An evaluation of the internal control systems at Zimbabwe Electricity Transmission and Distribution Company (ZETDC) of service delivery (2009 - 2012)
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The aim of this study is to evaluate the internal control system in ZETDC (Zimbabwe Electricity Transmission and Distribution Company) on service delivery with regards to the period 2009 to 2012. This is the period when Zimbabwe, as a country commenced using the US dollar and other foreign currencies after experiencing several years of devastation by a record inflation, on the local Zimbabwean currency. Most services were expected to improve with the stability in the economy. ZETDC is a subsidiary of ZESA Holdings (Zimbabwe Electricity Supply Authority), the electricity utility service provider in Zimbabwe. The COSO framework on internal controls as noted by Chambers and Rand (2011) articulates that internal controls should provide reasonable assurance regarding the achievements of objectives on the effectiveness and efficiency of operations, the reliability of financial reporting and compliance with applicable laws and regulations. Authors such as Hopkin (2012), Warren (2012) and Graham (2010) in supporting the COSO framework, notes that there are five elements of internal controls that form an umbrella over the business to protect it from control threats and these include, the control environment, risk assessment , control procedures, monitoring and information communication. A good internal control system should have three forms of controls as noted by Hall (2010), which include preventative, detective and corrective controls. As noted by Harrer (2010), strong controls put up roadblocks for fraud, bad decisions, human error and help to minimise pitfalls and surprises. On the other hand, poor internal controls were noted to negatively affect service delivery and Braiota, Gazzaway, Colson, Colson and Ramamoorti (2010) believe that an organisation cannot produce reliable services or products without good internal controls. Obtaining sufficient resources, recruiting and retaining the right expertise and maintaining good communications and relations are some of the challenges in implementing effective internal controls highlighted by Hightower (2008). The target population for the study consist of ZETDC staff members estimated at 5,000 inclusive of board members. A sample of 100 staff members was selected using multistage random sampling to ensure a fair representation of all hierarchical levels of staff in ZETDC on the sample. Data was collected through a survey questionnaire which was distributed to staff members in ZETDC including board members. A 55% response rate was obtained from the distributed questionnaires. The major findings were that ZETDC has an internal control system that is company devised with some elements of a good internal control system, which however are not modelled along any known frameworks. The internal control system was found to be regularly breached as evidenced by common activities such as assets abuse, electricity bill adjustments and illegal power connections. These internal control breaches negatively affected service delivery in that service provision in many instances was sub standard, was not done, was delayed and cost more. ZETDC faced staff resistance as a major challenge in implementing internal control systems, furthermore, it lacked the strategy to implement internal control systems. The research concluded that ZETDC had an ineffective internal control system that resulted in poor service delivery. It is recommended that ZETDC should adopt the COSO framework on internal controls to enhance its internal control system.