ASSESSMENT OF INTERNAL CONTROL SYSTEMS EFFECTS ON REVENUE COLLECTION AT NAKURU LEVEL FIVE HOSPITAL

Abstract

The purpose of a service industry is to satisfactorily meet customers demand. This Study seek to determine the effects of internal controls in revenue collection in level Five Hospital Nakuru. The research was conducted using both qualitative and quantitative approaches. Questionnaires were used on a population of about 40 respondents in gathering primary data for the study. The data collected was analyzed using regression analysis to find the relationship between control environment, risk assessment, control activities information and communication and monitoring and revenue collection. The study establishes if the absence of the above components contributes to collusion to fraud, loss of revenue and embezzlement of collected revenue. The revenue cycle continues to be the primary area of fraud and abuse requiring strong comprehensive internal control. Internal controls in the revenue collections are now more important than ever. According to an internal control system creates an organization’s confidence in its ability to perform or undertake a particular task and prevent errors and losses through monitoring and enhancing organizational and financial reporting process as well as ensuring compliance with per finery laws and regulations. Most of the research on internal control has gaps as they do not take into account the components of internal control and risk analysis. This study established that control environment, risk assessment, communication, control activities and monitoring and evaluation significantly influence revenue collection in Nakuru Level five hospital in Kenya. The study concluded that there is a direct correlation between the level of internal controls and the amount of revenue collection. The level of internal controls can be measured by the effectiveness of those controls. The study recommended that Future study should link Nakuru Level Five hospital to level of compliance by customers to ascertain how the two relate in respect to each other. The study should also be done with comparison to other revenue bodies to recommend for other revenue collection measures.