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Effect of Treasury Single Account (TSA) Implementation on Public Sector Financial Accountability in Nigeria: The Mediating Role of Financial Transparency and the Moderating Role of Internal Audit Effectiveness

Abstract

The implementation of the Treasury Single Account (TSA) represents one of the most significant public financial management reforms undertaken by the Federal Government of Nigeria to improve fiscal discipline, enhance transparency, strengthen accountability, and promote efficient management of public funds. Prior to the introduction of the TSA, government ministries, departments, and agencies (MDAs) operated multiple bank accounts across various commercial banks, creating opportunities for financial leakages, idle public funds, weak cash management, delayed financial reporting, and widespread misappropriation of government resources. The adoption of the TSA was intended to consolidate all government revenues and payments into a unified account maintained by the Central Bank of Nigeria (CBN), thereby improving cash management, reducing corruption, enhancing budgetary control, and strengthening public sector financial accountability. Despite these expected benefits, concerns remain regarding the effectiveness of TSA implementation due to institutional weaknesses, inadequate transparency practices, and variations in the effectiveness of internal audit functions across government institutions. Against this background, this study investigates the effect of Treasury Single Account (TSA) implementation on public sector financial accountability in Nigeria, while examining the mediating role of financial transparency and the moderating role of internal audit effectiveness.The study is anchored on Agency Theory, Stewardship Theory, and Institutional Theory. Agency Theory explains the need for accountability mechanisms that reduce information asymmetry and ensure that public officials manage government resources in the interest of citizens. Stewardship Theory posits that public officials can achieve organizational objectives through responsible management supported by effective accountability systems, while Institutional Theory explains how regulatory reforms such as the TSA influence organizational behavior and financial management practices within the public sector. Drawing from these theoretical perspectives, the study seeks to determine the direct effect of TSA implementation on public sector financial accountability, assess whether financial transparency mediates this relationship, and examine whether internal audit effectiveness moderates the relationship between TSA implementation and financial accountability.A quantitative research design will be adopted using a structured questionnaire administered to accountants, internal auditors, finance officers, budget officers, procurement officers, treasury officials, and senior administrative personnel across selected federal Ministries, Departments, and Agencies (MDAs) in Nigeria. A stratified random sampling technique will be employed to ensure adequate representation of respondents from different government institutions and administrative levels. Data will be analyzed using descriptive statistics to summarize respondents' characteristics and perceptions, while Structural Equation Modeling (SEM) will be employed to examine the direct, mediating, and moderating relationships among the study variables. The measurement model will be evaluated through reliability and validity assessments using Cronbach's Alpha, Composite Reliability (CR), Average Variance Extracted (AVE), and Confirmatory Factor Analysis (CFA). Additional diagnostic tests will be conducted to ensure the robustness and validity of the structural model.The study anticipates that TSA implementation will have a significant positive effect on public sector financial accountability by improving cash management, reducing opportunities for financial misappropriation, minimizing revenue leakages, strengthening expenditure control, and enhancing compliance with government financial regulations. The study further expects that financial transparency will mediate this relationship by improving the accuracy, timeliness, accessibility, completeness, and reliability of financial information generated through the TSA system. Increased transparency is expected to facilitate better monitoring of government transactions, strengthen public trust, improve legislative oversight, and enhance accountability in the utilization of public resources.Furthermore, internal audit effectiveness is expected to moderate the relationship between TSA implementation and public sector financial accountability. Government institutions with highly effective internal audit units characterized by professional competence, operational independence, risk-based auditing, adequate technological capacity, and strong management support are expected to derive greater accountability benefits from TSA implementation. Effective internal auditors are anticipated to strengthen internal controls, identify financial irregularities, ensure compliance with public financial management regulations, and improve the overall effectiveness of the TSA framework. Conversely, institutions with weak internal audit functions may experience reduced accountability outcomes despite implementing the TSA, as deficiencies in monitoring and control may undermine the intended objectives of the reform.This study is expected to make significant theoretical and empirical contributions to the literature on public sector accounting, public financial management, and governmental accountability by integrating financial transparency as a mediating variable and internal audit effectiveness as a moderating variable into the relationship between TSA implementation and financial accountability. Unlike previous studies that primarily examined the direct effects of the Treasury Single Account on financial performance or revenue management, this research provides a more comprehensive explanation of the mechanisms and organizational conditions through which the TSA enhances accountability within Nigeria's public sector. The findings will provide valuable insights for the Office of the Accountant-General of the Federation, the Federal Ministry of Finance, the Central Bank of Nigeria (CBN), the Office of the Auditor-General for the Federation, anti-corruption agencies, policymakers, public sector managers, and development partners regarding the importance of strengthening financial transparency and internal audit functions to maximize the effectiveness of the TSA policy. The study will also provide evidence-based recommendations for improving public financial management reforms, reinforcing institutional accountability mechanisms, promoting prudent management of public resources, and enhancing public confidence in government financial administration in Nigeria.

Keywords: Treasury Single Account (TSA), public sector financial accountability, financial transparency, internal audit effectiveness, public financial management, mediation, moderation, Structural Equation Modeling (SEM), Nigeria, government financial reforms.