Benford's law as a fraud detection tool and accounting manipulations - case study

Abstract

In the last decade, audit and accounting specialists have attached great importance to the subject of accounting and financial information fraud and to the approaches to deal with it, given the increase in the phenomenon and the progression of its methods. and the resistance of its techniques to conventional means of detection and prevention. Professional authorities and specialists have therefore had to find modern means of detection and update the classics like audit programs specializing in analysis, research and detection and Benford's law as tool for predictive detection of error and fraud in accounting and financial information. Benford's law was tested on a sample of accounting transactions on behalf of clients of Algerienne des Eaux - Laghouat unit, for six months of 2015, with the aim of knowing the detection capacity of said law. . After examining the results, it turned out that the Algerian Water Authority's accounting and financial data are indeed compatible with Benford's law and that the anomalies between the division of the sample and that of Benford's law have no statistical significance. The results also confirmed the possibility of using Benford's law in the process of predictive detection of error and fraud in accounting and financial information.