Audit warned of VCH purchasing card misuse; Fraud, liquor purchases found in Vancouver Coastal Health report

By Stanley Tromp, Vancouver Courier, 10 Aug. 2011



Some Vancouver Coastal Health employees have used purchasing cards in improper ways, leading to a possible loss of taxpayers' funds.

That was the finding of a 2010 audit of VCH spending, obtained by the Courier through the Freedom of Information law. Yet VCH spokesperson Gavin Wilson said last week that since the audit, the health authority tightened P-Card controls to prevent future losses.

VCH spent $280 million for goods and services in 2009 and 2010. The authority has a purchasing card program created to give employees a quick, easy way of paying for low cost items. In 2009 there were 239 cardholders who spent $1.44 million through 50,085 transactions.

Wilson told the Courier that although VCH does not have a breakdown on who is issued the P-Cards, they are generally non-unionized management staff.

"Fraud is something VCH takes extremely seriously," he added. "While we are pleased to say this situation shows that the audit process is working, we are not pleased to know that it found evidence of fraudulent activty by two former employees."

The audit found that they did not always comply with VCH policies, and "some instances of potential fraud were even noted."

Most transactions did not contain an explanation for their business purpose, 278 transactions did not have the original receipts attached, 17 P-Cards were issued to staff who did not have spending authority, and some cards were improperly shared.

"Cardholders have used P-Cards for questionable purposes," such as for 17 liquor purchases and 32 parking tickets. To reduce this problem, auditors advised the VCH to contact Scotiabank (its P-Card provider) to "block purchases from certain merchants."

In some other cases, VCH paid twice for the same transactions, as when employees claimed reimbursement on expense claims for charges paid for by P-Cards. "An decrease to VCH's reputation is at risk as this can be viewed as inadequate monitoring over the use of public funds."

A "high priority" problem noted was that cardholders did not have to undergo training for P-Card usage, the audit said. "Management should immediately improve the internal controls relating to the monitoring of P-Card purchases."

Wilson said that VCH amended its P-Card policy so that cardholders must explain the business purpose of their transactions, and those who don't follow the policy will have their P-cards suspended. Cardholders now have to pick up their card in person and receive an orientation session with the P-Card administrator.

The VCH accounting branch now sends out regular notices on what kinds of purchases are disallowed, and the branch reviews the monthly statements for disallowed expenditures. VCH has blocked charges to parking fines, towing charges, and drinking establishments as "non-allowable."

A separate 2010 audit noted that VCH spends millions of dollars yearly on computer software licence and maintenance fees. Yet it was hard to monitor software fees without a record of price increases, the report said, and VCH may be paying too much in annual maintenance.

As well, "some contracts were difficult to locate or not available." Wilson said these issues have been resolved. The authority created a central repository of contracts, which tracks the services provided, vendor, contract dates, and more.