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

  Benford's Law
 

By Mark Nigrini, Ph.D., with Foreword by Dr. Joseph T. Wells, CFE, CPA 

 

 

Description: 

 

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. In this book, author Mark Nigrini shows the widespread applicability of Benford's Law and its practical uses to detect fraud, errors and other anomalies. This book describes the mathematical foundations of Benford’s Law in a way that is easily understood by accounting and other business-related professionals. It then shows many examples of authentic and accurate data that conformed to Benford’s Law – and the fraudulent and invented numbers that did not.

 

Benford's Law: 

 

Explores primary, associated and advanced tests, all described with data sets that include corporate payments data and election data

Includes 10 fraud detection studies, including vendor fraud, payroll fraud, due diligence when purchasing a business and tax evasion

Covers financial statement fraud, with data from Enron, AIG and companies that were the target of hedge fund short sales

Looks at how to detect Ponzi schemes, including data on Madoff, Waxenberg and more

Examines many other applications, from the Clinton tax returns and the charitable gifts of Lehman Brothers to tax evasion and number invention

 

Benford's Law has 250 figures and uses 50 authentic and fraudulent real-world data sets to explain both theory and practice, and concludes with an agenda and directions for future research.

 


 
Product Details:
Copyright 2012
ISBN 978-7-118-15285-0
Hardcover, 330 pages
John Wiley & Sons Publishing
 

Table of Contents:

 

Chapter 1: Introduction and Mathematical Foundations

Chapter 2: Theorems, Truisms, and a Little Trivia

Chapter 3: More Formulas and Facts, and a Little Fibonacci

Chapter 4: Primary Benford’s Law Tests

Chapter 5: Advanced Benford’s Law Tests

Chapter 6: Associated Benford’s Law Tests

Chapter 7: Assessing Conformity to Benford's Law

Chapter 8: Examples of Fraudulent Data

Chapter 9: Fraudulent Financial Statements, Part I

Chapter 10: Fraudulent Financial Statements, Part II

Chapter 11: Madoff and Other Ponzi Schemes

Chapter 12: Earth Science and Income Tax Applications

Chapter 13: Future Directions and Conclusions