Internal Control Strategies on Financial Performance of Rushere Savings and Credit Cooperative Organization in Kiruhura District, Uganda

 Tayebwa John¹ and Tom Ongesa Nyamboga²

^1,2 School of Business and Management, Kampala International University, Uganda

 Email: tayebwaj@kiu.ac.ug; tomongesa@kiu.ac.ug

Abstract

Savings and Credit Cooperative Societies (SACCOs) play a crucial role in attaining the development goals of many nations. SACCOs contribute to financial inclusion by providing access to financial services for individuals who may not have access to traditional banking systems. This aligns with the broader goal of increasing financial inclusion, as outlined in Uganda Vision 2040. By providing financial services, including savings and credit facilities, SACCOs empower individuals and communities to lift themselves out of poverty. This aligns with the poverty reduction objectives of Uganda Vision 2040. SACCOs are often community-based and member-owned institutions. This model promotes a sense of ownership and empowerment within the community, aligning with the vision of building a society where citizens actively participate in their development. Consequently, effective internal controls are crucial for the financial performance of loans within the SACCOs. Challenges in internal controls impact various aspects of loan management, potentially leading to financial losses, increased risk exposure, and reputational damage. The purpose of this study was to assess the effect of internal strategy on the financial performance of Rushere SACCO in Kiruhura District in Western Uganda. The study was specifically conducted to establish the extent to which internal control strategies affect the financial performance of Rushere SACCO. The research questions focused on physical controls, authorization and approvals, documentation and record keeping, internal auditing, technology control, and training and awareness. A quantitative research approach was used. The study was underpinned by the Agency Theory. This study utilized a descriptive research design in which respondents’ opinions were statistically described in quantifiable terms. In this study, a target population of 160 was considered from which a sample size of 127 respondents was selected using the Yamane formula. Individual respondents were selected randomly using simple random sampling techniques. Primary data was collected using self-administered questionnaires with open questions framed on a Likert scale. The collected data was analyzed by the use of inferential statistics with the aid of Statistical Package for Social Scientists (SPSS) version 24.0. This study established a significant positive relationship between internal control strategy and financial performance (p=0.000<0.05). The study concluded that there is a strong positive relationship between the internal control strategy and the financial performance of Rushere SACCO.

Keywords: Internal Control, Performance, Strategy, SACCOs

CITE AS: Tayebwa John and Tom Ongesa Nyamboga (2024). Internal Control Strategies on Financial Performance of Rushere Savings and Credit Cooperative Organization in Kiruhura District, Uganda. IDOSR JOURNAL OF BANKING, ECONOMICS AND SOCIAL SCIENCES 9(1): 45-54. https://doi.org/10.59298/JBESS/2024/91.4554000