Leveraging Digit Analysis to Predict Financial Statement Fraud Risk of Select few Listed Indian Companies

  • Abinash Rath, Dr. Ashit Saha

Abstract

Based on a peculiar observation by Frank Benford in 1938, it came to notice that, in naturally occurring random datasets the leading digits follow a logarithmic law of distribution. This law has applications in Big Data analytics, Accounting and Auditing, to detect operational inefficiencies and fraud. This paper attempts to apply Benford’s Distribution to the publicly available financial data of the five largest Indian Companies, listed in National Stock Exchange and to test its applicability and prospects. The study found that the financial data in consideration, complies perfectly with the digital distribution law and can be used as a tool for finding possibility of fraud while auditing financial data reported in the financial statements.

Published
2020-06-01
How to Cite
Abinash Rath, Dr. Ashit Saha. (2020). Leveraging Digit Analysis to Predict Financial Statement Fraud Risk of Select few Listed Indian Companies. International Journal of Advanced Science and Technology, 29(7s), 5830-5837. Retrieved from https://sersc.org/journals/index.php/IJAST/article/view/26497