The Mediating Role of Financial Accountability in the Relationship between Internal Control Environment and Financial Performance of Savings and Credit Cooperatives in Mid-Western Uganda

Abstract

Purpose: This paper aimed at establish the mediating effect of financial accountability in the relationship between internal control environment and financial performance of savings and credit cooperatives (SACCOs). The purpose of this paper is to establish the mediating role of financial accountability in the association between internal control environment and financial performance. Methodology: A cross-sectional research design and positivist paradigm were used to collect data using a close-ended questionnaire. Also, a standard regression analysis, Medgraph program, and Baron and Kenny approach were adopted to test for the mediation effects. Based on the target population of 122 SACCOs, a sample of 93 SACCOs was selected using probability sampling technique. Findings: It is clearly revealed that the true drivers of financial performance in the SACCO sector are financial accountability and internal control environment. Nevertheless, financial accountability exhibits a partial form of mediation in the association between internal control environment and financial performance. Unique Contribution to Practice and Policy: In the event that financial accountability is established as a conduit in the relationship between internal control environment and financial performance, managers in the SACCO sector should work on reinforcing the agents of financial accountability (i.e., value for money and level of transparency) in an effort to enhance sustainable financial performance.