Are you a victim of these types of employee activities?
Payroll and ghost employees
“Ghost” employees are individuals who receive paychecks but do not exist, or exist but are not legitimate employees. In the first instance, they are fictitious employees who are entered into the
payroll file. In the latter, they may be associates of an existing employee or former employees who continue to receive checks after their employment is terminated. For this fraud to occur, employment files are created or altered. Work activity records (like time cards) are maintained. Payroll checks, or more conveniently, direct deposits, are diverted to an account controlled by the perpetrator.
Billing and fictitious vendors
This fraud scheme is perpetrated by issuing disbursements to either a fictitious vendor or to a legitimate vendor for fictitious goods/services. The fictitious vendor is entered into the vendor master file and receives payment for goods and services not actually provided. Legitimate vendor accounts may also be used to commit fraud. Payments to legitimate vendors for fictitious goods/services may be intercepted and converted, or employees can collude with existing vendors to create inflated invoices or false invoices and provide kick-backs or bribes to the employee.
Expense reimbursement is one of the most prevalent forms of corruption because it is so easy to commit compared to other frauds. Some common examples include:
Submitting personal expenses as business expenses (for example, dinner with a spouse is submitted as dinner with a client);
Writing in overstated amounts for blanks on a receipt (for example, a $20 taxi ride from the airport is submitted as a $40 ride);
Duplicating reimbursement (for example, a board member is reimbursed mileage from the organization and from their employer); and
Masking true nature of expense to one that is allowed by company policy (for example, submitting “discrete receipt” from a “gentlemen’s club,” to make an outing appear to be dining, rather than non-allowed adult entertainment)