International Journal of Management and Commerce Innovations ISSN 2348-7585 (Online) Vol. 7, Issue 2, pp: (17-31), Month: October 2019 - March 2020, Available at: www.researchpublish.com
Effect of Risk Assessment on Sustainable Revenue Collection in Embu County Government, Kenya 1
Johnson Mugendi Kariuki, 2Kennedy B. Mwengei Ombaba
1
Msc. Finance, 2Lecturer Jomo Kenyatta University of Agriculture and Technology
Abstract: Governments in both developed and developing countries require revenue to finance their expenditures. Sustainable revenue collection is necessary in promoting efficiency in the service delivery and economic development of county governments. For effective mobilization of revenue, there is the need to put in place strong internal controls. This study intended to establish the effect of risk assessment on sustainable revenue collection in Embu county government. The study was supported by the theory of planned behavior. A cross sectional research design was adopted. The target population of the study was 115 employees from revenue department, 62 from finance and accounting department and 38 from internal audit department adding to a total of 215 employees. The sample size included 75 employees from revenue department, 40 from finance and accounting department and 25 from internal audit department adding to a total of 140 employees who were sampled based on stratified random sampling and simple random sampling. The study used primary data which was collected using semi structured questionnaires. Both content validity and construct validity was adopted in this study. Internal consistency reliability was measured using cronbach alpha coefficient. Data collected was analyzed using statistical package for social sciences version 24. Descriptive statistics used included means, frequencies, percentages and standard deviation. Inferential statistics was Pearson’s product moment of correlation and multiple regression analysis. The study established that risk assessment has a positive and significant effect on sustainable revenue collection in Embu county government, Kenya (β=0.052; P< 0.05). This study recommends the establishment of risk assessment techniques in county governments since internal controls enhances sustainable revenue collection. The study will be of great benefit to policy makers of Embu county government in development of policies on sustainable revenue collection. Further, it will provide empirical evidence on revenue collection especially in Kenyan perspective. Keywords: Sustainable revenue collection, Internal Controls, Risk Assessment.
1. INTRODUCTION 1.1 Background of the Study Governments in both developed and developing countries require revenue to finance their expenditures. Sustainable revenue collection is necessary in promoting efficiency in the service delivery and economic development of county governments (Robert, 2018). Sustainable revenue collection refers to operations in an entity where its dues are fully collected improving the collection and increasing the amount collected (Angelovska, 2010). For effective mobilization of revenue, there is the need to put in place a robust internal controls as cash is the most liquid asset that is vulnerable to loss if not properly controlled (Fight, 2002). Use of Automated systems has been proven to produce massive efficiencies in regard to increased revenue collections (Gideon & Alouis, 2013). The main challenges in revenue collection rotate around internal controls (Ismail, 2016). A strong local revenue base for county government is essential for sustainability of devolved programs that ensures essential services are close to county residents. The local revenue collected forms a core means of building an independent and accountable local governance system (GOK, 2010). With the freedom to generate revenue to fund essential services and development projects the county governments have many sources at hand that include taxes such as property rates, entertainment taxes, business permits, user fees such as parking fees, market fees, game park fees, house rents, infrastructure maintenance fees, water and sewerage fees and trade licenses (COK, 2010). Internal control is one of the measures which can be used to ensure revenue is optimally collected (Fadzil, Haron, & Jantan, 2005).
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