Reasonableness test

Reasonableness test is a procedure to examine the logic of accounting information. It is where the expected value is determined by reference to data partly or wholly independent of the accounting information system, and for that reason, evidence obtained through the application of such a test may be more reliable than evidence gathered using other analytical procedures.

For example, the trend in promotion and entertainment expense for a company can be compared to that of prior years of the same company or to competitive companies, or to industry norms. If the promotion and entertainment expense is relatively high, it will require investigation because it does not appear reasonable.