Payroll fraud can be devastating for companies and individuals alike. Whether it’s one large, or numerous smaller incidents, the detrimental effect it can have on an organisation’s reputation and/or employee trust is significant. It is therefore crucial that the risk is managed by having an effective system in place to detect and prevent payroll fraud from taking place... here are Ceridian’s top tips to help avoid payroll fraud:
Spot Check: Ensure you are in a position to analyse your pay data and identify any irregular patterns or behaviour. Regular spot checks could highlight things like frequent changes of bank details, abnormal payment amounts, discrepancies with other HR data, split payments and so on.
Automate: Using a payroll system, either yourself or through an outsourced supplier, can immediately reduce the risk of fraud as a number of the processes are automated and there is no interpretation of policy or guidelines. There is also often an ability to check an audit trail and to add in controlled sign-off processes that act as a deterrent to someone who might commit fraud. Furthermore, if you choose to outsource your payroll entirely, then the risk reduces still further as the supplier is liable for any fraud committed by their employees and they can be managed through a contract or service level agreement.
Review your employees: Any two or more employees with the same address or bank account will need to be reviewed in more detail. A useful check is to compare the last month’s payroll with this month’s and check all new names – is there a signed contract? And if so, is the payroll amount in agreement with the contract?
Integrate: A former employee of the Department of Health and Ministry of Justice was recently sentenced to two years in prison after being found cheating his employers out of monies using the identity of a deceased person. Keeping your payroll up-to-date with any HR amends can be a long-winded job. Integrating your payroll with HR will keep confidential details and new joiner/ leaver information up to date.