Revenue Leakages, Prevention and Internal Controls in MMDAs

valuateation Leakages, Prevention and Internal Controls in MMDAs covering OF THEORIES TO REAL LIFE SITUATION3.0 IntroductionThis chapter is organize into four parts, with the source part dealing with explanation of the nature of trouble in LEKMA, the reciprocal ohm part is on the solutions proposed by the look forers to the problem, the third part talks just aboutwhat the contributions of the students to LEKMA tax income enhancement militarization and hinderion with the last part drawing proof on the chapter.3.1 Explanation of the Nature of Problem in Organization there had been an increasing demand for financial decentalisation in two essential and developing countries due to the inherent benefits in foothold of infrastructural development and none service delivery. The pertinent question here is, has this been decently implemented at LEKMA? What ar the challenges and the way forward with regards to monetary de substitutionization in LEKMA?In view of the st valuegic location of the gathering in the country, thus, its exact location between Tema an industrial hub of the country, and Accra, the capital city of gold coast, LEKMA is nearly placed to ca-ca back abundant intragroup Revenue to meet its recurrent expenditure and topical anesthetic infrastructural development take ups.However, the circumstance in the municipal gather (LEKMA) regarding Internally Gene investd pecuniary resource (IGF) performance showed huge gaps between intercommunicate tax tax income enhancements and reported actuals. Initial assureed figures had to be revised d avowwards done mid- year budget recap process in enjoin to meet Functional Organizational discernment Tool (FOAT) benchmarks as a result of massive gross leakages from the corpse. This mirror image does non depict the full potentials of the aggregation and the analysis below evanesce evidence to back the statements do above employ 2014 and 2015 complex budgets of LEKMA. Th e 2014 composite budget of LEKMA honked GH 5,710, 975.00as initial tax target to be imperturbable internally (IGF). However, only 54.13% of the projected figure was unfeignedized representing GH 3,091, 081.06by the end of the fiscal year. The trend in 2015 fiscal year was non anything different from the forward years achievement. Out of the budgeted receipts of GH 6,889, 512.00to be store internally, only 62.51% was realized, representing GH 4,306, 966.40in nominal phrase figures. The worse performance which threw the whole Municipal throng into disarray was enter in 2013 fiscal year. The Municipal Assembly had in its Composite budget GH 4,907, 779.40 as the amount to be mobilized internally. Only 44.87% of the projected amount was achieved, representing GH 2,202, 178.08in lordly terms.The Internal auditors report (2013) of the Municipal Assembly revealed that, tax income collectors were indulging in under carboning. This is just one of the numerous taxation militariz ation malpractices confronting LEKMA. sixteen tax income officers of the Municipal Assembly were interdicted in connection with the above call financial fraud. The report of the auditors as well as showed a lot of receipts leakages in the system due to weak internal controls and bar mechanisms. The gravity of the situation in like manner stems from the fact that, the building blocks who are responsible for these internal controls are also handicap in terms of financial and non-financial resources. This prevented them from executing their constitutionally mandated duties and therefrom the massive leakages of IGF revenue. This worrying situation calls for an empirical researched that prescribes concrete solutions to the problems.To resolve this problem, a subscribe to contrive which gives the broad objective framework of the researchers enquiry (Brown, 2006) provided a basis for collecting and analyzing the info to inform policy direction. In order to put the nature of the problem in the right perspective and breach analyze for solutions, a descriptive ascertain was active. The main purpose of the study was to fall upon the already existing st gaitgies, challenges and the causes. In view of this, descriptive onslaught is best suited for the study. According to Miller and Brewer (2003), qualitative proficiency aids the investigator to explore merely potentials and challenges to achieve the desire objectives of the study. The researchers treasured to explore other(a) strategies that could be utilize to rectify revenue mobilisation and reduce leakages in the system. According to Neuman (2007), the subjects or concerns in the research innovation includes the purpose of the study, the type of investigation, the type of the sample which forget be used, the methods by which the needed data lead be collected, as well as the process that bequeath be followed for the analysis. The study used the exploratory and descriptive approach to evaluate revenue militarisation challenges in LEKMA. The research technique provided an opportunity for the researcher to interact with respondents in the field of study, which enabled the researcher to turn in valid data and nurture using multiple sources of evidence. According to station (1995), interviews techniques enables the researcher to achieve reality by drawing appressed and acquiring involve in the phenomenon under study in order to gain the environment and its participants. Robinson (2002, p.178) defines case study as a strategy for doing research which involves an empirical investigation of a particular contemporary phenomenon within its real life context using multiple sources of evidence. The topic under study is a case study because it is impossible to study all MMDAs in Ghana concerning their revenue mobilisation. The research also aim at putting the theory into empirical test and unearth the challenges confronting LEKMA in terms of their revenue and expenditure.3. 1.1 Data SourcesData used for analyses by the researchers came from both special and vicarious sources. The interview schedule was used to collect primary data. In using this instrument, the researcher considered all laid down ethical procedure in research (Stake, 1995). Primary data included interviews conducted by the researchers. Core counselling staff of the assembly as well revenue collectors and rate acquiters were interviewed to render for more in-depth rating. The researchers conducted 34 interviews comprising paint personnel in revenue militarisation across all the responsible departments of the Assembly, revenue collectors and rate payers. These are stakeholders fulfil vital role in the effectual mobilization of revenue for the Assembly. In addition to this, key officers interviewed have the capacity to formulate and implement policies concerning IGF mobilization of the Assembly. The documentary analysis was done because documentary information is relevant in a ca se study research (Yin 2003). Seeking answers to the research questions required an examination of the organizations annual budgets and financial statements.3.1.2 Target population and sampling technique The target population for the study was totality perplexity staff of the assembly, revenue collectors and rate payers. Purposive and convenient sampling technique was employed to give the respondents who could provide relevant required information and who were available to participate in the study. A small-scale sample size was chosen because of the constraints eon and money. Furthermore, the small sample was used as the study did non set step forward to test hypotheses but to gather expert opinions necessary in respondent the research questions.Interviews were conducted with these persons. Excerpts of interview have been replicated as evidence in this report. A level of measured but inborn interpretation, in line with the subjective view and interpretive position taken by the researcher, was applied in analyzing respondents responses.3.2 Solution Provided for the ProblemUpon our review and analysis of both primary and alternative data gathered, the following are the proposed solutions to the challenges.LEKMA should adopt and implement software that en boldness generate and assign a odd Tax Identification matter to every tax payer in the data origination. This becomes a permanent encipher that identifies the business and the rate payer in case of none payment.rate should be collected electronically through mobile money and other banking system. LEKMA should partner with the Banks which impart provide an opportunity for tax payers to use their Unique Tax Code to pay at the bank and obtain receipt. This will prevent fraud through physiological cash handling as reported in the challenges.LEKMA should employ the use of Geographical Information musical arrangement (GIS) to identify old and new business and properties within the municipality. Throu gh this computerized system, a comprehensive database will be built which will then emend the revenue collection.LEKMA should adopt one community one stakeholder opposition project in addition to the town hall meetings for every fiscal year. This will promote awareness creation, transparency and obligation. Through this, rate payers and other stakeholders will get to k right off what their taxes are used for. Challenges such as privation of education, sensitisation, transparency and accountability will be minimised.Refresher training for revenue collectors and contractors should be done on a regular basis in areas such as communications skills, customer relation ethics, revenue mobilization strategies, topical anesthetic governance Act, Assembly by-laws and other control mechanisms to ensure ability.LEKMA should power for the printing of General Counterfoil Receipt (GCR) with adequate security features so as to avoid duplication of the receipt by revenue collectors and contra ctors.Revenue targets should be set for collectors and contractors which should be closely monitored and supervised to ensure that the boilers suit target of the Assembly is achieved.LEKMA should intensify the prosecution of rate defaulters in harmony with the bye laws of the Assembly to ensure that rate payers meet their civic obligations as well as serve as a deterrent for afterlife defaulters.Regular field monitoring and supervision should be carried out by the superintendents to ensure that revenue collectors and contractors are deterred from engaging in fraudulent activities. every last(predicate) revenue collectors should be bond and stiffer vindicatement meted out to those found in financial fraud.3.3 Contribution of Students to OrganizationThe contributions of the students to Ledzorkuku Krowor Municipal Assembly in terms revenue mobilization, leakages and prevention techniques cannot be over emphasized. Students professional and personal skills, experiences and capacita nce are being leverage on to augment the expertise of the Assembly staff handling revenue mobilization and expenditure portfolios. The students also contributed immensely to the organizations revenue and expenditure policy decisions by collecting detailed information on revenue mobilization leakages and prevention to enable top management design and implement strategies with high level of efficiency. This has become very critical given that LEKMA hardly meet their IGF revenue projections. Students also contributed to the deepening of fiscal decentralization in Ghana, Africa and the world at large through the findings and the good word from this study. The prime objective of decentralization is to take governance closer to the people, improve on quality service and infrastructural provision and to promote transparency and accountability in the expenditure of public funds. Students prescribed solutions in this regard which will increase revenue of the Assembly and subsequently leads to quality service delivery.3.4 destructionThis chapter has discussed the application of theories to real life. The researchers discussed in detail the research design, approach, strategy, time horizon, methods and procedures employed in data analysis. The descriptive research design guided the researchers evaluation of revenue mobilization leakages, prevention and internal controls in Ledzorkuku Krowor Municipal Assembly. In order to collect more detailed and evidence based data, a multi-method data collection technique involving both qualitative and quantitative data collection techniques were employed. Students employed convenient and purposive sampling approaches to select respondents who could provide relevant required information and who were more available to participate in the study.CHAPTER FOURLESSONS LEARNT AND CHALLENGES4.0 IntroductionThis chapter discusses the lessons learnt from undertaking this project and challenges the researchers confronted and how they were reso lved. Analyses and interpretations of data collected had also been covered in this chapter. Excerpts from the interviews are integrated as confirmation of respondents perspectives which is trustworthy in social research theory (Yin, 2009). To ensure ethical prerequisite in this kind of research namely assuring anonymity of identity and confidentiality of respondents, generic terms like officer, rate payer, among others are used in place of personal names (Yin, 2009).4.1 Lessons LearntIn both empirical and hypothetical literature, designing and implementing policies, programmes and strategies aimed at ensuring potent and efficient revenue mobilization are not without limitations. In our interview with the officials of the Assembly, it came out manifestly that the Municipal Assembly has some revenue mobilization strategies in place. This was what the Municipal Finance officeholder (MFO) said with regards to revenue mobilization strategies of the assembly.We have revenue mobiliz ation strategies in place and they include Building the capacity of revenue collectors, frequent sensitization and education of rate payers, involvement of rate payers in the budgeting process, holding stakeholders meetings with rate payers to determine their ability to pay, involving revenue collectors in annual revenue projections, enforcement of revenue, base a data base of all economic activities in the municipality, mobilization laws, using Assembly members in the hard to collect areas, etc.Upon further investigation and evaluation of the revenue mobilization challenges, we realized there were slaying issues. Revenue collectors were not involved in coming out with annual IGF targets, they were not frequently trained, no up to date data base on economic activities within the municipality and enforcement of revenue by-laws were poorly handled. Another key management staff has this to take on why they are not able to enforce the by-laws to the later as an assembly.The limitation we have in this area has to do with political interference. Especially when we are getting closer to an electioneering period, for fear of losing the election they do not allow to punish those who flout the laws to deter others. We are constrained but all cannot be attributed to politicians, we are also to be blamed for our inefficiencies.The researchers learned further that, logistics constraint, curiously on the part of revenue collectors, contributed to the poor implementation of the strategies as well as the enforcement of the by-laws.The next objective of the study was to evaluate the existing internal controls in the Municipal Assembly. Selected officers were interviewed which included the internal auditor of the organization. In this section, the researchers precious to know the exact internal controls the Assembly has and how they are implemented and the challenges faced. This is what the Municipal Internal Auditor had to say on internal control issues during our interview .This is a legal and a well-established institution and therefore have internal controls in place ranging from revenue mobilization to expenditure. The LI 1961 outlined the functions of each unit and department at the local level. However, ensuring effective internal controls is a divided responsibility. Let me give you internal controls we have as an Assembly nonchalant checks of their general counterfoil receipt and verifying the daily banking of cash into the Assemblys account, case audit and periodic inspection of value books, Regular monitoring of revenue activities, revenue collectors are to submit their returns daily for verification, hebdomadary auditing of revenue collectors cash books, we do periodic field audits, monitoring of reports by rate payers, Weekly performance of field audit, tracking of the value books to ensure that the value books used are from the Assemblys stock and duly registered in the stock register of the Assembly, that the revenue collected salari ed to the Assemblys account within the 24hrs.With regards to the challenges they faced by the Assembly in their implementation of revenue strategies, the following were the study concerns raised revenue collectors attitudes towards revenue collection, rate payers connivance with collectors to under pay the required rate bill and logistic constraints. These three concerns surfaced in our interviews with the key management staffs as being the major causes of revenue leakages from the system. However, a lot of progress had been do in these areas to remove barriers and bad nuts from the system to improve IGF performance. This was evident via the interviews and our personal verification from the 2016 fiscal year revenue performance. Key revenue items such as business operating permit (BOP) and property rate showed an upward trend.Another key objective of the study was to identify the conduct of revenue leakages from the system and what causes it. In view of this we had interviews with some rate payers and revenue collectors. It was very interesting during our interview with one of the rate payers and commenting on the channels, of leakages this is what she has to sayPeople who come for the taxes sometimes come at the wrong time when we does not have any money with huge bills, so they take bribe from us and go. Sometimes they come back to take over again and others do not come again. We also realized they have their own receipts different from assemblys receipt which they issue sometimes when they take the bribe. Our taxes collected goes into individual pocket, so at the end the Assembly do not receive the supposed revenue and that is why we sometimes do not pay. I will not give my money to someone to spend.We did not limit our interviews to only individual rate payers, institutions were also added since they pay both BOP and property rates and more especially we needed wide-ranging opinions from different perspectives. During our interview with one of the execu tives of a bank, this was what he had to say concerning the causes of revenue leakages.They do not give us enough education on what the taxes are used for and moreover, they failed to use an electronic system to mobilize the revenue. Taxes paid in cash to revenue collectors or task force causes rotting and mistrust. For the purpose of obtaining a comprehensive view of the situation on the ground, the researchers had interviews with some key revenue collectors of the Assembly. Two major concerns runs throughout our interviews with them namely wretched motivation and lack of frequent trainings on the job.In summary the lessons leant through this project work includeEducating rate payers that it is their civic responsibility to pay taxes and also on the uses of their taxes are vital in local governance revenue mobilization processes.Training revenue collectors on the new revenue mobilization tools, techniques and the revenue mobilization strategies of the Assembly is essential.Stak eholder consultative meetings which involve rate payers in fee-fixing and rate imposition of the Assembly is very important in facilitating effective and efficient revenue mobilization within the local government system.Another important lesson is the issue of transparency and accountability. Local authorities or vocation bearers within the sub-national governments, ability to account to the citizens or local constituents builds trust between rate payers and the Assemblies. Proper accountability promotes effective revenue mobilization and increase the willingness to pay.Electronic technique of revenue mobilization cannot be disregarded. automation of the tax collection system discourages corruption, temptation to steal and increase efficiency in the revenue mobilization drive. The responsibility to secure electronic equipment to transmigrate local authorities to this stage is a collective effort.4.2 Challenges encountered Executing this project work was not all that smooth. We we re confronted with a lot of challenges ranging from research design to its execution.The first challenge we faced had to do with the research instrument and the interviews thereafter. As mentioned earlier in this work, we wanted to explore a lot of areas within the local government revenue mobilization scheme so as to prescribe solutions which will greater impact on the revenue mobilization of the Assembly. There are laid down ethical considerations that mustiness be adhered to in social science research namely anonymity and confidentiality. Our major challenge was how to get interpretations for our respondents who were not literate in order to observe anonymity and confidentiality. In view of this we have to make several trips to them which was a herculean task. Added to this, designing an instrument to cover a lot of areas on the topic was not that easy considering the complicated nature of fiscal decentralization and the various stakeholders involved.Furthermore, our analysis o f the situation employed both secondary and primary data. Retrieving or getting access to annual composite budgets and financial statements of the foregoing years for the necessary reviews was a big challenge. Several calls and personal visits were made before those documents were made available. Reviewing and analyzing the data therein was also challenging and exciting. wizard key issue was the incorrect postings (2015 fiscal year) and some revenue items which had no unique codes. This inconsistency post a big challenge to us in the analysis and the Key Officers had to come in to rectify the situation. We were told that, this problem occurred on the field as revenue collectors were not able to describe the business well.CHAPTER FIVECONCLUSION AND RECOMMENDATIONS5.0 Introduction This last chapter of the study gives the end point and recommendations. In this chapter, the researchers give the conclusions and recommendations of the study.5.1ConclusionFindings from the project work s upports both theory-based and empirical literature which says that, sensitization and education of rate payers on their tax obligation and the uses of their monies have a positive impact on revenue mobilization. Transparency and accountability as well as the provision of efficient service and developmental projects to the local residents increases their willingness to pay and decreases if the reverse is applied. This suggests that citizens are now more concern about accountability and cannot be taken for granted.fiscal decentralization is very crucial in the decentralization process and demands central government commitment to ensure its success. Linking fiscal federalism theory to the findings from this study, revealed that some core components or elements in the theory has not been applied. Components such as effective revenue mobilization scheme, efficient service delivery, and efficient internal controls to prevent revenue leakages have not been fully executed. This was clearly shown when local constituents were demanding physical projects to showcase for the taxes they pay. Notwithstanding that, the findings also support theory from the public commodities with a different geographical pattern of function. The results showed that residents were asking for projects and services that suit their consumption pattern.5.2 RecommendationsThe main objective of this study was to assess revenue leakages, internal controls and prevention in local authorities. The study did found that there exist revenue mobilization leakages and thus has few dynamic policy recommendations for LEKMA, policymakers, and stakeholders in local governance system.Transparency and accountability from local authorities or duty bearers must be enforced. LEKMA must therefore design and implement policies which gives enough punishment to corrupt local government official and those who fail to properly account to their local constituents.Furthermore, involving ratepayers in fee-fixing and rate imposition through stakeholders meeting is very crucial in revenue mobilization within the local government system. This calls for a policy direction to make their involvement mandatory. Assembly members at LEKMA should pass a resolution to this effect.Capacity building should not be limited to top management of Assembly but must be extended to lower ranks as well. Building the capacity of revenue collectors is vital in local government revenue mobilization and the promotional material fiscal decentralization. focal point of LEKMA should direct policy to make their training a priority. They are implementers of revenue mobilization strategies formulated by LEKMA and therefore need to be equipped with the latest techniques in revenue mobilization.Automation of revenue collection process is another important way of achieving efficient revenue mobilization and prevention of fraud. LEKMA should adopt and implement policies that mandates it to migrate onto automated system of rate payin gREFERENCES Aryee, J.R.A. (2003). Towards in force(p) and Accountable Local Government in Ghana. Ghana Centre for Democratic Development (CDD), Accra.Arowolo, D. (2011). Fiscal federalism in Nigeria supposition and Dimensions. Afro Asian Journal of complaisant Science, 2 (2.2), 1-21.Badu, R., A. (2007) mobilization of Internally Generated cash in District Assemblies in Ghana A Case translate of the Shama Ahanta East District Assembly. Unpublished Document Submitted to the Department of Planning, KNUST, Kumasi.Bird, R.M. (2009). Fiscal Federalism. 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