Mitigating Internal Payroll Fraud

1. Introduction
2. Agenda 00:02:36
3. The Fraud Triangle 00:04:58
4. Identifying Risk 00:10:24
5. Payroll Process Flow Chart 00:21:16
6. New Hires. Timecards, Payroll Input, Preview Approval, and Reconciliation 00:24:38
7. Compliance 00:36:37
8. Audit Preparedness 00:48:56
9. Educating Others 00:55:37
10. Creating Competencies and Understandings 00:55:59
11. Best Practices 01:05:44
12. To Prevent Against Fraud 01:06:47
13. Case Study 01:20:49
14. Employee Fraud 01:22:50
15. Con… Scam… Cheat… 01:25:50
16. Attendee Questions 01:27:03
17. Presentation Closing 01:42:02

• ACH Debit 01:21:21
• Audit 00:36:56
• External Audits 00:42:37, 00:45:27
• Internal Audits 00:42:00
• Payroll Process Flow Chart 00:21:33, 00:49:03
• Reconciliation 00:28:07
• SOX 00:14:23, 00:21:36, 00:39:17
• The Fraud Triangle 00:02:42, 00:05:17
• Vendor 01:21:09

ACH Debit : An ACH debit transaction occurs when the originator of a transaction authorizes the recipient to “pull” funds from his or her account. For example, say a customer wants to pay an electric bill via ACH debit.

Audit: A formal examination of an organization's or individual's accounts or financial situation

External Audit: An external audit is an examination that is conducted by an independent accountant. This type of audit is most commonly intended to result in a certification of the financial statements of an entity. This certification is required by certain investors and lenders, and for all publicly-held businesses. The objectives of an external audit are to determine:The accuracy and completeness of the client's accounting records; whether the client's accounting records have been prepared in accordance with the applicable accounting framework; and whether the client's financial statements present fairly its results and financial position.

Internal Audits: Internal audits evaluate a company's internal controls, including its corporate governance and accounting processes. These audits ensure compliance with laws and regulations and help to maintain accurate and timely financial reporting and data collection.

Payroll Process Flow Chart: A payroll flowchart visualizes the process of running payroll, withholding deductions, and distributing paychecks to employees. In short, it breaks down the process bit by bit.

Reconciliation: Payroll reconciliation is when you compare your payroll register with the amount you're planning to pay out to your employees to confirm those numbers match. The simplest way to think about it is double-checking your math to ensure that you pay your employees correctly. Payroll reconciliation should happen frequently.

SOX -Sarbanes Oxley Act: The Sarbanes-Oxley Act of 2002 is a federal law that established sweeping auditing and financial regulations for public companies. Lawmakers created the legislation to help protect shareholders, employees, and the public from accounting errors and fraudulent financial practices.

The Fraud Triangle: The Fraud Triangle outlines three elements that are typically present when an individual commits occupational fraud – Pressure, Opportunity, and Rationalization. All of these elements are typically present, so effectively addressing any one of them will help minimize the fraud risk. “Pressure” refers to the motivation of the employee. “Opportunity” to commit fraud is a risk factor that is heightened where internal controls are weak or non-existent. “Rationalization” is the final factor and it is how the perpetrator justifies his or her fraud.

Vendor: A vendor is a person or business that supplies goods or services to a company. Another term for the vendor is the supplier. In many situations, a company presents the vendor with a purchase order stating the goods or services needed, the price, delivery date, and other terms.