The Fiscal Responsibility Commission (FRC) has disclosed that many Ministry Department Agencies (MDAs) are engaging in creative accounting while preparing their audited financial statements to reduce the remittable amount of operating surplus.
The commission also said it was in the process of reviewing and updating the calculation template to check under-remittances of revenue by federal Ministries, Departments and Agencies.
The chairman of the FRC, Mr Victor Muruako, who disclosed this at a training for accounting officers of MDAs organised by the Paradigm Leadership Support Initiative to boost Federal Government revenue in Abuja yesterday, explained that the calculation template makes the agencies know what they ought to remit to the government.
The FRC boss said it was important that the government strengthened its revenue mobilization strategy leveraging on improving remittance of operating surplus to the Consolidated Revenue Fund by the 122 schedule corporations covered by the Fiscal Responsibility Act 2007.
He stated, “The uniqueness of the calculation template is that it makes the operators, particularly, the DFAs (Director of Finance and Accounts), the heads of accounts, audit to know what they ought to remit. It would also help the chief executives to know allowable and disallowable expenditures such that as chief accounting officers, they would know when they are already violating the law.”
Muruako, a lawyer, explained that his commission had issues with the calculations contained in the audited financial statements submitted by government agencies.
“You find a situation whereby after reviewing their audited financial statements, we will return some of their expenditures back to them and calculate it as part of the revenue they owed to the government. We normally have that conflict with them but a good understanding of the template for calculation of operating surplus will help them to know. They would even know it when they are flouting the law,” the FRC chair noted.
Muruako stated that every agency by matter of operation earns one form of revenue or the other which they must remit to the government, stressing that the Fiscal Responsibility Act 2007 had made this mandatory, adding that the ongoing amendment of the Act would stipulate punishment for errant MDAs.
The PLSI chief executive, Mr Segun Elemo maintained that the inability of MDAs to determine what was due to the government from revenue generated had contributed to the increased deficit in the annual budgets, adding that this was responsible for the growing debt burden and cost of debt servicing.
He said, “Accountability is a dual way (revenue and expenditure) and our organisation, Paradigm Leadership Support Initiative, is not just about ensuring efficiency in public expenditure, we are also committed to accountability in revenue generation.”