engleski

Application of Benford's law in forensic accounting

Forensic accountants in their work - primarily in detecting fraud - use various investigative and analytical techniques to identify indicators of fraud and potential fraud areas. Different forms of digital analysis are used in forensic investigations, and one of the forms of digital analysis that has gained significant application in the field of auditing as well as in the field of forensic accounting is Benford's law. With this law, forensics narrow the search area for fraud and detect areas of potential irregularities in financial statements. Benford's law or the law of the first digit is based on the fact that certain numbers appear more often than others in different datasets. For example, number 1 has the highest likelihood of appearing in the first digit position, while number 9 has the least chance of appearing as the first digit. By analyzing the various datasets that accompany the Benford distribution, forensic experts identify anomalies and deviations from Benford's law and provide guidance on areas where more detailed forensic investigations are required. In this paper, the authors give a practical example of the application of the Benford's law in fraud detection and outline the main advantages and disadvantages of this form of digital analysis in the field of forensic accounting.

Benford's law ; frauds ; forensics

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