Comments on: Fun (and Fraud Detection) with Benford’s Law http://www.kirix.com/blog/2008/07/22/fun-and-fraud-detection-with-benfords-law/ The Official Kirix Weblog Sat, 13 Mar 2010 10:29:00 +0000 http://wordpress.org/?v=2.3.3 By: Benford’s Law : How Credit Cards Detect Frauds « The Gifted’s Hub http://www.kirix.com/blog/2008/07/22/fun-and-fraud-detection-with-benfords-law/#comment-4311 Benford’s Law : How Credit Cards Detect Frauds « The Gifted’s Hub Tue, 09 Mar 2010 00:25:55 +0000 http://www.kirix.com/blog/2008/07/22/fun-and-fraud-detection-with-benfords-law/#comment-4311 [...] Leading Digit Probability 1 30.1% 2     17.6% 3     12.5% 4     9.7% 5    7.9% 6      6.7% 7     5.8% 8     5.1% 9     4.6% Now let's see in more details how this works. The following video is taken from the website called Kirix. [...] […] Leading Digit Probability 1 30.1% 2     17.6% 3     12.5% 4     9.7% 5    7.9% 6      6.7% 7     5.8% 8     5.1% 9     4.6% Now let’s see in more details how this works. The following video is taken from the website called Kirix. […]

]]> By: learned something new | davehamel.com http://www.kirix.com/blog/2008/07/22/fun-and-fraud-detection-with-benfords-law/#comment-4268 learned something new | davehamel.com Wed, 09 Dec 2009 02:32:28 +0000 http://www.kirix.com/blog/2008/07/22/fun-and-fraud-detection-with-benfords-law/#comment-4268 [...] cool part is, forensic investigators use it when the think some one is cooking the books! Check out this cool video on it and actual data sets. It’s kind of freaky [...] […] cool part is, forensic investigators use it when the think some one is cooking the books! Check out this cool video on it and actual data sets. It’s kind of freaky […]

]]> By: Luc http://www.kirix.com/blog/2008/07/22/fun-and-fraud-detection-with-benfords-law/#comment-4267 Luc Sun, 06 Dec 2009 21:59:25 +0000 http://www.kirix.com/blog/2008/07/22/fun-and-fraud-detection-with-benfords-law/#comment-4267 This isn't actually just interresting; this is fasinating! I did the same as the 1st poster before i even read the reply, but with another random generator which generated 'random' numbers from one to a milion. At first it was close to the benford's law, but after like 500thousand it became more off. End result was this: 1: 241098 = 24.11% 2: 183346 = 18.33% 3: 145647 = 14.56% 4: 117081 = 11.71% 5: 94570 = 9.46% 6: 77008 = 7.70% 7: 60312 = 6.03% 8: 46829 = 4.68% 9: 34097 = 3.41% (the first number is how often it was chosen out of a milion times) Anyway, thanks for making the video. I've enjoyed it :) This isn’t actually just interresting; this is fasinating! I did the same as the 1st poster before i even read the reply, but with another random generator which generated ‘random’ numbers from one to a milion. At first it was close to the benford’s law, but after like 500thousand it became more off. End result was this:
1: 241098 = 24.11%
2: 183346 = 18.33%
3: 145647 = 14.56%
4: 117081 = 11.71%
5: 94570 = 9.46%
6: 77008 = 7.70%
7: 60312 = 6.03%
8: 46829 = 4.68%
9: 34097 = 3.41%
(the first number is how often it was chosen out of a milion times)

Anyway, thanks for making the video. I’ve enjoyed it :)

]]> By: Ken Kaczmarek http://www.kirix.com/blog/2008/07/22/fun-and-fraud-detection-with-benfords-law/#comment-2658 Ken Kaczmarek Thu, 30 Apr 2009 19:21:08 +0000 http://www.kirix.com/blog/2008/07/22/fun-and-fraud-detection-with-benfords-law/#comment-2658 Eric, that's great! Thanks for sharing. By the way -- we've got a couple other internal auditor extensions that we've been wanting to build (statistical sampling, stratification, etc.), so shoot us a support email (support@kirix.com) if you'd be interested in knowing when those get released for Strata too. Eric, that’s great! Thanks for sharing. By the way — we’ve got a couple other internal auditor extensions that we’ve been wanting to build (statistical sampling, stratification, etc.), so shoot us a support email (support@kirix.com) if you’d be interested in knowing when those get released for Strata too.

]]> By: Eric http://www.kirix.com/blog/2008/07/22/fun-and-fraud-detection-with-benfords-law/#comment-2657 Eric Thu, 30 Apr 2009 18:51:14 +0000 http://www.kirix.com/blog/2008/07/22/fun-and-fraud-detection-with-benfords-law/#comment-2657 Wow! I am an auditor and we use "judgemental sampling" in my department ... in other words we look at a set of records(disbursement checks, for example) and pick "x" number of them to test. Usually, that leads to samples based on interesting vendors or something like that. I decided to look into a better way to pick samples, so I tried using Banford's Law. Amazing! Out of a sample set of about 14,000, 5, 7, and 9 were off. The rest were within 5% of the predicted value. So, I used some other statistical analysis on the 5, 7, and 9 data sets and have, thusfar, uncovered six fraudulent schemes. I love numbers! Wow! I am an auditor and we use “judgemental sampling” in my department … in other words we look at a set of records(disbursement checks, for example) and pick “x” number of them to test. Usually, that leads to samples based on interesting vendors or something like that. I decided to look into a better way to pick samples, so I tried using Banford’s Law. Amazing! Out of a sample set of about 14,000, 5, 7, and 9 were off. The rest were within 5% of the predicted value. So, I used some other statistical analysis on the 5, 7, and 9 data sets and have, thusfar, uncovered six fraudulent schemes. I love numbers!

]]> By: Dusan Marjanov http://www.kirix.com/blog/2008/07/22/fun-and-fraud-detection-with-benfords-law/#comment-2615 Dusan Marjanov Tue, 17 Mar 2009 09:20:04 +0000 http://www.kirix.com/blog/2008/07/22/fun-and-fraud-detection-with-benfords-law/#comment-2615 But if we switch from decimal to binary numbers, every binary digit will start with 1! Thus, the first figure is 1 in 100% cases! But if we switch from decimal to binary numbers, every binary digit will start with 1! Thus, the first figure is 1 in 100% cases!

]]> By: Benford’s Law and Fraud Detection Analysis | Strata Extensions http://www.kirix.com/blog/2008/07/22/fun-and-fraud-detection-with-benfords-law/#comment-2016 Benford’s Law and Fraud Detection Analysis | Strata Extensions Thu, 19 Feb 2009 20:13:17 +0000 http://www.kirix.com/blog/2008/07/22/fun-and-fraud-detection-with-benfords-law/#comment-2016 [...] The Benford’s Law and Fraud Detection Analysis enables you to graph a data set against a Benford’s law curve to find abnormalities within the data.  This enables you to quickly ascertain the accuracy of the data, which is particularly helpful for detecting fraud in various business data such as check payment amounts.  See a video of this extension here. [...] […] The Benford’s Law and Fraud Detection Analysis enables you to graph a data set against a Benford’s law curve to find abnormalities within the data.  This enables you to quickly ascertain the accuracy of the data, which is particularly helpful for detecting fraud in various business data such as check payment amounts.  See a video of this extension here. […]

]]> By: Ken Kaczmarek http://www.kirix.com/blog/2008/07/22/fun-and-fraud-detection-with-benfords-law/#comment-1768 Ken Kaczmarek Tue, 03 Feb 2009 21:07:53 +0000 http://www.kirix.com/blog/2008/07/22/fun-and-fraud-detection-with-benfords-law/#comment-1768 As far as lotto... bottom line, you're out of luck. ;) The lottery is based on random numbers (number 10 has the same chance of appearing as the number 50). Benford works on "naturally occurring"/logarithmic amounts. As far as lotto… bottom line, you’re out of luck. ;) The lottery is based on random numbers (number 10 has the same chance of appearing as the number 50). Benford works on “naturally occurring”/logarithmic amounts.

]]> By: Tom http://www.kirix.com/blog/2008/07/22/fun-and-fraud-detection-with-benfords-law/#comment-1767 Tom Tue, 03 Feb 2009 20:59:18 +0000 http://www.kirix.com/blog/2008/07/22/fun-and-fraud-detection-with-benfords-law/#comment-1767 How can I use this to play lotto? How can I use this to play lotto?

]]> By: danielmadv http://www.kirix.com/blog/2008/07/22/fun-and-fraud-detection-with-benfords-law/#comment-1765 danielmadv Thu, 22 Jan 2009 13:58:29 +0000 http://www.kirix.com/blog/2008/07/22/fun-and-fraud-detection-with-benfords-law/#comment-1765 In the next link is Mark Nigrini explaining the Benford's Law and most interesting is his comentary about de data related on Enron and how can Benford's Law would advise from that fraud. http://fraudit.blogspot.com/2009/01/nigrini-y-ley-de-benford.html But, be carefully because in statistics there are the Errors Type I and Type II, an explanation and implications about these and Benford's Law in the next link http://fraudit.blogspot.com/2009/01/nigrini-y-ley-de-benford.html In the next link is Mark Nigrini explaining the Benford’s Law and most interesting is his comentary about de data related on Enron and how can Benford’s Law would advise from that fraud.
http://fraudit.blogspot.com/2009/01/nigrini-y-ley-de-benford.html

But, be carefully because in statistics there are the Errors Type I and Type II, an explanation and implications about these and Benford’s Law in the next link
http://fraudit.blogspot.com/2009/01/nigrini-y-ley-de-benford.html

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