Institutional Restructuring of the Nation’s Treasury for Improved Performance

8/12/2019 Institutional Restructuring of the Nations Treasury for Improved Performance

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Office of the Accountant General of the Federation

Institutional Restructuring of the Nations Treasury

for Improved Performance

2014 Strategy Session

21st22ndFebruary, 2014


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Content

1

Roles and Responsibilities of a Treasury Function

S/N

1 3

Page

High Level Review2 5

Key Issues and Challenges3 7

Key Strategic Imperatives4 20


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Session Objectives

2

Present and highlight typical functions of National treasury

Office

Articulate key learnings from the review of leading practices

Present high-level review scorecard for OAGF based on

leading practices from other jurisdiction

Set the tone for achieving agreements on the next steps


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3

Roles and Responsibilities of aTreasury Function


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4

The OAGF performs the treasury functions of the Federal Government and is

responsible for the following functions

Appropriation

Funds Allocation

Commitment Management

Budget Execution

Charts of Accounts

Accounting Rules and

Standards

Definition of financial controls

Accounting & Controlling

Revenue & Expenditure

Forecasts

Debt Service Forecasts

Cash Management

Financial Planning / Execution

Financial statements/ reports of

the government

Fiscal/ Financial Reporting


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Budget Execution Appropriation

Funds Allocation

Commitment Management

Leading Practice Role of a

Treasury FunctionMandate of the OAGF

Supervise the accounts of Federal Ministries and Extra-Ministerial departments;

Investigate cases of fraud, loss of funds, assets and store items

and other financial malpractices in Ministries/Extra-Ministerial

department;

Ensure revenue monitoring and accounting

Financial Planning /

Execution

Revenue & Expenditure

Forecasts

Debt Service Forecasts

Cash Management

Maintain and operate the Federation Account;

Maintain and operate the accounts of the Consolidated Revenue

Fund, Development Fund, Contingencies Fund and other public

funds and provide cash backing for the operations of the Federal

Government;


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Accounting & Controlling Charts of Accounts

Accounting Rules and

Standards

Definition of financial

controls

Leading Practice Role of a

Treasury FunctionMandate of the OAGF

Provide financial regulations and issue Treasury Circulars toFederal Ministries/Extra - Ministerial Departments to ensure that

there are adequate systems for the co-ordination of collection

and disbursement of public funds;

Formulate the accounting policies of the Federal Government;

Issue officially approved forms bearing Treasury Numbers for use

in all Federal Ministries to ensure uniformity

Fiscal/ Financial Reporting

Financial statements/

reports of the government

Conduct routine and in-depth inspection of the books of accounts

of Federal Ministries and Extra-Ministerial Department to ensure

compliance with rules, regulations, policies, and Internal Audit

Guides;

Collate, present and publish statutory financial statements of

accounts required by the Minister of finance


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High-level Review


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*Sources:

Mike Williams. Government Cash Management- Good and Bad Practice (2004) The leading practice indicators is primarily based on work on a number of OECD members: the UK, all the Eurozone countries; the USA, Canada and

Australia.

Based on selected leading practices, a high-level review shows opportunities for

enhancing the efficiency and effectiveness of the OAGF

The following case study countries / regions were selected for review:

United States

Canada

NorthAmerica

EuropeZone

UK

Australia

Australia


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*Sources:


Australia.



In selecting the case study countries, the following criteria were considered:

Canada

United States

United Kingdom

Australia

Europe

SelectedCountries are:

Evidence ofdemonstrated

success and

effectiveness in

service delivery

Existence of Functional

organizational Structure

that supports the

mandate of the Agency

Evidence of an

established and

operating

treasury office

Selection Criteria for Case Studies Countries

Similarities in

terms of mandate

and functions

Strong Institutional

Interactions &

Collaboration


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KeyWell aligned with

leading practiceFairly aligned with

leading practiceSignificant gaps in alignment

with leading practice

Inadequate information on

current state to assign a rating

*Sources:Mike Williams. Government Cash Management- Good and Bad Practice (2004) The leading practice indicators is primarily based on work on a number of OECD members: the UK, all

the Eurozone countries; the USA, Canada and Australia.

Mike Williams. (2010) Government Cash Management:Its Interaction with Other Financial Policies



Focus AreasLeading Practices from other

Jurisdictions*Preliminary Review of the OAGF

Efficient

Internal

Payment

Processing

Existence of robust internalarrangements to process government

transactions efficiently and with a

minimum of intermediate sub-

processes/ touch points

A number of manualprocess touchpoints/ steps

still exist for payment

processing within the

OAGF and spending MDAs

An improved/ increased reliance on

electronic transactions and centralising

receipts and payments through a

limited number of agents

Ongoing efforts to ensure

automation of transactions

at the OAGF and selected

MDAs (i.e. GIFMIS)

Where a larger number of agents are

used (reflecting its size), they are

highly controlled and coordinated

Inefficient and inadequate

controls over the large

number of MDAs


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JurisdictionsPreliminary Review of the OAGF

Consolidation

of Accounts &Minimisation of

Account

Balances

Existence of internal accountingrequirements and controls to

minimise level of idle balances held

by government bodies other than

the Ministry of Finance/Treasury

Office Central Bank

Ongoing efforts

Existence of arrangements with thebanks, that permit netting of the

transactions between government

agencies and aggregation of

departmental balances

No known agreement with

Banks that allows for the

netting of transactions

between MDAs. Each

MDA is treated as a

separate entity

Centralization of government cash

balances and establishment of aTreasury Single Account (TSA)

Implementation of

Treasury Single Account iscurrently being

championed by the MoF









*Sources:


Australia.



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Receipts and

PaymentsFlows

Forecasting

Capacity to forecast future

changes in the ministrys account

at the central bank, together with

the monitoring of actual changes

in close to real time

Existence of a Cash

Management Committee with

representation from OAGF,

MoF, Budget Office, DMO etc.

Ability to forecast governmentcash inflows and outflows on a

daily basis

It does not appear the OAGF

has the system/ technology

capability to forecast cashflow

on a daily basis

Utilization of forecasting

techniques that leverages

knowledge within the relevant

spending departments, ratherthan the MoF which monitors

actual cash flows

Additional information will be

required to properly assess

alignment with this leadingpractice



*Sources:


Australia.



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Strong

InstitutionalInteractions &

Collaboration

Seamless information sharingarrangements between the

cash managers, revenue-

collecting agencies and

spending ministries (and any

relevant ministry branch offices)

There are existing arrangementson information sharing between the

OAGF, and revenue-collecting

agencies (FIRS, etc.). Information

sharing by spending agencies

however, require improvement.

Strong coordination of debt andcash management



alignment with this leading practice

Utilization of forecasting

techniques that leverages

knowledge within the relevant

spending departments, rather

than the MoF which monitorsactual cash flows



alignment with this leading practice



*Sources:


Australia.



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Key Issues and Challenges


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According to World Bank*, some other issues and challenges currently faced by the

OAGF in executing its mandate include the following amongst others.

Financing of oil sector investments: Funds designated for JVCCsare retained by the NNPC before

payments to the Federation Account and the ECA

Subsidies and investment grants are awarded to MDAs and parastatals with no reporting on its use

by the MDAs

A significant portion of MDA-generated revenues are not remitted to the FG accounts

Some MDAs still maintain accounts with commercial banks for which the OAGF has inadequate

oversight and in some cases, open numerous accounts with theAGFsapproval

Absence of a regular reporting mechanism on budget commitments and arrears by MDAs

Poor predictability in budget implementation as a result of poor cash management practices

The under skilled Internal Audit function remains primarily focused on prepayment audit

*Source: World Bank Public Expenditure Management and Financial Accountability Review (PEMFAR), 2007

Inadequate control over the Federal Governments fiscal operations1


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Inadequate oversight of fiscal risks related to the operations of parastatals and MDAs, including

losses, debts and contingent liabilities for which the FG may be ultimately liable

Poor oversight of the FGs total commitments and assets in its MDAs due to the cash accounting

requirements, low quality and poor record keeping, and infrequent and sub-optimal in-year and year-

end reporting by the MDAs

Accounting officers are seldom, if ever sanctioned for irregularities or loss of funds, and the

stewardship of their votes is not a factor in the transfer and promotion of senior officers in

government. Consequently, management response to internal audit findings remains disappointing,

and this feeds back to the quality of auditing


Inadequate demand for accountability from MDAs2


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It seems that OAGF has transferred the Power of Attorney for many of the FGsinvestments to the

BPE for privatisation and do not have adequate oversight over the financial activities of the

agencies. The role of the Revenue and Investment department in OAGF has been limited to collecting

dividends from investments, directors fees for Civil Servants and operating surpluses from profit

oriented MDAs


Weak monitoring of the Federal Governments investments3


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Inadequate consolidation of fiscal data from the MDAs. The system remains manual and reliant on

transcript data/ information Significant un-reconciled balances still exist:

Differences exist between the OAGF and CBN balances

MDAs are responsible for reconciling and clearing advance accounts however most Accounting

Offciers are unable to resolve these balances.


Poor financial reporting4


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Poorly motivated and inadequately

inability to attract and retain a sufficient number of high caliber professionals, Absence relevant productivity tools, and

Sub-optimal performance management systems.


Poorly motivated and inadequately skilled staff5


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Key Strategic Imperatives

Documents

Institutional Restructuring of the Nation’s Treasury for Improved Performance