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No business owner wants to believe their employees could steal from them, but it happens quite often. Payroll fraud is one of the most common forms of theft, and it causes a significant loss of profit for many businesses. This is why the seasoned accountants at Cloyd & Associates PSC in London, KY, recommend employers watch out for the many different ways payroll fraud can be committed. Below, they review a few types of payroll fraud and what you can do to prevent them.

Accountants Discuss 3 Kinds of Payroll Fraud

1. Ghost Employees 

Ghost employees allow a member of payroll to receive additional pay through diverted funds. This is done by either creating a fake employee or using the identification of someone who no longer works for the company but was never taken out of the payroll system. Thus, you would be paying people who don’t work for you. This can be avoided if you perform regular payroll audits, make sure there’s a proper exit strategy for employees who leave, and have separate people handle employee records and payroll.   

2. Timesheet Falsification

accountantTimesheet falsification involves getting paid for hours that weren’t worked. In some cases, employees will have a co-worker clock in for them on a day off, or they may manually enter extra hours when given the opportunity. Having your accountant monitor timesheets and compare them to employee schedules can deter this fraudulent activity.

3. Reporting False Expenses

Companies that reimburse their employees for work-related expenses must watch out for people who take advantage of this procedure. It’s not uncommon for employees to increase the amount they spent, submit receipts for personal expenditures, or dishonestly claim expenses that never took place. The best way to protect your company from false expense reporting is to set limits on how much can be spent and make sure you receive receipts for every claim of reimbursement.

Payroll fraud can create a serious financial burden for your business. Utilizing the payroll services of Cloyd & Associates PSC will minimize this threat and help to keep your bottom line intact. Their accountants will alert you to any unusual activity, so you can adjust policies and handle the situation appropriately. Contact them at (606) 864-8110 to schedule a consultation, or visit their website for more information about their services.

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