MJAMR

The Role of Internal Control Systems on Financial Performance of Savings & Credit Cooperative Societies (Sacco’s) In Wakiso District

Kagoya Viola, Irumba Alex


Abstract

Savings and Credit Cooperative Organizations (SACCOs) in Wakiso District, Uganda home to over 50 registered SACCOs serving more than 200,000 members played a vital role in financial inclusion, SME growth, and agriculture. However, they faced persistent financial challenges, including declining Return on Assets (ROA), NonPerforming Loan (NPL) ratios exceeding 12% (above UMRA's 5% benchmark), and internal control weaknesses like poor segregation of duties and fraud risks (Auditor General Reports, 2022–2024; UMRA, 2025). This study examined the perceived influence of COSO (2013) internal control components control environment, risk assessment, control activities, information & communication, and monitoring on SACCO financial performance (ROA, ROE, NPL ratios, liquidity, solvency), grounded in Agency Theory (Jensen & Meckling, 1976) and Contingency Theory (Donaldson, 2001). Employing a mixed-methods explanatory sequential design, it analyzed survey data from 105 experienced respondents (mean tenure: 7.2 years) across 20 purposively selected SACCOs, secondary financial data (2020–2025), and semi-structured interviews with 15–20 key informants.Findings revealed moderately to highly positive perceptions of controls, with strengths in control activities (e.g., 83.8% endorsement of approvals) and monitoring (80.0% for corrections), driving gains like 83.9% perceived NPL reductions and 95.2% liquidity improvements. Communication emerged as a key weakness (59.0% dissatisfaction). Conclusions affirmed controls' role in resilience, with recommendations for ethics training, digital tools, and regulatory mandates. The study suggested future research via regressions and regional comparisons.

Keywords

Internal Controls COSO Framework Financial Performance SACCOs Wakiso District Uganda Agency Theory Contingency Theory
Metropolitan Journal of Academic Multidisciplinary Research

Cite This Article

Kagoya Viola & Irumba Alex (2026). The Role of Internal Control Systems on Financial Performance of Savings & Credit Cooperative Societies (Sacco’s) In Wakiso District. Metropolitan Journal of Academic Multidisciplinary Research, 5(5). https://journals.miu.ac.ug/pages/article.php?article_id=453

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