COMPLIANCE
How we can wage war on payroll fraud
Stewart Waddell ACIPP, operations director, DataPlan Payroll, explains the key steps payroll experts can take to stop criminals committing payroll fraud in their tracks
I t’s easy for payroll fraud to sneak under the radar, sometimes with catastrophic legal or financial consequences. Why does this happen? Generally, it's because if you don’t know what you're looking for, all you have is instinct, trust and the hope that the monthly figures will look right. Fraudsters often exploit all three of these things. For the big rewards, they have to get close, commit their crime and then cover their tracks. That’s not a pleasant thought, I know. If you’re part of an in-house team, it means you could wave to them every morning. They might bring you that first cup of coffee or even bail you out when things get busy. However, the solution isn’t to push colleagues away ‘just in case’. Trust is essential to everyday life; you can’t function well or have a good day at the office without it. Instead, it’s better to know the three ways most payroll fraudsters operate. They are: l timesheet fraud l salary fraud l ghost / fake employees. When you understand what payroll
fraud looks like and how it’s committed, you’ll be able to put the right precautions in place. You’ll never find yourself second- guessing the people you work with – rather, you’ll be able to approach the issue professionally and with the right amount of vigilance. Timesheet fraud Timesheet fraud is when a worker falsifies reported working hours for the week or month. What makes it different from the other types of fraud we’ll discuss is that many people doing it don’t think they’re committing a crime. How so? Some think they’re doing a good deed – their friend is late, and they ‘buddy punch’ for them so that, on paper, they’re present and correct. Or perhaps they’re taking excessive breaks while on the clock. But if you deceive someone to gain money you’re not entitled to, it’s fraud, plain and simple. And, done repeatedly, the losses add up. So, how can we deal with this? One way is to assign a senior manager or supervisor to sign off on every timesheet. A regular and careful review of overtime pay will not
only help your business spot irregularities but also provide a nuanced view of what’s impacting the bottom line. Salary fraud Salary fraud is particularly unpleasant. To succeed, the fraudster has to be trusted and likely work close to the payroll team. When this fraud is committed, someone with access to payroll data changes the pay rate, inflating their wage pay out. After they pocket the money, they change the payroll back to what it should be, and their tracks are covered. So, how can you stop something like this from happening? Your leadership team needs to know, on a month-by-month basis, who has access to your payroll. Only those who truly need such privileges should have them. This makes it easier to track anyone attempting salary fraud and reduces the likelihood an opportunist can log in. It’s also good General Data Protection Regulation housekeeping, ensuring those who don’t need the information don’t have it. It’s also important to double-check real time information (RTI) submissions and compare any internal reports with what
| Professional in Payroll, Pensions and Reward | June 2023 | Issue 91 24
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