Benford's Law - Applications for Forensic Accounting, Auditing, and Fraud Detection

Benford''s Law gives the expected patterns of the digits in the numbers in tabulated data such as town and city populations or Madoff''s fictitious portfolio returns. Those digits, in unaltered data, will not occur in equal proportions; there is a large bias towards the lower digits, so much so that nearly one-half of all numbers are expected to start with the digits 1 or 2. These patterns were originally discovered by physicist Frank Benford in the early 1930s, and have since been found to apply to all tabulated data. Mark J. Nigrini has been a pioneer in applying Benford''s Law to auditing and forensic accounting, even before his groundbreaking 1999 Journal of Accountancy article introducing this useful tool to the accounting world. In Benford''s Law, Nigrini shows the widespread applicability of Benford''s Law and its practical uses to detect fraud, errors, and other ano