=largest divided by second largest small set of high-risk transactions relative size is an...
TRANSCRIPT
CHAPTER 11
=Largest divided by second largest
Small set of high-risk transactions
Relative Size is an error-detecting test
Access or Excel
Prepared by:Mark J. Nigrini
Copyright © 2012 by Mark J. Nigrini. All rights reserved.
INTRODUCTION
Company wired $600,000 to a charity
Usual amount was $3,000 The wire was 200x larger than
normal RSF takes largest divided by 2nd
largest Identifies the abnormally high
amounts Small sample of high-risk
transactions
RSF FORMULA
EXAMPLE RESULT
FINDINGS
Decimal point error, $320000 > $3200.00
High risk when subset has many records
Errors in perpetual inventory records Insurance claims approved by
adjusters Health care payments to providers Beverage sales by an airline Sales prices of a sportswear
manufacturer
LOGIC UNDERLYING THE TEST
ACCESS STEP 3
ACCESS STEP 4
ACCESS STEP 7
ACCESS STEP 10
ACCESS RESULTS
ACCESS DRILL DOWN
RSF: EXCEL
RSF: EXCEL
RSF: EXCEL
EXCEL RESULTS
RSF SUMMARY
Test aimed at detecting errors and fraud Tests gives a small set of high-risk
transactions Formula: Largest ÷ second largest Based on company wiring $600,000 to a
charity This is a reasonableness test Finds the decimal point error Useful for audits of health care claims Somewhat complex Access or Excel routines