Use Of Benford's Law In Fraud Investigation Essay

Use Of Benford's Law In Fraud Investigation - Essay Example it is surmised that when used appropriately and prudently, Benford’s Law presents itself as useful tool in investigating fraud, particularly in relation to accounting and auditing situations. The mathematical validation of the law and the technological advances in the recent past, which facilitate faster and easier programs for digital analysis, have enhanced the usefulness of the law in detecting fraud, as the law is increasing used by forensic accountants and auditors. The cases discussed in the course of the paper demonstrate the usefulness of the law in detecting fraud in real life situations. However, it is important to note that the detection and establishment of fraud in the legal sense of the term calls for further analysis and Benford’s law is only a facilitator in detecting fraud, albeit an effective facilitator. Given the caution in SAS No. 99 that traditional statistical methods only provide broad indications of fraud, and the increasing incidences of white-collar crimes, the usefulness and applicability of Benford’s law in fraud investigation assumes greater significance. Benford’s law, is particularly useful as it conducts â€Å"digit by digit† analysis and helps in identifying the fraud exactly, despite the huge scale and size of data.