ACCA SBL Exam 1

Report to the board of trustees of Thandeka Care Trust
From: Head of strategy and performance · October 2026

1 Purpose

This report reviews the performance of the four homes in 2025/26 and the board's own arrangements, and recommends changes before the funding applications are renewed.

2 Performance of the homes

Workings. Occupancy = occupied bed-days ÷ (beds × 365). Cost per care-hour = operating cost ÷ care hours delivered.

Value for money. In a not-for-profit organisation value for money is judged with the 3 Es rather than profit. Economy means buying inputs at the lowest cost for the quality needed: agency nurses are bought at a premium, and they make up 22.1% of Khotso Home's costs and 10.8% of Tlotlo Home's, against 3.0% at Ikhaya Lethu. Efficiency relates outputs to inputs: Khotso Home's cost per care-hour of ZAR 405.66 is 36% above the Trust figure of ZAR 299.24, because a home with largely fixed costs (the building, night staff and the dementia unit) is spreading them over only 63.8% of its beds. Ikhaya Lethu, at 94.0% and ZAR 275.05, is the most efficient home. Effectiveness concerns outcomes for residents: the share of families rating care good or excellent falls from 91% in Soweto to 79% in Maseru, and falls with injury rise from 1.4 to 3.1 per 1,000 bed-days, which suggests that heavy use of agency staff who do not know the residents also harms quality and safety.

Overall the two Gauteng homes give good value. Tlotlo Home is acceptable but needs to recruit permanent nurses. Khotso Home gives poor value on all three measures, although it creates public value as the only subsidised dementia unit in Maseru, which a cost measure alone does not capture. Its occupancy also reflects the six-month pause in admissions in 2025, so part of its weakness is self-inflicted rather than a lack of demand.

3 The claims in the chief executive's report

The report should not be relied on as it stands. The statement that all four homes are 'close to capacity' is contradicted by the data: Trust occupancy is 88.0% and Khotso Home's only 63.8%. The sector comparison is out of date (2019) and compares Thandeka with private, for-profit homes in Gauteng, which serve different residents with a different service, so it is not a like-for-like benchmark. The family rating rests on a 31% response rate, so it may suffer from bias towards satisfied families, and as a Trust-wide average it hides the weaker result in Maseru. These selective and unverified statements could mislead funders; future reports should use the KPIs above, with the source of each figure stated.

4 Governance of the Trust

How charity governance differs from a listed company. A listed company's directors act as agents for shareholders, whose main aim is a financial return, and the share price, analysts and the market for corporate control discipline the board. Thandeka has no owners: the trustees hold its assets on trust and owe fiduciary duties to act in the best interests of its beneficiaries, the older people in its care, and to pursue its charitable mission. It has several principals with differing objectives: residents and families, donors, the three governments that pay subsidies, and the public. Performance cannot be read from profit, so it must be measured through the 3 Es and outcomes. Trustees are unpaid volunteers whose time and skills are often limited, and there is no shareholder vote to remove a weak board, so the board must discipline itself.

Weaknesses in Thandeka's arrangements.

• Chief executive as voting trustee. Nomsa sits on the board that should hold her to account, which blurs the line between oversight and management.
• Long tenure and informal appointment. The chair has served 14 years and some trustees 16, and members are chosen by personal invitation, so the board may lack challenge and diversity of thought.
• Skills gap. No trustee has had an accounting qualification since 2024, and only one, a retired general practitioner, has clinical experience, although the Trust spends ZAR 104.5 million a year and is responsible for the safety of 300 residents.
• No committees for finance, audit or quality. Nobody oversees financial reporting, internal control or care standards, and the payroll and agency weaknesses found in July 2026 went undetected.
• Poor information. Board papers are narrative plus the accounts, with no KPIs, so the trustees could not see Khotso Home's decline.
• Outdated register of interests. Last updated in 2021, it failed to reveal a trustee's interest in the Maseru property offer.

Recommendations.

1. Create a finance, audit and risk committee, chaired by a newly recruited trustee with an accounting qualification, to oversee the accounts, internal control and the external auditor and to commission internal audit work.
2. Create a care-quality and safety committee that includes a trustee with clinical experience, to monitor falls, inspections and complaints.
3. Use a skills matrix to recruit new trustees through open advertisement, with a structured induction.
4. Introduce term limits, for example three-year terms with a maximum of nine years, and plan the chair's succession.
5. Make the chief executive a non-voting attendee rather than a trustee.
6. Give the board a quarterly KPI dashboard covering the 3 Es for each home, and carry out an annual board evaluation.
7. Update the register of interests every year and ask for declarations at the start of each meeting.

5 Conclusion

On balance, the most urgent priority is the board's oversight capacity: without a finance, audit and risk committee and reliable KPIs, the trustees cannot judge value for money or the Khotso Home proposal. The committee and the dashboard should come first, before the November meeting, because recruiting one or two skilled trustees costs little and the benefits clearly outweigh that cost. Term limits and the change to the chief executive's role can follow over the next 12 months, so that experience is not lost all at once; this is a proportionate pace for a volunteer board.

Equivalent forms accepted in marking: 88.0 = 88%.

📋 Objective: 2.6 (Public sector governance (B6))

Briefing notes for Reverend Bongani Mthembu, chair of Thandeka Care Trust — proposed closure of Khotso Home

(a) Stakeholders, their claims and the board's response

Mapping with Mendelow's power and interest matrix

Qiloane Heights has a strong interest but should have no influence on the decision at all.

Conflicting claims. The claims cannot all be met. Residents, families and the Lesotho government claim continuity of care: Thandeka owes a duty of care to 27 frail residents, some with dementia, and a move of more than 500 km would harm their wellbeing and cut them off from family. Staff claim job security. Against this, Gauteng residents and the 140 people waiting for a place have a claim on the ZAR 4.2 million cross-subsidy that keeps Khotso Home open, and the trustees must protect the Trust's financial sustainability. The Foundation's claim is contractual: closing in March 2027, with six of the ten years unexpired, would trigger repayment of about ZAR 3.6 million (6.0 million × 6/10) of its restricted grant. For a charity the deciding test is the mission: which option serves the most older people in need without abandoning those already in care.

Recommended response. The board should not decide in November on the present evidence. It should:

1. Manage the key players closely: open talks with the Lesotho government about a higher subsidy or joint funding, and with the Foundation about redirecting its grant.
2. Hold a formal consultation with families and staff and publish a communication plan, so that they hear decisions from Thandeka rather than from the radio.
3. Test alternatives to closure: reopening admissions to restore occupancy, recruiting permanent nurses to cut agency costs, or transferring the home to a local church or alternative provider that would keep the dementia unit open.
4. If closure is still necessary, agree a phased transition plan in which no resident moves until a suitable place has been found.

Wider consequences. A hurried closure would cause reputational damage in all three countries and in the media, could put subsidies in Botswana and South Africa at risk, and would trigger the grant repayment and redundancy costs, so the net saving is much smaller than the ZAR 4.2 million deficit suggests.

(b) Lineo Mokhothu's interest in Qiloane Heights

The issues. Lineo has a conflict of interest: as a director and 30% shareholder of the company bidding for the site, she would gain personally if the home closed and the site were sold cheaply. This is a self-interest threat to her objectivity. Trustees owe a fiduciary duty to act in the best interests of the charity and its beneficiaries, not their own. Her failure to disclose the interest while presenting the proposal, and while chairing the subcommittee that paused admissions, calls her integrity and professional behaviour into question. Her view that it is 'a family matter' misunderstands the duty: the test is whether a reasonable and informed observer would think her judgement could be affected, and they clearly would. A sale below market value could also breach the trustees' duty to protect the charity's assets and expose the decision to challenge by the Foundation, the families or the authorities.

Advice to the chair. You should:

1. Ask Lineo to declare the interest formally and record it in the minutes.
2. Require her to withdraw from all discussion of Khotso Home and take no part in the decision, and to stand down as chair of the property and estates subcommittee while the matter is open.
3. Ask the board to consider whether she can remain a trustee, given the non-disclosure.
4. Commission an independent valuation from a registered valuer in Lesotho and, if a sale goes ahead, market the site openly so that offers can be compared, rather than dealing only with Qiloane Heights.
5. Adopt a written conflicts of interest policy with an annual declaration by every trustee and an up-to-date register of interests, and take legal advice on whether the matter must be reported to the authorities that register the Trust.

Questioning the subcommittee's case. The case for closure should be treated with caution. The 'generous offer, well above market value' is unsupported: no independent valuation exists and the building was insured for LSL 12.8 million, 35% more than the LSL 9.5 million offered. Khotso Home's low occupancy of 63.8% was partly self-fulfilling, because the same subcommittee stopped admissions for six months in 2025, so the deficit may overstate the home's underlying weakness. The proposal also comes from a trustee who stands to gain from it.

📋 Objective: 2.2 (Stakeholder analysis and social responsibility (B2))

Slide 1 — The proposal and the numbers

• One shared service centre in Johannesburg: 14 staff instead of 26 across four homes
• Annual saving: ZAR 2,300,000 (24% of today's cost)
• One-off cost ZAR 5,980,000; payback 2.6 years
• Net gain over the three-year fixed price: ZAR 920,000

Notes: Today the homes spend ZAR 9,600,000 a year on these staff. Under the proposal, staff cost ZAR 5,400,000 plus the CareLedger subscription of ZAR 1,900,000, a total of ZAR 7,300,000, so the annual saving is 9,600,000 − 7,300,000 = ZAR 2,300,000. Payback = 5,980,000 ÷ 2,300,000 = 2.6 years, inside the three-year fixed-price period, leaving a cumulative gain of only ZAR 920,000 (3 × 2,300,000 − 5,980,000) by the end of year 3. The subscription after year 3 is unknown, so the saving could shrink.

Slide 2 — Benefits

• Economies of scale and standard processes across the homes
• Specialist skills concentrated in one team
• Better management information for the board
• Home managers free to focus on care

Notes: A shared service centre is an internal unit that serves all the homes. It brings economies of scale and allows standardisation of payroll, purchasing and month-end processes. One specialist team is easier to train and supervise than 26 people in three countries, and CareLedger can produce the KPIs the board lacks, such as occupancy, agency spending and cost per care-hour by home. Home managers spend less time on administration and can focus on care. Using Ngong Ridge to run payroll is outsourcing: Thandeka buys in capacity and systems without having to build them itself.

Slide 3 — Risks and doubts

• Loss of local knowledge of Botswana and Lesotho payroll rules
• Data protection when personal records leave the country
• Dependence on one vendor (lock-in)
• Redundancies and service quality during the change
• The vendor's agency saving claim is unproven

Notes: Each country has its own income tax, social security and employment law; payroll run in Nairobi by people unfamiliar with these rules risks errors and penalties, so the Trust loses local knowledge. Staff and resident health data sent to a Kenyan provider must comply with South Africa's POPIA, the data protection laws of Botswana and Lesotho and Kenya's Data Protection Act, including the rules on cross-border transfers. Once its data sit in CareLedger the Trust faces vendor lock-in. Twelve redundancies may lower morale and the service quality of payroll during the transition. The claim that CareLedger cuts agency spending by 30% (ZAR 2,433,000 of our ZAR 8,110,000) comes from the vendor, is unverified and is based on Kenyan hospitals, not care homes in Gaborone and Maseru, where the real cause is a shortage of nurses; it has therefore been left out of the saving above, and references from care providers should be taken up before signing.

Slide 4 — Controls we will need

• One accountable contract manager, overseen by the board
• Payroll: segregation of duties, leavers' checklist, monthly reconciliation
• Agency staff: timesheets matched to rosters before payment
• Vendor: service level agreement, right to audit, ISAE 3402 report
• Pilot one home, then roll out in phases

Notes: Using the COSO framework, the control environment needs a named contract manager and oversight by the new finance, audit and risk committee. Risk assessment should rank payroll fraud, data loss and vendor failure in the risk register. Control activities answer the July 2026 findings: unique logins and access rights replace the shared password; segregation of duties means no single person can both change payroll details and approve a run; a leavers' checklist makes HR notify payroll on the day someone leaves, which would have stopped the BWP 61,000 paid to three Tlotlo leavers; a monthly reconciliation of payroll to the rosters and an exception report of new, changed or unusual payments go to a manager for approval; and at Khotso Home a second manager approves agency timesheets, which are matched to the rosters before invoices are paid. For Ngong Ridge, the contract needs a service level agreement on accuracy and deadlines, a right to audit clause and an annual independent ISAE 3402 report on its controls. Information and communication: monthly KPI and exception reports to the committee. Monitoring: internal audit reviews the new controls six months after go-live.

To protect day-to-day care, the change should start with a pilot at Ikhaya Lethu, running the old payroll in parallel for two months, before rolling out to Pretoria, Gaborone and Maseru.

Equivalent forms accepted in marking: 2,300,000 = 2.3m / 2.3 million.

📋 Objective: 8.1 (Enabling success: organising (H1))