health Authority Responding to Financial Review
The Annapolis Valley District Health Authority is taking steps to improve its financial planning and reporting processes in response to a financial review by accounting firm Ernst and Young. Health Minister Jamie Muir released the final report today, July 25.
"We asked Ernst and Young to conduct the financial review in response to concerns raised by the Annapolis Valley Health Authority about the accuracy of the information it had to determine its financial position. The department shared those concerns," said Mr. Muir. "The district, the department and the people living in this area need to know that decisions are being made based on the best financial information available. We are now going to move forward with the district to implement the necessary changes in response to the findings of the Ernst and Young report."
The Department of Health, with the support of the Annapolis Valley Health Authority, asked Ernst and Young in February to review and comment on the appropriateness of the authority's budget planning and reporting processes for 2001-02, including confirming its forecasted deficit for March 31, 2002.
"In our view, the Annapolis Valley Health board and CEO and the Department of Health took appropriate steps in requesting a financial review," said John Carter, partner, Ernst and Young LLP. "It appears that the concerns raised were most likely a result of process deficiencies and unique circumstances during the budget process. We have discovered no evidence of intentional misinformation by any member of the Valley's finance team."
Key findings of the Annapolis Valley Health financial review included the fact that many finance managers were responsible for creating the 2001-02 budget with no overall financial leadership. This resulted in numbers being adjusted many times with little explanation. Consequently, the reporting analysis to the department was inadequate and the business planning process influenced by incorrect information. For example, the deficit number identified by the district was more than twice the actual amount.
Findings also noted that district finance managers were responsible for creating the budget, but not sufficiently involved in the decision-making process for the business plan and budget. Weaknesses in monitoring the budget by staff and other controls were also noted.
The former Annapolis Valley Health CEO's resignation in August more than likely contributed to the overall confusion. Ann McGuire, the current CEO, was only three months into the job when she raised concerns with the department that she was unable to accurately determine the financial position and forecasted results for the district.
Staff from the Department of Health have met with Ms. McGuire to review the report's findings and to discuss next steps. The CEOs from South West Nova and South Shore Health were also briefed because they share financial services with Annapolis Valley Health.
"The release of this report is welcomed in the district," said Ms. McGuire. "We have started to make changes in response to a number of the findings in the Ernst and Young report, which mirror those of our own internal review. We are restructuring the management of the financial service, providing budgeting education to our managers throughout the district and developing new finance policies."
The report concluded that the health authority's deficit for 2001-02 would be about $1.2 million. This is supported by the district's drafted audited statement. The department has agreed to pick up this deficit. The district has taken steps to manage within their 2002-03 budget.
The 2002-03 budget for Annapolis Valley Health is $54.8 million, which is an increase of $1.4 million from its adjusted 2001-02 budget. There will be an additional increase to support new collective agreements.
A complete copy of the Ernst and Young financial review can be found at www.gov.ns.ca/health/reports.htm .