Discussion Question 37: Explain why Benford's Law is useful to auditors in the detection of fraud. (write a one page response for each question):

Answered: Discussion Question 37: Explain why…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Discussion Question 37: Explain why Benford's Law is useful to auditors in the detection of fraud. (write a one page response for each question):

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Step 1: Define Benford's Law:

Benford's Law, also known as the "first-digit law," is a statistical principle that states that in many naturally occurring datasets, the leading digits (the first digits) are not distributed uniformly, but rather follow a specific logarithmic distribution. The law predicts that the digit "1" will appear as the first digit approximately 30.1% of the time, followed by "2" with a lower frequency, and so on, down to "9."

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