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Fraud by Payroll Department Employees
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 Posted: 2009-02-17 00:36
   
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BIFRANCHISE

 

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 Payroll schemes are similar to billing schemes. The perpetrators of these frauds produce false documents that cause the victim company to (unknowingly) make a fraudulent disbursement. The major difference between payroll schemes and billing schemes is that payroll frauds involve disbursements to employees rather than to external parties. The most common payroll frauds are:
1. Ghost Employees – someone on the payroll who does not actually work for the company. The ghost employee may be a fictitious person or a real individual who simply does not work for the employer.
2. Falsified Hours and Salary – either falsifying the number of hours employee had worked or changing his wage rate.
3. Commission Schemes – either falsifying the amount of sales made, or increasing employee’s rate of commission.

There are TWO basic preventive measures for the payroll-related fraud:
1. Segregation of Duties
• Payroll preparation
• Payroll disbursement (into payroll and withholding tax accounts)
• Payroll distribution
• Payroll bank reconciliations
• Human resource departmental functions
2. Periodic payroll Review and Analysis.
• More than one employee with the same address
• More than one employee with the same government identification number
• More than one employee with the same account number (automatic deposit)
• Employees with no withholding tax
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BIFRANCHISE: Unique International Trade Import Export Concept > FRAUD SCHEMES > PAYROLL FRAUD > Fraud by Payroll Department Employees
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