Official Explanation Magoosh :
Premise #1 – According to Benford’s Law most numbers begin with ‘1’s, followed in frequency, by ‘2’, then ‘3’, then ‘4’, etc.
Premise #2 – This fact has been used to determine who has been committing fraud because perpetrators randomly distribute the starting number of sums.
Conclusion: - The better investigators become at using Benford’s Law the more fraud cases are going to be exposed.
Assumption: - Nothing will change in regards to how perpetrators manipulate amounts in financial statements.
(A) The findings of one financial case does not disprove (or prove) anything. Perhaps that person was aware of Benford’s Law; perhaps that person has a penchant for the number ‘5’. Too many unknowns are at work here.
(B) is tempting. True, one can reason that is a very evolved technology and that Benford’s Law might have trouble catching up. But the key here is “might”. We simply do not know enough about the sophistication of Benford’s Law and the history of fingerprinting to come to this conclusion.
(C), if true, weakens the argument. If perpetrators know about Benford’s Law, they will likely change the way they fudge numbers. In other words, they will make sure that most sums that they fabricate begin with ‘1’, the second most common number will be ‘2’, so and so forth.
(D) is very tempting. What we currently know is that Benford’s Law “can often determine when people have fabricated numbers”. That implies that it is not 100% accurate, and we know this to be true from the final sentence that also states that Benford’s Law is going to become even more refined (meaning it is not currently 100% accurate). Therefore, (D) could be consistent with this: Benford’s Laws inaccuracy derives from the fact that it is not as accurate with smaller sums.
(E) is out of scope. Sure, there are other means besides Benford’s Law, but that doesn’t relate to whether Benford’s Law is going to become even more refined.
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