Benford law is applied to expose income smoothing practices when measuring at fair value

Abstract

Income Smoothing practices are dangerous practices in large part to the appropriateness of accounting information and its sincere representation of the reality of the company’s business, so it is necessary to follow certain methods to ensure this, as Benford Law is applied in the field of accounting and auditing to uncover the possibilities of tampering with this information and departing from certain standard possibilities , And the research aims to implement this law to ensure that the accounting method used is not used to carry out such practices, on the assumption that the research sample companies can take advantage of the shift to measure at fair value and apply them to make certain adjustments to their financial statements, as well Concerning that this preamble may be reflected on the value of the shares of these companies and the result of their value as a whole, and the research reached a set of conclusions, the most important of which is that the preliminary income practices do not depend or are not based on the accounting measurement method used. At historical cost, it was not practiced when measuring at fair value, other companies practiced Income Smoothing in both cases, and others practiced income-generating when measuring at fair value while other companies did not practice Income Smoothing