Using the Newcomb-Benford Law as a Deviation Identification Method in Continuous Auditing Environments: A Proposal for Detecting Deviations over Time

Authors

  • Wilton Bernardino da Silva Universidade Federal de Pernambuco; Centro de Ciências Sociais Aplicadas; Departamento de Ciências Contábeis e Atuariais
  • Silvana Karina de Melo Travassos Faculdade de Ciências Sociais Aplicadas; Departamento de Administração
  • Jose Isidio de Freitas Costa Tribunal de Contas do Estado de Pernambuco; Assessoria de Pesquisa e Inteligência

DOI:

https://doi.org/10.1590/1808-057x201702690

Abstract

This paper used the Newcomb-Benford Law (NB Law) to analyze 210,899 contracts issued by sixty management units in two states in the Brazilian Northeast in 2010. In this article we seek to address the following question: What proposal emerges from the need to identify financial deviations over time in terms of NB Law compliance in continuous auditing scenarios? To this end, the goal of the paper is to analyze this compliance with the aim of identifying deviations over time. The analysis focuses on first significant digit distribution. Graphical analysis of observed frequencies and time series of relative discrepancies reveals the formation of typical patterns of divergences from Public Tenders Law (Federal Law n. 8.666/93). From the results obtained, we conclude that time series analysis of NB Law compliance can improve the accuracy of sampling procedures in continuous auditing.

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Published

2017-04-01

Issue

Vol. 28 No. 73 (2017)

Section

Articles

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How to Cite

Silva, W. B. da, Travassos, S. K. de M., & Costa, J. I. de F. (2017). Using the Newcomb-Benford Law as a Deviation Identification Method in Continuous Auditing Environments: A Proposal for Detecting Deviations over Time . Revista Contabilidade & Finanças, 28(73), 11-26. https://doi.org/10.1590/1808-057x201702690