The number one method of monitoring and preventing long term fraud.

Many Internal Control Managers use Benford's Law to periodicly monitor their own financials, in order to follow up early on all suspicous activity. When you understand your company's long term statistical distribution as well as the company's typical Benford Distribution, one can spot short term changes(Red Flags) rather quickly and determine if further investigation is necessary.

When Benford's law is ran periodicly as part of an effective internal control process, and compared to prior results, it is the most effective and fastest method in determining irregularities in data. Whether it is ran on vendor accounts, inventories or sales ledgers, the data should show

Benfords Distribution in the long term.

Fraud examiners use Benford’s Law tests on natural numbers, like payment amounts. The theory is that if a fraudster submits fake invoices for payment, he won’t submit invoices for $125 or $189, he will submit invoices for $789 or $857. If this is repeated enough, it will alter the natural order and distribution.

Quickly determine any variance on any natural occurring numerical data; vendor accounts, income statements, general ledgers, insurance claims data, banking deposits, Municipal Agency budgets, etc.

Any large variances from period to period should be investigated as soon as posible in order to determine the reasons and minimize any duration of fraud, if it is determined to have accured.