The Federal Government is set to inaugurate the use of a new template for calculating the operating surplus payable by government agencies and departments deemed as revenue generating organisations.
The Fiscal Responsibility Act, 2007 requires listed agencies to pay 80 per cent of their operating surpluses into the Consolidated Revenue Fund, while retaining 20 per cent.
The operating surplus is made up of revenues accruing to government agencies above what they are approved to spend at the beginning of the budget year.
Thirty agencies were originally listed in the Act. However, the addition of 92 agencies by the Ministry of Finance in an effort to shore up the revenues accruing to the government had brought the number of organisations required to pay operating surpluses to 122.
Among the 92 new agencies now included in the list are the National Drug Law Enforcement Agency, Nigerian Investment Promotion Council, Nigerian Railway Corporation, Small and Medium Enterprise Development Agency of Nigeria and the Federal Radio Corporation of Nigeria.
Following a new thinking about how to calculate the operating surplus, the FRC had prepared a new template for determining what agencies should pay.
Although the new template has already been circulated to concerned agencies, our correspondent learnt that the inauguration of the template scheduled for the early days of August would mark the formal implementation of the template.
In the document titled ‘Operating Surplus Calculation Template’, the Federal Government claimed that the mopping up of unspent funds from the Ministries, Departments and Agencies at the end of a financial year by the Office of the Accountant-General of the Federation was not scientific and thus the need for the adoption of payment of operating surpluses by agencies.
The document stated, “The Federal Government has the statutory responsibility of setting up bodies to perform certain specialised functions for smooth running and growth of the economy. It has consequently invested resources and efforts to set up such entities.
“Akin to a private sector investor, the Federal Government expects to reap some level of reward out of the surplus made by these entities from their operations by way of independent revenue.
“Over time, the OAGF has been mopping all balances liquid funds at the end of each financial year. The practice is, however, not based on a scientific assessment of the surplus earned by the entities nor does it encourage them to retain a portion of that surplus.”
The new template on calculating operating surplus stipulate expenses, which agencies are not allowed to deduct before calculating what they are to pay into the Consolidated Revenue Fund as operating surpluses.
These are salaries in excess of scales approved by the National Salaries, Incomes and Wages Commission; monetisation of medical and other allowances; business class travel for officers other than chairman and chief executive officer; and personal loans to staff in excess of approved limits including unapproved mortgages.
Others are expenditure in excess of approved mandates; donations to individuals, including those to political and charitable organisations; and expenses in respect of conference meeting in excess of approved circular on frequency of meetings.