TSA: Self-auditing imperative for Nigeria’s financial system

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On August 12, 2017 while Americans were still trying to understand why James Fields Jr ploughed his car into a crowd of innocent protesters in Charlottesville, there was a mild outburst at an event in Abuja. The outburst was the product of lack of information or outright misinformation about the workings of the Treasury Single Account (TSA) at a private hearing put together by a House of Representatives ad-hoc committee.

What happened that day was that the leadership of the committee asked representatives of the finance ministry if TSA had been audited two years into its use. In response, they said that had not been done. The whole vociferation of displeasure centred on why a system that is used to process huge volumes of government funds could go unaudited for two years.

But the fuss was largely unnecessary because the TSA in itself is a self-auditing system. Indeed, it is surprising that years after the adoption of TSA, the Accountant General of the Federation who was at that meeting in Abuja claimed ignorance of TSA’s audit mechanisms and procedures.

Most people who are a bit tech savvy know that essentially, the architecture of an electronics based fund collection and disbursement system, like TSA, is designed in such a way that there are trails for every transaction on the platform in real time.
So the process of monitoring what TSA has processed does not need any brouhaha or celebrated audit. All that is required is a request from the authorities to those that administer the system for details of transaction records. (A printout can then be made available if necessary.)

It is instructive that, till date, TSA is the most significant audit imperative in the 57-year history of Nigeria. Indeed, an interesting fact about TSA is that unlike in the past when the Federal Government had to wait till the end of the year (or several years) before revenue collection and disbursement audits could take place, with TSA, records can be made available anytime.

Also, with TSA, receipts for payments into government coffers are also available online and in real time. Indeed, the introduction of TSA makes it unnecessary for auditors to make endless journeys from ministry to ministry in the name of audit since most payments to government are routed and receipted real time as the funds hit the federation account at the collection port (in most cases banks).
In the past, powerful interests were able to print fake government receipts for transactions that were never paid for. But with TSA, that is impossible because receipts are generated, serialised and authenticated electronically. When government funds are paid into the commercial banking system, unique reference numbers are automatically generated, that helps the accounting and vetting process.

Apart from that, lost receipts can be reprinted from any part of the world. All the individual who paid the bill needs to do is to log in his details into the portal and the original receipt will reappear and can be reprinted.

So far, TSA (and the electronic platform upon which it runs) has addressed the challenges that it was set up to fix. However, the major problem the policy faces is that those who are supposed to own it have not done so religiously.

Even though the policy is somewhat a master stroke of the Buhari-led administration, no one within the administration is taking responsibility for telling its success story.

Indeed, the ministers of information and finance, as well as the Attorney General of the Federation should be at the forefront of informing Nigerians about the workings of the policy. They should also be advertising it to other African countries as the poster child of better public sector financial management as prescribed by the World Bank.

TSA also presents an opportunity for Nigeria to export a locally developed technology that had processed an estimated N7trillion for the Federal Government as of March 2017. In the past, Nigeria used to have a vibrant technical aid corp., today, TSA presents an opportunity to export technology that can aid the financial processes of African countries.

So, focus should be more on government agencies and parastatals which are not complying with the TSA directive rather than on an audit. Because as things stand currently, a number of government arms have failed to adopt the TSA and still maintain accounts that are separate from TSA.

Like the confusion that went with the request for an elaborate audit, there are still a lot of misconceptions about TSA informed by lack of information.

At present, there are at least three outstanding misconceptions about what the TSA is and how it operates. The first and most enshrined is that the TSA came into effect two years ago. This is untrue. What is fact is that the Federal Government began to use SystemSpecs’ Remita software which is the backbone upon which TSA runs five years ago. Albeit, back then the platform was used primarily to process government payments strictly.

TSA’s use as a revenue collection system (which is its most important use) started in September 2015 when President Buhari gave the go ahead.

Another misconception about TSA is that it holds government funds somewhere in the Central Bank of Nigeria. To this end, there have been comments that suggest that TSA traps funds. Nothing can be further from the truth.

The reality is that what the TSA really does is to provide a concise platform that sees to it that all payments to government are captured in one account, from which funds are also distributed to government agencies and projects. So the account is never static, it’s a flow. Funds flow in and out of the system on a daily basis. What Systemspecs’ application does it to keep track of those funds, ensure that proper records are kept, and provides an electronically precise and robust software that drives the whole process. In essence, it serves as a form of gateway. All funds flowing to government must flow through and be captured by it.

What this does is that it makes it easier at each point in time to point out the government agency and parastatals that are not contributing to the government purse. It also points to where funds are being allocated. Therefore, the focus of the authorities should not be just an audit because TSA is not a single account that is unknown, but that which has records that are free to the public especially now that there are laws that prohibit the hoarding of information that pertains to government.

The real issue is that there should be a query of those agents of government who have deemed it unimportant to imbibe TSA. Why, for instance, would the Controller General of Customs still keep an account separate from the TSA?
The process of setting up the TSA started in 2010. It began with the setting up of the TSA Inter-Ministerial Technical Committee. Following this committee’s work, the Federal Government announced in late 2011 the commencement of the TSA by January 2012. In this regard, the CBN was requested to provide necessary electronic funds transfer platforms for the TSA. In preparation for this full implementation, the Office of the Accountant General of the Federation required a system that could collate and manage its payment process; while the CBN required a system that could interface with the Office of the Accountant General of the Federation for the settlement of its payment instructions. Unfortunately, neither agency had such a system.

To resolve this challenge, a CBN interdepartmental committee was set up in September 2011 to identify and review the options available to the bank. After thorough consideration, the committee found that only two licensed payment system providers had the potential to provide the services required by both the CBN and the Office of the Accountant General of the Federation these companies were: the Nigerian Interbank Settlement System (NIBS) and SystemSpecs Limited. Both companies were invited by the CBN inter-ministerial committees to make presentations and ascertain if they could provide the service required. After the discussions, demonstrations and verification of their claims, it was discovered that only SystemSpecs had the competence to handle the tasks as it already had a product handling such transactions. Hence in October 2011, the management of the CBN approved Systemspecs’ platform for the operation of the TSA.

So far, several nations other than Nigeria have made efforts to understudy and adopt the mechanisms, and workings of the TSA, howbeit, there is still a lot of misconception about the working of the payment and receipt system among many Nigerians. The sensitisation effort obviously needs to be stepped up.

Funmi Martins is a public affairs analyst based in Lagos

The post TSA: Self-auditing imperative for Nigeria’s financial system appeared first on Vanguard News.


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