Health Minister Zane DeSilva admitted yesterday there had been a lack of financial controls in the Health Insurance Department, which had led to an “unacceptable” situation.As he tabled six years of financial statements relating to government-run health insurance schemes, Mr DeSilva said his Ministry had faced multiple problems including backlogs of claims, enrolment applications and audited accounts, as well as a lack of accounting personnel.Auditor General Heather Jacobs Matthews said her vetting of the accounts, which relate to the fiscal years ended March 2005 to March 2010, showed up “serious deficiencies in the accounting records of the funds and in the system of internal controls”.As a result, Ms Matthews denied an audit opinion for all of the statements tabled, indicating that she had no confidence that the accounts accurately reflected the funds’ finances.The statements tabled included the Health Insurance Fund and the Mutual Re-insurance Fund, both for the six fiscal years ended March 31, 2010, and the FutureCare Fund for the one year ended March 31, 2010.Mr DeSilva was not arguing with the Auditor General’s conclusions. “Let me be clear — we have not been under any illusion regarding the problems the Department faced.“Overall, there was a lack of financial controls due to insufficient accounting and finance personnel for several years. Radical and bold moves are needed to correct this going forward.”Mr DeSilva said changes to the operating model of the Health Insurance Department that would “fundamentally strengthen its daily operations and allow it to properly manage the funds” would be announced.One of the core problems highlighted by Mr DeSilva was the manual processes used by the Department between 1970 and 2010, which had been “prone to human error, data integrity issues and the duplication of efforts”.“These process errors led to multiple qualified audit opinions on both premium revenues and claims expenses,” Mr DeSilva added.In October 2010, the Department implemented a new automated system and new operational procedures.“After a thorough analysis, and based on this chain of events, it was clear that obtaining clean audits was going to be impossible.“For the periods covered, the Ministry of Health and the Department agreed with the Auditor General to accept Denials of Audit opinion for all the years being tabled today.“Mr Speaker, this was a difficult decision, but it was a prudent one, considering the lack of automation, the undocumented procedures and the significant backlogs inherited by the Ministry of Health in assuming responsibility for the funds in April 2009.“Although the Department’s efforts have been valiant, the result is unacceptable.”Mr DeSilva said the backlogs that had been successfully cleared related to medical claims in July 2007 and July 2008, enrolment applications in December 2007, preparation of financial statements in January 2008 and claims payments in February 2010.He also catalogued the major problems encountered by the Department over the years.These included an inability to produce financial statements, due a lack of resources.The impact had been exacerbated by a lack of resources in the Auditor General’s office which had led to delays in the auditing of outstanding financial statements.This in turn meant that management had been unable to correct issues that would normally have been raised in the audit process, he added.