Benford's Law Model (template)
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Fraud Doctor LLC
You can analyze naturally occurring numbers (e.g. transaction level data) to see if the actual distributions conform to Benford’s Law. Under certain conditions, deviations from Benford’s could indicate the possibility of human manipulation, i.e. fraud. Therefore, those results would require additional scrutiny. This analysis provides a direction of inquiry.
This is a model for Benford's Law analysis built in MS Excel which calculates graphical and tabular results for the following tests:
(F1) First Digit
(D2) Second Digit
(F2) First Two Digits
(F3) First Three Digits
(L1) Last Digit
(L2) Last Two Digits
-- Raw statistics on the data are calculated such as: N, Min, Max, Md, Mode, Mean, & StdDev.
-- Calculations to determine if the data set is large enough are performed.
-- Z-Scores are calculated for each digit as a measure of risk.
-- Risk for each digit is rank ordered for all tests.
-- Step by step instructions are included in the "User Notes" tab.