Review of Recent Literature on Pressure on CFOs to Manipulate Financial Reports

Financial statement misreporting continues to be a significant problem for companies, shareholders, regulators, and internal and external auditors. According to the Committee of Sponsoring Organizations of the Treadway Commission (COSO) sponsored study, Fraudulent Financial Reporting: 1998–2007 (Beasley, Carcello, Hermanson, and Neal, 2010), Chief Executive Officers (CEOs) and/or Chief Financial Officers (CFOs) are involved in the vast majority of the cases of financial reporting fraud in public companies. The involvement of CFOs is of particular concern given the CFO’s central role in financial reporting and his/her formal access to the financial records, which contributes to the CFO’s capability to commit fraud (Wolfe and Hermanson, 2004).