Payroll Fraud
Payroll Fraud
From the high dollar executive creating business deals to the man on the corner with a food cart, everyone is out to make a dollar. Our entire business infrastructure revolves around the gain and loss of money. Everyone gets money and everyone gives money. It is a beneficial merry-go-round that sustains the modern world. Some like to try and find a loophole in the system that allows them to take more then they give. Many times this is done through abuse of the payroll system.
Not only does this take money out of a company, it takes money away from hard working employees who earn what they keep. This is why it is important to recognize payroll fraud when it occurs, and to find effective ways to prevent it from happening.
Ghost Employees: A ghost employee can be an employee who has either quit or been dismissed from work that is still receiving a regular paycheck. It can also be a fictitious employee who never existed, or an employee’s friend. Mistakes can happen, and a former employee can be given a paycheck even after they have left, but if they do not report it than they are doing the same as stealing from the company.
More Hours than Time: When paid on an hourly basis, an employee’s pay is based on his hourly wage, and how many hours he has worked. Employees can not change their wage, they can however manipulate the number of hours they worked. Some can enter it manually into a computer system, others can clock out later than they actually left work, or have someone else clock them out
Lying About Commission: Commission pay is based on how many products are sold by the salesman, or by the income generated by the employee. Some can lie about the number of products sold, or exaggerate the income made by them. If this is done and discovered, the employee can be forced to pay the sum of the fraud, or have it removed from his future paychecks.
These are the most common forms of payroll fraud. They can cost a large amount of a company’s profit over time. Luckily they are also preventable with the right steps.
Segregate Duties: One person doing all of the payroll for the company can find the weaknesses a company may have, and capitalize on them. With no one else working with them, they are safe from the eyes of co-workers. It is best to leave payroll in the hands of more than one or two employees.
Data Mining: Many times fraud can be found by analyzing data. Research done by the company or by an hired accountant can show if two different employees share the same address, or deposit funds into the same bank account. They can detect abnormalities in employee information and help zero in on any employee committing fraud.
Be Effective, Be Organized: The most basic level of security to prevent fraud is paying attention to your payroll and to your employees. Take time on occasion to look through your payroll documents. Use the data along with your own knowledge of the company and employees to find anything that is out of place.
You worked hard to get your company started. Don’t let someone steal what you put so much effort into creating. Take steps to prevent fraud within your company. Don’t be afraid to outsource your payroll to a company such as Vision H.R. that will work with you to prevent fraud in payroll.
