Payroll fraud: do not let your business become a victim

When you are dealing with large amounts of money on a regular basis, people who are appointed to accurately monitor expenses can be easily tempted. When these anomalous transactions are discovered, business owners are already clueless about the unexplained financial activity. As a business owner, ensuring fraud risk is minimised is in your hands. The things that make your business more exposed to fraud are untrained people, loose systems and mediocre processes. When it comes to protecting your business, it is important that you pay particular attention to accountability and tightening the processes is also necessary.

Signs Of Payroll Fraud

1. Regular changes in master file. A business owner needs to conduct an investigation if there are regular changes in entitlement balances or bank details of employee. The changes should have explanations, but it is considered a common payroll fraud red flag.

2. Remote access to payroll system. When office activities are performed out of normal office hours such as remote access to payroll system, this is a clear sign that something is not right. When there is a need for access to these confidential files, it should be questioned by the business owner. Even after hours activity needs to be audited to find out if it is part of regular process.

3. Security is loose. When there are individuals attempting to access the payroll system that should only be entrusted to people who are assigned to pay employees, a business owner has the reason to suspect. It is important that the access to the payroll system is limited to those that are in the business of paying employees.  Anyone should have read-only or restricted access to the system. The possibility of payroll fraud is reduced when people are only given read-only access.

4. Using obsolete login credentials or sharing login credentials. Logins must be treated with confidentiality and sharing them is a big no-no. If there is an employee practicing this prohibited act, concerns must be raised immediately. If the reasons for gaining access to a payroll system are genuine, you need to secure your own login and password. It is also important to delete old logins in the event of turnover of payroll staff. Old logins must be deleted so third party users are restricted.

5. Payroll audit trail. It is necessary for a payroll system to have a strong and comprehensive audit trail.  The audit trail will be a good way to determine if there is any fraudulent activity going on. If ever some areas of the audit trail reflect suspicious activity, you need to investigate before the matters get worse.

6. The percentage of casual employees increases. Although this is not the sole reason that there is an unusual activity going on, a casual workforce is often a gateway to payroll fraud. If you have noticed that you have a high percentage of casual employees, you need to pay more attention to the process of your business including bookkeeping and accounting so you can eliminate the possibility for payroll fraud.