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Internal Audit Department
Benfords Law
Practical Example – Accounts
Payable
2
Introduction
The objective of the review was to undertake an independent systematic assessment of
the accounts payable d...
3
The Caveat
Whilst Benfords Law is a very useful tool the results have to be interpreted alongside the
conclusions of a w...
4
The Caveat cont ….
Duplicate Bank Account
Search
Query run to identify where different suppliers have the same bank
deta...
5
Benford’s Law – IDEA Steps
1. Obtain data file which includes all the details of paid invoices within the defined time
p...
6
Benford’s Law – The Results
6
Benford’s Law – The Results
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Benford's Law - Example - EDF

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Example of Benford's Law using IDEA

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Transcript of "Benford's Law - Example - EDF"

  1. 1. Internal Audit Department Benfords Law Practical Example – Accounts Payable
  2. 2. 2 Introduction The objective of the review was to undertake an independent systematic assessment of the accounts payable data. The audit scope focused on reviewing several months worth of accounts payable data in orderto: • identify potential duplicate payments • highlight unusual supplieractivity • highlight unusual payment activity • identify potential ghost suppliers
  3. 3. 3 The Caveat Whilst Benfords Law is a very useful tool the results have to be interpreted alongside the conclusions of a whole suite of tests. As part of the APaudit IDEA was used to performthe following tests: Identification of: - debit balances - historic invoices Query run to establish invoices which were debit balances to ensure appropriately classed as a credit note. Query run to establish extent of old invoices. Potential Duplicate Payments Several queries run to identify potential duplicate payments: Duplicate Query Supplier No Invoice No Invoice Date Invoice Amount 1 Match Match Match Match 2 Match Match Match 3 Match Match Match 4 Match Match Match 5 Match Match Match
  4. 4. 4 The Caveat cont …. Duplicate Bank Account Search Query run to identify where different suppliers have the same bank details. Ghost Suppliers Search Matching performed between Supplier Database and Employee database to establish whether there were any links between : ● address ● postcode ● bank details Date Analysis Identification of transactions posted at weekends. Benfords Law Analysis Query run to identify any potential anomalies in the data for further investigation
  5. 5. 5 Benford’s Law – IDEA Steps 1. Obtain data file which includes all the details of paid invoices within the defined time period 2. In this case had to remove negative amount (using the Extraction query) which had been classed as credit notes 3. Summarized the data by SupplierNo and Invoice No (as each invoice numberwas repeated foreach line itemon that invoice) 4. Chose Benford’s Law fromthe Analysis menu 5. Result is given in a table format which you can then convert into a graphical format foreasierinterpretation.
  6. 6. 6 Benford’s Law – The Results
  7. 7. 6 Benford’s Law – The Results
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