1. Donning your Detective Hat: Sniffing Out Payroll Fraud
Gerard M. Hall, CPP | Payroll Technical Operations Manager, CBIZ

2. Purpose
To provide awareness and education to the potential threats of fraud and its impact to your processes/organization

3. Agenda What is Fraud/Why the attraction External Fraud Keyloggers
Phishing/IRS Scam
Internal Fraud
Vigilant Tactics
Questions

4. Quick Housekeeping Rules
Active Participation is Appreciated
Respect other people’s opinions/thoughts
Maryland State Police
FBI

5. What do you think of when you hear the term “fraud”?

6. What is Fraud?
An illegal act involving obtaining something of value through willful misrepresentation

7. Payroll fraud: Why the attraction?
Payroll is usually #1 expense of companies
Variable expense/Always fluctuating
Limited measures in banking verifications
Limited people with full knowledge due to confidentiality

8. External Fraud

9. External Payroll Fraud
Compromise of servers to obtain sensitive information/perform fraudulent activity on behalf of company
Keyloggers
Phishing

10. Keylogging

11. Ways to Protect Against Keyloggers
Use a Firewall
Install Password Manager
Keep All Software Updated
Change Passwords Frequently
Use Secured WiFi Connections

12. Phishing
The attempt to obtain sensitive information such as usernames, passwords, and credit card details by disguising as a trustworthy entity in an electronic communication

13. A Phishing Example

14. Avoid being Phished!

15. Legit Company Correspondence…
Don’t request your sensitive information via
Call you by your name
Have domain s
Know how to spell
Don’t force you to their website
Don’t send unsolicited attachments
Links match legitimate URL’s

16. Payroll-Related Phishing Scams

17. ALWAYS REMEMBER
THE IRS NEVER SENDS S REQUESTING INFO!

18. Even Employees need to be careful!

19. Vigilant Tactics for detecting external payroll fraud
Follow up with questionable s with a phone call, even if it looks from the client
Do not click on links with suspicious s
Question s for sensitive data/processes

20. Internal Fraud

21. Payroll Fraud: Internal Fraud
Employee (HR/Payroll) misappropriating company funds for personal gain
Illegitimate access from other employees to sensitive information
Legitimate access in payroll system

22. A Quick Video…

24. Fraudster Rationalizations
Barry Webne
Embezzled >$1MM TWICE!
2 different companies
1995
2006

25. Payroll Fraud Types Time Card Fraud Payroll Input Fraud
Accounts Payable Fraud
Expense Report Fraud

26. Time Card Fraud Buddy Punching Falsifying of Hours (Manual Timesheets)
Excessive “Edits”
Paid Breaks/Lunches

27. Payroll Input Fraud Pay rate alteration Phantom payments/employees
Reimbursement
PTO padding

28. Accounts Payable Fraud
Vendor Spoofing
Stale Dated Checks
Falsifying Invoices

29. Expense Report Fraud Reimbursement for personal expenses
Mileage falsifying/padding
Double Dipping of Expenses
Kickback/Membership Rewards

30. Staggering ACFE Stats

31. POP QUIZ
In occupational fraud, the percentage of first-time offenders are…
40.7%
53.2%
78.9%
94.8%

32. Payroll Anti-Fraud Measurements for internal fraud
CHECKS AND BALANCES
Change Audit (Payroll Changes)
Hours Report
Direct Deposit Change Audits
Multiple Direct Deposits with same Acct#

33. IF YOU SUSPECT FRAUD… RAISE. YOUR. HAND.
Inform your manager/accounting of questionable processes
Contact local authorities

35. Connect with me
gerardmhall
ThatPayrollGuy