Authors: Egondi Obinga Patrick, Dr. Mwenda Paul, Dr. Ongalo Thomas
Abstract: This study investigates the influence of internal control practices on the financial performance of Deposit-Taking Savings and Credit Cooperative Societies (DT-SACCOs) in Kenya, with firm size introduced as a moderating variable. Anchored on Agency Theory and Resource Dependence Theory, the study adopted a descriptive and explanatory research design involving 221 governance-level respondents drawn from SACCOs regulated by SASRA. Internal control practices were measured through control environment, audit systems, compliance structures, ICT-based monitoring, and fraud prevention mechanisms, while financial performance was assessed using profitability, liquidity, and asset quality indicators. Findings reveal that internal control practices significantly and positively influence financial performance. However, firm size significantly moderates this relationship, with larger SACCOs deriving stronger performance gains due to better institutional capacity, while smaller SACCOs face structural and resource constraints. The study concludes that internal control effectiveness is context-dependent and recommends differentiated governance frameworks across SACCO sizes.
