European Financial Systems 2014 - Proceedings of the 11th International Scientific Conference, V.Kajurová, O. Deev, and J. Krajíček (Editors), pp. 359-363.
ISSN/ISBN: Not available at this time. DOI: Not available at this time.
Abstract: Benford's Law is used not only to detect electoral fraud but also to detect manipulation of numbers especially in accounting. Benford’s Law can recognize the probabilities of highly likely or highly unlikely frequencies of numbers in a data set. The probabilities are based on mathematical logarithms of the occurrence of digits in randomly generated numbers in large data sets. The objective of this paper is to describe and interpret the results applying Benford ́s Law on a set of accounting records – journal entries in several companies. The paper examines the following hypotheses: H1: Benford ́s Law is held true in companies whose accounting data have not been manipulated. Benford ́s Law does not apply in companies in which some accounting entries have not been recorded. Benford ́s Law does not apply in companies in which all accounting entries have been recorded but some items have been modified. H2: Benford ́s Law can detect the type of the bias. H3: Benford ́s Law does apply only for whole accounting period. Despite its limitations, Benford’s Law is effective in detecting data bias in journal entries but ineffective in detecting the type of the bias. Benford’s Law is also applicable for shorter periods as they have comparable results as one whole accounting period and can be used for special examinations by state authorities as an effective tool to spot anomalies in VAT control statement.
Bibtex:
INPROCEEDINGS{,
author={Zuzana Kubaščíková and Renáta Pakšiová},
booktitle={European Financial Systems 2014 - Proceedings of the 11th International Scientific Conference},
title={Applying Benford's Law},
year={2014},
pages={359--363},
url={https://www.ceeol.com/search/chapter-detail?id=843030},
}
Reference Type: Conference Paper
Subject Area(s): Accounting