Formula in an Excel Spreadsheet

Over the last few months 3 dealers I work with have identified employees who were stealing from the dealership. Some of the mechanisms used to steal were quite unique (I won’t share them as they are easy to replicate) and in one instance, the fraud has put the dealership at risk of failure.

I’m always looking for ways to use technology to solve problems for my dealers. Recently I came across some research on Benford’s law. While somewhat technical, it’s a relatively easy concept to understand. In the normal course of business, numbers will occur in consistent patterns. When fraud is at play, employees will have a bias towards using certain numbers over and over again.

Using Excel, it’s easy to analyze the dealership’s check register to see if checks follow the predicted pattern. If they don’t, it’s time for an audit.

It took me 5 minutes to run this audit on the check register at our business. I was amazed to find that each data point was within 3% points of the prediction. I’m pretty sure I could build this report within Lightspeed EVO to completely bypass Excel.

https://www.journalofaccountancy.com/issues/2017/apr/excel-and-benfords-law-to-detect-fraud.html

How do you keep an eye out for fraud?

https://www.linkedin.com/posts/markjsheffield_using-excel-and-benfords-law-to-detect-fraud-activity-6635191187751919616-gcKE

#powersports #dealers #marine #RV #fraud

Identifying Accounting Fraud

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