BENFORD LAW AND COMPLETED PROJECT SETTLEMENT AUDIT

Abstract

The purpose of this study is to determine if the cost data of an investment project adheres to Benford’s Law, and if the cost information provided in the completed project settlement report becomes more reliable after undergoing an audit. The research data used in this study is the approved completed project settlement report of a public investment project, both before and after the audit. The analysis results indicate that the construction investment project cost data both before and after the audit follow Benford’s Law. Besides that, the post-audit data shows a higher level of compliance with Benford’s Law, which means that post-audit cost data is more reliable and has fewer errors. In terms of application, auditors can use the Benford distribution to identify and localize areas of fraud, which can help them select samples for detailed inspection of high-risk work items.