Most of the country’s provinces owe hefty amounts to the National Health Laboratory Services, which is still reeling from the crippling cyberattack in 2024, and resulted in 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, reports BusinessLIVE.
The disclaimer is a red flag that raises potential concerns about the NHLS’ financial management and governance.
The NHLS, with its crucial role in the public health system, ground to a virtual standstill after the cyber attack in June 2024, resulting in delays in its external audit and setting back a remedial plan to tackle the issues that had led to it receiving a qualified audit in 2023/2024. These delays in turn led to the disclaimer for 2024/2025.
Corrective action
The disclaimer underscored “persistent challenges in internal controls”, said NHLS CEO Koleka Mlisana in an introductory note to the NHLS’ 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 plan focuses on strengthening internal controls, reinforcing compliance and improving cash flow, all of which are aimed at restoring trust and accountability
Deficit widens amid hack attack fallout
The NHLS reported a R173.4m deficit for the period under review, which it attributed to the combined effects of the cyber-attack, 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.
See more from MedicalBrief archives:
NHLS targets dented by 2024 cyber attack
NHLS cyber hack continues to cause chaos in hospitals
NHLS executives suspended following PwC audit