=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.

 Company wired $600,000 to a charity  Usual amount was $3,000  The wire was 200x larger than normal  RSF takes largest divided by 2 nd largest  Identifies the abnormally high amounts  Small sample of high-risk transactions

 Decimal point error, $ > $  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

 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