Detection of Anomalies in Accounting Data Using Benford’s Law: Evidence from India

Abstract

This study uses the financial accounting data to examine if they depart from Benford's Law. Using large sample of Indian public listed companies, the study conducts an analysis of the "first digit analysis", "second digit analysis", and "first two digit analysis "of test variables such as total assets, receivables, fixed assets, property, plant and equipment, inventory, current assets, current liabilities, sales, selling and distribution expenses, cost of goods sold, cash, EBIT, direct tax, indirect tax. The initial results find that most of the variables have significant deviation from Benford's Law distribution. Further analyses indicate that business ISSN 2329-9150 2017 http://jsss.macrothink.org 124 group firms indulge more data anomalies than standalone firms and small size firms have more data anomalies than large size firms in Indian context. Journal of Social Science Studies

Reliability of Financial Information from the Perspective of Benford’s Law

“…Certification of the reliability of information, disclosed in the companies’ financial statements, through the use of Benford’s Law, has been performed on capital markets of different countries: Hungary [ 25 ], India [ 26 ], Indonesia [ 27 ], Korea [ 28 ], Poland [ 29 ], Romania [ 30 ], Russia [ 31 ], Taiwan [ 32 ], Turkey [ 33 ], UK [ 34 ] and USA [ 35 , 36 ].…”

Window Dressing of Financial Statements in the Era of Digital Finance: A Study of Small Cap Indian Companies

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