Examining the Association Between Internal Control Systems and Financial Performance of SACCOs in South Western Uganda

Ivan Twinematsiko

doi:10.51168/sjhrafrica.v6i6.1805

Authors

Ivan Twinematsiko Mbarara University of Science and Technology

DOI:

https://doi.org/10.51168/sjhrafrica.v6i6.1805

Keywords:

Internal Control Systems, Financial Performance, SACCOs, South Western Uganda, UMRA

Abstract

This study investigated the association between internal control systems and the financial performance of SACCOs in South Western Uganda, addressing concerns about low financial performance, as seen in profitability, liquidity, and leverage ratios reported by the Association of Microfinance Institutions of Uganda (AMFIU) Annual reports, 2022/2023. Using a cross-sectional design with quantitative methods, the study focused on 36 SACCOs licensed by the Uganda Microfinance Regulatory Authority (UMRA, 2023), selecting a sample of 252 respondents (7 per SACCO, including top management and board members). Data was collected through questionnaires and document review, and analyzed with SPSS v26.00. The findings revealed a significant positive relationship (r=0.615**, p<0.01) between internal control systems and financial performance, indicating that enhanced internal controls lead to better financial results. Based on these results, the study recommends that SACCOs focus on improving their internal control systems by strengthening risk management, enhancing monitoring mechanisms, and fostering a culture of accountability through regular training and clear policies to ensure long-term financial stability.

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