Big losses were suffered by the Ministry of Health due to the expiration of large quantities of drugs, the 2010 report of the Auditor General has stated.
The report tabled in Parliament earlier this month said that during the period under review, the Ministry “continued to suffer losses due to expiration of large quantities of drugs. Noteworthy was the fact that destruction of expired drugs valued at $39.955M had occurred”. Further, it said that there was a large quantity of expired stock still on hand pending processing and destruction.
Observers say that destruction of such large amounts is usually a sign of poor stores control and a mismatch in ordering.
The report said that in response, the Head of Budget Agency stated that corrective actions were now being taken. The Head said that the Ministry of Health was carrying out a 100% stock count and the records would be adjusted accordingly. There was no explanation of why this had not been done before and why there was such a large amount of expired drugs. Further, the Head said that at the end of the stock count the ministry was moving from maintaining a parallel manual system to a fully computerised inventory.
Aside from stores handling, the Ministry which was headed by Dr Leslie Ramsammy at the time was also criticized in the report over its procurement practices with the New Guyana Pharmaceutical Corporation.
During a verification exercise at the Ministry’s Kingston stores, the Auditor General’s team found a series of unsatisfactory practices. Several entries in stock ledgers were made in pencil and the records were not balanced. “In addition, there were instances where receipts and issues of stock were not recorded and there was a failure to reconcile stock ledgers with bin cards. As a result, the vital control mechanism for ensuring proper accountability for stock was not in place”, the report said.
Further, a physical count of items at these stores showed 31 cases where there were significant shortages and excesses. The team also found that some items of stock were not displayed on shelves or stored in a way to enable easy verification of quantities on hand and in some cases there was no evidence of labelling.
At the Farm, East Bank stores, the audit team found that records were not updated and this resulted in unreliable balances being shown. Therefore a proper comparison with physical balances could not be conducted. “This is evidenced in the fact that a physical count of a sample of ninety-three items resulted in discrepancies in relation to fifty-seven items or a sixty-one percent error rate”, the report said.
Further, the team discovered that the computerised database was being incorrectly used as a basis for recording information into stock ledgers thereby defeating the necessary requirement of reconciling these records. “These ledgers are required to be independent records of transactions, which can otherwise be authenticated through the use of source documents, such as, orders or requisitions, invoices and delivery, receipt and issue notes”.
The report also lamented that there was no evidence of reconciliation between stock ledgers and bin cards thereby leading to the loss of a vital control mechanism. There were several defects in the bin cards. Some bin cards were not balanced to show the quantity of stock on hand and were not updated with the receipt and issue of stock; in some instances entries were deleted and superimposed without being initialled; some entries were written in pencil; bin cards were not maintained in some cases.
In its response to these defects, the Head of the Budget Agency told the Auditor General’s office that stock ledgers were now being balanced and all entries were done in ink. It further said that reconciliation between the stock ledgers and bin cards was in progress and variances will be clarified. Items were also being fully labelled and placed on shelves.
New GPC transactions
Apart from its criticising of uncompetitive bidding for $1.5B worth of drugs by New GPC, the Auditor General’s report also went into the details of the transaction. It noted that there were 16 contracts with New GPC for 2010 with expenditure reaching $927M for which outstanding supplies were valued at $30.9M. For 2009 the report said that there were still outstanding supplies totalling $7.56M relative to 10 awards totalling $415.4M for the period August 2009 to December 2009. For the period January 2009 to July 2009, the report said that the ministry was still to account for $77.8M of its unsubstantiated computed outstanding balance of $286.69M. The audit report said that this was as a result of continuing reconciliation of records with the supplier. It said that similar issues affected payments made in 2008 where transactions with New GPC valued at $137M could not be verified and were still to be verified.
The ministry in its response said that for the period 2009 to 2010 drugs to the value of $75.6M from New GPC were still outstanding and it was “working with the supplier to have outstanding drugs brought to account”.
In its recommendation, the audit office said that the ministry should make available all relevant documentation “that would clearly establish the reasonableness of the outstanding balances on all contracts for the supply of drugs, while providing evidence of compliance with Stores Regulations in relation to quantities received and utilised over the period”.