INTHEBLACK April/May 2024 - Magazine - Page 27
PwC’s Global Economic Crime and Fraud
Survey 2022 found that internal fraud can
become visible in times of transition, because
fraudster behaviour lags the shift to new
goals and targets.
“For example, corrupt employees may be
taking illegal actions to achieve sales targets
that leaders know are unobtainable heading
into a down economy, and [are] therefore
suspicious,” the report says.
Symons says regular audits may not be
the best method to identify payroll fraud.
“An offender, knowing an audit is
scheduled, can falsify documents to deceive
the auditor. Random and surprise payroll
audits can address this.
“The auditor should seek patterns such
as consistent overtime claims, rounding
of figures, multiple employees having
the same banking details, multiple employees
having the same or a similar address.
These are red flags that indicate fraud.”
Symons adds that regular reconciliation
of payroll expenses with bank statements
may identify unauthorised transactions.
ACTION AGAINST FRAUD
Angwin points out that only a small
percentage of payroll fraudsters are ever
prosecuted because their employers choose
not to act.
“One thing I continue to see when there
is payroll fraud – and when an organisation
discovers payroll fraud – is they are reluctant
to actually report it to police,” Angwin says.
“The reason is that there is a belief by the
employer generally that they have a better
chance of getting the money back if they
negotiate directly with the fraudster, but
that is almost never the case.”
When payroll fraud is detected,
Symons adds, businesses should secure
STEPS
TO PREVENT
PAYROLL FRAUD
•
•
•
•
•
•
Segregate duties to make sure no
individual employee has control over all
parts of any critical financial transaction.
This means permission must be,
at a minimum, double approved.
Ensure staff undertake regular training
on ethical conduct within the workplace.
Discuss case studies of payroll fraud
during training. Employees should know
the repercussions of engaging in fraud
within the workplace.
Put a whistleblower program in place,
because this is one of the most effective
methods to identify potential fraud within
the workplace.
Conduct thorough due diligence checks
on all employees, including police
checks, especially those with financial
responsibilities within the company.
Ensure that any changes in payroll,
especially those about rates, benefits,
or commissions, are passed through
several layers – at least two independent
signatories – of approval.
Implement advanced payroll and
human resources management systems
with built-in controls to prevent
unauthorised changes and manipulations
of the system. These could include
technologies such as fingerprint access,
required activation of entry using
an employee card, use of CCTV and
(where appropriate) independent
verification of activities.
intheblack.cpaaustralia.com.au 27
