Fraud, Payroll, and the vulnerability of your business

1st June 2016

I’ve just read the latest report from the Centre for Counter Fraud Studies at Portsmouth University and it drops a bombshell with regard to payroll fraud. After the initial shock should you believe the hype?

Ever since the Government’s National Fraud Authority closed its doors back in 2014 a void in fraud analysis has been present. But this report is different as it has the backing of a number of fraud experts, the University of Portsmouth’s Centre for Counter Fraud Studies and Experian.

The report paints a bleak picture of ‘industrial scale’ fraud in the UK, with innovative external attacks and widespread internal vulnerabilities creating £12billion losses. There have been several high profile phishing attacks on business such as at Snapchat, targeting company staff with fake phone calls and  emails impersonating legitimate senior staff contacts. Phishing attacks in the UK rose by 21% in 2015.

Of course IRIS FMP has relentlessly given advice to payroll teams on payroll fraud but a client on reading this report queried whether the scale of the figures was correct. It doesn’t matter. What does matter is that fraud and payroll fraud could be happening under your nose and you might not even know it.

With expenses claims, for example, fraud can go unchecked for years. An employee might add a few miles onto a business trip here or there, claim a visit that didn’t actually take place or misuse a fuel card. Sloppy checking and infrequent auditing could mean these losses are never detected.

Furthermore, where ‘ghost employees’ are created fraudulently and subsequently found out, many businesses will choose to take the losses ‘on the chin’. There are two reasons for this. Firstly, taking an employee to the police and going through a court process can be time consuming and costly, and might not get the result you would expect. Secondly some companies would rather sweep things under the carpet rather than face any potential reputational implication.

We’ve put together several blogs and ebooks covering this subject that give valuable tips for business.

Five Fraud Red Flags to Ignore at your peril

Payroll audit -Time to Act