The Effect of Financial Statement Audit on Tax Revenue Collection Growth in Rwanda. A Case Study of Rwanda Revenue Authority, Head Quarter (2016-2020)

Abstract

The aim of this study was to assess the effect of financial statement audit on revenue collection growth in Rwanda. Under five specific objectives; *to analyse whether desk audit influences tax revenue collection growth in RRA; *to investigate whether field audit influences tax revenue collection growth in RRA; *to evaluate whether compliance tests audit affect tax revenue collection growth in RRA; *to establish the moderating effect of government policies on financial statement audit and tax revenue collection growth; and *to identify the effect of tax revenue collected on economic growth in RRA. This study adopted a descriptive research design, quantitative approaches were used. The population under this research was 100 RRA's tax audit officers. In this study a sample size of 50 tax audit officers in RRA was determined using Yamane's formula. Both primary and secondary sources of data were obtained for the study. Primary data was collected using questionnaire and secondary data was collected using documentation technique from RRA reports (2016)(2017)(2018)(2019)(2020). After the data collected were organized, edited and coded, quantitative data were entered into SPSS 20 and MS-Excel. The significance of the findings was tested using the T-test. The p-value was used to determine whether the null hypothesis should be accepted or rejected. If the p-value >0.05 then alternative hypothesis is accepted while null hypothesis is rejected. The results of the findings indicated that the correlation coefficient showed that there was a strong positive relationship between desk audit, field audit, and compliance test audit and government policies respectively and tax revenue collected performance. The results showed that the Pearson correlation coefficient indicated that there is strong positive relationship between tax revenue collected before audit and the tax revenue collection after audit (r=0.984, p=0.014267878). The study concluded that all the tax audits are important because they add something to tax revenue collected. The study recommended that the companies or individual's tax payers should comply with tax law pertaining the payment of the corporate or personal income tax in particular area.