This program implemented in Java computationally determines if the data in a given dataset follows Benford’s law.
According to Benford’s law, in data in some large-enough numerical datasets, the first significant digit is 1 much more often than would be expected; in fact, 1 occurs as the first significant digit in the data almost 30% of the time, and 9 occurs less than 5% of the time. (We would expect each to occur one-ninth, or about 11%, of the time if each digit were equally likely to occur as the first significant digit.)
the law could be used to detect possible fraud in lists of socio-economic data submitted in support of public planning decisions. Based on the plausible assumption that people who make up figures tend to distribute their digits fairly uniformly, a simple comparison of first-digit frequency distribution from the data with the expected distribution according to Benford's Law ought to show up any anomalous results.So Benford's Law could be used in forensic accounting and auditing as an indicator of accounting and expenses fraud.
According to Benford’s law, each digit occurs as the first significant digit in a dataset as follows:
| Digit | Percentage |
|---|---|
| 1 | 30.103% |
| 2 | 17.609% |
| 3 | 12.494% |
| 4 | 9.691% |
| 5 | 7.918% |
| 6 | 6.695% |
| 7 | 5.799% |
| 8 | 5.115% |
| 9 | 4.576% |
This program takes a given dataset as input and then check if the ouput follows Benford’s law.
The file data.txt, which contains our dataset as rows of numerical data, with each row representing one unit of data.
The percentage of occurrence of each digit as the first significant digit in the data, represented both numerically and visually.
Your output should appear as follows:
1 (4.550%) : *****
2 (32.123%) : ********************************
3 (23.623%) : ************************
4 (8.322%) : ********
5 (3.484%) : ***
6 (10.008%) : **********
7 (7.555%) : ********
8 (1.892%) : **
9 (8.443%) : ********
How to use it? ( You can download and click the runnableApp.jar to run this app on any computer windows or mac)
- Open the AccountingFraudDetection app on your computer
- Click the "read file" button to read a real life dataset (any company accounting data)
- This app will caculate and display the frequency distribution of leading significant digit for that dataset.