To detect manipulations or fraud in accounting data, auditors have successfully used Benford’s law as part of their fraud detection processes. Benford’s law proposes a distribution for first digits of numbers in naturally occurring data. Government accounting and statistics are similar in nature to financial accounting. In the European Union (EU), there is pressure to comply with the Stability and Growth Pact criteria. Therefore, like firms, governments might try to make their economic situation seem better. In this paper, we use a Benford test to investigate the quality of macroeconomic data relevant to the deficit criteria reported to Eurostat by the EU member states. We find that the data reported by Greece shows the greatest deviation from Benford’s law among all euro states.

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This chapter analyzes Greek statistics which are not relevant to government deficit spending and compare the findings with the results of prior research, which had shown a significant deviation from Benford's law of the first digits distribution of Greek financial statistics. The hypothesis here is that the social data set should conform better with Benford's law than the financial data set, as the incentive for manipulation is lower. However, the results in this chapter show that, in contrast to their financial data, the Greek social statistics data have a good fit with Benford's law. The chapter interprets this outcome as a sign for the effectiveness of the Benford test.