What is a ghost employee?
A ghost employee is someone being paid on the payroll who doesn’t actually work for the company.
Through false payroll records a fraudster can pay a ghost employee. The ghost employee may be a false person or a real individual who simply doesn’t work for the employer.
How does ghost employee fraud work?
The scheme works if:
- the ghost must be added to the payroll,
- timekeeping and wage rate information must be collected,
- a pay slip must be issued to the ghost, and
- the funds must be delivered to the fraudster or an accomplice.
How to prevent ghost employee fraud
Companies need to focus on internal controls and process improvement.
Preventing ghosts on your payroll includes:
- Segregation of duties in the payroll function
- Formal process for adding new/terminating employees
- Always look into employees with no deductions for tax or PRSI/USC
- Are the payroll records on the right paper or using the right font?
- Check payroll listing for duplicate names
- Check payroll listing for duplicate bank account numbers
- Review budget variations on monthly payroll
Remember: The fraudster is only successful if they have unmonitored access.
What questions do you have?
We are happy to help. Please post your comment below or contact Lisa Byrne, Audit Manager at Cooney Carey, on 01 677 9000. Alternatively, send her an email: firstname.lastname@example.org
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Posted on September 12, 2017 by Lisa Byrne