The impact of internal controls on the financial sustainability of savings and credit cooperative societies (saccos) a case study of tumaini saccos in arusha, Tanzania
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Date
2026-04-23
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Uganda Christian University
Abstract
This study examined how different components of internal control systems influence the financial sustainability of Savings and Credit Cooperative Organizations (SACCOs), focusing on Tumaini SACCO in Arusha, Tanzania. The study specifically aimed to assess the effect of the control environment on financial sustainability, evaluate how control activities and monitoring practices contribute to financial performance, and establish the relationship between internal controls and financial sustainability within the SACCO. A cross-sectional research design was adopted to analyze the relationship between the study variables. The study targeted 47 employees from different departments of Tumaini SACCO, from which a sample of 42 respondents was selected using appropriate sampling techniques. Data was collected using structured questionnaires and later analyzed with the help of SPSS software. Descriptive statistics, including means and standard deviations, were used to summarize the data, while correlation and regression analysis were applied to determine the strength and nature of the relationship between internal controls and financial sustainability. The findings revealed that Tumaini SACCO has relatively strong internal control systems in place, supported by a well-established control environment, defined control activities, and ongoing monitoring practices. Although risk assessment measures were present, some gaps were noted, particularly in the regular review and updating of risk management strategies. The SACCO also showed strong performance in terms of financial sustainability, with key indicators such as profitability, liquidity, and loan recovery rated highly. In addition, the results indicated a very strong positive relationship between internal control systems and financial sustainability, with a correlation coefficient of 0.992. The regression analysis further showed that internal controls account for 98.5% of the variations in financial sustainability. Based on these findings, the study concluded that effective internal control systems play a significant role in enhancing the financial sustainability of SACCOs.
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Undergraduate