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THE PAYROLL FACTORY 610-644-4569 thepayrollfactory.com. The Payroll Factory Service is the Difference Presents Payroll Fraud Information & Discussion. The Payroll Factory Service is the Difference. What is the problem?. What is the problem? Dishonest Employees

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The payroll factory 610 644 4569 thepayrollfactory com

THE PAYROLL FACTORY610-644-4569thepayrollfactory.com

thepayrollfactory.com 610-644-4569


The payroll factory 610 644 4569 thepayrollfactory

The Payroll FactoryService is the Difference

Presents

Payroll Fraud

Information & Discussion

thepayrollfactory.com 610-644-4569


What is the problem

The Payroll Factory

Service is the Difference

What is the problem?

  • What is the problem?

  • Dishonest Employees

    • Financial Pressures on the employee (rise of credit and other debt)

    • Layoffs – commit fraud knowing they are leaving the company

    • Kick backs from other employees

    • Stealing Time

thepayrollfactory.com 610-644-4569


Demographics

Demographics

Men59.1%

Women40.9 %

High School Degree34 %

Some College21 %

Bachelor’s Degree34 %

Postgraduate Degree11 %

Association of Certified Fraud Examiners, Easy Small Business HR, Institute for Corporate Productivity, Jack L. Hayes International, Inc.Research Date: 9.18.2012

thepayrollfactory.com 610-644-4569


The payroll factory 610 644 4569 thepayrollfactory

According to the Association of Certified Fraud Examiners, payroll fraud the number one source of accounting fraud and employee theft

  • Payroll Fraud happens in 27 percent of all businesses

  • Payroll fraud occurs nearly twice as often (14.2 percent) in small organizations with less than 100 employees than in large ones (7.6 percent).

  • The average instance of payroll fraud lasts about 36 months. That’s three years of paying ghost employees or overpaying existing ones. In Delaware, a School District Finance Director paid himself an extra $150,000 over eight years. He also underpaid several school administrators a combined $50,000 in one school year.

thepayrollfactory.com 610-644-4569


Other employee theft statistics

Other Employee Theft Statistics

  • Percent of total thefts committed by a manager 37.1 %

  • Percent of total thefts by an employee who had ideas stolen at work 29 %

  • Average time office fraud lasts before detected 2 years

  • Retail employees arrested for workplace theft 1 in 30

    Association of Certified Fraud Examiners, Easy Small Business HR, Institute for Corporate Productivity, Jack L. Hayes International, Inc.Research Date: 9.18.2012

thepayrollfactory.com 610-644-4569


The payroll factory 610 644 4569 thepayrollfactory

The Payroll Factory

Service is the Difference

How big is the problem?

Employee Theft Statistics Data

Amount stolen annually from U.S. businesses by employees$50,000,000,000

Percent of annual revenues lost to theft or fraud7 %

Percent of employees who have stolen at least once from their employer75 %

Percent of employees who have stolen at least twice from their employer37.5 %

Percent of all business bankruptcies caused by employee theft33 %

Source: Association of Certified Fraud Examiners, Easy Small Business HR, Institute for Corporate Productivity, Jack L. Hayes International, Inc.Research

Date: 9.18.2012

thepayrollfactory.com 610-644-4569


The victims

Loss by Number of Employees

Loss by Type of Organization

Victim

Number

Pct. cases

Pct. cases

Median loss

Median loss

The Payroll Factory

Service is the Difference

1–99

Government agency

36.0

17.6

$190,000

$100,000

Publicly traded company

100–999

20.3

31.7

$200,000

$179,000

1,000–9,999

Privately held company

24.8

36.8

$210,000

$120,000

Not-for-profit organization

10,000+

18.9

13.9

$150,000

$100,000

The Victims

Source: 2006 Association of Certified Fraud Examiners Report to the Nation on Occupational Fraud & Abuse

thepayrollfactory.com 610-644-4569


Ways to cheat

The Payroll Factory

Service is the Difference

Ways to Cheat

  • Ghost employees

    • Someone on the payroll who does not actually work for the victim company

  • Falsified Hours and Salary

    • Buddy Punching

    • Online RIO Calculator available

  • Altering the Payee Name on a check

  • Withholding Tax Schemes

  • Commission Schemes

  • False Workers Compensation Claims

Paying a Nonexistent Employee Can Be Expensive

Source: Occupational Fraud And Abuse,by Joseph T Wells,2002

thepayrollfactory.com 610-644-4569


Vast majority of incidents of employee fraud goes undetected due to

Vast majority of incidents of employee fraud goes undetected due to:

  • No employee screening

  • No internal audit control/procedures

  • No monthly reconciliation of accounts

  • No separation of duties of employees

  • Bad habits by Owners/Management

  • Emotional Issues

thepayrollfactory.com 610-644-4569


The payroll factory 610 644 4569 thepayrollfactory

The Payroll Factory

Service is the Difference

  • Detection of Fraud

  • Tip from employee26.3 %

  • Accidental discovery18.8 %

  • Internal audit18.8 %

  • Internal controls15.4 %

  • External audit11.8 %

  • Tip from customer 8.8 %

  • Anonymous tip 6.2 %

  • Tip from vendor 5.1 %

  • Notification from law enforcement 1.7 %

  • Source: Association of Certified Fraud Examiners, Easy Small Business HR, Institute for Corporate Productivity, Jack L. Hayes International, Inc.Research

  • Date: 9.18.2012

thepayrollfactory.com 610-644-4569


Reducing and preventing fraud

The Payroll Factory

Service is the Difference

Reducing and Preventing Fraud

  • Owners Involvement

  • Select the Right Employee

    - Verify Past Employment

    - Criminal Conviction Checks

    - Drug Screening

    - Reference Checks

    - Have Employee Bonded

    • Perform Audits

    • Expense Reports

    • Payroll

    • Sales

    • Cash

    • Suspense Accounts

    • Job Rotation and Separation of Duties

    • Thorough Internal Control

    • Retain Outside Payroll Fraud Consultant

    • Allow Payroll Provider to Control Tax Monies

thepayrollfactory.com 610-644-4569


Behavioral red flags

Behavioral Red Flags

  • In 81% of cases, the fraudster displayed one or more behavioral red flags that are often associated with fraudulent conduct.

  • Living beyond means 36%

  • Financial difficulties 27%

  • Unusually close association with vendors or customers 19%

  • Excessive control issues 18%

thepayrollfactory.com 610-644-4569


Technology

The Payroll Factory

Service is the Difference

Technology

  • State of the Art Time Clocks

    • Biometric Hand Scanner

    • Web-based Systems

      • Automating Time Systems

      • Time Management

thepayrollfactory.com 610-644-4569


The payroll factory 610 644 4569 thepayrollfactory

Thank You for Attending Today’s Seminar

If you have any further questions about Payroll Fraud

Please contact

The Payroll Factory

610-644-4569

www.thepayrollfactory.com

thepayrollfactory.com 610-644-4569


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