Chapter 11

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=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.
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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
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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
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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
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