A finished ACC-680 Topic 2 Benford screen risk memo example, testing vendor payments against expected digit frequencies, stating the screen's limits and pinning the anomaly to one account and assertion. Searches like "acc 680 topic 2 assignment example", "acc680 topic 2 sample" and "acc-680 topic 2 example" land here.
What a finished ACC-680 Topic 2 benford screen risk memo looks like
The finished memo first shows why Benford's law could apply here: vendor payment amounts arise naturally and span several orders of magnitude, with no assigned numbers or fixed prices in the file. The illustrative results follow. First-digit frequencies sit close to expectation. The first-two-digit test does not: payments beginning 48 and 49 make up 3.5 percent of the file against about 1.8 percent expected: 1,330 payments where 674 would be normal. Of those, 1,010 fall between $4,800 and $4,999, just beneath the $5,000 level that requires a second approval, mostly coded to facilities maintenance. The memo treats this as a pointer. It names the risk, occurrence of maintenance expense through split or fabricated invoices, and plans the response: every payment in that band examined against work orders, plus a test for same-vendor payments on one day summing past $5,000.
How an ACC-680 Topic 2 example is structured
The memo anticipates a reviewer's questions and answers them in sequence. The first part states the conditions under which Benford's law describes a population and shows this file meets them, with counts of payments by order of magnitude. The second sets out the tests run, first-digit and first-two-digit, and the conformity measure used, with its threshold fixed before the results were seen. Results come third, as a table of observed and expected frequencies with the two outlying prefixes marked. A fourth part explains the limits: nonconformity says the data departs from a pattern, not that anything is wrong, and it cannot distinguish fraud from a legitimate pricing habit. The fifth part pins the pattern to one account and assertion and rates the risk. The planned response closes the memo, with the payment band, the split-invoice test and the evidence each would produce.
Applicability shown before any test
Payment amounts spanning several orders of magnitude, with no assigned numbers or set prices, give the memo grounds to expect Benford frequencies in the first place.
A threshold fixed before results
The conformity measure and the level that would count as nonconformity are recorded ahead of the run, so the result cannot be read to suit a conclusion.
Two prefixes standing out
Payments starting 48 and 49 appear at nearly twice the expected rate, and three in four of them sit between $4,800 and $4,999.
The screen's limits stated plainly
A departure from expected frequencies shows the data differs from a pattern, which a legitimate pricing habit could also produce, so the memo stops short of a finding.
One account, one assertion, one response
Occurrence of facilities maintenance expense is named as the risk, and every payment in the band is examined against work orders for evidence.
Where marks go in ACC-680 Topic 2
The usual deduction on Benford work falls on a nonconforming result reported as a misstatement, because the screen shows only that the data departs from an expected pattern. Running the test without first showing the population suits it costs credit before any result is read; invoice numbers, capped reimbursements and small files do not follow the law. A first-digit test alone would have missed this case, and memos that stop there hide the concentration the two-digit test reveals. Leaving the conformity threshold unstated until after the results allows any outcome to be called significant. Papers that find the approval limit and then assess risk across the whole expense cycle spread effort over accounts the pattern never touched. A memo naming a risk with no planned response loses the rest, since the screen is worth only the testing it directs.
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ACC-680 Topic 2 questions, answered
What is Benford's law?
An observation that in many naturally occurring sets of numbers the leading digit is 1 about 30 percent of the time, 2 about 18 percent, and so on down to 9 at under 5 percent. Financial data often follows it when amounts arise from many transactions and span several orders of magnitude. Mark Nigrini's work brought it into auditing as a way to find parts of a file that depart from the expected pattern.
When does Benford's law not apply?
When numbers are assigned rather than generated, such as invoice or check numbers; when amounts are set by policy or price lists; when a minimum or maximum constrains them, as with reimbursement caps; and when the file is too small for frequencies to settle. A population dominated by a few fixed amounts, such as monthly rent, will also depart from the pattern for reasons unrelated to error or fraud.
Why test the first two digits as well?
Because the first-digit test groups every amount beginning with 4 together, from $4 to $49,999, and a concentration in one narrow range can disappear inside that group. The first-two-digit test separates 48 from 41 and 42, which is where an approval-limit pattern shows up. Here the first-digit results looked ordinary while the two-digit test found the bunching the memo is built on.