Preventing Payroll Fraud

Transcription

1 Preventing Payroll Fraud Keith Schmidt Senior Customer Care Representative / Consultant November 14, 2017

2 Agenda Welcome & Introduction Advances not Paid Back Buddy Punching Ghost Employees Pay Check Diversion Pay Rate Alteration Unauthorized Hours Identity Theft Q&A 2

3 Welcome & Introduction 3

4 Integrity Data s leadership in human capital management for 20 years More than 8,000 organizations worldwide use our technology to improve businesses processes, specifically for payroll Engaged by Microsoft to author payroll and human resources upgrades to the ERP system known as Microsoft Dynamics GP Original authors of: Core Payroll Extensions Overtime Rate Manager Deductions In Arrears Payroll Integration to Payables HRP Extended Pack PTO Manager Advanced Payroll Advanced HR Benefit Self Service MICROSOFT DYNAMICS GP PARTNER 20 YEARS! 4

5 The reality is payroll fraud is not preventable, but is catchable. The largest expense for most employers are the wages and benefits paid to its employees Effective internal controls can significantly reduce the amount of exposure employers have to these areas. Some simple activities that can greatly reduce intentional fraud Staying up to date on regulatory and administrative changes Ensuring that your processes are effectively documented 5

6 Advances Not Paid Back Employee requests an advance on his payroll and then never pays it back This works best when the accounting staff does not record advances as assets - Instead charging them directly to expense Never monitors repayment No Follow-up & Employees are silent Solution: Monthly procedure to review advances 6

7 Buddy Punching Employee arranges with his fellow employees to have them punch his hours into the company time clock while he takes the day off Solutions: Supervisory reviews Threat of termination Use biometric time clocks 7

8 Ghost Employees Payroll staff either creates a fake employee in the payroll records OR prolongs the pay of an employee who has just left the company THEN alters the payment record so that the direct deposit or check is made out to them Conditions: Works best in large companies where supervisors have very large staffs Do not usually track compensation in sufficient detail Supervisor has left the company and has not yet been replaced Uses Ghost employee(s) 8

9 Ghost Employees cont. Solution: Periodic auditing of the payroll records is needed to spot ghost employees Another way to spot a ghost employee is when there are no deductions from a pay check 9

10 Pay Check Diversion Employees could take the paycheck of another employee who is absent, and then cash the check for themselves. Solution: Have the paymaster retain all unclaimed checks in a locked safe By requiring that everyone receiving a pay check prove his identify with a driver's license or some similar document 10

11 Pay Rate Alteration Employees collude with the payroll clerk to increase the amount of their hourly pay in the payroll system. A more clever clerk will then return the pay rate to its original level just a few pay periods later Solution: Matching pay rate authorization documents to the payroll register. 11

12 Unauthorized Hours Padding of time sheets by employees, usually in small enough increments to escape the notice of supervisors This is a particular problem when supervisors are known to make only cursory reviews of time sheets Solution: 12

13 Faking Illness Employees might go even further and fake their injuries or illnesses to be eligible to collect sick leave payments. Solution: Limiting the number of sick days per year Reserve the right to ask for a medical certificate Ask the sick employee to attend an examination at a doctor trusted by the company. 13

14 Identity Theft Common sense" controls Develop incident response plan Determine if notification is required should a breach occur Be aware of Corporate identity theft Verify via phone before sharing information via requests Employer responsibility Protect PII (Personally identifiable information) SSN DL# Passport# Alien Regist # Financial Info Mothers maiden name Names addy's Medical Info Education Info Employment Info Photos Fingerprint Biometric data Handwriting

15 Resources. 15

16 integrity-data.com/software/comprehensive-leave-manager/ Read our blog Watch videos Customer stories Check the ROI for YOU Download software Download documentation Follow us 16

17 ACA Compliance and Reporting Payroll Processing - Negative Payroll Transactions - Negative Deductions - Mid Pay Period Rate Changes - Overtime Hours Rules Benefits Management - Leave Management - Enhanced Retirement Plans - Life Insurance Tax Calculator Payroll Accounting - Employee Accounts and Splits - FTE Manager YOUR PEOPLE, OUR PRIORITY Payroll Productivity - Employee Suite - Paycheck What If Calculator Tailor-made Solutions Stellar Support 17

18 Questions Fire away!. 18

19 Thank you Learn more Contact us Keith Schmidt Senior Customer Care Representative / Consultant Keith Schmidt kschmidt@integrity-data.com 19

20 Credits Slide 5 Slide Slide 13

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