As a business owner, you have a lot to worry about when it comes to accounting and bookkeeping. For many, payroll fraud is another source of stress. Fortunately, knowing what to look for and taking the proper precautions will help safeguard you and your business from employee theft. The payroll service specialists at Wilson, Rea, Beckel & Associates CPAs LLC have helped businesses in Pagosa Springs, CO, identify fraud. Below are four types of fraud you should be on the lookout for.
4 Types of Payroll Fraud
1. Non-Existent Employees
Sometimes called a “ghost employee,” this is someone on your payroll who doesn’t exist. They could be a former employee who was never taken off payroll, a friend or relative of the thief, or someone entirely made up. Either way, they’re collecting a check and stealing hard-earned money. Proper payroll services and software will help you prevent this type of fraud.
2. Falsified Time Cards
This is one of the most common types of fraud, particularly at companies where employees are paid hourly or receive overtime. Some employees may add a couple of minutes here and there which can go entirely unnoticed, while others may add entire hours or days to their time cards. Some even enlist the help of their co-workers to clock in and out for them. Falsified time cards are hard to prevent and hard to spot, but being diligent with your payroll review helps.
3. Claiming Injury or Illness
If you offer paid sick leave to your employees, it’s probable that they’ve called in sick when they were really at the movies or catching a ball game. To prevent this, you can require employees to present a doctor’s note as proof of their illness or injury. Implementing complex sick policies can get overwhelming, though, so make sure you have payroll services and support to make things easier.
4. Falsified Expense Reports
Most companies reimburse their employees for expenses when traveling for work, but employees may take advantage of this generous policy. Many will claim personal expenses as work expenses or claim certain expenses were higher than they actually were. The best way to combat this type of fraud is by requiring receipts for all work-related purchases. You can also implement a per diem policy, which limits how much an employee can spend per day.
Payroll fraud is easier to prevent and catch when you have adequate support. Wilson, Rea, Beckel & Associates CPAs LLC offers comprehensive payroll services to ensure your employees never take advantage of you. They also offer accounting and bookkeeping services so you can spend your time on other areas of your business. Visit their website to learn more, or call (970) 731-1040 to request an appointment with one of their CPAs.