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Identify irregularities and potential frauds in numerical datasets

What is Benford's Law?

Benford's Law is a statistical observation about the frequency distribution of leading digits in many real-life sets of numerical data. It states that in many naturally occurring collections of numbers, the leading digit is more likely to be small (e.g., 1, 2, or 3) than large.

The Underlying Principle

According to the law, the number 1 appears as the leading significant digit about 30% of the time, while 9 appears less than 5% of the time. A dataset that has been manipulated or fabricated will often deviate significantly from this expected pattern.

Why Auditors Use It

It provides a simple yet powerful test for spotting anomalies. Deviations from Benford's Law can indicate data invention, manipulation (e.g., rounding values to evade scrutiny), or processing errors, making it a key tool in forensic accounting and fraud detection.

A Practical Tool for Data Scrutiny

This website provides a robust tool to apply Benford's Law to your own data. By analyzing the first-digit frequencies in your datasets—such as invoice amounts, payment records, or journal entries—you can quickly identify subsets of data that warrant further investigation.

How It Works on This Site:

The process is designed to be straightforward:

  • Upload Your Data: Use the "Data Upload" link in the menu to upload your Excel file containing accounting entries or other numerical data.
  • Automatic Processing: The system validates your data and prepares it for analysis.
  • Perform the Analysis: Click the button below to proceed to the analysis tool.

This automated approach saves time and provides a scientific basis for your audit procedures, helping you focus your efforts on the areas of highest risk.

Go to the Analysis Tool
An auditor reviewing documents with a magnifying glass.