AG’s IWK audit is justified
If there were any doubts about the seriousness of the IWK Health Centre’s failure to properly vet credit card charges and expense claims by its nowdeparted CEO, Tracy Kitch, they were dispelled this week by the decision of Nova Scotia auditor general Michael Pickup to become involved.
Mr. Pickup announced Tuesday that, in response to an official IWK request and after discussions with board officials, he will audit the books, financial oversight practices and expenditure controls of the hospital. And beginning next April, he will be its annual financial statement auditor.
He also made it clear how bad the Maritime’s only children’s hospital’s financial governance and oversight have been in this matter. “I am gravely concerned with the ineffectiveness of financial controls and lack of rigour in financial management as publicly reported by the IWK in recent weeks,” the AG’s release stated. Mr. Pickup said the hospital “will turn the information it currently has related to the former CEO’s expenses over to police officials for their consideration on any possible legal matters.” The AG will provide police with any audit information he deems relevant and will report his audit publicly to the legislature. On Thursday, news reports said Halifax police will be investigating the IWK’s financial practices.
The IWK board announced Ms. Kitch’s departure in late August “to pursue other opportunities” and has released findings of an independent review by accounting firm Grant Thornton of her corporate credit card and other expense claims. The review identified $47,273.32 in “potentially personal expenses” that lacked documented approval or sufficient support to establish a business reason. The IWK has said it expects to recover the full amount by end of September; about $10,000 remains to be reimbursed.
Some $30,000 of the CEO expenses, deemed personal, related to use of airline flight passes and other air travel costs. Other major items were taxis ($4,474.34), exceeding mobile data limits ($4,636.55), exceeding a $20,000 moving allowance ($2,651.75), car rental ($1,970.44) and hotel expenses ($1,580.31). There were smaller amounts for meals, parking, gas, movies and iTunes charges.
The Grant Thornton review pointed to oversight policies not followed, notably failure by the CEO to submit credit card expense reports on time, to sign off on them and to provide receipts and supporting documents to enable the board chair to determine their validity. In some cases, there was no documented evidence the board chair did approve them. Following the review, IWK chief financial officer Stephen D’Arcy agreed to take paid leave while the AG’s external audit is underway.
A full, public examination by the AG of what went wrong at the IWK, of how and why it failed to properly screen the former CEO’s expenses and disclose them accurately on a monthly basis, as required by law, is certainly warranted. The IWK’s credibility — a priceless asset — has been hurt by these failures and the piecemeal way they came to light since the CBC began an investigation months ago of discrepancies in posted expense reports. We need Mr. Pickup to give us the whole picture and to name the remedies to restore proper financial oversight at, and public confidence in, one of the region’s most important health facilities.