Impact of poorly managed organizational trust on the internal control of a segment 1 savings and credit cooperative

Abstract

This study was carried out with the purpose of analyzing how poorly managed organizational trust affects the effectiveness of internal control in a segment 1 savings and credit cooperative in Ecuador by considering that excessive trust, when it is not supported by formal verification mechanisms, can become an institutional risk factor. The current research applied a mixed-method approach which combined a Likert-scale questionnaire directed to twenty employees, interviews to the manager and the credit officer, and an internal audit report review. Through this process, it was possible to determine that poorly managed organizational trust reached a medium level (average 3.1) and that the perceived effectiveness of internal control was high (average 3.8). Moreover, the audit report allowed the identification of specific weaknesses, such as deficiencies in segregation of duties, lack of adequate documentation for certain operations, and limited supervision of sensitive processes, so demonstrating that excessive trust can weaken the practical application of established controls. Thus, the findings showed that strengthening internal control depends not only on formal policies and procedures, but also on the conscious management of trust and organizational culture. Finally, the study raised the need to balance interpersonal trust with verification, accountability, and transparency within savings and credit cooperatives.