eliminate payroll fraud in your company
You know the CCMA made the wrong decision
Here are the 7 internal controls you must implement in your payroll process
Discover 144 secrets that made leaders like Blanchard, Branson, Trump and Sunter so effective!
Tue, 2012-08-21
We value your privacy
In this issue:
· You know the CCMA made the wrong decision
· Here are the 7 internal controls you must implement in your payroll process
· Discover 144 secrets that made leaders like Blanchard, Branson, Trump and Sunter so effective!
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From Michelle Govender, Managing Editor of the Labour Law for Managers
Dear Reader,
Payroll provides an easy opportunity to defraud your company. Depending on the size of your company and the staff you have on your payroll, fictitious employees could be added to your payroll if you’re not checking your payroll correctly.
Depending on the controls you have for the pay rates, these could be manipulated to increase the gross pay for staff members.
Let me show you how to eliminate payroll fraud in your company…
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You know the CCMA made the wrong decision!
So what can you do about it?
Find out how you can challenge the CCMA and save yourself paying up to R72 000 for its mistakes.
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Here are the internal controls you must implement in your payroll process
Changes to the payroll system should only be processed by a designated manager. The payroll represents confidential information and is too sensitive to be dealt with by anyone else.
1. New employees should only be taken on to your payroll once a contract has been signed. This means that you should only add employees who you’ve actually met and approved.
2. The contract should be used to add the employee to the payroll system, as proof the person is a new employee. The contract will also confirm the salary amount.
3. The system should be set up in such a way that management authorisation is required to add an employee.
4. Pay slips should be reviewed on a monthly basis. Payroll reports should be signed off as evidence they’ve been checked and approved.
5. Payroll is an expense that doesn’t change much from month-to-month. An excellent control is for management to compare monthly totals to the prior month. Any changes should be investigated.
6. Changes to the payroll (increases, bonuses etc) should also only be made by management.
7. The system may be able to provide a report of changes made to the payroll during the month. If this is possible, the report can also be reviewed to see if unauthorised changes have been made.
Let’s look at an example below…
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Example
The owner of ABC (Pty) Ltd leaves the payroll processing to a payroll staff member, Mary, to save time.
He leaves the whole process, from drawing up the contract to printing out the pay slips, to the payroll staff. Since the owner isn’t very involved with the payroll system, he doesn’t keep track of the changes made to the system. After a few months, Mary decides to take advantage of his lack of involvement to help herself out of a financial crisis.
She adds a new employee to the system, using her own bank details for the payment. The owner signs the payroll off without being aware that there is a fictitious employee on the payroll.
Use these seven steps above to prevent payroll fraud from happening to you.
Plus don’t forget to answer our survey above as we value your feedback.
Until next time…
Michelle Govender
Managing Editor: Labour Law for Managers
PS. There are more ways to prevent payroll fraud in the Practical Accountancy loose leaf.
Find out more here
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