Abstract:

One of the most important mathematical methods employed in auditing is Benford’s Law and digital analysis performed within this scope. Benford’s Law is a mathematical theory based on a logarithm of probability of occurence of digits. It provides the auditor with an efficient and simple means of detecting possible errors, frauds, or other irregularities. The auditor is better able to isolate whether the digital distribution of the data examined by digital analysis is compatible with the actual distribution. The current study investigates the utility of Benford’s Law with auditing purposes. In the first part, historical development of Benford’s Law and theoretical frame of the study is dealt with and related literature is examined. The second part focuses on the application of Benford’s Law on auditing by explaining under what conditions the digital anaysis is useful or invalid.

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