Betsi Cadwaladr NHS board accounts deliberately wrong, report says

Finance officials at an NHS health board deliberately made incorrect entries into their own accounts, a leaked report shown to BBC Wales says.

An investigation by accountancy firm EY said Betsi Cadwaladr wrongly accounted for millions of pounds.

It alleged EY's work was "hindered" by the alteration of a document and the deletion of a recording of a meeting.

The north Wales health board said it is dealing with issues raised by EY.

Welsh Conservative Senedd leader Andrew RT Davies said the report was "serious" and Labour Welsh government ministers should "get a grip".

EY said there were "systematic cultural failings" in the organisation's finance team.

Its forensic accountants said the health board recorded transactions in its 2021-22 accounts that related to work which contractors had not yet done, or medical equipment which did not arrive until months afterwards.

A criminal fraud investigation into the matter was dropped earlier this year, though an internal review of what happened is continuing.

The EY investigation began in September 2022 after the regulatory body Audit Wales found what it called "significant errors" with the Betsi Cadwaladr University Health Board's 2021-22 accounts.

Investigators spoke to senior managers at the health board and heard they were under pressure to spend all the money given to them by Welsh government, and to balance the books.

But as the 2021-22 financial year drew to a close, the health board wrote to the Welsh government, predicting it would spend £10.2m less than expected.

The report describes how incorrect accounting entries were knowingly made to use up some of the budget not spent in 2021-22, for items "related to post year-end expenditure or services, or on items which "should not have been validly recognised" as expenses that year.

The Welsh government had told health boards they did not intend to take back unspent cash from 2021-22. EY said it saw no evidence that the Welsh government told the board to put accounting entries in the wrong year.

EY said: "We have found that costs were posted to the incorrect financial year or were incorrectly accounted for.

"We have identified evidence that these postings were deliberate and that the misstatements were not limited to a single individual or team."

The report said: "There have been systematic cultural failings in the finance team and leadership at Betsi Cadwaladr University Health Board which will require a programme of change."

The investigators said that items of medical equipment such as wheelchairs and pumps for intravenous drips were ordered and included in the 2021-22 accounts, even though they did not arrive until well into the following financial year.

"Betsi Cadwaladr University Health Board recognised £1.8m of costs associated with a contractor in the 2021-22 financial year, despite these services relating to the following financial year and beyond," EY said.

"In order to recognise the entry in the wrong year, a purchase order was produced on 31 March 2022 with incorrect details which were intentionally designed so that it would not be sent."

The report's authors stressed they saw "no evidence of direct personal gain as a result of these misstatements".

EY's report also alleged that both its own and Audit Wales' work had been hindered because "a document has been altered and a file has been deleted".

"A proposal document… was altered for the purpose of providing it to Audit Wales," the report said.

"These alterations made it less clear which accounting period the proposal related to."

Andrew RT Davies and former Plaid Cymru leader Adam Price have both raised the report in the Senedd in recent weeks.

When questioned about it, Labour First Minister Mark Drakeford said that disciplinary procedures "have been instigated by the health board".

He added that the report was not critical "in any way of Welsh government ministers or civil servants" and did not find any evidence or suggestion of complicity.

He said the reason it cannot be published is that it would "inevitably… lead to identification of individuals, who… are now potentially subject to disciplinary procedures".

"It would be utterly unfair to them in any response that they would wish to make to have that report circulated."

The report emerged after the organisation was put into special measures after a damning Audit Wales report said the board's executive team was "dysfunctional".

It alleged working relationships between executives and independent board members had broken down.

Health Minister Eluned Morgan forced the independent board members to resign in the report's wake, and has been under pressure to take action against executives.

She has insisted she does not have the power to do so.

A spokesperson for Betsi Cadwaladr University Health Board said: "The management of the issues raised in the EY report is progressing in line with existing procedures and policies.

"This follows the conclusion of the NHS Counter Fraud Wales investigation connected to the auditor general's qualified opinion of the health board's 2021-22 financial accounts.

"It is inappropriate to comment on the status of any employees at this stage."