A Guide to Detecting and Preventing Payroll Fraud

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A Guide to Detecting and Preventing Payroll Fraud
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• Its an unfortunate reality that in many
  instances, payroll fraud isnt detected, or even
  suspected, until large amounts of money have gone
  missing, and it can even take years for timesheet
  fraud or ghost employees to become apparent.
• To help your business prevent payroll fraud, you
  could try hiring a remote payroll service, who
  are trained to detect such issues and prevent
  them. If you dont want to do this however, or
  are in the process of doing so, the following
  brief guide can help you better detect and
  prevent payroll fraud within your business

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• Detecting payroll
• One of the best ways to detect payroll fraud
  within your business is to schedule regular
  payroll audits, which can help you identify and
  correct payroll errors related to fraud. Some
  examples include fictitious timesheet data or
  payments to ghost employees, but can also include
  human error.
• Annual audits can be useful, but quarterly or
  monthly ones are even more effective, and they
  can be carried out by internal staff, or a third
  party, such as a CPA or consultant.

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• Below are some activities that should be included
  in a payroll audit
• Check that all payroll procedures are followed
  correctly every pay period
• Review your list of payroll software
  administrative users and ensure that only those
  employees with specific system rights are
  processing payroll
• Check your active employees list for
  discrepancies
• Make sure that no payments have been made to
  terminated employees after the termination date
• Analyze pay rates and check for any unusual
  alterations
• Study any hours worked for unscheduled overtime
  or a higher number of hours than you would expect
  for part-time employees

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• Review commissions and bonus pay along with any
  off-cycle payroll checks
• Compare total payroll expenses across pay periods
  within your general ledger and examine any
  fluctuations that appear to be unexplained
• Verifying a ghost employee
• When conducting an audit, one simple way of being
  able to spot a ghost employee is to look for
  anyone with few or no deductions from their pay,
  along with the following
• An employee who has a record with information
  missing from it

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• The same bank account being used for the deposit
  of wages for more than one employee
• A turnover of staff that you cant explain
• A name appearing on the payroll that nobody
  recognizes, or which has no defined job
  description attached to their record
• The best ways to prevent payroll fraud
• As an employer, there are many options for
  protecting your business and payroll department
  from fraud, and here are 4 of the most effective

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• Outsource payroll with a professional remote
  payroll service, they will help you to ensure
  that all payroll procedures are being followed to
  the letter, making much more difficult for
  mistakes to slip though, and fraudulent actions
  to remain undetected.
• Conduct background checks if you prefer to have
  an in-house payroll department, carry out
  background checks for all employees who will be
  able to access company bank accounts.
• Segregate payroll duties you can achieve this
  by processing payroll using a checks-and-balances
  procedure in which one person prepares the
  payroll and another reviews it.

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• Review standard employee and payroll reports do
  this for each pay period to enable you to quickly
  spot any payroll errors.
• Simplify all of your payroll needs and make fraud
  something you never have to worry about, by
  outsourcing your payroll requirements to a
  professional provider.
• Apollo Payroll is dedicated to delivering expert
  advice, responsive service, and highly accurate
  payroll processing and reporting to ensure the
  success and growth of the business that we serve.
  Our services include comprehensive payroll
  services in Homestead and other cities in
  Miami-Dade County, employee background check and
  group health insurance in Miami Coral Gables