How to Detect Fraud Using Benford's Law
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- Опубліковано 27 вер 2024
- Forensic Accountant Robert A. Bonavito discusses Benford’s Law which is a technique to detect fraud especially when analyzing tax returns, general ledgers and other items that contain a large amount of numerical data
Topic Overview:
✔️ What is Benford’s Law?
✔️ Expected Data When Applying Benford's Law
✔️ Example of Benford's Law by Analyzing COVID Data
Website Mentioned:
www.cdc.gov/co...
👉 For more information contact me below or visit our website: www.rabcpafirm...
Robert A. Bonavito, CPA
1812 Front St.
Scotch Plains, NJ 07076
908-322-7719 - Авто та транспорт
One Month Ago... Bruh, he drops the smoking gun a month before it happens. This man is a psychic!
UA-cam changed the date
Yeah it’s not like Benford’s law existed before the election or was ever used
@@NotKewl According to people on Twitter, quite a few people, Benford's law before the election was a decent tool and it had its uses to detect fraud. After the election, it is just a pipe dream of the sore losers and not reliable.
Life comes at ya fast.
It was expected that the dems would cheat for a long time now
It was used to catch Bernie Madoff
Upvote if you are here because of the 2020 election “results”.
yes and was sad to find out this law doesn't work well for election fraud detecting. see description and thesis paper showing it didn't work in the past: ua-cam.com/video/vIsDjbhbADY/v-deo.html&authuser=0
@@dylanmcgriff822 Think you may have the wrong link in your comment. The ua-cam.com/video/vIsDjbhbADY/v-deo.html&authuser=0 link goes to a video just explaining the law and does not address how it applies to elections.
@@reasonforge9997 Yes, read his 2020 election update in his discriptions below. He references this paper: core.ac.uk/download/pdf/206427437.pdf
@@dylanmcgriff822 Update, found the paper link in video description and read it and left comment on that video. The paper was full of much rhetoric but when it finally got to a real argument it picked artificial district sizes in a simulation--which seems ridiculous if they were really interested in simulating real life. From their description of their simulation: " "Our
simulations, though, consist of two types. In the first type, we simulate an election by creating 1000
districts wherein each contains the same fixed number of eligible voters. Here we run several sequences
of elections where every district contains 1000 eligible voters, elections where every district contains
10,000 voters, and elections where every district contains 20,000 voters".
This helps prove voter fraud!
No, you can’t use Benford’s Law to tell whether this cdc data is manipulated. For one the dataset is much too small (only 56 data points), giving random events too much weight.
You can do the same analysis for the population count of the US states and will get a similar “fraudulent” looking histogram.
Robert my man, get ready for a Red wave of Subs. 🙏🏾
Unless he gets removed for being fake news
@@PRODAt3 ARCHIVE EVERYTHING!
some kind of miracle... i’m not going to go out and riot if we have to live under a Biden administration but man...his gun reform policies is OUTRAGEOUS. no online gun sales, ammo sales, or gun accessory sales: gun parts (springs, screws, pins, slings, mags, etc.)...a new age identity politics...scary stuff.
Why? Because a bunch of Republicans falsy think they can apply Benford's Law in a place where it SHOULD NOT under any circumstance be applied? Watch this video: ua-cam.com/video/etx0k1nLn78/v-deo.html
@@TomGalonska OK... Looks like Trumps data is way outta wack...But Biden's is A-OK. Sounds good? So... Umm.... Why don't we look into that?
Do you see a lot of Republicans saying that if there was fraud on behalf of Trump we shouldn't look into that?
What I am seeing is almost universal, the Republicans want a second look at the numbers where as the Democrats, even when the numbers show that it is Trump doing the tampering, do not want to look at the numbers and are fine with the result.
Frankly, it doesn't matter what party you subscribe to, these anomalies should encourage you to look further into the counts no?
Not only that, but the districts that Quick Maths provided were of Chicago where is this Forensic Accountant did all of Georgia.
IT DOESN'T MATTER WHOSE SIDE YOU ARE A FANGIRL FOR! THE ANOMALIES ARE THERE ON BOTH SIDES NO? THEN LOOOOOOOOK INTO IT!!!!!!!!!!!!!!!
Its not the Republicans that are having a tough time getting it this time around.
Do a video on the election using Benfords Law. Thank you.
yes and was sad to find out this law doesn't work well for election fraud detecting. see description and thesis paper showing it didn't work in the past: ua-cam.com/video/vIsDjbhbADY/v-deo.html&authuser=0
@@dylanmcgriff822 paid shill
Dylan McGriff probably edited the wikipedia page to say that too, thats why he links to a random video about the law.
Check out his new video: ua-cam.com/video/DoF3WS42w3M/v-deo.html
@@r-gart The guy made a vid on how Benfords law does not work for elections in 2011. He's not a paid shill. You;re just a moron
Wow I stumbled upon this. Great presentation by the way, I’m wondering, can you apply Benfords Law to the results Of the 2020 Presidential Election?
Yes, and how has this been applied to other elections in failed democratic elections?
Thanks Pb X, really glad you enjoyed the video. Yes, unfortunately, the 2020 election results will have similar issues when we apply Benford’s law.
Trump vote totals conform rather well to Benford's law, one of the first things you'd check in trying to determine whether there was fraud. Biden's fail miserably, and, what's more, the frequencies of leading digits for him are virtually symmetric about 5: exactly what you get if these were faked by those ignorant of Benford's law, and wanting to manufacture "average" looking numbers, those that begin with 4,5, or 6
@@d1agram4 I was sad to find out this law doesn't work well for election fraud detecting. see description and thesis paper showing it didn't work in the past: ua-cam.com/video/vIsDjbhbADY/v-deo.html&authuser=0
@@dylanmcgriff822 shill
You should probably mention that Benford's law only applies to datasets that cross several orders of magnitude. A lot of people are being mislead by this with the election results. If, for example, all the values in the dataset are two digit numbers then Benford's law does NOT apply.
AND only if the dataset is big enough.
And even if the criteria are met and there is a violation, it's an indicator, not proof
I'm amazed that youtube would recommend this. The machine AI must not realize this goes against their narrative.
@Smarmy Fellow no, its not. the "maths" he's trying to use here is not apt at all for this situation. if you want, you should look up benfords law yourself and watch a vid from an actual mathematician so you understand
@@notme-ji5uo I agree to an extent, but that's not to suggest what he's explaining and uncovered isn't applicable in this case. He didn't say the reasons why the data could be misleading, only that something merits further investigation. I understand what you're saying though, due to other unforeseen circumstances (depending on the situation and circumstances) these anomalies would alter the results making the progressive curve less uniform. As he also said, this Benford's Law is a preliminary tool to look for anomalies, perhaps he should have then delved in deeper from that point on to see what else were the actual causes.
I did a presentation of Benford's Law in my fraud class in the Masters of Accounting Degree.
I would do an overlay of the presented number against the Benford's distribution.
can you tell me about fake data entry i mean how can we know the data is fake or authentic? for example if someone has 150 responses and duplicate the data and make some changes in it and make it 300 is there any way we can find out that the data of 150 responses is fake or not?
Who's here after the 2020 us election?? Haha
If you actually care enough about this to watch a 2 minute intro, here you go: ua-cam.com/video/etx0k1nLn78/v-deo.html
Me
Everyone lol
@@thelastengineer2315 me 2....
That is EXACTLY why I'm here!
I’ll be taking this to court
that awkward moment when bidens election results break this law, and only in the swing states lol
Are you sure it's only in the swing states? Has anybody ever checked the election results in CA and NY against the Benford law?
@@mengyuanxian3279 Nah, they just watched one video one the results from the Detroit area and became instant experts. Next they'll prove the USPS is fraud because zip codes don't follow Benford's law.
@@SBBurzmali How's that CNN internship coming along ? I see your already falling in line ... you'll do just fine
@@chadbitcoin5085 lol, have you woven CNN into this conspiracy to steal the election or that just the go to attack these days?
@@SBBurzmali Even without benford's law theres been several witness accounts from postal workers and poll workers directly corelating to some of the fradulent/compromised votes we see
Mr. Bonavito, please do a video on this election in relations to Benford's Law.
yes and was sad to find out this law doesn't work well for election fraud detecting. see description and thesis paper showing it didn't work in the past: ua-cam.com/video/vIsDjbhbADY/v-deo.html&authuser=0
@@dylanmcgriff822 American used it to detect fraud in the 2009 Iranian election
@@dylanmcgriff822 No, it actually works
As the only detraction is that certain areas tend a little bit towards certain leading digits, but not enough that a benfords law with a large data set would fail to follow the general trend. It is only a distinction that matters if you are looking at very minor deviations from benfords law, it doesn't apply to massive deviations.
You just get the curve being a little steeper or a little less steep, the general curve still exists.
Not to mention, every other location in this election follows the trend. And the only ones that don't just happen to be for biden in the massive swing states.
@@dylanmcgriff822 Benford law still applies. It's just not as steep. It's not supposed to have such massive deviations as Biden's does.
To everyone asking for a thorough Benford’s Law analysis of the Chicago precinct election results, the mathematician Matt Parker did a thorough look on his UA-cam channel Stand-up Maths.
The long and short of it is that Benford’s Law is not suitable for all data sets. Specifically, it’s a good indicator only for datasets that span multiple orders of magnitude. Consider a dataset that follows a normal (bell curve) distribution. If, for example, all of these data are one-digit numbers, then the Benford’s Law graph would be equivalent to a histogram of the data; it would look like a bell curve, which doesn’t match Benford’s Law. This doesn’t mean the data is fraudulent, it just means that it doesn’t cover a wide enough range for Benford’s Law to be applicable. A real-world example of this would be the distribution of adult heights in inches- all of the data will be two-digit numbers, so plotting all of the first digits is the same as just grouping all of the data into 10-inch bins. Legitimate data, doesn’t follow Benford’s Law.
The issue with the Chicago precincts is twofold: first, 98% of the precincts had vote totals between 100 and 1000 (average of 516, stdev of 173) and second, Biden was the favorite in the majority of the precincts. This means that the vast majority of Biden vote totals were three-digit numbers, while about 30% of Trump vote totals were three-digit numbers with 70% as two- or one-digit numbers. This means that, like in the example above, the Biden graph of the data is essentially a histogram with a bin size of 100, which we would reasonably expect to follow a normal distribution, which we see. Meanwhile the Trump data significantly covers three orders of magnitude, making it a suitable dataset for Benford’s Law.
Apply this law to each county & state electoral return's and publish the results. It will be very interesting to see how each state is different
It's already been proven in Chicago.
A good video, but I gotta say that Covid data looked like it conformed pretty well with Benford's Law. There are only a few dozen data points, which is not many when you have nine slots to fill with data. Obviously, 1 is going to be the number that starts to take shape first as you add data and produce the Benford graph. 2 will be the second quickest slot to take it's proper shape. In this data, 1 occurs most frequently and 2 is already in the 2 spot. The rest of the graph deviates, but not wildly, and there are limited data points.
I think the Covid data follows the rule decently well.
My man you are about to get a lot of views once people start hearing about Benford’s Law
ive noticed that the number 6 is usually the number that is second highest on the chart when benfords laws doesn't work on the data. why is that?
or doesn't show true benfords law curve. sorry not sure if that make sense.
If the number 6 has the second-highest frequency, then it probably means that the data is not random or the sample size is not large enough. When our analysis comes up with the number 6 as the second-highest frequency, it’s usually telling us that the data is manipulated and probably fraudulent.
Thanks for the observation
Robert
@@Rabcpafirm awesome thanks for the reply
I was sad to find out the Benford's Law doesn't work well for election fraud detecting. see description and thesis paper showing it didn't work in the past: ua-cam.com/video/vIsDjbhbADY/v-deo.html&authuser=0 core.ac.uk/download/pdf/206427437.pdf
Now that's some very good short example, quite helpful for getting a quick, basic grasp of how the law gets applied on practical level. You just earned another sub sir!
"The logorithms are way out of wack". Im getting that tattooed
Hilarious
Hi Robert, thanks for sharing this information.
Probably gonna sound like a broken record here in the comment section but I am too here due to the 2020 election.
The numbers in a phone book won't follow Benford's law. Also there are some assumptions that must be true in your data for Benford's law to be applicable.
Like uncle Joe said "follow the science."
Bensford's law only applies when there is a large range in the sizes of the data sets. en.wikipedia.org/wiki/Benford%27s_law It would have been nice if you had mentioned it. There may also be a misunderstanding of the definition of "law." A law is "a generally valid description, usually mathematical." In engineering, for example, Hooke's law is not valid for all materials over all stresses.
Good presentation. One last step to statistically decide if the number set conserves to Benford' s law is doing Chi Square test
running befords law on a data set of
At 2:50 Not sure it will work on the numbers of a phone book as they are not naturally occurring counts but may be artificially distributed.
I thought that too. Especially if it’s a local phone book, the numbers will have a higher likelihood of starting with a particular number due to area codes. Now if you took all the phone numbers in the US, that might be different. I wonder what he meant
A practical example of how to apply Benford's Law! Great job!
Unfortunately not - there are major flaws in this application (e.g. it is based on just 50 numbers whereas Benford's law would need much larger datasets across several orders of magnitude to have any chance of the dataset conforming to the pattern shown in Benford's law. Check this video out for a much more insightful analysis on Benford's law. ua-cam.com/video/etx0k1nLn78/v-deo.html
This is such a small data set that you would expect some statistical variation. Digits 1 and 2 are the biggest but in a small set, the remaining digits are basically meaningless
The database you used for the example looks too small, 7 days' data seems to be small of sample size to be accurate. I heard it should be over something like 2000 to be more accurate, is that true?
Can you please show an example of a actual data set that has no fraud and the graph stating that?
Im seeing a lot of criticism saying that Benfords law is not applicable to the election results. Its only applicable for accounting....
This is amazing!
Our friend told us about Standard deviation many times. (4639, 4247, 3896, 3727, 3439, 2567, 2461 and many more)
#SloppyPoppy
Please save Trump!
Have no fear, New Jersey Forensic Accountant is here!
Everyone on the left rn: "im gonna pretend i didn't see that"
Would you consider doing a benford's law video for New York's COVID-19 data?
Your dataset is very small.
I applied Benfords law to a variety of datasets that I had used in my college days and not one follows it.
The datasets ranged from modules relating to finance, economics, marketing and 1 HR subject.
I performed most of them with high integrity and caution yet not one of them follows this law.
What could be some of the possible explanations for this?
Regardless of political affiliation, the possibility of fraud in a free and fair society should disgust and concern *everyone*. Unless we want to become a third world nation, this must be taken seriously and thoroughly investigated. Thank you for such a fantastic explanation and analysis.
I'd recommend to all viewers to check out the video by Matt Parker on his Stand-up Maths channel where he explains Benford's Law and the US 2020 election results in greater detail. Gives good insight and will help put to rest any conspiracy theories as far as at least Benford's law is concerned. The apparent anomalies in the election data when Benford's Law is applied are discussed and proven to be as expected given the constraints of the system.
If there is some sort of conspiracy, this is provably not it.
It should be renamed to Biden's Law
The hero America needs, the hero America deserves.
"Biden's Law"
A question, if we take a supplier ledger account balance every end of day and plot it so its results should be same as benford law ? or suppose a cash ledger debit entries and then credit entries balance will they follow this law ? Please elaborate
If the numbers are random, you can utilize ledger account balances or cash ledger debit entries and credit entries. Remember, Bedford’s law only tells you there may be a problem; you have to do extensive forensic accounting to substantiate any anomalies
The CDC data shows total cases in each state, why would we expect that number to be randomly distributed? It doesn't even make sense that it would be, different states have different conditions, they are not all identical population densities, number of large cities, movement of people intra and inter state, etc. If Benford's Law looks to see if data is random this data set has no reason to be random.
We need to spread this as far as we can. I learned of Benford's Law from Louder with Crowder. Hopefully the President can learn of this fraud detection technique.
Dont worry, the guy who made this video actually commented a few days ago he was contacted to help with the investigations.
I mean. Here we are a month later. This man gave us the clear guide we need.
What happens when you cheack Benfords law on the 2019 flew season database?
Very interesting.
Why is it that the numbers are distributed in this way?
Is there’s a short answer to that question?
Also you look at cause and effect. Is it logical or not?
This infinity backfired, lol... I feel you man, people trust forensic way too much
I still don’t understand how the first number of a data number value relates to data being tampered with or frauded. Seems there would be many variables depending and suitable to the data set which would not be considered under Bedford’s law.
Can Benford's law be assistive in investigating fraud cases where fraudsters misused the Covid relief funds? Is there a pattern observed in cases already investigated?
Yes, we used it on vaccine data
@@Rabcpafirm I recently read an article in NewYork times. It said that the government released $5 Trillion in relief funds. Billions of dollars from these grants were misused by fraudsters …. There are thousands of such fraud cases that the investigators are looking into. I was wondering if Benford law could be helpful there.
@@AditiJainSyal Yes, we have used Benford's Law to focus are fraud selection targets
Now as a hypothetical would some fraudster who knew of Benfords law be able to manipulate the data in such a way that it was still fraudulent but fell well within the law? Or is that sort of thing unmanageable like trying to keep track of a lie.
How does the size of the data set affect the fit of that logarithmic curve? Simple chance must be involved for small data sets. After all, a Data set of one value will have a 100% spike on one digit. Is there a rule for how many numbers a data set must have before you rely on this method?
laymens terms a tool for verify garbage in garbage out data. The difficult part is where, whom, what created this garbage data and the fraud part is why (motive)?
Is there any case where numbers were legitimate, or more accurately, fraud was not found where the histogram did not look like the model random distribution?
Phone numbers do not follow the law. In Finland for example all numbers begin with 0. Benford's law applies in figures were the variation is high there is no clear upper limit, like sums that can be just a few dollars to thousands of dollars. It does not apply to cases where the variation is small and in a limited range like human heights.
Thank you very much! We all need to know the truth about the election, whatever it turns out to be.
Applying this test outside of financials is tricky. It works well with general ledger items because the prices come from unrelated external sources. It's great for accounting.
When you're looking at something from a single measured source, like these COVID results, the data needs a spread of many orders of magnitude for the test to be useful.
Try this:
Measure the height, in inches, of everybody you know and run it through this test. Why are 6 and 7 dominating everything? Did you manipulate the data? Of course not.
Doesn't the size of the data set matter? Is there proof that a data set of only 50 items is large enough?
Glad I got to see this before youtube censored it.
There’s a video done by a mathematician and a study that shows how Benford’s law doesn’t work in counting swing districts in cities.
Can Benfords Law be used when one party voted by person and the other side was voted later by mail?
I never thought I'd say accounting was fun, but anything forensic is interesting.
I’m not sure if I understand this properly but how can you use Benford’s law on a raw data and determine some sort of manipulation in numbers if the numbers are not supposed to go in sequence and don’t have causal or correlative relationship with eachother? (Maybe it’s just a stupid question because I don’t fully understand how it works on this particular example).
I hope you can show the irregularities.
Math question: Is it possible to manipulate data so that the numbers seem to be alright? This method seems to be very not effective versus people who are aware of it.
If the data does not follow an exponential growth does the law still work?
Thanks, but I don't understand why it should flow that pattern. Different state populations should have wildly different numbers of cases, right? Arbitrary borders (states) may not be the best way to group this. I have to wonder that, if the data was total cases by blocks of US land with the same population in each, would the results follow Benford's law?
A good general explanation of Benford's Law, but his example has way too few data points to expect a close fit to the curve.
I can't thank you enough for this video. It was so instructive and clarifying, and easy to understand, and it took just a few minutes. I'll share this video on every opportunity I get.
Again, thank you very much.
Just checked covid confirmed numbers in 470 cities in china, and the distribution follows the law perfectly...
It just hit me. I understand it now.
Nice
Distribution is the key . Like chicago . The way the make up is heavy blue districs go all at once it will spike numbers am I right ?
In the Covid cases example, isn't the applicability of the Benford's law impacted by the place values (tens/hundreds/thousands/etc) of these numbers? What I mean is that due to the pandemic having run its course for a long while there appear to be many states with cases in the hundreds of thousands instead of tens of thousands. Thus, the distribution of first digits shift more towards 1 (cases being in hundreds of thousands) or high end 6, 7, 8, 9 (cases being in high tens of thousands). The gap between 2 and 5 could be explained by having fewer states that handled the pandemic well or just rural/small population states.
I am genuinely curious on your thoughts! I would definitely be interested in learning more about the theory behind Benford's law and also its limitations.
You don't apply benfords law to an epidemic or pandemic you apply the SIRS or SIR model. Growth of infections can change and is dependant on the organism /virus among many other factors
you should also do tests on data sets not likely to be fraudulent/manipulated at all in the video.
This is a very fascinating subject
cool
This phenomenon will save the fate of the free world
Sir, this video is about to get a LOT of views as people look up Benford's Law -- and your graph has *Benson's* Law!
Benson's Law - The butler is the funniest person in the house and gets his own spinoff.
If you test positive then test positive again a week later it is counted as 2 positive tests, not 1 individual person.
What if the median of cases is 150000 and there's is a small variance (from the median)? (which seems to be somehow the case) That can explain why so many numbers start with 1. Now what is the proper median, what is the proper variation, these questions would need deeper analysis and comparison with other data. Thank you for the idea and the formulas though. As a future auditor, this might be useful :)
Unfortunately Benfords Law is known to NOT be effective in the specific case of elections. This is because the voter districts are divided into roughly equal populations. This means the numbers aren’t random. If each district has a thousand voters and it’s a close race you will have a lot more 4s and 5s as first numbers than 1s and 2s.
Show me the DATA TO SUPPORT that there are NO anomalies in any of the data we analyzed.
@@Rabcpafirm "It's not my job to prove that anomalies exist. It's your job to prove they don't exist".
How did you ever become a lawyer?
Make Benfords Law Great Again
Before selecting this video shows 27k views. Once I select the video it shows 36k views......weird
Benford's Law... "Covid 9" GUILTY!
Nice
2020 election!! I subbed, hoping to see this channel talk about 2020.
"Thanks" for the UA-cam algorithm on this one. Very interesting!
However, I don't understand how a figure starting with a '1' is substantial in and of itself.
So, if a small testing area had '100', a larger area had '10,000', and another area had '100,000', that they could remotely be in the same sample group. Another thought, if one area had 90, and another had 90,000, they're in the same group.
Granted, I didn't take much higher math in my schooling, but the layman in me can't wrap his head around the fact '90' is in the same group as '9,000,000'.
Please explain!
Why are they calling it "Benson's Law" on the graph?
How about running the numbers on California's Governor's recall ?
My team is looking at the election results
Benford's Law only works if the data covers a very large range of magnitude. If most of the data is, say between 100 and 1000, you would expect more of a normal distribution. It can reveal suspicious things but it can't just prove fraud, you have to look at the data and try to figure out *why* it behaves that way. What explanations based on sampling and how the data is spread match the graph? What explanations where it is "fraudulent" would explain why it is what it is?
In this case, it looks like the data is distributed between having 5 digits, and having 6 digits where the first one is a 1 or a 2. (i.e. between 10000 and 200000). Before claiming fraud, I would check whether that is reasonable in terms of the sizes of each state.
WOW! I was wondering about this very question.
i dont know how i got here but great stuff thank for sharing
In one video, this dude just slammed the election AND COVID reporting - LEGEND!
If you showed that graph in court, I think the judge would ask "I get all this Benford's Law stuff, but what's Benson's Law?".
if we look at the view count of this video by day starting on Nov. 3, 2020, the graph will look the opposite of a benford's law curve
Numbers in the phonebook do NOT follow Benford's law, as they are assigned by humans. They are not random.
Is there a way to contact you regarding a matter I'm not comfortable sharing in these comments ?
Yes, email me robert@rabcpafirm.com