Question

Are jobs that allow/encourage employees to work from home more subject to payroll fraud? How can they insert appropriate control?

Answer 1

Yes, the jobs that allow/ encourage employees to work from home are more subject to payroll fraud for the following reasons:

A) The employees are out of sight of the employer and are susceptible to use the liberty of working from home for leisure activities.

B) The person can also work at night when there is less monitoring of the company's technical assets to steal data.

C) Since the employee is deemed to be working from home, the payroll staff can also create ghost employees and siphon the funds from the company.

D) Paycheck diversion can also be done where in the payroll staff can write checques in the name of work from home employees and then cash it themselves.

Appropriate controls can be established in the following ways:

A) Authentic documentation should be ensured at the time a person joins an organization and face to face interview should be conducted.

B) Even if the employee works from home , a target should be given and should be monitored on daily basis.

C) Periodic auditing of the payroll records needs to be done to spot ghost employees. Another way to spot a ghost employee is when there are no deductions on a paycheck, since the perpetrator would want to receive the maximum amount of cash.