The implementation of Benford's law testing method to detect fraud in customs audit

Muhamad Ridwan Tri Prabowo, Siti Nuryanah, Sardar M.N. Islam

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

1 Citation (Scopus)

Abstract

Benford's Law has been widely used as one of the risk analysis tools in detecting the possibility of fraud. The purpose of this study is to examine whether Benford's Law test method can be used as a complementary alternative method in identifying audit objects that are indication of fraud. Companies examined in this study are within the scope of the General Audit conducted in Indonesia, a developing country, during the period of 2016 with the transaction time for the period of 2014-2015. These companies are General Importers and Manufacturer Importers having more than 1,000 transactions in one audit period. The data set are divided into Customs Value and Total Charges for each sample. Benford's Law test results show that companies that did not pass the Second Digit test on any of the Customs Value or Total Charges and did not pass the First Two-Digit test on either the Customs Value or the Total Charges have a tendency to get a lower audit finding value than the companies that passed Second Digit test in Customs Value or Total Charges but did not pass First-Two Digit test either at Customs Value or at Total Charges. This study aims to assist Customs and Excise (CE) Auditor in summarizing the time required to determine the audit object that could be indication of fraud in relation to customs charges. Implementation of risk mitigation analysis and customs value determination using six methods in stages could be more effective by examining the Benford's Law test results that have been previously found at the time of determination of audit object.

Original languageEnglish
Title of host publicationProceedings of the 33rd International Business Information Management Association Conference, IBIMA 2019
Subtitle of host publicationEducation Excellence and Innovation Management through Vision 2020
EditorsKhalid S. Soliman
PublisherInternational Business Information Management Association, IBIMA
Pages9329-9339
Number of pages11
ISBN (Electronic)9780999855126
Publication statusPublished - 1 Jan 2019
Event33rd International Business Information Management Association Conference: Education Excellence and Innovation Management through Vision 2020, IBIMA 2019 - Granada, Spain
Duration: 10 Apr 201911 Apr 2019

Publication series

NameProceedings of the 33rd International Business Information Management Association Conference, IBIMA 2019: Education Excellence and Innovation Management through Vision 2020

Conference

Conference33rd International Business Information Management Association Conference: Education Excellence and Innovation Management through Vision 2020, IBIMA 2019
CountrySpain
CityGranada
Period10/04/1911/04/19

Keywords

  • Audit
  • Benford's Law
  • Customs Value
  • Total Charges

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