3 Common Types of Payroll Fraud

on

Companies are faced with numerous challenges and threats that are detrimental to revenue. Some of these are external causes and based on market conditions and competition. Others come from internal issues such as payroll fraud. If you think this is a rare occurrence then think again – payroll fraud in the staffing industry impacts a surprisingly large amount of businesses each year. Below are three common scenarios involving fraud and how to detect them.

Ghost Workers

This situation occurs when an employee doesn’t actually exist put is paid anyway. Typically this is set up by someone with access to HR or payroll systems. They create an employee in the system tied to their account and send additional pay to themselves. Regular auditing can prevent this from happening.

Timecard Fraud

Otherwise known as padding hours, this may be the most familiar of fraud schemes. Employees manipulate the timesheet system to get paid for hours they didn’t actually work. This can take many forms, but clear policies and attentive supervisors can reduce these cases.

Misclassification

These usually manifests when a worker is classified as an independent contractor instead of a W-2 employee. This saves the company on taxes and benefits but will cost more in the long run due to steep fines if caught.

Payroll fraud can be costly to your business if it goes undetected. Being able to recognize how it can happen is key to eliminating it from your company.