How to analyze payroll fraud and how to prevent these risks?

Payroll Fraud happens 27% in all businesses and most companies’ are not able to make any action about it. Many entrepreneurs and managers believe that payrolls cannot be changed, that too in an automated environment. When you have uncontrollable circumstances in your organization where cashflow could go missing and sometimes it cannot be found because the sources become untraceable.

Ghost employees’ are fictional employees’ who do not belong to the company in any way or would have resigned from the company. It is close to impossible to find who committed this fraud and there are chances for a lot of loss incurred due to ghost employees.’ Mostly, in humongous companies, events like these happen when there is not a strict administration to control.

Employees’ who do not make it to the office for an entire day or a specific period need to mark their attendance for the day. Their friends make up proxy punching so that they are marked present for the day. The problem in this is, even though the employee is not current, attendance is given to them and payments are also given at the end of the month.

When a proxy is applied, until and unless the managers or administrators notice this, there are no possible chances of finding out which employee took part in this.

The most common payroll frauds to happen in every organization. Employees’ can change their work hours like over time and claim the amount to their payroll. Any employee with the access to the payroll can change all the details and transfer the claim to their account.

Since there are many payments in the company like EPF, SOCSO, HRDF and much more, the wrong transaction can be made to employees’. The benefit schemes are also not that easy to find because you must consider every employee in the company and find the person who committed all these problems.

When you outsource your payrolls, ask for the vendor to create an audit along with the payroll analytics. By doing this, you would be able to find any fraudulent transaction or any ghost employees’ in your office. Even false claims for overtime can be seen with the help of audits. Conduct these reports every quarterly to find out any missing money and continue this process every time.

With many technologies coming into place, go for a payroll software which provides a lot of protection. Allow the payrolls to be accessed by only individual members of the company. The vendor should maintain the protocols set by the company for effective security provided by the payroll software.

The HR department must be trained on how to maintain the cash flow of the company without any compromise. The training must be consistent that they must follow all the protocols with high compliance and be managing the ethics of the organization.

Have a skilled fraud management team which involved chartered accountants, fraud examiners, MBA graduates in your organization. They would provide all the support and ensure no transaction leaves the company illegally. Even your company can appoint employees’ who are trained in corporate intelligence.

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