Payroll fraud detection and prevention with QuickBooks hosting

Being an entrepreneur and running a company is an arduous task, even if everything goes well. You must be prepared for all possible situations that may arise and put your quick decision-making skills to the test.

Every employer is afraid of discovering fraudulent activity, especially of discovering that a trusted employee is misleading him. But your money is for your business, and you don’t want to keep harboring a rogue employee, particularly someone who could get you in trouble with the IRS.

Payroll fraud is real and the main source of accounting theft in companies. According to statistics provided by the Association of Certified Fraud Examiners (ACFE), 27 percent of all companies face cases of payroll fraud and almost twice as many in small companies as large ones. Non-profit organizations are also not exempt from this criminal activity.

Let’s look at a case. Forensic accounting specialist Tiffany Couch shared some payroll fraud stories in a podcast with Accounting Today that will put things in perspective.

A trusted employee for 14 years in a dentist’s office is convicted of cash theft. He is a sweet, hard-working person and popular with colleagues. She handles incoming cash and bank deposits, takes care of QuickBooks data, takes care of all money-related tasks. Because no one is controlling it, it gives you free access to steal it. She begins to pay herself extra paychecks, manipulates incoming cash bills, and doesn’t deposit all of the money into the official bank account.

The dentist reviews some tax forms one day and discovers that she is being paid more and confronts her about it. She denies it at first, then says the boss had agreed to pay her by the hour for all the overtime she did last year and gets mad at him for not believing her. The dentist, avoiding the fuss and wanting to clear up a few facts before the conversation went any further, said they will talk about it later in the day. The lady went to lunch and never came back. When the accounts and data were verified, it showed a large number of discrepancies, deleted receipts, and missing cash inflows. In total, he stole more than $ 400,000 and is now serving a sentence for it in prison.

Payroll fraud seems difficult to commit, but if it is well hidden, it can take months (or even years) to discover. It can happen in any industry, be it a small store or a large company. The key is to check your accounts regularly yourself. In the above case, too much confidence cost the dentist a lot of money. If you had reviewed or posted invoices earlier, the case would have been different.

Using QuickBooks Payroll can save you a lot of trouble. It comes with the remote access facility, allowing you to check your accounts from anywhere and at any time. This way, you will always know your cash flow and can check financial data from home. You can also cleverly catch a scammer on the spot and with evidence.

The following are the most common payroll fraud schemes:

1. Ghost employee

A bogus or fired employee is paid paychecks that the fraudster collects himself. This is common in organizations with a large number of employees managed by a supervisor. Regular audits of payroll reports are essential to ensure that employees receive the correct pay. Check for multiple deposits to the same bank account or checks issued to employees at the same address.

2. Handling fee

When an employee who has access to payroll accounts increases his own salary or pays himself for overtime or a bonus. This fraud is clearly taking advantage of the trust the employer has in the employee. As a business owner, you need to remember that trusting your employees is okay, but too much trust is not wise. Establish internal control and monitor critical financial records yourself periodically.

3. Setting the timesheet

This is a very common occurrence in companies where employees are paid an hourly rate. Employees can mark time for absent employees or increase the duration of their own work. But if the supervisor is strict, this can be avoided.

Payroll is the largest expense of a company and payroll fraud can cause a lot of damage to the finances and reputation of the company. It is of the utmost importance that all financial operations are controlled in detail so that nothing is left to chance. Hosted QuickBooks offers you many benefits, including the right to work on your QuickBooks from a remote location. It is essential to keep a close eye on cash flow and to be up to date.