Last year’s crippling cyberattack on the National Health Laboratory Service (NHLS) led to the auditor-general being unable to express an opinion on the veracity of its financial statements for 2024/2025, its worst audit outcome in more than a decade.
The disclaimer is a red flag that raises potential concerns about the NHLS’s financial management and governance.
The NHLS is a crucial part of the public health system, as it provides most of the diagnostic tests required by patients using government clinics and hospitals. It also manufactures serum for anti-snake venom and conducts training and research.
Its operations were brought to a virtual standstill by a cyberattack in June 2024, which led to delays in its external audit and set back implementing a remedial plan to address the problems that had led to it receiving a qualified audit in 2023/2024. These delays in turn led to the disclaimer for 2024/2025.
Leadership pledges corrective action
The disclaimer underscored “persistent challenges in internal controls” said NHLS CEO Koleka Mlisana in an introductory note to the NHLS’s 2024/2025 annual report, tabled in parliament last week. “The executive leadership team accepts this outcome with the seriousness it demands and is working closely with the board to implement a comprehensive corrective action plan,” she said.
The executive leadership team accepts this outcome with the seriousness it demands and is working closely with the board to implement a comprehensive corrective action plan.
— Koleka Mlisana, NHLS CEO
“The plan focuses on strengthening internal controls, reinforcing compliance and improving cash flow, all of which are aimed at restoring trust and accountability throughout the organisation,” she added.
NHLS spokesperson Mzi Gcukumana declined to answer Business Day’s questions, saying the annual report was under embargo until the organisation presented it to parliament’s health portfolio committee, which it expected to do on Thursday. However, annual reports become public documents once they are tabled in parliament and are available to the media and any member of the public once they have been submitted to the clerk and recorded in the announcements, tablings and committees report.
Deficit widens amid cyberattack fallout
The NHLS reported a R173.4m deficit for the period under review, which it attributed to the combined effects of the cyberattack, constrained revenue growth, rising operational costs and escalating provincial debt.
Outstanding payments from provincial health departments soared from R7.8bn in 2023/2024 to R9.2bn in the year under review.
The worst offender was KwaZulu-Natal, which owed the NHLS R4.02bn by March 31, a 9% increase on the R4bn owed the year before. Much of this is historic debt, which KwaZulu-Natal disputes owing.
Gauteng’s outstanding debt rose 17% to R1.9bn in the period under review, up from R1.63bn the year before, while outstanding payments from the Eastern Cape soared 42% R1.33bn, up from R0.94bn the year before.
At the end of the financial year, the Northern Cape owed the NHLS R475m, up 12% on the R423m it owed the year before. Outstanding debt from the Free State stood at R523m, a 40% increase on its R372m debt the year before.
The Western Cape, Mpumalanga and Limpopo were paying timeously and in full, said the NHLS.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.