Internal control systems and financial performance of deposit-taking SACCOs in Western Kenya

Deposit-taking Savings and Credit Cooperative Organisations (SACCOs) hold member deposits, yet sector returns and asset quality have been unstable. This study examined the relationship between internal control systems and the financial performance of deposit-taking SACCOs in Western Kenya. A cross-sectional, quantitative-dominant mixed-methods design was used. A proportionate stratified random sample of 108 officers was drawn from 149 in the 18 SASRA-licensed deposit-taking SACCOs in the region, and 78 usable questionnaires were returned (72.2%) from all 18 SACCOs. Data were analysed using descriptive statistics, Pearson correlation and simple linear regression. Internal control was rated favourably (M = 3.90) and correlated strongly with perceived financial performance (r = .701, p < .001), explaining 49.1% of its variance (B = 0.661, 95% CI [0.508, 0.814]). The null hypothesis was rejected. The single-informant, cross-sectional data show association, not causation. Internal audit frequency and follow-up of audit findings were the weakest-rated controls; SACCO boards should prioritise regular internal audits and tracked corrective action.