Assessing Internal Control Effectiveness in Credit Unions: A Coso-Based Study

Abstract

Purpose: The purpose of this study was to evaluate the internal control process in organizations, specifically focusing on savings and credit unions in the Tambo canton. The aim was to assess the fulfillment of actions, activities, plans, policies, standards, records, procedures, and methods within these organizations. The study sought to provide insights into the reliability of internal controls and their impact on the achievement of objectives in public, private, and mixed companies.

Theoretical framework: The study is grounded in the COSO (Committee of Sponsoring Organizations of the Treadway Commission) model, which provides a comprehensive framework for internal control systems. The research draws upon concepts and principles from this model to assess the reliability of internal control components within savings and credit unions in the Tambo canton.

Design/Methodology/Approach: This investigation employed two main approaches: quantitative and bibliographic. The quantitative approach involved using an internal control questionnaire specifically designed for savings and credit unions in the Tambo canton. The questionnaire was structured based on the COSO model components. The bibliographic approach involved an extensive review of existing literature and relevant sources to establish a theoretical foundation for the study. These methods were used to assess the reliability of internal controls in the organizations under investigation.

Findings: The study found that the savings and credit unions in the Tambo canton demonstrated high levels of reliability in the components of the COSO I methodology. The internal control processes within these organizations were effective, indicating commitment, responsibility, integrity, common objectives, communication, and evaluation among the workers. The findings suggest that the internal control systems in place contribute significantly to the organizations' overall reliability and low levels of risk.

Research, Practical & Social implications: From a research perspective, this study contributes valuable insights into the effectiveness of internal control processes within savings and credit unions, particularly when assessed through the lens of the COSO model. Practically, the findings have implications for organizations seeking to enhance their internal control systems, emphasizing the importance of commitment, communication, and evaluation in ensuring reliability. Socially, the study underscores the significance of trustworthy and reliable internal control mechanisms, which can foster integrity and responsibility within organizations and, by extension, contribute to the community's overall trust in these institutions.

Originality/Value: The originality of this study lies in its specific focus on savings and credit unions in the Tambo canton, providing a detailed evaluation of their internal control processes using the COSO model. The research adds value by offering practical insights for organizations aiming to improve their internal control systems, making it a valuable resource for practitioners and policymakers. Additionally, the study contributes to the broader academic discourse on internal control processes, reaffirming the importance of commitment and communication within organizations for achieving reliability and low risk levels.