USAID revamping Financial Structure of Power Distribution Companies
Islamabad, March 01, 2013 (PPI-OT): Multan Electric Power Company’s (MEPCO) Audit Committee and Board of Directors (BOD) Chairman met with representatives from the United States Agency for International Development (USAID) Power Distribution Program, to consider adopting the recently completed Accounting Process Organization accounting manual. Both this manual and internal audit manuals were presented to the Committee.
The new manuals update the legacy manuals of government-owned power distribution companies (DISCOs), last revised in the 1980s, and provide DISCOs with manuals consistent with those of a best practices modern electric utility.
The accounting manual has been developed in accordance with the International Financial Reporting Standards, International Accounting Standards and Companies Ordinance 1984 and will serve as a comprehensive finance and accounting resource.
The manual aims to: bring transparency in the financial reporting system, facilitate record keeping of each accounting process, ensure books of accounts are prepared in accordance to sound accounting policies, enable management to obtain accurate financial reports on monthly, quarterly and yearly basis, help to organize and manage the assets and liabilities of DISCOs, support coordination of accurate financial report and adequate financial disclosures, promote compliance with applicable reporting framework, law and regulations, promote efficient financial management through the provision of useful reference materials and provide standardized documentation flow including Enterprise Resource Planning (ERP) implementation in financial functions.
The Internal Audit Manual was a product of the Power Distribution Program’s Internal Audit Process Optimization project which included a new internal audit framework that introduced the involvement of the Audit Committee to oversee the internal audit function.
The Audit Committee reports results directly to the BOD instead of centralizing accountability into the hands of the CEO. The Power Distribution Program is working on improving the transparency of financial transactions and operational efficiencies of DISCOs while introducing better controls in these companies. The independence of the internal audit function has introduced an improved level of financial transparency and financial accountability.
A milestone was reached when the first quarterly risk-based audit report was issued. MEPCO became the first DISCO to issue the results of its internal audit under the new framework. Only one business process from eight of MEPCO’s 34 revenue offices produced an increase in revenues of approximately 45% over what other business processes produced under its former legacy internal audit framework.
The new internal audit framework will examine a total of 11 business processes on a risk-based approach. The results are encouraging and the Power Distribution Program anticipates realizing significant revenue improvements through the Internal Audit Process Optimization initiative.
The USAID Power Distribution Program is a five year, USAID-funded program aimed at working jointly with DISCOs in Pakistan to improve their performance in terms of a reduction in losses, and improvement in both revenues and customer services, to bring them to the level of well-run utilities in other progressive countries.
Through this program, the United States Government provides assistance and support to the Government of Pakistan in its efforts to reform the power sector to end the current energy shortfall. Additional information can be solicited from the Program’s website: http://pdip.pk.
For more information, Contact:
USAID Power Distribution Program
Zia Ur Rehman
Tel: +92 51 2270911-916 Ext (106)
Fax: +92 51 8312997
Mobile: +92-334 513 0 950