Capias rivets vows WW Uicall up AvOJUNIULIY. LUUIIUL UEHICLU S WHgUe-rasuIny Over padde... rage 1 OF 3 FPinfomart.ea EDMONTON JOURNAL Capital Health vows to clean up accounting: Auditor General's tongue- lashing over padded costs sparks change Edmonton Joumsl Mon Jan 8 2007 Pago: A10/ FRONT ‘Secton: Ciypus ‘Byine: Charles Rusnell Dateline: EDMONTON ‘Soutes: The Edmonton Journal EDMONTON ~ Auditor General Fred Dunn's sharp criticism of Capital Health's auditing practices has forced the health region to change the way It reports its finances to the public. In 2004 and 2005, Dunn privately told the health region to stop overstating its liabilities to hide the true stale of its finances. Despite two warnings, Capital Health again overstated its liabilities in 2006 ~ and by an even larger amount than in the previous two years. After the health region fixed $22 milion in overstatements at the auditor general's request, its surplus jumped from $24 milion to $46 milion. Organizations sometimes overstate their fulure costs to reduce or eliminate surpluses in order to Increase thelr ‘chances of getting more -- or at least the same amount -- of money for their next year’s budget. When Capital Health overstated its liabilities again in 2006, Dunn decided to get tough. He included a formal recommendation in his annual report, which would require the health minister to provide a written response to his ‘complaint about Capital Health's questionable auditing practices. Athis annual news conference in October, Dunn sharply criticized Capital Health. “Auditing should not be a hide-and-seek exercise whereby management hides the truth and auditors seek to get adjustments made in order that the financial statements reflect reality,” Dunn said, After the news conference, Capital Health spokesman Steve Buick insisted the health region had not attempted to hide anything. He said if Capital Health's estimates were off, twas because the organization was pressed for time at the end of its fiscal year. “That is misleading, Dunn said in a recent interview. Capital Health, with a budget of more than $2.5 billion, is one of the region's largest corporations. Faced with questions about auditing practices, chief executive officer Sheila Weatherill repeatedly stated there was 10 intention to mislead the auditor general or the public. ‘She repeatedly said Capital Health's failure to heed Dunn's warning for three consecutive years was due to @ misunderstanding, and because she and her executives had not taken his advice seriously enough. She stressed Capital Health wil comply in the future. But Dunn wondered how Capital Health could think he wasn't serious. He pointed out the health region's chief financial officer, Allaudin Merali, who is paid $487,000 a year, had previously worked for the office of the Alberta auditor general for 16 years, http://www fpinfomart.ca/doc/doc_print.php?key=arj2517429jedjn|20070108|7403084 02/03/2011Lapse asst voma w Livan up aueuul ig. AUUNUL GeHELa» WLue-raSHUUY OVEr padde... rage 3 Or 5 Capital Health, That policy change has been made, Weatheril said, Despite the public drubbing of Capital Health's auditing practices by the auditor general, Weatheril said Capital Health and the office of the auditor general are on good terms. But twice during the interview, she mentioned the health region is not required to have the auditor general as its auditor. In fact, as Buick pointed out, three health regions in the province are not audited by the auditor general The auditor generat’ office is aware that its criticism of Capital Health could lead to it being dropped as the organization's auditor. “it does put us in a difficult situation,” Hug said. "We're trying to audit for the public and there are billions of dollars that go through the health system and in situations where we are brutally honest, we run the risk of pethaps not being reappointed. “Our objective is to get greater transparency into the health authorities. It has taken this kerfuffle, but I think it has finally driven home the message.” crusnell@thejoumal.canwest.com Eston: Fina Story Type: News Length: 1097 words dowmber: 200701080079 http://www.fpinfomart.ca/doc/doc_print.php?key=ar{2517429|edjn|20070108|7403084 02/03/2011