TONASKET – State auditors found in December that the North Valley Hospital District complied with state laws and regulations and its own policies and procedures in “most areas.”
However, auditors did report an issue (known as a “finding”) regarding the use of internal labor on the hospital’s second floor construction project.
Auditors determined that the district “failed to follow state procurement laws, limiting competition.”
The audit covered the years 2011 and 2012.
The audit describes the second floor project as originally estimated to cost $180,000, but when the district found (after the project had started) that it had to bring existing systems up to current health and building code standards, it cost much more than that: $419,000 as of the time of the report.
“The District did not formally bid the project as required,” the report states, “and exceeded its statutory authority when using day labor costing approximately $47,000 and acting as the project’s general contractor.”
Three additional violations of public works laws were listed.
Auditors found that policies and procedures were in place, and staff at the time was not knowledgeable when it came to state law regarding public works and bid requirements.
“Most of the people working on the project are no longer working for the district,” said NVH Chief Financial Officer Helen Verhasselt at the Thursday, Jan. 9, Board of Commissioners meeting. “We had some trouble locating some of the documents. At that point we knew we needed more education, and we needed to update our policies and procedures.”
Before the audit finding came out, we’d sent people to Spokane in October for additional training… We also joined MRSC (Municipal Research and Services Center) … which we now use for our small works roster.”
Auditors recommended that the district “improve its accountability to citizens for the compliance with procurement laws by:
* Requiring training that ensures employees responsible for the procurement have a complete understanding of applicable laws and regulations;
* Establishing and following written policies and procedures to ensure state procurement laws are followed and competitive practices are used.”
The report stated since the district couldn’t demonstrate it received the best price for its project, or provide evidence that it provided fair competition, it could be “responsible for wages and benefits to workers paid less than the established prevailing wage rates (and) … for claims arising under the contract or payment of taxes due to the state that the contractor did not pay.”
“We had already started working on those before the audit finding,” Verhasselt said.
Auditors acknowledged the corrective steps and said they would review the condition at the next audit in two years.
Other areas the auditors reviewed (and found the district compliant in) included other internal procedures and controls; the district’s financial condition; and compliance with the Open Public Meetings Act. Those areas are considered to be at the highest risk of noncompliance.
The report itself included some outdated information, listing the district as operating a 27-bed acute care hospital (it is currently 25) and the extended care as holding 70 beds (58).
Auditors also noted that a 2008 finding regarding the district’s financial state has since been resolved to their satisfaction.
The full report can be found online at: http://www.sao.wa.gov
Verhasselt had told the commissioners last month that November was shaping up to be a rough one financially, and she was right. A whopping $$267,000 in charity care and bad debt contributed to the hospital’s $397,000 loss for the month.
“As we anticipated, November was a disappointing month,” Verhasselt said.
For the year, the district shows a net income of $58,000, including an $857,000 profit in the Hospital Division and a $799,000 loss in Long Term Care.
As of Jan. 7, the warrants owed to Okanogan County stood at just over $699,000.