ASSESSING THE EFFECTIVENESS OF INTERNAL CONTROLS ON LIVESTOCK

REVENUE: A CASE OF MIKOLONGWE GOVERNMENT FARM.

Problem statement

Livestock farming is a major source of income for an entity like Mikolongwe government
farm. This means revenue is generated from livestock-related activities, which includes selling
livestock, livestock products or any related services. However, there is a prevailing concern
about the effectiveness and sufficiency of the existing internal controls in safeguarding and
maximizing its revenue. In accounting, internal controls are processes that are put in place to
ensure the reliability of financial reporting, compliance with laws and regulations and the
effective and efficient operations of an entity. In this case, this study is looking at the controls
over recording and reporting of livestock numbers including births, deaths and sales in order to
track the livestock population, controls over costs related to feeding, health and maintenance of
livestock, controls on the revenue side such as the receivable management, the pricing strategies
and the sales recording and controls over compliance with relevant regulations. Effective internal
controls are essential for ensuring that revenue is accurately recorded, managed and protected,
internal controls ensures that resources efficiently utilized to avoid operational bottlenecks or
wastage, effective internal controls are also essential in maintaining the trust of stakeholders
including the public since Mikolongwe is a government farm it might serve as a model for other
farms in the country and lastly effective internal controls can contribute to economic growth
since livestock farming is a significant contributor to local economies.

Despite, the farms crucial role to the government, there is limited understanding and
documentation on the efficiency of these internal controls which could led to potential revenue
losses (in terms of theft, fraud or errors), mismanagement of resources leading to losses in
livestock production, decreased stakeholder trust, reputation damage and increased audit costs if
internal controls are perceived as weak. Therefore this study will help to investigate how well the
internal controls related to livestock revenue at the Mikolongwe government farm are working in
order to offer insights and suggestions that can help to improve these controls and the farm’s
financial management policies. In simpler term, this research is like a health checkup for the
farm’s livestock revenue management system.
 According to Kirsty (2016), internal control system creates an organization’s confidence
in its ability to perform or undertake a particular task and prevents errors and losses through
monitoring and enhancing organizational and financial reporting processes as well as ensuring
compliance with laws and regulations. According to Marie Maseko (2017), internal control
system provides reasonable assurance that assets are safeguarded, it promotes accountability,
increases efficiency and stop fraudulent behavior. So far there are no studies carried on the
effectiveness of internal controls on livestock revenue across the spectrum of sectors in Malawi.
It is in this regard therefore that this study will broadly attempt to address the gaps left in the
previous studies elsewhere and extend it more specifically to the Mikolongwe government farm.

Research Objectives

The objective of this study is to assess the effectiveness of internal controls on livestock
revenue for Mikolongwe government farm.

Specific objectives

1. To identify and describe key internal controls used in livestock management and
how they impact revenue.
2. To evaluate the effectiveness of internal controls
3. To understand how internal controls can optimize operational efficiency
4. To propose improvements or recommendations for the internal control system in
the livestock industry.

Research Questions

1. What are the key internal controls used in the livestock industry and how do they
impact revenue generation?
2. How effective are existing internal controls in preventing financial discrepancies?
3. In what ways do internal controls contribute to operational efficiency and
influence livestock revenue?
4. What improvements can be made to the internal control system?