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Is Your Payroll System Protected from Fraud?

December 18, 2018 by OSYB Staff

If you think that payroll fraud only happens in large companies, you may be surprised to find out that 30% of payroll fraud cases occur in small businesses with less than 100 employees.  Fraud often goes undiscovered and the average time of an undetected payroll fraud instance can be as long as 36 months.  Imagine, how much financial devastation is caused by an unprotected payroll system.

Some examples of employee fraud shared by Patriot Software include:

  • employees reporting more hours than actually worked
  • employees increasing their hourly rate
  • creating ghost employees

Keep in mind that employees are not the only offenders, owners commit fraud too, and this is often more devastating for the business.

So what can you do to prevent this from occurring in your small business.  Patriot Software has some ideas:

  • maintain checks and balances
  • encourage employees to share suspicious behavior
  • conduct regular internal audits (scheduled and unscheduled)
  • create a separate payroll account
  • ensure that payroll tax deposits are made
  • perform due diligence when hiring staff

Payroll fraud occurrence can be minimized with the appropriate checks and balances.  Be thoughtful in your payroll process and close all possible opportunities for fraud to occur.  Conduct internal audits regularly and hire qualified and well-vetted staff.

For more details:  How Small Businesses Can Fight Payroll Fraud Schemes

Image Credit:  Deposit Photos

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