According to a study by the Association of Certified Fraud Examiners conducted in 2012, over 11% of bookkeeping services fraud in the workplace involves the payroll. It accounted for an average of $48,000 per business. The fraud lasted an average of three years with the leading cause being lack of adequate bookkeeping services. An internal control was not found to be enough in many cases. So what’s a business to do? Check out our guide to bookkeeping services fraud where payroll is involved.

houston-bookkeeping-services-fraud1. Ghost Employees on the Dole

One of the most common forms a payroll scheme is carried out was for a “ghost employee” to be added. This employee is on the payroll and collects a check, as well as many other benefits in some cases. However, they are not real. They never come in nor perform any work. They are usually associated with a fraudulent or stolen Social Security Number. These ghost employees are also often added by someone within the company.

2. Hourly Fraud

This form of fraud is becoming less common but is still used, especially in the case of old-fashioned punch cards. A common way this form of payroll scam is being carried out is when two or more employees clock each other in and out at inaccurate times. Just having one of this type of scheme can cause a business to pay hundreds of dollars in earned income per each pay cycle. It can also add up to tens of thousands in just one year. Having a clock in system in which employees must use a secure and confirmable means of clocking in and out is well worth the money.

3. Commission Calamity

This type of fraud occurs when the number of sales made or the rate of commission is fraudulently inflated by the employee. If you have a team or even one sales person who gets paid in part of full off of commission of sales, you can be subject to payroll fraud. The best way to counter this is to compare commission expenses to verified sales figures and calculate amounts on your own or via an external bookkeeping service to determine if there has been a fraud.

For more on bookkeeping and payroll fraud, visit the official site of the Association of Certified Fraud Examiners.

4. How to Spot Bookkeeping and Payroll Fraud

You don’t have to be a professional to spot bookkeeping services fraud after it happens. A few telltale signs to look for include but are not limited to:

  • Is an employee showing signs of living an overly expensive lifestyle for their income?
  • Are there anomalies in the payroll records? For example, if you normally pay $10k a month for payroll did it randomly jump to $11k with no new hires or raises?
  • Does more than one employee share the same address, bank accounts, or other significant info?
  • Is an employee who is not associated with payroll, human resources, etc. spending an excessive amount of time in those areas?

Bookkeeping Service Fraud in Houston?

Do you suspect your business may be undergoing a payroll fraud? Do you suspect one may happen in the future? Contact us today to see how we can help save you thousands in lost income.

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