Payroll Fraud happens in 27% of all businesses.

It's far cheaper to pay for somebody to keep your payroll fraud free than it is to pay the legal fees if you get tangled in one yourself

Payroll fraud is when employees wrongfully manipulate the payroll system to either receive payment they haven't earned.

A few years ago the CEO of a global MNC suspected that its HR & Payroll Manager was committing payroll fraud, however short of any evidence he did not pursue this matter.

The HR & Payroll Manager’s job included processing the staff’s biweekly payroll. Over a two year period the manager had approved payroll advances for several employees but discrepancies came to light when the company hired a new Finance & Administration Director. While reviewing payroll journal entries, the Finance & Administration Director noticed that the payroll for one period was higher than that of the preceding period. He notified the company of this, indicating that there was a need to check with the HR & Payroll Manager, however an explanation was given that the difference was the result of a pay advance. The matter was then not pursued any further.

However, similar discrepancies for other periods began to surface which was brought to the attention of the company’s COO. They immediately requested all employees’ records and found that the HR & Payroll Manager had been overpaying his/herself. The payroll had been exclusively processed by the HR & Payroll Manager and he/she solely maintained the master payroll schedule. When the company requested a check to see if all transactions had been properly entered, he/she informed the company that due to confidentiality he/she was unable to do so. He/she was subsequently confronted and fired.

Payroll fraud is more common than you think and undetected, could essentially tank a company. Fraud by staff is a prevalent issue within many companies. By outsourcing, the entire process of handling payroll and accounting, accuracy and quality is ensured as service providers will be held accountable for any anomalies in the transactions.

At Propay Partners we practice the ’6i principle’ as part of our internal control procedure. The ’6i Principle’ comprises of three stages of checking procedures by different team members through an escalation process, to ensure that your payroll is not only processed accurately but to identify any significant or abnormal changes in your payroll.

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