Benford's law: applications for forensic accounting, auditing, and fraud detection

A powerful new tool for all forensic accountants, or anyone who analyzes datathat may have been alteredBenford'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, somuch so that nearly one-half of all numbers are expected to start with the digits 1 or 2. These patterns were originally discovered by physicist Frank Benford in the early 1930s, and have since been found to apply to all tabulated data. Mark J. Nigrini has been a pioneer in applying Benford's Law to auditing and forensic accounting, even before his groundbreaking 1999 Journal of Accountancy article introducing this useful tool to the accounting world. In Benford's Law, Nigrini shows the widespread applicability of Benford's Law and its practical uses to detect fraud, errors, and other anomalies. Explores primary,associated, and advanced tests, all described with data sets that include corporate payments data and election dataIncludes ten fraud detection studies, including vendor fraud, payroll fraud, due diligence when purchasing a business,and tax evasionCovers financial statement fraud, with data from Enron, AIG, and companies that were the target of hedge fund short salesLooks at how to detect Ponzi schemes, including data on Madoff, Waxenberg, and moreExamines many other applications, from the Clinton tax returns and the charitable gifts of Lehman Brothers to tax evasion and number inventionBenford's Law has 250 figures and uses 50 interesting authentic and fraudulent real-world data sets to explain both theory and practice, and concludes with an agenda and directions for future research. The companion website adds additional information and resources. INDICE: ForewordPrefaceAbout the AuthorChapter 1 Introduction and Mathematical FoundationsBenford's Expected Digit FrequenciesDefining the First and First-Two DigitsThe Digit Patterns of U.S. Census DataLogging on to Benford's LawThe General Significant Digit LawLog and Behold, the Census DataLove at First SightThe Mantissa Test and the Census DataThe Number of Records and Benford's Law TestsWhen Should Data Conform to Benford's Law?ConclusionsChapter 2 Theorems, Truisms, and a Little TriviaThe Digits of Corporate Payments DataThe Digits of Lake DataThe Scale Invariance TheoremThe Mean Absolute Deviation (MAD)Scale Invariance and Census DataScale Invariance and Corporate Payments DataScaleInvariance and Lake DataA Level Playing Field Becomes BenfordMultiplication by 1/XAll Distributions Lead to BenfordGetting a Gripf on Benford and ZipfConclusionsChapter 3 More Formulas and Facts, and a Little FibonacciThe Fibonacci NumbersThe Lucas NumbersBack to Square OneThe 3n+1 ProblemThe Ultimate Uniform DistributionBenford Embraces Other BasesNigrini's Second Last TheoremConclusionsChapter 4 The Primary Benford's Law TestsThe Corporate Payments DataThe DataProfileFirst Come First ServedPlaying Second FiddleThe First-Two Digits TestRunning the Digit Tests in ExcelRunning the Digit Tests in AccessConclusionsChapter 5 The Advanced Benford's Law TestsThe Summation TestRunning the SummationTest in ExcelRunning the Summation Test in AccessThe Second-Order TestAn Analysis of Payments DataAn Analysis of Journal Entry DataAn Analysis of Census DataRunning the Second-Order Test in ExcelExcel, Thanks a million(s)Scale Invariance and the Second-Order TestConclusionsChapter 6 The Associated Benford's Law TestsThe Number Duplication TestAn Analysis of Payments DataAn Analysis of Census DataRunning the Number Duplication Test in ExcelRunning the Number Duplication Test in AccessThe Last-Two Digits TestAn Analysis of Payments DataAn Analysis of Census DataAn Analysis of Election ResultsRunning the Last-Two Digits Test in ExcelRunning the Last-Two Digits Test in AccessThe Distortion FactorModelDistortion and the Census DataConclusionsChapter 7 Assessing Conformity to Benford's LawThe Z-statisticThe Chi-Square TestThe Kolmogorov-Smirnoff TestThe Mean Absolute Deviation (MAD) TestTests Based on the Logarithmic Basis of Benford's LawCreating a Perfect Synthetic Benford SetThe Mantissa Arc TestConclusionsChapter 8 Examples of Fraudulent DataThe Inside StoryThe Vendor Who Never WasNot Paying AttentionSelling Yourself ShortThe Heart of the MatterGoing the Extra MileLaugh All the Way to the BankCulture ShockHaving a Bad Hair DayAnUnclean Bill of HealthTurning the Table on Tax EvasionConclusionsChapter 9 Fraudulent Financial Statements, Part INumber CrunchingWrong NumbersA Look at Enron and AIG's NumbersFiguring Out the ControllersConclusionsChapter 10 Fraudulent Financial Statements, Part IIDigital Yoga by AbsarokaCan't see the Forest for the TreesDigit a Little Deeper into Papua New GuineaThe Good, the Bad, andthe UglyGoing Back for Second-Order SecondsThere are More Questions Than AnswersConclusionsChapter 11 Madoff and Other Ponzi SchemesThe Madoff ClaimsDon't Bank on KaupthingThe Whole Ball of WaxenbergGeneral Motors Demoted to PrivateChrysler Unable to Dodge BankruptcyDiscussion of the Claims ResultsA Review of the Madoff ReturnsApple, Dell, Berkshire, and BenfordDiscussion of the ReturnsResultsChapter 12 Earth Science and Income Tax ApplicationsStill Waters Run DeepThe Lay of the LakeFor a Few Dollars LessA Clean Bill of ClintonConclusionsChapter 13 Future Directions and ConclusionsMy LawInsights into Number InventionLehman's Charitable GiftsThe Bottom LineReferencesIndex

• ISBN: 978-1-118-15285-0
• Editorial: John Wiley & Sons
• Encuadernacion: Cartoné
• Páginas: 352
• Fecha Publicación: 09/05/2012
• Nº Volúmenes: 1
• Idioma: Inglés