Applying visual analytics to fraud detection using Benford's law

Abstract

Benford's law has been examined as a useful tool for detecting potential accounting fraud. In this article, I provide an introduction to Benford's law and examine how the first digit, second digit, and first-two digits tests in Benford's law can be employed to detect potential accounting fraud. In addition, I also highlight, through a worked example, how Tableau, a visual analytics tool, can be used to perform Benford's law's first-digit test to detect potential fraud.

Analyzing crop production statistics of the Philippines using the newcomb-benford law

“…The application of the first two-digit test reinforces the significance of the results, highlighting potential areas of concern and offering valuable guidance for policymakers and stakeholders in the agricultural sector (Yanik & Samanci, 2013). The combination of both the first-and second-digit tests into first two-digit test contributes to a more comprehensive understanding of the conformity of crop production statistics to NBL and enhances the credibility of the research findings (Goh, 2020).…”

“…This analysis test whether the data adhered to the expected distribution pattern according to the law, where smaller leading digits occur more frequently than larger digits (Newcomb, 1881;Benford, 1938). The first digit and first two-digit tests were conducted as part of the general analysis to provide initial insights into the distribution patterns (Goh, 2020). The probability (𝑃) of the first significant digit (𝑑) occurring is given by:…”

“…It is important to note that the first-and seconddigit tests are unsuitable for control sampling. Nonetheless, the first two-digit test is highly effective in identifying fundamental anomalies within the data (Goh, 2020). The NBL has exhibited successful applications in diverse domains such as finance (Jianu & Jianu, 2021), cryptocurrencies (Vičič & Tošić, 2022), malicious online automated accounts (Madahali & Hall, Abstract The agricultural sector plays a crucial role in the Philippines, contributing significantly to its food security and economic growth.…”

Applying Benford’s Law to Monitor Death Registration Data: A Management Tool for the COVID-19 Pandemic

“…This mathematical law has been used in various scientific fields, such as physics [34] and economics [35]. One of its most frequently used applications is to detect tax fraud [36,37].…”