Regardless of how payroll is carried out in your business, you need to be aware of the possibility of fraud. The person or team in charge of your payroll has the power to transfer your company’s funds away from the business into external bank accounts.

Here are some of the ways this can happen, and the signs to watch for.

Haunted Payroll

If you seem to be paying out more that you should each payday, you may have ‘ghost’ employees. Ghosts are created when a member of payroll staff creates additional members of staff and siphons their pay into their own accounts. The spook isn’t always a fake member of staff, ghosts are often created by paying casual staff who might not work often, but changing their details in the process. If you suspect there are spectres in the rafters of your payroll department, run checks for duplicate tax file numbers, bank account numbers, dates of birth, and addresses in your system. You can easily do this by checking the monthly Aussiepay “Compliance and Control Report” which lists all the duplicate bank account details. Keep an eye out for details that are often changed before or after the pay run.  Simply check the Aussiepay “Exception Report” provided to you each payroll.  This report lists all the employees who have new banking details, rates of pay and changes in their accrual of annual leave structure.  Each such change should be investigated to ascertain its accuracy.

Are Employees Living Like P Diddy on a 50 Cent Income?

Take note of employees whose lifestyles seem to far exceed what their income would lead you to expect, especially if they are in charge of payroll or have other financial responsibilities.

Of course, someone living large is not reason enough to start pointing fingers. An employee may have investments, family money, or live in their car and spend everything on diamonds, gold chains, and caviar. However, it is worth double checking their work and making sure there are no anomalies.

You don’t want to end up like Clive Peeters – over two years their employee Sonya Causer stole close to $20 million by redirecting approved company payments into one of her eight bank accounts. She was only caught out in 2009 after a dedicated accountant noticed discrepancies in the ledgers. But there were red flags that could have alerted the company earlier.

Causer earned $125 000 per annum. Not too shabby, but doesn’t quite explain how she was able to buy 44 properties in and around Melbourne along with multiple brand new cars, all in a short space of time!

Time Keeps on Slipping

If employees you barely see at work are getting a lot of overtime, you may have a time thief on your hands. Much less exciting than a time lord, time thieves simply overstate their hours consistently; but plausibly, siphoning away un-earned payments from your company. This can be done actively by adding extra hours to timesheets, or more passively by over-extending breaks or spending 7 hours a day on Facebook. In the latter cases, disciplining or firing may be in order. The same is true for cases where additional hours have been added, but you’ll also need to re-examine the payroll practices that let it happen.

Controls

There is a fundamental practice that should be employed to minimise fraud called “separation of duties”. With “separation of duties” the payroll process is effectively split between two people.  One person is responsible for employees’ hours and new hire details while the other person is responsible for checking the payroll transactions, particularly those that have changed since the last payroll.  It doesn’t mean that fraud can’t take place but for it to occur there would need to be collusion between the two people involved.  Aussiepay’s payroll outsourcing system is designed to facilitate “separation of duties”.

Let the Professionals Clean up Your Payroll

The best way to avoid a dodgy payroll is to use a dedicated, award-winning payroll service like Aussiepay and employ “separation of duties” technique. We ensure best practices, accountability, and transparency so that your payroll will be clear, crisp, and pure as a winter morning in Antarctica.