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MŲller, M (2009)

Measuring the Quality of Auditing Services with the Help of Benfordís Law - An Empirical Analysis and Discussion of this Methodical Approach

E-print available at: http://ssrn.com/abstract=1529307; last accessed June 23, 2014.

ISSN/ISBN: Not available at this time. DOI: 10.2139/ssrn.1529307



Abstract: The so-called Benfordís Law describes regularity in the distribution of digits of randomly selected numbers, which states that the relative frequency of the leading digits reduces in a systematic manner from the digit 1 to the digit 9. This distribution hypothesis is being discussed in recent times as an audit instrument in order to gain insights into possible conscious and inadvertent errors in data records. The present paper analyses the closing accounts of 1,373 annual financial statements of companies listed on the German DAX and compares these with the Benfordís distribution hypothesis. It can be seen in the process that data pertaining to financial accounts, which have not been audited by the so-called ďBig 4Ē audit firms, but by smaller external auditors, deviate to a significant extent from the regularity of Benfordís Law, which appears to make the use of Benfordís Law suitable as a benchmark to assess the quality of the audit.


Bibtex:
@article {, AUTHOR = {Manuela M{\"o}ller}, TITLE = {Measuring the Quality of Auditing Services with the Help of Benfordís Law - An Empirical Analysis and Discussion of this Methodical Approach}, YEAR = {2009}, NOTE = {E-print published online; last accessed June 23, 2014}, DOI = {10.2139/ssrn.1529307}, URL = {http://ssrn.com/abstract=1529307}, }


Reference Type: E-Print

Subject Area(s): Accounting