Effects of internal control systems on the financial performance of credit unions in the Sekondi-Takoradi metropolis

Abstract

Internal control systems are primarily established to enhance the reliability of financial performance directly or indirectly by increasing accountability among information providers in an organisation. As the credit unions in Ghana has existed over the past twenty years but their activities have not witnessed significant growth as compared to banks and financial services within the country. It therefore calls for a systematic approach to analyse the internal control system within credit unions and how it has affected their financial performance over the years.This study sought to determine the effect of internal control system on the financial performance of Credit Unions in the Sekondi-Takoradi Metropolis. There were sixteen credit unions in the Metropolis. All sixteen were used for this study. Quantitative analysis was employed for this study. Some of the findings from the study revealed that Credit unions in Sekondi-Takoradi Metropolis have structured control environment which included the presence of policies that guided work process and roles and responsibilities that highlights each employee’s role and responsibility. It was therefore recommended that the management of credit unions should exert collective efforts in identifying the ideal mix of effective and efficient internal control systems that match their business needs and invest in them, and future researchers should consider replicating this study in the all financial institutions in Sekondi-Takoradi order to establish the role of internal audit in financial institutions.