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A Benford’s Law based methodology for fraud detection in social welfare programs: Bolsa Familia analysis

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  • Azevedo, Caio da Silva
  • Gonçalves, Rodrigo Franco
  • Gava, Vagner Luiz
  • Spinola, Mauro de Mesquita

Abstract

This paper aims to introduce a data science approach for guiding auditors to accurately select regions suspected of frauds in welfare programs benefits distribution. The technique relies on Newcomb–Benford’s Law (NBL) for significant digits. It has been analysed Bolsa Familia data from Federal Government Transparency Portal, a tool that aims to increase fiscal transparency of the Brazilian Government through open budget data. The methodology consists in submit four data samples to null hypothesis statistical methods and thereby evaluate the conformity with the law as well as the summation test which looks for excessively large numbers in the dataset. Research results in this paper are that beneficiaries’ cash transfer per se is not a good test variable. Besides, once payment data are grouped by municipalities, they fit NBL, and finally, when submitted to the summation test, the distribution of the Bolsa Familia payments in several municipalities shows some fraud evidence. In this sense, we conclude the NBL can be an appropriate method to fraud investigation of welfare programs’ benefits distribution having beneficiaries’ payment geographically grouped.

Suggested Citation

  • Azevedo, Caio da Silva & Gonçalves, Rodrigo Franco & Gava, Vagner Luiz & Spinola, Mauro de Mesquita, 2021. "A Benford’s Law based methodology for fraud detection in social welfare programs: Bolsa Familia analysis," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 567(C).
    • Handle: RePEc:eee:phsmap:v:567:y:2021:i:c:s0378437120309249
    DOI: 10.1016/j.physa.2020.125626
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    References listed on IDEAS

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