How hard is it to ferret out securities fraud? It might be as easy as looking for how many times the digit `1’ appears in a company's financial entries instead of ‘9.’ A simple mathematical law that applies to everything from the height of mountains to the population of towns in Tajikistan can also be used to uncover suspicious numbers in public-company accounting, an expert at Columbia Business School says in a new paper. Benford’s Law states simply that the quantity of most things in the real world is more likely to be described by a number beginning in 1 than any other digit, and the likelihood of it being described by other digits declines at an increasing rate as those digits get higher. More on Forbes: Is This The Cigarette Of The Future When Columbia’s Dan Amiram and two coauthors applied Benford’s Law to public companies, they found the same rules hold true: Companies whose financial statements were significantly out of compliance with the law were far more li
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