Unless the owner handles all aspects of computing and paying
payroll, there is room for fraud in every small business. The fact that your
company has only a few employees does not guarantee that you will be safe.
Perhaps one of the easiest payroll fraud techniques is the
overpayment of withholding or payroll taxes. Your bookkeeper simply overpays
the government. When the refund check arrives, it is deposited by the employee
to his or her personal account. In some cases, the employee will have an
account at a different bank but in the company name. Such an account could be
used for the fraudulent deposit of other company receipts as well.
The greater the number of employees, the easier it is to
pull off a scam. Perhaps the payroll clerk has invented a fictitious employee
or falsifies hours or commissions for a cooperating employee who shares the
stolen funds. Or perhaps the employee holds the payroll deposit funds in his or
her own interest-bearing account until it is time to make the payroll deposit
to the government.
A payroll review by an independent accountant may help
prevent such employee schemes. Even in small companies, it is possible to
divide office tasks to make employee theft more difficult.
Give us a call; we will gladly review your company's
internal controls to determine what changes may be needed.
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