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Office of the Accountant General of the Federation

Institutional Restructuring of the Nations Treasury
for Improved Performance

2014 Strategy Session
21
st
22
nd
February, 2014
Content
1
Roles and Responsibilities of a Treasury Function
S/N
1 3
Page
High Level Review 2 5
Key Issues and Challenges 3 7
Key Strategic Imperatives 4 20
Session Objectives
2
Present and highlight typical functions of National treasury
Office
Articulate key learnings from the review of leading practices
Present high-level review scorecard for OAGF based on
leading practices from other jurisdiction
Set the tone for achieving agreements on the next steps
3
Roles and Responsibilities of a
Treasury Function
4
The OAGF performs the treasury functions of the Federal Government and is
responsible for the following functions
Appropriation
Funds Allocation
Commitment Management
Budget Execution
Charts of Accounts
Accounting Rules and
Standards
Definition of financial controls
Accounting & Controlling
Revenue & Expenditure
Forecasts
Debt Service Forecasts
Cash Management
Financial Planning / Execution
Financial statements/ reports of
the government
Fiscal/ Financial Reporting
5
The OAGF performs the treasury functions of the Federal Government and is
responsible for the following functions
Budget Execution
Appropriation
Funds Allocation
Commitment Management

Leading Practice Role of a
Treasury Function
Mandate of the OAGF
Supervise the accounts of Federal Ministries and Extra-
Ministerial departments;
Investigate cases of fraud, loss of funds, assets and store items
and other financial malpractices in Ministries/Extra-Ministerial
department;
Ensure revenue monitoring and accounting

Financial Planning /
Execution
Revenue & Expenditure
Forecasts
Debt Service Forecasts
Cash Management
Maintain and operate the Federation Account;
Maintain and operate the accounts of the Consolidated Revenue
Fund, Development Fund, Contingencies Fund and other public
funds and provide cash backing for the operations of the Federal
Government;
6
The OAGF performs the treasury functions of the Federal Government and is
responsible for the following functions
Accounting & Controlling
Charts of Accounts
Accounting Rules and
Standards
Definition of financial
controls
Leading Practice Role of a
Treasury Function
Mandate of the OAGF
Provide financial regulations and issue Treasury Circulars to
Federal Ministries/Extra - Ministerial Departments to ensure that
there are adequate systems for the co-ordination of collection
and disbursement of public funds;
Formulate the accounting policies of the Federal Government;
Issue officially approved forms bearing Treasury Numbers for use
in all Federal Ministries to ensure uniformity

Fiscal/ Financial Reporting
Financial statements/
reports of the government
Conduct routine and in-depth inspection of the books of accounts
of Federal Ministries and Extra-Ministerial Department to ensure
compliance with rules, regulations, policies, and Internal Audit
Guides;
Collate, present and publish statutory financial statements of
accounts required by the Minister of finance
7
High-level Review
*Sources:
Mike Williams. Government Cash Management- Good and Bad Practice (2004) The leading practice indicators is primarily based on work on a number of OECD members: the UK, all the Eurozone countries; the USA, Canada and
Australia.
Mike Williams. (2010) Government Cash Management:Its Interaction with Other Financial Policies
Based on selected leading practices, a high-level review shows opportunities for
enhancing the efficiency and effectiveness of the OAGF
The following case study countries / regions were selected for review:
United States
Canada
North
America
Europe
Zone
UK
Australia
Australia
*Sources:
Mike Williams. Government Cash Management- Good and Bad Practice (2004) The leading practice indicators is primarily based on work on a number of OECD members: the UK, all the Eurozone countries; the USA, Canada and
Australia.
Mike Williams. (2010) Government Cash Management:Its Interaction with Other Financial Policies
Based on selected leading practices, a high-level review shows opportunities for
enhancing the efficiency and effectiveness of the OAGF
In selecting the case study countries, the following criteria were considered:
Canada
United States
United Kingdom
Australia
Europe
Selected
Countries are:
Evidence of
demonstrated
success and
effectiveness in
service delivery
Existence of Functional
organizational Structure
that supports the
mandate of the Agency
Evidence of an
established and
operating
treasury office
Selection Criteria for Case Studies Countries
Similarities in
terms of mandate
and functions
Strong Institutional
Interactions &
Collaboration
Key
Well aligned with
leading practice
Fairly aligned with
leading practice
Significant gaps in alignment
with leading practice
Inadequate information on
current state to assign a rating
*Sources:
Mike Williams. Government Cash Management- Good and Bad Practice (2004) The leading practice indicators is primarily based on work on a number of OECD members: the UK, all
the Eurozone countries; the USA, Canada and Australia.
Mike Williams. (2010) Government Cash Management:Its Interaction with Other Financial Policies
Based on selected leading practices, a high-level review shows opportunities for
enhancing the efficiency and effectiveness of the OAGF
Focus Areas
Leading Practices from other
Jurisdictions*
Preliminary Review of the OAGF
Efficient
Internal
Payment
Processing

Existence of robust internal
arrangements to process government
transactions efficiently and with a
minimum of intermediate sub-
processes/ touch points
A number of manual
process touchpoints/ steps
still exist for payment
processing within the
OAGF and spending MDAs

An improved/ increased reliance on
electronic transactions and centralising
receipts and payments through a
limited number of agents
Ongoing efforts to ensure
automation of transactions
at the OAGF and selected
MDAs (i.e. GIFMIS)

Where a larger number of agents are
used (reflecting its size), they are
highly controlled and coordinated
Inefficient and inadequate
controls over the large
number of MDAs


Focus Areas
Leading Practices from other
Jurisdictions
Preliminary Review of the OAGF
Consolidation
of Accounts &
Minimisation of
Account
Balances
Existence of internal accounting
requirements and controls to
minimise level of idle balances held
by government bodies other than
the Ministry of Finance/Treasury
Office Central Bank
Ongoing efforts

Existence of arrangements with the
banks, that permit netting of the
transactions between government
agencies and aggregation of
departmental balances
No known agreement with
Banks that allows for the
netting of transactions
between MDAs. Each
MDA is treated as a
separate entity

Centralization of government cash
balances and establishment of a
Treasury Single Account (TSA)
Implementation of
Treasury Single Account is
currently being
championed by the MoF

Key
Well aligned with
leading practice
Fairly aligned with
leading practice
Significant gaps in alignment
with leading practice
Inadequate information on
current state to assign a rating


Based on selected leading practices, a high-level review shows opportunities for
enhancing the efficiency and effectiveness of the OAGF
*Sources:
Mike Williams. Government Cash Management- Good and Bad Practice (2004) The leading practice indicators is primarily based on work on a number of OECD members: the UK, all the Eurozone countries; the USA, Canada and
Australia.
Mike Williams. (2010) Government Cash Management:Its Interaction with Other Financial Policies
Key
Well aligned with
leading practice
Fairly aligned with
leading practice
Significant gaps in alignment
with leading practice
Inadequate information on
current state to assign a rating
Focus Areas
Leading Practices from other
Jurisdictions
Preliminary Review of the OAGF
Receipts and
Payments
Flows
Forecasting
Capacity to forecast future
changes in the ministrys account
at the central bank, together with
the monitoring of actual changes
in close to real time
Existence of a Cash
Management Committee with
representation from OAGF,
MoF, Budget Office, DMO etc.

Ability to forecast government
cash inflows and outflows on a
daily basis
It does not appear the OAGF
has the system/ technology
capability to forecast cashflow
on a daily basis

Utilization of forecasting
techniques that leverages
knowledge within the relevant
spending departments, rather
than the MoF which monitors
actual cash flows
Additional information will be
required to properly assess
alignment with this leading
practice



Based on selected leading practices, a high-level review shows opportunities for
enhancing the efficiency and effectiveness of the OAGF
*Sources:
Mike Williams. Government Cash Management- Good and Bad Practice (2004) The leading practice indicators is primarily based on work on a number of OECD members: the UK, all the Eurozone countries; the USA, Canada and
Australia.
Mike Williams. (2010) Government Cash Management:Its Interaction with Other Financial Policies
Key
Well aligned with
leading practice
Fairly aligned with
leading practice
Significant gaps in alignment
with leading practice
Inadequate information on
current state to assign a rating
Focus Areas
Leading Practices from other
Jurisdictions
Preliminary Review of the OAGF
Strong
Institutional
Interactions &
Collaboration
Seamless information sharing
arrangements between the
cash managers, revenue-
collecting agencies and
spending ministries (and any
relevant ministry branch offices)
There are existing arrangements
on information sharing between the
OAGF, and revenue-collecting
agencies (FIRS, etc.). Information
sharing by spending agencies
however, require improvement.

Strong coordination of debt and
cash management
Additional information will be
required to properly assess
alignment with this leading practice

Utilization of forecasting
techniques that leverages
knowledge within the relevant
spending departments, rather
than the MoF which monitors
actual cash flows
Additional information will be
required to properly assess
alignment with this leading practice




Based on selected leading practices, a high-level review shows opportunities for
enhancing the efficiency and effectiveness of the OAGF
*Sources:
Mike Williams. Government Cash Management- Good and Bad Practice (2004) The leading practice indicators is primarily based on work on a number of OECD members: the UK, all the Eurozone countries; the USA, Canada and
Australia.
Mike Williams. (2010) Government Cash Management:Its Interaction with Other Financial Policies
14
Key Issues and Challenges
15
According to World Bank*, some other issues and challenges currently faced by the
OAGF in executing its mandate include the following amongst others.
Financing of oil sector investments: Funds designated for JVCCs are retained by the NNPC before
payments to the Federation Account and the ECA
Subsidies and investment grants are awarded to MDAs and parastatals with no reporting on its use
by the MDAs
A significant portion of MDA-generated revenues are not remitted to the FG accounts
Some MDAs still maintain accounts with commercial banks for which the OAGF has inadequate
oversight and in some cases, open numerous accounts with the AGFs approval
Absence of a regular reporting mechanism on budget commitments and arrears by MDAs
Poor predictability in budget implementation as a result of poor cash management practices
The under skilled Internal Audit function remains primarily focused on prepayment audit
*Source: World Bank Public Expenditure Management and Financial Accountability Review (PEMFAR), 2007
Inadequate control over the Federal Governments fiscal operations 1
16
According to World Bank*, some other issues and challenges currently faced by the
OAGF in executing its mandate include the following amongst others.
Inadequate oversight of fiscal risks related to the operations of parastatals and MDAs, including
losses, debts and contingent liabilities for which the FG may be ultimately liable
Poor oversight of the FGs total commitments and assets in its MDAs due to the cash accounting
requirements, low quality and poor record keeping, and infrequent and sub-optimal in-year and year-
end reporting by the MDAs
Accounting officers are seldom, if ever sanctioned for irregularities or loss of funds, and the
stewardship of their votes is not a factor in the transfer and promotion of senior officers in
government. Consequently, management response to internal audit findings remains disappointing,
and this feeds back to the quality of auditing
*Source: World Bank Public Expenditure Management and Financial Accountability Review (PEMFAR), 2007
Inadequate demand for accountability from MDAs 2
17
According to World Bank*, some other issues and challenges currently faced by the
OAGF in executing its mandate include the following amongst others.
It seems that OAGF has transferred the Power of Attorney for many of the FGs investments to the
BPE for privatisation and do not have adequate oversight over the financial activities of the
agencies.
The role of the Revenue and Investment department in OAGF has been limited to collecting
dividends from investments, directors fees for Civil Servants and operating surpluses from profit
oriented MDAs
*Source: World Bank Public Expenditure Management and Financial Accountability Review (PEMFAR), 2007
Weak monitoring of the Federal Governments investments 3
18
According to World Bank*, some other issues and challenges currently faced by the
OAGF in executing its mandate include the following amongst others.
Inadequate consolidation of fiscal data from the MDAs. The system remains manual and reliant on
transcript data/ information
Significant un-reconciled balances still exist:
Differences exist between the OAGF and CBN balances
MDAs are responsible for reconciling and clearing advance accounts however most Accounting
Offciers are unable to resolve these balances.
*Source: World Bank Public Expenditure Management and Financial Accountability Review (PEMFAR), 2007
Poor financial reporting 4
19
According to World Bank*, some other issues and challenges currently faced by the
OAGF in executing its mandate include the following amongst others.
Poorly motivated and inadequately
inability to attract and retain a sufficient number of high caliber professionals,
Absence relevant productivity tools, and
Sub-optimal performance management systems.
*Source: World Bank Public Expenditure Management and Financial Accountability Review (PEMFAR), 2007
Poorly motivated and inadequately skilled staff 5
20
Key Strategic Imperatives