Effect of Internal Control System on the Operational Performance of Organization: A Case Study of Kenya Revenue Authority (KRA) Headquarter, Kenya
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Date
2023
Authors
Chepkonga, Lorna Chepkorir
Mbirithi, Daniel Mange
Journal Title
Journal ISSN
Volume Title
Publisher
IAJAH
Abstract
The issue of financial crisis has persisted
despite the fact that internal control systems
have been in place for many years in the
majority of organizations. However, the
current research aims to determine the effect
of the internal control system on operational
performance of Kenya Revenue Authority.
The survey objectives were; to explore the
effect of control environment, risk
assessment, control activities and automation
on the performance of Kenya Revenue
Authority. The survey was anchored by New
Public Management theory and Contingency
Theory. A descriptive research design was
utilized. The research targets 640 employees
working at finance, administration and
internal audit departments. The study
sampled 128 respondents. Questionnaires
were utilized to gather primary data. Both
quantitative and qualitative data were
collected. Secondary data were gathered
from annual financial reports. Quantitative
data were analyzed descriptively and
inferentially. Qualitative data were analyzed
through themes and presented in verbatim
forms. Only frequency, percentage, means,
and standard deviations were utilized in
descriptive statistics. Regression modeling
and product moment correlation were used
for inferential statistics. Graphs and tables
were used to display the findings. The
findings show that coefficient of correlation
was 0.865, an indication that the study
variables significantly influenced operational
performance of KRA. Coefficient of adjusted
determination was 0.724 which translates to
72.4%. This indicates that variations in
dependents variable was explained by the
independent variables (risk assessment,
control environments, control activities and
automation). Also, the findings from
regression coefficients revealed that risk
assessment, control environments, control
activities and automation significantly affect
the operational performance of KRA since
the P-value is less than 0.05. The study
concludes that internal control systems have
statistically significant relationship with
operational performance of Kenya Revenue
Authority. The study concludes that KRA
should establish strong internal control
policies that will help the firm achieve its
goal of optimizing revenue collection. The
study recommends that management needs to
be dedicated to the system's operations, set
policies and processes for authorizations at a
high enough level, and make sure that clear
lines of authority and responsibility have
been established to guarantee policy and
procedure compliance. Additionally,
managers need to make sure that roles in the
department responsible for collecting
revenue are clearly defined, train personnel
on how to use the accounting and financial
management system, and finally make sure
that management promptly explains any
differences between actual and budgeted
income.
Description
Article
Keywords
Internal Control System, Risk Assessment, Control Environment and Operational Performance
Citation
Chepkonga, L. W., Mbirithi, D. M. (2023). Effect of internal control system on the operational performance of organization: A case study of Kenya Revenue Authority (KRA) Headquarters, Kenya. International Academic Journal of Arts and Humanities, 1(3), 310-330.