The Nigerian government has issued fresh guidelines for the computation of operating surpluses in a bid to check the high level of under-remittance of funds by revenue-collection agencies.
The new guideline that will help the preparation of the agencies’ financial statements for the next three years covering up to 2019 is contained in a circular signed by the Minister of Finance, Mrs. Kemi Adeosun.
The circular, with reference number FMF/HMF/2016/1/2, was addressed to top government officials such as the Chief of Staff to the President, all ministers, Secretary to the Government of the Federation, National Security Adviser, Governor of the Central Bank of Nigeria and all service chiefs.
Others are the Chairman of the Federal Inland Revenue Service, all federal permanent secretaries, Clerk of the National Assembly, Auditor General for the Federation, all vice chancellors of federal universities, all directors of finance and internal audit and all directors-general.
The circular, according to findings, has also been sent to the chief executives of all the agencies mandated by the government under the Fiscal Responsibility Act, 2007 to generate and remit revenue into the Consolidated Revenue Fund account.
Some of these agencies are the Central Bank of Nigeria, Securities and Exchange Commission, Nigeria Shippers’ Council, Nigeria Export Promotion Council, Nigeria Civil Aviation Authority, National Pension Commission, Bureau for Public Enterprises and the Nigerian Communications Commission.
Thirty-three revenue generating agencies had been indicted by the government for not remitting a total sum of N450bn into the CRF account.
The development made President Muhammadu Buhari to issue an executive order for the funds to be recovered and measures put in place to guide against under-remittance in the future.
In the new guideline titled: ‘Preparation of estimates of revenue and expenditure by corporations, revenue collections agencies’, the finance minister warned that there would be severe sanctions for violators of the new template.
She said, henceforth, all the revenue-generating agencies of the Federal Government must prepare and submit to her office estimates of revenue and expenditure as well as their annual budgets for the next three years.
In addition, the guideline stipulated that the operating surplus derived from the preparation of the financial statement in line with the International Public Sector Accounting Standards accrual basis of accounting must be submitted to the minister’s office.
In preparing the estimates of the revenue and expenditure of these agencies, the minister, through the guideline, stated that the financial statement must provide details of all the projected internally generated revenue, personnel and overhead costs derived from the national budget, and all aids and grants from domestic and foreign development partners.
The financial statement must also provide details of any other inflow to fund the operations of such agencies, projected net inflow from current activities, amount payable as operating surplus, and projected utilisation of capital allocation showing the affected projects.
Adeosun stated in the guideline that a review team would engage each agency to finalise their estimates of revenue and expenditure.
The guideline read in part, “Pursuant to part IV, section 21 of the FRA 2007 (as amended). The Minister of Finance hereby calls for strict compliance with the provisions of the Act, which requires, among others, that corporations and revenue-collection agencies shall prepare and submit their schedule estimates of revenue and expenditure for the next three financial years not later than the end of the second quarter of every year.
“Following the need to ensure strict compliance with the statutory requirements, therefore, the directors of finance and accounts of all Federal Government corporations, revenue-collection agencies and those added to the Act are to send to the Minister of Finance the information required above in respect of their 2017 budget.
Adeosun had lamented that while the Fiscal Responsibility Act, 2007 was designed to provide guidelines and controls to elicit greater accountability and transparency in fiscal operations, the actual compliance by revenue-generating agencies had been poor.
This, according to her, has resulted in revenue leakages as confirmed by the audit findings conducted by the Finance ministry, which revealed the under-remittance of N450bn into the treasury.
The minister gave the infractions committed by the agencies to include non-remittance and under-remittance of operating surpluses due to the Consolidated Revenue Fund; operating without approved budgets; overstating of budgets and spending above budgeted amounts; and under-reporting of revenues.
The minister said the audit report, also revealed that payments were made without invoices and payment receipts; while loans and grants were given to parent ministries without prior approval.
There were also findings that the agencies had poor book keeping, failed to reconcile accounts and had in existence irreconcilable differences.
Some of these agencies, according to Adeosun, lack fixed asset registers and inadequate internal audit processes with weak internal controls.
There were also the issue of failure to submit audited financial statements; payroll fraud and exaggeration of payroll costs; overpayment of staff salaries and abuse of personnel grants; and unapproved monetisation of medical and other allowances.
Commenting on the development, the Acting Chairman, Fiscal Responsibility Commission, Mr. Victor Muruako said the template would help the government stop the level of abuse of the Fiscal Responsibility Act by its agencies.
Muruako explained that most of the agencies preferred not to obey the law and as such were using all forms of accounting techniques to short-change the government.
For instance, he lamented that some of the chief executives of the agencies in their bid to avoid remittance would go as far as submitting two financial statements to the government.
He added that in the last seven years alone, the government had lost over N1tn to non-remittance of operating surpluses by its agencies, while about N380bn had been forcefully recovered and remitted to the Consolidated Revenue Fund by the FRC.