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Are you protecting yourself from payroll fraud

Are you protecting yourself from payroll fraud Thinking about payroll fraud can be unpleasant - after all no one wants to feel like they can't trust their colleagues. However a 2014 Global Fraud Study by the Association of Certified Fraud Examiners found 5% of a typical organisation's revenue is lost to fraud. It's an issue all organisations should be concerned about.

But while businesses may not always be able to prevent the motivation for committing fraud, they can try to minimise the opportunities. Whilst there are many types of fraud, here are a few processes you can try implementing in your organisation to prevent payroll fraud.

Segregated duties

One of the simplest ways to prevent payroll fraud is to segregate HR and payroll duties. This means human resources controls the authorisation for entering employee details into the system and payroll are the individuals who physically key those details in. This basic two-step process allows neither to perform any action that is not overseen and verified by the other department. Separating these duties can prevent inputting of 'ghost employees.' That is, employees who exist only on paper in order to funnel payments to someone else's accounts.

Paper trails

A clear paper trail is also an easy way to prevent payroll fraud. Even if a director or executive orders a salary increase, having a signed authorisation process leaves a clear trail of accountability, should any impropriety be suspected. If your payroll software allows for individual log-in credentials and permission settings - Great! You can control who is able to access payroll details and know exactly who is responsible for alterations.

Third-party reviews

A fresh set of eyes can often catch details others miss. Whether by a member of your organisation or an outside body, regular audits by a third-party increases the chance of any misappropriation being discovered as soon as possible. These steps can not only minimise the opportunities for payroll fraud, they also provide opportunities to catch any accidental errors before they are processed.

Have you got any other suggestions for protecting payroll? Share them with us in the comments below.

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