Skip to main content

Legal

Tax & Accounting

Trade & Supply

Risk & Fraud

News & Media

Books

Developers

Nonprofit companies

Revenues - Predictive Test

This workbook is used to perform a predictive test of revenue, such as charges for services. Predictive tests can be an effective analytical procedure. In addition, they can be a very effective method of responding to fraud risks related to revenue.

Entering Data

This workbook allows you to specify criteria to be used for highlighting unexpected results. Specify the dollar and/or percentage amount that is considered significant. The criteria or criterion input is applied to each individual source of revenue (line item) and total revenue (the "totals" row).
If you enter only a percentage criterion, then all differences greater than that percentage will be identified with a red border in the "percentage difference" column regardless of their dollar amount. Conversely, if you enter only a dollar amount criterion, then all differences greater than that dollar amount will be identified with a red border in the "dollar difference" column regardless of their percentage difference.
If both criteria are input, only rows with differences greater than both criteria will be identified with a red border around the cells of the "dollar difference" and “percentage difference" columns. Specifying both criteria aids efficiency by eliminating the selection of high percentage differences that are insignificant dollar amounts, or high dollar amount differences that are insignificant percentages. After entering the data, scan the differences identified as significant based on the criteria and consider whether the criteria appear appropriate for identifying unusual items.
Several lines are available to disaggregate total revenue in the event there are multiple sources of revenue. In addition, the precision of the calculations is increased by entering data at a more disaggregated level (for example, multiple lines if tuition revenue varies by grade or there are multiple ticket prices for a performance). For each revenue line item, the following inputs are required: quantity of service, key factor, key factor amount, and actual revenue. The Excel comments located at each column heading describes the type of data required to complete the workbook. See the section “General Workpaper Functionality and Tips for Entering Data” for further information concerning Excel comments in PPC’s Workpapers for Nonprofit Organizations.
When inputting data within the table, a blue outline around an individual cell or cells indicates that an input row was skipped or data remains to be input for that row. Certain formulas will not calculate if data inputs are missing. Red borders around any cells in the “Dollar Difference” and “Percentage Difference” columns identify significant differences between the expected revenue and the amount recorded in the general ledger for the particular line item(s) (based on the amount and/or percentage criteria entered near the top of the worksheet).