Treasury Single Account

CHAPTER 1
1.0 INTRODUCTION
Treasury Single Account is a unified structure of government bank accounts that gives a consolidated view of government cash resources. It is based on the principle of unity of cash and the unity treasury, that a treasury single account is a bank account or a set of linked accounts through which the government transacts all its receipts and payments. It is necessary to distinguish individual cash transactions for the control and for reporting purposes.
Section 80 (1) 1999 Constitution of the Federal Republic of Nigeria (as amended) provides “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.” However successive governments have operated numerous accounts used to collect and spend public funds in flagrant disregard to this provision of the constitution in the Nigerian law.
In 2012 the government ran a pilot scheme for Treasury Single Account using 217 Ministries, Departments and Agencies to test the scheme. Over N450 billion was saved by the scheme and the government was motivated to implement TSA. The Remita e-collection platform was developed for the implementation of the TSA scheme and banks were directed to integrate the software into their core banking systems and train their staff on how to use it. But like everything in Nigerian, this was not the case.
An excerpt from Communique №92 issued at the Monetary Policy Committee meeting held on the 18th and 19th of November 2013 reads; “The Federal Government debt has also risen phenomenally along with its deposits at the deposit money banks, showing the Government as a net creditor to the system. This underscores the urgent need for the immediate implementation of the Treasury Single Account. The continued delay in returning government accounts to the Central Bank is adding to the huge cost of government debt due to poor cash flow management.
To my own understanding, treasury single account can be seen as a public accounting system under which all government revenue or income is collected into one single account called the treasury account (Treasury Single Account).
Treasury Single Account can also be said to be an accounting system in which all government revenue (income) and payments (expenses) are done through a single account.

1.1 DEFINITION OF TERMS
1.1.1TREASURY
A treasury is either
• A government department related to finance and taxation.
• A place or Schatzkammer where currency or precious items like gold, diamonds etc are kept.
The head of a treasury is typically known as a treasurer. This position may not necessarily have the final control over the actions of the treasury, particularly if they are not an elected representative.
1.1.2 TREASURY SINGLE ACCOUNT(TSA)
TSA refers to Treasury Single Account, a public accounting system using a single account, or a set of linked accounts by government to ensure all revenue receipts and payments are done through a Consolidated Revenue Account (CRA) at the Central Bank of Nigeria (CBN).
The pilot TSA scheme commenced in 2012 using a unified structure of accounting for 217 government Ministries, Departments and Agencies, MDAs, for accountability and transparency in public fund management.
All government MDAs remit their revenue collections to the CRA through their individual commercial banks on a fee-for-service remuneration basis.
Although all monies earned by the federal government through value added tax (VAT), customs duties, immigration and other charges, are supposed to be paid into the CRA, a few exceptions border on accounts operated by joint venture partners with government, like oil mining leases (OMLs) in the oil and gas industry.
Deposit Money Banks (DMBs) are allowed to maintain revenue collection accounts for MDAs, but all collections must be remitted to the CRA at the end of every banking day; that is MDAs’ accounts with DMBs must be at zero balance at the end of every banking day.
TSA allows government banking to be unified, to enable the relevant stakeholders, such as the Ministry of Finance and Accountant General of the Federation to have full oversight of all cash flows across different bank accounts.
The different TSA account types include main account; subsidiary or sub-account; transaction account; zero balance account; imprest account; transit and correspondence accounts for different transaction purposes.
TSA helps check incidence of multiple accounts operated by government MDAs for collection and spending of government revenues.
TSA will ensure adequate monitoring of government revenue receipts and expenditures and block leakages, as no MDA is allowed to keep any operational bank account.
TSA will help check incidence of idle cash lying over extended periods in bank accounts held by spending MDAs, while government continues to borrow to execute its budgets.
Under TSA, DMBs using public sector funds deposited by MDAs to make free profits will not be possible.
To pay money under TSA, depositors make payment to a transit account in a commercial bank and the funds are automatically remitted to the CRA in the CBN at regular intervals, say at the end of the business day or at more frequent intervals
Payments through the TSA follow an electronic system, with direct payments or deposits to the bank account of the beneficiary MDA.
MDAs registered on the electronic payment platform, or CBN Payment Gateway, through the Settlement Centre, Funds Department, Office of the Accountant General of the Federation are granted access to funds collected on their behalf at the CBN.
The TSA scheme covers all MDAs as well as other institutions and parastatals that collect revenues and monies payable to FGN, including all forms of receipts, refunds, operating surpluses, transfers, donations, over-payment, taxes and customs duties, etc

CHAPTER 2
2.1 HISTORICAL PERSPECTIVE
The operation of the Treasury Single Account in Nigeria has not been without controversies. On Tuesday, 10 November 2015, Dino Melaye, a Nigerian senator representing Kogi West, raised a motion that the operation of the treasury single account (TSA) be investigated for possible corruption. He claimed that "the appointment of REMITA, an e-collection agent, is a gross violation of section 162 (1) of the Nigerian Constitution and the banks and other Financial Institutions Act." He claimed the constitution only recognised a banking institution to be the collector of government funds, that Remita was not a bank. The provision of the Constitution cited by Melaye states, “the federation shall maintain a special account to be called the federation account into which all revenues collected by the government of the federation except the proceeds from the personal income tax of the personnel of the Armed Forces of the Federation, the Nigeria Police Force, the ministry or department of government charged with foreign affairs and the residents of the FCT, Abuja.” According to Melaye, the total inflow of 1% commission charged and received by SystemSpecs for all revenue collected on behalf of the government from the various ministries, departments and agencies to be 25 billion Naira as of November, 2015 was fraud and must be returned to the account of the Central Bank of Nigeria. The senate consequently ordered its committee on finance and public accounts to "commence an investigation into the use of Remita (which it erroneously described as an e-collection agent) since the inception of the TSA policy.
Ayo Fayose, Governor of Ekiti State, introduced a political angle to the controversy when he alleged that the funds collected through of TSA were used to finance governorship elections in Bayelsa and Kogi States by the All Progressives Congress, apart from enriching "a single company in one month." 25 billion Naira is the negotiated commission of one per cent of 2.5 trillion Naira - total amount of monies collected by Remita for the Federal Government of Nigeria. However, the Federal Government of Nigeria through the office of The Minister of Information and Culture Lai Mohammed debunked the opinion that the TSA policy was not intended to loot the Nigeria treasury. The minister in his statement attempted to absolve the administration of President Muhammadu Buhari when he claimed that the TSA contract was signed during the administration of President Goodluck Jonathan The CBN in an attempt to justify their position released a letter to the press titled “Commencement of Federal Government independent revenue collection under the Treasury Single Account (TSA) initiative”. In the letter, the CBN debunked all the allegations made by Melaye as being misleading. At the height of the controversy, the Central Bank of Nigeria (CBN), instructed SystemSpecs to return of all the revenues made so far on the contract, a directive, which SystemSpecs obeyed without delay as a "business decision".
In a letter reportedly written to President Muhammadu Buhari by John Obaro, Founder and Managing Director of SystemSpecs, developers of the Remita application, the allegation that SystemSpecs pocketed 25 billion Naira was refuted. Obaro explained that the one per cent commission was negotiated prior to the signing of the contract; and the one per cent commission was shared by SystemSpecs, participating commercial banks and the Central Bank of Nigeria in the ratio of 50:40:10 respectively. According to findings by PremiumTimes,'Remita' is not "an agency" but an application/software for executing payment instructions and collection of government revenue. The software facilitates the payment of government revenue from financial institutions to a TSA in the CBN. The report cited holes in Melaye's accusations and termed them "misleading." The Joint Senate investigative committee absolved SystemSpecs of any wrongdoing as “the committee could not ascertain the deduction/collection of twenty-five billion Naira (N25 billion) by SystemSpecs as 1% fee charged for the use of its Remita platform within the period under investigation.” This was contained in section 6.1.16 on pages 16 and 17 of the committee’s report.

CHAPTER 3
3.0 PROBLEMS/CONSEQUENCES OF TSA IN NIGERIA
3.1 MERITS OF TSA IN NIGERIA

1. Allows complete and timely information on government cash resources. In countries with advanced payment and settlement systems and an Integrated Financial Management Information System (IFMIS) with adequate interfaces with the banking system, this information will be available in real time. As a minimum, complete updated balances should be available daily.
2. Improves appropriation control. The TSA ensures that the MoF has full control over budget allocations, and strengthens the authority of the budget appropriation. When separate bank accounts are maintained, the result is often a fragmented system, where funds provided for budgetary appropriations are augmented by additional cash resources that become available through various creative, often extra-budgetary, measures.
3. Improves operational control during budget execution. When the treasury has full information about cash resources, it can plan and implement budget execution in an efficient, transparent, and reliable manner. The existence of uncertainty regarding whether the treasury will have sufficient funds to finance programmed expenditures may lead to sub-optimal behavior by budget entities, such as exaggerating their estimates for cash needs or channeling expenditures through off-budget arrangements.
4. Enables efficient cash management. A TSA facilitates regular monitoring of government cash balances. It also enables higher quality cash outturn analysis to be undertaken (e.g., identifying causal factors of variances and distinguishing causal factors from random variations in cash balances).
5. Reduces bank fees and transaction costs. Reducing the number of bank accounts results in lower administrative cost for the government for maintaining these accounts, including the cost associated with bank reconciliation, and reduced banking fees.
6. Facilitates efficient payment mechanisms. A TSA ensures that there is no ambiguity regarding the volume or the location of the government funds, and makes it possible to monitor payment mechanisms precisely. It can result in substantially lower transaction costs because of economies of scale in processing payments. The establishment of a TSA is usually combined with elimination of the “float” in the banking and the payment systems, and the introduction of transparent fee and penalty structures for payment services. Many governments have achieved substantial reductions in their real cost of banking services by introducing a TSA.
7. Improves bank reconciliation and quality of fiscal data. A TSA allows for effective reconciliation between the government accounting systems and cash flow statements from the banking system. This reduces the risk of errors in reconciliation processes, and improves the timeliness and quality of the fiscal accounts.
8. Lowers liquidity reserve needs. A TSA reduces the volatility of cash flows through the treasury, thus allowing it to maintain a lower cash reserve/buffer to meet unexpected fiscal volatility.
9. Other benefits include the blocking of leakages that have stunted the growth of the economy, ensuring of accountability of government receipts and expenditure, promotion of transparency, reduction of corruption and diversion of public funds, elimination of idle funds left in numerous accounts in commercial banks usually used to bear interest for corrupt entities and easier reconciliation of revenue collection and payments.
   In summary, I think the implementation of this treasury single account system in Nigeria has a great positive effect on the economy of the country as public funds are better managed with alongside low liquidity of reserve funds.

3.2 DEMERITS OF TSA IN NIGERIA
One key challenge of TSA is the ignorance of how it works by some Nigerians. Even the AGF recently noted that “the greatest challenge is that people should understand that the TSA is out to achieve efficiency and effectiveness. It is one of the critical aspects of our economic reform. If you are talking of accountability and transparency, the best way to go is TSA”.
There is also the issue of deploying the saved monies into funding the economy. Currently, the government is exploring effective ways of using some of the TSA savings to drive budget implementation. The details are still being fine-tuned but our correspondent leant that the 2017 budget may be significantly financed with proceeds from TSA.
The TSA, at inception, experienced some difficulty in releasing funds to MDAs for their operations but Office of the Accountant General recently declared that “the initial challenges of TSA have been resolved and the Projects are now accessing funds through the TSA.
How the funds can be deployed for betterment of the economy
Funds in the TSA are largely owned by government MDAs, funds that huge chunks of were previously lost to corruption. But now that the funds are no longer being stolen, the MDAs can better utilize them to fund building of infrastructure and providing basic social amenities for the about 180 million Nigerians.

CHAPTER 4
4.1 CONCLUSION
The study investigates the TSA as a catalyst for Public Financial Management in Nigeria. The study therefore concluded that TSA policy is paramount in the nation’s revenue drive, transparency and fight against corruption. However, the policy adoption affects banks’ liquidity and employment as well. The study on Treasury Single Account as a Catalyst for Enhancing Efficient PFM in Nigeria, the public perception of the effect of TSA policy on the nation’s revenue drive, transparency and fight against corruption and also the likely effects of TSA policy adoption on banks’ liquidity and employment were analysed. The result shows that the majority has their mean sets above the criterion mean of 2.50, because the consolidation of cash resources through a TSA helps to avoid borrowing and paying additional interest charges to finance the expenditures of some agencies while other agencies keep idle balances in their bank accounts. The study therefore concluded that “TSA policy is paramount in the nation’s revenue drive, transparency and fight against corruption’’.
Other conclusions upheld the fact that TSA is a unified arrangement which enhances the fungibility of the government’s cash resources, and implies that no other government agency should be allowed to operate bank accounts without the oversight of the treasury. It is also concluded that it is comprehensive, encompassing all government cash, both budgetary and extra budgetary. Regarding the “architecture” of the TSA, it should be underscored that there is no single TSA model or design.
The TSA model to be implemented in each country depends on the stage of development of the quality of its public institutions and financial management systems, its technological development and communications infrastructure, and the degree of maturity of its banking system. Also in the conclusion is the fact that the design of a TSA also depends on the technology used for interbank settlements and the electronic and/or manual system, used by the Central Bank for clearing of collections and payments with the commercial banks. In some cases, the banking system might also be moving to a Real Time Gross Settlements System (RTGS).
The TSA enhances the transparency of the government’s banking arrangements by ensuring that all end-of-the-day balances are electronically swept into the TSA. It was finally concluded that the establishment of a TSA is a key element of an efficient and effective Public Financial Management system and an essential tool for minimising government borrowing costs.

4.2 RECOMMENDATIONS

1. TSA principle such as the government banking arrangement should be unified and strengthened to ensure the fungibility of the government’s cash resources.
2. No government agency should be allowed to operate bank accounts without the oversight of the treasury
   iii. The coverage of the TSA should be comprehensive and encompassing all government cash resources.
3. The study suggests that banks in Nigeria should formulate sound personnel policies to attract people with good moral standing as bank employees because TSA will affect banks liquidity and employment when such banks have failed, refused and neglected to understand banking and do what bankers do elsewhere because good and well-managed banks will have no problem with this policy.
   The degree of maturity of our banking system, including the technology used for the inter-bank settlements and clearing systems, should be improved since countries with well-developed PFM systems and an advanced banking network, best practice TSA in the Central Bank.
4. Professional Accountancy Bodies in Nigeria should ensure that best standards and regulations are established to ensure best practice and service delivery in the implementation of TSA.
5. Several measures towards the development of sound, effective and efficient government policy on TSA have to be implemented in tandem with the Government Integrated Financial Management Information System (GIFMIS), Automated Accounting Transaction Recording and Reporting System (ATRRS), Integrated Payroll and Personnel Information System (IPPTS), International Public Sector Accounting Standards Board (IPSASB)
   iii. To make the operation of the TSA more efficient, procedures for transferring revenues to the TSA should be streamlined through the banking system; and procedures for transferring funds to the bank accounts of suppliers and other beneficiaries.
6. The effectiveness and efficiency of TSA should be enhanced through an Electronic Fund Transfer System (EFT) in other to achieve its set goals.
7. Issues related to cash management should not be confused with issues related to the distribution of responsibilities for accounting control and administration of the payment system.
8. There should be a complete inventory of existing bank accounts by CBN, all MDAs, asking each agency to provide information on the number and type of accounts held at commercial banks and the amounts deposited in them and reasons for holding them to enable the government have full information about the bank accounts opened/operated by various agencies under its control.
   vii. Establishing a TSA may require hard decisions, such as closing the existing bank accounts of spending units, therefore for a successful TSA implementation, explicit and strong support for reform of government banking arrangements by the government is recommended.
   viii. The technological feasibility and capacity of the banking system to participate in the operation of a TSA should be established. This includes the existence of an interbank settlement system, a small payments clearing system, a Real Time Gross Settlements System (RTGS) at the Central Bank for high value transactions, and the connection of major commercial banks to the RTGS.
9. To make the TSA a stable feature of treasury management, it is recommended that the use of the Vote Book in Treasury Accounting should be retained, strengthened and made more effective with balances extracted on daily bases as this will ensure sound budgetary control/effective budget-monitoring to boost the new policy of TSA.
   Finally, I wish to commend the administration of President Muhammadu Buhari for the political will and determination to undertake full implementation of the key agent of the Public Financial management Reform-The TSA and the Accountant-General of the Federation for ensuring close monitoring and supervision of treasury staff. This is a clear demonstration of the administration’s resolve to fight corruption and enthrone financial discipline, transparency, probity and accountability in the nation’s public financial system.
   This is also in tandem with the Economic Reform and Governance Project (ERGP), a reform initiative that was approved in December, 2004 to strengthen governance, accountability, reduce corruption and deliver services more effectively to the people.