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This study investigates factors indicating CFO intentions of fraudulent financial reporting. Structural equation modeling is used to analyze survey data obtained from 139 CFOs. We find that an extended reasoned action model fits the data well and explains CFO intentions to report fraudulently. More specifically, we find that CFOs of large companies are more likely to report fraudulently in the financial statements and that compensation structure is not a good indicator of CFO intentions to report fraudulently. Informal and formal audit methods for assessing management attitudes toward fraudulent reporting, such as questionnaires and automated decision aids, are recommended since they offer the best opportunity to improve significantly auditors' ability to predict fraudulent financial reporting. Implications for future research and practice development are considered.
Gillett et al. (Sun,) studied this question.