- MDAs Must Pay Operating Surplus Before Investing – FRC
Scheduled government Ministries, Departments and Agencies are to pay their operating surpluses to the Consolidated Revenue Fund of the Federal Government before making any investment, the Fiscal Responsibility Commission has said.
The FRC stated this in the Operating Surplus Calculation Template obtained by our correspondent in Abuja on Tuesday. The template is scheduled to be officially inaugurated in Abuja on Wednesday (today).
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.
The document stated that a number of corporations were in the habit of investing their funds in other areas, resulting in low liquidity and the consequent inability to pay the operating surplus due to be paid into the Consolidated Revenue Fund.
It said, “In line with Regulation 3206 and 3208 of the Financial Regulations, scheduled corporations are barred from investing funds without prior approval of the Accountant General of the Federation. Corporations with limited liability companies as subsidiaries are expected to report the activities of those entities in their annual reports. Where the subsidiaries pay dividend, the dividend received is to be included in the corporation’s income.
“Where, however, the corporations’ accounts are consolidated with that/those of the subsidiaries, such consolidated accounts will not be used for the purpose of determining operating surplus. Therefore, only the corporation’s account and each of its subsidiaries as an entity forms the basis for determining operating surplus.”
The FRC said corporation taxes and other fees and levies paid by the subsidiaries and associates of a government organisation would not count as payment of operating surplus.