PROSPECTS AND CHALLENGES OF TREASURY SINGLE ACCOUNT IN A DEVELOPING ECONOMY: CASE STUDY OF NIGERIA


PROSPECTS AND CHALLENGES OF TREASURY SINGLE ACCOUNT IN A DEVELOPING ECONOMY: CASE STUDY OF NIGERIA

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PROSPECTS AND CHALLENGES OF TREASURY SINGLE ACCOUNT IN A DEVELOPING ECONOMY: CASE STUDY OF NIGERIA

CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND TO THE STUDY

Treasury Single Account is a public accounting system under which all government revenue, receipts and income and collected into one single account, usually maintained by the country’s Central Bank and all payments done through this account as well. The purpose is primarily to ensure accountability of government revenue, enhance transparency and avoid misapplication of public funds. The maintenance of a Treasury Single Account will help to ensure proper cash management by eliminating idle funds usually left with different commercial banks and in a way enhance reconciliation of revenue collection and payment (Adeolu, 2016).

Section 80 (1) of the 1999  Constitution as amended states “All revenues, or other moneys raised or received by the Federation (not being revenues or other moneys payable under this Constitution or any Act of the National Assembly into any other public fund of the Federation established for a specific purpose) shall be paid into and form one Consolidated Revenue Fund of the Federation”; successive governments have continued to operate multiple accounts for the collection and spending of government revenue in flagrant disregard to the provision of the constitution which requires that all government revenues be remitted into a single account. It was not until 2012 that government ran a pilot scheme for a single account using 217 ministries, department and agencies as a test case. The pilot scheme saved Nigeria about N500 billion in frivolous spending. The success of the pilot scheme motivated the government to fully implement TSA, leading to the directives to banks to implement the technology platform that will help accommodate the TSA scheme. The recent directives by President Mohammed Buhari that all government revenues should be remitted to a Treasury Single Account is in consonance with this programme and in compliance with the provisions of the 1999 constitution (CBN, 2016).

The Central Bank has opened a Consolidated Revenue Account to receive all government revenue and effect payments through this account. This is the Treasury Single Account. All Ministries, Departments and Agencies are expected to remit their revenue collections to this account through the individual commercial banks who act as collection agents. This means that the money deposit banks will continue to maintain revenue collection accounts for Ministries, Departments and Agencies but all monies collected by these banks will have to be remitted to the Consolidated Revenue Accounts with the CBN at the end of each banking day. In other words, Ministries, Departments and Agencies accounts with money deposit banks must be zerorized at the end every banking day by a complete remittance to the Treasury Single Account of all revenues collected. The implication is that banks will no longer have access to the float provided by the accounts they maintained for the Ministries, Departments and Agencies. Difference types of account could be maintained under a Treasury Single Account arrangement and these may include the TSA main account, subsidiary or sub-accounts, transaction accounts and zero balance account. Other types of accounts that could operated include imprest accounts, transit accounts and correspondence accounts. These accounts are maintained for transaction purposes for funds flowing in and out of the Treasury Single Account (Adeolu, 2016).  

From the foregoing, it is obvious that the primary benefit of a Treasury Single Account is the mechanism it provides for proper monitoring of government receipts and expenditure. In the Nigerian case, it will help to block most if not all the leakages that have been the bane of the growth of the economy. We have a situation where some Ministries, Departments and Agencies manage their finances like independent empire and remit limited revenue to government treasuries. Under a properly run Treasury Single Account, this is not possible as agencies of government are meant to spend in line with duly approved budget provisions. The maintenance of a single account for government will enable the Ministry of Finance monitor fund flow as no agency of government is allowed to maintain any operational bank account outside the oversight of the ministry of finance.

As a matter of fact, deposit money banks stand to lose immensely from the implementation of Treasury Single Account.  This is because of the fact that public sector funds constitute a large chunk of commercial banks deposit.  Indeed, it is estimated that commercial banks hold about N2.2 trillion public sector funds at the beginning of sector quarter of 2016.  The impact of this amount of money leaving the system can be imagined when one considers the fact that each time the monthly federal allocation is released, the banking system is usually awashed with liquidity and as soon as this public sector funds dries up through withdrawal by the states, liquidity tightens again with interbank rates going up.  Of major impact will be the movement of funds of revenue generating parastatals such as the NNPC, out of commercial banks.

PROSPECTS AND CHALLENGES OF TREASURY SINGLE ACCOUNT IN A DEVELOPING ECONOMY: CASE STUDY OF NIGERIA

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Treasury Single Account is a public accounting system under which all government revenue, receipts and income and collected into one single account, usually maintained by the country’s Central Bank and all payments done through this account as well. The purpose is primarily to ensure accountability of government revenue, enhance transparency and avoid misapplication of public funds... accounting project topics

PROSPECTS AND CHALLENGES OF TREASURY SINGLE ACCOUNT IN A DEVELOPING ECONOMY: CASE STUDY OF NIGERIA

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  • CATEGORY : ACCOUNTING
  • TYPE : PROJECT MATERIAL
  • FORMAT : MICROSOFT WORD
  • ATTRIBUTE : Documentation Only
  • PAGES : 57 Pages
  • CHAPTERS : 1 - 5
  • PRICE : ₦ 3,000.00

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