Benfords Law or the First Digit Law Essay Example | Topics and Well Written Essays - 1000 words

Benfords Law or the First Digit Law - bear witness ExampleI can astronomer names Simon Newcomb, who noticed that the earlier pages of logarithm tables that are use in the performance of calculations were much more worn than other pages. Newcomb published result become the setoff known instance of this observation and alike includes the distribution of the second digit. He then proposed a law of nature that is based on the probability of a single number N that is the first digit of a number was equal to log(N+1)log(N).The results from Benfords law are used in different selective information such(prenominal) as street addresses, electricity bills, population numbers, lengths or rivers, stock prices, death rates, mathematical and physical constants as well as processes that are described using power law. The main condition for this law is that the data set or population must only consist of natural numbers (Nigrini 170). The results from the law be to be highly accurate whenever th e values are distributed across numerous orders of magnitude.Benfords law is also highly used in the detection of fraud, errors, embezzlements, and sloppy accountants. This is because those people who normally commit a curse may end up creating fake payment amounts that may appear real. Benfords law is a data mining approach that is used in auditing in order to examine the digit properties in different accounting data for the purposes of character identification. However, unless the person committing is aware of Benfords law of distribution, then he will not be in a position to make up numbers that imitate the proper curve and this makes it very easy to spot a potential fraud. People who commit a crime also tend to distribute their digits in a fairly uniform manner. With a unsubdivided comparison of the frequency of the first digit from the data in accordance with the expected distributing according to Benfords law will always reveal anomalous results. Based on this idea, Benford s law could be used in auditing and forensic auditing to act as an indicator.