An IS auditor is tasked with reviewing an organization's purchase invoices to discover fictitious entries that may have been created as part of a suspected fraud scheme. Which of the following is the MOST effective data analysis technique for this situation?
Why Benford’s Law? Benford’s Law is a data analysis technique used to detect anomalies or irregularities in numerical datasets, particularly financial data like invoices. It works by comparing the frequency distribution of leading digits (1–9) in naturally occurring datasets. In legitimate data: Numbers starting with 1 appear about 30% of the time, 2 around 17%, and so on, decreasing to 9. If the actual distribution of invoice amounts significantly deviates from Benford’s expected pattern, it may indicate fabricated or manipulated values, such as fictitious purchase invoices.