Payroll fraud can be costly to any company. While it may seem like fraudulent activity should be easy to spot, that isn’t always the case. It can take months or years for a problem to come to light. The longer the fraud is able to continue, the more it costs the business.
Finding ways to detect and handle payrolling fraud is critical. That way, you can identify problems early and address them quickly. If you aren’t sure where to begin, here are some tips.
Have Checks and Balances
By divvying out payrolling duties to several team members, you can actually reduce the risk of fraud. Since multiple employees are involved in the process, the likelihood that a problem will be overlooked goes down. Additionally, the team approach creates checks and balances, ensuring that no one in the payroll department is using their position and payroll systems access for fraudulent activities.
Establish an Anonymous Tip Line
Sometimes, one employee will discover that another is committing payroll fraud. However, not all workers will be comfortable coming forward, especially if they are worried about any fallout that might come with reporting the problem.
By establishing an anonymous tip line, you are giving employees a way to report suspicious behavior without exposing themselves to retaliation. This increases the odds that a worker will speak up if they think someone else is committing fraud.
Have a Separate Payroll Account
When you separate your payroll funds from the rest of your business funds, you are reducing the potential impact of fraud. It gives you the ability to limit the amount of money in that account to just what you need to cover wages and taxes. Plus, reviewing these bank statements for issues will be easier, as the rest of your operational funds won’t be mixed into your payroll expense-related activities.
Conduct Internal Audits Regularly and Randomly
With an internal audit, you review your payroll records to look for errors and anomalies. While you should handle these activities regularly, it’s also wise to do random checks. This ensures that there isn’t a pattern to your audits, increasing the odds that a person who was committing fraud is caught off-guard.
Additionally, the audits serve as an opportunity to check a variety of payrolling activities. For example, you can confirm that tax deposits are being made, ensuring an employee isn’t pocketing those funds.
Hire the Right Payroll Team
When you are hiring employees for your payroll team, performing your due diligence checks is essential. Nearly every job candidate is going to put their best foot forward during an interview, so you can’t rely on that impression alone. Additionally, some may blatantly lie, hoping to trick you into selecting them.
Every time you hire, make sure to conduct reference checks. Additionally, a background check should also be standard procedure. That way, you increase your odds of spotting a bad hire before an offer is extended.
All of the tips above can help you identify potential payroll fraud and handle it appropriately. If you would like to learn more about how you can protect your company, the staff at Apogee Managed Solutions can help. Contact us to speak with one of our team members today and see how our payrolling expertise can benefit you.