The result of the search for variables based on financial statement data was a model that includes eight variables. 8The variables were measured from data from the fiscal year of the first reporting vio-lation (e.g., the first year for which the company was subsequently required to restate). I designated seven of the eight variables as indexes because they
are intended to capture distortions that could arise from manipulation by comparing financial state-ment measures in the year of the first reporting violation with those in the year prior.