Ten Ways to Protect Against Payroll Fraud
Australia’s Daily Telegraph ran a useful report in mid-November on payroll fraud, a form of financial crime that is often particularly difficult to detect. One victim, a whitegoods and electrical retailer, managed to retrieve the $A20 million stolen by its payroll officer, but most companies never see their money again. And the crooks involved don’t always gamble the proceeds away. In this case, the officer invested the money in property. If you want to avoid being targeted by a clever operator it pays to bring in a team of experienced professionals who use state-of-the-art technology, like computer forensics, to help you secure your system.
An Australian expert has stated that while cases of payroll fraud have increased in the past year, it is impossible to be sure what is happening. Estimates indicate that around 90 per cent of cases go undetected. That should set alarm bells ringing.
Clearly, top priority is to choose the right person for the job in the first place, which means careful screening and checking of references and background. Interestingly, the majority of those caught for payroll fraud have no criminal history as such. But they may have committed similar acts in the past, then been encouraged by their employer to quietly move on – without prosecution. Whether money is paid back or not, many companies avoid embarrassment by not reporting fraud to police. This merely passes the problem on to other employers.
Here are ten ways you can check your payroll system:
1. Undertake Regular Review Processes. As tasks become second nature, many staff members fail to follow the correct procedures.
2. Change Your Password Regularly. It should be changed every month and not be obvious, such as using a child’s name.
3. Check Monthly Audits. Software should have audit reports built into the system and be monitored by an independent party.
4. Take Processes Beyond One Person. Have someone other than the payroll officer checking reports.
5. Never Reveal Log-In Details. This simple protective measure is too often overlooked.
6. Secure Your Payroll Officer’s Work. A locked office ensures that documents can’t be viewed or taken by others.
7. Separate Printers. Give the payroll officer a separate printer so that details aren’t left on general office printers.
8. Separate Duties. Have two or more staff members performing independent tasks.
9. Use a Shredder. Anything printed needs to be either stored or destroyed.
10. Conduct Random Checks. If staff members don’t know that a check is about to be carried out, they are unable to correct details prior to an audit.
One of the most common – indeed classical – forms of payroll fraud involves the creation of phantom workers. This applies particularly to businesses with a large component of casual employees, which is why the fundamental importance of reconciling bank statements with payrolls must never be ignored.
If the risk of payroll fraud worries you, call in a team of professionals as soon as possible. They can examine the system you currently have in place, strengthen it, and also build in processes of regular review. To have anything less than this is to leave your business dangerously exposed.
