Investigating The Role Of Internal Control Mechanisms On Revenue Collection In Tanzanian Local Government Authorities (LGAS)

Abstract

This study investigates how internal control mechanisms influence revenue collection in Tanzanian LGAs, focusing on Monitoring of Control (MOC), Financial Management Information System (FMIS), and Information-Communication (INFC), and guided by COSO Framework, agency theory, and Resource-Based View (RBV). A total of 358 responses from finance and accounting officers in the selected LGAs were analyzed using PLS-SEM approach. Findings reveal that FMIS and INFC have strong, positive, and statistically significant direct effects on revenue collection, emphasizing their role as critical enablers of financial performance. MOC, however, showed no direct influence on revenue collection but significantly enhanced both FMIS and INFC, which in turn mediated its impact. This suggests that MOC’s effectiveness is realized through its ability to strengthen operational systems rather than through direct revenue outcomes. Interestingly, the moderating role of INFC between MOC and revenue collection was found to be insignificant, implying weak interaction effects in this relationship. From a practical perspective, the results imply that LGAs need to invest in more capacity-building, digital systems, and continuous monitoring to improve revenue collection. Hence, this study recommends that LGAs need to strengthen the implementation strategies, integrate their systems further, and direct internal controls to policy implementation to foster sustainable revenue management.