Largest Subset & Growth Tests

The first analysis of any data set need not use sophisticated mathematics or statistics. The goal of these test is to find subsets that are highly inflated due to the error or fraud.

Largest Subset Test

The largest subsets test uses two fields, one with transaction or balance numbers (such as amount, inventory counts, vote counts, population counts) and another field to indicate the subset (e.g., vendor number, credit card number, or branch number). Subset is a group of records that have something in common.

The data can often be divided into several subset groupings. For example, accounts payable data could be grouped by vendor or by the type of purchase (purchase order, no. purchase order) or by time. There are often a few different ways that data can be divided into subsets. For inventory data the grouping could be by location. For airline ticket refunds or retail customer refunds the groupings could be the credit card that received the refund.

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Spreadsheets: Auditing & Validating (Part 2)

00_Spreadsheet AuditIn the previous post I mentioned few of the risks associated with spreadsheets. In this post I’ll try to show some excel tools which can help  in detecting errors and frauds in Excel spreadsheets.

In the late 1990’s “Poor control over spreadsheets at Jamaican indigenous banks contributed to management information and external reporting problems (i.e., P&L distortions) that contributed to the banks’ management and external regulators losing sight of the banks’ true positions and exposures. Which led to collapse of entire Jamaican Banking System.

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