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Benford’s Law and transparency: an analysis of municipal expenditure

Author

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  • Ricardo Sartori Cella

    (Universidade Federal de Goiás)

  • Ercilio Zanolla

    (Universidade Federal de Goiás)

Abstract

This study aims to ascertain an adherence between the level of municipal transparency and the application of Benford's Law in implementing the municipal expenditure. Therefore, two municipalities in the state of Goiás were selected, one with a higher and one a lower level of transparency, according to the National Transparency Ranking of the Federal Public Ministry, of 2016. Then, we performed Z and chi-square tests on the expenses engaged in the first four months of 2016 to check for incompliances with the Benford’s Law. Based on the data analyzed we were able to conclude that: the municipality with greater transparency has greater conformity with Benford’s Law; the municipality with less transparency showed greatest discrepancies between the expected and observed frequencies; the municipality with less transparency showed higher likelihood of irregularities in the execution of expenditures, compared to the municipality with greater transparency. Both municipalities showed discrepancies regarding Benford's Law, differing from each other only by the degree of calculated divergences from the model.

Suggested Citation

  • Ricardo Sartori Cella & Ercilio Zanolla, 2018. "Benford’s Law and transparency: an analysis of municipal expenditure," Brazilian Business Review, Fucape Business School, vol. 15(4), pages 331-347, July.
    • Handle: RePEc:bbz:fcpbbr:v:15:y:2018:i:4:p331-347
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