ระบบเตรียมข้อมูล Payroll · Payroll และ การมอบอํานาจ ระบบเตรียมข้อมูล Payroll 1.งด.6
Is Your Payroll Being Plundered - Detecting Payroll Fraud Using Data Analytics
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Transcript of Is Your Payroll Being Plundered - Detecting Payroll Fraud Using Data Analytics
Is Your Payroll Being Plundered?
February 27, 2013
Special Guest Presenter:Katrina Kiselinchev, CIA, CPA, CFE, CFF
Copyright © 2013 FraudResourceNet™ LLC
Copyright © 2013 FraudResourceNet™ LLC
About Peter Goldmann, MSc., CFE
President and Founder of White Collar Crime 101
Publisher of White-Collar Crime FighterDeveloper of FraudAware® Anti-Fraud Training
Monthly Columnist, The Fraud Examiner, ACFE Newsletter
Member of Editorial Advisory Board, ACFE Author of “Fraud in the Markets”
Explains how fraud fueled the financial crisis.
Copyright © 2013 FraudResourceNet™ LLC
About Jim Kaplan, MSc, CIA, CFE
President and Founder of AuditNet®, the global resource for auditors
Auditor, Web Site Guru,
Internet for Auditors Pioneer
Recipient of the IIA’s 2007 Bradford Cadmus Memorial Award.
Author of “The Auditor’s Guide to Internet Resources” 2nd Edition
Copyright © 2013 FraudResourceNet™ LLC
About Katrina Kiselinchev, CPA, CIA, CFE, CFF
President of Inclusivitie, We Do “SMART”
Integration Partner with IDEA
Experience across industries, audit, fraud, and value
Achieved Value of $5+ Million & ROI of 2000+%, which included using IDEA’s SMART Analyzer for continuous monitoring & external reliance
Adjunct Professor at Georgia State University
Specific Fraud, in Payroll, Fake Checks & Hour Overages
Copyright © 2013 FraudResourceNet™ LLC
Webinar Housekeeping
This webinar and its material are the property of FraudResourceNet LLC. Unauthorized usage or recording of this webinar or any of its material is strictly forbidden. We will be recording the webinar and you will be provided access to that recording within five business days after the webinar. Downloading or otherwise duplicating the webinar recording is expressly prohibited.
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Learning Objectives
Costliest Forms of Internal & External Payroll Fraud
Who Commits Payroll Fraud
Gathering Accurate Data for Effective Data Analysis
Powerful and User-Friendly Audit Automation Tests
Techniques for Detecting Red Flags of Payroll Frauds
Data Analytics Results & Improving Preventative Controls for Payroll
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Agenda
Introduction
Standards & Essentials
Fraud State of the Union
In the News: Costliest Forms of Payroll Fraud
Payroll Fraudsters
Planning for Payroll Fraud
Data Gathering for Payroll Data Analysis
Data Analysis & Payroll Fraud
Red Flag Detection & Payroll Fraud
Using Data Analysis Results to Improve Controls
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The Auditor’s Role
IPPF Standard 1210.A3 Internal auditors must have sufficient knowledge of…available technology based audit techniques to perform their assigned work
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IIA Guidance – GTAG 13
Internal auditors require appropriate skills and should use available technological tools to help them maintain a successful fraud management program that covers prevention, detection, and investigation. As such, all audit professionals — not just IT audit specialists — are expected to be increasingly proficient in areas such as data analysis and the use of technology to help them meet the demands of the job.
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Professional Guidance
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Fraud State of the Union
2012 ACFE Report to
the Nations
Copyright © 2013 FraudResourceNet™ LLC
Fraud State of the Union
2012 ACFE Report to the Nations
Copyright © 2013 FraudResourceNet™ LLC
In the News:Costliest Forms of Payroll Fraud
According to ACFE's "Report to the Nation on Occupational Fraud and Abuse":
> 39% of Fraud Cases in Payroll Occur in Business with < 99 Employees
Payroll Fraud Accounts for Nearly 10 percent e.g. $60 Billion Annually Small Businesses Losses Average $127,500 per Scheme. Large Company Losses Average $97,000 per Scheme.
Ranked from Most to Least Costly Average Per OccurrenceGhost Employees $100,000 - $300,000Commission Schemes $100,000+Workman’s Compensation $100,000+Falsified Wages $50,000+
Copyright © 2013 FraudResourceNet™ LLC
Polling Question 1
The median loss in 2012 for owners/managers in fraud cases was _______.
a. $182,000
b. $573,000
c. $60,000
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In the News: Case of Being Asleep at the Wheel in the City That Never Sleeps
Mayor Says Payroll Fraud “Slipped Through the Cracks”Joel Bondy, Head of NYC Payroll hired Mark
Mazer, a “quality assurance” consultant and gave him authority and budget to hire subcontractors.
Mazer awarded “subcontract” of $55 million to a company owned by his uncle… one for $20 million to a friend … one worth $1.4 million to another friend.
Each “ghost subcontractor” kicked back 1/3 to Mazer thru shell companies owned by his wife and his mother.
Total cost to NYC payroll budget: $80 million
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Payroll Fraudsters: Perpetrators
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Payroll Fraudsters: Perpetrators
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Polling Question 2
The duration of payroll incidents in 2012 was...
a. 24 months
b. 18 months
c. 36 months
d. 12 months
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Data Gathering for Payroll Data Analysis
Request All Meta Data Fields Name Employee ID Address Rate of Pay Commission History for X Time Period Additions & Changes to Status Changes to Fields & Who Made Them
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Auditing for Payroll Fraud
Request Access Listing & Last Activity from IT Provide Employee Listing from Payroll & 100% Alignment with
Access
Cross Reference IT to Active Employees Paid (Join)
Review Employees with High Withholding Exemptions
Review Employees with Low (or no) Tax Withholdings
Request Data of Employees with No Voluntary Deductions
Request a No-PTO-Used Report for Employees
Request a Listing of Employees with No Changes > 6 Months
Request a Listing of Employee & Deposit Accounts (Dups)
Any Red Flags Could Equal a Problem!
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Red Flags of Payroll Fraud
Allowances/Garnishments to Disallowed Positions Overtime for Salaried Employees Meal allowances to Unqualified Employees
Employees on the payroll that do not appear on the: Phone listings, Human Resources employee listing etc
Same Bank Account Numbers for Two Employees Excessive Overtime Excessive Commissions “Earned” Gross pay = Net Pay (no deductions)
Continued…
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Red Flags for Payroll Fraud (continued)
Duplicate Payments & Time Modified Time by Other Employees Employees with No Vacation Time Paid Employees Paid with Non-Standard Checks Two employees with Same Social Security # Same address for 2+ Employees Oddly-timed Pay Increases Ex-employees with Paychecks
Copyright © 2013 FraudResourceNet™ LLC
Behavioral Red Flags
Unexplained Wealth
Sudden Unusual Mood Swings
Financial Problems e.g. Credit card or other debt
Family problems e.g. divorce, child access issues
Gambling Problems
Addiction to Drugs / Alcohol
Copyright © 2013 FraudResourceNet™ LLC
Polling Question 3
What Additional Items Should Be Requested Beyond Meta Data Standard Fields?
a. Access & Activity Listing from IT
b. Employees with All Changes
c. Neither of the Above
d. Both a and b
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Top 10 Areas for Data Analysis
1) Accounts Payable & Accounts Receivable
Purchasing to Payment Analysis
Review of Operating Disbursements
Validation of Payments to Vendors
Analyzing AR Open Orders for Process Deficiencies
Evaluating AR Aging for Internal and External Financial Reporting
AR Testing and Searching for Duplicate Payments
2) Duplicate Detection (Payroll) Fraud, Errors, Anomalies, or Outliers Payments, Invoices, Transactions, Credits
Results from Survey Conducted by Audimation Services, Inc. in 2011
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Top 10 Areas for Data Analysis cont.
3) Sampling Ability to Test 100% Adequate Representation Scope Setting4) Data Imports/Extracts & Analysis of Large Data Sets Text PDF Excel Word5) Continuous Auditing & Monitoring Financial Statements & Areas Travel & Entertainment Disbursements(Payroll) Human Resources
Results from Survey Conducted by Audimation Services, Inc. in 2011
Copyright © 2013 FraudResourceNet™ LLC
Polling Question 4
Which of the following could be red flags of payroll fraud (choose all that apply)
1. Different Bank Accounts2. No Overtime for Salaried Employees3. Overtime for Salaried Employees4. Gross Pay = Net Pay5. Terminated employees receiving paychecks
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Top 10 Areas for Data Analysis cont.
6) Fraud Detection & Forensics Red Flags & Discovery (Payroll)
7) Analysis of P - CardsReviewing Internal Controls Process DeterminationFraud Detection
8) Payroll & Time Sheets (Payroll)Ghost EmployeesFalsified Wage Sheets & Time CardsWeekly / Monthly ReasonablenessCompliance Review e.g. Approvals
Results from Survey Conducted by Audimation Services, Inc. in 2011
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Top 10 Areas for Data Analysis cont.
9) Joins & Comparisons
Active Application Users vs. List of Terminated Employees
Physician Scheduling System to the Billing System
Vendor Terms including Early Payments & Aging
Tax ID numbers and Conflict of Interest
Review of Billing & Pricing vs. Contracts
Missing Invoice Numbers
Employee to Vendor Address
10) Inventory Obsolescence Slow Moving Reconciliations
Results from Survey Conducted by Audimation Services, Inc. in 2011
Copyright © 2013 FraudResourceNet™ LLC
Using Data Analysis to Improve Controls
Don’t Simply React to Findings
Determine What is Not Happening
Improve the Environment
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Payroll Control Improvement
Prevention of Unauthorized RaisesSegregation of Duties for Preparation, Disbursement, and
Distribution. Restrict Access to the Software & Keep Passwords SafeHave Removed Approver for PayrollCompare Wages Approved vs. Paid QuarterlyReview Budget v. Actual Monthly.
Prevention of Creation of Ghost EmployeesDo all Employees Have Deductions?Do All Match IT Access Listing? Implement Controls That Don’t Allow Addition of Payroll Without
Confirmed IT Access
Copyright © 2013 FraudResourceNet™ LLC
Preventing Payroll Fraud
Ghost Employees Conduct periodic payroll audits in which all employees must physically sign Review payroll for duplicate addresses or Social Security numbers.
(Sample) Investigate all returned W-2 forms. Verify Social Security numbers with Social Security Administration. Randomly review payroll database for employees with P.O. boxes or No
Deductions Require direct mailing of checks or have management distribute them
physically
Types: Terminated, Fake, No Show, Temporary, Rehire, and Pre-employment Ghost
Copyright © 2013 FraudResourceNet™ LLC
Preventing Payroll Fraud
Worker’s Compensation Maintain cameras in your workplace to capture accidents. Require that injuries are reported promptly. Receive concurring medical opinions for certain injuries. Consider retaining private investigators to monitor employee actions.
Falsified Wages Sophisticated time clocks or systems that require a unique employee
pass code. Require manager or supervisor approval of all timecards or timesheets,
including overtime. Executive approval of all bonus-type compensation. Mandatory vacations for at risk employees. Executive approval of all paychecks. The ability to modify wage rates, add employees are restricted. These individuals should have their records periodically reviewed.
Copyright © 2013 FraudResourceNet™ LLC
Preventing Payroll Fraud
Commission Schemes Periodically review your commission structure for needed changes
aligned to business? Are you recovering commissions overpaid to employees or paid for
cancelled sales? Review financial correlations. Are sales commissions increasing
when sales are dropping? Closely audit some of your top performers. Are commissions
justified? Re-perform commission pay-outs (Sample)
Copyright © 2013 FraudResourceNet™ LLC
Polling Question 5
Obtaining concurring medical opinions for employee injuries is key to auditing for...
a. Ghost employee schemes
b. Commission schemes
c. Worker’s comp fraud
d. None of the above
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Questions?
Any Questions?Don’t be Shy!
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Thank You!
Website: http://www.fraudresourcenet.com
Jim KaplanFraudResourceNet™
800-385-1625 [email protected]
Peter GoldmannFraudResourceNet™
Katrina KiselinchevInclusivitie, LLC832-236-4778
[email protected]://www.inclusivitie.com