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CS Professional · Internal and Forensic Audit · Audit and Investigations

During a forensic review of Kaveri Pharma Ltd., the auditor wants to compare how a suspect's reported expenses are distributed against the expected pattern of leading digits in naturally occurring numbers, to spot possible fabrication. Which technique is the auditor applying?

The auditor is applying Benford's law analysis. It compares the frequency of leading digits in the data with the expected natural pattern, and large deviations may signal fabricated or manipulated numbers that merit deeper investigation.

  1. ABenford's law analysisCorrect
  2. BBank reconciliation
  3. CRatio of current assets to current liabilities
  4. DPhysical verification of inventory

Explanation

Benford's law predicts how frequently each leading digit appears in naturally occurring data sets. Significant deviations in expense data can indicate fabricated or manipulated figures. The other options do not test digit distributions.

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