Assessing the Effectiveness of the Treasury Single Account as a Tool for Curbing Financial Irregularities in the Nigerian Public Sector

Transcription

1 Assessing the Effectiveness of the Treasury Single Account as a Tool for Curbing Financial Irregularities in the Nigerian Public Sector Dr. Eno Gregory Ukpong & Mrs. Ese Bassey Nsentip Department of Accounting Faculty of Social and Management Sciences Akwa Ibom State University, Nigeria Abstract The treasury single account has proven to be quite effective in the control and management of public funds in public entities around the world prior to tits adoption in nigeria. this research was carried out to ascertain the effectiveness of the TSA policy implemented in ministries, departments and agencies (MDAs) of government. 3 specific objectives, research questions and hypotheses were stated for the study. The study employed both qualitative and quantitative research design, using the federal Inland Revenue service (FIRS), Uyo, Akwa Ibom State as a case study. A sample size of 63 staffers from the FIRS1 was purposefully used. The mean and standard deviation was used to anser the research questions while regression was used to test the hypotheses at.05 alpha level. Consequently, the result finds that there was a high positive relationship between the implementation of TSA and the management of public funds. The research also established that the main job of the TSA is to mop up cash and not to detect fraud. It was recommended among others that Government should endeavour to sensitize the public on the implications of the TSA on government MDAs as well as other technical partners. Keywords: TSA, fraud, funds management, public funds, government, remitta system Introduction Several emergent scholars have noted that the adoption of the Treasury Single Account has sufficed as an operational trend in developing countries recently. It remains a phenomenal concept that has been a major catalyst for driving efficiency in public financial management systems. It has been in operation in most advanced and developed countries including the United Kingdom, France, Sweden, United States, to mention but a few for several years now prior to its adoption in Nigeria. Yusuf (2016) noted that the Treasury Single Account has been both a constitutional provision and an extant fiscal practice. Its inception and coherent implementation came as a result of the need for the Nigerian government to tackle financial aberrances, promote accountability and transparency as well as to prevent revenue loss and mismanagement by revenue-generating agencies. Although the adoption and implementation of the TSA scheme was supported by several government agencies, it is worthy of note that it also faced opposition from some other federal agencies. Agencies against the adoption of the treasury single account alleged that the scheme deterred them from mobilizing finances necessary for funding extra budgetary projects and activities of the ministries (Adams, 2001). Consequently, Ocheni (2016) posits that the proper implementation of the TSA would remove the ambient secrecy in the management of public finance in MDAs. Under the guise Vol. 8(1) 2017 Page 79

2 of non-descript official secrecy, government staff and politicians have been known to employ all sorts of administrative devices and illegal liaisons to engage in business ventures for private gains using government money. Hence, frustrating proper execution of projects, as well as causing salary delays. To this end, the implementation of the Treasury single Account in every ministry and extra ministerial department of government will enhance an overall effectiveness in the management of public funds in Nigeria. Hence, this study attempts to appraise the extent to which the Treasury Single Account which here-in-after shall be referred to as the TSA remittal policy has been complied with in Federal agencies. It also attempts to decipher how effective it has been in curbing financial anomalies in the revenue remission and expenditure allocation system of government (Adebisi, 2016). Statement of the Research Problem Unfortunately, the unimpressive state of public sector fund management In Nigeria has spilled in a quick glance several leakages and pitfalls in the revenue generation and remission processes of Government holistically. Recent investigations prior to the implementation of the ISA policy revealed that several government agencies were evidently involved in the fraudulent diversion of government funds through the keeping of mushroom bank deposits in commercial banks. Consequently, the diversion of funds by ministries and extra ministerial departments of government has cost great financial loss to the Federal government in estimable trillions of naira. Prominent among other challenges in relations to the public financial management of the government funds is also the inability to keep proper track and record of revenue generated from inception stage to the stage of final remission. The need to keep progressive track of government revenue came as a result of being unable to estimate to a reasonable degree of certainty the amount of revenue available to the Federal government for budget planning and subsequent appropriation. Research Questions i. Is there any relationship between the implementation of the.tsa remittal system and the management of public funds in Nigeria? ii. Has the adoption of the TSA remittal system led to an increase in the amount of revenue remitted to the federal government in Nigeria? iii. Has the TSA remittal system been effective in minimizing financial irregularities in the management and remission of public funds in Nigeria? Objectives of the Study The main objective this study is to appraise the relevance o f the TSA remittal system as an essential tool in public financial management as regards to the Nigerian public sector. This study also intends to highlight the usefulness of the TSA remittal system in minimizing financial anomalies in the generation and remission of federal government revenue. In this regard, the specific objectives of this study will include to: i. Determine the relationship between the implementation of the TSA remittal system and the management of public funds in Nigeria. ii. Examine the extent to which the adoption of the TSA remittal system has led to an increase in the amount of revenue remitted to the federal government in Nigeria. Vol. 8(1) 2017 Page 80

3 iii. Ascertain the effectiveness of the TSA remittal system in minimizing financial anomalies in the management and remission of public funds in Nigeria. Statement of Null Hypotheses In order to ensure accurate validation of primary data to be gathered through the questionnaires, the null hypotheses have been postulated. For the purpose of this study, the hypothesis shall be stated thus; Null Hypothesis 1: There is no significant relationship between the implementation of the TSA remittal system and the management of public funds in Nigeria. Null Hypothesis 2: The adoption of the TSA remittal system has not led to a significant increase in the amount of revenue remitted to the federal government in Nigeria. Null Hypothesis 3: The TSA remittal system has not been significantly effective in detecting financial irregularities in the management and remission of public funds in Nigeria. Significance of the Study The implementation of the TSA scheme faced several challenges primarily in form of under enlightenment, as many government agencies only saw the TSA scheme as an effort of government to cripple their autonomous ability to utilize government revenue for the funding of their extra- ministerial activities. This research project will therefore be of great benefit to the ministries and extra ministerial departments of the Nigerian Federal government as it seeks to serve as a source of enlightenment to them on how the TSA scheme actually works. This study will be of immense benefit to federal government ministries as. it intends to decipher how effective the TSA scheme could be in preventing financial fraud in the public sector. It also intends to proffer reasonable detail to policy makers to enable them establish more feasible Data Analysis Data obtained are analyzed using Pearson Product Moment Correlation, Mean and Standard Deviation to answer the research questions and regression analysis to test the null Hypotheses. Research Questions: The following three research questions were answered. Research Question 1: Is there any relationship between the implementation of the TSA remittal system and the management of public funds in Nigeria? Table 1: Analysis of relationship between the implementation of the TSA remittal system and the management of public funds variables X X 2 XY r-cal Y Y 2 1mplementation of the TSA Management of public funds in Nigeria Vol. 8(1) 2017 Page 81

4 Table 1 shows the analysis of the relationship between the implementation of the TSA remittal System and the management of public funds in Nigeria using Pearson Product Moment Correlation (PPMC). The result gives a correlation index of 0.557, indicating a high positive Relationship between the implementation of the TSA remittal system and the management of public funds in Nigeria. Research Question 2: Has the adoption of TSA remittal system led to an increase in the amount revenue remitted to the federal government of Nigeria? Table 2: Analysis of adoption of TSA remittal system and increases in remitted revenue to the federal government S/N Items N Mean Std Remarks X Dev 1 The TSA has been able to enhance the SA public financial management policies in Nigeria. 2 The TSA is beneficial to the Nigerian A Public Sector 3 The TSA has improved the revenue SA remission process of FIRS to the Federation Account since implementation. 4 There are no financial leakages in the SA management of public funds as they were, prior to implementation of the TSA 5 The TSA has significantly enhanced the A effective execution of government yearly appropriations in MDAs. Grand Mean SA Table 2 shows the item by item analysis of how the adoption of the TSA remittal system has led to increase in remitted revenue to the federal government. The result shows that all the items have Mean responses above 3.0, indicating that the respondents all agreed to the benefits of adopting TSA by the government. The grand mean of the respondents that is the averages score for the total set of questions asked is This shows that all the respondents all agreed positively that the adoption of TSA remittal system has led to an increase in the amount of revenue remitted to the Federal government of Nigeria. Research Question 3: Has the TSA remittal system been effective in minimizing financial regularities in the management and remission of public funds in Nigeria? Vol. 8(1) 2017 Page 82

5 Table 3: Analysis of the effectiveness of the TSA in minimizing financial irregularities in the management of public funds S/N Items N Mean Std Remarks X Dev 1 The TSA is an effective instrument for SA curbing fraudulent financial practices in the Nigerian Public Sector 2 The TSA is effective in ensuring financial SA Accountability and Transparency in the Nigerian Public Sector. 3 The TSA has stiffened fund mobilization SA procedures for extra budgetary activities of the FIRS 4 The TSA has mopped up cash available but SA inaccessible to government prior to its implementation 5 The TSA has been effective in checking SA sharp practices by public services Grand Mean SA Table 3 shows the item by item analysis of the effectiveness of TSA in minimizing financial regularities in the management of public funds. The results shows that all the items have Mean responses above 3.0, indicating that the respondents all agreed to the effectiveness of adopting SA by the government for checking financial irregularities. The grand mean of the respondents at is the average score for the total set of questions asked is This shows that all the respondents all agreed positively that the TSA remittal system has been highly effective in minimizing financial irregularities in the management and remission of public funds in Nigeria. Testing of Null Hypotheses The following null hypothesis were tested at 0.05 level of significance Ho 1 : there is no relationship between the implementation of the TSA remittal system and the management of public funds in Nigeria. Table 4: Summary of Significant Relationship test for implementation of the TSA remitta system and the management of public funds in Nigeria Model Sum of squares Df Mean Square Fcal Fcrit Decision 1 Regression Reject Ho Residual Total r= 0.557, R 2 = 0.05 Table 4 shows the summary of the regression- ANOVA table for the significant test of relationship between the implementation of the TSA remits system and the management of public funds in Nigeria. The result shows that the calculated F-value is At 1 and 61 degree of freedom and.05 alpha levels, the critical f-value is Since the Fcal is greater Vol. 8(1) 2017 Page 83

6 than the Fcrit, the null hypothesis is rejected. Thus, there is a significant positive relationship between the implementation of the TSA remittal system and the management of public funds in Nigeria. The coefficient of determination value (R2) gives a value of 0.311, indicating that the only 31.14% of changes in the management of public funds is as a result of TSA implementation. Ho 2 : The adoption of the TSA remittal system le to a significant increase in the amount of revenues remitted to the federal government of Nigeria. Table 5: Summary of Regression Analysis of the Influence of TSA on increases the amount of revenue remitted to the Federal government of Nigeria Model Sum of squares Df Mean Square Fcal Fcrit Decision in 1 Regression Reject No Residual Total r= 0.366, R 2 = 0.05 Table 5: shows the summary of the regression- ANOVA table for the significant test of significant increase in the amount of revenue remitted to the Federal government of Nigeria. The result shows that the calculated F-value is At 1 and 61 degree of freedom and.05 alpha level, the critical f-value is Since the F-cal is greater than the fcrit, the null hypothesis is rejected. Hence there is a significant positive relationship between TSA remittal system and the increase in the amount of revenue remitted to the Federal government. Thus the adoption of ISA remittal system led to a significant increase in the amount of revenue remitted to the federal government of Nigeria. Ho 3 : The TSA system has not been significantly effective in detecting financial irregularities the management and remission of public funds in Nigeria Table 6: Summary of Regression analysis of the significant effectiveness of the TSA in detecting financial irregularities Model Sum of squares Df Mean Square Fcal Fcrit Decision 1 Regression Accept Ho Residual Total r= 0.194, R 2 = 0.05 Table 6: shows the summary of the regression-anova table for the significance test of effectiveness of TSA in detecting financial irregularities. The result shows that the calculated Vol. 8(1) 2017 Page 84

7 F- value is At 1 and 61 degree of freedom and at.05 alpha level, the critical f-value is Since the Fcal is less than the Fcrit. The null hypothesis is accepted. Thus, TSA system has not been significantly effective in detecting financial irregularities in the management and remission of public funds in Nigeria. The main job of the TSA is to mop up cash and not to detect fraud. However, it helps control other factors that manage fraud in the public sector. Discussion of Findings Relationship between the implementation of the TSA remittal system and the management of public funds The result of the analysis shows that there is high positive relationship between the implementation of the TSA remittal system and the management of public funds. The corresponding hypothesis shows that there is a significant positive relationship between the implementation of the TSA remittal system and the management of public funds in Nigeria. The coefficient of determination value (R2) gives a value of 0.311, indicating that the only 31.14% of changes in management of public funds is a s a result of TSA implementation. These findings are in line with Pattanayak and Fainboim (2011) which found that the maintenance of fragmented systems of handling government receipts and payments through the banking system remains a critical public financial management weakness that needs to be addressed. Hence, TSA system helps to consolidate government cash balances. Influence of TSA on increase in the Amount of revenue remitted to the Federal government Result of the research question analysis shows that all the respondents all agreed positively that the adoption of TSA remittal system has led to an increase in the amount of revenue remitted to the Federal government of Nigeria. The hypothesis test indicates there is a significant positive relationship between the TSA remittal system increases in the amount of revenue remitted to the federal government. Thus, the adoption of the TSA remittal system led to a significant increase in the amount of revenue remitted to the Federal Government of Nigeria. Thus the findings, is supported by Oguntodu et a! (2016) which found that TSA would facilitate transparent reporting of tax revenue and pave way for tax offsetting and faster payment of refunds. He added that the adoption of TSA will be positive for the economy in the long run, Significant Effective of TSA in Detecting Financial Irregularities The findings of the study from the research question show that all the respondents all agreed positively that, the TSA remittal system has been highly effective in minimizing financial irregularities in the management and remission of public funds in Nigeria. The corresponding hypothesis test shows that TSA system has not been significantly effective in detecting financial irregularities in detecting financial irregularities in the management and remission of public funds. The main job of the TSA is to mop up cash and not to detect fraud. However, it helps control other factors that manage fraud in the public sector. The findings of the study is in line with Yusuf ( 2016) which found that the implementation of the ISA will go a long way in blocking financial leakages in the system, improve revenue collection and promote transparency and accountability. Vol. 8(1) 2017 Page 85

8 Conclusion Based on the results of analysis, it is concluded that the TSA since its adoption and implementation in Nigerian public sector, has increased revenues collected and remitted to the federal government significantly. While there may have been grumblings in some quarters with regards the implementation of, overwhelmingly, TSA remita system has led to significant increase in the amount of revenues remitted to the federal government of Nigeria. however, TSA system has not been effective in detecting and checking financial irregularities in the management and remission of public funds in Nigeria. the main job of the TSA is to mop up cash and not to detect fraud. However, it helps to control factors that manage fraud in the public sector. Recommendations Based on the findings of the study, the following recommendations are made. 1. Government should endeavour to sensitize the public on the implications of the TSA on government MDAs as well as other technical partners. 2. Government should consider alternative fiscal means of stimulating cash liquidity for banks who are hit with shortage of cash through the mop up activities of the TSA. 3. The synergy between banks and government should be strengthened for more undisclosed accounts to be accessed by the government. References Adams J.K. (2001). Reinventing governmental accounting for accountability assurance in Nigeria. Nigeria Research Journal of Accountancy, 1(1):1-16. Adebisi, J.F. (2016). The adoption of the treasury single account (TSA) and its effect on revenue leakages of Nigerian States. American Research Journal of Business and Management. 43(2):1-10. Ocheni, A. (2016). Nigeria: the victims, the gainers of treasury single account. Available at retirved on 12 th July Oguntodu, J.A, Alalade, Y.S, Adekunle, Y.A and Adegbie, F.F (2016). Treasure single account and nigeria s economy between 1999 and 2015: An assessment. Journal Of Accounting And Financial Management., 2(6): Pattanayak, S and Fainboim, I.(2011). Treasury single account. An essential management for government cash management. International Monetary Fund. Yusuf, I. A.(2016). Counting cost of treasury single account. Available at Nation. Vol. 8(1) 2017 Page 86