Ask Question
15 August, 21:50

A large manufacturing business has hired you as a fraud detection specialist. The first day on the job your boss tells you she has heard about something called Benford's Law that is used to detect fraud, and she wants to know more about it. She has asked you to explain what Benford's Law is and how it is applied.

+5
Answers (1)
  1. 15 August, 23:03
    0
    Benford's Law predicts the frequency of leading digits using base-10 logarithms which predict that specific frequencies will decrease from 1 to 9.

    It predicts that in a large set of data, the leading digits will be as following:

    Leading number Probability of appearance

    1 30%

    2 18%

    3 12%

    4 10%

    5 8%

    6 7%

    7 6%

    8 5%

    9 4%

    Benford's Law is used by forensic accountants since people who fabricate data figures tend to distribute the leading digits uniformly. If you compare the distribution of the leading digits of the data sample with the expected distribution using Benford's Law you can detect any anomaly (e. g. if number 3 shows up 30% of the time instead of around 12%).
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “A large manufacturing business has hired you as a fraud detection specialist. The first day on the job your boss tells you she has heard ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers