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Benford’s Law: Theory, The General Law Of Relative Quantities, And Forensic Fraud Detection Applications
Price: $55.73
(as of Dec 24,2024 12:35:45 UTC – Details)
ASIN : B00NXJV87Y
Publisher : World Scientific (August 21, 2014)
Publication date : August 21, 2014
Language : English
File size : 30315 KB
Text-to-Speech : Enabled
Screen Reader : Supported
Enhanced typesetting : Enabled
X-Ray : Not Enabled
Word Wise : Not Enabled
Print length : 674 pages
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Customers find the narrative style clear and concise. They appreciate the refreshing new approach and clear presentation of mathematics. The pacing is described as good and technically sound. Readers describe the book as reader-friendly and entertaining at times.
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Benford’s Law, also known as the first-digit law, is a mathematical principle that describes the frequency distribution of leading digits in numerical datasets. This law states that in many real-life datasets, the probability of a number starting with a specific digit is not uniform, but instead follows a logarithmic distribution.
The general law of relative quantities, as described by Benford’s Law, can be expressed by the equation:
P(d) = log10(1 + 1/d)
where P(d) is the probability that a number starts with the digit d (ranging from 1 to 9).
Benford’s Law has gained popularity in forensic accounting and fraud detection due to its ability to detect anomalies in financial data. In fraudulent datasets, numbers are often manipulated to achieve a desired outcome, leading to a deviation from the expected distribution predicted by Benford’s Law. By analyzing the leading digits of financial statements, tax returns, and other numerical datasets, forensic accountants can identify potential red flags and investigate further for signs of fraud.
One of the key applications of Benford’s Law in fraud detection is the identification of “Benford’s outliers,” which are numbers that deviate significantly from the expected distribution. These outliers may indicate manipulated data, intentional rounding, or other fraudulent activities.
Overall, Benford’s Law serves as a powerful tool for detecting anomalies in numerical datasets and has been widely used in forensic accounting, auditing, and investigative analysis. By understanding the theory behind Benford’s Law and applying it in practice, professionals can improve their ability to detect financial irregularities and protect against fraud.
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