There are many many ways that fraud can manifest in a company, one of the most important things that business owners or managers can do is regularly check financial documents of the organization. No matter the size of the company, it can only take one person with selfish intentions to commit fraud that may have devastating effects on the financial health and social reputation of a business. A common method of fraud is through the creation of a ghost employee or several ghost employees, who do not exist but are put on the payroll.
Ghost Payroll Fraud
In a nutshell, ghost payroll fraud is when fake employees are created and listed on the payroll by the thieving party, who then picks up the paycheck of the non-existent employee. By pocketing the check of this ghost employee, the thief easily takes advantage of a company that is not paying attention to its payroll. It is a good idea for businesses of all sizes to ensure the human resources department and financial department are staffed with trustworthy and reputable employees, to avoid ghost payroll fraud.
How to Stop Ghost Payroll Fraud
There are a number of ways to protect your company from ghost employee fraud. First, limit the number of people who can make changes to the payroll documents. Second, check the payroll list against the list of hired employees at least once per financial quarter. Last, refuse to hire anyone with a history or connection to embezzlement.