Benford's Law can help detect fraud by:
A) establishing weaknesses in the accounting control system.
B) identifying accounting anomalies.
C) focusing on unexplained changes.
D) identifying possible attempts by fraudsters to make stolen amounts look random.

Question

Quizplus · Accepted Answer

Benford's Law is a statistical tool that predicts the expected frequency distribution of the first digit of numbers in certain data sets. It has been observed to apply to financial data, where the first digit of numbers in legitimate financial transactions should follow the expected frequencies. If fraudsters attempt to make stolen amounts look random by manipulating the first digits of their fraudulent transactions, it will not follow the expected frequencies of Benford's Law, which can indicate possible fraud activity. Therefore, the best choice is D, identifying possible attempts by fraudsters to make stolen amounts look random.

Benford's Law Can Help Detect Fraud By