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How Dear Could Be Your Payroll Mistakes?

“As long as the HR is making payroll mistakes on overpayment, I will continue to pretend that I am getting the right salary.” - Anonymous

Payroll risks are the chief contributor to Insider threats. In fact, they are the top ranking source of fraud, mistakes and employee theft. If unnoticed, the payroll 'leakages' can carry on for years.

There are various threats which can give rise to payroll frauds. Let’s see some of them:

  • Timesheet Fraud: Payroll manipulation by way of ‘Time theft’. Timesheet fraud happens when an employee increases their pay by claiming to have worked more hours than they actually did. Like recording inaccurate times, soliciting a colleague to clock them in, conducting personal activities while on the clock, or taking frequent breaks.

  • Falsified Wages: Payroll fraud through falsified wages can happen when an employee manipulates their wage rate, tampers with their actual pay check or increases their sales numbers for more commission pay. Employees who have access to your payroll system might also be able to alter check amounts or issue themselves unauthorized checks, since physical pay checks are easier to steal and forge than digital payment methods.

  • Ghost Employees: This one is really scary! Here, regular pay checks are going to employees who just aren't there. This type of fraud happens when a trusted employee blatantly manipulates payroll, so they can pocket the pay check of a fake employee.

  • Gaps in Processes & Applications: Many times, if there are improper controls and checks in payroll processes or your payroll applications, it could give rise to incorrect payments being released to the staff.

Here are some of the examples of payroll frauds and mistakes:

  1. Former Payroll Administrator Found Guilty of $1.5 Million Fraud Against Longtime Employer. Read this news here.

  2. Louisiana Deputies Fired for Payroll Scam. Read more here.

  3. Company Accidentally Pays Employee Rs 1.4 Crores Instead Of His Actual Salary. He Resigns & Disappears. Read more about this payroll mistake here.

Payroll risks can be prevented. The following steps can help:

  • Implement proper Payroll policies and procedures, taking into account the risks with proper controls and mitigation plans

  • Segregation of duties and controls - deploy a maker / checker concept into the payroll process

  • Perform Payroll audits. The payroll team, their processes and applications should be under the scope of Process, Quality, ISMS and BCMS audits

Is your payroll system secure and free of risks? Get the assessment done without any delay. Speak with our experts.

At Gorisco, our motto is 'Embedding Resilience' and we are committed to make the organizations and their workforce resilient. Reach out to us if you have any queries, clarifications or need any support on your initiatives.

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