Payroll Fraud: Everything You Should Know
Employee payroll fraud is one of the most common frauds causing pains and damage to several businesses. Simply put, payroll fraud is about asset fiddling. A payroll fraud usually involves tampering of employee records/timecard, altering pay scale or job type.
This article sheds light on helping you detect employee payroll fraud and warning signs that could indicate a possible payroll fraud in your organisation.
Keep an eye on the following red flags that could possibly indicate a payroll fraud lurking within a business:
- No background or reference checks for new recruits.
- Pay scale unauthorized from the designated official. It has to be in writing from the delegated personnel.
- Paid leaves, sick leaves and vacations are not assessed for compliance with organisation policy.
- Payroll records and data is not verified against personnel record or attendance/timesheet for terminated employee.
- Absence of automated biometric attendance system for tracking employee time and attendance thus, resulting in erroneous timesheets every time.
Preventing Payroll Fraud
Following steps can be put to use for preventing payroll fraud and setting up robust internal controls in salary disbursement:
- Every person receiving the salary must be verified using company identity cards and employee code.
- Most importantly, payroll accounts and details must be checked on a routinely basis to ascertain duplication in bank accounts, names or addresses.
- All the overtime claims ought to be authorized by a designated official/supervisor.
- In the case of an extensive overtime by an individual employee, all the records must be verified and checked thoroughly.
- Calculation as well as distribution of payroll ought to be shuffled/rotated routinely amongst the department without giving any prior notice of the same to the team.
- Employee record should be maintained by someone different from the timekeeping or payroll department.
- Payments should be made from a separate bank account.
- Newly hired employees
- Part-time workers
- Low paid employees
- Drug and alcohol abusers
- Employees with a possible direct/indirect criminal association or background.
While the information furnished above may assist in uprooting a possible payroll fraud, the most vital thing to do is to start using a good payroll software to execute this quintessential process. A payroll software tracks and automates most of these key processes whilst giving you proper control. So it’s high time you think about paying your people electronically using a payroll system.
Is your payroll up-to-the mark or is it as good it ought to be?
Contact us to know how an automated and cloud based payroll software can safeguard your business against payroll fraud. You can also give us a shout-out at Facebook and Twitter or SMS SAGE to 56767 or drop a mail at firstname.lastname@example.org