Method
An amount is round when it is a whole multiple of the unit you choose ($100 to $10,000) and at least one unit in size, tested to the cent. An amount is just below a limit when its absolute value is under the limit and no further below it than the band percentage. For each limit the tool also counts items in the same-width band above the limit. No distribution is assumed, so the comparison needs no model of how amounts should fall.
Source
Round numbers or a consistent ending number appear among the journal entry characteristics in PCAOB AS 2401, and AU-C 240 requires testing the appropriateness of journal entries. The just-below pattern follows from how approval limits work: a limit creates a reason to price at or under it. Neither standard sets a percentage band.
When to use it
Use it on a payment register, a procurement card file or a journal entry listing when you want leads for fraud inquiries. It complements the journal entry testing filter and the Benford analyzer.
Limits
Roundness and proximity to a limit are common in legitimate data, and the tool cannot tell a split invoice from two real invoices. The bunching counts are descriptive, not a statistical test. Results cover only the rows pasted. Check the result against your firm's methodology before relying on it.
Common questions
Why test for round amounts?
AS 2401 lists entries containing round numbers or a consistent ending number among the characteristics of potentially fraudulent journal entries, next to entries to unusual accounts and entries made by people who do not normally post them. A round amount is a reason to look, not a finding: retainers, rent, payroll accruals and fixed fees are often round.
What does the just-below test look for?
Amounts that sit a little under an approval or review limit, which is where someone avoiding approval would price a payment or split an invoice. The tool lists every item inside the band under each limit you enter and counts items in a same-width band above the limit, so you can see whether the below side is heavy.
How wide should the band be?
That is your call and the tool makes it a setting. A narrow band such as 2% to 5% targets amounts clearly priced to slip under a limit. A wider band pulls in ordinary amounts and gives more to review. Record the band and the limits in the workpaper so the test can be reperformed.
Where do I get the approval limits?
From the client's delegation of authority, purchasing policy or ERP workflow settings. Use the limits that were in force when the payments were made, and enter every tier if there are several.
Is a clean result evidence that approvals worked?
No. It means no item matched these two patterns in the rows you pasted. Splitting across vendors, across periods or into several payments under the limit each need their own tests, and the duplicate transaction finder and the journal entry testing filter cover related patterns.
Runs in your browser. The figures you type are not sent to CORAA or stored. Check the result against your firm's methodology before relying on it.