The Bermuda Hospitals Board (BHB) wasted $300,000 on new laundry equipment that never even reached the Island, the Auditor General has revealed.

The news came as Auditor General Larry Dennis blasted financial controls at the hospital in his report for the year ending March 31, 2001 which was tabled in the House of Assembly yesterday.

He said a facilities manager at the BHB had bought laundry equipment for $100,000 more than its market value from an unauthorised dealer in the US.

The equipment turned out to be unusable and will now be sold for just $50,000, he said.

Mr. Dennis said the problem reflected weak control over the BHB's $25 million in capital assets, some of which could not be identified.

"The need to improve capital assets management is further illustrated by some laundry equipment purchased more than three years ago for $344,000," he said.

"The equipment was capitalised and is being amortised even though it is still in storage in the United States," he said. "It apparently was purchased from an unauthorised dealer and cost approximately $100,000 more than its market value at the time.

"It was subsequently discovered that it would be costly to transport to Bermuda and would require modifications before it could be used with the Board's current equipment.

"The Board decided to sell the equipment and estimates its resale value to be $50,000."

The Board responded that "this matter did not unfold until a new Director of Facilities was hired".

"Then it was fully investigated, alternatives considered, and the matter resolved."

Mr. Dennis also revealed that "there is evidence of major problems with the recording and collecting of patient billings". These included:

l The patient billings receivable sub-ledger at March 2001 was out of balance with the board's general ledger by $246,000;

l the balance on a special account used to "temporarily" hold billing uncertainties increased from $15,000 to $93,000 during 2001;

l ageing of billings receivable and allowance for doubtful accounts increased from 34 percent to 36 percent of the total outstanding during the year;

$830,000 of patient billings were written off at March, 2001 and collection agencies were only able to collect $200,000 of $1 million sent to them for collection.

The board responded that the receivable accounts area would have adequate staffing by year-end and "strategies will be in place to address these and other problems".

Mr. Dennis also criticised the Hospitals Board policy of delaying payments to suppliers and deferring capital expenditures because of cash flow shortages: "These are short term expedients and do not address the underlying causes of the problem."

He said: "A longer term strategy is needed to return the Board to a positive cash flow position. Improving controls over revenue streams would be a good place to start."

The board responded that "revisions to fee schedules were being considered generate cash flows needed to sustain operations and capital asset requirements".

"Meanwhile, capital projects related to the more critical patient-care projects are proceeding and donations to fund major acquisitions are being sought".