Written by Sarah NEGEDU

Operating surplus: FG to review laws against defaulting MDAs

To curb the growing trend of evading payments into the Consolidated Revenue Fund by some government agencies, the federal government has directed all listed agencies to pay their operating surpluses into the CRF before making any investment.

The Fiscal Responsibility Commission had recently revealed that some of the 122 agencies listed as qualified for the payment of operating surplus had started avoiding payment by indulging in creative accounting. It said a number of corporations were in the habit of investing their funds in other areas, resulting in low liquidity and the consequent inability to pay the operating surplus due to be paid by them.

To this end, the Minister of Finance, Mrs. Kemi Adeosun said it had become necessary to review the Fiscal Responsibility Act 2007 in order to accommodate sanctions and incentives against erring agencies.

Speaking at the inauguration of a new template for the calculation of operating surplus in Abuja, Adeosun regretted that no MDA had met the set financial target in the past two decades.

Adeosun, who was represented by the Secretary, Presidential Initiative on Continuous Audit, Dikwa Kyari, proposed linking the tenure of chief executive officers of agencies to financial performance. She said this would help to shore up the meeting of the financial goals of the organisations.

“For the last two decades, none of the MDAs has ever met 50 percent of their target. There is a need for the review of the Fiscal Responsibility Act to provide for sanctions and incentives so that at least there will be an improvement.

“There is a need to sanction defaulters; maybe by way of denying them promotion, or encouraging them by giving them some incentives.”

The minister also frowned at the use of government funds to support charities and political parties and charged the Fiscal Responsibility Commission to begin to monitor the financial activities of the MDAs.

She said, “Most of these MDAs go outside the confines of their mandates to donate to political parties and charity organisations and give zero balance as surplus. So, we came up with this template.”

The new Operating Surplus Calculation Template bars scheduled corporations from investing funds without prior approval of the Accountant General of the Federation.

The document states that in line with Regulation 3206 and 3208 of the Financial Regulations, “Corporations with limited liability companies as subsidiaries are expected to report the activities of those entities in their annual reports. Where the subsidiaries pay dividend, the dividend received is to be included in the corporation’s income.

“Where, however, the corporations’ accounts are consolidated with those of the subsidiaries, such consolidated accounts will not be used for the purpose of determining operating surplus. Therefore, only the corporation’s account and each of its subsidiaries as an entity forms the basis for determining operating surplus.”

It said corporation taxes and other fees and levies paid by the subsidiaries and associates of a government organisation would not count as payment of operating surplus.

 

Search

Latest posts

PhotoKiller beans: SON to sensitise Nigerians on preservation codes

Following the shocking discovery of the use of pesticide for the preservation of beans by some vendors in parts of the country, the Standards Organ [...]

14 November 2018

PhotoWe are overwhelmed by rape, incest cases – FCTA Family members, clergy top abuse list

Officials of the Federal Capital Territory Administration Social Development Secretariat have revealed startling details of rape and incest against [...]

11 November 2018