NPO Financial Statement Quality: An Empirical Analysis Based on Benford’s Law

被引:0
作者
Tom Van Caneghem
机构
[1] KU Leuven,
来源
VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations | 2016年 / 27卷
关键词
Non-profit organizations; Financial reporting; Financial statements; Benford’s Law; Digital analysis;
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中图分类号
学科分类号
摘要
In order to assess the accuracy of the figures reported in NPOs’ financial statements, I perform a digital analysis on Belgian non-profit organizations’ financial statements for accounting years 2007 up to 2012. Specifically, I compare observed frequencies for digits in the second-from-the-left position with expected frequencies based on Benford’s Law. Results based on the full sample indicate that observed frequencies strongly conform to Benford’s Law (and thus suggest a high degree of accuracy of the figures reported in NPOs’ financial statements). Nevertheless, I note statistically significant deviations from Benford’s Law (both for the entire distribution and at the individual digit level). The largest deviation is noted for zeroes in the second position (i.e., a significantly positive deviation), which can be explained based on humans’ reliance upon so-called cognitive reference points. Considering different sub-samples, I note that observed deviations from Benford’s Law are largest for the smallest non-profits and those non-profits that rely most heavily on grants and/or donations.
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页码:2685 / 2708
页数:23
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