Relative size factor

[kranthi kumar]

Relative size factor-RSF I. Relative size factor is a technique which can immediately through the transactions which are deviated from the normal range II.Transactions may be deviated from normal range in two cases 1)    Due to error say Rs 100.00 is entered as Rs 10,000/- 2)    Due to fraud, here the perpetrator intention is to include the transaction amount in any class which will make the transaction abnormal in the class for example in a purchase of lubricants consider the storage capacity of godown is 1000 lts @ Rs 50 per lts and minimum purachase is 10 lts then in that class the transaction should be in the range of Rs 50,000 to Rs500 without considering this the fraudster may include an amount of Rs 5,00,000 which is a fake bill III. How to find abnormal transaction using RSF this formulae is used to identify the error or fraud by finding the distance between highest amount and second highest amount RSF Formula=A/B A:highest transaction amount in that class B: Second highest transaction amount in that class IV. IF RSF is >10 then there is scope for error or fraud However in verifying certain classes like salaries, RSF should be limited to 2   Best Regards, CA Kranthikumar kedari MCOM, FCA, DISA(ICAI) Partner, MANOHAR&VENKATA CHARTERED ACCOUNTANTS Cell:9493264564 Land line: 040-267612101