Returns Near Abnormal Period-Ends
Table of Contents
Use Case:
Organizations need to monitor product returns associated with unusually high revenue booked near the end of a financial period. While increased sales activity near a period close may be legitimate, a concentration of revenue followed by related returns can indicate aggressive revenue recognition, channel stuffing, earnings management, or inaccurate financial reporting. For example, if a customer accounts for a significant amount of revenue near quarter-end and later returns those products, the activity may warrant further review to confirm that the original sales were valid and recorded appropriately.
The Returns Near Abnormal Period-Ends analytic identifies return transactions associated with customers whose revenue activity was unusually concentrated near the close of a selected financial period. Organizations can configure the financial period and define how much of that period is considered near the close. By highlighting returns connected to abnormal period-end revenue patterns, the analytic helps organizations identify potential manipulation, verify the accuracy of reported revenue, and strengthen compliance with financial reporting standards and internal controls.
| Description | Identifies return transactions associated with customers whose revenue activity was unusually concentrated near the close of a configured financial period compared with prior periods. |
| Domain(s) | Customer Revenue |
| Analysis Type | Context Flag |
| Focus Area | Financial |
| Score Methodology | The transaction value (billing value) |
Default Scoring Criteria
Importance: 5 (default)
Enabled: True (default)
No rules are configured by default. Rules must be set by user.
Rule Configuration
To configure a rule for this risk analysis:
1. From the Admin page, navigate to Risk Settings > Risk Analysis Settings > Returns Near Abnormal Period-Ends (Customer Domain). Then, click Add A Rule.
2. Complete the following required rule fields:
| Rule Field | Description | Settings Options |
|---|---|---|
| Name | Name for the specific rule | Free text |
| Description | Description of the rule | Free text |
| Measurement Type | Determines whether return activity is measured by the total transaction value or the number of transactions | Value or Volume |
| Financial Period of Interest | Specifies the financial period used to identify transactions occurring near the period close | Annually, Monthly, or Quarterly |
| Close Period in Days | Defines the number of days before the end of the financial period that are considered to be near the period close | 1 to 45 Days |
| Benchmark Periods | Specifies the number of historical financial periods used to establish the baseline for comparison | 1 to 6 Periods |
| Returns Period Length in Days | Defines the length of time after the financial period close during which return transactions are evaluated | 1 to 180 Days |
3. Click Add A Rule Component.
4. To set a component, select a Field and Search Type from the dropdowns.
The Value field will appear after you select a Field and Search Type.
See a description of Field, Search Type and Value below:
| Field | Search Type | Value Type |
|---|---|---|
| Company | Includes OR Excludes | List is populated from customer data* |
| Customer (Payer) | Includes OR Excludes | List is populated from customer data* |
| Has Free of Charge Item | Includes OR Excludes | Yes/No |
| Organization Unit | Includes OR Excludes | List is populated from customer data* |
| Subject (Payer) Country | Includes OR Excludes | Preset list |
| Subject Account Group | Includes OR Excludes | List is populated from customer data* |
| Subject Classification | Includes OR Excludes | List is populated from customer data* |
| Transaction Reason | Includes OR Excludes | Preset List |
| Transaction Type | Includes OR Excludes | List is populated from customer data* |
*For values populated from customer data, value lists will not populate if data is not available.
Note: Where multiple rule components are set, they operate only in an “and” manner.
5. Click the Save Changes button at the bottom of the page to save your rule.
Exclusions
- Only transactions classified as Sales or Receivable Increases are included when calculating the portion of prior-period revenue booked near the financial period close.
- Transactions marked as no longer valid are excluded from the aggregated data.
- Only returns occurring within the configured Returns Period Length in Days are considered by the analytic.