Step for Frauds Prevention in Payroll System

Some critical processes are always based on auditing/review to make sure that they are free of errors, especially where the process involves money or sensitive data. An organization is always at some risks including the possibilities of fraud being committed through various factors. Whenever an individual has some authority or control over the funds or sensitive data of the company, which is not secured, have more chances of frauds.

Such situations demand more documentation, clear strategies, and securities. In a company, one such critical process is Payroll since it has access to both funds as well as sensitive data which requires at most care and security.

What is Payroll Fraud?

In simple terms, Payroll fraud is defined as unfair or dishonesty within the company. It can be on both sides employees as well as employers. There are numbers of ways where payroll frauds are being committed which includes the following:

• Payroll Process: Employees or workers may inform about the high salaries and paid some other amount or managers may show false employee list and take away wages.
• Information Leakage: Here manager or any employees may leak the salary sheet due to which confidential data of employees or accounting information of a company may be misused.
• Attendance Management: Employees who have worked for a month may not get the salary if they are not included into the payroll list or employees may claim for the salaries of days when they were not present in the company or organization.
• Daily Wages: In this process, employees may be paid for the less hours than they works or employees may claim for more hours than actually, they have worked.
• Incentives: Here workers or employees are paid on the products or clients they have built for the company. So while paying them, it may happen that they do not receive the correct amount for the products they produce or the sales they have made.
• Travel Expenses: Employees may have to travel for the business purpose at some places and they are getting back all the expenses made during the business trip in simple term is known as Travel Expenses/Dearness Allowance. Here while calculating payroll, employees can submit the fake bills and get more reimbursement than actually, they have made. Approval managers or authorized person may submit fake bills on behalf of employees and can receive reimbursements which are not made.

It is the serious threat of the business that they have not safeguarded themselves properly which in turn leads to improper management with accounts and decreases the growth as well as the number of employees of the company. However, the Human Resource Management System can help to reduce payroll frauds.

How to prevent payroll frauds?

The best way to prevent your company’s HR and Payroll fraud is by using a secured and automized system which fulfills your company’s requirement. To safeguard your organization/company against frauds one can have a trusted payroll provider. While using automate system one can set the rights of the employees according to their designations so that no frauds is done in processing payroll.

• Payroll Process: factoHR provides the on-boarding module which has the facility of generating employees offer letter, appointment letter, memo and warning letter automatically and it also has a salary which is integrated with the payroll so that there are no chances of doing frauds with employees. As it has the facility of managing documents, there is no chance of creating a false employee list by managers. Only authorized persons can enter new hires data into the system.
• Information Leakage: Here only authorized person has rights over the salary master for accessing data. So there is no chance of leakage of any information.
• Attendance Management: factoHR’s HR and Payroll solution are integrated with the biometric machine so there is no chance that employees can claim for the salary of the day when they were not present. As biometric is integrated with the payroll system, it stores the data of employees in-out punch and calculates salary accordingly.
• Daily Wages: As stated above that payroll software is integrated with the biometric machine in factoHR, there are no chances of calculating salary on manually calculated hours. It reduces the frauds in paying employees and increases the employee’s satisfaction. Employees can also apply for overtime and can claim for their compensation.
• Incentives: In factoHR one can calculate employees salary based on Key Performance Indicator (KPI). Here goals can be predefined by the authorized persons or seniors through the system which is integrated with the payroll. So employees can have predefined monthly goals which give them the proper path of their tasks. They feel motivated as their work is taken into consideration and they can not claim for the compensation of work which they have not done.
• Travel Expenses: Travel expense system is integrated with the payroll system in factoHR. Employees can attach the bills of expenses and can claim for the reimbursement at the time when they are on the trip. They can also view their claim status and can get confirmation regarding their payments. Here there are no chances of doing frauds as it has the multi-level approval process. Neither employees nor managers can do any frauds to claim expenses.