BENFORD’SLAW本福德定律.ppt

BENFORD’S LAW BENFORD’S LAW History What is Benford’s Law Types of Data That Conform Uses in Fraud Investigations Examples Other uses of Benford’s Law Cautions When Using Benford’s Law HISTORY Simon Newcomb – 1881 Frank Benford – 1938 Roger Pinkham – 1961 Theodore Hill – 1995 History – Accounting Data Benford’s Law was first used by accountants in late 1980 Nigrini, WHAT IS BENFORD’S LAW BENFORD’S LAW FORMULA The probability of any number “d” from 1 through 9 being the first digit is…. Log10 (1 + 1/d) WHAT IS BENFORD’S LAW? Benford’s law gives the probability of obtaining digits 1 through 9 in each position of a number. For example, 3879 3 - first digit 8 - second digit 7 - third digit 9 – fourth digit WHAT IS BENFORD’S LAW Most people assume the probability is 1/9 that the first digit will be 1 - 9 This would mean digits are equally likely to occur, but this is not the case According to Benford’s Law the probability of obtaining a 1 in the first digit position is 30.1% Expected Frequencies Based on Benford’s Law  Logic Behind Benford’s Law If a data entry begins with the digit 1 it has to double in size (100%)before it begins with the digit 2 If a data entry begins with the digit 9 it only has to be increased by 11% in order for the first digit to be a 1 Types of Data That Conform Types of Data That Do Not Conform Types of Data That Conform Accounts payable data Accounts receivable data Estimations in the general ledger Relative size of inventory unit prices among locations New combinations of selling prices Customer refunds Duplicate payments Uses in Fraud Investigations Invented or altered numbers are not likely to follow Benford’s Law Human choices are not random 1993, State of Arizona v.Wayne James Nelson Examples of Benford’s Law Benford’s Law was used to analyze the first 2 digits of accounts payable data for a NASDAQ-listed software company Examples of Benford’s Law Bank audit Small Business Owner Example Small business owner expanded hi