Than multi digit numbers beginning with 4, 5, 6.ĭata Sets First Digit = 1 First Digit = 2 First Digit = 3 Multi digit numbers beginning with 1, 2 or 3 appear more frequently Rivers, baseball averages, atomic weights, electricity bills, and more. To begin with ‘1’ than any other number.”įrank Benford: Analyzed 20,229 sets of numbers, including, areas of Simon Newcomb: Looked at frequency of use of the differentĭigits in natural numbers - “A multi-digit number is more likely Practical Applications of Benford’s Law.Using Benford's Law for Fraud Detection and Auditing This test results in a required audit sample of more than 2,000 fewer invoices - certainly a more efficient and focused sample This was calculated by multiplying 1.78% (actual frequency percentage for the first two digits 31) by 10,000 (number of total invoices) and adding that to 1.69% (actual frequency percentage for the first two digits 33) times 10,000 (number of total invoices). Therefore, if we focus on numbers beginning with 31 or 33, we only need to review 347 (178 + 169) invoices.
As you can see in the chart, these are the first two digits whose actual frequencies differ the most from their expected frequencies (-.40 and -.39, respectively). Instead, we need only examine those invoices beginning with the first two digits 31 and 33.
However, using the first two digits test, we can see that not all of the invoices need to be examined. Based upon that review, we need to examine approximately 2,600 invoices. Thus, these tests help to clearly visualize when order or permission limits have been systematically avoided Example: We detected an abundance of invoices beginning with 3. In particular the output serves for the analysis of avoided threshold values.
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