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 violation (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 statement measures in the year of the first reporting violation with those in the year prior.