In short
Benford's law describes the expected frequency of leading digits in many naturally occurring data sets: 1 appears first about 30% of the time, and 9 less than 5% of the time.
Key takeaways
- Auditors and analysts compare actual digit frequencies with the expected pattern to spot fabricated numbers.
- It doesn't apply to assigned numbers (such as invoice numbers) or data with set limits.
- A deviation points to where to look; it isn't proof of fraud.
Where it's tested
BAR: Data Analytics for Accounting — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
Under Benford's law, approximately what share of naturally occurring numbers in a large data set begin with the digit 1?