JESSA TORRE BSA 2
PERSONNEL AND PAYROLL
WHAT CAN GO WRONG
(RISK)
Employees clocking in and out
for each other known as buddy
punching which may result to
overpayment or
overcompensation.
The person who manages the
payroll may create fictitious account
or ghost employees which are either
employee on paper only, are dead
but kept on the payroll, or they’re
real people who don’t even work at
the business that’s sending out
paychecks to them. The last of the
CONTROL PROCEDURE
 Require a manager or
supervisor to provide a
secondary review and
approval prior to payment. A
two-tiered level of review will
also help reduce incidences of
overcompensation.
 Require that timesheets be
completed and submitted on
schedule to avoid delays after
which a supervisor may not
remember the hours an
employee worked.
 Schedule periodic audits by
someone outside the
department to compare
timesheets to work schedules
to spot anomalies.
 Require a supervisor’s
approval for any changes to
employee pay rates or
employee types.
 Require documentation and
authorization from
management before an
employee can be added to the
payroll.
 Conduct background checks
and reference checks on new
hires.
three ghosts splits the fraudulent
profits with a person inside the
company who is committing the
crime.
Employees claiming work
during hours they were not
present or false time record
which may result to
overpayment or
overcompensation.
 Separate the duties of
maintaining payroll records
and personnel records.
 Personnel who create or
maintain payroll data and lists
should not be allowed to make
changes or add employees
without management
approval.
 Reconcile the check register
against payroll records each
month.
 Separate the duties of
processing payroll and issuing
checks.
 Use data analytics to spot
anomalies in pay records.
 Compare pay data with payroll
budget to spot inconsistencies.