Using Benford Analysis to Detect Fraud
Internal Auditing, Vol. 27, No. 3 (May 2012): 24-29
6 Pages Posted: 18 Jul 2012 Last revised: 28 Mar 2017
Accountants, especially internal auditors, external auditors, and forensic accountants, are often called upon to help in efforts to detect and prevent fraud. A variety of methods have been developed to assist in fraud detection and prevention. This article describes a fraud-detection strategy based on Benford’s Law. Benford’s Law analysis is a mathematical technique for identifying irregular patterns in data, which might represent red flags that indicate fraudulent activity or material errors. By using the Benford Analysis Workbook that is described in this paper (and available online), internal auditors, external auditors, forensic accountants, and others can readily perform this effective test to help identify possible fraud- or error-infested accounts.
Keywords: internal auditing, Benford analysis, forensic accounting, fraud detection
JEL Classification: M41
Suggested Citation: Suggested Citation