Electrokit | IADB

Accounting and Financial Practices Accounting and Economic Analyses

Accounting and Economic Analyses

Individual annual accounting analyses are carried out for operating and maintenance costs as a whole and for system. Also, individual monthly accounting analyses are carried out for main system facilities, these comprise, at the very least, the technical service units, customer service, units/crews of new investments and corrective maintenance. For these evaluations, individual and segregated accounting analyses are carried out for the main components of these operating costs.


Rates of return: Achieving a rate of return is an important aspect in ensuring that company activities are operating like comparable businesses. In cost management, setting appropriate rates of return for each separate line of commercial or technical activity is an important factor to avoid cross-subsidization. Only projects and initiatives with a reasonable rate of return can be executed. For SOEs, its productivity should be benchmarked with similar business activities in the same industry and private companies. For this evaluation minimally the following criteria must be used for new projects: (a) simple payback; (b) return on investment; (c) net present value; and (d) life-cycle cost.

Performance-informed budgeting

It is important to promote the use of performance indicators in budgetary decision making, that is, the use of the estimated budget must be linked to technical and commercial indicators that measure the investment objectives and costs used.

Read More

Cost Efficiency, transparency, and optimization

Characterization of all the processes necessary for the activity of electricity distribution, with description of the main activities of each one of them

Read More

Procurement

Procurement policies and procedures must be competitive, non-discriminatory and maintain high standards of transparency and technical quality. To this end, in general, companies tend to always choose the same providers, as this results in traditional economies of scale. However, it is important to have a mechanism that encourages the search for new suppliers, albeit on a smaller scale and with less capacity to meet the needs of the company, as a way of seeking solutions in the market. Some practices can help optimize operating and maintenance costs:

Read More