Treasury Management And Public Accountability

“Strict compliance with all these laws by the office of the Accountant General, Office of the Auditor General and all public officers will ensure public accountability in Government.”

TREASURY MANAGEMENT The treasury management functions include the following:

A. RECEIPT AND CUSTODY OF GOVERNMENT FUNDS

All Government revenue is lodged into Government Revenue Accounts opened in various banks approved by government. The accounts include: (i) Statutory Revenue from Federation Account; (ii) VAT (Value Added Tax); etc. All Statutory Expenditures like salaries, pension and gratuity, overheads and capital expenditure are disbursed from these accounts. (iv) Other classes of revenue include the Internally Generated Revenue, PAYE TAX, revenue generated from school fees and all other types of revenue generated by the Internal Revenue Services are lodged in appropriate accounts in different banks and immediately swept into the Consolidated Revenue Account also known as Ministerial Single Account (MSA). It is used to fund pressing financial demand of government on daily basis.

B. DISBURSEMENT OF GOVERNMENT FUNDS

All disbursement of government funds is made through payment voucher duly authorized by the appropriate authority, well prepared, processed and passed for payment. Different classes of vouchers include Recurrent Vouchers, Remittance Vouchers and contract vouchers for capital projects. All payment vouchers must be properly prepared with complete documentation before submitting to the Treasury for payment. The officer preparing payment voucher is to be guided by Financial Regulation 601, 602, 603, 604,605,606,607,608,609 and 610.

For example,

  1. Vouchers shall be made out in ink or typewritten (FR 604[a]).
  2. All copies of vouchers must be legible (FR. 604 [a]).
  3. The totals on the voucher should be written in ink in words as well as in figure (FR. 604[a]).
  4. No erasure of any kind whether in typescript or manuscript is allowed (FR. 604[b]).
  5. No alterations to the amount on voucher whether in words or figures are allowed. A new voucher must be prepared when necessary (FR.610).
  6. The information furnished on the voucher must be correct in all

C. FINANCIAL STATEMENTS PREPARATION AND ANALYSIS:

One of the most important Treasury Management functions is the preparation of financial Statements and analysis. The office of the State Accountant General produces its financial Statements using the ORACLE E-BUSINESS SUITE.

In other words, the financial statements are Oracle-based, utilizing fully a 35 digit CRS Oracle compliant chart of accounts. For purpose of clarity, permit me to give brief explanation on how financial Statements are prepared by the office of the State Accountant General. Voucher Analysis

Vouchers are classified into revenue and payment vouchers and they are analyzed separately as follows:

  • Revenue Vouchers: Revenue receipts emanate from two sources:
  1. Revenue Receipt by Cash control: Revenue reported by Cash Control are backed by the relevant Receipt Vouchers and when it is received by the Final Account Department, a new Journal is opened in the Oracle E-Business Suite and it is categorized as “Revenue Journal”. The Receipt Vouchers are coded before entering into the Oracle Journal.
  2. Interswitch Revenue (PAY DIRECT): Here, government revenue is paid direct to the bank account designated for that purpose. The revenue is down loaded daily from the Interswitch into Government Revenue Accounts. The downloaded revenue is up loaded daily into the Oracle General Ledger. The revenue is then posted to the appropriate Revenue Heads.
  • Processing of Paid Payment Vouchers: Here, the vouchers are entered through the invoice workbench. After proper coding of the vouchers:
  1. They (vouchers) are validated to confirm that the proper code has been used and apply it against the budget (creating account)
  2. The validated payment vouchers are paid through the system after selecting the bank and the cheque number used for the payment.
  3. After payments and at the end of every month, paid vouchers in the Account payable module are transferred to the General Ledger. An officer logs to the General ledger and posts all the invoices by transferring them to different expenditure Heads.
  • Financial Reporting: Government financial reports state the financial position of government in a particular period and the report should disclose the level of accountability, transparency and probity in the handling of government resources by those in government within that period.

A good government financial report should necessarily possess the following attributes:

  • It should be prepared in a way that it will not be in conflict with the provisions of the Constitution of the Federal
  • Republic of Nigeria and other legal requirements.
  • The reporting entity should be able to state the purposes for which government resources are being released and expended.
  • It should be related to budget classification.
  • It should provide reliable and relevant financial data that will be useful for economic analysis.
  • It should relate to certain financial period e.g. One financial year.
  • The report should be prepared on time and be released for use within a reasonable period.
  • It should state the Accounting basis, assumptions etc on which its preparation was based.
  • Government financial Report should state the financial position of Government, which shall disclose the level of accountability, transparency and probity displayed in the handling of Government resources by those in Government.
  • The Financial Statements produced by the office of the State Accountant General complied with all the attributes enumerated above.

The financial report has 4 main financial statements and 19 notes to the Accounts as shown below:

STATEMENT 1 – Cash Flow Statement:

This is the summation of the effects of revenue and expenditure relative to:

  • Operating Activities
  • Investment Activities
  • Financing Activities, to show its increase or decrease in cash and its equivalents.

STATEMENT 2 – Assets and Liabilities

This is similar to the balance sheet in the private sector. It shows the assets owned and the liabilities owed by the Government at a particular period in time; the cut-off-date is normally the last working day in December of every year.

STATEMENT 3 – Consolidated Revenue Fund

This is the aggregation of all Government funds from different sources weighed against the expenditure of government on different expenditure Heads/ Classification to make up the Consolidated Revenue Fund with appropriation for capital Development Fund, Public Debt Servicing etc.

STATEMENT 4 – Capital Development Fund

This Statement records the net effect of capital Receipts and Capital Expenditure. It measures the amount committed to infrastructural development of government at a given period in time. This statement records all capital receipts like VAT, Transfers from consolidated Revenue Fund (Statements), loans obtained for capital development, Grants and subventions etc.

The second leg of the Statement is the capital Expenditure which is sectored into 4, namely: Economic Sector, Social Sector, Regional Development Sector, and General Administrative Sector. Expenditure on each of these sectors is reflected against the sector which also shows the level of government investments in that sector within a given financial year.

Other reports which further explain government expenditure are notes 1 – 19:

Note 1 – Gross Statutory Allocation; 2 – Internally Generated Revenue; 3 – Value Added Tax (VAT); 4 – Capital Receipts; 5 – Personnel Cost; 6 – Recurrent Expenditure and 7 – Consolidated Revenue Fund Charges. Also among them are notes 8 – Capital Expenditure by Sector; 9 – Cash and Cash Equivalent; 10 – Cash and Bank Balances; 11 – Due from MDAs (Imprest) and 12 – Investment and General Account. Notes 13 – Taxes (Direct and Indirect); 14 – Fines and Fees; 15 – Licenses; 16 – Earning and sales; 17 – Rent on Government property; 18 – Interest and Dividends and 19 – Miscellaneous are the rest. All these are normally included in the accounts as appendixes for reference.

PUBLIC ACCOUNTABILITY IN GOVERNMENT

To ensure Public Accountability in government, Treasury Management is guided by the following regulatory framework:

1. The Constitution of the Federal Republic of Nigeria, 1999:

There are some sections of the constitution that regulate the operation of public Sector Accounting. For example; Sections 80 and 81 of the 1999 constitution stipulates that all government revenue shall be paid into the consolidated Revenue Fund. It regulates the allocation of revenue, the audit of public accounts, the budget procedure and other financial matters. Section 82 of the 1999 constitution authorizes withdrawals from the Consolidated Revenue Fund by the President or the Governor for a maximum of six months in case of default or delay of budget approval.

2. The Finance (Control and Management) Act of 1958:

This governs the management and operation of all government funds. Some of the provisions of the Act are as follows:

  • The Act placed the management of public finance, especially the CRF under the Minister/Commissioner of Finance. E.g. issuance of Annual General Warrant.
  • It also established the Development fund and states its operation. It stipulates accounting format for the preparation of government Account.
  • Adoption of Cash Basis of accounting for the CRF.
  • Preparation of Government Account on Fund Accounting basis.
  • It mandates the Accountant General to submit Accounts for Audit.

Section 33 of the Audit Act, 1958 stipulates that the Accountant General shall render to Auditor General accounts showing government finances at the end of the financial year and these shall include:

  1. Statement of Assets and Liabilities
  2. Statement showing the sums estimated to be received as revenue into the consolidated Revenue Fund and the sums actually received in the period of account
  3. A statement showing sums estimated to be issued out of consolidated
  4. Revenue Fund and the sums actually so issued in the period of account.
  5. A statement showing the sums estimated to be received into the Development fund and the sum actually received in the period of account,
  6. A statement showing the sum estimated to be issued out of Development fund and the sums actually so issued in the period of account.
  7. Any other statement as may be required.

3. Audit Act of 1956 mandates

The Accountant General to submit within six months after the end of each financial year the Account of Government to the Auditor-General for audit. The Act also sets out the duties of Auditor General. It covers the area of Audit and Accountability in Government.

Section 13 of the Act requires the Accountant General to submit as part of the Annual Accounts:

  1. An abstract account of receipts and payments.
  2. A statement of assets and liabilities at the close of the financial year.
  3. Detailed statement of revenue and expenditure according to heads and sub-heads.
  4. Such other statements as may be required from time to time.

4. Financial Regulations, Revised to 2009:

These are regulations which are issued to regulate various financial matters and set rules and procedures for Public Accountability. They specify the rules and regulations on opening of bank accounts, collection of revenue, security of documents, revenue control, issuance of cheques and payment procedure, etc.

5. Appropriation Act/Law:

These are bills; either money bills or others passed into law by the National or State Assemblies. Appropriation Law states the revenue to be received and amount to be spent on each programme on the approved estimates.

 6. Treasury Letters/Circulars:

These are directives issued in form of circulars, letters, or memo to guide the day-to-day activities of government MDAs.

7. Gazette:

This is the government official newsletter published periodically and contains all government policy statements like appointment of new officers, retirement, financial statement, release of warrants, advertisement on contracts, etc.

8. Public Service Rules:

These deal mostly on personnel matters.

9. International Public Sector Accounting Standards (IPSAS):

These are a set of standards issued by IPSAS Board for use by public Sector entities around the world in the preparation of financial statements. The objective of IPSAS is to improve the quality of General Purpose Financial Reporting by Public Sector entities, leading to better informed assessments of the resource allocation decisions made by government thereby increasing transparency and accountability.

10. Other legislations include Fiscal

Responsibility, Public Procurement, State/Public Finance Management and Debt Management laws. Strict compliance with all these laws by the office of the Accountant General, Office of the Auditor General and all public officers will ensure public accountability in Government.

Compiled by Ikang who is the Permanent Secretary, Ministry of Finance, is a Chartered Accountant (ACA) and was the former Director of Accounts (Treasury) in the Office of the Accountant General in the Administration of former Governor Liyel Imoke.

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