Detecting using ERP data fraud the first digits formula of Benford's Law

• Main Authors: Ma’arif, Muhamad Yusnorizam, Abdul Jalal, Abdul Arriff, Mohd Satar, Nurhizam Safie, Abu Samah, Mohd Armi
• Format: Article
• Language: English
• Published: Publications International 2020
• Subjects: HA Statistics; HA154 Statistical data
• Online Access: http://irep.iium.edu.my/96253/7/96253_Detecting%20using%20ERP%20data%20fraud.pdf; http://irep.iium.edu.my/96253/; http://www.sci-int.com/pdf/637323930858416050.edited.pdf

Frauds in managing ERP system have been widely reported in Malaysia. The management should initiate a series of anti fraud measures, as a leverage of cost control, while offsetting an existing resource. Fraud involves a significant financial risk that may threaten profit, as well as the image of the business entity. In this situation, where the development of the IT system plays a key role in the creation of competitive companies, the amount of processed data has grown rapidly. The integrated ERP system is growing rapidly in the country, so the increase in financial data becomes faster and risky. Internal control teams need to take a look at every transaction that has been done, but unfortunately, this issue can no longer be done manually, instead of requiring the use of data analytics tools. Since companies typically operate with large amounts of data, it is necessary to implement a continuous monitoring process, to identify anomalies in data flow or behavioral patterns, which are potentially fraudulent. Such new and important information will then be used in directing the inquiry, as well as making recommendations to enhance control activities. This research paper describes a method to identify and detect any potential fraud in ERP data using the application of Excel program based on Benford’s law.