The NHLS chief executive, told MPs that the qualified opinion still came with findings and that the entity had set itself a long-term goal.
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The National Health Laboratory Service (NHLS) improved its audit outcome from a disclaimer to a qualified opinion, but MPs warned that R1.8 billion in irregular spending, weak procurement controls, and heavy reliance on consultants still threatened the public laboratory service.
The concerns emerged during a virtual meeting of a National Assembly health committee on Thursday.
NHLS moves from disclaimer to qualified audit opinion
According to the committee chairperson, Faith Muthambi, the auditor-general released its report last Saturday, and the NHLS moved from a disclaimer with findings to a qualified opinion for the 2025/26 financial year.
Muthambi added that the auditor-general would be called back to brief MPs before Parliament went on recess.
The chairperson then turned to the outgoing board, which had led the entity through that improvement.
“So that’s why, as a committee, we want to acknowledge the importance of additional leadership continuity and the willingness to take responsibility for addressing inherited governance challenges,” Muthambi stated.
The NHLS chief executive, Professor Koleka Mlisana, told MPs that the qualified opinion still came with findings and that the entity had set itself a long-term goal.
“As the executive of the NHLS, we have committed ourselves to aiming that by the year 2030, we should be able to achieve a clean audit,” Mlisana said.
Late financial statements led to dismissals
Mlisana admitted the entity submitted its annual financial statements late for three successive years, causing recurring audit delays.
According to her, incomplete reconciliations and a delayed clean-up of historical records contributed to the problem.
The previous chief financial officer was dismissed, and the chief procurement officer was suspended pending an investigation.
Mlisana also outlined how the previous board responded.
“They implemented structural interventions, and we are continuing to monitor the effectiveness of those interventions and some of those we will highlight here,” she stated.
Mlisana then conceded where the deeper weaknesses lay.
“We have issues around capacity and accountability,” the chief executive acknowledged.
R1.8 billion in irregular spending and unaudited contracts
The chairperson reported that irregular expenditure reached R1.8 billion in the 2025/26 financial year, and that the auditor-general raised two material irregularities.
DA MP Michéle Clarke raised the audit findings on contracts.
“Now the Auditor-General found that R9.7 billion contracts lack sufficient audited evidence,” she said.
Clarke asked whether consequence management had followed and requested a full register of contracts, including suppliers, values, and deviations.
She then listed the failures in how contracts were awarded.
“Some procurement took place without competitive tenders. Some tenders were not advertised for the required minimum period. Contracts were awarded despite missing mandatory supplier declarations.”
Mlisana responded that tenders above R10 million went through an internal audit assessment before reaching the board, while those between R1 million and R10 million were randomly audited.
The chief executive acknowledged that the auditor-general’s evidence showed transgressions among tenders below R1 million.
She also said she had erroneously signed award letters that split a tender contrary to a board decision.
According to the human resources executive, two senior officials, one in supply chain and one in finance, faced disciplinary processes over irregular expenditure.
Heavy reliance on consultants raised red flags
Muthambi stated that about 80% of finance personnel at the NHLS were external consultants, while 20% were internal staff.
The chairperson then described a further concern raised by the Auditor-General.
“The AG has raised something very worrying: that even when they were dealing with the audit committee, there’s a consultant who has been hired to respond to the audit queries, which is the sole function of management,” she claimed.
The human resources executive said people brought in by the suspended chief procurement officer were sourced through a consulting firm and were never on the payroll.
The executive said the contract linked to them was terminated.
“There was never an HR engagement,” the committee heard.
Cyber security remediation continues
Mlisana described the 2024 ransomware attack and its impact on the entity’s systems.
“We realised that the core infrastructure was affected. Backups were unavailable, and some of them were not recoverable,” she explained.
According to the presentation, three cybersecurity issues were fully resolved, and six were still ongoing.
The chief information officer said the laboratories still processed at least 450 000 tests a day.
She also addressed a March outage that MPs asked about.
“When we had a system failure on March 16 that was not cybersecurity related,” the committee was told.
Minister unavailable as ARV briefing is postponed
The health minister was unavailable, and a briefing on antiretroviral (ARV) tenders was postponed.
A department official said the minister was still travelling back from abroad, while the deputy minister and director-general were hosting regional health ministers in Durban.
Several MPs objected to the absence, and the chairperson defended the decision to proceed.
“Unfortunately, those were unavoidable issues,” Muthambi said.
The chairperson described the ARV item as one of critical public interest, concerning treatment for millions of people who relied on public health care.
She also highlighted the scale of the shortages. “It never happened in the history of this country that we have shortages of medicines like what is currently happening here,” the chairperson stated.
The committee agreed to call the minister back and to defer the ARV briefing to that meeting.
“So I think the way forward on this is that we need to get the minister in as early as Wednesday next week,” the chairperson said.
