Impact of Internal Control System on Tax Revenue Collection at BURS in Francistown

1.1 Introduction

This section will mainly focus on the background of the problem which will be about what has caused the problem. Also the research will focus on the main aims of this research and research objectives giving the reader a clear picture of what the researcher wants to achieve. The research will also come across the significance of the study giving the importance of why this study is being carried out. Moreover the research will focus on the limitations of the research meaning the effects that the researcher may come across when conducting a research.

There are other sections that the study will come across. One of those sections is the literature review. This section will focus on the perceptions or the views of other authors relating to the internal controls on the revenue collection.

1.2 Background of the study

Botswana Unified Revenue Services continues to face low levels of revenue collection. This study will find out the internal controls that may be put in place so as to curb out the problem. There are many Batswana whom shall pay tax and they are not doing so. Remember that it is the right of every Motswana earning P3600 per month to pay tax. Even though they know that, they are not paying tax hence resulting in low generation of tax revenue. This research will look into the relationship between internal controls and revenue collection in Botswana Unified Revenue Services (BURS).

Botswana unified revenue services was founded in 2004 as an Act of Parliament in 2004 and came into operation in August 2004. Originally it was put in place as the sector of taxes and will be controlled by the Ministry of Finance. It was formed at a time when resourceful tax collection was recognized as an essential part of the Government’s aptitude to complete both its governance and its civic duties. Certain internal controls were then put in place so as to ensure that there was continued viability. Even though there were set internal controls in the department so that it can make more revenue collection, there were leakages that were taking place due to some activities that were taking place in the organization.

This study will therefore look into the effectiveness of internal controls in revenue collection in BURS. This research will look more onto the accounting software’s and the internal controls that are into place at BURS and their impact in the revenue collection at BURS.

1.3 Statement of the Problem

‘BURS’ continues to face the low levels of tax collection because people do it intentionally knowing that they will be avoided. Despite of rules and regulations that put in place there is fluctuation on the levels of tax revenue generation and collection which is happening across all the sectors of the government as well as private sectors. No matter how fine it is, the internal control system can only offer a reasonable, not absolute assurance that the objectives of the company are met in relation to the tax revenue collection. In analyzing the problems related to this, is to check whether there are operative internal control systems in preventing and detecting of the problem that led to the losses. Internal controls are designed to give the company the confidence in its aptitude to achieve a particular task and avoid errors and losses through monitoring and improving organizations and financial reporting processes as well as ensuring compliance with laws and regulations. The internal controls on the tax revenue generation have caused effectiveness in the performance of the finances. A research has been carried out in respect of the effect in the internal control system on tax revenue collection. Regardless of the internal controls that are put in place in BURS, the revenue collection remains below the target market and the resources are being poorly managed. This is due to the fact that the internal controls that are put in place are weak. This is because people are being too slow to pay their taxes on time and some are being corrupt. The authority has identified that one of the major causes of low revenue collection is corruption which has led to the integrity plan action being formed which will lead to transparency thus reducing corruption in revenue collection. Thus, the idea of this research is to inspect and assess the internal control system in procedure at BURS with the outlook of knowing whether escalation of internal controls can have any impact of revenue collection and to answer the question “To what degree has internal controls enhanced revenue collection in BURS in Francistown.

1.4 Aim of the study

This study aims to establish best internal controls that will help to generate revenue at BURS.

1.5 Research Objectives

The study aims to achieve the following:

1. To identify the controls those are put in place by Burs in the revenue collection.
2. To establish the importance of the internal controls in enhancing revenue collection at BURS in Francistown.
3. To suggest the best practices of internal controls that can be used in BURS to enhance revenue collection.

1.6 Research Questions

1. What are the internal controls that are put in place by BURS to enhance revenue collection?
2. What is the importance of internal controls in enhancing the revenue collection at BURS in Francistown?
3. What do you think are the best practices that can be put in place in order to enhance revenue collection in BURS here in Francistown?

1.7 Significance of the study

This research would be critical to BURS in figuring arrangements and systems for gathering and keeping an eye on corrupt tax collection field. The investigation would make mindfulness with regards to the dimension of internal controls which have been set up and to utilize the proposals proposed to include to the effectively actualized. To the training consequently, the investigation would assist researchers with understanding how inner controls work and how to actualize them and to know the territories of income leakage. The discoveries of this exploration would likewise add to hypotheses by giving extra proof to help the current speculations. Individuals will utilize data in this investigation as a major aspect of writing survey while completing other research on the effect of inner control on income gathering. This study will likewise be useful to the Botswana government in thinking of the spending limit and setting out gathering focus for the income accumulation body.

1.8 Limitations of the study

One of the limitations of this study is that there is less time that we are supposed to complete this project. Also it is costly to do this research project as I have to pay for transport costs and other expenses that are needed in order to complete the project. The management of BURS may not want to disclose some of the information as they feel that it is confidential.

1.8.1 Mitigation measures

I intend to do all the work required from me well on time so that I can catch up with time. Also I will be saving so that I can be able to pay well the expenses without constraints. Some of the information will be taken from the government portal for incase the management do not disclose some information.

Literature Review

This research is proposed to survey the impact of internal controls on income gathering with accentuation in BURS. The survey of accessible writing thusly endeavored to build up whether there is a connection between's Internal Control as an autonomous variable and income accumulation as a reliable variable. The survey especially centered around; Control condition, Internal Audit, Control exercises, Information and Communication and monitoring the primary parts of Internal Control.

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Internal controls

According to Hilario (2015), he explains that internal controls are one of the important aspects that every business should adhere to. He explains them as set standard and principles that are used in the business so that they can help to detect fraud and error. He said that these internal controls should be realistic and should bas on the truth so that the business can be able to achieve what it has set.

Internal controls in Revenue Collection

According to Obat (2010), BURS was framed to create enhance income accumulation measures just as ensuring that all income spillages are shut. He continue to explain that these internal controls were meant to avoid some of the individuals to cheat the government by not paying tax. It was likewise to guarantee that it speeds up exchange by setting up those measures that permit controlled development of commodities and ventures. BURS in this manner have set up those measures to decrease the spillages. They perpetually incorporate isolation of obligations, care of benefits, exacting approval strategies, inner review, and the utilization of passwords, legitimate record controls and the executive’s supervision.

Segregation of duties

This convention expresses that if certain activities are performed by one individual quite possibly that individual can deceitfully change over the advantages of the association to possess self and furthermore control the bookkeeping records. In representing income in BURS the three angles fundamental any income exchange which is approval, execution and recording are performed by various people. One can realize that there is segregation of duties since all the activities are being carried out by different individuals.

Custody of Assets

According to Kaplan (2007), BURS have set up essential measures for the insurance of organization resources. The measures are intended to guarantee that just those approved approach the association's advantages. For the situation of some fringe posts where there are no financial offices cash is transported from these ports of section in completely protected money in travel (CIT) vehicles. The money is contained in real money boxes which are fixed and bolted.

Authorization

Matamande (2012) continues to explain that there is utilization of passwords guarantees that nobody has the option to enter unapproved data which may twist income age. The utilization of Passwords disheartens people to embrace degenerate exercises as exchanges are ceaselessly observed on the web.

1.10 Methodology

This Chapter centers around the strategies that was be utilized to gather information and examine it. It significantly concerns the exploration structure, the populace to be contemplated, the example choice strategies and examining procedures, information gathering systems utilized, and information examination utilized.

1.10.1 Research Design

This research will use non-numeric data and he numeric data wherever applicable. This is because whenever the two are being used together they can provide a solid and valuable research which will have a true picture of what is happening around the research topic. This also are quick to use and they saves time.

1.10.2 Study Population

The exploration targets BURS staff since most workers are straightforwardly or in a roundabout way associated with basic leadership and controls.

1.10.3 Study Sample

The research essentially focused on top and center dimension the executives individuals since they are the Custodians of Internal control. The specialist hence utilized purposive testing strategies in choosing interviewees with an alternative of supplanting the individuals who don't wish to react to the scientist's request. Purposive testing is the place the researcher intentionally chooses who to incorporate into the example.

1.10.6 Information Collection methods

There will be different methods that the researcher will use to collect data. The researcher will use both qualitative methods and quantitative methods of data collection. When dealing with the quantitative methods this is whereby one uses the numeric methods to collect data and the qualitative involves the use of descriptions.

• Questionnaire- it is an instrument of data collection that involves asking questions in a written form. A questionnaire is the most inexpensive method of data collection. It is easy to use. Moreover, one can get the fast results as soon as possible. When using a questionnaire one can choose what kind of questions they can ask to a certain group either open minded or multiple choice. Even though it is a good method of collecting data, one may find out that it has some disadvantages. One of its disadvantages is that some people may skip some of the questions. Also one may get dishonest answers from the respondents. Some people may not understand the question clearly and wrongly interpret it.
• Interview –this is one of the qualitative methods that the researcher will use. In this case the researcher will ask some of the questions face to face so that they can understand and clear up some of the confusions that the researcher may have. It is a good method since the researcher may be able to narrate some of the questions that the respondant may not understand.

1.10.7 Information Analysis

The researcher will use different methods to analyze the data collected.

This will involve:

• Graphs
• Tables
• Pie charts

References

1. Hilario Ribeiro, Daniel (2015), internal control system
2. Kaplan E and Schultz Y (2007), authorization as part of internal control system.
3. Matamande, et al (2012), The effectiveness of internal controls in revenue management. A case study of Zimbabwe Revenue Authority. University of Zimbabwe.
4. Obat, J. (2010). The effectiveness of Internal Control Systems in achieving value for money in revenue services