Internal Auditing 19(1), pp. 4-9.
ISSN/ISBN: Not available at this time. DOI: Not available at this time.
There are no links available at this time.
Abstract: An overview of Benford's Law is provided and a methodology for its application in fraud detection is proposed. A case study is used to illustrate the application of digital analysis using Benford's Law via a financial review of a small chemical manufacturing plant: digital analysis facilitated fraud detection by enabling the speedy identification of suspicious purchasing transactions and resulted in the discovery and termination of fraudulent activities. Benford's Law is a theory of statistical probability that establishes the expected frequency of numbers that appear in a database. Where there are built-in biases, the data will not conform to Benford's Law. A general approach to utilizing digital analysis using Benford's Law for fraud detection is summarized in a flowchart. Digital analysis is best implemented as part of a more comprehensive approach to fraud detection involving inter alia training in ethics, the implementation of a hotline, a well-trained audit department, a profile of potential frauds to be tested, and the use of outside specialists to complement the internal resources.
Bibtex:
@article {,
AUTHOR = {Moore, Gordon B. AND Benjamin, Colin O.},
TITLE = {Using Benford's Law for fraud detection},
JOURNAL = {Internal Auditing},
YEAR = {2004},
VOLUME = {19},
NUMBER = {1},
PAGES = {4--9},
}
Reference Type: Journal Article
Subject Area(s): Accounting