engleski

Challenges of Benford’s Law goodness-of-fit testing in discovering the distribution of first digits: comparison of two industries

Benford’s Law is a logarithmic distribution that gives the expected patterns of digits in numerical data. Digital analysis based on Benford’s Law is used by auditors and forensic accountants to detect anomalies in financial reports. This paper describes the first digit law that predicts the appearance of expected data as to respect Benford’s distributions. The aim of this paper was to test whether the financial statements from selected companies of two industries from Croatia comply with Benford’s Law of first digit. The paper demonstrates the difference in performance of two compared industries’ results.

Benford’s Law ; first digit distribution ; audit risk ; fraud detection ; financial statements ; significance level ; Croatia

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