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Fact and Fiction in EU-Governmental Economic Data
Article first published online: 28 APR 2011
DOI: 10.1111/j.1468-0475.2011.00542.x
© 2011 The Authors. German Economic Review © 2011 Verein für Socialpolitik
Additional Information
How to Cite
Rauch, B., Göttsche, M., Brähler, G. and Engel, S. (2011), Fact and Fiction in EU-Governmental Economic Data. German Economic Review, 12: 243–255. doi: 10.1111/j.1468-0475.2011.00542.x
Publication History
- Issue published online: 4 JUL 2011
- Article first published online: 28 APR 2011
- Abstract
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Keywords:
- C16;
- E01;
- M42
- Benford's law;
- government statistics;
- fraud detection;
- auditing
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.