A continuous auditing implementation with Benford’s law and relative discrepancies to an SME in Turkey

Abstract

In this study, we analyze the proper use of Benford's Law in the technique of continuous auditing to determine the audit sample of a Small to Medium-Sized Enterprise (SME). Most other studies analyze corporate firms; however, we tested an SME with a relatively small data set. While testing, we determined the best technique, frequency, and data-set type to create an audit sample. We analyzed weekly and monthly time intervals. Also, we sought to answer the question of which dataset to analyze: the cumulative or non-cumulative one. To answer these questions, we benefited from Benford’s analysis and relative discrepancies techniques. The results demonstrate that using the relative discrepancies technique with a weekly cumulative dataset is the best option in our case.