The probability distribution given by the law suggests that certain digits will show up more often than others in certain sets of data – digit “1” should appear as the first digit about 30-31 percent of the time, 2” as the leading digit about 17-18 percent of the time and so on, te percentage gradually reducing to less than 5 percent for “9” as a leading digit. Te law works almost as a gimmick for certain random data sets, ngating the native logic that given the basic numbers 0 9, te probability of the occurrence of each number in data sets should be equal.
Wile the law was mostly applied by statisticians, pysicists, egineers and mathematicians in analyzing data sets in the past, te potentialities of the law and the advanced applications of technology in businesses, cupled with the increasing incidences of accounting and auditing frauds as exposed by the Enron debacle and many others in the recent years, ae facilitating accountants and auditors in applying the law to investigate and detect fraud in accounting and auditing situations.
Hllison and Pacini (2004) assert that, i used properly, Bnford’s law, wich facilitates digital analysis on transaction level data rather than aggregated data, cn assist auditors by identifying specific accounts in which fraud might reside so that they can then analyze the data in more depth. Ohers like Dr. Teodore Hill and Dr. Mrk Nigrini are also understood to be stanch proponents of the application of Benford’s law in fraud detection. It is understood that, tday income tax departments of several nations and several states, icluding California, a as a multitude of large companies and accounting are using fraud detection software based on Benford’s Law.
Bfore presenting the Benford’s law in its mathematical form, a understanding of the background of the law and its development would be worthwhile and add to the perceptive application of the law in significant situations. Te statistical representation of Benford’s Law, a expressed later in the section, ws the result of simple, yt discerning observation by Dr. Fank Benford, dring his career as a physicist at the General Electric Research Laboratories in Nw York Company, dring the 1920s and 1930s.
During these years, pysicist and mathematicians were largely dependent. ..
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