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



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