It can be carried out by individual employees and most commonly observed when employees falsefully increase the amount they should be paid. An employee attempting to receive any money they are not entitled to from the workplace is considered as a fraud which can cause the organization to fall into losses.
Ghost employees, timesheet fraud and false reimbursement of expenses are the most common ways of committing payroll fraud. Ghost employee are those employee who received all bonuses and benefits like other employees but does not work for the company. The money payment goes directly to the fraudster’s account who may happen to be an employee of the organization or third party to the organization. In most cases timesheet fraud occur when companies overpay employees due to manipulated timesheet submissions and paying employees for hours they didn’t work. The false reimbursement often involve false statements about objects or events that never took place. For instance, claiming medical expenses and manipulating receipts prior to submission and in some cases some employees may also claim to have lost their receipts to avoid presenting them and are making false claims.
Preventing EPF can be done by conducting a thorough background check on the person responsible for preparing and filing payroll, who have access to the organization’s payroll expenditure accounts. This helps ensure that the person hired is honest and possess high level of probity
Periodic payroll reports checks also minimize EPF since it ensure employees are getting their accurate entitlement. It’s also important to check employees’ addresses and bank account numbers to determine if multiple payments have been made to the same bank account or not.
In preventing false claims, organizations should clearly outline expense policies by requiring employees to provide receipts with every expense report. Checks should be done by contacting receipt issuing company for verification of the expenditure before funds is released for such claims.
The organization may outsource its payroll to consulting organization as it is an efficient and cost-effective way to pay your employees. In addition, it ensures safe and accurate payroll processing. Are interested in preventing payroll fraud in your company, get all the education and payroll services by clicking here