Comments on: random sampling invoices for errors?
http://ask.metafilter.com/297666/random-sampling-invoices-for-errors/
Comments on Ask MetaFilter post random sampling invoices for errors?Thu, 30 Jun 2016 16:09:48 -0800Thu, 30 Jun 2016 16:15:46 -0800en-ushttp://blogs.law.harvard.edu/tech/rss60Question: random sampling invoices for errors?
http://ask.metafilter.com/297666/random-sampling-invoices-for-errors
To check for errors, what would be a good number to sample? <br /><br /> I'm helping a new biz owner catch up with the bookkeeping.<br>
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I've already found one error in an invoice from a sub-contractor. There are approximately 30 invoices each month. I think this particular error was likely to be a typo (the keys are adjacent). <br>
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She's very cost-conscious, but of course, if there are lots of errors, that may be why things are feeling tight.post:ask.metafilter.com,2016:site.297666Thu, 30 Jun 2016 16:09:48 -0800egkauditrandombookkeepingsmallbusinessBy: calgirl
http://ask.metafilter.com/297666/random-sampling-invoices-for-errors#4312589
At the rate you quote of approx. 30 invoices each month...<br>
i would check all of them for errors in calculation for a test period of about 3 months.<br>
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Then you can assess whether errors are frequent, are limited to a type of invoice or even a particular vendor.comment:ask.metafilter.com,2016:site.297666-4312589Thu, 30 Jun 2016 16:15:46 -0800calgirlBy: Pinback
http://ask.metafilter.com/297666/random-sampling-invoices-for-errors#4312673
Yeah, this is one of those cases where a small population size (~30/mo) and a (hopefully!) low count of the thing you're looking for bites you. Assuming you want your estimate to be reasonably accurate (let's say ±10%, which itself implies a fairly high % of incorrect invoices), you'll still have to examine 24+ invoices. May as well check them all…<br>
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And calgirl makes an excellent point: know your aim. If it's just to assess the # of incorrect invoices then random sampling at minimal effort (which in this case is still a large % of the whole) is fine. If you want to see if the problem correlates to something (as per her examples of invoice type or vendor) then a different / more intensive sampling strategy might be required.comment:ask.metafilter.com,2016:site.297666-4312673Thu, 30 Jun 2016 18:37:09 -0800PinbackBy: crazycanuck
http://ask.metafilter.com/297666/random-sampling-invoices-for-errors#4312695
I wouldn't sample. You can do the following:<br>
- set a lower bound threshold to disregard (eg, everything under $100). Set an upper bound where everything above is reviewed (eg $5000). Set a time period for review (eg 1 year). Start reviewing in descending order by size of invoice until you either reach your upper threshold or get tired of reviewing.comment:ask.metafilter.com,2016:site.297666-4312695Thu, 30 Jun 2016 19:18:27 -0800crazycanuckBy: egk
http://ask.metafilter.com/297666/random-sampling-invoices-for-errors#4312813
Thank you! <br>
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I don't think there's a big problem; but I feel like I need to check and confirm that these are simply errors and not a problematic vendor. <br>
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So setting the boundaries will help and checking all those for the last 3 months. That lines up with when the biz started to get busier, and being more pressed for time, errors may have escaped detection. <br>
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I appreciate it - I needed something effective but not costly!comment:ask.metafilter.com,2016:site.297666-4312813Fri, 01 Jul 2016 04:40:07 -0800egkBy: Xhris
http://ask.metafilter.com/297666/random-sampling-invoices-for-errors#4313117
If this is math/statistics question - the sampling rate would depend on the error rate (the higher the error rate, the lower the sample would have to be to detect them). <br>
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A targeted sample is good from a business/accounting view. From a math/statistics point of view you should sample randomly until you have enough positive hits (ie errors) to calculate the error rate. If you get 8 errors in a random sample of 10, that enough to suggest a rate of 80%, If you only find 1 error in 100 samples theoretically you should sample more (maybe 500) before deducing the error rate is 1%.comment:ask.metafilter.com,2016:site.297666-4313117Fri, 01 Jul 2016 12:44:16 -0800Xhris