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Assessing the omission of records from a data set using Benford’s law

Pedro Carreira (School of Technology and Management and CIGS Management for Sustainability Research Center, Leiria Polytechnic Institute , Leiria, Portugal)
Carlos Gomes da Silva (School of Technology and Management, Leiria Polytechnic Institute , Leiria, Portugal and INESC Coimbra, Coimbra, Portugal)

Journal of Financial Crime

ISSN: 1359-0790

Article publication date: 3 October 2016

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Abstract

Purpose

The purpose of this paper is to propose a methodology to estimate the number of records that were omitted from a data set, and to assess its effectiveness.

Design/methodology/approach

The procedure to estimate the number of records that were omitted from a data set is based on Benford’s law. Empirical experiments are performed to illustrate the application of the procedure. In detail, two simulated Benford-conforming data sets are distorted and the procedure is then used to recover the original patterns of the data sets.

Findings

The effectiveness of the procedure seems to increase with the degree of conformity of the original data set with Benford’s law.

Practical implications

This work can be useful in auditing and economic crime detection, namely in identifying tax evasion.

Originality/value

This work is the first to propose Benford’s law as a tool to detect data evasion.

Keywords

Citation

Carreira, P. and Gomes da Silva, C. (2016), "Assessing the omission of records from a data set using Benford’s law", Journal of Financial Crime, Vol. 23 No. 4, pp. 798-805. https://doi.org/10.1108/JFC-10-2015-0060

Publisher

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Emerald Group Publishing Limited

Copyright © 2016, Emerald Group Publishing Limited