【正文】 hich characteristics are helpful in explaining variations in an internal control system and its observed effectiveness. However, the model examined, yields different results when examined in a bivariate or in a multivariate setting. Therefore, this paper demonstrates how a contingency approach and SEM technique may be applied to internal control research. Understanding monalities and differences in internal control structures and observed effectiveness in alternative contexts makes a significant contribution to the internal control discussion. Thus, the study provides a means to identify the special needs of different anizations. The rest of the paper is anized as follows. The next section presents a research framework and the following section presents definitions of constructs and the literature related to the research questions. The fourth section explains the survey design and measurement of variables. Following that, the paper elaborates on the empirical analysis using the SEM method based on data collected from 741 Finnish firms. The sixth section includes a discussion of the results. The last section ends with the conclusions and limitations of the study. 2 Research framework Control systems are designed to assist managers to achieve their firm’ s goals and desired outes (Chenhall 2020). An internal control system potentially enhances a firm’ s monitoring and reporting processes, as well as ensuring pliance with laws and regulations. In this way effective internal control has a critical role to play in a firm’ s success. But, as we can see from the practical findings, internal control does not exist in vacuum. The COSO framework (1994, p. 18) states that two anizations should not have similar internal control system unless the anizations are identical. The need for, and the specifics of, internal control systems may vary in anizational contexts. This statement presented in the internal control framework (COSO 1994) is analogous to contingency theory that claims that each anization has to choose the most suitable control system by taking into account contingency characteristics (see reviews in Chapman 1997。 Chenhall 2020) and in this paper, the literature is reviewed along with an analysis of the research based on these studies. The aim is to use contingency theory to understand characteristics affecting internal control structures and its observed effectiveness rather than to elaborate on contingency theory as such. Figure 1 illustrates the research framework based on contingency theory and internal control frameworks. The relationships between three sets of variables — the contingency characteristics, the internal control structure and the observed effectiveness— are the focus of this research. The first four research questions (RQ1–RQ4) aim to test if contingency characteristics (strategy, size, anizational structure and environmental uncertainty) affect the internal control structure. There is evidence in earlier management control studies (for example Chenhall 2020。 Simons 1987。 Mills 1997). Stringer and Carey (2020) examines all five ponents but use a qualitative approach and examine the ponents separately. In this study internal control ponents and observed effectiveness are used as latent variables in the analysis. It should be noted that the level of analysis is theoretical and specific individual controls or judgments are not the main focus of the study (see for example Felix and Niles 1988。Hoque and James 2020。 Otley 1980). However, the selection of the characteristics may not be the only set of variables that might have an effect on internal control structure but the characteristics are considered relevant and are widely examined in control literature (Chenhall 2020). Next, this paper reviews the related literature for each contingency characteristic and develops its first four research questions. Strategy Otley (1980) and Dermer (1977) state that the business strategy should be one ofthe main features in accounting control system design. Depending on the firm’ s strategy, as noted by Miller et al. (1986), Miles and Snow (1978) and Porter (1980), control systems are used in different ways. For example, Simons (1990) found evidence that firms employ accounting control systems in dissimilar ways if they use different strategies. While these earlier studies suggest that different types of firm strategies tend to cause different control system configurations, strategies may also cause some differences in internal control. However, empirical studies conducted to date have not yielded any firm conclusions about the nature of the most appropriate connections between strategies and control (., 1999) The Miles and Snow (1978) typology was adopted in this st