Effect of Internal Controls on Revenue Performance in Organisations: A case of the National Forestry Authority (NFA), Uganda
Abstract
The general study objective focused on examining the effect of internal controls on revenue
performance in organizations: a case of the National Forestry Authority (NFA) in Uganda. The
specific objectives included examining the relationship between control environment and
revenue performance, examining the relationship between control activities and revenue
performance and examining the relationship between monitoring and revenue performance.
“Agency theory” by Meckling (1976) was adopted to underpin the study findings. A cross
sectional research design was used where 61 respondents were randomly and purposively
sampled out of a population of 73 employees. Descriptive statistics, correlation and regression
approaches were used to analyze data. Hypotheses were tested at 5% significance level and
revealed that control environment carried a weak negative relationship (r = -0.170) to revenue
performance and not significant since the calculated p = 0.203>0.05. Control activities exhibited
a weak positive correlation (r = 0.192*) at significance level of p = 0.150>0.05. Monitoring
exhibited a moderately positive correlation (r = 0.458) at p = 0.000<0.05. This resulted into
rejection of the former two and acceptance of the latter hypothesis. The study revealed that the
three dimensions of internal controls covered in this study performed fairly and accounted for
24% of the total revenue in NFA. Therefore, it is recommended that management investigates
other factors that may be affecting revenue performance as well as working to improve on the
implementation, supervision, enforcement, and monitoring of its established internal control
frame works in the organization.