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INTERNAL CONTROLS AND FINANCIAL PERFORMANCE OF SACCOS IN BUSHENYI DISTRICT, UGANDA (issue 8)

This study was an examination of the relationship between internal controls and financial performance of SACCOs
in Bushenyi district. It was guided by specific objectives of assessing the relationship between control environment
and financial performance, risk assessment and financial performance, control activities and financial performance,
monitoring activities and financial performance, information and communication and financial performance as well
as examining the combined relationship between internal controls and financial performance of SACCOs within
Bushenyi district. The study applied a cross-sectional research design where quantitative data was tabulated using
SPSS version 25 for better interpretation and analysis of the relationship between the study variables. With a sample
size of 126 respondents, the study successfully obtained data from 110 respondents giving a response rate of 87.3%.
The study also used factor analysis in addition to inferential statistics of correlation and regression analysis. In
addition, the questionnaire instrument was tested for validity and reliability ensuring that the study variables
returned the minimum acceptable benchmark of 0.7 as suggested by Cronbach (1951). The findings revealed a
significant and positive relationship between; control environment and financial performance, risk assessment and
financial performance, control activities and financial performance, monitoring activities and financial performance
as well as information and communication and financial performance among SACCOs. Moreover, it was also
revealed that of the five variables that influence financial performance outcomes, the control activities provide a
higher explanatory power for the variances in financial performance than the other four internal control dimensions
of risk assessment, control environment, monitoring activities plus information and communication. In view of these
findings, managers within SACCOs should ensure that; they strengthen their control activities by instituting
preventive, detective and corrective controls within their operations such as proper loan appraisal and
documentation, continuous risk assessment, timely cash audits, segregation of duties among staff, automating
reporting process and periodical reconciliations. Similarly, there is need to establish information and communication
platforms to promote easier access to information about the performance targets and procedures for undertaking
particular activities within SACCOs. Furthermore, managers need to identify risk assessment mechanisms that
produce operational and financial reports to make it possible to run and control the business. This can be achieved
through continuous monitoring of the SACCOs’ activities to minimise their exposure to risks. Moreover, it was
recommended that managers should provide training to their employees to improve their level of competence to be
in position to implement certain controls.

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