Audit activity: Municipal Clinical Hospital „Sfânta treime” and Municipal Clinical Hospital „Sfântul Arhanghel Mihail”

On July 31st, the Court of Accounts of the Republic of Moldova examined the Compliance Audit Report on the management of public assets and financial resources by the Public Medical-Sanitary Institution Municipal Clinical Hospital (PMSI MCH) "Sfânta Treime" in 2023, and the Compliance Audit Report on the management of public assets and financial resources by the Public Medical-Sanitary Institution Municipal Clinical Hospital (PMSI MCH) "Sfântul Arhanghel Mihail" in 2023.

The Court of Accounts reported that the audits aimed to evaluate the compliance of public asset and financial resource management with the applicable regulatory framework and to issue a general audit opinion.

PMSI MCH "Sfânta Treime" and PMSI MCH "Sfântul Arhanghel Mihail" are public curative-prophylactic, scientific, and didactical institutions, with Chisinau Municipal Council (CMC) as their founder.

The assets managed by PMSI MCH "Sfânta Treime" at the end of 2023 amounted to 257.4 million lei, increasing by 764.36 thousand lei compared to the previous year, mainly due to the growth of commercial receivables.

The revenues and expenditures recorded and reported by PMSI MCH "Sfânta Treime" at the end of 2023 amounted to 481.8 million lei and 464.2 million lei, respectively. The largest share of PMSI MCH "Sfânta Treime"'s revenues comes from medical services funded by NHIM, totaling 444.9 million lei (92.33%), while the largest share of expenditures consists of labor-related costs, totaling 253.81 million lei (54.68%).

The audit found that the founder had not issued a decision on the formation of the Administrative Council until 2024, resulting in non-compliance with statutory provisions and a failure to exercise its administrative rights. The nominal composition of the Administrative Council for all public medical-sanitary institutions was approved by the founder based on the CMC Permanent Commission's decision on April 8, 2024, consisting of 4 members instead of 5 as stipulated in point 27 of the Regulations on the organization and functioning of medical institutions.

The following deficiencies were identified:

The founder did not comply with legal provisions, and PMSI MCH "Sfânta Treime" did not have grounds to record the liabilities related to public domain assets received for economic management. The total value of assets received between 2004 and 2023 amounted to 152.77 million lei, recorded as a contribution to social capital.
The founder did not ensure the transfer of capital repair works worth 11.09 million lei, carried out by the Capital Construction Directorate on assets managed by PMSI MCH "Sfânta Treime," because of the lack of final acceptance reports, which distorted the value of the buildings.

PMSI MCH "Sfânta Treime" did not fully comply with the applicable regulatory framework regarding the complete registration, inventory, and proper disposal of assets, leading to:

- failure to capitalize capital repair works carried out with internal resources amounting to 946 thousand lei;
- incorrect determination of the useful life of fixed assets, resulting in an overstatement of amortization expenses by 35.78 million lei for the period 2018–2023;
- failure to evaluate and properly record the information systems used by the entity, resulting in an overstatement of expenses by at least 27.76 thousand lei;

The planning of medication needs was based on the institution's requirements, but in some cases, the stock quantity was not considered, and the lack of evaluation by the interdepartmental commission led to inefficient apportionment of donated medications, incurring additional disposal costs of 7 thousand lei.

In 2023, the medical institution fulfilled 99.59% of the contracted medical services with NHIM, but did not fully deliver high-performance services, achieving only 75.35% by December 31, 2023, resulting in 1.89 million lei less than the contracted volume.

The Court of Accounts noted that PMSI MCH "Sfânta Treime" had taken several actions to address the identified non-compliances, such as:

Capitalizing repair works initially recorded as separate assets, including and allocating them to the immovable properties held, totaling 160.2 million lei;
Transferring low-value and short-term assets to the category of fixed assets, worth 542.97 thousand lei, and adjusting their depreciation by 287.55 thousand lei;
Correcting the duration of use of a medical device and its related depreciation, amounting to 1.56 million lei;
Capitalizing the value of repair works amounting to 946 thousand lei;
Recording four information systems in the accounting records, totaling 27.76 thousand lei, etc.

Regarding the results of the compliance audit on the management of public assets and financial resources by PMSI Municipal Clinical Hospital "Sfântul Arhanghel Mihail" for 2023:

The assets managed by PMSI MCH "Sfântul Arhanghel Mihail" at the end of 2023 amounted to 136.9 million lei, increasing by 7.6 million lei compared to the previous year.

The revenues and expenditures recorded and reported at the end of 2023 amounted to 165.4 million lei and 153.1 million lei, respectively. The largest share of PMSI MCH "Sfântul Arhanghel Mihail"'s revenues comes from medical services covered by NHIM, totaling 154.0 million lei or 93.1%, while the largest share of expenditures consists of labor-related costs, totaling 81.7 million lei or 53.4%.

The external public audit identified some non-compliances in the activities and procedures covered by the audit, caused by both some gaps in the internal managerial control system and the non-compliance of those responsible within the entity with the regulatory framework, summarized as follows:

The founder's decisions regarding the registration and increase of PMSI MCH "Sfântul Arhanghel Mihail"'s social capital were contrary to legal provisions, leading to the incorrect registration of public assets received for economic management, totaling 96.2 million lei. Additionally, the founder did not ensure the establishment of the administrative council and the timely coordination of the organizational and operational regulations of PMSI MCH "Sfântul Arhanghel Mihail";
The Ministry of Health and the founder (Chisinau Municipal Council) failed to announce and conduct the selection competition for the position of head of PMSI MCH "Sfântul Arhanghel Mihail" contrary to the regulatory framework. As of now, this position operates based on the Department of Health's 2001 CMC order, without a management contract concluded with the founder;

The founder of PMSI MCH "Sfântul Arhanghel Mihail" and the institution's management did not comply with the applicable regulatory framework requirements and did not ensure the proper registration of assets, leading to:

- The non-registration of ownership and management rights for 8 buildings/constructions with a total area of 17.24 thousand m², valued at 77.25 million lei;
- The lack of delimitation of a construction with an area of 161 m² and a book value of only 800 lei;
- The non-recognition and non-reflection in the accounting records of 2 constructions/rooms with an area of 64 m²;
- The failure to capitalize repair works on immovable property and machinery totaling 1.42 million lei.

PMSI MCH "Sfântul Arhanghel Mihail" did not properly evaluate the needs, coordinate the approved/adjusted budget with the procurement plan. When preparing the 2023 public procurement plan, the audited entity did not consider legal provisions and did not include planned allocations for contracting and paying for utility services (electricity, heat, water, and sewage) totaling 13.7 million lei. Although income and expenditure estimates were frequently adjusted during the year by increasing allocations from NHIM contracted services, which for only five types of goods and services amounted to 4.5 million lei, the audited entity did not modify the procurement plan for these.

Finally, the Court of Accounts noted that PMSI MCH "Sfântul Arhanghel Mihail" made the necessary adjustments by capitalizing the value of capital repairs and correcting the results of previous years by 1.4 million lei.