Did SCANA’s auditors warn of risks, problems for nuclear construction project?

As the finger pointing and recriminations fly in the aftermath of SCANA’s nuclear debacle, one question no one seems to have asked is: What, if anything, did SCANA’s internal auditing department do to identify and assess the risks posed by the construction of Units 2 and 3 and to bring its assessment of those risks to the attention of the audit committee of SCANA’s board of directors?

Construction of Unit 1 at the V.C. Summer nuclear station in the early 1980s provides context.

At that time, the auditing department was composed of a core group of accountants, CPAs, certified internal auditors (of which I was one) and certified information systems auditors, many possessing years of internal auditing experience. Internal auditors, representing both SCANA and Santee Cooper, rotated into an on-site position and performed a variety of contract, construction, financial and compliance audits.

Each audit had been selected based on an annual formal risk assessment in which the most significant financial risks to the company were identified, incorporated into a proposed annual audit schedule and submitted to the board of directors for approval.

Given this, it would have been incumbent on the department, during SCANA’s planning and construction of Units 2 and 3, to identify, assess and report on material risks.

Such as: Was it “prudent” to build nuclear generation given that (1) no commercial nuclear units had been built in America for 30 years; (2) other utilities were abandoning their plans for nuclear generation because of rapidly falling natural gas prices and (3) after a 30-year hiatus, did contractors possess the requisite manpower and experience to complete their work as designed, within budget, and on time? Was it prudent to constructed two units, rather than one, given that U.S. electricity demand had been flat since 2007? Did Westinghouse, whose nuclear units were critical to the project, possess the financial and engineering stability and expertise to complete the project within budget and on time?

A good place to begin a search for answers to these question would be in SCANA’s internal audit letters related to this project.

The State publishes a cross section of the letters we receive from South Carolinians in order to provide a forum for our community and also to allow our community to get a good look at itself, for good or bad. The letters represent the views of the letter writers, not necessarily of The State.

This story was originally published April 13, 2018 at 10:35 AM with the headline "Did SCANA’s auditors warn of risks, problems for nuclear construction project?."