{"id":447,"date":"2018-05-04T12:57:14","date_gmt":"2018-05-04T17:57:14","guid":{"rendered":"http:\/\/blog.northone.io\/?p=447"},"modified":"2023-05-16T11:53:39","modified_gmt":"2023-05-16T16:53:39","slug":"preventing-payroll-fraud","status":"publish","type":"post","link":"https:\/\/www.northone.com\/blog\/accounting\/preventing-payroll-fraud","title":{"rendered":"5 Ways to Prevent Payroll Fraud"},"content":{"rendered":"
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\"5<\/figure>\n<\/div>\n\n\n

Your credit card payments are encrypted, you back up your data to a secure cloud, and you’ve enabled two-step authentication on your most important software. Congrats, you’re impenetrable.<\/p>\n\n\n\n

…just kidding.<\/p>\n\n\n\n

Have you looked at your payroll security recently? Payroll fraud is often overlooked, yet a very expensive way that SMBs throw away money. Some payroll fraud may be unintentional, but most of it is done on purpose. What’s more, the median loss<\/a> from a case of occupational fraud (which includes payroll fraud) is a whopping $150,000. Yeah, Wowza.<\/p>\n\n\n\n

The good news is that you can be proactive about preventing payroll fraud. The first step is understanding how it happens, and the next step is stopping it. Like Wonder Woman deflects any incoming threat with the power of her Bracelets of Submission, you too can ward off threats to your payroll funds. Corset and cape optional.<\/p>\n\n\n\n

<\/span>What is payroll fraud?<\/span><\/h2>\n\n\n\n

Payroll fraud is the act of stealing money from a business using the payroll system. This crime manifests itself in a few common ways. If you’re new to payroll accounting, some of them may be unfamiliar to you, so let’s take a few minutes and brush up on our fundamental knowledge of payroll fraud and the way it is most commonly committed.<\/p>\n\n\n\n

<\/span>4 Types of Payroll Fraud<\/b><\/span><\/h2>\n\n\n\n

<\/span>Ghost Employees<\/b><\/span><\/h3>\n\n\n\n

A \u201c<\/span>ghost employee<\/span><\/a>\u201d is created in your payroll system. If you\u2019re a small business<\/a> with fewer than 50 employees, this one won\u2019t be an immediate threat, but it\u2019s still something to keep an eye on as you grow. In this scenario, someone creates a fake employee in the system and then pockets the money that is distributed to this non-existent worker. Unless you\u2019re paying close attention, an expanding company can easily have an extra \u201cemployee\u201d in its system.<\/span><\/p>\n\n\n\n

<\/span>Timesheet Fraud<\/b><\/span><\/h3>\n\n\n\n

Wages are <\/span>falsified<\/span><\/a>. Employees can falsify wage records by lying on their timesheets, taking advantage of commission loopholes, or inflating expense reports. More savvy people may even be able to break into a payroll system and assign an unearned bonus to themselves. Common payroll fraud includes:<\/span><\/p>\n\n\n\n