AHS Controls Over Expense Claims, Purchasing Card Transactions and Other Travel Expenses
What we examined
In response to a request from both the Minister of Health and Alberta Health Services, we examined AHS’s systems for processing expense claims, purchasing card transactions, and other travel expenses. Our objective was to assess if AHS has effective controls to ensure that these types of expense payments comply with AHS policies.
In addition to our audit, under the direction of the Minister of Health, AHS hired Ernst & Young to perform an audit of expenses claimed by the former Capital Health’s Chief Financial Officer. Four executives who were, at that time, executives with the former Calgary Health Region also requested an internal audit of their expenses. AHS released both reports on December 13, 2012.
While the other two reports focus on the expense transactions of a small number of individuals, we focused on, and report our findings for, the whole system, not individuals.
Policies—We tested transactions against the expense reimbursement component of the Board Member Remuneration and Expense Reimbursement Policy; the Travel, Hospitality and Hosting Policy (and the predecessor policy); the Travel User Guide; the Purchasing Card Program User Guide; the Medical Staff Recruitment Incentives Policy; the Medical Staff Recruitment Guideline—Relocation Support; Medical Staff Strategic Workforce Incentives Guideline and the Employee Relocation Procedure in effect from April 1, 2011 to August 31, 2012.
Essentially, these policy requirements were our detailed criteria.
What we found and what needs to be done
AHS is a large, complex organization that operates the delivery of the provincial health care system. Travel is essential to its operations. AHS spent about $100 million on travel expenses and other expense claim and purchasing card expenses (expenses) between April 2011 and August 2012.
We found that AHS needs to tighten its controls by:
- improving the analysis and documentation that support the business reasons for—and the cost effectiveness of—these expenses
- improving education and training of staff on their responsibilities for complying with policies
- monitoring expenses and reporting results to the Board
We also found that AHS needs processes to guide employees on how to achieve cost effectiveness. Specifically, it needs to:
- analyze the major expense categories to guide employees on minimizing travel costs by choosing cost effective alternatives
- provide guidance to employees on where to document their analyses considering cost effectiveness and what to consider when doing these analyses
We also found that AHS has improved controls over expenses since our 2008 audit (of Peace Country Health Region, a predecessor of AHS).
Why it is important to Albertans
An effective control framework ensures that public servants do not subsidize the government—or reward themselves at public expense. It protects employees and helps ensure organizational policies are implemented. It also enables AHS’s Board to show and publicly state that AHS expenses are incurred only for business reasons, with proper consideration of economy and efficiency—in other words, that AHS expenses are cost effective.
Although these types of expenses are a very small percentage of the total expenses spent by AHS, an effective control framework over these types of expenses helps reduce reputational risk to AHS and promote an overall proper control environment.