manzoor ahmed (Auditor) (479 Points)
05 February 2013Benford's law is a technique to detect fraud in an accounting data e.g. identifying the false or fraudulant payments in ledger etc.
1) The Effective use of Benford's Law to Assist in Detecting Fraud in Accounting Data
2) Step by step Instructions for using Benford's Law at your work place on accounting data.
Regards,
Manzoor ahmed
Ganeshbabu K
(Audit and Tax Advisory)
(48564 Points)
Replied 05 February 2013
manzoor ahmed
(Auditor)
(479 Points)
Replied 10 February 2013
I have updated the guide and included more learning details which could help you to understand it with practical examples.
If you are not known or have not heard about Benford’s Law before, Let me explain you as an auditor or accountant how could you use the Benford’s Law while auditing the accounts data e.g. purchase invoices/ Bills etc.
This guidance will let you know the concept and how to apply the benford’s law in an accounting data e.g. Supplier’s Invoices or Bank payments etc.
In 1993, in State of Arizona v. Wayne James Nelson (CV92-18841),
he was caught or found guilty to trying to defraud the state for aproximately $2 Million. Nelson (A Manager) in Arizona state treasurer office told that the funds had been diverted to a fake vendor due to the absense of safeguards in new computer system. this fraud was detected using the benford's law.
Regards,
Manzoor ahmed
CAclubindia
