Proceedings of Eurasian Conference on Economics, Finance and Entrepreneurship, Budapest, pp. 91-97.
ISSN/ISBN: Not available at this time. DOI: Not available at this time.
Abstract: Sales are a critical indicator for companies operating in the retail sector, reflecting the primary source of revenue and the company’s overall performance. A deviation from the expected Benford distribution in sales figures could potentially signal important issues that require further investigation. Such anomalies play a significant role in managers’ and auditors’ efforts to assess the company’s financial health and shape management decisions. Benford’s Law is commonly utilized to detect potential irregularities in financial statements. As a statistical rule, Benford’s Law states that the leading digits of naturally occurring numbers follow a specific distribution. When a deviation from this expected distribution in the leading digits is observed, it is often considered a sign that warrants a more detailed examination. Therefore, the application of Benford’s Law in accounting audits plays a crucial role in maintaining financial integrity and reliability. The aim of this study is to investigate whether the sales revenues of companies in the retail sector listed on Borsa Istanbul (BIST) conform to Benford’s Law. The analysis examined 20 quarters of sales revenue data for ten retail companies from 2019 to 2023. The Chi-Square test was used to determine the conformity of the numerical distribution of sales revenues to Benford’s Law. The results indicate that the sales revenues of retail companies exhibit a distribution consistent with Benford’s Law. This finding suggests that the sales revenues reported in the financial statements of BIST retail companies follow a natural distribution, with no signs of irregularities, errors, or manipulation. In this context, the findings support the financial transparency and reliability of retail sector companies as an important indicator.
Bibtex:
@inProceedings {,
AUTHOR = {Nazif Ayyildiz and Medet İğde},
TITLE = {Benford’s Law in Auditing: Analysis of Sales Item in Bist Retail Sector},
BOOKTITLE = {Proceedings of Eurasian Conference on Economics, Finance and Entrepreneurship},
YEAR = {2024},
ADDRESS = {Budapest},
MONTH = {August},
PAGES = {91--97},
URL = {https://econefe.org/uploads/pb/2024/ECONEFE_Proceedings_Book.pdf#page=100},
}
Reference Type: Conference Paper
Subject Area(s): Accounting