Report of the Auditor General

Accounting Authority’s Responsibilities and Approval

The Accounting Authority is required by the Public Finance Management Act (Act 1 of 1999), to maintain adequate accounting records and are responsible for the content and integrity of the annual financial statements and related financial information included in this report. It is the responsibility of the Accounting Authority to ensure that the annual financial statements fairly present the state of affairs of SAHPRA as at the end of the financial year and the results of its operations and cash flows for the period then ended. The external auditors are engaged to express an independent opinion on the annual financial statements and was given unrestricted access to all financial records and related data.

The annual financial statements have been prepared in accordance with Standards of Generally Recognised Accounting Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board.

The annual financial statements are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates.

The Accounting Authority acknowledge that they are ultimately responsible for the system of internal financial control established by SAHPRA and place considerable importance on maintaining a strong control environment. To enable the Accounting Authority to meet these responsibilities, the Accounting Authority sets standards for internal control aimed at reducing the risk of error or deficit in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout SAHPRA and all employees are required to maintain the highest ethical standards in ensuring SAHPRA’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in SAHPRA is on identifying, assessing, managing and monitoring all known forms of risk across SAHPRA. While operating risk cannot be fully eliminated, SAHPRA endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.

The Accounting Authority is of the opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the annual financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or deficit.

The Accoui1ting Authority have reviewed SAHPRA’s cash flow forecast for the year to 31 March 2025 and, in the light of this review and the current financial position, they are satisfied that SAHPRA has and have access to adequate resources to continue in operational existence for the foreseeable future.

SAHPRA is partially dependent on the National Department of Health for continued funding of operations. The annual financial statements are prepared on the basis that SAHPRA is a going concern and that SAHPRA have neither the intention nor the need to liquidate or curtail materially the scale of its business operations.

Although the Accounting Authority is primarily responsible for the financial affairs of SAHPRA, they are supported by SAHPRA’s external auditors.

The external auditors are responsible for independently reviewing and reporting on SAHPRA’s annual financial statements. The annual financial statements have been examined by SAHPRA’s external auditors and their report is presented on page 111.

The annual financial statements set out on page 118 to 164, which has been prepared on the going concern basis, was approved by the Accounting Authority on 30 July 2024 and were signed on its behalf by:

 

Report of the Auditor-General to Parliament on the South African Health Products Regularity Authority 

Report on the audit of the financial statements

Opinion

  1. I have audited the financial statements of the South African Health Products Regulatory Authority (SAHPRA) set out on pages 118 to 164, which comprise the statement of financial position as at 31 March 2024, statement of financial performance, statement of changes in net assets, cash flow statement and statement of comparison of budget information with actual information for the year then ended, as well as notes to the financial statements, including a summary of significant accounting policies.
  1. In my opinion, the financial statements present fairly, in all material respects, the financial position of the South African Health Products Regulatory Authority as at 31 March 2024 and its financial performance and cash flows for the year then ended in accordance with Generally Recognised Accounting Practice (GRAP) and the requirements of the Public Finance Management Act (PFMA).

Basis for opinion

  1. I conducted my audit in accordance with the International Standards on Auditing (ISAs). My responsibilities under those standards are further described in the responsibilities of the auditor-general for the audit of the financial statements section of my report.
  1. I am independent of the public entity in accordance with the International Ethics Standards Board for Accountants’ International code of ethics for professional accountants (including International Independence Standards) (IESBA code) as well as other ethical requirements that are relevant to my audit in South Africa. I have fulfilled my other ethical responsibilities in accordance with these requirements and the IESBA code.
  1. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Emphasis of matters

  1. I draw attention to the matters below. My opinion is not modified in respect of these matters.

Restatement of corresponding figures

  1. As disclosed in note 34 to the financial statements, the corresponding figures for 31 March 2023 were restated due to errors in the entity’s financial statements for the year ended 31 March 2024.

Material impairments

  1. As disclosed in note 3 to the financial statements, a material impairment of R4 753 792 (2023: R5 155 309) was incurred due to the entity not recovering the monies owed.

Responsibilities of the accounting authority for the financial statements

  1. The accounting authority is responsible for the preparation and fair presentation of the financial statements in accordance with the GRAP and the requirements of the PFMA and for such internal control as the accounting authority determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

  2. In preparing the financial statements, the accounting authority is responsible for assessing the public entity’s ability to continue as a going concern; disclosing, as applicable, matters relating to going concern; and using the going concern basis of accounting unless the appropriate governance structure either intends to liquidate the public entity or to cease operations or has no realistic alternative but to do so.

  3. In preparing the financial statements, the accounting authority is responsible for assessing the public entity’s ability to continue as a going concern; disclosing, as applicable, matters relating to going concern; and using the going concern basis of accounting unless the appropriate governance structure either intends to liquidate the public entity or to cease operations or has no realistic alternative but to do so.

Responsibilities of the Auditor-General for the audit of the financial statements

  1. My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with the ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of financial statements.
  2. A further description of my responsibilities for the audit of the financial statements is included in the annexure to this auditor’s report.

Report on the annual performance report

  1. In accordance with the Public Audit Act 25 of 2004 (PAA) and the general notice issued in terms thereof, I must audit and report on the usefulness and reliability of the reported performance against predetermined objectives for the selected programme presented in the annual performance report. The accounting authority is responsible for the preparation of the annual performance report.
  2. I selected the following material performance indicators related to programme 4: Clinical and pharmaceutical evaluation presented in the annual performance report for the year ended 31 March 2024 for auditing. I selected those indicators that measures the entity’s performance on its primary mandated functions and is of significant national, community, or public interest.
    1. Percentage applications for the sale of unregistered Category A {human) medicines finalised within 3 working days
    2. Percentage of human clinical trial applications finalised within 90 working days
    3. Percentage of lot release requests finalised within 50 working days
  3. I evaluated the reported performance information for the selected material performance indicators against the criteria developed from the performance management and reporting framework, as defined in the general notice. When an annual performance report is prepared using these criteria, it provides useful and reliable information and insights to users on the entity’s planning and delivery on its mandate and objectives.
  4. I performed procedures to test whether:
    1. the indicators used for planning and reporting on performance can be linked directly to the entity’s mandate and the achievement of its planned objectives
    2. all the indicators relevant for measuring the entity’s performance against its primary mandated and prioritised functions and planned objectives are included
    3. the indicators are well defined to ensure that they are easy to understand and can be applied consistently, as well as verifiable so that I can confirm the methods and processes to be used for measuring achievements
    4. the targets can be linked directly to the achievement of the indicators and are specific, time bound and measurable to ensure that it is easy to understand what should be delivered and by when, the required level of performance as well as how performance will be evaluated
    5. the indicators and targets reported on in the annual performance report are the same as those committed to in the approved initial or revised planning documents
    6. the reported performance information is presented in the annual performance report in the prescribed manner
    7. there is adequate supporting evidence for the achievements reported and for the reasons provided for any over- or underachievement of targets.
  5. I performed the procedures to report material findings only; and not to express an assurance opinion or conclusion
  6. I did not identify any material findings on the reported performance information for the selected indicators.

Other matters

  1. I draw attention to the matter below.

Achievement of planned targets

  1. The annual performance report includes information on reported achievements against planned targets and provides explanations for over- or underachievement.
  2. The table that follows provides information on the achievement of planned targets and lists the key indicators that were not achieved as reported in the annual performance report. The reasons for any underachievement of targets are included in the annual performance report on pages 38 to 66.

Report on compliance with legislation

  1. In accordance with the PAA and the general notice issued in terms thereof, I must audit and report on compliance with applicable legislation relating to financial matters, financial management and other related matters. The accounting authority is responsible for the entity’s compliance with legislation.
  2. I performed procedures to test compliance with selected requirements in key legislation in accordance with the findings engagement methodology of the Auditor-General of South Africa (AGSA). This engagement is not an assurance engagement. Accordingly, I do not express an assurance opinion or conclusion.
  3. Through an established AGSA process, I selected requirements in key legislation for compliance testing that are relevant to the financial and performance management of the entity, clear to allow consistent measurement and evaluation, while also sufficiently detailed and readily available to report in an understandable manner. The selected legislative requirements are included in the annexure to this auditor’s report.
  4. I did not identify any material non-compliance with the selected legislative requirements.

Other information in the annual report

  1. The accounting authority is responsible for the other information included in the annual report which includes the audit committee’s report. The other information referred to does not include the financial statements, the auditor’s report and those selected material indicators in the scoped-in programme presented in the annual performance report that have been specifically reported on in this auditor’s report.
  2. My opinion on the financial statements, the report on the audit of the annual performance report and the report on compliance with legislation do not cover the other information included in the annual report and I do not express an audit opinion or any form of assurance conclusion on it.
  3. My responsibility is to read this other information and, in doing so, consider whether it is materially inconsistent with the financial statements and the selected material indicators in the scoped-in programme presented in the annual performance report or my knowledge obtained in the audit, or otherwise appears to be materially misstated.
  4. I did not receive the other information prior to the date of this auditor’s report. When I do receive and read this information, if I conclude that there is a material misstatement therein, I am required to communicate the matter to those charged with governance and request that the other information be corrected. If the other information is not corrected, I may have to retract this auditor’s report and reissue an amended report as appropriate. However, if it is corrected, this will not be necessary.

Internal control deficiencies

  1. I considered internal control relevant to my audit of the financial statements, annual performance report and compliance with applicable legislation; however, my objective was not to express any form of assurance on it.
  2. I did not identify any significant deficiencies in internal control.

Annexure to the Auditor’s report

The annexure includes the following:

  • The auditor-general’s responsibility for the audit
  • The selected legislative requirements for compliance testing

Auditor-General’s responsibility for the audit

Professional judgement and professional scepticism

As part of an audit in accordance with the ISAs, I exercise professional judgement and maintain professional scepticism throughout my audit of the financial statements and the procedures performed on reported performance information for selected programme and on the entity’s compliance with selected requirements in key legislation.

Financial statements

In addition to my responsibility for the audit of the financial statements as described in this auditor’s report, I also:

  • identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error; design and perform audit procedures responsive to those risks; and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal control
  • obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control
  • evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made
  • conclude on the appropriateness of the use of the going concern basis of accounting in the preparation of the financial statements. I also conclude, based on the audit evidence obtained, whether a material uncertainty exists relating to events or conditions that may cast significant doubt on the ability of the entity to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial statements about the material uncertainty or, if such disclosures are inadequate, to modify my opinion on the financial statements. My conclusions are based on the information available to me at the date of this auditor’s report. However, future events or conditions may cause an entity to cease operating as a going concern
  • evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and determine whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Communication with those charged with governance

I communicate with the accounting authority regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

I also provide the accounting authority with a statement that I have complied with relevant ethical requirements regarding independence and communicate with them all relationships and other matters that may reasonably be thought to bear on my independence and, where applicable, actions taken to eliminate threats or safeguards applied.

Compliance with legislation – selected legislative requirements

The selected legislative requirements are as follows: