IS BENFORD’S LAW EFFECTIVE IN FRAUD DETECTION FOR EXPENSE CYCLE?

Authors : Emre ERGİN, İlkay Ejder ERTURAN

Pages : 316-326

Doi:10.14780/muiibd.854444

View : 19 | Download : 11

Publication Date : 2020-12-31

Article Type : Research Paper

Abstract :Despite measures taken by firms to prevent fraud, it has been found in recent studies that losses derived from fraudulent activities are increasing on a global basis. International standards on auditing do not define which analytical approaches and technological tools to be used in performing audit. Decisions are left on the auditor’s judgment. Auditors try to use digital techniques to deal with mass data sets generated by firms. Academic research may mislead practitioners as controversial outcomes exist in literature concerning empirical research. Benford’s Law insert ignore into journalissuearticles values(BL); is one of the methods used frequently in digital analysis. Although some researchers defend the use of BL in audit, especially in fraud detection, this paper disputes its effectiveness for expense cycle. Different firm’s data are tested to conclude that the use of BL is not appropriate for expense items. The reasons of this deficiency are explained in this paper.
Keywords : Benfords Law, Audit, Fraud, Expense Cycle