Audit committee attributes and loan portfolio performance of SACCOS In Bushenyi District

Abstract

This study examined the influence of audit committee attributes on loan portfolio performance in SACCOs in Bushenyi District, Uganda. Specifically, the study focused on audit committee independence, financial expertise on the audit committee, and frequency of audit committee meetings. Guided by Agency Theory and Stakeholder Theory, the study adopted a cross-sectional quantitative research design. Data was collected from 284 respondents drawn from 36 registered SACCOs, including audit committee members, managers, accountants, internal auditors, and credit officers. Organizational-level aggregation was applied where individual responses were averaged to obtain SACCO-level scores. Data was analyzed using descriptive statistics, Pearson correlation, and multiple regression analysis. The findings revealed that audit committee independence had a strong positive and significant relationship with loan repayment rate and negative significant relationships with portfolio at risk and non-performing loan ratio. Financial expertise on the audit committee recorded the strongest positive relationship with loan repayment rate, and strong negative relationships with portfolio at risk and non-performing loan ratio. Similarly, frequency of audit committee meetings had a positive relationship with loan repayment rate, and negative relationships with portfolio at risk and non-performing loan ratio. Regression results further established that financial expertise was the strongest predictor of loan portfolio performance. The study concludes that effective audit committee attributes significantly influence loan portfolio quality, reduce credit risk exposure, and strengthen institutional performance within SACCOs. The study recommends strengthening audit committee independence, enforce the governance provisions and increase financial expertise among AC members, institutionalizing regular meetings, by improving internal control and loan monitoring systems within SACCOs.