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A powerful new tool for all forensic accountants, or anyone who analyzes data that may have been altered Benford's Law gives the expected patterns of the digits in the numbers in tabulated data such as town and city populations or Madoff's fictitious portfolio returns. Those digits, in unaltered data, will not occur in equal proportions; there is a large bias towards the lower digits, so much so that nearly one-half of all numbers are expected to start with the digits 1 or 2. These patterns were originally discovered by physicist Frank Benford in the early 1930s, and have since been found to apply to all tabulated data. Mark J. Nigrini has been a pioneer in applying Benford's Law to auditing and forensic accounting, even before his groundbreaking 1999 Journal of Accountancy article introducing this useful tool to the accounting world. In Benford's Law, Nigrini shows the widespread applicability of Benford's Law and its practical uses to detect fraud, errors, and other anomalies.
Explores primary, associated, and advanced tests, all described with data sets that include corporate payments data and election data
Includes ten fraud detection studies, including vendor fraud, payroll fraud, due diligence when purchasing a business, and tax evasion
Covers financial statement fraud, with data from Enron, AIG, and companies that were the target of hedge fund short sales
Looks at how to detect Ponzi schemes, including data on Madoff, Waxenberg, and more
Examines many other applications, from the Clinton tax returns and the charitable gifts of Lehman Brothers to tax evasion and number invention
Benford's Law has 250 figures and uses 50 interesting authentic and fraudulent real-world data sets to explain both theory and practice, and concludes with an agenda and directions for future research. The companion website adds additional information and resources.
Dr. Nigrini does an excellent job juxtaposing ideas from various sources and delivering a very compelling exposition on Benford's Law coupled with many interesting examples. I can already see where Benford's Law may be applied to predicting the frequency of earthquakes in conjunction with the esteemed publication " The Signal and the Noise" by Nate Silver.
It is not common to find a book that you hope covers the topic you are looking for and entertains you at the same time.
Nigrini does a good job of developing the context of the book: some more esoteric math concepts, the challenges of getting new ideas through academia and the business world, and the unfortunate responsibility of catching bad people. My job requires me to communicate math to people who are NOT mathematicians, and I appreciate the help when I get it.
As a consultant in the area of fraud and forensics for more than six years, much of my work relates to data mining and analytics. Benford's Law is something I regularly use in my work. Nigrini's "Benford's Law" provides great insight into the history, current application and future uses of Benford's Law. If you're into the hardcore mathematics - the first few chapters will provide you just that. A history of Benford, his law and the theorems behind Benford's Law. Good news for those that aren't mathematicians (myself included) - it is written in a way even we can understand it! As the book progresses, it provides discussion about the variations and supplemental tests used in analyzing Benford's Law. Included are screen shots and how-to's on performing the tests in Excel and/or Access. From here there are numerous chapters showing how well-known fraud schemes look through the eyes of Benford's Law. This is not only interesting, but also quite beneficial if you are looking for "real-world" application.
Finally, Nigrini touches on the concept of "My Law". This is one of my favorite parts of the book, providing a new way to apply Benford's in a comparative environment. Overall, this book is a great resource on Benford's Law. Whether you enjoy reading on the topic or are trying to figure out how to apply Benford's Law in practice, this book should provide most (if not all) of what you are looking for. For those outside accounting, I think it is interesting reading on the topic of numbers manipulation and creation in data sets.
Product Details :
- Series: Wiley Corporate F&A (Book 586)
- Hardcover: 330 pages
- Publisher: Wiley; 1 edition (April 24, 2012)
- Language: English
- ISBN-10: 1118152859
- ISBN-13: 978-1118152850
- Product Dimensions: 1.3 x 7.2 x 10.2 inches
More Details about Benford's Law: Applications for Forensic Accounting, Auditing, and Fraud Detection (Wiley Corporate F&A), 1st Edition
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