BBC NEWS | UK | Wales | Auditor's warning on NHS finances

Jeremy Colman's report found NHS overspend, combined with previous debts, came to a total of £114m.

More than half of the £82m of previous debts will have to be paid off before 2009, worsening the financial situation of the Welsh NHS, he warned.

Deputy Welsh Health Minister John Griffiths said a "deficit culture" within the NHS was being tackled.

SUMMARY FINDINGS

Local Health Boards mostly expected to meet 2005-2006 budget limits, with overall £4m surplus

Most NHS trusts forecast deficits, with £26m overspend estimated

Health Commission Wales forecast £10m deficit

Estimates in December showed an improvement on previous forecasts, with total net deficit of £32m by March 2006

Source: Auditor General for Wales, Is The NHS In Wales Managing Within Its Available Resources?

The report recommends an "all-Wales analysis" is carried out, examining how well NHS finances are managed.

Mr Colman said: "While the exercise of financial control has improved, there is a worrying downward trend in the financial position of the NHS in Wales.

"Recovery plans must be realistic with effective reporting procedures. It must be quite clear where responsibilities for action lie and who is accountable for delivery.

"Most of all, the underlying reasons for the deficit must be addressed."

Effective links

In addition to the £82m of previous debt, the study found the NHS overspent by £32m last year.

This figure is combination of a £26m overspend predicted by NHS trusts, and a deficit of £10m forecast by Health Commission Wales.

But the total is offset by local health boards in Wales, which are predicting an overall surplus of £4m.

The report questions whether there have been effective links between the "strategic direction" of the NHS and the implementation of local plans.

'Enormous debts'

In March, the Welsh Assembly Government confirmed the NHS in Wales would end the financial year £71m in debt.

But Health Minister Brian Gibbons said the figure was 2% of annual turnover, which was "manageable".

Deputy Welsh Health Minister John Griffiths told BBC Radio Wales the assembly government's handling of the NHS had produced "continuous improvement" but said he was "concerned" with financial management within the NHS.

He said: "We've got more doctors and nurses, better equipment, better buildings, waiting times have been driven down.

"We are determined that we will have better financial management within the NHS in Wales.

"Their has been a deficit culture for quite some time and we are determined to eradicate it.

"We'll be agreeing plans with (the NHS) to make sure these deficits are wiped out."

Mr Griffiths added he did not think job cuts were likely to reduce the deficit.

Richard Lewis, Welsh secretary of the British Medical Association, said the inherited debt was a "real handicap to the NHS moving forward positively".

Dr Lewis said health service managers who had such "enormous debts" hanging over them would not be able to concentrate on how best to look after patients, "despite their best efforts".