How Forensic Accountants Use Benford’s Law To Detect Fraud

Most naturally occurring data sets follow a strange rule called Benford’s Law. This rule allows you to predict how often each number 1 through 9 will appear as the first non-zero digit in the data set.

Benford’s Law can be used to analyse financial data and identify red flags. If the data doesn’t look anything like the distribution predicted by Benford’s Law it may mean the numbers have been manipulated.

Produced by Sara Silverstein

Follow BI Video: On Facebook