Why Everyone Should Be Concerned About Payroll Fraud

Did you know that most cases of payroll fraud are never reported to the authorities?  This is probably because businesses are often embarrassed that “it happened to them”.  It’s a bit like having a relative in jail – you don’t talk about it.

If you think about it, payroll is the most obvious place where fraud could occur, given the fact that it is by far the biggest expense in business.

It is therefore relatively easy to “hide” between big numbers, i.e. if a business has a payroll of R5 million per month, what are the odds of picking up fraud of R25 000?  Probably not great.

It is common with payroll fraud cases that only one person does the payroll (and has access to the payroll) and thus always has to be there when payroll is done.

However, businesses often want to limit the number of employees who have access to the payroll, given the sensitive nature of the data.

It is however critical that “separation of duties” exist to some degree e.g. someone processes the payroll and another person checks for correctness and releases payment.

Businesses often outsource their payrolls to achieve adequate separation of duties and remove the risk of payroll fraud.  An employee would typically collate input, and the payroll outsourcing provider will process the payroll and release payment.

Payroll outsourcing also provides continuity, meaning that payroll can still be done when the payroll administrator goes on leave, or leaves the business.

Using cloud payroll technology also reduces the risk of payroll fraud because it gives the business owner or executives direct access to live payroll data, without being reliant on the payroll administrator.

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