Fact and Fiction in EU-Governmental Economic Data

Rauch Bernhard, Göttsche Max, Engel Stefan and Brähler Gernot
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Rauch Bernhard: University of Regensburg,Regensburg,Germany
Göttsche Max: University of Regensburg,Regensburg, Germany
Engel Stefan: Catholic University of Eichstätt-Ingolstadt,Eichstätt, Germany
Brähler Gernot: Ilmenau University of Technology,Ilmenau, Germany

German Economic Review, 2011, vol. 12, issue 3, 243-255

Abstract: To detect manipulations or fraud in accounting data, auditors have successfully used Benford’s law as part of their fraud detection processes. Benford’s law proposes a distribution for first digits of numbers in naturally occurring data. Government accounting and statistics are similar in nature to financial accounting. In the European Union (EU), there is pressure to comply with the Stability and Growth Pact criteria. Therefore, like firms, governments might try to make their economic situation seem better. In this paper, we use a Benford test to investigate the quality of macroeconomic data relevant to the deficit criteria reported to Eurostat by the EU member states. We find that the data reported by Greece shows the greatest deviation from Benford’s law among all euro states.

Keywords: Benford’s law; government statistics; fraud detection; auditing (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (6)

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DOI: 10.1111/j.1468-0475.2011.00542.x

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