Question

Assignment ONE

Energy plays a very important role in any given country Zambia included. Since the advent of the current government in 2011 they have prioritised infrastructure development. This sudden surge in activity requires support from the energy sector which for a long time had remained static not growing to the same level as the development being witnessed currently.

However, due to this inability to keep up with the country’s unprecedented developments in all economic spheres has resulted into a lot of demand for energy which the power utility has had challenges to meet.

  

Required:

In this regard, you as a performance auditor are asked to undertake a performance audit of ZESCO and issue a report as to the causes of the power loadshedding that took place in 2015/2016 in the country.

Note

It is expected that you had been following the unfolding events in the media both electronic and print to be able to effectively research and write something about what could have led to the present situation; and whether this could have been avoided indicating way forward through recommendations. In dealing with this assignment you are expected to follow the report layout below;

Introduction

Why conduct an audit of ZESCO?

What is hydro power?

Audit Objective/Questions

Audit Scope

Audit Methodology

Audit Criteria

The ZESCO Act

Technical Guidelines on the Sound Management of ZESCO

Findings

Recommendations

Conclusion

Answer 1

Hydropower is energy from water sources such as the ocean, rivers and waterfalls.

Because the source of hydropower is water, hydroelectric power plants must be located on a water source. Electricity is produced by directing or channeling moving water to power electric generators.The flow or fall of the moving water determines the amount of energy available. There is a new technology on the horizon called Microhydro. It uses smaller water flows such as water flowing out of abandoned mines to run small generators. These small generators can then power equipment on remote sites to help treat the pollution in the abandoned mine water flow.

Audit objectives are associated with the audit of financial statements. They cover the following topics:

To obtain reasonable assurance that the financial statements are free of material misstatements; and
To issue a report on those financial statements based on the findings resulting from the audit

AUDIT SCOPE

The scope of work of the internal audit activity is to determine whether the University’s network of risk management, control and governance processes, as designed and represented by management, is adequate and functioning in a manner to ensure:
Risks are appropriately identified and managed.
Interaction with the various governance groups occurs as needed.
Significant financial, managerial and operating information is accurate, reliable, and timely.
Employees’ actions are in compliance with policies, standards, procedures, and applicable laws and regulations.
Resources are acquired economically, used efficiently and adequately protected.
Programs, plans, and objectives are achieved.
Quality and continuous improvement are fostered in the University’s control process.
Significant legislative or regulatory issues impacting the University are recognized and addressed appropriately

AUDIT METHODLOGY

The complexities of the client’s businesses and the challenges posed by today’s business and regulatory environment require that professionals with a diverse set of skills and experience be used to perform certain substantive auditing procedures
We achieve the necessary high efficiency and target orientation of our audit in five main phases:

1. Audit planning and preliminary risk assessment
2. Assessment of risks and identification of internal controls
3. Audit of controls and determination of levels of control assurance over processes
4. Substantive procedures
5. Processing information and communication

AUDIT CRITERIA

Audit criteria include policies, procedures, and requirements.
Audit evidence is used to determine how well audit criteria are
being met. Audit evidence is used to determine how well policies
are being implemented, how well procedures are being applied,
and how well requirements are being followed.

When requirements are used as audit criteria, auditors often use
the terms conformity and nonconformity to indicate whether or not
requirements are being met. However, when legal requirements are
used as audit criteria, auditors tend to use the terms compliance
and noncompliance (instead of conformity and nonconformity)

ZESCO Limited is a vertically integrated
electricity utility, which generates, transmits,
distributes and supplies electricity in Zambia.

Powering the Nation, ZESCO Limited was formed in 1970 after the Zambia Electricity Supply Act was passed in Parliament.

This Act brought together the electricity undertakings that were previously managed by the local authorities. The Corporation traces its origins to 1906 when a
small thermal station was established in Livingstone to serve a small section of the town.

In 1994, the name of Zambia Electricity Supply
Corporation Limited was changed to ZESCO
Limited. This was to reflect the recommitment to
providing a high quality of customer service.
Shareholding The Government of the Republic of
Zambia is the sole shareholder of ZESCO
Limited.

The Permanent Secretaries of the Ministry of
Finance and National Planning, and the Ministry
of Mines, Energy and Water Development
represent the Government on the Board.

ZESCO is committed to providing safe and
reliable electricity to improve the quality of life
for all.