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Blood Bank
Blood Bank
It was December 2015, Mr. Abdul Haleem, newly appointed finance manager at Sukkur Blood
Bank and Drugs Donating Society (SBDDS) was striving for how to reshape and implement
standard operating practices and policies of hospital. During his last three months duration at
SBDDS he had observed and identified that hospital was lacking management control at a
greater extent by underlining accounting information system which was inadequate to reconcile
daily transitions which ultimately could led to funds mismanagement, an informal systems of
budgeting and poor compliance of standard operating procedure resulted to increase in running
costs of the hospital, Staff of hospital were extremely lacking either the basic skills or
willingness of performing routine tasks for effective and efficient utilization of organizational
resources hence backlog of uncompleted work was increasing day by day. Over and above
Trustees started to show concerns regarding the transparency in distribution of funds and
provision of free of cost health facilities which alarmed through showing a decline in two main
sources of revenue i.e. zakat and donations, while contrary to that, to cover the deficit
management put more focus raising the revenue from hospital operations which startled that
hospital had diverted its focus of being a non for profit organization. Mr. Haleem prepared a
hefty list of observations to discuss these issues to senior management in upcoming meeting of
Audit committee and aligned suggested management control measures at those concerned areas
to rehabilitate the trust of the community by delivering more services to the needy people as
reflected in the mission statement of SBDDS.
INTRODUCTION
In 1988 a group of five medical students belonging to Sukkur felt a need to urgently address the
problem of Thalassemia and Hemophilia in Sukkur and its suburbs. They contributed Rs: 600/=
as seed money to undertake the initiative. The team convinced the first general meeting of the
society which was attended by 30 medical students. Each member contributed Rs. 20 and with a
working capital of Rs.600/- in hand, the society started serving its vision and mission of SBDDS.
Sukkur Blood and Drugs Donating Society
They started working in a small cabin where they wrote a number of letters to various blood
donor organizations, not-for-profit hospitals and hospitals run and managed by government to
setup a blood bank in the area but all their efforts could not get any response .Meanwhile, the
team met with Dr. Wazir Ali Lakhani, who offered them space for blood testing and transmission
free of cost at his Ultrasound/ laboratory. The Society was formerly registered as a not for profit ,
non-political, Social and Welfare organization under the Voluntary Social Welfare Agencies
(Registration & Control) Ordinance, 1961 in Sukkur named Sukkur Blood & Drugs Donating
Society (SBDDS) founded on 9th January, 1989. Initially It was started as a Blood Bank SBDDS
services later In 1995, SBDDS built its Sukkur hospital to extend state-of-the –art diagnostic,
blood banking, Emergency Medical, Surgical, Gynecological/Obstetrical, Pediatric and blood
transfusion and management facilities to patients suffering from Thalassemia, Hemophilia and
Leukemia besides patients requiring blood off the counter. The thalassemia Centre, working for
the last 15 years, has been extending services of blood transfusion to the most deserved class of
patient’s i.e. destitute women and children who also have been provided through Iron chelation
and family planning counseling services to 756 registered transfusion patients in order to support
healthy motherhood and aseptic delivery practices, SBDDS Modern Blood Bank is the only
registered blood bank in the entire upper Sindh which provides healthy and screened blood. The
Laboratory is equipped with the latest Chemistry Analyzer, Flam Photometer, Densitometer and
ELISA “enzyme-linked immunosorbent assay” machines: The 100 bed Sukkur Hospital and
Maternity Home was built at a cost of Rs: 46.0 million with the help of the Pakistan Bait-ul-Mal,
philanthropists, industrial community, corporate sector and the government of Sindh, A free
Tuberculosis (TB) cure center was also established in 1999 with the help of local philanthropists.
Currently around 15-20 child patients undergo blood transfusion at free of cost on a daily basis,
not even being charged the expenses for the equipment utilized in process. In case of a reaction
to a blood transfusion the required medicines are also given completely free of charge. For
provision of blood, the Center relies on voluntary donations through a blood donation camp. The
blood donated undergoes screening for HIV/ AIDS, Hepatitis B, C, VDRL and Malarial Parasite
however extending those services though free mobile Health Clinic, Hepatitis B & C screening,
Awareness Camps, Blood Collection & Screening Camps to rural, desert, remote, sub-urban and
urban population of the area are carried out by outreach activities to help people reducing the
maternal and infant mortality rate
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Sukkur Blood and Drugs Donating Society
SBDDS generates finances mainly from three sources; through operations from its hospital,
national donations and through fund raising (ZAKAT Campaigns) at various locations of Sukkur
and Karachi during the month of Ramadan every year. SBDDS has very strong philanthropists,
community, government and corporate sectors financial support to raise donations of about Rs.
10 Million annually to undertake its charitable program. Whereas the other main sources of
operational revenue for SBDDS are OPD (out patients department) where doctors run their
private clinics at SBDDS and pay SBDDS some percentage of revenue as fees, IPD (In door
patient care department) in which different patients are referred by OPD Doctor and admitted in
hospital which are based on their stay and medication, Laboratory which consists of all lab
investigations done at SBDDS premises. SBDDS provides quality services to its patients and
takes every possible step to improve its services. Being a non for profit organization it charges
affordable rates for its qualitative services and also treat some patients free of cost. In order to
meet its needs SBDDS is also being supported by Government grants to run their operations and
expand their services.
The The Mission Statement is “To increase access of health care services to impoverished
communities preventing communicable diseases and promoting physical, Mental and
reproductive health as a MNCH & reproductive health training, service delivery and umbrella
organization”.
The Future aspirations of Local community and management are to strive for the establishment
of SBDDS as an institute of medical science aligned with a professional school for nursing and
Para-medics at Sukkur Hospital having a building dedicated to Emergency, Accidental and
Trauma center while extending the hospital to specialized diagnostic free of cost or quite
reasonable services like CAT/CT scan and MRI for the patients of underserved areas.
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Sukkur Blood and Drugs Donating Society
CURRENT SCENARIO
Mr. Abdul Haleem Soomro joined the organization on 1 st October, 2015.Initially He was placed
in the accounts department because of having background of professional accountancy
qualification with 10 years of relevant experience including the implementation of ERP system
in various organizations, so in a very short span of time he witnessed heaps of problems are
layered in fancy demonstrations presented to him related to human resource policies, accounting
information system, and operating practices and procedures.
HR Policies
It was coined though observations that SBDDS was deficient in formal recruitment policies and
procedures which were practiced for hiring and managing staff. Normally employees were being
hired on the basis of their references rather than their skills and expertise which was accustomed
due to the undue influence and pointless intervention of trustees, senior management or local
politicians in hospital’s operation, many times it has created a tug of war among those different
stakeholders, after hiring an employee has to put up with an outdated practiced performance
appraisal systems named ACR(Annual Confidential Report) this reporting systems was
notorious for abundantly used as unjustified tool by the Senior management against the
subordinate or posing the undue influence considerations, There was lack of provision of proper
on job training to the employees to perform their jobs, so the employees who were already hired
through reference based system explicitly become more reluctant to perform their duties and
those who are hired through meritorious recruitment having formal educational background
become more frustrated.
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Sukkur Blood and Drugs Donating Society
end notes of accounts. Refer Exhibit 1 balance sheet and income statement of SBDDS for the
year 2014 and 2015.
Control weaknesses were found at large in the accounting system which were also raised by
Auditors in report for the year ended on June 30, 2015. Most of the observations of audit
committee was regarding missing of entry records, unauthorized vouchers, transactions
unsupported documents, misclassification of the various journals and transactions. Whereas
overstatement of the expenses and understatement of Assets were also reported during findings
Exhibit 2 which were showing the observations regarding different accounts in the Management
Letter issued by auditing the committee.
Mr. Haleem was surprised to know about immense lack of proper financial planning for the
coming year which concluded that revenues could not be forecasted from different sources and
expenses would have agitatedly remained uncontrolled in last couple of year. Abruptly he sensed
that If it could not be curtailed here this mess is going to expose to a severe Funds management
and utilization which would also became a problem for him as well, rationalizing the importance
of tracking the funds, He noticed it at extreme priority because it was quite difficult to find out
from where the funds were coming and where they were being utilized in such an informal and
undocumented system.
Other concern there wasn’t any clearly defined criteria whom the services would be provided
free of cost and to who would be charged with the fee charged, which created problems for most
deserving class patients remained deprived to get required medical services and medicines while
nepotism and favoritism by hospital management was found at its peak.
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Sukkur Blood and Drugs Donating Society
Issues:
SBDDS was surrounded with thick and widespread cobweb of problems. At one side
management put their more focus at raising the revenue from hospital operations. While contrary
to that, the two other main streams were (Zakat and Donations) were decreasing. It was an
intimidating position itself of community SBDDS to be converted form a philanthropist to
commercial organization however it sensed the SBDDS management in a strong financial
position by showing less dependency on its other funding resources. However more dependency
on internally generated funds could only impact running day to day operations by escalating the
trust deficit of trustees and put the deserving patients away from hospital window services, and
thus it has more weaken the overall financial position of SBDDS. Traditionally, for Zakat and
Donations, SBDDS was not neither carried out any sort of marketing activity or promotional
campaign compared to other trust operating in locality resultantly there was continuous decline
of Zakat and Donations amount which was pointing to the fact that these both were less focused.
Inadequate accounting system gave birth to several other issues. Funds management and
utilization was an apex concern. It became quite difficult from where the funds were collected
and where they were being utilized was difficult to find out with such accounting system where
heads of accounts not properly recorded. Lack formal written operating procedures and policies
were another highly distressed area. SBDDS was operating from years without any formal
procedures and policies. It was very much necessary for SBDDS to develop and frame Standard
Operating Procedures (SOPs) for carrying out daily operations to ensure efficacy and yardstick
to measure performance. Budgeting was another issue that management needed to address.
Formal Budgeting System based on complete analysis of internal and external environment and
management plans were needed to be made for coming years in order to control costs and
establish performance appraisal system for employees.
Budgeting:
Budgeting was being drafted by each department informally without serious involvement of the
senior management or board of trustees. Practice of preparing a budget document was based on
posturing estimates about various expenses which was being done by managers of different
departments who used their past performance and experiences to make increments in existing
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Sukkur Blood and Drugs Donating Society
results while developing these estimations. Formal budgeting system or model was extremely
lacking that’s why management of SBDDS least focused upon controlling cost.
Mr. Soomro had jotted down some of assumptions from previous budgeting system for drafting
budget document for year 2016 he supposed that once the organization solved all other urgent
and important issues so started categorizing those in quadrants of priority matrix. So far
measuring the year end performance of SBDDS he started documenting the system that could be
applicable to budgeting,
1) He was in a position that after taking necessary measures to resolve various issues and
extending the services of the OPD, IPD and Laboratory and MCH income of SBDDS can
be increased by 10% whereas revenue from all remaining sources is expected to increase
with same percentage as increased in 2015.
2) To increase its awareness promotional campaigns, community outreach medical camps
and blood collection campus drives would bridge the gap between hospital management
and board of trustees for donations which will increase the income from Donations, Zakat
and Grants by 25%. However, revenue from all other sources will increase by same
percentage as in 2015.
3) Increment in salaries is expected to be announced by Sindh government and due to
promotional activities will be taken place in coming year so the salary and advertisement
expense will increase by 10%. However ratio of all other expenses to hospital revenue
will remain same as in 2015.
4) Thalassemia patients’ treatment and blood donation camp expense are being calculated as
percentage of blood service revenue, laboratory expenses are also calculated as
percentage of laboratory revenue so these expenses would be estimated to increase in
relation with those revenues.
5) Project based charges will increase by 20% and the ratio of all other expenses to hospital
revenue will remain same as in 2015.
Task:
Mr. Abdul Haleem was desperately waiting for to discuss all these issues and recommend the
possible solutions with the senior management and board of trustees in his upcoming meeting in
next week. He was strongly probing that implementation of a robust Accounting Information
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Sukkur Blood and Drugs Donating Society
System like ERP can resolve many issues of quality reporting in organization which would
definitely lead to develop an exercise the stronger management control system.
Assignment Questions:
1. How do you evaluate the nature of SBDDS by analyzing the mission statement? How it is
different from an organization that exists for profit and at what extent it is practiced?
2. Analyze the issues discussed in case and evaluate the impact of those issues in Exhibit
1A and 1B. What are the acute problems faced by financial health of SBDDS?
3. Criticize or justify that the observations raised by Mr. Abdul Haleem would really be an
area of concern for senior management or it is these are just some irregularities that every
next organization in locality is facing itself?
4. Conclusively based on observation portrayed in Exhibit 5 by Mr. Haleem and the Audit
committee what controls are deficient regarding information accessibility and quality of
operational process. Highlight those controls that help to prevent detect or correct
operational and financial errors.
5. Audit committee reviews shows some genuine issues, which has raised serious concerns
by the board of trustees to know regarding what hospital is doing to provide the health
care facilities for poor and needy people. Prepare a reply in response to management
letter you would suggest as the Finance manager to remove the anxieties of trustee for
assuring the rightly provision of treatments to deserving patients? Please Refer Exhibit 4.
6. Prepare a budget for 2016 by looking at income statement of 2014-2015 and estimations
of Mr. Abdul Haleem and how this budget would help as controlling toll.
7. How your control strategy would mitigate the trust deficit of board of trustees in order to
get maximum donations and zakat funds or increase the revenue streams of hospital.
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Sukkur Blood and Drugs Donating Society
Exhibit 1A:
Sukkur Blood Bank and Drugs Donating Society
Balance Sheet
For the Year Ended on 30, June 2015.
Non-Current Assets 2014 2015
Property, Plant and Equipment 40952495 4513201
8
Capital work in progress 3998495 5806350
44950990 5093836
8
Current Assets
Stock-Medicine and Supplies - 3146102
Trade debts-Considered good 4237686 5702850
Advances and other receivables 4487957 7990083
Tax Refund Due 282654 282654
Short Term Investment 10000000 1050000
0
Cash and Bank Balances 11518397 1685337
1
30526694 4447506
0
Total Assets 75477684 9541342
8
Current Liabilities
Trade and other payables 4262872 8136415
Advances from Patients - 1704390
Provident funds-Unrecognized - 2404501
4262872 1224530
6
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Sukkur Blood and Drugs Donating Society
2014 2015
INCOME Total funds and Liabilities 75477684 9541342
Hospital revenue 8
In-patients Revenue 53,680,956.00 54,387,311.00
Ultrasound 2,159,690.00 3,590,250.00
ECG 46,100.00 52,400.00
X-Ray 2,512,960.00 3,512,170.00
OPD Hospital 8,509,742.00 7,955,915.00
Laboratory Income 12,745,213.00 11,182,053.00
Blood Service Income 6,072,003.00 9,212,000.00
MCH Income - 6,597,998.00
total hospital revenue 85,726,664.00 96,490,097.00
Zakat, Donations and Grants 19,314,423.00 14,776,198.00
Other income 1,749,246.00 2,710,158.00
total income 106,790,333.00 113,976,453.00
Expenditure
Salaries & Allowances Expenses 27,960,014.00 37,771,550.00
Exhibit
Consultant Services Expenses 12,555,777.00 1,775,619.00 1B:
Hospital Panel Expenses 5,424,051.00 9,076,815.00 Sukkur
Thalassemia Patients Treatment Expenses 4,950,089.00 4,994,905.00 Blood
Waived as Financial Support to Indigent Patients 603,866.00 1,644,919.00 Bank
Laboratory Expenses 7,361,745.00 7,763,589.00
and
Utilities Expenses 5,432,902.00 5,331,975.00
Repair & Maintenance 3,973,853.00 3,496,476.00
Drugs
Vehicle Running & Maintenance 3,899,409.00 5,268,383.00 Donating
Postage Expenses 68,349.00 40,109.00 Society
Printing and Stationery 1,225,647.00 1,313,922.00
Oxygen Gas Charges 2,645,102.00 2,408,859.00
Laundry Expenses 264,358.00 64,945.00
advertisement expenses 401,952.00 720,364.00
Blood Donation Camp Expenses 250,767.00 268,397.00
Computer and Software Expenses 243,708.00 411,972.00
office supplies 3,450,109.00 1,065,276.00
Security Expenses 227,700.00 254,745.00
Conveyance Expenses 8,514.00 33,782.00
Entertainment Expenses 322,984.00 513,175.00
Subscriptions, Newspaper and Periodicals 12,392.00 16,853.00
Program and seminar Expenses 15,535.00 102,930.00
Audit expenses 99,000.00 271,095.00
Staff Uniforms Expenses 330,783.00 366,183.00
Curtain and bed sheet expenses 86,891.00 232,778.00
Depreciation charge 968,383.00 1,504,040.00
Bank charges 42,198.00 47,845.00
Other Expenses 6,671,863.00 6,646,934.00
project based charges 9,269,787.00 8,753,251.00
Discard blood pints Expenses
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total expenses 98,984,431.00 102,372,564.00
Income Statement
For the Year Ended on 30, June 2015.
Exhibit 3
Excerpts from Management Letter by Auditing Committee
1 PROPERTY PLANT & EQUIPMENT
1.1 FIXED ASSET REGISTER IS NOT MAINTAINED
OBSERVATION:
It has been noted, during the course of audit, that fixed asset register is not maintained by the
management and assets of the society are not tagged.
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Sukkur Blood and Drugs Donating Society
Furthermore it has been noted that recording of stock is not on timely basis.
Furthermore long outstanding balances like this may indicate management’s inefficiency in recovering
amount form debtors within due time due to lack of follow up. Furthermore also related party
transactions and implications needs to be evaluated in this case.
3 CASH IN HAND
3.1 INAPPROPRIATE RECORDING OF CASH TRANSACTIONS / VOUCHERS
NOT SERIALLY NUMBERED
OBSERVATION:
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Sukkur Blood and Drugs Donating Society
It has been observed that in many cases revenue and other receipts in cash are entered in ledger through
Journal Voucher (JV) rather than Receipt Voucher (RV). Furthermore the Journal and other Vouchers are
not serially numbered and serial numbers are not generated by the accounting system.
5 REVENUE
5.1 LACK OF CONTROL OVER SERVICE PROVIDED THROUGH DONATION
OR ZAKAT
OBSERVATION:
It has been observed that there is no specific controls and evaluation procedure for allowing patients free
of cost services either through Zakat Fund or through other sources. Usually patients are waived
expenses / costs of hospital services and medicines based on the reference of various hospital personnel
and general secretary.
5.2 REVENUE FROM VARIOUS SERVICES ARE NOT TIMELY DEPOSITED
OBSERVATION:
It has been noted in case of many instances that cash receipts from various services is not deposited in
same day or following day. In certain cases cash was deposited after 5 to 15 days.
5.3 UNRECORDED REVENUE
OBSERVATION:
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Sukkur Blood and Drugs Donating Society
It has been observed during the course of audit, revenue from certain services is not recorded in ledger,
though services are provided during such days.
5.4 CONTROL OVER PUBLIC ZAKAT
OBSERVATION:
Pre numbered book has been used for receipt of zakat from public; however numbers are not followed
properly.
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Sukkur Blood and Drugs Donating Society
Exhibit 4
Data Analysis Working Sheet
OBSERVATION LEVEL OF RISK IMPACT SUGGESTED
CONTROL IDENTIFICATION ASSESSMENT CONTROL
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Sukkur Blood and Drugs Donating Society
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