Faked numbers in a tax returns invoice or expense account cl

Faked numbers in a tax returns, invoice, or expense account claims often display patterns that aren\'t present in legitimate records. Remarkably, the first digits of numbers in legitimate records often follow a model known as Benford\'s law. True or False and Explain: If 10 expense account claims are selected at random with replacement it is unlikely that none begins with a 1

Check that the probabilities of the outcomes sum to exactly 1. This is therefore a

legitimate discrete probability model. Investigators can detect fraud by comparing the

first digits in records such as invoices paid by a business with these probabilities.

The probability that a first digit is equal to or greater than 6 is

P(X6)=P(X=6)+P(X=7)+P(X=8)+P(X=9)

=0.067+0.058+0.051+0.046=0.222

This is less than the probability that a record has first digit 1,

P(x=1)= 0.301

Fraudulent records tend to have too few 1s and too many higher first digits.

Note that the probability that a first digit is greater than or equal to 6 is not the same as the

probability that a first digit is strictly greater than 6.The latter probability is

P( x > 6) = 0.058 + 0.051 + 0.046 = 0.155

The outcome

6 is included in “greater than or equal to” and is not included in

“strictly greater than.”

$Faked numbers in a tax returns, invoice, or expense account claims often display patterns that aren\'t present in legitimate records. Remarkably, the first digi$

Faked numbers in a tax returns invoice or expense account cl

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