One quick and effective method to determine whether a transaction stream requires further investigation is the reasonability test. This test requires understanding the relationship between two or more components such as a balance sheet amount and its corresponding income statement amount.

What is a reasonability check?

reasonableness check: A test to determine whether a value conforms to specified criteria. Note: A reasonableness check can be used to eliminate questionable data points from subsequent processing. Synonym wild-point detection.

What is the purpose of a reasonableness test?

The reasonableness standard is a test that asks whether the decisions made were legitimate and designed to remedy a certain issue under the circumstances at the time. Courts using this standard look at both the ultimate decision, and the process by which a party went about making that decision.