Canberra Health Services audits have revealed “failures in financial management”, interim director-general Dave Peffer told staff this morning.

The ACT Health Directorate audited 118 June 2023 invoices with Nippon Telegraph and Telephone (NTT), a major contractor for the Digital Health Record, after the Chief Financial Officer raised concerns last year about the increasing financial risks of invoicing practices with the contract, Mr Peffer said.

The Health Directorate committed approximately $83 million in Work Orders with NTT; actual spending reached more than $66 million as of June. Two updates were made to the original contract, including a one-year extension in October 2021 and a cost variation to $110 million for system migration and datacentre services. $110 million is the total estimated maximum cost of the contract (not the amount spent to date, but the projected upper limit of expenditure).

“Overall, we’re not able to assure ourselves the services we were invoiced for during the month audited were received and were appropriate for the payment,” Mr Peffer said.

“There’s a significant risk the Directorate’s paid for products and services that are inconsistent with our contract. At the time of the audit, we didn’t have the ability to accurately confirm we’d receive what we were paying for. The NTT panel contract was originally incorrectly classified on Tenders ACT, and there was no evidence we managed NTT’s compliance with the contract.”

Canberra Health Services put controls in place to process and pay invoices when the audit began, and established the Digital Solutions Division’s Business Improvement Program and DSD Oversight Committee in response to audit recommendations. Mr Peffer has requested a broader audit by the Auditor-General into the Digital Health Record.

“The consequences of audit findings like these cannot be underestimated,” Mr Peffer said. “There’s no excuses for where we find ourselves today. As public servants, we rely on trust and confidence we have from our community and our Government in delivering advice, projects, and services. In return, they expect our management of public money to be beyond question.”

Health minister Rachel-Stephen Smith called the report’s findings “concerning”, and said she expected the Directorate to recoup any payments inappropriately made to NTT or any other provider.

She said she had been kept broadly updated, but was “disappointed that [she] was not explicitly briefed on the NTT invoices audit and the concerns that led to it being undertaken”.

Shadow health minister Leanne Castley criticised Ms Stephen-Smith for her “lack of Ministerial oversight”.

“The fact that the Minister claims she was kept in the dark despite this issue being referenced in a report relating to funding pressures highlights a health system that is in disarray because of a lack of leadership from Minister Stephen-Smith,” Ms Castley said.

Ms Stephen-Smith said the issues with financial processes in the Digital Solutions division did not affect the delivery of the Digital Health Record.