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  Independent assurance report on
sustainability performance
     
 

We have been engaged by the directors of Eskom Holdings Limited (“Eskom”) to provide assurance over selected performance information presented in the “business and sustainability performance review” section of the 2008/09 annual report (the report).

The directors are responsible for the preparation and presentation of the report, the identification of stakeholders and stakeholder reporting requirements, material issues, for commitments with respect to sustainability performance, establishing and maintaining appropriate performance management and internal control systems, and the selection of the performance information (the selected performance information) which forms the subject matter of our engagement. The directors are also responsible for the selection and application of the following criteria used in the evaluation of the subject matter:
  • the AA1000APS (2008)1 for the three principles of inclusivity, materiality and responsiveness
  • the internally developed reporting guidelines (which are available on request from Eskom) for the selected performance data and
  • the Global Reporting Initiative (GRI) G3 Guidelines for the B+ application level

Our responsibility is to express assurance conclusions on the selected performance information based on our work performed.

We comply with the appropriate requirements of the International Federation of Accountants (IFAC) Code of Ethics for Professional Accountants and have systems and processes in place to monitor our compliance with the code and to prevent conflicts regarding independence.

Our work was carried out by a multi-disciplinary team of health, safety, social, environmental and assurance specialists with extensive experience in sustainability reporting.

Our report is made solely to Eskom in accordance with the terms of our engagement. Our work has been undertaken to enable us to express an opinion to Eskom on those matters we have been engaged to do, and for no other purpose. We do not accept or assume liability to anyone other than Eskom, for our work, for this report, or for the conclusions we have reached.

Assurance standards used
We conducted our engagement in accordance with ISAE 30002 and AA1000AS (2008)3.

1. AA1000 AccountAbility Principles Standard 2008, issued by AccountAbility.
2. International Standard on Assurance Engagements 3000: Assurance engagements other than Audits or reviews of Historical Information, issued by the International Auditing and Accounting Standards Board.
3. AA1000 Assurance Standard (2008) issued by AccountAbility.

The scope of AA1000AS (2008) conforms to the requirements of a Type 2 assurance engagement. A Type 2 Assurance engagement, covers not only the nature and extent of the organisation’s adherence to the AA1000APS (2008) of inclusivity, materiality and responsiveness, but also evaluates the reliability of the selected performance data. The terms, reasonable and limited assurance, used in ISAE 3000 are consistent with a high and moderate level of assurance respectively, as defined by AA1000AS (2008).

The scope of our engagement includes the provision of:
1.   Limited assurance on Eskom’s alignment with AA1000APS (2008) as described here,  
2.   Assurance, as described below:  
 
(a)   Reasonable assurance on the following performance data:
  • technical performance parameters – unplanned capability loss factor (UCLF), system minutes lost, major incidents, system average interruption frequency index (SAIFI) and system average interruption duration index (SAIDI)
  • environmental performance parameters – specific water consumption, demand-side management monitoring and verification, internal energy efficiency, particulate emissions, carbon dioxide emissions, sulphur dioxide emissions, low level radioactive waste, intermediate level radioactive waste and environmental legal contraventions
  • social performance parameters – race, gender, disabilities, total training cost, black economic empowerment expenditure, corporate social investment spend, employee and contractor work-related fatalities and employee lost-time injury rate (LTIR)
  • operational parameters – generation capacity installed and commissioned, transmission lines installed and transmission MVA installed
(b)   Limited assurance on the following performance data:
  • environmental performance parameters – coal-stock days, diesel usage at the open cycle gas turbines (OCGT), nitrogen oxide emissions, polychlorinated biphenyl (PCB) waste disposed, asbestos waste disposed and ash waste disposed
3. Limited assurance on Eskom’s assertion of the GRI B+ application level.  


We believe that the evidence obtained from our work performed, as described in this report, provides an appropriate basis for our assurance conclusions expressed below.

Conclusions

1.  

On the AA1000APS(2008) principles of inclusivity, materiality and responsiveness
In our opinion, based on our work described in this report, we have no reason to believe that Eskom’s assertions relating to their alignment with the AA1000APS (2008) principles of inclusivity, materiality and responsiveness, described here, are not fairly stated.  

2.  

On the selected performance information
In our opinion, the performance information set out in 2(a) above for the year ended 31 March 2009, is fairly stated in all material respects on the basis of the internally developed Eskom reporting standards.

Based on our work described in this report, we have no reason to believe that the performance information set out in 2(b) above for the year ended 31 March 2009, is not fairly stated in all material respects on the basis of the internally developed Eskom reporting standards.

3.  

On Eskom’s assertion on Global Reporting Initiative B+ Application Level
Based on work described in this report, nothing has come to our attention that causes us to believe that Eskom’s assertion of the GRI B+ application level is not fairly stated in all material respects on the basis of the GRI G3 Guidelines.

Work performed

Our work performed was to obtain all the evidence, information and explanations that we considered necessary for the scope of our engagement. The extent of limited assurance evidence gathering procedures is more limited than where reasonable assurance engagement is expressed.

Our work included the following evidence-gathering procedures:
  • interviews with management and senior executives at corporate level and with management at site level to evaluate the implementation of the GRI G3 Guidelines and the AA1000APS (2008) principles and to obtain an understanding of the general control environment
  • evaluation and testing of process and systems and review of documentation in place at corporate level, head office level and at business unit level to generate, collate, aggregate, monitor and report the selected sustainability performance data and inspection of certain documentation
  • visits to a risk-based selection of eight business units including Koeberg (nuclear power station), Arnot (coal power station), Majuba (coal power station), Gourikwa (open-cycle gas turbine station), Southern Transmission Grid, the Western Distribution Region, Northern Distribution Region and Roshcon
  • conducting an application level check on the report to evaluate whether all disclosure requirements of the GRI B+ application level have been adhered to; and
  • an evaluation of whether the information presented in the report corresponds with our overall knowledge and experience of sustainability management and performance at Eskom
  For more detail on the work performed, please click here.  
  
Key observations

We draw attention to our key observations. These observations do not affect our conclusions.

1. On the principles of inclusivity, materiality and responsiveness in terms of AA1000APS (2008):

  

  • in relation to the principle of inclusivity:
    Eskom has carried out work to identify opportunities for improvement, and has drafted a policy to develop a process which will ensure coordinated and ongoing engagement with all key stakeholders at both corporate and local level
  • in relation to the principle of materiality:
    In an endeavour to further enhance the risk management process, Eskom’s board has resolved to identify areas for improvement and a closer alignment with the ISO 31000 risk management standard adopted by Eskom. This will also allow for stakeholder concerns to be fed directly into the risk management process
  • in relation to the principle of responsiveness:
    As the observations identified under inclusivity and materiality are addressed, responsiveness to stakeholder concerns should improve

2.   

On the selected performance information:
Eskom has developed a continually evolving reporting and assurance plan. During the course of this year’s engagement, we found that Eskom has made significant progress in implementing many of our recommendations and much work has been undertaken to improve reporting systems and processes to the extent that certain modified conclusions are no longer modified. This includes a focus on internal communications and controls around sustainability information.


KPMG Services (Pty) Limited
 
PD Naidoo 
Director
   
Johannesburg  
16 July 2009  
  AH Jaffer   
Director
  
Johannesburg  

 

 
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