How to use the Benford Analysis Tests

All eight Benford Analysis Tests work in the same fashion.

From the SmartAnalzyer ribbon select Select & Run.

From the Audit Test Navigator select - IS Fraud Tool Kit - Benford Analysis.

You will then have the list of the eight tests available.  Select the tests you are interested in.  For this example I will use the Benford 1st Digit Test.

The first step is to tag the fields that will be used in the test.  Each test will use certain fields for the analysis, in the case of the Benford tests you will need an amount and a client (vendor) field.

Click on the No to select your fields.  You will now have the option to define your tags.

In the column called Field to Assign you can select the fields that correspond to the Tag Name, in this case Amount and Client Field.

Once the fields have been selected click on the green check mark to exit the dialog. The tagged will now change to Yes.

If the test needs additional input it will be indicated with Required.  Select the Required link and you will get the following dialog.

These dialogs will be different based on the test.  For the Benford tests you have several options that must be selected.  The first is the minimum number of transactions per vendor, the default is per the recommendations found in the IDEA documentation but can be changed if needed.  The tests can only be performed on Positive or Negative number, not both at the same time, so you must select one or the other.  Finally there is an option to create an Excel spreadsheet.  This will contain the summary data and graph for each client that meets the minimum number of transactions.  Once you have finished making changes click OK to exit the dialog.

The status will change to a start button and the assigned database will be shown.  Once you have the start button you can run the test.

The test will show its progress.

Once the test is complete you can view the results.

The file starting with the @ is the SmartAnazlyer result file.  So in this case there are 324 records in the result.  By clicking on the 324 you can bring up the transactions.  The file is also saved as an IDEA file automatically.

We can see the first two vendors in this example.  The following fields will be available:

• VENDORNUM - this is the file you selected for the client.
• FIRSTDIGIT - Shows which digit the results are for.
• ACTUAL - The actual number of times the first digit shows for this client.
• TOTAL_RECORDS - The total number of records for this client.
• EXPECTED - The expected number of times the first digit should appear.
• LOWERBOUND - This is the lower boundry of the range in which the predicted result should fall.
• UPPERBOUND - This is the upper boundry of the range in which the predicted result should fall.
• DIFFERENCE - This is the difference between the actual and expected.
• PERC_DIFFERENCE - This is the percent difference between the actual and expected.
• MAD_RESULT - This is the Mean Absolute Deviation that indicates whether the data conforms to the Benford's test.
• MAD_CONCLUSION - This is the MAD conclusion.  There are three results: Nonconformity, Close conformity and Acceptable conformity.

If you select Excel a spreadsheet will be created (assuming you have Excel installed) that will give a table for each client along with a graph.

You are then able to review the spreadsheet and show graphically which clients do not conform and should be looked at closer.