The Accounting Chamber has reviewed the Ministry of Health’s reporting on loans from the IFIs and identified a number of significant shortcomings.

Experts from the Accounting Chamber conducted a financial audit of the projects “Emergency Response to COVID-19 and Vaccination in Ukraine” and “Additional Financing for the project “Emergency Response to COVID-19 and Vaccination in Ukraine” supported by loans from the International Bank for Reconstruction and Development, reports the Press Center of the Accounting Chamber.The Ministry of Health reported to the IBRD on the use of over $58 million under the first project, as well as nearly $121 million under the second project. The submitted reports do not contain significant distortions. The targeted use of funds is ensured.

However, the financial audit of these projects has revealed significant deficiencies in the Ministry of Health’s internal control system, and the accounting and reporting system is inefficient and not sufficiently reliable.

Reports are generated without the involvement of Ministry officials

Reports on IBRD loans are generated based on general accounting, for which there are no methodological recommendations. The procedure for forming planned performance indicators for the use of funds was not defined. Ministry officials did not sign the reports; they were generated, signed, and sent by a consultant under contract without the Ministry’s involvement.
Due to the absence of an integrated internal control system, risk management and monitoring of deficiencies were not carried out, and there was no established procedure for exchanging information between internal and external users. The Ministry of Health’s activity plans for 2021 and 2022 did not include measures, deadlines, indicators, and responsible executives for implementing joint projects with the World Bank.

Deficiencies in MOH Accounting Policies

The Ministry of Health’s accounting policy has not been reviewed since 2018. The audit revealed that the data from general and accounting records are not synchronized, and operations related to IBRD loans are not separately identified, as required by the loan operation manual.
Specific deficiencies include:

  1. The document workflow management system, which should automate project accounting and reporting, was essentially not created. Foreign currency transactions were manually recorded until 2022. The Ministry of Health’s accounting chart of accounts was not adapted to software, resulting in entries being made under sub-accounts not provided for in the plan.
  2. Some economic operations were recorded incorrectly and in violation of the law. In particular, there is no data for the first project on the unallocated medical equipment worth nearly UAH 14 million at the end of 2022, and the inventory of containers for medical waste totaling over UAH 4 million was carried out without primary documents.
  3. Retrospective financing, i.e., reimbursement of expenses for previously purchased COVID-19 vaccines, amounted to $30 million under the first project and $120 million under the second. The procedure for retrospective financing is not defined, affecting the transparency of project expenditures. These funds are not reflected in the Ministry of Health’s accounting since they are transferred from the loan account to the state budget.
  4. Due to the full-scale invasion of Russia in Ukraine, the pace of COVID-19 vaccination significantly slowed down, so only $13 million was allocated for vaccination expenses under the first project. At the end of 2022, the unused $17 million was reallocated to equip healthcare facilities with generators.
  5. The audit found that in 2022, the Ministry of Health did not receive 2,888 units of medical equipment for the cold chain worth nearly $5 million from UNICEF. Despite an 8-month delay in supply, no changes were made to the Agreement between the Ministry of Health and UNICEF. Information about equipment installation is missing.
  6. Experts from the Accounting Chamber did not have sufficient confidence in the actual volume of services provided by the Ministry of Health’s Contact Center, paid for with project funding, as this information is confidential. The Ministry’s control over the volume of services provided by the Contact Center is insufficient.

Decisions and audit reports will be published on the official website of the Accounting Chamber. Responsible for conducting control measures is a member of the Accounting Chamber, Vasyl Nediomyi.

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