Islamabad, July 09, 2013 (PPI-OT): The United States Agency of International Development USAID Power Distribution Program (PDP) is working with government-owned power distribution companies (DISCOs) to improve their revenues and financial futures. Few key areas where PDP has been assisting DISCOs include optimization of accounting and internal audit processes, financial forecast models and assistance in providing roadmap for Enterprise Resource Planning (ERP) implementation.
“Our main objective is to assist DISCOs in improving their performance and efficiency, therefore revised accounting manual shall help in achieving our objective,” said Craig VanDevelde, Chief of Party of the USAID Power Distribution Program “We are also working on business models for DISCOs to enable DISCOs to forecast their long term needs and adjust their priorities accordingly”, he added.
The Accounting Manual has been developed in accordance with the requirements of International Financial Reporting Standards (IFRSs), International Accounting Standards (IASs) and Pakistan’s Companies Ordinance 1984.
The Accounting Manual will bring transparency in the financial reporting system, facilitate record keeping of each of the processes wherein control for each activity is defined, promote compliance with the applicable reporting framework including laws and regulations, and promote efficient financial management through the provision of useful reference materials and standardized documentation flow across all the functions of business processes.
Similar to the outdated Accounting Manual, the legacy internal audit manual was also developed in the 1980s and audit practices were mainly based on the auditing of certain documents instead of process-based and risk-based audit methodologies.
The new Internal Audit Department now being established in DISCOs will help to decentralize power previously held by the CEOs and will provide oversight, with direct ties to the Board of Directors (BOD). PDP has developed the Internal Audit Manual as per the Internal Control Integrated Framework defined by the Committee of Sponsoring Organizations of the Tread way Commission (COSO) and as per the requirements of International Standards on Auditing (ISA).
The new Internal Audit manual details the new internal audit framework PDP has developed for DISCOs which emphasizes risk-based audit approach which looks at the entire business processes rather than on individual transactions.
This will result in increased operational efficiency in the business processes of DISCOs. Previously the reporting control was with DISCO CEOs, now the Internal Audit Function will report its findings directly to the Board Audit Committee which will be responsible to take corrective measures on the basis of these findings. The Internal Audit staff of all DISCOs totalling to a little over 700 including audit assistants, audit officers and senior audit officers has been trained for this new approach.
PDP has also developed standard ERP documentation manual which provides a roadmap for all DISCOs to shift to modern best practices for timely reporting of information within and outside DISCOs.
PDP has also developed a Ten-Year Financial Forecast Model for all DISCOs; this model will be used by all DISCOs for effective planning, budgeting, monitoring and tariff determination. The key objectives of this model are to provide a reliable tool for planning, budgeting and consumer tariff modelling for National Electric Power Regulatory Authority. This model provides different reports including periodical Balance Sheets and Profit and Loss in both numerical and graphical formats.
“The internal audit manual is one of the major highlights of the PDP’s interventions in MEPCO”. MEPCO’s BOD Chairman Naseem Rehman Remarked “the accounting manual is a very good resource: it not only looks after finance but also goes deep into the processes of the Finance Department. This would really help all DISCOs in cutting deep into the processes and operations of DISCOs” FESCO’s Finance Director Muhammad Iqbal Ghauri.
“The revised accounting manual will vastly improve the existing processes and facilitate implementation of ERP financials in IESCO. The new audit manual will assist in carrying out the audit processes in accordance with local regulatory requirements as stated in Companies Ordinance 1984, and Audit General of Pakistan Financial Audit Manual” Mr Mohsin Khalid Chairman BoD IESCO.
For more information, Contact:
Zia Ur Rehman
USAID Power Distribution Program
Tel: +92 51 2270911-916 Ext (106)
Fax: +92 51 8312997
Mobile: +92-334 513 0 950