INTERNAL CONTROL SYSTEM AND PERFORMANCE OF CO-OPERATIVE SOCIETIES IN LAGOS, NIGERIA

O Gaffar; O George; O Aladejebi

O Gaffar University of Lagos Business School (ULBS), University of Lagos, Lagos, Nigeria
O George University of Lagos Business School (ULBS), University of Lagos, Lagos, Nigeria
O Aladejebi University of Lagos Business School (ULBS), University of Lagos, Lagos, Nigeria

Keywords: Keywords: internal control system, control environment, monitoring, financial controls, performance

Abstract

Co-operative societies significantly contribute to community development, enhance access to credit, and offer essential support to rural and urban communities. However, despite these positive socio-economic impacts, some co-operative societies still struggle with multifaceted challenges that undermine their performance. Internal control system is fundamental for ensuring efficiency, minimising risks and ensuring effectiveness within organisations. Thus, it is important to examine the effect of internal control system on performance of co-operative societies to ensure their long-term sustainability. This study examines the relationship between internal control system and performance of co-operative societies in Lagos, Nigeria. The study selected three Lagos-based co-operatives in different sectors with a total population of 1,174 members out of which 298 were sampled with 99% response rate. Correlation and multiple regression analyses tools were employed to test the study hypotheses. The findings indicated that both monitoring and financial controls have significant effect on performance of co-operatives in Lagos state, control environment does not have a significant effect on performance and internal control system (control environment, monitoring and financial controls) has a joint significant effect on the performance. The study concluded that an effective internal control system is a tool for enhancing performance of co-operative societies in Lagos State. The study recommended the establishment and enforcement of ethical codes of conduct and policies, regular risk assessments and audits, implementation of a robust financial control framework and targeted training to enhance internal control systems of co-operatives. Future research should extend to other geopolitical zones in Nigeria to address the generalisability limitation of the study and should also examine the role of technology adoption in enhancing internal control of co-operatives.