forensic accounting

09-90

9-90. The AICPA provides a free Excel spreadsheet pro- gram that can be used to test data for consistency with Benford's Law. A link to this spreadsheet is available at www.pearsonglobaleditions.com/rufus. Download the spreadsheet and study its structure as well as the manner in which it presents the results of the first-digit and second-digit tests. 1. Once you understand the spreadsheet, perform the following: a. Obtain the Excel data file for 1978 taxable income in the Chapter 8 materials via a link at www.pearsonglobaleditions.com/rufus., which will take you to a web site hosted by Dr. Mark Nigrini. b. Copy and paste the first 6,000 observations into the data entry tab (Column A) of the Fraud Buster spreadsheet. Remember to clear all existing data prior to performing this step. . c. Run Fraud Buster. 2. How do the results of the first-digit and second- digit tests compare to Benford's predicted distri- bution? Are there any digits you might investigate further? C E G K N R A First Two Digits Sample Rate Sample Frequency 03 0.0530230330 2 B Digits 10 11 12 33 14 15 16 9 0.13 10 Benforde 0.04 0.0078856 0.0024702100 0.032154663 603 0.028028724 0.02078330 1954 0220 0021170 0.000203386 0.019505155 OM DOT2167 et Arm 0.023481004 0.013333333 9 5 016 15 014 0.0207 0.018333350 0 1 0 0.12 70 20 erford 18 19 20 2 22 25 24 25 28 27 20 29 30 31 32 30 4 35 e O 0 24 O O 2 Oon 26 21 0 0.06 20 20 30 31 13 33 0.016380410 0.015794257 0.01623002 0.0172335 0.014240430 0.013 001200 0.012580127 0.0122 0.011699223 00114 0.01328101 0.010998354 0.01072 0104 0.010219105 0.000064221 0.00 0.0005453 o 002 0.6667 0.02007 0 0 0 0 M 0.020666667 0 0 004 0.02 30 40 41 2 43 44 2 2 0 EN98SUB 74 0 0.083333333 70 &&&* D m A B 1 2 3 4 5 F29 $5,601 $4,977 $5.959 56,267 $5,221 53,094 9 7 8 BOES 10 12 13 1 15 16 17 10 19 $450 $390 $74 $589 $290 $3,543 $1,078 $325 56,755 58.582 56,982 55.282 $7,772 $9,306 SR04 59.58 $11.918 $12,099 514338 OZ 21 TE 23 24 25 20 22 28 20 30 TE 12 35 10 $15.02 514.671 $15.917 514.722 51711 510654 517,133 S8833 517,70 5193 51011 $10.912 5164 SI IMET + esc