Department of Mathematics

Colloquium

An Overview of Benford's Law with Applications

to Auditing

Rick Cleary, Ph. D.

Associate Professor of Mathematical Sciences

Chair of the Department of Mathematical Sciences

Bentley College

Waltham, MA

Abstract: Benford's law proposes a distribution of digits, most notably first digits, in measurements that span many orders of magnitude. Auditors have begun using Benford's law as part of fraud detection schemes in a variety of settings. It is well known, however, that Benford's law does not apply in certain conditions, such as when the data is all of the same order of magnitude. In this presentation we give an overview of Benford's law and we demonstrate some applications. We discuss how the related output from popular auditing software raises interesting statistical questions for the accounting community. (This work is being done jointly with Prof. Jay Thibodeau, Bentley College Department of Accountancy.).

Rick Cleary is Associate Professor and Chair of the Department of Mathematical Sciences at Bentley, a business university in Waltham, MA. He specializes in applied statistical analyses. He enjoys finding ways to use his knowledge of statistics and the research process to work with people in a variety of fields. In the past few years he has worked on problems in sports, biomechanics, market research, and plant pathology, among others. At Bentley since 2001, he is now learning the ways in which statistical tools are applied in accounting, economics and finance. He previously taught at Saint Michael's College in Vermont (1980-1997) and Cornell University (1997-2001). Prof. Cleary's interests outside the classroom tend to athletics, especially running, golf, baseball and basketball. He was an undergraduate at Oneonta State College in New York, and earned his Ph. D. in Statistics at Cornell.

Tuesday, March 1, 2005 4:00 p.m.

Jeanmarie 364

Refreshments will be served.