Forensic Analytics Second Edition, Benford's Law discussion and free Excel software

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Benford's Law gives us the expected patterns of the digits in accounting data. This video has a 15 minute discussion followed by 11 minutes reviewing the Nigrini Cycle Excel template. The template and the data file can be downloaded from tinyurl.com/NigriniBenLaw2020. The two published papers referenced are "The implications of the similarity between fraud numbers and the numbers in financial accounting textbooks and test banks", Journal of Forensic Accounting Research, 2016, and "Audit sampling using Benford's Law: A review of the literature with some new perspectives", Journal of Emerging Technologies in Accounting, 2017. Another related article is "Round numbers: A fingerprint of fraud", Journal of Accountancy, 2018. The full citations should be available on Google Scholar.

Пікірлер: 36

@aaronphillips402 3 жыл бұрын

2020 is the year of Benford's Law.

@allansiqueira 3 жыл бұрын

The Biden Report! LOL

@ForensicAnalytics 3 жыл бұрын

My Ph.D. dissertation is dated 1992 and my first Benford's Law article is dated 1994, so it's only taken about 26 years. I have a new article that is the cover article in the current issue of Fraud Magazine. You might find the Benford's Law bit to be interesting. You are right about 2020 being significant. Benford's Law is covered in the Digits episode in the Netflix Connected series.

@currently7886 3 жыл бұрын

This is so wonderful to watch in 2020. Thank you for this

@ForensicAnalytics 3 жыл бұрын

Thanks for your kind words.

@hxhdfjifzirstc894 3 жыл бұрын

What happens when you stop counting ballots, in the middle of the night, and start tweaking the results?

@ForensicAnalytics 3 жыл бұрын

Benford's Law is not very effective in identifying (slightly) incomplete data unless we are missing a major portion (perhaps thee-quarters) of the data.

@trixiemcfly8584 3 жыл бұрын

Comment for the algorithm. You would think that the *statistical improbabilities* would demand some attention.

@juggernaut316 3 жыл бұрын

KZfaq won't let me like this video

@ForensicAnalytics 3 жыл бұрын

Thanks please try again. If you watch a video on KZfaq and it goes on to the next video, and you then come back (using the back arrow) YoiuTube doesn't know that you watched it, so you can't Like it. Please watch it again for a minute or so and then while it's playing click Like. Thanks :)

@davidjackson7675 3 жыл бұрын

BTW, There is (at least) two R package for Benford's Law : benford.analysis and B.enfordTests

@ForensicAnalytics 3 жыл бұрын

Thank you David. Users should note that they ordinarily won't need all the results produced by the comprehensive R packages. Choose what you need. Also, if you want to see the R code, and you only want the first-two digits test, then my "Benford's Law, Part 3 (Analysis in R, no packages), updated code June 2020" will work just fine.

@davidjackson7675 3 жыл бұрын

@@ForensicAnalytics, Thanks I watched that video and downloaded the code and data.

@davidjackson7675 3 жыл бұрын

@@ForensicAnalytics Thanks for your reply. What do I do when the first digit included 0's ?

@ForensicAnalytics 3 жыл бұрын

@@davidjackson7675 Under Benford's Law the first digit is the first non-zero digit and negative signs are ignored. So the first digit of 46, -432, and 0.045 are all 4. Mathematicians often define the first digit as the integer portion of the normalized significand (see Wikipedia for the definition of this term).

@TheStainlessFish 3 жыл бұрын

But does benford's law help with election data???

@TheStainlessFish 3 жыл бұрын

@Nate Diaz Couldn't Beat a Rattata I dont know what organic means, but please do for the US elections. I assume separately for biden and trump!

@ForensicAnalytics 3 жыл бұрын

I analyzed the Maricopa data yesterday, see my Benford's Law playlist. Milwaukee data is in progress.

@Anglo-EgyptianMan 3 жыл бұрын

MAGA math!!!

@kenp3L 3 жыл бұрын

I think Benford's Law only works if your range of data is greater than three orders of magnitude. This won't work for comparing ballot counts at various precincts within a given state because the precincts are deliberately designed to have reasonable size parity. The number of votes for a given candidate per precinct will only span a range of about 1.5 orders of magnitude. So while I appreciate the forensic accounting analysis, I would need to see a statement from a recognized mathematician who specializes in this area saying that 2020 presidential ballots can be successfully analyzed with this technique.

@drew96 3 жыл бұрын

Be very careful with spreadsheets, the formulas have been proven to be full of bugs.

@ForensicAnalytics 3 жыл бұрын

Paul you are correct. I've taken great care with my formulas and for transaction data of the size that is normally dealt with, in dollars and cents, my spreadsheet should be fine. I talk about spreadsheet risk on page 29 of Forensic Analytics Second Edition and also on page 29 readers are referred to the European Spreadsheet Risks Interest Group, a group that you are probably familiar with.