Moderating Effect of Internal Control System on the Relationship Between Government Revenue and Expenditure

Abstract

The study aims at examining the moderating effect of internal control system on the relationship between government revenue (statutory allocation and internally generated revenue) and expenditure. All the sixteen (16) local governments in Taraba state of Nigeria were considered the population and were as well maintained as the sample size of the study. Secondary data was gathered from the official websites of Federal Ministry of Finance and office of the Accountant General of the Federation, and others from annual accounts and reports of the population of this study. The study utilizes ex-post facto research design to examine the relationship between the study variables. Descriptive statistics, correlation, and hierarchical multiple regression analyses were carried out to answer the research questions raised in this study. The study finds that statutory allocation and internally generated revenue are positively related to government expenditure, which may cause more government spending that may leads to fiscal imbalances. When further analysis was conducted, the result reveals that internal control system moderates both statutory allocation and internally generated revenue towards government expenditure, but internal control system is not effectively applied in the local governments. Therefore, this study suggests that government should strategize ways to improve revenue generation on one hand, and control expenditure excesses on the other hand so as meet its objectives.