THE APPLICABILITY OF BENFORD’S LAW TO DETECT FRAUD IN THE FINANCIAL STATEMENT OF OIL AND GAS COMPANIES LISTED ON THE NIGERIAN STOCK EXCHANGE

Fraud in financial statements of government and business organizations all over the world has a devastating effect on the individuals as well as the economy of the world. The purpose of this study is to apply Benford’s Law to determine fraud in the financial statements of oil and gas companies in Nigeria from 2012 to 2022. To achieve the objective of the study two null hypothesis were constructed and tested. The study in the first place, employed Benford’s First Significant Digit Distribution and the result show that most of the digits of receivables data and payable data deviated from the proposed Benford’s First Significant Digit Distribution. To determine the significant relationship between the variables of interest, the study employed the Chi-square test. The findings of the study indicates that there is no significant relationship between receivable data of oil and gas companies listed on the Nigerian Stock Exchange and the proposed Benford’s First significant digit. Similarly, there is no significant relationship between payable data of oil and gas companies listed on the Nigerian Stock Exchange. The lack of conformity of the receivable and payable data to Benford’s Law implies that there is fraud. The study recommends that auditors should be employed to further investigate the identified figure of deviations.