Book description
A powerful new tool for all forensic accountants, or anyone who
analyzes data that may have been altered
Benford'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, so much 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 data
- Includes ten fraud detection studies, including vendor fraud,
payroll fraud, due diligence when purchasing a business, and tax evasion
- Covers financial statement fraud, with data from Enron, AIG, and
companies that were the target of hedge fund short sales
- Looks at how to detect Ponzi schemes, including data on Madoff,
Waxenberg, and more
- Examines many other applications, from the Clinton tax returns
and the charitable gifts of Lehman Brothers to tax evasion and
number invention
Benford'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.
MARK J. NIGRINI, PhD, is a professor at The
College of New Jersey where he teaches forensic accounting courses.
His research involves advanced theoretical work on Benford's Law and
the legal process surrounding fraud convictions. Nigrini is also the
author of Forensic Analytics (Wiley), which describes tests to
detect fraud, errors, estimates, and biases in financial data. He has
been published in national media including the Wall Street
Journal and has published papers on Benford's Law and accounting
in academic and professional journals. Nigrini regularly presents
professional seminars for accountants and auditors in North America,
Europe, and Asia with recent events in Singapore, Switzerland, and New
Zealand.
