Table 2.
Scale items and latent variable evaluation.
| Construct and items | Weight/Loading | t-test |
|---|---|---|
| Internal control structure [2] | ||
| Control environment (formative scale)* | ||
| The governing body/board genuinely called management’s decisions into question and evinced realizable alternatives | 0.27 | 4.01 |
| Managers and management have not been overworked | 0.06 | 1.12 |
| There has been a great deal of variation in control and management tasks | 0.23 | 2.97 |
| The personnel understand the content and responsibilities of their tasks | 0.14 | 1.60 |
| The personnel have demonstrated commitment to honesty and the ethical values of the company through their conduct | 0.54 | 6.34 |
| Risk assessment (formative scale)* | ||
| The goals for the company’s operations had credible and, in my opinion, reasonable measures | 0.31 | 3.09 |
| Management actively evaluated both internal and external risks likely to prevent the achievement of goals | 0.27 | 1.88 |
| A risk analysis covering the entire company was carried out during the last year | 0.17 | 1.43 |
| Those in managerial functions were aware of the risks of their areas of responsibility and knew how risk management was implemented | 0.35 | 3.03 |
| In my opinion, the company’s risk analysis and means of protection could have been more efficient (Reversed code) | 0.03 | 0.52 |
| Control activities (formative scale)* | ||
| Functioning controls in the company’s processes warned whenever something exceptional occurred | 0.35 | 4.97 |
| As soon as something exceptional and undesired was noticed, it was promptly and appropriately dealt with | 0.26 | 3.55 |
| In the definition of tasks, special attention was paid to authorization and the special demands of tasks | 0.40 | 5.95 |
| In my opinion, the internal control measures should have been stepped up still further (Reversed code) | (0.11) | 2.58 |
| The entire personnel had updated job descriptions | 0.24 | 3.60 |
| Information and communication (formative scale)* | ||
| The personnel had no problems obtaining information about their own work tasks | (0.14) | 1.64 |
| The reports forwarded to management were sufficiently clear and contained relevant information from the management perspective | 0.44 | 3.59 |
| Sufficient information moved between the different divisions of the company so that the smooth, uninterrupted running of operations could be ensured (e.g., from sales to manufacturing) | 0.29 | 2.35 |
| Our company’s information and communications system was not quite up to date with respect to functions | (0.02) | 0.46 |
| The work was efficiently coordinated within the function and also with other functions | 0.50 | 5.08 |
| Monitoring (formative scale)* | ||
| The operative information used in management was specified to the systems information of financial management | 0.11 | 0.94 |
| Line managers take excellent care of day-to-day control | 0.35 | 2.94 |
| There is active control of how the personnel obey the operating instructions issued | (0.18) | 1.34 |
| We conducted analyses-based (customer satisfaction, job satisfaction, efficiency) changes during the last year | 0.34 | 3.38 |
| Management has not in the last year requested accounts of the accomplishment of control measures | 0.49 | 3.25 |
| Internal control effectiveness [1] | ||
| Operation (CR = 0.89; AVE = 0.66) | ||
| Risks of operations are reliably controlled | 0.80 | 42.61 |
| Operational objectives have been achieved in recent years | 0.75 | 28.11 |
| Operations are characterized by high efficiency | 0.86 | 62.92 |
| Control activities support the achievement of operational objectives | 0.84 | 47.01 |
| Financial reporting (CR = 0.84; AVE = 0.57) | ||
| In recent years, all finance-related risks were identified in due time | 0.78 | 35.88 |
| I am very satisfied with the effectiveness of the control activities | 0.74 | 31.73 |
| I have full confidence in our financial reporting | 0.78 | 31.42 |
| The risk of a material misstatement in the financial statements is nearly impossible | 0.73 | 23.42 |
| Compliance (CR = 0.88; AVE = 0.64) | ||
| Internal guidelines are complied with | 0.75 | 34.26 |
| Violations of laws and standards very seldom occur | 0.82 | 54.09 |
| Risks associated with non-compliance are at an acceptable level | 0.86 | 73.77 |
| I can assure that our company complies with relevant laws and standards | 0.77 | 29.41 |
| Organizational mindfulness [19] (CR = 0.90; AVE = 0.53) | ||
| Our company has an organization-wide sense of susceptibility to the unexpected | 0.82 | 32.50 |
| Everyone in our company feels accountable for the reliability | 0.65 | 15.57 |
| Our leaders pay as much attention to managing unexpected issues as they do to achieving formal organizational goals | 0.72 | 24.02 |
| People at all levels of our organization value the quality of their works | 0.71 | 23.46 |
| We spend time identifying how our activities potentially harm our organization, employees, our customer, other interested parties, and the environment at large | 0.78 | 36.47 |
| We pay attention to when and why our employees, customers, or other interested parties might feel peeved or disenfranchised from our organization | 0.70 | 21.43 |
| There is widespread agreement among the members on what we don’t want to go wrong | 0.73 | 24.21 |
| There is widespread agreement among the members about how things could go wrong | 0.71 | 21.70 |
| Organizational ethical behaviors [58] (CR = 0.95; AVE = 0.68) | ||
| Top managers of our company regularly show that they really care about ethics | 0.76 | 41.02 |
| Top managers of our company represent high ethical standards | 0.73 | 34.16 |
| Top managers of our company guide decision-making in an ethical direction | 0.74 | 37.43 |
| Management in our company disciplines unethical behaviors when they occur | 0.76 | 40.27 |
| Employees in our company accept organizational rules and procedures regarding ethical behaviors | 0.76 | 43.47 |
| Organizational rules and procedures regarding ethical behavior serve only to maintain our company's public image (Reversed code) | 0.74 | 35.80 |
| Penalties for unethical behaviors are strictly enforced in our company | 0.72 | 36.36 |
| Ethical behaviors are the norm in our company | 0.74 | 35.79 |
| Ethical behaviors are rewarded in our company | 0.73 | 36.17 |
Notes: CR: composite reliability; AVE: Average variance extracted; *: CR and AVE are not applicable for formative constructs.