Applying Benford's Law to CAR — car-chase.net October 17, 2008
Posted by Jonathan Hewett in : delicious links , trackbackA technique to check figures, particularly to aid computer assisted reporting (CAR), summarised by Chase Davis:
"One of the techniques [Phil] Meyer mentioned is known as Benford's Law — a decades-old mathematical rule that forensic accountants have recently used to spot fraud by examining the distribution of individual digits in large datasets. I've been meaning to test it out for a long time, ever since I came across this old New York Times article earlier this year, but I never took the time until a couple weeks ago. […]
Most people assume that individual digits in something like a budget are randomly distributed […] when in fact that isn't the case. […] The important thing is that checking to see whether individual digits occur at the expected rates can reveal indications of fraud — particularly when you're looking at data that people can fudge. […]
You can't support a story on it, but Benford's Law can tip you off when something is amiss."
Comments»
no comments yet - be the first?